BankAtlantic Bancorp Inc. Reports Operating Results (10-Q)
Bankatlantic Bancorp Inc. has a market cap of $122.7 million; its shares were traded at around $2.49 with and P/S ratio of 0.3. BBX is in the portfolios of Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc.
Highlight of Business Operations: The decrease in BankAtlantics loss from continuing operations during the 2010 quarter compared to the same 2009 quarter primarily resulted from an $11.5 million decline in the provision for loan losses, $11.1 million of lower impairment charges and a reduction in operating expenses. The above improvements in BankAtlantics performance were partially offset by a $3.6 million decline in revenue from service charges on deposits and a $2.8 million decrease in net interest income. The decline in the provision for loan losses for the 2010 quarter compared to the 2009 quarter resulted from a reduction in the allowance for loan losses during the 2010 quarter compared to an increase in the allowance during the 2009 quarter. The reduction in the allowance for loan losses during the 2010 quarter was primarily due to the disposition of certain non-performing loans, declines in loan balances, and a stabilizing of our historical loss experience. The allowance for loan losses during the 2009 quarter reflected deteriorating economic conditions and adverse delinquency trends. During the three months ended March 31, 2009, BankAtlantic recognized a $9.1 million goodwill impairment charge and $1.9 million of termination costs associated with a reduction in the workforce. BankAtlantic did not recognize a goodwill impairment charge or incur termination costs during the 2010 quarter. BankAtlantics non-interest expenses excluding goodwill impairment and termination costs declined by $7.8 million during the 2010 quarter compared to the same 2009 quarter. This decline in expenses was primarily due to the 2009 workforce reductions, the on-going consolidation of certain back-office facilities, renegotiation of vendor contracts and general expense management efforts. The decline in service charges on deposits during the 2010 quarter compared to the 2009 quarter reflects a decline in the total number of accounts which incurred overdraft fees and a decrease in the frequency of overdrafts per deposit account. We believe that the decline in the number of accounts incurring overdraft fees is the result of both our focus on targeting customers who maintain deposit accounts with higher balances and the result of a change in customer behavior in response to the current public focus on bank overdraft fees. The decline in BankAtlantics net interest income primarily resulted from lower earning asset
The decrease in the Parent Companys loss for the 2010 quarter compared to the same 2009 quarter resulted from a $0.5 million decline in net interest expenses and a $2.0 million improvement in the provision for loan losses. The lower net interest expense reflects a significant decline in the three-month LIBOR interest rate from March 2009 to March 2010, as the majority of the Parent Companys debentures are indexed to the three-month LIBOR interest rate. The provision for loan losses during the 2010 quarter reflected a recovery of $1.3 million as the Parent Company sold a builder land loan and recognized a recovery of $1.8 million from the reversal of a specific valuation allowance.
During the three months ended March 31, 2010, BankAtlantic recognized $13.5 million of charge-offs related to two builder land bank loans that were sold to unrelated third parties. The specific valuation allowances on these loans as of December 31, 2009 were $13.2 million. Additionally, during the first quarter of 2010 BankAtlantic recognized a $3.4 million charge-off on a $20 million residential land acquisition and development loan upon the sale of our participation interest at a discount to the lead lender. The remaining commercial loan charge-offs during the 2010 quarter primarily related to residential land acquisition and development loans where updated valuations reflected lower collateral values. . The unemployment rates nationally and in Florida have reached 9.7% and 12.3%, respectively, real estate values in Florida are forecast to decline further and national and local economic measures remain weak. As a consequence, there is no assurance that the credit quality of our loan portfolio will improve in subsequent periods and if general economic conditions do not improve in Florida and nationwide, the credit quality of our loan portfolio will continue to deteriorate and additional provisions for loan losses will be required.
The decline in the provision for loan losses for the three months ended March 31, 2010 compared to the same 2009 period reflect lower loan portfolio balances and stabilizing delinquency trends during 2010 compared to negative trends during 2009. Included in the $21.3 million commercial real estate loan charge-offs were $16.9 million of charge-offs associated with these loan sales.
The increase in non-accrual loans at March 31, 2010 compared to December 31, 2009 reflects higher residential non-accrual loans. The increase in residential non-accrual loans was primarily the result of a prolonged foreclosure process. Residential loan delinquencies have remained stable for the last twelve months; however, the foreclosure processes vary by state and can currently take more than 15 months to complete. We believe that the time to complete foreclosures may improve in subsequent periods which may result in lower non-accrual residential loan balances and higher residential real estate owned. Non-accrual commercial loans increased slightly from December 2009. During the three months ended March 31, 2010, BankAtlantic sold two non-accrual loans with outstanding aggregate balances of $18.8 million as of December 31, 2009, transferred one $3.6 million loan to real estate owned, placed $29.3 million of loans on non-accrual, charged-off $21.3 million of loans and moved one $6.5 million loan to accruing. Non-accrual commercial loans have overall trended downward since the first quarter of 2009 as the balance of our commercial residential loans has significantly declined. Approximately 45% of the commercial
Read the The complete Report