Analyst: Regulators Monitoring Florida-Based Bank With Troubled Loan Portfolio

A Florida-based bank with seven South Florida locations and assets of $606 million is being closely monitored by banking regulators, a veteran investment banker told the Sarasota Herald-Tribune.

Peninsula Bank in Englewood, Fla., on the state's Gulf of Mexico coast is under regulatory scrutiny due to the instituion's noncurrent loans spiking 723 percent to $38.7 million on March 31, 2008 compared to $4.7 million in March 31, 2007.

The bank's noncurrent loans to total loans jumped to 8.99 percent in March 31, 2008, compared to 1.05 percent in March 31, 2007, according to the Federal Deposit Insurance Corp., which insures deposits up to $100,000 per account.

Noncurrent construction and development loans were a major factor in the bank's rapidly deteriorating portfolio. Problem construction and development loans jumped from 1.19 percent on March 31, 2007, to 11.14 percent in March 31, 2008, according to the FDIC.

"It gets back to the way they judge their risk," Ben Bishop, chairman of Allen C. Ewing & Co., a Jacksonville-based investment bank, told the Sarasota Herald-Tribune. "The regulators are looking over their shoulders and if they do something that isn't proper, the regulators will call them on it."

Founded in January 1986, Peninsula Bank had 133 employees working from a dozen locations throughout Florida on March 31. Peninsula Bank operates five branches in Palm Beach County, and one branch in both Broward and Miami-Dade counties. Peninsula's other five branch locations are situated in Sarasota County, where there are two branches, and Charlotte County, where the headquarters and two branches are located, according to the FDIC.

Investors are closely watching the banking industry in Florida given the state's rapidly deteriorating real estate market, which was a key lending focus for most institutions.

Deteriorating real estate markets on the West Coast of the United States prompted federal regulators to seize three banks in the month of July.

Federal regulators shut down on July 25 two banks in three states with combined assets of $4.6 billion and 28 locations scattered around Arizona, California, and Nevada.

Regulators seized the First National Bank Holding Co. in Scottsdale, Ariz, the parent company of First Heritage Bank in Newport Beach, Calif., and the First National Bank of Nevada in Reno, Nev.

The First National Bank of Arizona merged with the First National Bank of Nevada on June 30, only to be shutdown 25 days later.The estimated cost of the failure of First National Bank of Nevada and First Heritage Bank is projected to be $862 million, according to the Federal Deposit Insurance Corp, which guarantees deposits up to $100,000 per account.

Earlier this month on July 11, federal regulators shut down IndyMac Bank, a $32 billion institution based in Pasadena, Calif. The estimate cost of that seizure is between $4 billion and $8 billion, according to the FDIC.

Before IndyMac, regulators seized Minnesota-based First Integrity Bank with $54.7 million in total assets and $50.3 million in total deposits on May 30; Arkansas-based ANB Financial with $2.1 billion in total assets and $1.8 billion in total deposits on May 9; Missouri-based Hume Bank with total assets of $18.7 million and total deposits of $13.6 million on March 7; and Missouri-based Douglas National Bank with $58.5 million in total assets and $53.8 million in total deposits on January 25, according to the FDIC.

A Florida bank has not been seized since March 12, 2004, when regulators took over Guaranty National Bank of Tallahassee, which had assets of $74.1 million.

Peter Zalewski is a principal with the consulting company Condo Vultures® LLC and a licensed real estate broker with Condo Vultures® Realty LLC. Peter can be reached at 305-865-5629 or by email at peter@condovultures.com. Be sure to check out Peter's blog at CondoDump.com. Don't forget to sign up for our weekly Market Intelligence Report. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database^TM .

Copyright © 2008, Condo Vultures® LLC