Florida, Arizona Banks First Ones to Fail in 2011

Regulators shuttered the first two banks to fail this year. The Federal Deposit Insurance Corp. (FDIC) closed First Commercial Bank of Florida based in Orlando, and Scottsdale, Ariz.-based Legacy Bank. The two are the first banks to collapse in 2011, following 157 closures in 2010.

First Commercial had $529.6 million in deposits, while Legacy had $125.9 in deposits, according to the FDIC. Analysts expect bank failures to be fewer in 2011 than last year, but the U.S. economy isn’t out of the woods yet. Despite strong earnings from major banks in recent quarters, many smaller banks are still struggling and have yet to repay their TARP loans. Many smaller banks in regions hardest hit by the financial crisis still have not recovered, mainly due to sagging local economies and weak performance of commercial mortgages.