Copyright 2010 Sarasota Herald-Tribune Co.All Rights Reserved Sarasota Herald Tribune (Florida)
August 23, 2010 Monday
D; COLUMNIST; Pg. D11
Florida bank failures rising, but cost to FDIC is lower
MORE FLORIDA BANKS ARE going under this year, but the cost to resolve those failures is easing.
Twenty-two Florida banks had failed as of Friday, more than the 14 that collapsed in all of 2009. This year’s list so far includes just one local community bank, Peninsula Bank of Englewood on June 25.
Research by SNL Financial shows the cost to the Federal Deposit Insurance Corp. has averaged 20.8 percent of the failed banks’ assets this year, a sharp reduction from the 34.46 percent average in 2009.
The reason appears to be the growing pool of buyers for weak banks — not just the healthy banks looking to break into or expand in the state, but the new private equity groups that have formed to snap up the weak players. When more potential buyers bid on failed banks, the FDIC can swing better deals.
One recent example: Bank of Florida-Southeast, which failed May 28, attracted 16 bids from interested buyers.
Among them were North American Financial Holdings Inc., a private group that is buying into TIB Bank of Naples; IberiaBank of Lafayette, La., which last year bought the failed Century Bank of Sarasota and Orion Bank of Naples; American Momentum Bank of Tampa; and Centennial Bank of Conway, Ark., the buyer of three failed Florida banks this year.
Peninsula’s failure bucked the decreasing cost average. The FDIC estimated a $194.8 million hit to its insurance fund for that bank, just over 30 percent of its assets.
Peninsula was acquired by Premier American Bank of Miami, which is owned by a private investor group that has grabbed three Florida failed banks this year.
Analysts believe a sizable number of state banks will fail before year end. SNL reports that 59 of the state’s 263 banks are now operating under regulatory enforcement actions, and 56 of them as of March 31 had Texas ratios — a measure of financial health — topping 100 percent, the point at which banks tend to fail.
Among the banks still hunting for Florida deals are IberiaBank and CenterState Banks Inc. of Winter Haven, which acquired a small failed bank in Clewiston last month.
SNL says most of Florida’s troubled banks are on the small side. Of the 56 banks with high Texas ratios, only five topped $1 billion in assets. The median size of that group was $230 million in assets.
Horizon late in filing
The parent company of Bradenton’s Horizon Bank, one of the region’s weakest institutions, had to again notify regulators that it would be late filing a required report.
Horizon Bancorporation Inc. told the Securities and Exchange Commission that it would be late with its second-quarter filing. It was also a tardy filer in the first quarter. The publicly traded company said its accountants have been busy working on inquiries from regulators and could not file its 10-Q on time “without unreasonable effort and expense.”
Horizon did say it expects to post a second-quarter profit of $117,000, compared with a net loss of $6.9 million one year earlier. The bank itself earned $123,000 in the quarter. But capital dipped below 2 percent, and Horizon is now considered critically undercapitalized.
New home closing costs rise
The costs of closing on a home in Florida rose 18 percent this year, according to a new study by Bankrate Inc.
The total costs associated with buying a home average $3,987 in Florida, up $619 from last year. Florida ranked 12th in the nation for those costs. Last year, the state had the third highest costs.
Bankrate measured the costs to close on a $200,000, 30-year fixed-rate loan with a 20 percent downpayment and good credit.
Closing costs are soaring nationwide this year, due in large part to new regulations that require tighter estimates on title and closing fees.
The nationwide average this year is $3,741, up from $2,732 in 2009. In Florida, the closing costs include $1,237 for origination and $2,751 for title and closing.
New regulations implemented in January now require lenders in their good-faith estimate of costs to come within 10 percent of what the final cost will be. Previously, lenders could fall lower without penalty.
“The big rise on average closing costs may scare some homebuyers, but it’s important to keep things in perspective,” said Greg McBride, senior financial analyst at Bankrate.com. “Increased regulation on lenders’ GFEs means more accurate estimates and less expenses popping up for consumers on the back end.”
Contact John Hielscher at 361-4875 or firstname.lastname@example.org
August 23, 2010