As the US economy shows signs of recovery on one hand, the banking industry is still suffering on the other. South Florida is only one of several areas throughout the U.S. that is dealing with small and large bank closures due to ailing commercial and residential real estate markets.

Since January 2009, more than 103 banks in the United States have failed; many of which ceased operations and closed their doors overnight. To make matters worse, it has been speculated there are several other banks – possibly hundreds – that are struggling every day to stay afloat and remain viable throughout this banking crisis recovery.

In recent days, the Federal Deposit Insurance Corp reported that three (3) banks in Florida had failed:

• Partners Bank of Naples, Florida
• Hillcrest Bank of Naples, Florida
• Flagship National Bank of Bradenton, FL

Collectively, these banks reported $341.7 million in assets and $322.4 million in deposits.

It has been estimated the deposit insurance fund will lose nearly $120 million due to the three bank failures mentioned above. However, although the banks are suffering huge losses, most account holders’ money is safe in that the FDIC guarantees up to $250,000 on each account.

Experts agree the US has not seen bank failures of this magnitude since 1992 when several banks closed as a result of the Savings and Loan Crisis.

Many believe the current bank closures are primarily a result of failed mortgages in the commercial and residential real estate markets. They are probably correct. The Florida real estate market is no stranger to residential and commercial foreclosures, declining home prices, low demand, and high supply.

We likely have not witnessed the end of bank closures in South Florida. In the third quarter, three local banks fell into the “significantly undercapitalized” category, which means their capital ratios are low enough to warrant regulatory action. Those banks are Sun American Bank, Premier American Bank, and Republic Federal Bank. Unfortunately, these banks are not alone. Several other South Florida banks reported undercapitalization at the end of the third quarter.

Despite the seemingly constant barrage of negative information we hear about the banking crisis, there has been progress made and there may be more good news on the horizon for small banks.

The Obama administration recently announced it would provide funds from the $700 billion financial bailout to banks at low interest rates in exchange for them agreeing to increase their lending to small businesses. And, if it’s a bank servicing small businesses in low-income urban and rural areas, funding will be provided at an even lower rate. If you are an entrepreneur or small business owner seeking funding from lenders, relief may be on the way.