Bank of Florida Corp. reports wider losses for the third quarter

— Bank of Florida Corp. reported deeper losses in the third quarter, primarily due to one-time charges.

The Naples-based bank holding company reported a loss of $78.1 million for the quarter, or $6.10 a share. Most of that loss was attributed to a $62 million write-off for “all of the company’s goodwill,” related to the acquisition of two banks it paid a premium for a few years ago.

Those bank assets have since dropped in value, requiring a “paper adjustment,” said Michael L. McMullan, the company’s CEO.

“This is not a cash item,” he said. “It does not affect our operating income or our regulatory capital in any way.”

Excluding the goodwill write-off, the net loss for the quarter would have been $16.1 million, or $1.26 a share. That compares with losses of $6.5 million, or 51 cents a share, in the second quarter of this year.

Also hammering the bank’s third quarter results was a $25.7 million provision for loan losses.

“We are continuing to work through problem assets systematically, and as quickly and efficiently as possible,” McMullan said in a statement.

Bank of Florida operates 13 full-service branches through three separately chartered community banks in Florida: Bank of Florida-Southwest, Bank of Florida-Southeast and Bank of Florida-Tampa Bay. It’s one of Florida’s largest independent commercial banks.

A recent “stress test” showed Bank of Florida’s credit losses over the next two years could total $131 million, indicating a need for an additional $72 million in capital to meet regulatory requirements, according to a company filing made Monday with the U.S. Securities and Exchange Commission.

State and federal regulators have already called for corrective action for the three subsidiary banks. The board of directors for each of the banks has agreed: to ensure that the banks remain “well capitalized” at all times; to prepare written risk-reduction plans; to reduce high-risk commercial real estate loans; to notify regulators when a change is made to the board or the executive team; to furnish quarterly progress reports, and to not extend credit to borrowers with problem loans.

Bank of Florida has put together a top team of investment bankers to lead an effort to raise more capital to help it get through these trying times, McMullan said. The team is made up of Raymond James, Sandler O’Neill + Partners LP, Allen & Company LLC and Stifel Nicolaus.

“This is truly the highest profile group of underwriters that we could work with,” McMullan said.

There will be a public offering of 85 million shares and the goal is to raise at least $75 million. As a public company, Bank of Florida has successfully raised capital nine other times, McMullan pointed out.

The new shares will be sold to individual and institutional investors.

“Once you hit the road, it shouldn’t take more than a couple of weeks to sell the shares,” McMullan said.

“As we raise the capital to go forward, we will continue to take care of our existing customers, bring in new customers and look to the future.”

Since 2008, Bank of Florida has worked out 26 loans totaling $20.9 million, losing an average of 12 percent in principal while avoiding foreclosure. It has sold another 20 properties through foreclosure totaling $16.1 million, with an average principal loss of 37 percent.

Another 54 loans totaling $74.2 million are in foreclosure, representing about half of the banking company’s total non-performing loans.

In the third quarter, non-performing loans totaled $150.1 million, or 11.98 percent of total loans. That was up $9.1 million from $141 million, or 11.2 percent in the second quarter.

The increase in troubled loans last quarter was primarily related to eight commercial real estate loans totaling $20.2 million. Since the second quarter, the company has seen more deterioration in commercial real estate, while residential real estate has shown signs of stabilizing, McMullan said.

Net charge-offs were $12.7 million for the third quarter. That was primarily due to adjustments on several large residential construction loans.

Other highlights of the third quarter include:

■ Land, construction and development loans decreased 19 percent to $238.2 million;

■ The allowance for loan losses was 3.03 percent of total loans, compared with 1.96 percent in the second quarter;

■ Non-performing assets totaled 10.79 percent, compared with 9.74 percent in the second quarter;

■ Total core deposits increased $58.4 million, or 8 percent, in the third quarter. Since Sept. 30, they’ve increased another $84.5 million.

“Our balance sheet liquidity has never been stronger than it is right now,” McMullan said.

The Bank of Florida Trust Co. continues to do well, he said.

In the third quarter, the trust’s assets under management increased by $100 million over the second quarter.

Bank of Florida announced Monday that Scott Kellett, who has served as the trust’s president, has been promoted and will also assume the role of CEO.

As of Sept. 30, Bank of Florida had total assets of approximately $1.5 billion, total loans of approximately $1.3 billion and total deposits of $1.2 billion.

The company trades under the symbol BOFL on Nasdaq. Shares closed down 3 cents on Monday at $1.43.

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