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Feds shut Naples-based Orion Bank

Exec allegedly lied to regulators; branches are sold to IberiaBank

Nov. 13, 2009
Orion Bank had four branches in Lee. / Lindsay Terry/


Orion Bank is the 122nd FDIC-insured institution to fail in the nation this year, and the 11th in Florida.

• Who closed the bank? The Florida Office of Financial Regulation closed the bank Friday, and the Federal Deposit Insurance Corp. was named receiver.

• All deposit accounts, excluding certain brokered deposits, have been transferred to IberiaBank of Lafayette, La., and will be available immediately. Former Orion Bank locations will reopen as branches of Iberia during regular business hours.

• Checks drawn on Orion Bank that did not clear before the institution closed will be honored as long as there are sufficient funds in the account.

• ATM and online service will remain available.

• During business hours, you may continue to use the services to which you previously had access, such as safe deposit boxes, night deposit boxes and wire services.

• Your checks will be processed as usual.

• If you have a problem with a merchant refusing to accept your check, contact your branch office.

• If you had a loan with Orion Bank, you should continue to make payments as usual.

• If you or your company provided a service or product, leased space, furniture, or equipment to Orion Bank before Friday and have not been paid, you may be entitled to a claim against the bank.

Federal Deposit Insurance Corp.
Receiver: Orion Bank
7777 Baymeadows Way West
Jacksonville, FL 32256
Attention: Claims Agent

• Customers who have additional questions can call the FDIC toll-free at 800-331-6306.
Source: FDIC


1:10 A.M. — Regulators shut down Naples-based Orion Bank on Friday and dealt most of its deposits and assets to a Louisiana bank.

Branches will reopen as locations of IberiaBank, based in Lafayette, La.

The closure comes on the heels of a directive filed by the Federal Reserve, ordering Orion to fire chairman and CEO Jerry Williams for making false statements to regulators and participating in “inaccurate regulatory reports.”

The order was issued Monday, but publicly announced Friday, just before the closure.

It is the fifth bank with branches in Southwest Florida to be closed by regulators this year, following Riverside Bank of Gulf Coast, Colonial Bank, Hillcrest Bank and Partners Bank. It is the 11th bank to fail in Florida and the 122nd bank in the nation this year.

Veteran Lee County banker Bruce Schultz, president of Southwest Capital Bank in Fort Myers, said the closure is more troubling than others because of the accusations of false statements.

“In the banking business we don’t like that kind of news,” Schultz said. “It just shakes the confidence of the community.”

The 23 former Orion branches from Monroe to Manatee counties — including four in Lee — will reopen for regular business hours as branches of IberiaBank.

IberiaBank agreed to assume all of Orion Bank’s deposits and $2.4 billion of its assets. The FDIC and IberiaBank agreed to share losses on about $1.9 billion of Orion Bank’s loans and other assets.

The failure of Orion Bank will cost the federal deposit insurance fund an estimated $615 million.

IberiaBank previously had 63 branches in Louisiana, Alabama and in Jacksonville. IberiaBank was almost twice the size of Orion, with Iberia having about $4.2 billion in assets, according to the Federal Deposit Insurance Corp.

Customers will have access to their funds and borrowers should continue making payments, according to a statement from the FDIC.

IberiaBank also picked up branches of Sarasota-based Century Bank in a separate transaction brokered by regulators Friday. Calls to IberiaBank after regular business hours Friday were not returned.

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Bill Valenti, president of Florida Gulf Bank in Fort Myers, said the ramifications of the closure will be lasting.

“There goes another community bank and another bank from outside the area — although I’m sure IberiaBank is a fine institution — coming from outside the area with no history here,” Valenti said.

“What we lose is someone to help with the desperate need to get loans to businesses trying to get out of this recession. It’s going to be a while before they can sort through everything and start lending,” he said.

On Friday, the Federal Reserve made public a “Prompt Corrective Action Directive,” saying Williams “permitted the bank” to use straw borrowers to lend an additional $60 million to an unnamed customer who had already reached the bank’s legal lending limit.

Williams knew $15 million of proceeds from those loans were to be used to purchase common and preferred stock issued to Orion Bancorp, the bank’s parent company, the order states.

In early July, “Williams stated orally and in writing that $15 million in capital referred to above was raised without any financing provided by the bank. This statement was false ...,” the order states.

Calls to Williams’ office were not returned Friday.

Federal Reserve spokesman Barbara Hagenbaught said the closure of the bank superseded elements of the order demanding Orion raise capital.

She declined to comment whether Williams could face additional action.

Orion, with deposits of $2.1 billion and $2.6 billion in assets, has 23 branches stretching from Collier to Sarasota and Palm Beach counties.

The bank also had $277.3 million in non-performing debt related to real estate on its books as of Sept. 30, the most of any bank based in Lee and Collier counties.

Orion had been under cease-and-desist orders from the Federal Reserve since Aug. 29, 2008. The orders are one of the stronger tools used by the Fed to deal with problem banks.

Fed officials ordered the bank not to give credit to “doubtful” borrowers, improve standards for renewing, extending or modifying existing loans, and hire a consultant to determine whether Orion's senior executive officers are competent to perform their jobs.

When asked last week for an update on efforts to meet regulatory requirements, an Orion spokesman declined to comment.

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