Great Florida Bank loses $16M
The losses continued for Great Florida Bank in the fourth quarter, but it succeeded in paring down its problem loans.
The Miami Lakes-based bank (NASDAQ: GFLB) suffered a net loss of $15.9 million in the fourth quarter, following a $13.3 million loss in the third quarter, according to its filing with the Federal Financial Institutions Examination Council. The bank has yet to announce its earnings in a Securities and Exchange Commission filing.
Great Florida Bank CFO Gary Laurasch said in an interview that $6.9 million of the loss in the fourth quarter was a non-cash charge from writing off a deferred tax asset – an income tax reimbursement that the bank could have recovered if it had turned a profit last year. The actual cash loss was lower in the fourth quarter than in the previous quarter, he noted.
For the full year, Great Florida Bank’s losses more than doubled to $46.8 million, from $19.2 million in 2008.
Great Florida Bank’s results were hurt in the fourth quarter by a drop in net interest income, to $7.8 million from $8.9 million in the previous quarter. The decline was the result of a combination of more loans going delinquent and lower interest yields on its securities portfolio as the bank sold some mortgage-backed securities, Laurasch said. It also lost $2 million on sales of repossessed property.
The bank recorded a $7 million expense to reserve for future loan losses and charged off $8.7 million in bad loans in the fourth quarter, down from $15.7 million and $16 million, respectively, in the third quarter.
Although its level of problem loans remains high compared to most banks, Great Florida reduced it to $149.1 million in late or unpaid loans, or 12.14 percent of total loans, as of Dec. 31, from $161.2 million, or 12.84 percent, as of Sept. 30. Laurasch said that $11 million of its noncurrent loans at year-end have started generating payments again and could return to current status if they continue to do so.
However, Great Florida Bank’s repossessed property total increased to $9.7 million by year-end from $7.5 million at the end of the third quarter. It’s bank-owned property includes Courthouse Commons in West Palm Beach and the Palladium Building in Davie. Laurasch said it could open a Great Florida Bank branch in Courthouse Commons by the end of the year. The bank shares an interest with HSBC Bank in a $12.7 million foreclosure judgment covering Miami’s Havana Lofts, which is set for public sale in April. It also has a pending foreclosure lawsuit against Miami Springs Golf Villas over a 99-unit apartment complex that received a $5 million mortgage.
Great Florida Bank’s $35.7 million reserve for future loan losses covered nearly 24 percent of its noncurrent loans at year-end.
While the bank remained “well-capitalized” under regulatory guidelines, it’s concerning that it has more problem assets than capital and reserves. At year-end, Great Florida Bank had $105.6 million in Tier 1 capital and $35.7 million in reserves for loan losses against the $149.1 million in noncurrent loans and the $9.7 million in repossessed property, a difference of $17.5 million in problem assets.
Laurasch said the bank is in a comfortable position with its reserves because it already has written down the value of its noncurrent loans to market prices.
“Delinquencies and nonperforming loans are trending down, and barring another lay down in the economy or further price depreciations in the real estate market, we feel these trends should hold as far as the credit quality of the portfolio,” he said. “We don’t know what the future holds, but, at this point, we feel we are adequately reserved with the level of reserves we have on the books today.”
Great Florida Bank was the 11th-largest bank chartered in South Florida on Sept. 30, with $1.72 billion in assets. By the end of 2009, it increased that to $1.77 billion in assets. During the same period, the bank grew its total deposits to $1.35 billion from $1.26 billion.
However, Great Florida Bank’s total loans dipped to $1.18 billion at the end of the year from $1.22 billion as of Sept. 30. Laurasch said it would not have much loan growth this year as the bank focuses on reducing its problem assets. It will continue making residential mortgages and selling them to government agencies and making U.S. Small Business Administration-backed loans.
NASDAQ warned Great Florida Bank in January that it could fast delisting because its stock traded below $1 for too long. A boost in its stock price recently put the bank back in compliance.
Great Florida Bank shares were down 8 cents to $1.46 in afternoon trading. The 52-week high was $2 on May 11. The 52-week low was 49 cents on Dec. 31.
Filed under: business by Finance Boss