First Florida Will Report $30 Million Loss for Quarter
First Florida Banks Inc. announced Thursday that it will report a $30 million loss for the third quarter, citing continuing real estate-related problems.
Tampa-based First Florida said it would take a $35 million provision for possible loan losses and $25 million in write-downs in foreclosed real estate. The provision and the write-downs will be partially offset by $15 million in tax benefits and $17 million in core earnings.
The disclosure came just weeks after Paul M. Homan, a former regulator with the Office of the Comptroller of the Currency, assumed his duties as president and chief executive. First Florida had reported losses totaling nearly $50 million during the previous three quarters, but Mr. Homan said the company will be profitable by early next year, and possibly by this year's fourth quarter.
General Economic Conditions
He attributed the third-quarter deficit to the effect of "sluggish economic conditions" on the bank's commercial real estate portfolio.
Although First Florida was expected to boost its loan-loss provision in the third quarter, some analysts said they were surprised at the size of the company's expected deficit.
"I have observed that new CEOs tend to fully acknowledge the mistakes of their predecessors. This is another instance of that," said Timothy G. Rayl, with Southeast Research Partners in Boca Raton.
Capital Maintenance Plan
First Florida, which has $5.8 billion in assets, also disclosed Thursday that it has reached an agreement with the OCC not to declare dividends without the agency's prior approval. The company suspended its 24 cent quarterly dividend in the first quarter of this year.
First Florida said it has also agreed to a capital maintenance program that requires Tier 1 capital to equal at least 5% of adjusted total assets and at least 8% of risk-weighted assets by yearend.
"First Florida expects to exceed these capital requirements by Dec. 31 and to operate at above those levels in the months and years ahead," Mr. Homan said.