Thursday, May 27, 2010

Bank of Florida Corp. in Naples facing new federal action


Originally published 06:59 p.m., May 26, 2010 

Updated 07:02 p.m., May 26, 2010

Naples-based Bank of Florida Corp. faces new enforcement actions from its regulators.

The Federal Deposit Insurance Corp., or FDIC, has entered into consent orders with each of the holding company’s three banks, according to a filing with the U.S. Securities and Exchange Commission. In those orders, the company does not deny or admit any wrongdoing.

The orders require the boards of directors to get more involved in their banks by holding meetings at least once a month and more closely monitoring activities.

The banks have been directed to retain experienced, qualified management, who can comply with the consent orders, and operate the banks “safely and soundly.”

Within 30 days, the banks must submit plans to the FDIC on how they will achieve and maintain an adequate level of capital. They will have the same amount of time to review the adequacy of their allowances for loan losses.

Within 45 days, the banks will have to implement plans to reduce assets classified as “substandard or doubtful.”

The orders also require the banks to reduce concentrations of credit that represent large portions of its working capital.

The banks have 60 days to develop profit plans and comprehensive budgets, and to adopt a liquidity, contingent funding and liability management plan.

While the orders are in effect, the banks can’t declare or pay any bonuses or dividends, or make any principal or interest payments on subordinated debt, without FDIC approval.

The banks also can’t accept, renew or roll over any brokered deposits.

In its filing with the SEC, the company also noted that is has received a warning letter from Nasdaq that its stock may be delisted. Shareholder equity on March 31 was less than $1 million, falling below the equity required for listing. The company has 45 days to submit a plan to regain compliance. The ability to comply is “likely exclusively dependent upon the success of the company’s current $72 million common stock offering,” the SEC filing says.

In March, regulators ordered Bank of Florida Corp. to boost its capital, giving it 30 days to strengthen its finances. Its three subsidiaries are still short on capital.

Bank of Florida-Southwest, with branches in Lee and Collier counties, is in the worst shape.
“The Southwest bank is critically undercapitalized,” said Michael McMullan, CEO of Bank of Florida Corp., in a recent interview with the Daily News. “It’s very much a reflection of the economic times and the dramatic decline in real estate values.”

The Bank of Florida - Southeast and Bank of Florida - Tampa Bay subsidiaries are also struggling with troubled loans in a bad economy.

In 2009, the holding company reported losses of $147.6 million, or $11.54 per diluted share. That compares to a loss of $13.2 million, or $1.03 a share, in 2008.

The company recently adjusted its financial results for the first quarter of this year to show bigger losses. The loss was increased to $48.2 million, or $3.76 per diluted share. Originally the loss was estimated at $33.1 million, or $2.66 per diluted share.

If the company fails to meet the latest regulatory demands, the FDIC will likely take further action, which could include closure and appointing a receiver to take over the banks.

Bank of Florida Corp. was organized in 1998. It has grown to include 13 financial centers, more than 250 employees and more than $1.5 billion in assets.

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