Florida used to be known as the land of sunshine, oranges, and retirees, but recent events have conspired to create a new moniker - the land of bad real estate loans. Here's a look at which banks are hurting from their overexposure to this sunny land.

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Eroding Credit Quality
This new title is demonstrated by a review of fourth quarter of 2009 credit quality and other statistics conducted by FIG Securities. The survey showed that the median level of bad loans was 10.3% in the fourth quarter of 2009 for 256 banks in the state. This was up from 9.7% in the third quarter.

CenterState Bank of Florida (NASDAQ:CSFL) reported total non-performing loans as a percentage of total loans of 4.42% as of December 31st, 2009. This bank does maintain strong capital and reported a tangible common equity ratio of 11.3%.

1st United Bancorp, Inc (NASDAQ:FUBC) is headquartered in Boca Raton, Florida, and has also been hurt by its exposure to Florida, but much less than its peers. The bank reported that its ratio of non-performing assets to total assets was 2.26% at the end of the third quarter of 2009.

Vision Problems
One bank that probably wished it had never heard of Florida is Park National Corporation (NYSE:PRK), based in Ohio. In 2007, Park National Corporation, apparently not satisfied with its current growth in the Midwest, purchased Vision Bancshares. Vision was a bank holding company that owned two banking subsidiaries, one in Gulf Shores, Alabama, and one in Panama City, Florida.

Park National recorded a $44.4 million loan loss provision from this subsidiary in 2009, after recording a $47 million loan loss provision in 2008. Also, Park National took a goodwill impairment charge of $55 million in 2008 related to its Vision Bank subsidiary.

Vision Bank had a problem loan ratio of 27% in the Panama City Metropolitan Statistical Area (MSA) at the end of 2009. Despite the problems with its Florida subsidiary, Park National ended 2009 with a tangible common equity to tangible asset ratio of 7.75%, up from 6.61% at the end of 2008.

Citrus Overload
The rush to Florida during the boom times has also hurt the larger regional banks. Synovus Financial Corp (NYSE:SNV) has several banking subsidiaries in various Florida markets that have asset quality problems. The bank reported total credit costs of $427.8 million in the fourth quarter of 2009.

I can't help but wonder how much the investment community is to blame for many banks crowding into Florida in search of growth. Management teams were under intense pressure from some investors when loan and deposit growth dipped below that of their peers.

The Bottom Line
Despite the situation occurring in Florida, it's clear that one day that the problems will pass. The state has been the scene of many real estate cycles throughout its history. The key for investors is to figure out which publicly traded banks will survive this cycle. (Investing in big buildings means big money - and bigger risks. To learn more, refer to Find Fortune In Commercial Real Estate.)

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