Shares of BankAtlantic Bancorp Inc. fell sharply Wednesday after the Fort Lauderdale, Fla., company reported a larger-than-expected second-quarter loss and said it intends to raise $55 million in a rights offering.
With losses on loans to developers continuing to mount, the $6.5 billion-asset company announced late Tuesday that it lost $19.4 million, or 35 cents a share — 15 cents worse than the estimate of analysts polled by Thomson Reuters. For last year's second quarter BankAtlantic posted net income of $11.7 million, or 20 cents a share in last year's second quarter.
BankAtlantic's shares, which have lost much of their value in the last year, were down 17.6% in heavy trading late Wednesday, to $1.36
The company said that nonperforming assets rose 117% year over year, to $100 million, and that nonperformers now make up 2.05% of total loans, versus 0.945% a year earlier.
Its loss provision was $37.8 million, 669% more than a year earlier but a 12% decrease compared with the first quarter.
During a conference call Wednesday, BankAtlantic's chairman and chief executive, Alan B. Levan, said that despite the loss, he was "pleased" and "bordering on excited" about the company's performance.
Since the end of the first quarter, he said, "Our chargeoffs are down, our net interest income is up, our core deposits are up, and noninterest expenses are down."
Though BankAtlantic's chargeoffs were up more than 1,000% from a year earlier, they were down 51% compared with the first quarter. Net interest income was $49.9 million, down 2% year over year but up 4% compared with the first quarter. Core deposits rose 0.8% year over year and 1.3% compared with the first quarter.
Also late Tuesday, BankAtlantic said it would offer 50 million of its shares to shareholders at $1.10 apiece.
Mr. Levan said in the conference call that the company decided to go ahead with the rights offering because "the best time to raise capital is when you don't need it, when your trend lines are improving."
He also said during the conference call that he would recommend at its board meeting Tuesday that BankAtlantic do a reverse stock split, exchanging every five shares into one.
Mr. Levan said he was aware that "initially reverses are not particularly appreciated in the marketplace," but he said the company does not want its stock selling at $1 to $3. "It's a better perception if your stock is higher."
During the call one listener challenged Mr. Levan's decision to recommend a reverse split.
"If you do a reverse and it drifts back down, you put everyone behind a rock," said the listener, identified in a transcript of the call as Michael Solaka of CC Capital. "If you're a strong and solid financial company, eventually your numbers will improve and the stock will turn. It seems to me you're taking a pretty big risk to just magnify the stock price for that perception."
