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TIB Bank opens Riverside Bank branches as own

By Staff | Feb 16, 2009

In addition to a high rate of foreclosures and a high unemployment rate, Cape Coral now has another characteristic of a failing economy — a failed bank.
Riverside Bank of the Gulf Coast was shuttered Friday by the Florida Office of Financial Regulation.
The initial confusion of its account holders was followed by a sigh of relief when they discovered all of their deposits would be safe and available. TIB Bank of Naples will take over about $425 million in Riverside deposits.
Riverside branches will open today as TIB branches. Riverside customers will be able to use their ATMs, checks, wire services and safety deposit boxes as before. Customers also will be informed of any changes in interest rates and policies resulting from the transition.
“It’s a definite shock to your system,” Riverside customer Laurie Pesek said.
Pesek, who had a checking account with Riverside for three years, said she discovered the bank’s failure Saturday when she attempted to check her account online. She feared losing her account, but the anxiety wore off as she read through an online question and answer information packet provided by the FDIC.
“The Q and A, I mean, that was all encompassing and allayed any fears I might have,” Pesek said.
Riverside customers can find information regarding the transition to TIB at: www.fdic.gov/bank/individual/failed/riverside.html.
Warning signs for Riverside could be seen as early as October, when the bank signed an agreement with the FDIC to streamline its management and lending practices.
Pesek said she did not realize the bank was in trouble.
“I never thought anything was going on or wrong. It’s a shock they don’t have to notify you,” she said.
Riverside chairman Elmer Tabor knew the end was near as early as December.
“Under Florida statutes, a bank must be taken over once they fall below 2 percent risk-based capital. We fell below 2 percent in December,” he said.
Tabor, who was working Friday at Riverside’s main branch on Santa Barbara Boulevard when he heard the news, said the bank’s failure is the result of the fallout from the housing crisis and not due to mismanagement. Construction loans that typically would be picked up by secondary market lenders like Fannie Mae, Freddie Mac, Wells Fargo and others were left on Riverside’s books.
“In ’05 a brand new house was selling at $250,000. By the time the house got completed a year later that house was at $190,000. The secondary market wouldn’t take that loan because it was upside-down,” Tabor said.
“Ours was not frivolous lending,” he added.
Tabor also pointed out that the bank’s customers would not lose any assets in the transition.
“The only ones that lost out on this are the stockholders,” he said.
Riverside was one of four banks taken over Friday by regulators. Sherman County Bank of Nebraska, Corn Belt Bank and Trust Co. of Illinois, and Pinnacle Bank of Oregon also were seized.