Beach First National Bancshares Inc (BFNB) filed Quarterly Report for the period ended 2009-09-30.
Beach First National Bancshares, Inc. is the parent of Beach First National Bank. Beach First provides a full range of community banking services to individuals and small to medium size businesses. Beach First National Bancshares Inc has a market cap of $4.2 million; its shares were traded at around $0.871 with a P/E ratio of 1.7 and P/S ratio of 0.1. Beach First National Bancshares Inc had an annual average earning growth of 32.8% over the past 5 years.
Highlight of Business Operations:
The Company experienced a net loss for the nine months of $24.02 million and a net loss of $14.20 million for the three months ended September 30, 2009. Included in the net loss was the establishment of a deferred tax asset valuation allowance of $8.25 million that relates to the ability of the Company to use its deferred tax assets (Note 4. Income Taxes). On November 6, 2009, there was a change in federal tax legislation that will allow the Company to reduce this valuation allowance as of September 30, 2009 by $2.21 million (Note 8. Subsequent Event). This increase in income and capital will be reflected in the fourth quarter, 2009.
Our net loss was $24,016,889 or $4.96 diluted net loss per common share, for the nine months ended September 30, 2009, as compared to net income of $1,421,635 or $0.29 diluted net income per common share, for the same period in 2008. Our net loss was $3,708,116 or $0.77 diluted net loss per common share for the year ended December 31, 2008. The decrease in net income reflects the effect of the challenging financial environment that is facing all banks as well as a valuation allowance for income taxes. The net interest margin decreased to 2.15% at September 30, 2009 compared to 3.21% at September 30, 2008, due in part to rate reductions in the prime lending rate, an increase in non-accrual loans, and an increase in short term investments to improve liquidity. We expect continued pressure on the net interest margin for the remainder of 2009. The return on average assets for the nine month period ended September 30, 2009 was (4.63%) as compared to 0.29% for the same period in 2008 and was (0.56)% for the year ended December 31, 2008. The return on average equity was (72.48)% for the nine month period ended September 30, 2009 versus 3.56% for the same period in 2008 and was (6.94)% for the year ended December 31, 2008.
The provision for loan losses increased to $23,700,000 for the nine months ended September 30, 2009 compared to $2,291,000 for the nine months ended September 30, 2008. For the three months ended September 30, 2009, the provision for loan losses increased to $8,800,000 from $977,000 during the same period in 2008. Over the past three years, real estate values have fallen and the rate of default on mortgage loans has risen. There has been a resulting disruption in secondary markets for mortgages, especially in non-conforming loan products. The Federal Reserve Bank has reduced short-term rates to stimulate the economy. The Company has been affected by these events in areas such as mortgage banking, land acquisition, development and construction lending, and consumer lending. The Company has seen an increase in delinquencies and non-performing loans during 2007, 2008, and throughout 2009. The Company continues to monitor its portfolio of real estate loans closely. During the second quarter of 2009, an independent credit review group analyzed approximately 50% of the loans in our portfolio. The credit group’s review focused on the higher risk loans components of our portfolio including loans that were past due in terms of interest, development and construction loans, and certain industry segments. The reduction in short-term rates has adversely impacted the Company’s net interest margin. In the current economic, market and credit environment, there can be no assurance that the Company’s portfolio will continue to perform at current levels.
The Company evaluated the expected realization of its deferred income tax asset that totaled $11.3 million, primarily comprised of future tax benefits associated with the allowance for loan losses and operating loss carryforwards. The company set up a valuation allowance of $8.2 million and a $3.1 million federal income tax receivable that will be obtained when the Company files its federal income tax return for 2009.
Our primary source of revenue is net interest income, which represents the difference between the income on interest-earning assets and expense on interest-bearing liabilities. During the first nine months of 2009, net interest income decreased 29.25% to $10,640,541 from $15,038,902 for the same period of 2008. For the three months ended September 30, 2009, net interest income decreased 25.22% to $3,735,909 from $4,995,938 during the same period in 2008.
The impact on net interest income from the continued growth of our loan portfolio and investments was offset by the increase in nonaccrual loans and the increase in short term investments which reduced our net interest margin. Average total loans increased from $546.5 million in the first nine months of 2008 to $564.0 million in the same period in 2009. Average total loans increased $14.0 million to $564.0 million for the period ended September 30, 2009 from $550.0 million for the year ended December 31, 2008, and $17.5 million from $546.5 million for the period ended September 30, 2008. In addition, average securities increased to $82.1 million in the first nine months of 2009 compared to $73.2 million for the first nine months of 2008, and increased $8.8 million from $73.3 million for the year ended December 31, 2008.
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