Bank South Posts $36 Million Loss Reflecting Bad Real Estate Loans
ATLANTA -- Bank South Corp. reported a third-quarter loss of $36.8 million, up from a $20.2 million loss a year earlier.
The Atlanta-based company attributed the deficit to charges related to bad real estate loans. Losses for the nine months totaled $47.5 million. Bank South added $33.9 million to loss reserves in the third quarter, 71% more than in the second. Foreclosure costs were $20.3 million.
Under New Management
The news did not surprise analysts, who had expected Bank South's new management team to clean house. During the quarter, the $5 billion-asset company hired four top executives from C&S/Sovran Corp., Atlanta, including a new president and chief executive, Patrick L. Flinn.
"Whenever you have a management change, it almost always results in significant reserve-building," said Kathryn M. Bissette, a banking analyst with Sterne, Agee & Leach Inc. in Atlanta.
Bank South's reserve for bad loans now stands at $89.4 million and covers 66.1% of nonperforming loans, up from 61.7% at June 30.
Nonperforming assets of $235.7 million were down 5% from the second quarter and only $11.7 million higher than at the end of last year.
The Office of the Comptroller of the Currency completed a credit examination of Bank South in the third quarter. The company stated that the office "expressed no significant differences with the loan ratings or loan-loss reserve levels established by management."