First Priority Bank initially reported a net loss of $7.4 million for the quarter ending Dec. 31, but revised its report to reflect a net loss of nearly $19 million, according to regulatory filings.
The bank posted an additional net loss of $3 million for the first quarter of this year.
Freedom Bank's net loss grew from nearly $6 million at the end of December to $7.8 million at the end of March, according to its report to the FDIC.
Both banks are struggling to raise capital and working hand-in-hand with regulators to improve their financial conditions.
Freedom announced Friday its Tier One Capital ratio - a measure of its financial health that is monitored by regulators - was 5.63 percent. As a recently formed, or "de novo" bank, Freedom is required to have a Tier One Capital ratio of at least 8 percent.
David Zuern, Freedom's chief executive officer and vice chairman of its board, said the bank's weakening financial condition is due in part to its increasing reserves for future loan losses.
The past two quarters, Freedom has set aside a total of $14.7 million to offset potential future losses from outstanding loans.
"That (loan loss) provision reflects the continued deterioration of the real estate markets in the Bradenton area," Zuern said. "We, like many banks locally and nationally, are in a negative impact from the fallout of the decline of the housing market and the valuation. We believe the bank is sound. What tends to happen in a situation like this is the bank will work with the regulators to deal with the problem assets and sustain the bank in a strong position going forward."
First Priority's Tier One Capital ratio also is hovering in dangerous territory at 4.25 percent, according to its regulatory filing.
Joel Hyman, First Priority's chief financial officer, said established banks must have a Tier One Capital ratio of at least 4 percent to be considered adequately capitalized.
First Priority's non-performing loans soared from $4.6 million during the first quarter of 2007 to nearly $40 million this year.
However, Hyman pointed out that additions to non-performing loans fell by half - from $26.5 million to $12.5 million - between the fourth quarter and most recent quarter.
The revision to First Priority's initially reported losses for the fourth quarter was due to an additional $6 million being added to its loan loss reserves after a revised audit, as well as a $5.5 million tax-loss carry forward, said Frank Knautz, a First Priority spokesman.
Knautz said First Priority is working closely with regulators.
"We are working with the regulators diligently," Knautz said. "We talk to the regulators on a regular basis."
Officials at both banks were hesitant to put a timeframe on how long it might take to work through the fallout of the real estate boom that reached its crescendo around 2006 before home prices began to plummet and the mortgage crisis ensued.
"The bulk of our portfolio growth has been in that environment," Zuern of Freedom said. "Regardless of how well-managed we are to deal with the environment, since Bradenton has had such high appreciation it's more susceptible to the downturn in real estate. I would hope over the next few months there would be a noticeable improvement."
Hyman said First Priority is continuing to renegotiate many of its nonperforming loans.
"We're continuing to address these issues with borrowers," Hyman said. "It is a very aggressive action on our part. We meet with the borrowers regularly."
A third bank, Century Bank of Sarasota, also has experienced its share of problem loans.
The bank's nonperforming loans grew from just over $8 million at the beginning of 2007 to more than $42 million at the end of December, according to its regulatory filings. Its Tier One Capital ratio was 8.3 percent at the end of 2007.
