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10 Bank Stocks Trading Below Book Value

BankAtlantic Bancorp (BBX) of Fort Lauderdale, Fla. closed at $1.45 Thursday or 0.7 times book value. Shares were up 12% year-to-date.

TARP Status: The company is not participating.

Capital: BankAtlantic Bancorp is a thrift holding company, which doesn't report the same exact capital ratios as the bank holding companies previously mentioned. The company's main subsidiary, BankAtlantic, was well capitalized as of March 31, with a Tier 1 leverage ratio of 7.51% and a total risk-based capital ratio of 12.86%.

The holding company has priced a $25 million rights offering, giving shareholders of record as of June 14 the right to purchase common shares at a price of $1.50. The offering expires after the market close on July 20.

BankAtlantic Bancorp most recently increased its offer to redeem privately-held trust-preferred securities totaling $230 million, to 60 cents on the dollar from 20 cents, and extended the deadline to June 21. This was a major improvement for investors and trustees who were holding out since the original offer was made in January.

Before raising the offer, BankAtlantic was fighting one trustee, Bank of New York Mellon (BK), which refused to accept the original 20 cents on the dollar offer, even though more than two thirds of the shareholders of one of the trust-preferred tranches had voted to accept it. While BankAtlantic said the trust-preferred debenture required only a two-thirds vote, Bank of New York was requiring 100% shareholder approval.

Despite tripling the offer, if BankAtlantic succeeds in redeeming the entire $230 trust-preferred pool for $138 million, the company will be able to book a gain of $92 million. Not bad.

Earnings: The holding company reported a first-quarter net loss of $20.5 million, or 42 cents a share, following a total 2009 loss of $185.8 million, or $7.87 a share, with most of the losses coming from the commercial real estate lending portfolio.

Asset Quality: Nonperforming assets comprised 10.83% of total assets as of March 31, according to SNL, which is the highest nonperforming assets ratio among the ten holding companies being discussed here. The ratio of net charge-offs to average loans for the first quarter was 4.25% and loan loss reserves covered 3.04% of total loans as of March 31.

Prospects: While BankAtlantic has been able to make many moves to boost capital and survive the credit crisis as it works through its problem loans, it's not easy to see how investors can make money on the stock. Another confusing element for investors is the company's unusual structure, where another company called BFC Financial, which is thinly-traded and controlled by BankAtlantic CEO Alan Levan, controls 66% of the voting power among BankAtlantic's common shareholders, despite holding less than 36% of the common shares as of Dec. 31.

With the company losing so much money for investors over the past several years, investors considering the stock should be aware of the fact that senior management effectively reports to nobody.
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