Insurance News

Bank of Florida given three weeks to fix financial woes

Posted on: March 27, 2010

(Banking News) Banking regulators have told Bank of Florida Corp. that is has until April 17 to solve the capital shortfall at each of its three bank subsidiaries.

The Naples-based bank holding company (NASDAQ: BOFL) disclosed the Federal Deposit Insurance Corp?s enforcement order in a Securities and Exchange Commission filing on Thursday.

The prompt corrective action directive, issued on March 18, gave the company?s three subsidiaries, including Fort Lauderdale-based Bank of Florida ? Southeast, an ultimatum: Raise enough money in 30 days to become ?adequately capitalized,? or sell the banks.

The $1.4 billion-asset Bank of Florida Corp. is attempting to meet that requirement through a public offering. It recently priced the shares at nearly twice the stock?s most recent closing price.

?If our subsidiary banks fail to meet or satisfy the requirements of the directives, it is likely that the FDIC will take further regulatory enforcement actions against our subsidiary banks, including the imposition of consent orders or the closure of the subsidiary banks and the placement of them into receivership with the FDIC,? Bank of Florida Corp. stated in its SEC filing.

If one of its banks failed, it would likely mean the FDIC would close all of them, the company added.

The regulatory order also limits the interest rates the bank can pay depositors, prevents it from selling or acquiring significant assets without FDIC approval and restricts it from awarding officers with bonuses or increases in compensation.

At year-end, its Fort Lauderdale subsidiary was considered ?undercapitalized? because of its low capital ratios. Its subsidiaries in Naples and Tampa Bay were ?critically undercapitalized? and ?significantly undercapitalized,? respectively.

Bank of Florida Corp. hopes to restore those banks to ?adequately capitalized? status through a previously announced public offering with a minimum goal of $45 million.

The company said its officers and directors have committed to invest at least $2.7 million.

Terry W. Stiles, CEO of Fort Lauderdale-based developer Stiles Corp., is on the board of directors. He owns 322,393 shares of the company, for a 2.55 percent stake. The SEC filing did not name the investors who committed to the public offering.

In an SEC filing concerning the offering made public on Thursday, Bank of Florida Corp. priced the 86 million shares of common stock for the offering at $1.565 a share. It could raise a maximum of $134.6 million.

Bank of Florida Corp. forecast that it would need $50 million to $55 million to be ?adequately capitalized? and $75 million to $80 million to be ?well capitalized? over the long term. The company said it expected to suffer losses throughout this year.

?The company?s short-term capital plan is to raise enough capital to keep the banks adequately capitalized during 2010,? Bank of Florida Corp. stated in the filing. ?Once this capital is raised, it is the company?s intent to, once again, increase the authorized shares outstanding and to raise additional capital late 2010/early 2011.?

On March 12, the company revised its 2009 loss to $147.6 million from the previously reported $108.8 million, after correcting a miscalculation of its deferred tax assets.

Its Fort Lauderdale-based subsidiary had $548.8 million in assets and $448.7 million in deposits as of Dec. 31.

Its six branches include two each in Fort Lauderdale and Coral Gables, and one each in Aventura and Boca Raton.

Shares were down 11 cents to 78 cents in morning trading. The 52-week high was $4.50 on March 27, 2009. The 52-week low was 50 cents on Dec. 17.

The company had nearly 13 million shares outstanding, which means its public offering could significantly dilute the value of those shares.

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South Florida Business Journal – by Brian Bandell

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