MIAMI, FL--Troubled real estate loans have triggered nearly $3 billion in losses for South Florida-based banks in the last three years of the Great Recession, according to a new report from CondoVultures.com.
South Florida banks lost $1.8 billion in 2008, $802 million in 2009, and $368 million in 2010, according to the analysis based on data from the Federal Deposit Insurance Corp, which guarantees deposits up to $250,000 per account.
During the same three-year period, the number of banks based in the tricounty South Florida region of Miami-Dade, Broward, and Palm Beach counties has decreased by eight institutions to an overall total of 72.
"South Florida banks are dependent upon real estate lending for the majority of their loan portfolios," said Peter Zalewski, a principal with the Bal Harbour, Fla.-based real estate consultancy Condo Vultures® LLC.
"As residential property prices plummeted by more than 40 percent in the tricounty region since 2007, South Florida banks have struggled to absorb the losses associated with real estate loans. Several of the institutions have had to raise additional capital to meet FDIC-established ratios to avoid the fate of the eight South Florida institutions that have failed between 2008 and 2010."
Florida banks are reevaluating their strategies regarding distressed real estate loans going forward.
Real estate lending trends are scheduled to be discussed at the upcoming Condo Vultures® webinar entitled "Buying Mortgage Notes At Deep Discounts" scheduled from 6.30 pm to 8 pm Tuesday, March 1.
Peter Zalewski of Condo Vultures® can be reached at 800-750-0517 or by email at peter@condovultures.com
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