What do Boca Raton, FL, Normal, IL, Germantown, MD, and Ogden, UT have in common? They are home to the latest four banks to shutter their doors in 2010, bringing the total failed bank count this year to 26. With over 700 banks on the FDIC’s watch list, 2010 could prove to be the year of extreme bank failure across the US.

Sun American Bank, Boca Raton, Florida

The FDIC, in conjunction with the Florida Office of Financial Regulation, closed Sun American Bank on March 5, 2010. At the same time, First-Citizens Bank & Trust Company and the FDIC entered into a loss-share transaction on $433.0 million of Sun American Bank’s assets assuming all of the deposits of the failed bank.

Sun American Bank had approximately $535.7 million in total assets and $443.5 million in total deposits by December 31, 2009, and the 12 branches of Sun American Bank will be reopened as branches of First-Citizens Bank & Trust Company.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) for this individual closure will be $103.8 million. Sun American Bank is the 23rd FDIC-insured institution to fail in the nation this year, and the fourth in Florida.

Distressed Pro’s BankProspector shows weak capital adequacy ratios at Sun American, $63 million in non-accrual distressed asset totals and over $10 million in OREO. The bulk of the institution’s distress was centered in commercial and construction loan asset types.

Bank of Illinois, Normal, Illinois

Recently, the Bank of Illinois was closed by the FDIC and the Illinois Department of Financial Professional Regulation – Division of Banking. This failure represents the third FDIC-insured banking institution to close in Illinois and the 24th to fail in the nation this year. Heartland Bank and Trust Company of Bloomington, Illinois has assumed all of the deposits of Bank of Illinois, approximately $211.7 million in total assets and $198.5 million in total deposits. The 2 branches of Bank of Illinois have reopened as branches of Heartland Bank and Trust Company.

Bank of Illinois was burdened by distress in their construction and residential loan portfolios, and was carrying OREO balances over $1 million in both multifamily and commercial asset types.

Waterfield Bank, Germantown, Maryland

Waterfield Bank of Germantown, MD is the first bank to fail in Maryland this year. Unique to Waterfield Bank is the fact that the failed institution had a solo branch location and namely took deposits from customers via the Internet and 38 affinity groups.

Waterfield Bank had $155.6 million in assets and $156.4 million in deposits by December 31, 2009. At the time of closing, the amount of deposits exceeding FDIC insurance limits totaled approximately $407,000. Depositors with more than $250,000 at Waterfield Bank should call the FDIC at (800) 830-4735 to make an appointment to discuss the status of their funds.

Waterfield Bank was troubled with negative capital adequacy ratios, and distress mainly in their construction and residential loan portfolios, where 23% and 16% was non-current respectively.

Centennial Bank, Ogden, Utah

Centennial Bank of Ogden, UT was closed on March 5, 2010 by the FDIC in conjunction with the Utah Department of Financial Institutions. Zions First National Bank of Salt Lake City accepted the failed bank’s direct deposits from the federal government

The FDIC was unable to find another financial institution to take over the banking operations of Centennial Bank and brokered deposits will be wired once brokers provide the FDIC with the necessary documents to determine if any of their clients exceed the insurance limits. Customers who placed money with brokers should contact them directly for more information about the status of their funds.

The failed bank is the 26th FDIC-insured institution to fail this year and the second in Utah. It had approximately $215.2 million in total assets and $205.1 million in total deposits by December 31, 2009 and approximately $1.8 million in uninsured funds by the time of closing.

The cost of the failure to its DIF is estimated to be $96.3 million. BankProspector shows that Centennial Bank was burdened with significant construction loan portfolio distress, capital adequacy ratios between 1% and 3%, and OREO balances over $35 million.

Florida Community Bank was the 11th FDIC-insured institution to fail in the nation this year, and the second in Florida. Florida Community Bank was closed by the State of Florida Office of Financial Regulation, and the Federal Deposit Insurance Corporation (FDIC) on Friday, January 29, 2010.

The 11 branches of Florida Community Bank reopened as branches of Premier American Bank, N.A., but under the name Florida Community Bank.

Premier American Bank, N.A. agreed to pay the FDIC a premium of 0.4 percent to assume the deposits of Florida Community Bank, which had approximately $875.5 million in total assets and $795.5 million in total deposits. The amount of the loss-share transaction between the FDIC and Premier American Bank, N.A., is pegged at approximately $305.4 million.

Florida Community Bank of Immokalee, Florida Fails

BankProspector shows that Florida Community Bank became heavily burdened by construction loans, to the point that more than 50% of their portfolio was noncurrent. OREO levels across construction and commercial loan types had past levels of $75 million.

On Friday, January 22, 2010, Premier American Bank, Miami, FL was closed by The State of Florida Office of Financial Regulation. Subsequently, the Federal Deposit Insurance Corporation (FDIC) was named Receiver. All deposit accounts, excluding certain brokered deposits, have been transferred to Premier American Bank, N.A., Miami, FL, a newly chartered National Bank.

