Atlantic Coast Financial Corporation (the "Company")(NASDAQ: ACFC), the holding company for Atlantic Coast Bank (the "Bank"), today reported financial results for the third quarter and nine months ended September 30, 2011.
For the third quarter of 2011, the Company reported a net loss of $1.4 million, down from a net loss of $1.5 million in the second quarter of 2011 and a net loss of $2.2 million in the year-earlier quarter. The net loss was equal to $0.55 per diluted share versus $0.61 per diluted share in the second quarter of 2011 and $0.83 per diluted share in the third quarter of 2010 (as adjusted for the completion of the Company's second-step conversion in February 2011). For the first nine months of 2011, the net loss totaled $6.3 million compared with a net loss in the year-earlier period of $9.0 million. On an adjusted basis, the net loss was equal to $2.52 per diluted share versus $3.49 per diluted share for the first nine months of 2010.
Notable highlights of the third quarter report included:
- The Bank remained well capitalized in the third quarter of 2011, with a Tier 1 (core) capital ratio of 6.22% and a Total risk-based capital ratio of 11.08% at September 30, 2011.
- Non-performing assets at September 30, 2011, increased to $51.3 million from $47.0 million on a linked-quarter basis at June 30, 2011, and compared with $30.2 million at September 30, 2010.
- Annualized net charge-offs to average loans increased slightly to 1.99% for the third quarter of 2011 from 1.95% for the second quarter of 2011; annualized net charge-offs were 1.54% in the year-earlier third quarter.
- The Company sold $85.0 million of mortgage-backed securities to lock-in net gains of approximately $2.5 million on securities susceptible to a high risk of prepayment following a steep decline in mortgage rates.
- Total assets were $792.4 million at September 30, 2011, compared with $892.6 million at September 30, 2010, as the Company has continued to manage its asset size within its overall capital management strategy.
The Bank's Tier 1 leverage ratio, Tier 1 risk-based capital ratio and Total risk-based capital ratio were 6.22%, 9.82%, and 11.08%, respectively, at September 30, 2011. As such, they continued to exceed the required minimums of 5%, 6%, and 10%, respectively, necessary to be deemed a well-capitalized institution. However, under an Individual Minimum Capital Requirement agreement ("IMCR") dated May 13, 2011, between the Bank and the Office of the Thrift Supervision, the minimum required Tier 1 leverage ratio for the Bank was 7% as of September 30, 2011. Consistent with the terms of the IMCR, the Bank expects to be notified by the Office of the Comptroller of the Currency (the "OCC"), the successor agency to the Office of Thrift Supervision, that it must submit a capital plan for their approval that defines the actions and timeline necessary to achieve the 7% capital ratio level.