Miami Bank Indicates It Needs Aid
Southeast Banking Corp. for the first time has formally indicated that it has little chance of surviving without federal assistance.
In a regulatory filing, the troubled Miami-based company said the proposed liquidity and capital plans it submitted earlier this month to the Federal Reserve call for either a merger or sale of equity "with open-bank assistance," meaning some form of aid from the Federal Deposit Insurance Corp.
Receivership Possible
Southeast, which has $11.3 billion in assets, also warned that continued deterioration in its condition could result in "the possible appointment of a conservator or receiver."
The company also confirmed that liquidity problems have forced it to borrow from the Federal Reserve's discount window Southeast said its daily borrowings from the Federal Reserve Bank of Atlanta have been as high as $275 million.
According to the latest figures available, borrowing by banks in the Atlanta Fed's district totaled $240 million on Wednesday, and Southeast is believed to have been responsible for most of the activity.
Southeast classified its discount window borrowings as "extended credit," a term the Fed uses to denote long-term credit to banks suffering financial difficulties.
Southeast chief executive Douglas E. Ebert said the stern language in the company's quarterly filing with the Securities and Exchange Commission was prompted by disclosure requirements. "We felt compelled to present the full range of options or alternatives that are available to regulators," Mr. Ebert said.
Noting the absence of major announcements from Southeast in recent months, some stock analysts have questioned whether Mr. Ebert or federal regulators are running the bank. Mr. Ebert said Thursday, "Management is running the organization."
Southeast, dragged down by a mass of problem real estate loans, lost $147.2 million in the second quarter. With seven consecutive quarterly losses totaling $483 million, the company's Tier 1 capital ratio is down to 2.84%, well below the 1992 regulatory guideline of 4%.
Regulators have been actively pushing for a sale of Southeast under a new policy that aims to reduce the cost of bailouts by finding merger partners for troubled banks before they become insolvent.
But the regulators have run into significant roadblocks in their effort to arrange a quick sale, according to people familiar with the matter.
