JUPITER, Fla. ( TheStreet) -- The third quarter was another rough one for Florida's banking industry, with another 10 institutions failing and 53% of banks and savings and loan associations in the Sunshine State reporting quarterly losses. So far this year, Florida has had 28 bank failures, by far the most for any state. According to data provided by SNL Financial, 17 of Florida's 252 banks and thrifts were undercapitalized per ordinary regulatory guidelines as of Sept. 30, making Florida second only to Georgia, which had 41 institutions included on TheStreet's second-quarter Bank Watchlist. While the Watchlist is a very comprehensive way of identifying the weakest banks, another approach is to look at overall credit quality.
Nonperforming assets (NPA) include nonaccrual loans, loans past due 90 days or more and repossessed assets. Government-guaranteed loan balances are excluded The list also includes financial strength ratings provided by Weiss Ratings. Weiss Ratings uses a very conservative ratings model, placing the greatest weight on capital strength, credit quality and earnings stability to assign ratings ranging from A-plus (Excellent) to E-minus (Very Weak). While all of the listed banks lost money during the second quarter, several, including Vision Bank of Panama City (a subsidiary of Park National Corp. ( PRK) of Newark, Ohio) and Beach Community Bank of Fort Walton Beach, had fairly high total risk-based capital ratios. Unless under regulatory orders to hold additional capital, most banks and thrifts need to maintain a total risk-based capital ratio of at least 10% to be considered well-capitalized. The Florida bank with the highest concentration in nonperforming assets as of September was First National Bank of Florida of Milton, with NPA of 31.34%, increasing from 30.01% the previous quarter. The bank was added to TheStreet's Watchlist because its total risk-based capital ratio slipped below the 8% required for most institutions to be considered adequately capitalized. A cease-and-desist order from the Office of the Comptroller of the Currency issued in March 2009 required First National Bank of Florida to maintain a total risk-based capital ratio of at least 12.5% by June 30, 2009, and the regulator has not announced a subsequent order.