Florida Closes First Priority Bank

FDIC spokesman David Barr confirmed that First Priority was on the agency's watch list of 90 troubled institutions.

Updates for institutions discussed in May

In our previous article on troubled Florida banks, we discussed two institutions that were below-well capitalized, in addition to First Priority.

Bank of Bonifay was considered undercapitalized per regulatory guidelines as of March 31, but there were some very positive developments during the second quarter. The bank brought in a new management team on June 17. Members of the new management team and the bank's board of directors invested additional capital, and the bank was well capitalized as of June 30, with leverage and risk-based capital ratios of 6.72% and 10.27%.

The institution's asset quality continued to deteriorate, as nonperforming assets, including loans past 90 days or more and repossessed real estate, comprised 8.44% of total assets as of June 30, up from 7.37% last quarter. Bank of Bonifay plans to continue raising capital, which will probably be needed, as loan loss reserves covered just 17.37% of nonperforming loans as of June 30.

The other institution we highlighted back in May was Federal Trust Bank of Sanford, held by Federal Trust Corp(FDT Quote) since it was not considered well capitalized per regulatory guidelines. According to the holding company's second quarter earnings release, Federal Trust Bank remained adequately capitalized as of Jun 30, with a risk-based capital ratio of 8.24%, down from a revised 8.96% last quarter.

In the earnings release, CEO Dennis Ward said the company's "plan to raise the additional capital within the Sept. 20, 2008, time frame we received from the Office of Thrift Supervision" is well under way.