Overdue loans to Florida banks quadruple

The housing downturn continues to crush Florida bankers: Overdue loans, mostly real estate related, have nearly quadrupled the past year in the Sunshine State.

If that were not enough, the state's lenders have unusually low cash reserves to protect against mortgage defaults. And 41 percent of Florida-chartered banks were unprofitable the first three months of this year. That's twice the number of banks that bled red ink last year.

These not-so-encouraging trends emerged from reports released the past week by the Federal Deposit Insurance Corp. Experts blame a chain reaction ignited by a two-year plunge in real estate values. It's not just problem home mortgages, but also developers defaulting on loans used to buy land and finance condominium towers.

"We're still on the downside of the curve. We've not reached a bottom," Miami banking expert Ken Thomas said.

The FDIC reported that "past due and non-accrual loans" — loans people aren't paying back on time — swelled 276 percent the past year in Florida. Bad loans rose from 0.7 percent of all loans in the first quarter of 2007 to 2.63 percent of all loans in the first quarter of 2008.

Though Florida's percentage rise is among the worst, other states have more problem loans. Georgia and Nevada banks reported that more than 3 percent of loans are past due.

But the Florida report probably underestimates the extent of defaults. The state's largest lenders — banks like Wachovia and Regions — report in the states in which they're headquartered.

That means Wachovia's bad Florida loans count against North Carolina, the state in which the bank is based. Same goes for Atlanta's SunTrust. "SunTrust has lots of problem loans in Florida but it shows up in the Georgia numbers," Thomas said.

Federal regulators said they're troubled by the depletion of cash reserves used to cover bad loans. Nationally, banks held about 89 cents in reserve for every $1 of bad loans. Tampa Bay area banks reserves are closer to 60 cents on the dollar, the worst ratio in decades, Thomas said.

"This is a worrisome trend," FDIC Chairwoman Sheila Bair said last week. "It's the kind of thing that gives regulators heartburn."

Some of the state's hardest-hit banks have been in the Bradenton area. Coast Bank went out of business last year, wiped out by problem loans made to customers of St. Petersburg builder Construction Compliance Inc.

Comments on this article

by investor-dude	Jun 10, 2008 1:45 PM
(cont'd)the rising taxes. Just because the home values increase does NOT give rise to higher property taxes. Property taxes are designed to balance teh budget NOT create windfalls. The rates should have been lowered so the county income remained stea

by investor-dude	Jun 10, 2008 11:48 AM
Taxes rose more than 300%. Peoples payments (due to escrow shortages caused by increasing property taxes)forces payments to increase $600-$900 per month. The people you are talking about never signed up for this. The greedy counties could have contro

by Bill	Jun 9, 2008 9:39 AM
The price of Health & Home Ins. gasoline and food,but the Republicans voted against raising the MINIMUM wage.They continue corporate welfare entitlements and bush's legalized tax dodge for the ultra wealthy.Keep electing Republicans. Idiots!

by Edward	Jun 9, 2008 9:39 AM
Kay: I agree with John... you need a Bush and Cheney sticker on your Hummer...Your so right its Monica's fault. Enjoy your sleep we'll wake you later.

by john	Jun 9, 2008 9:39 AM
The time has come to give the Federal thievery Reserve the BOOT that they deserve. Life will be much better with out the FED thieveries for everyone on this planet. No more wars and best of all no more global warming.

by jim	Jun 9, 2008 9:38 AM
You folks deserve what is coming your way cause most of you are druggie mentality, just looking for a quick fix and don't have brain and the guts to cure the cause. Change in self equates change in the broken system. Good luck you sheep!

by SnoBelter	Jun 9, 2008 9:38 AM
What ever happened to all that PMI we are all paying ? I thought it was insurance for the bank incase we defaulted on the mortgage? IO guess we have a NEW scam now !

by Peter	Jun 9, 2008 9:38 AM
Did anyone mention the increased property taxes that are driving payments beyond the capacity of the owners?

by baba	Jun 9, 2008 9:38 AM
Maybe the banking industry has learned not to lend money to poor people who know full well they will not be paying it back. It was fun while it lasted but as with all good things....they must come to an end.

by Alan	Jun 9, 2008 9:38 AM
Welcome back to the late 1920s. Guess what came after that?

by JP	Jun 8, 2008 12:35 PM
Corporate greed, fully backed and even encouraged by Washington. You didn't have to be a fortune teller to see where this country was going, when Bush had his mail forwarded to the White House. No one reading this blog, will live long enough to see this mess straightened out... Sad! (Former Republican)

by jb	Jun 8, 2008 12:32 PM
Thank You,President Bush,for seperating the rich from the poor and wiping out the middle class,(lower to upper),I'm very sure McCain will keep up the good work,(if elected),for all you people who do not own guns,(the time is here),for us to take back

by Dave	Jun 8, 2008 12:32 PM
The Time has come to put an end to federal reserve system. They drove Europe into bankruptcy and now it is our turn. Read the history of federal reserve system.

