Orlando Foreclosed Properties Bearing on Fifth Third Bank

Orlando repo homes and other foreclosures in Florida account for 29 percent of the $3.2 billion bad loans and assets of Ohio-based Fifth Third Bank as of September 30 despite the fact that total loans provided by Fifth Bank in Florida account for only 10 percent of the bank’s loan portfolio.

According to records from the Federal Deposit Insurance Corporation, Fifth Third Bank still has to remedy a total of $922 million of bad commercial and residential loans in Florida after already having charged off almost $900 million bad loans.

According to analyst Bert Ely, many banks have substantial loan problems in Florida, which has among the highest foreclosure rates in the country largely because of overbuilding and overlending.

Fifth Third Kevin Kabat explained that the bank’s entry into the real estate market in Florida was ill timed. For years, the bank did not invest in the state, and when it did, it got burned.

After taking over First National Bankshares in 2005 and R-G Crown Bank in 2007, Fifth Third became the tenth biggest lender in Florida, with $7.61 billion worth of deposits and 167 branches in the state. The two banks added $$10 billion worth of assets to Fifth Third.

Today, Florida is the fourth biggest market of Fifth Third, but Orlando foreclosed properties and other Gulf Coast foreclosures have been contributing significantly to the difficulties of Fifth Third in paying back the $3.4 billion in bailout money it received from the Troubled Asset Relief Program in December last year.

Over the past year-and-a-half, $892 million or 20-percent of the $4.3 billion charge-offs made by Fifth Third were for bad loans in Florida. Additionally, 55 percent of the $473 million bad loans set aside for sale at a loss in the last months of 2008 were in Florida.

Fifth Third has cut down its $9.7 billion worth of loans in Florida to $8.1 billion by September 30, but Florida still accounts for nearly 30 percent of the bank’s distressed assets.

Fifth Third is not the only big bank with substantial loan troubles in Florida. SunTrust, BB&T and Regions all are suffering from bad property loans across the state. Commercial and residential foreclosures contributed to the collapse of 15 Florida banks over the past year, including BankUnited, which was the country’s fifth biggest bank before its collapse.

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• Orlando Foreclosed Properties Rose in 3Q, Put the City 11th
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• Financial Industry Wants More of the 2008 Foreclosure Fund