The roster of severely troubled Florida banks jumped more than 70 percent in the fourth quarter, increasing the likelihood of more bank failures, according to ratings agency Bauer Financial.
First Commercial Bank of Tampa Bay was the only bay area representative among 19 Florida banks that Bauer gave a "zero-star" rating, signifying deep distress.
First Commercial, a community bank with two locations catering primarily to Tampa's Westshore financial district, is marking its 20th anniversary this year. With more than $150 million in assets, the bank was considered well capitalized in Bauer's analysis.
However, it's also considered susceptible to the real estate downturn, with a heavy concentration of delinquent loans.
The bank posted a fourth-quarter loss of $1.5 million, bringing total losses for the year to $3.3 million. And, most troubling from Bauer's perspective, its total of loans that were delinquent at least 90 days jumped from $9.5 million to $16.6 million in the quarter.
Albert Salem Jr., First Commercial's chairman and chief executive, said Monday that his bank has strong reserves and liquidity, but he's frustrated that there's no sign of a real estate turnaround.
"The bank is very stable … but how long can you keep doing this?" Salem said. "I feel like a quarterback playing football in the fog. Where's my receiver at? Where's the goal line at? Am I going in the right direction? I can't even see the scoreboard."
Salem said he feels sorry for honest developers "who got stuck when the music stopped" and doesn't want to foreclose on them, picking up property that the bank doesn't want.
"They weren't reckless and crazy," he said. "They were doing what everyone else was doing. Now they're stuck with properties and can't do anything with them."
In early 2006, when the housing boom was at its apex, federal regulators noted it was the first time in history that more than 50 percent of Florida's community banks held construction and development loans exceeding 100 percent of the bank's capital. At the time, First Commercial's ratio of 252 percent in loans to capital was second-highest among bay area community banks.
In Bauer's rating hierarchy, a five-star bank is very healthy, a three-star bank is okay and two stars or fewer indicate problems. In the previous quarter, First Commercial had a two-star rating.
The number of problem banks statewide — two stars or below — swelled from 52 to 67. And the damage could have been worse. Not included in that tally are two banks that have failed since the last quarter: Ocala National Bank in Ocala and Riverside Bank of the Gulf Coast in Cape Coral.
"We knew year-end was going to be a messy quarter, and it was," said Karen Dorway, Bauer's president and director of research.
One bright side from a regional perspective: The immediate Tampa Bay area — Hillsborough, Pinellas, Pasco, Hernando and Citrus counties — continued to fare better than much of the rest of the state. The only two-star bank in the area is Old Harbor Bank in Clearwater. In contrast, Sarasota/Naples, Miami/Fort Lauderdale, Jacksonville, and the Panhandle all have far more problem institutions.
Accounts in a bank insured by the Federal Deposit Insurance Corp. are protected to a point. Congress has temporarily increased FDIC deposit insurance from $100,000 to $250,000 per depositor through Dec. 31.
A takeover by the FDIC is the most dramatic way of dealing with a weakened bank. Or a stronger bank may step in with a merger. An Alabama insurance company earlier this year agreed to buy Bank of Bonifay, one of the zero-stars on Bauer's list.
Bauer on Monday also released its quarterly database for credit unions, reiterating a few areas of concern. Bay Gulf Credit Union of Tampa was a one-star, unchanged from last quarter. And Suncoast Schools Federal Credit Union of Tampa was unchanged as a two-star institution. Suncoast, the biggest credit union in Florida with $6 billion in assets, is merging with GTE Federal Credit Union.
Jeff Harrington may be reached at email@example.com or (727) 893-8242.