Florida's Most Troubled Banks and Thrifts

Loan loss reserves also were low, covering 21.56% of problem loans. The majority of First Priority's nonperforming assets were construction loans and commercial real estate loans, with home mortgages making up the rest.

CFO Joel Hyman stated on May 1 that "the company continues to pursue an infusion of capital."

With a tier-one leverage ratio of 5.09% and a risk-based capital ratio of 7.55%, Bank of Bonifay was considered undercapitalized per regulatory guidelines, as of March 31.

In the fourth quarter of 2007, a spike in (mainly) nonperforming construction loans forced the bank to make an extraordinary $5.8 million provision for loan loss reserves, leading to a quarterly net loss of $5.1 million.

While asset quality continued to decline in the first quarter of 2008, Bank of Bonifay reserved a much lower $500,000 for the quarter and was able to post positive net income of $230,000, improving its capital position a bit.

Still, there was another spike in problem construction loans, so nonperforming assets were up to 7.37% as of March 31, and reserves covered just 36% of nonperforming loans. Since housing lots comprise a good portion of the collateral for these loans, the institution could lose more than the amount reserved.

Brian James, the chairman of the holding company that owns the bank, pointed out that Bank of Bonifay's lending activities on the coast of Florida's panhandle were not concentrated on out-of-market speculators. Many smaller local builders and related businesses were hit hard when The St. Joe Company (JOE Quote), a very large landowner in the area, curtailed its real estate development activities.