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Florida's Most Troubled Banks and Thrifts

05/05/08 - 07:09 AM EDT

Philip van Doorn

Mr. James said that Bonifay Holding Company considered a variety of strategic options and has now entered into an agreement with a private-equity firm to raise a significant amount of capital within the next three weeks. The plan is to raise sufficient capital to make Bank of Bonifay well capitalized again per regulatory guidelines, with an additional cushion to ride out possible further increases in nonperforming loans.

Federal Trust Bank of Sanford (held by Federal Trust Corporation FDT), was also considered adequately capitalized as of March 31, with a risk-based capital ratio of 9.77%. Even though the institution lost $2.2 million in the first quarter, its capital ratios improved a bit because its total assets shrank to $673 million as of March 31, from $688 million last quarter.

While we don't yet have complete information for March 31, nonperforming assets comprised 8.6% of total assets. The problem loans were mainly land development loans, but also included some residential and commercial mortgages.

The increase in problem loans was partially offset by a $500,000 insurance payout from Federal Trust's insurance carrier, on its loss related to the bankrupt Transland Financial Services, which we discussed previously.

There could be a lot more trouble ahead, since performing loans exhibiting weakness totaled $43.4 million as of March 31, although this figure was down from $56.6 million in December.

The holding company announced on April 2 that it was negotiating a cease and desist order with the Office of Thrift Supervision to address weakness the regulator found in Federal Trust's lending practices. The holding company expects the order will include temporary restrictions on non-residential lending, as well as requirements to increase its capital and strengthen loan review, liquidity and board of directors oversight.

Philip W. van Doorn joined TheStreet.com Ratings., Inc., in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a Bachelor of Science in business administration from Long Island University.

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