Before it was shut down by banking regulators last month, First Guaranty Bank & Trust Co. of Jacksonville was running dangerously low on capital and facing millions of dollars in additional losses from bad loans.
According to its year-end financial report filed with the Federal Deposit Insurance Corp., First Guaranty’s capital fell to just $2.4 million, or 0.6 percent of total assets, as of Dec. 31 after losing nearly $10 million in 2011.
And the bank still had $96.5 million in non-current loans on its books — that is, loans that are either 90 days or more overdue or are not being repaid at all. Potential losses on those loans could have depleted the rest of its capital.
The year-end reports of all 11 FDIC-insured commercial and savings banks in the Jacksonville metropolitan area show that three other banks continue to have capital levels below industry standards after posting net losses in 2011.
But their capital levels had not fallen as low as First Guaranty at the end of the year.
First Guaranty was shut down by regulators on Jan. 27 and its eight area branches were sold to CenterState Bank of Florida, based in Davenport in Central Florida.
Six of the 11 Jacksonville area banks lost money in 2011, continuing a four-year trend in which the extremely weak real estate market has led to massive loan losses.
While this problem has persisted throughout Florida, Jacksonville institutions have been hit particularly hard, said banking analyst Ben Bishop of Allen C. Ewing & Co. in Jacksonville.
“Banks in Northeast Florida as a group continue to be the worst performers in the state,” he said.
Excluding EverBank, a large bank that does business nationally (mainly through online banking), the 10 community banks in the Jacksonville area had a combined ratio of non-current loans to total loans of 9.2 percent as of Dec. 31.
That compares with a non-current loan ratio of 5.1 percent for all Florida banks and 2.1 percent for all banks nationally, according to FDIC data.
Bishop says it may take three more years for bank earnings to return to “normal” levels, but he is optimistic that 2012 will be a better year than the previous few.
“The key is stability of real estate prices,” which is already happening in “a spotty way,” he said.
First Guaranty was the third Jacksonville area bank to be shut down by regulators in the last three years, after Haven Trust Bank of Florida and First Bank of Jacksonville were closed in 2010 and sold to out-of-state banks.
Three other area banks have capital-to-asset levels below 6 percent and have been under orders from regulators to raise additional capital.
Atlantic Coast Financial Corp., the publicly traded parent company of Atlantic Coast Bank, announced in November that it had retained an investment banking firm to assist in “exploring strategic alternatives,” indicating that it is seeking a merger partner. Atlantic Coast’s capital ratio was 5.8 percent as of Dec. 31.
The two other banks seeking capital are Florida Capital Bank, with a ratio of 3.4 percent, and Heritage Bank of North Florida, with a ratio of 3.2 percent. The CEOs of both banks did not respond to phone messages this week.
Bishop said it is a difficult environment for community banks to raise additional capital.
“The banking industry is not looked at like a good place to put investment capital,” he said.
But Bishop is hopeful that banks that have made it this far through the real estate downturn can get back on their feet.
“The banks that are left are the surviving banks. They’re going to get better,” he said.
First Guaranty thought in November it had a plan to survive with a deal to raise capital by selling seven of its eight branches to South Carolina-based CertusBank N.A. But with the losses mounting, the FDIC instead began seeking bids to take over the bank entirely during the fourth quarter, said Gilbert Pomar, Northeast Florida market president for CenterState.
Pomar said CenterState was informed on Jan. 24, three days before First Guaranty was shut down, that it had the winning bid.
CenterState continues to operate the eight First Guaranty branches under their old name, but Pomar said the bank may change them to the CenterState name around May. He also said he’s pleased with progress of integrating the First Guaranty offices into CenterState.
“It’s going amazingly well. Customers have been terrific and embraced us,” he said.
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| Bank | Assets | Net income/loss | Capital to assets ratio | Non-current loan ratio |
| American Enterprise Bank | $194,881 | -$2,184 | 8.05% | 6.48% |
| Atlantic Coast Bank | $789,812 | -$8,946 | 5.85% | 7.04% |
| Bank of St. Augustine | $186,303 | -$407 | 7.16% | 3.16% |
| CBC National Bank | $477,611 | $1,399 | 8.38% | 5.36% |
| EverBank | $13,039,950 | $55,453 | 8.21% | 3.68% |
| FirstAtlantic Bank | $336,889 | $503 | 12.15% | 3.23% |
| First Guaranty Bank & Trust | $397,082 | -$9,976 | 0.61% | 35.33% |
| Florida Capital Bank | $798,989 | -$31,218 | 3.41% | 8.78% |
| Heritage Bank of North Fla. | $132,549 | -$1,270 | 3.16% | 13.64% |
| Prosperity Bank | $779,271 | $23 | 7.77% | 2.20% |
| The Jacksonville Bank | $580,688 | $3,337 | 11.73% | 11.32% |
This chart shows the financial data for all 11 FDIC-insured commercial and savings banks headquartered in the Jacksonville metropolitan area as of Dec. 31, 2011.
Dollar figures are in thousands.
Assets are the total assets on a bank's balance sheets as of Dec. 31
Net income/loss is the bank's results for the full year.
Capital to assets ratio is the bank's total equity capital as of Dec. 31 divided by its total assets.
Non-current loan ratio is the amount of loans that are 90 days overdue or are not being repaid at all, divided by total loans as of Dec. 31. Overdue loans that are guaranteed by government agencies are not included in the total of non-current loans.