BY JIM FREER
Special Correspondent

Delinquent real estate loans at Florida-based banks spiked by 47 percent in 2009 compared to a year earlier as the number of financial institutions in the state decreased by 21, according to a new report from CondoVultures.com.

The percentage of real estate loans that are non-current - no payments for at least 90 days - at Florida-based banks rose from 6.02 percent on Dec. 31, 2008 to 8.85 percent on Dec. 31, 2009, according to the report based on Federal Deposit Insurance Corp. data. 

During the same period, the number of Florida-based banks declined from 307 in 2008 to 286 in 2009, due primarily to 14 failures. 

Real Estate Owned (REO), the banking industry’s term for properties that have been repossessed through the foreclosure process, also spiked.

At Florida-based banks, the booked value of that inventory rose 54 percent from $1.1 billion at the end of 2008 to $1.7 billion at the end of 2009.

Data released on Feb. 23 by the FDIC also show that banks, overall, are continuing to make huge additions to their reserves to cover potential losses.

Florida-based banks’ loan loss provisions held steady at approximately $3.5 billion in 2008 and 2009. That number was $923 million in 2007. Money banks add to reserves is taken out of income each quarter.

The continuing trends with problem loans, REOs and loan loss provisions indicate why many banks will remain cautious in real estate lending and other lending in 2010.

Banks will continue to devote time and staff to loan workouts, and some will remain concerned that regulators will discourage them from making new loans or refinancing loans to some commercial real estate owners and other businesses, industry watchers said.

The charts at the end of this story show the composite rising levels of REOs and non-current loans at Florida-based banks since 2005.

In Florida, where “real estate is us” describes many banks, the overall profit picture showed some improvement but remained bleak.

Florida-based banks lost $2.0 billion in 2009, compared with $2.8 billion in 2008. The Florida industry benefited last year from reductions in salaries and employee benefits and from a decline, mirrored nationally because of low interest rates, in total interest paid on deposits.

Non-Current Real Estate Loans (Percentage of loans 90 days or more delinquent or no longer accruing interest)

All Loans and Leases
2009: 7.86
 2008: 5.33
2007: 2.12
2006: 0.65
2005: 0.43

All Real Estate Loans
2009: 8.85
2008: 6.02
2007: 2.38
2006: 0.66
2005: 0.40

All Florida Real Estate Acquired And Owned

2009: $1.7 billion
2008: $1.1 billion
2007: $303 million
2006: $ 62 million
2005: $ 27 million

Residential Real Estate Acquired & Owned
2009: $458 million
2008: $432 million
2007: $144 million
2006: $20 million
2005: $8 million

Source: Condo Vultures® analysis of data from Federal Deposit Insurance Corp.

Jim Freer is a special correspondent for CondoVultures.com. He is a veteran banking reporter and a consultant to the finance industry in South Florida. 

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