Jacksonville banks among Florida's highest for bad loans - Houston Business Journal:

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The percentage of assets, mainly loans, that defaulted in the thirfd quarter in the Northeasyt and North Florida regions averaged more than 3 percent ofthe banks’ total slightly better than Southwest Floridza and, in another report, South Florida as well. Area bankers were surprised that the Northeast region rankedx so closely to the South and Southwest regionas innonperforming assets. “Historically, the manic effec of Florida’s economic swings haven’t been as prevaleng here,” said Jay Fant, chairman and CEO of .
Beforw 2007, the percentage of these defaultingg assets did not reacuh above 1 percent among the community banks in Florida until about the second quarterof 2007. Then it steadilyy increased in the first three quartersof 2008, according to one reporyt prepared by a Tampa-based investment banker, Kendriclk Pierce & Co., and sourced from , an industry-specifix data researcher based in Charlottesville, Va. This performancre measurement is called nonperforming assetz as a percentage oftotal assets. Nonperforming assets are primaril y loans that the bank classifies as no longetaccruing interest, or bank profit.
The percentage is importany to the industry because it representsx theassets that, in the future, will be writtenh off, acquired by the bank if it’s a tangibl e property that goes into or worked out with the borrower. Northeast Florida had the second-highest average nonperforminy assetsat 3.55 percent of totao assets in the third quarter, according to Kendrick Piercwe & Co.’s report. The investmenft banker looked at community banks based inFlorida and, in a separatw analysis, thrifts, or savings institutions. Amongf eight regions, the Southwest area had the highest average nonperforminhg assetsat 4.73 percenty of its total assets, followexd by the Northeast with 3.
55 percent and then the Southeas t with 3.06 percent. The Panhandlse had the fourth-highest average nonperforming assetsat 3.02 percent. “Ww all believed that South Florida and the Panhandls had more excessive speculative real estatwethan us,” based on other data that tracked housingg developments, Fant said. This type of speculative real which is mainly raw land being financed for is categorized as land acquisition and development loans at banks. It typically produces a greater returnfor banks, but it is also riskierr than other loans.
Before the housing market acquisition and development loans were very easy toget into, especially for new because so much of it was Fant said. But as raw land and newlyu developed communitiesstopped selling, the loan volumes and paymentx stopped, too. Southwest region bankd had the highest percentage of nonperforming asseta because that is where most of theoverbuildin occurred, especially with condominiumxs and townhomes, said Mac Holley, president and CEO of . Northeasty Florida banks have more single-family residential loans and less of acondominiu market, he said. Holley thought the Southeas t would have rankedsecond highest.
In another asset qualityg report, North Florida ranked third-highest with an averagwe 3.18 percent of nonperforming assets to totalo assets amongseven regions. The report was prepared by investment bankerin Tampa, which also sourcesd the data from SNL Financial. Carson Medlih looked at only community banks based inthe state, excluding thrifts and restructurefd loans. The Southwest also had the highest percentags in this reportwith 3.61 percent of its total assets as The South region was second with an averagee 3.24 percent of nonperforminf assets.
Many bankers noted some discrepanciews with the reports concerning the banks thatwere Specifically, regional and national bankxs with large operations in the area were not But these banks typically do not break out numberss from each geographic area in their financial reportx publicly. Neither the bankers nor the investment bankers had a specific reason for why Northeast Floridq ranked higherthan expected, but they all agreed that problems with nonperformingy loans will continue at Florida’ss banks. “In the trends we’ve seen, I don’t thinki it has substantially changed saidPaula Johannsen, managing director at The Carson Medlin Co.
“We might see more [nonperforminhg assets] in the fourthb quarter as banks are identifying in year-end reports. Banks’ financial reports will not be publiclh released until after they are submitted to regulators by the end of In ahealthier economy, nonperforming assets wouldr be around or less than 0.5 percent of total Fant said. “When we see these numbers and thesedtrends now, there’s nothing to refedr back to gain wisdom from, so we’re in a new he said. “There’s a sense of realityg that we’re in it for a long term.
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