Another small fry takes a big hit from real estate lending
The stock closed down $3.92, 22.2%, due to the late afternoon announcement.
You may recall another lender active in FL, Coast Financial Holdings, has gotten into real trouble thanks to problems with construction lending. Specifically, according to this St. Petersburg Times story ...
"Coast Financial Holdings is finishing a turbulent three weeks in which it transformed from a fast-expanding community bank to a candidate for acquisition under scrutiny of state and federal regulators.
"The source of recent troubles was 482 loans for customers of St. Petersburg builder Construction Compliance Inc. CCI ran out of money last fall while building investment homes in the city of North Port in Sarasota County.
"CCI tapped about $70-million in construction loans from Coast but left customers with unpaid debts on vacant lots and unfinished houses. To the detriment of Coast, many customers vow to walk away from the deals, accusing Coast of failing to monitor and correct CCI's slide into insolvency."
These are just a few isolated incidents, of course. But they do show that loan losses related to the housing bubble/bust won't just be confined to losses on individual, subprime mortgages. Condo conversion loans ... lot purchase loans ... construction loans -- several of them could cause problems in the months and quarters ahead.