Midway through 2012, the Jacksonville banking industry is looking a lot better than it did during the financial crisis that started in 2007. Perhaps that’s because there are fewer banks still around, with the weak institutions disappearing over the past few years.
According to financial reports filed with federal banking regulators, there currently are only 10 FDIC-insured commercial and savings banks headquartered in the Jacksonville metropolitan area, down from 20 before the financial crisis.
The other institutions either were taken over by banking regulators or merged on their own.
Banking analyst Ben Bishop, chairman of Allen C. Ewing & Co. in Jacksonville, said there now are about 220 banks operating throughout Florida, down from about 350 before the meltdown.
The industry’s problems aren’t completely behind it, but conditions are improving.
“2008, 9 and 10 were three horrible years for banking. That’s over,” Bishop said.
“It’s clear the worst is behind us,” he said.
Bishop said the housing market appears to be at least stabilizing, if not improving, and that’s reflected in the level of bad loans on local banks’ books.
In 2008 and 2009, the amount of noncurrent loans – loans that are either 90 days or more overdue or not being repaid at all – equaled more than 20 percent of all loans at several Jacksonville banks.
According to the midyear uniform bank performance reports filed by the 10 Jacksonville area banks, two had noncurrent loan ratios near 10 percent and EverBank was at 17.87 percent, but EverBank’s number isn’t what it seems.
Most of the noncurrent loans on EverBank’s books are guaranteed against losses by federal government programs. Now that EverBank’s parent company has gone public, it is filing detailed quarterly financial reports in addition to its reports sent to banking regulators.
Its latest quarterly report disclosed that when its level of bad loans is adjusted to account for government guarantees, the noncurrent loan ratio is only 1.57 percent.
EverBank also has been strongly profitable, with earnings of $25.4 million in the first six months of the year.
Four of the 10 Jacksonville banks lost money in the first half of 2012, including the two other banks owned by publicly traded parent companies.
The Jacksonville Bank had a loss of $9.5 million and Atlantic Coast Bank lost $4.2 million in the six-month period, according to their regulatory reports.
Both of those banks have Tier 1 leverage capital ratios (capital divided by total assets) below 6 percent. Banking regulators have several ways of measuring capital adequacy and Tier 1 is the most basic form of capital, consisting basically of the stockholders’ equity on the banks’ balance sheets. Regulators sometimes set different capital requirements for different banks.
Both Jacksonville Bancorp Inc., the parent company of The Jacksonville Bank, and Atlantic Coast Financial Corp., the parent of Atlantic Coast Bank, said in their quarterly reports that they have fallen below regulatory capital requirements and are looking at ways to raise more capital.
Jacksonville Bancorp said regulators are requiring it to have a Tier 1 leverage ratio of at least 8 percent and Atlantic Coast is required to raise its capital level to 7 percent.
The two other area banks that lost money in the first half of the year have capital ratios below 3 percent.
One of those, Florida Capital Bank, already has a plan in place to add capital. CEO J. Malcolm Jones said the bank added $10 million in capital in December and $5.9 million in June, and should soon have another $17.6 million.
“It’s been sitting in escrow since April waiting for the Federal Reserve to approve a change of control,” Jones said.
One of Florida Capital’s board members, James Heavener of Winter Park, filed the application with the Federal Reserve Board to buy additional stock in the bank. The stock would not give Heavener a majority stake in the bank but it is large enough to be considered a “change in control.”
Jones said the board of directors together will end up owning about 80 percent of the stock after that deal is complete.
Jones said Florida Capital also is working to reduce its level of problem loans and he expects the bank to begin showing better results.
“We feel like we’ve turned the corner on the credit issues,” he said.
The other bank with a capital ratio below 3 percent is Heritage Bank of North Florida, which is headquartered in Orange Park and also has a branch in Ponte Vedra Beach. CEO Randolph Knepper did not respond to phone messages left this week.
Even after Florida lost about one-third of its independent banks since the financial meltdown began, Bishop said the state could lose more before the dust settles completely.
“There are still about 50 of them (problem banks) out there,” he said. “We’ve got more to go.”
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| Bank | Net income/Average assets | Capital to loss | Noncurrent assets ratio | loan ratio |
| American Enterprise Bank | $198,741 | $104 | 7.20% | 5.16% |
| Atlantic Coast Bank | $778,827 | -$4,249 | 5.36% | 5.95% |
| Bank of St. Augustine | $184,746 | $338 | 6.97% | 3.74% |
| CBC National Bank | $429,983 | $663 | 9.37% | 4.55% |
| EverBank | $13,757,359 | $25,322 | 8.31% | 17.87% |
| FirstAtlantic Bank | $322,268 | $1,028 | 12.27% | 5.10% |
| Florida Capital Bank | $756,243 | -$12,946 | 2.25% | 7.54% |
| Heritage Bank of North Florida | $132,485 | -$467 | 2.68% | 10.60% |
| Prosperity Bank | $788,379 | $1,921 | 6.35% | 1.95% |
| The Jacksonville Bank | $578,536 | -$9,511 | 5.26% | 10.23% |