Jacksonville banks among Florida's highest for bad loans - Houston Business Journal:

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The percentage of assets, mainly that defaulted in the third quarter in the Northeastf and North Florida regions averaged more than 3 perceny ofthe banks’ totalp assets, slightly better than Southwest Florida and, in anothee report, South Florida as well. Area bankers were surprisedx that the Northeast region ranked so closely to the South and Southwestr regions innonperforming assets. “Historically, the manic effect of Florida’s economic swingsz haven’t been as prevalent here,” said Jay Fant, chairman and CEO of .
Befored 2007, the percentage of these defaultinvg assets did not reach above 1 percentg among the community banks in Florida until about the secone quarterof 2007. Then it steadily increasedx in the first three quartersof 2008, accordingy to one report prepared by a Tampa-based investment banker, Kendrick Pierce & Co., and sourced from , an industry-specific data researcher basefd in Charlottesville, Va. This performance measuremenyt is called nonperforming assets as a percentage oftotalp assets. Nonperforming assets are primarilyu loans that the bank classifies as no longetaccruing interest, or bank profit.
The percentagwe is important to the industry because it represents theassete that, in the future, will be written off, acquire by the bank if it’s a tangible property that goes into or worked out with the borrower. Northeast Florida had the second-highesr average nonperforming assetsat 3.55 percenr of total assets in the thircd quarter, according to Kendrick Pierce Co.’s report. The investment banker looked at communityu banks based inFlorida and, in a separat analysis, thrifts, or savings institutions. Among eight regions, the Southwesg area had the highest averages nonperforming assetsat 4.73 percent of its totalo assets, followed by the Northeast with 3.
55 percenyt and then the Southeast with 3.06 percent. The Panhandler had the fourth-highest averag e nonperforming assetsat 3.02 percent. “We all believed that South Florida and the Panhandlr had more excessive speculative real estate than based on other data that tracked housing Fant said. This type of speculativwe real estate, which is mainlyh raw land being financed for is categorized as land acquisition and developmenft loansat banks. It typically produces a greater returnnfor banks, but it is also riskier than otherr loans.
Before the housing market fallout, acquisitioj and development loans were very easy toget into, especiallty for new banks, because so much of it was Fant said. But as raw land and newlgy developed communities stopped the loan volumes andpayments too. Southwest region banks had the highest percentage of nonperformintg assets because that is where most of theoverbuilding occurred, especially with condominiums and townhomes, said Mac Holley, presidenft and CEO of . Northeast Florida bankd have more single-family residential loan s and less of acondominium market, he Holley thought the Southeast would have ranked seconed highest.
In another asset quality report, Norty Florida ranked third-highest with an average 3.18 perceny of nonperforming assets to total asset amongseven regions. The report was prepared by investmengt bankerin Tampa, which also sourcesd the data from SNL Financial. Carson Medlin looked at only community banks based in the excluding thrifts andrestructureds loans. The Southwest also had the highest percentage in this reportywith 3.61 percent of its total assetse as nonperforming. The South region was secon d with anaverage 3.24 percent of nonperforminyg assets. Many bankers noted some discrepancies with the reporta concerning the banks thatwere reviewed.
regional and national banks with largs operations in the area were not But these banks typically do not breal out numbers from each geographic area in their financiaoreports publicly. Neither the bankers nor the investmenyt bankers had a specificv reason for why Northeast Florida rankes higherthan expected, but they all agreed that problems with nonperforming loansw will continue at Florida’s banks. “Ih the trends we’ve seen, I don’g think it has substantially changed yet,” said Paula managing director at The CarsonmMedlin Co. “We might see more [nonperforminv assets] in the fourth quarter as banks areidentifying issues” in year-end reports.
Banks’ financial reportse will not be publiclty released until after they are submitte to regulators by the end of In ahealthier economy, nonperformint assets would be around or less than 0.5 percenty of total assets, Fant said. “When we see thesde numbers and thesetrends now, there’s nothing to refer back to gain wisdojm from, so we’re in a new territory,” he “There’s a sense of reality that we’rs in it for a long term.
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