Of all the institutions to fail during the Great Recession, Hillcrest Bank was around for the shortest amount of time.
It was open for about three years.
Its fatal flaw — common among failed Florida banks — was a focus on lending to developers at a time when real estate prices were falling.
The bank quickly grew to more than $100 million in assets during its first year thanks to its ties to a lender in Overland Park, Kan., with the same name and several of the same directors.
By February 2007, more than 50 percent of Hillcrest's loans had been made by its sister institution in Kansas, and regulators complained that it was relying too much on out-of-state borrowers.
"Although the bank has an experienced and capable lending staff, it lacks the personnel and resources to properly monitor, assess and manage a large portfolio of complex commercial real estate loans outside of its local market area," regulators wrote in their 2007 report.
Examiners from the state Office of Financial Regulation
also complained that lending so much to developers was never part of the bank's business plan.
"The change in business plan was not submitted in advance to the FDIC or the OFR for approval under the bank's charter," the authorities wrote after Hillcrest failed in October 2009.
Hillcrest Bank of Kansas also failed during the Great Recession. It was shuttered in October 2010.
Regulators said in their reports that the Florida bank was in such a hurry to make loans at the outset that it failed to properly examine borrowers' ability to pay what they owed.
It also failed to collect financial documents, allowed loan officers to hire appraisers — considered a dangerous conflict of interest for bankers — and continued to lend to customers even after it was clear they wouldn't be able to pay back those loans.
By June 2008, the bank had set up interest reserves so that borrowers with loans totaling $36 million could continue making payments after they'd fallen behind.
In one case, the bank lent $5.5 million to Macro Investment Group LLC so the Nevada company could transform 12 acres near Clearwater into a collection of 17 homes.
Regulators said that the loan was based on a faulty appraisal provided by Integra Realty Resources, and that five of the purchase contracts related to the deal were fraudulent.
Examiners found that bank files had scant financial information on the borrower, and that the customer's 2005 tax return showed a negative gross income of $53,000.
The property eventually fell into foreclosure and the developer, David Shtrax, filed for personal bankruptcy protection in 2011.
Shtrax did not return two messages left with his bankruptcy attorney.
Jack Fingersh, the bank's former chairman, did not return three calls.