These Florida Banks Could Be in Danger

Topping the list was Ocala National Bank, with nonperforming assets (including loans past due 90 days or more and repossessed real estate) of 17.64%. With an annualized net charge-off ratio of 4.67% of average loans during the first half, and loan loss reserves covering 2.73% of total loans as of June 30, it's clear that the institution is not ready to handle continued charge-offs at this level.

Ocala's net loss for the second quarter was $7.6 million, as the bank added $6.5 million to loan loss reserves during the quarter. The institution slipped from well to adequately capitalized, with leverage and risk-based capital ratios of 5.10% and 8.24% as of June 30.

A call to Ocala National Bank was not returned.

When we looked at troubled Florida banks back in May, we pointed out that Florida Community Bank had limited loan charge-offs, even though it had the second-highest nonperforming assets ratio on the list.

Florida Community remained second on the list, with nonperforming assets comprising 15.62% of total assets as of June 30. Things changed during the second quarter, as the institution reported net charge-offs of $11.4 million. The annualized ratio of net charge-offs to average loans for the first half of 2008 was 3.25%. Loan loss reserves covered 2.51% of total loans as of June 30. While this would normally be a high level of reserve coverage, it appears low at this time, based on second quarter charge-off activity.

The good news for Florida Community was that its leverage and risk-based capital ratios were 12.14% and 15.21%, giving it room to add significantly to loan loss reserves during the third quarter.