Atlantic Coast Financial's (ACFC) quarterly loss widened as its lending income fell and expenses rose.
The Jacksonville, Fla., company said Wednesday that it lost $2 million in the first quarter, compared with a $1.7 million loss a year earlier.
It also reported that the Federal Reserve Bank of Atlanta has approved its sale to Bond Street Holdings.
The deal now hinges on the approval of Atlantic Coast's shareholders, who are scheduled to vote June 11. Last month, the two companies eliminated a provision of the deal that would have held 40% of the sale price in escrow to defend against shareholder lawsuits. Jay Sidhu, a former chairman of BankAtlantic who has criticized the deal, has said that the offer remained "very inadequate" and vowed to vote against it.
Atlantic Coast said in its earnings release that Bond Street's offer represents "the best overall solution" to improve its capital position and will "result in a more competitive bank franchise in the marketplace."
The Office of the Comptroller of the Currency last year required it to hold Tier 1 capital of 9% and total risk-based capital of 13%. Those ratios were 5.03% and 9.81% on March 31.
The $748 million-asset Atlantic Coast said its net interest income fell 13% compared with the first quarter of 2012, to $4.3 million, because of lower loan yields and a reduction in warehouse lending. Its net interest margin contracted by 23 basis points, to 2.42%.
Noninterest income fell 20%, to $1.7 million, as gains on mortgage-loan sales decreased, while noninterest expense rose 28%, to $6.9 million, thanks partly to a $500,000 penalty for the prepayment of $25 million of Federal Home Loan Bank advances, the company said.
Atlantic Coast's asset quality improved compared with the prior-year quarter. Its provision for loan losses fell to $1.2 million, from $3.5 million, and its net chargeoffs were $1.7 million, down from $5.5 million. Nonperforming assets stood at $29.3 million, a 36% reduction.