Orion one of Florida Strongest Banks : Warned by the Feds

Naples/Key West Florida USA by By By Anne-Margaret Swary

Orion Bancorp, which maintains five branches in the Florida Keys, has been told by state and federal regulators to take immediate corrective actions in order to maintain the financial soundness of the institution, including reforming its lending practices and strengthening oversight by the board of directors. The agreement, signed on Aug. 25, is one of 15 such enforcement actions the Federal Reserve has taken against a U.S. bank this year. The Naples-based bank originally was founded in Marathon, and still has five branches in the Florida Keys.

According to the 15-page agreement, the bank has 10 days to eliminate from its books all assets or portions of assets classified as a “loss.” Within 60 days, the bank must submit a plan to improve the management of the bank’s liquidity position and funds management practices, as well as a new program for real estate appraisals and revised loan practices.

The agreement also advises immediate steps to mitigate the risk to the bank’s commercial real estate loans, in light of current market conditions.

Williams said Orion also holds a $17 million loan for the Harbor House luxury townhouse project in Key West on Caroline Street, developed by KeysCaribbean. That project has been stalled as a result of the current real estate market and the death in October of the company’s chief financial officer, Derek Parker.

“It’s a problem loan,” Williams said. “That doesn’t mean it’s a loss.”

Phil Hogue, CEO of Key West Bank, said many banks are facing similar issues. He said the situation with Orion Bank is serious but doesn’t necessarily signal the bank won’t survive the market downturn.

“Because real estate values have dropped 30 percent or more, all banks are feeling pressure,” Hogue said. “However that doesn’t mean that any of them are going to fail.”

Abridged for E.A. =>>

Orion bank was founded in Marathon in 1977 as First National Bank of Marathon. In 1982, the name was changed to First National Bank of the Florida Keys.Over the past 30 years, the bank’s assets have grown from $25 million to nearly $3 billion this year.

As such it is one of Florida stellar success stories, or was until it got caught up in the frenzy, but we all knew once the music stops there wasn't going to be enough chairs for everyone, didn't we?