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Florida's Most Troubled Banks and Thrifts

While large banks like Citigroup (C) continued to raise capital in the public markets last week, local banks in some regions are competing to raise additional capital from local investors, private equity or any other way they can. According to one veteran Florida banker, "Raising capital is priority No. 1 in this business."

With Florida on the forefront of the residential real-estate calamity, Ratings has updated its watch list of troubled Florida banks and S&Ls.

A problem of bank analysis is that you're always clamoring for the most recent data. At this point, preliminary call report data for most banks is available for March 31, and is subject to change. S&L data is not yet available.

To come up with the watch list, we started off with Dec. 31, 2007, data for all Florida banks and S&Ls. We picked out the ones with a nonperforming assets ratio greater than 5%, and then updated the data for March 31 they were was available. Since we were unable to analyze the full set of Florida data for March 31, we have probably missed some institutions that would have met our criteria.

Click here for larger image.'s financial strength ratings are based on Dec. 31 data.

Looking at the list of Florida banks and S&Ls with nonperforming assets comprising 5% or more of total assets, most were under-reserved as of March 31. Despite that, all but the three bolded institutions remained well-capitalized per regulatory guidelines.

Three Institutions Needing More Capital

First Priority Bank had the worst loan quality and lowest capital ratios on the list. The institution had a very bad first quarter, with nonperforming assets rising to 15.65% of total assets and a net loss of $3 million -- its sixth straight quarterly loss. Capital continued to erode and First Priority was considered significantly undercapitalized per regulatory guidelines as of March 31, with a leverage ratio of 4.25% and a risk-based capital ratio of 5.87%. That second ratio needs to be at least 10% for an institution to be considered well capitalized, and 8% to be adequately capitalized.

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