Looking to trim overhead amid mounting credit-quality troubles, BankAtlantic Bancorp Inc. in Fort Lauderdale, Fla., is scaling back its expansion plans and said it is considering leaving the Orlando market entirely.
The $6.4 billion-asset company announced late Tuesday that it had lost $9.9 million in the fourth quarter, down from a profit of $1 million a year earlier. For the year it lost $22.2 million, compared with a profit of $15.4 million in 2006.
BankAtlantic chairman and chief executive officer Alan B. Levan attributed the fourth-quarter loss largely to higher levels of nonperforming loans, particularly in its commercial real estate portfolio. At Dec. 31, nonperformers totaled $178.6 million, or 3.87% of total loans, compared to just 0.10% of total loans a year earlier.
Mr. Levan said the company is working closely with borrowers — primarily residential developers — to get the loans repaid. However, he added, economic conditions in Florida are “challenging,” and “we do not anticipate the real estate housing market in Florida will improve in the near term.”
Analysts said the silver linings in the earnings report were that the loss was much lower than the third quarter’s $29.6 million and that nonperformers edged up only slightly. Nonperformers rose 8.4% from the third quarter after rising 626% in the third quarter.
Investors, too, appeared to be pleasantly surprised. BankAtlantic’s shares closed at $5.01 Wednesday, up 15.4%.
Still, Matt Olney, an analyst at Stephens Inc., said in a conference call that management’s comments on credit quality were “guarded.”
This could be because, after the company’s third-quarter earnings call, management had been far more forthcoming and the stock dropped about 40% in one day.
News that BankAtlantic is scaling back its costly branch expansion might also have given the stock a boost Wednesday, analysts said.
The company, which added 15 branches in 2007 and has opened 32 since the beginning of 2005, said it would slow the pace of expansion, and Jarett S. Levan, the CEO of the banking unit, said BankAtlantic has hired an investment banker to help it identify potential buyers for its four Orlando-area branches market, as well as for three building sites there where it had planned to open branches.
It entered the Orlando market about a year ago, and at June 30, it had a 0.04% deposit share there, according to Federal Deposit Insurance Corp. data.
“We will not have sufficient presence in the short term to justify being in this market,” Jarett Levan said in a press release.
Albert Savastano, an analyst at Fox-Pitt Kelton Cochran Caronia Waller, wrote in a Wednesday note that he was not surprised by the company’s possible exit from the Orlando market. He questioned, however, “how much of a premium, if any, the company will get.”