by Aquasparky	Jun 8, 2008 9:15 AM
I saw this coming in 02 and sold my house. I am amazed it lasted so long, but that it did confirms my suspicion that common sense is not and that perception runs all markets. Turn off your dang TV and use your brain. Follow the money to find answers!

by kay	Jun 8, 2008 9:10 AM
Dear john, you are just plain ignorant. this all began long before bush & chenny. look into clinton and robert rubin.

by Paul	Jun 8, 2008 9:05 AM
It is simply greed. The bankers saw a way to make a quick buck and the gov't had other priorities that took priority over banking oversight. Now WE have to bail them out..... This is why you elect people with sound economic policies, people!

by Kim	Jun 8, 2008 9:03 AM
Buyers should have done thier math before taking on huge mortgages. What were people thinking? Live simply, within your means, and don't worry about the Jones'!!! I am tired of people not taking responsibility for thier debts! Everyone suffers!

by Stephen	Jun 8, 2008 8:32 AM
Manatee is one of 2 major roads to the beaches..over last 4 years about 5 more new banks have built on Manatee.If real estate is so bad here how can this expansion be...seems like more consolidation is the future??

by Jon	Jun 8, 2008 8:31 AM
Lois, great idea. Hey you who just lost the $500,000 house you couldn't afford in the first place, time to sell your golf clubs, jet ski, and that awesome barbecue you got at Home Depot. Come on cough it up. We know you've got that half million!

by Tom	Jun 8, 2008 8:28 AM
Florida leads the way. Its real estate bubble popped in 1926 and finally entered the Great Depression in 1928. The rest of the country followed. The solution is borrow and spend, our grandchildren pay for the Iraq War as we paid for Vietnam.

by john	Jun 7, 2008 8:15 AM
"This is a worrisome trend," FDIC Chairwoman Sheila Bair said last week. Rise and Shine Sheila. Did you have a nice 7 year nap?

by Abe	Jun 7, 2008 8:11 AM
People who borrow money and do not pay it back are thiefs. Ask any landlord what recourse they have. One thing can be said for the "MOB" is nobody cheats them.

by Jim	Jun 6, 2008 8:52 PM
Hey Lois, me thinks you doth protest too much.

by Angela	Jun 6, 2008 8:00 PM
Come on people! The banks, realtors and brokers did this to them selves! People who make $400 a week do not belong in 400K houses! Do the math, it doesn't work! They were greedy! And rolling in it! Selling over priced houses to poor people.

by Kris	Jun 6, 2008 8:00 PM
With income's not increasing to keep up with taxes and homeowners insurance not to speak of gas prices, what do you expect to see?

by Bonnie	Jun 6, 2008 7:55 PM
During the housing boom, banks found an easy way to make money. They used shady lending tactics and loaned money to people they knew could not pay it back.This was created out of greed. The banks deserve everything they get. No crying towel here.

by jimmy	Jun 6, 2008 7:38 PM
Regulation is as much of the problem as out of control greed. If banks weren't required to invest exclusively in low margin opportunities, they'd have someplace else to go. As things are now, they take their chances with homeowners.

by Allen	Jun 5, 2008 7:08 PM
Must be L night. Larry name just 1 tax increase O has proposed to fix Bush's deficits - just 1. Lois what was written that makes u think these guys are off scott free - IQ's in SW Fl continue to fall like house prices.

by Larry	Jun 5, 2008 3:12 PM
This is nothing that a hefty tax increase won't fix. See "Obama" for details

by Carol	Jun 5, 2008 2:41 PM
This is not just bad for banks, but for everyone who specializes in real estate. So many salespeople, closers and escrow officers are working for minimum wage-the economy in Florida will be taking a direct hit when incomes plummet.

by Moe	Jun 5, 2008 2:41 PM
Low income state with high housing costs.... what else would anyone expect?

by Brian	Jun 5, 2008 1:32 PM
Greedy banks have only themselves to blame. So much for gov't oversight.

by jim	Jun 5, 2008 1:02 PM
I'm sure our increased taxes and home owners insurance also have a major role in not being able to pay house payments the lender's are not the only problem here we have no intelligent leadership to many good old boy's running this State

by Lois	Jun 5, 2008 1:02 PM
Why don't the banks make EVERYONE be responsible for their debt,espcially the developers and investors who haven't lived in these homes.Why are the banks just forgiving these debts completely? Make them liquidate other assets.

by Peter	Jun 5, 2008 10:53 AM
Credit folk saw this coming two years ago,little by little, tracking real time data. If Management and Stockholders are now shocked, shocked I say! Well it's only because they didn't want to see it. Now they must face reality and finally address it.