Business and Finance

Community Bank of Florida moderately increased its earnings in the second quarter, but restated its 2009 results to change what it thought had been a profitable year into a loss.

The Homestead-based bank filed its amended 2009 results on June 4 with the Federal Financial Institutions Examination Council. Instead of the $229,000 gain it originally reported in February, the bank lost $3.8 million last year. The main difference was the bank’s revision of its expense to reserve for future loan losses, which it increased to $11.6 million, more than double the $5.1 million expense it originally reported.

Sometimes, when banks review their problem loans, they determine drops in the appraised values of the collateral properties, which cause them to go back and take additional reserves.

Things went better in the second quarter for Community Bank of Florida. It earned $629,000, up from $570,000 in the first quarter. Its expense to reserve for future loan losses declined to $288,000 from $408,000 in the first quarter.

However, the bank’s net interest income fell to $4.8 million in the second quarter from $5.1 million in the first quarter.

The bank’s battle with a higher-than-average level of problem assets continued. As of June 30, Community Bank of Florida had $47.9 million in noncurrent loans, representing 11.75 percent of its total loans. As of March 31, it had $49.7 million in noncurrent loans, representing 11.59 percent.

The bank achieved that reduction by completing foreclosures on $6.4 million in additional properties during the second quarter, ending the quarter with $7.7 million in repossessed properties. It also charged off $4.6 million in bad loans during that time.

Its $9.9 million reserve for future loan losses covered 21 percent of its noncurrent loans as of June 30. That’s well below the coverage ratio of most banks and could leave Community Bank of Florida vulnerable to additional losses should it need to charge off more loans, especially given that nearly half of its problem loans are in the hard-hit sectors of construction and land holdings.

Community Bank of Florida was the 19th-largest bank chartered in South Florida as of March 31, with $592 million in assets. By midyear, its assets declined slightly, to $591 million. While its deposits increased to $489 million from $487 million, the bank’s loans dropped to $397 million from $421 million over that period.

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