Two months after taking over Florida Community Bank, Bond Street Holdings is consolidating its position as a community bank - and dealing with some of the failed ventures left behind by FCB.
New York-based Bond Street is operating Premier American Bank, which picked up a failed Premier bank in Miami and Immokalee-based Florida Community in January, acquiring both in deals brokered by the Federal Deposit Insurance Corp.
Since then, said Kent Ellert, president and chief operating officer of both banks, he's been concerned mainly with holding on to the goodwill and customer base he inherited.
"Our first priority was to open this institution (Florida Community) with an eye to stability," he said. "We immediately rehired over 95 percent of the bank's employees. When we opened the doors the following day, our customers were able to see the same people they'd seen for years."
Premier American also has sunk an initial $135 million of its $440 million in capital into the two banks, which will continue to operate under their own names, Ellert said.
So far so good, he said.
"Our bank has already grown since the conversion. We're winning back old customers. We've taken in more deposits and on the lending side we've been meeting with our clients. They're very, very pleased to know their bank has been recapitalized."
Florida Community got into trouble with loans that went bad after prices plummeted following the end of the real estate boom in Southwest Florida in late 2005.
By the time it was acquired by Premier, the bank had about $200 million in bad debt.
That included some high-profile properties, including Zoomers Family Amusement Park in south Fort Myers and Concordia condominium in Cape Coral. Both were taken back by Florida Community in foreclosure after their developers defaulted on loans.
Ellert said it's too soon to comment on what will happen to those projects and the rest of the assets Bond Street acquired.
Sharing the risk
FDIC spokesman David Barr said his agency has a loss-share agreement with Premier for the old Florida Community assets. That means that the bank has to assume 20 percent of all the losses it takes when it sells those properties.
Whether the bank or the FDIC ends up with the assets, the goal is to make sure they're disposed of as profitably as possible to make sure the failed bank's creditors get as much back as possible, Barr said.
That can be tricky, however.
For example, he said. "If it's a loan, how do you continue to fund it and how much? Do you fund to completion or to get it completely enclosed and weather-proofed? It all has to be decided case by case."
A takeover can cause complications even for a property that already belongs to the bank. Concordia, for example, was only partly completed when Florida Community took it in foreclosure. The bank finished building the project and proceeded to market and sell the condos.
But Susan Lucia, director of marketing for the Concordia sales center, said she lost some sales when the old bank was taken over because Florida Community had been financing some purchases.
Some of the pending mortgage deals couldn't be completed when the new owners took over, although her team has continued selling the units - so far, more than 220 of the total 340.
Meanwhile the future of Zoomers - started in 2002 but never opened although it's 99 percent finished - is still in doubt.
Setting a course
Tony Gargano, the Fort Myers-based attorney and real estate broker who was representing Florida Community trying to sell Zoomers, said he doesn't know how that property will end up.
But as more banks are taken over and even more properties go into foreclosure or their owners declare bankruptcy, the issues of how to handle such situations are becoming common occurrences, he said.
Gargano said it's not always obvious at first glance what the best course of action is.
"In my opinion, the biggest problem is the permits and construction side," he said. For example, in a case where permits are about to expire, it can be expensive to let them lapse.
Bank takeovers aren't the only situations in which those problems arise, said Steve Cunningham, a Fort Myers-based commercial real estate broker and appraiser who recently started up LandQwest Asset Recovery to do receiverships in foreclosure actions.
A receiver deals with the same issues of how to preserve value but is constrained by the terms of a judge's order, he said.
For example, Cunningham said, a renter in a commercial building might ask him for a rent reduction because the market has softened.
But he typically will only reduce rent for the duration of the receivership to avoid obligating whoever ends up buying the property.
The overloaded foreclosure docket in Lee County will guarantee a future for receivers for awhile, Cunningham said.
"With foreclosures taking anywhere from six months to two years, there's no question you need a receiver."