Atlantic Coast Reports Smaller Loss as It Prepares to Be Sold

Atlantic Coast Financial (ACFC) in Jacksonville, Fla., trimmed its losses last quarter as it readies for possible challenges to its deal with Bond Street Holdings.

The $772 million-asset company lost $300,000 in the fourth quarter, or 12 cents a share. That was a $3.7 million improvement from the year-prior period mainly because of a reduction in bad loans.

Atlantic Coast's net interest income fell 17%, to $4.4 million, as its net interest margin narrowed to 2.37% from 2.80%. But its provision for loan losses decreased 67%, to $1.7 million, and its chargeoffs fell 27%, to $3.6 million.

Atlantic Coast's noninterest income rose 62%, to $3.4 million, on higher gains from investment and loan sales.

Overall, its nonperforming loans fell to $24.9 million at yearend, a 47% improvement from the previous year. But its capital ratios fell slightly. Its Tier 1 capital ratio was 5.13%, down from 5.83% at the end of 2011, and its total risk-based capital ratio dropped to 10.59% from 10.91%.

Last week, Atlantic Coast agreed to sell itself to Bond Street for $13 million, an approximately 49% premium. But 40% of the sale price would be set aside to cover potential shareholder lawsuits.

Former Sovereign Bank chief Jay Sidhu has hinted that he is prepared to oppose the deal. Sidhu resigned from Atlantic Coast's board last year and tried to oust three members of the bank's management in late February.