Albert Salem Jr., chief executive of First Commercial Bank of Tampa Bay, is at wit's end.
A cease-and-desist order disclosed by the FDIC on Friday compels his Tampa bank to halve its total of problem real estate loans to about $9 million.
"We're told to get rid of these loans. … Get rid of them? What do you do with them?" Salem said Monday. "We know we have to get (borrowers) to pay somehow, but you just can't force people to pay something they can't pay.
"People have just been running out of money; they're tapped out."
Salem said First Commercial has already whittled the troubled loan portfolio cited by regulators from $19 million to $15 million and has a two-year window under regulatory guidelines to reach the $9 million.
But he's loath to squeeze his longtime customers, developers that he says were not speculators, but sophisticated and responsible investors.
"They got slammed against the wall because they were ahead of the pack. These were guys that knew what they were doing. They're considered in the top 10 percent of real estate gurus and developers in the state."
He said the bank is trying to walk the line between being "benevolent" and firm in modifying loans.
Salem isn't worried about his institution's stability. The bank still has plenty of capital (about $19 million) to weather economic turbulence and its 30 percent liquidity is twice the level regulators look for. He said news on Friday of the FDIC's intervention didn't spark any run on the bank's $150 million-plus in deposits.
"Our deposits are strong and our people are strong," Salem said. "We're hanging in there. We're going to be fine."
The FDIC, however, could trigger a sale if First Commercial is unable to increase deposits and trim its troubled loans.
In its order, the FDIC said it had reason to believe First Commercial "had engaged in unsafe or unsound banking practices and had committed violations of law and/or regulations."
Among other charges, regulators said the bank was operating with inadequate board supervision, inadequate capital, a large volume of poor quality loans, inadequate oversight of its loan portfolio, and lax underwriting and weak lending procedures.
Jeff Harrington can be reached at email@example.com or (727) 893-8242.