In addition to assuming all of the deposits of the failed bank, Premier American Bank, N.A. agreed to purchase essentially all of the assets.
The FDIC and Premier American Bank, N.A. entered into a loss-share transaction on $300 million of Premier American Bank’s assets. They will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. However, as part of this transaction, the FDIC will acquire a cash participant instrument. This instrument serves as additional consideration for the transaction.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) for this failure will be $85 million. Premier American Bank is the fifth FDIC-insured institution to fail in the nation this year, and the first in Florida.

Distressed Pro’s BankProspector shows that Premier American Bank reported capital adequacy of 2% with nonaccrual real estate loans of $88 million, an OREO balance over $3 million, and non-current real estate loans at approximately 32%, the majority of which are in multifamily and construction.

Premier American Bank Miami, FL Cause of Death: Multifamily and Construction Loan Complications.

Following the bank’s failure, FDIC sold four of the Miami-based branches, as well as $326 million in deposits and some of its assets to Bond Street Holdings, a Naples-based company, and now parent company to Premier American Bank, N.A.. Dan Healy, the Executive Chairman of Bond Street Holdings noted that the real estate crisis in Florida has made it hard for many banks to lend significantly to small businesses, but stated, “I think it’s a profitable place.”

As I’ve reported in the past the volume of construction loan and REO trouble is significantly higher than the commercial totals are today. And as most everyone knows Florida is in the thick of it. I’ve also written in past articles about the fact that it aint over.

In fact our bank data shows that there has been more trouble in the pipe every quarter and it doesn’t look like its going to let up for a while. So with that, I offer you the Distressed Florida Construction Report.

Many regional and community banks got heavy into construction as they were beaten badly in the home loan game. Unfortunately for many of them the investments proved to be just too risky. In the most recent report 228 Florida based banks are reporting $3,139,888,000 in nonperforming construction loans. Bank owned construction projects in Florida (with Florida banks) were last reported at $730,780,000.

Florida Banks with the top 10 Nonperforming Construction Loan Balances:
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Obviously there is significant overlap in these lists but it is interesting that the lists are not identical and the positions certainly change. Some of that has to do with simple timing but it may also be an indication of how these lenders are choosing to deal with, or not deal with, their troubled construction projects.

Our numbers show that while these 14 banks are carrying a significant load, there are some 214 more Florida based banks also struggling with bad construction loans. New numbers are due out any day and it will be interesting to see movement in the ranks and whether or not “the recovery” that has started will be reflected in the numbers. Something tells me probably not, though I’m ready to be wrong.

If you’re a Floridian real estate professional or you’re working in distressed assets in Florida, or in distressed construction projects generally, we want to hear from you. Chime in with a comment below and let us hear your professional opinion. (Oh… and you get a link back to your site too.)

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Its no secret that Florida is one of four states that has borne the brunt of the residential real estate bust. Now as we teeter on the edge of a major commercial slide what role will Florida fill?

While we don’t have the data on the entire Floridian commercial real estate universe we do know what trouble lies with Florida based banks and since local and regional banks tend to do the bulk of the commercial lending our data provides a good barometer of what’s to come. These numbers are accurate as of the end of Q2 reporting Q3 data should be available any day.

Florida Banks Commercial REO

Florida based banks reported commercial REO balances at only $216,821,000. This number is spread over 120 banks. Do keep in mind though that this does not include bank owned construction projects or multifamily REO. Also the trend has been an increase in every one of the last four quarters.These numbers are only for banks headquartered in Florida. this number has grown from only $81,996,000 just four quarters ago. That’s a 164% increase.

Florida Banks Non Performing Commercial Loans

FL banks saw a 112% increase in non-performing commercial real estate loans over 4 quarters

Non performing loans are the pre-cursor to REO. If our bank data is any indication of what’s to come (and it is) then commercial real estate investors are about to see an avalanche over the coming quarters. At last reporting Florida based banks had $1,235,618,000 in distressed commercial loans (non performing) at 217 banks. It is quite clear that the trouble is growing and it is not being dealt with very quickly.

Are you an investor, broker, banker, or attorney dealing in distressed property or working with banks? We want to hear from you. Weigh in on the opportunities you’re seeing now and what you see in the future in the comments below.

The 5 Florida based banks with the most commercial REO (bank owned commercial real estate) are showing less than $100MM. The most recent bank report data suggests that Florida’s banks have been slow to pull the trigger on nonperforming commercial real estate loans.

While the 5 Florida banks with the most commercial REO are showing $75,063,000 the top 5 banks with non-accrual commercial real estate in Florida are showing $282,220,000 or about four times the amount. It should be noted that noe of the top 5 commercial REO banks re-appear in the top 5 non-accrual balances.

The fact that none of the first group appear in the second may speak to a difference in the way that certain lenders are handling their troubled loans.