Hamilton Bancorp's stock plunged 35% Thursday in heavy trading after the Miami company reported a $5.6 million loss, or 55 cents per share, for the third quarter.
Consensus estimates had the $1.7 billion-asset company earning as much as 72 cents per share, according to First Call/Thomson Financial. The stock price closed at $9.625.
Hamilton blamed its woes on increased loan-loss provisions, declines in fee income, and the legal costs of its dispute with regulators over its international lending practices. The company charged off $11.5 million in loans, 90% of which was related to two for which "the prospects for recovery were considered long-term," according to executive vice president Carlos Bernace.
The company also took several one-time charges, including a $3.3 million boost in legal reserves to cover two judgments against it and the lengthy appeal to the Office of Comptroller of the Currency concerning its dealings in Ecuador. That dispute was settled in late September.
Total noninterest income for the quarter was down 23.3% from last year, to $3.7 million. Chairman and chief executive officer Eduardo Masferrer attributed the drop to a decrease in trade financing fees as the company reduced its exposure in Latin America.
Mr. Masferrer said he is confident that earnings will return to "historic profit levels" as Hamilton refocuses its domestic lending. The 12-year-old company had never reported a loss until last year, when a disagreement with the OCC over its risk reserves forced it to restate earnings.
"We remain committed to improving credit quality, and we feel that the actions taken by the bank during the quarter build a strong foundation for future growth," Mr. Masferrer said.