These Florida Banks Could Be in Danger

As a follow up to last week's failure of First Priority Bank of Bradenton, Fla., TheStreet.com Ratings has prepared a list of 12 Florida banks with the weakest asset quality as of June 30.

The list is based on preliminary FDIC data, which are subject to change. Bank call report data are often revised before being finalized about 45 days after quarter-end. Savings and loan institutions are not included, since preliminary results for June 30 are not available for the group.

Here are the 13 banks with nonperforming assets of over 8%, as of June 30. TheStreet.com's ratings (based on March 31, 2008, financials) are also included.

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For most of the listed banks, the majority of nonperforming assets were residential construction and development loans.

When looking at asset quality, reserves and capital levels, it's important not to dwell on just one ratio. For example, Integrity Bank had loan loss reserves covering just 18.27% of nonperforming loans as of June 30, however, its annualized ratio of net charge-offs to average loans for the first half of the year was 0.67%. Since the institution was well-capitalized and its loan loss reserves covered 3.09% of total loans as of June 30, it was positioned to handle four times the level of charge-offs over the next two quarters.

The two bolded banks were considered below well-capitalized per regulatory guidelines, as of June 30. To be well-capitalized, a bank needs to maintain a leverage ratio of at least 5% and a risk-based capital ratio of 10%.