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, 2012.
For the third quarter of 2012, the Company reported a net loss of $1.7 million or $0.66 per diluted share compared with a net loss of $1.4 million or $0.55 per diluted share in the year-earlier quarter and a net loss of $3.0 million or $1.20 per diluted share in the second quarter of 2012. For the first nine months of 2012, the net loss totaled $6.4 million or $2.55 per diluted share compared with a net loss in the year-earlier period of $6.3 million or $2.52 per diluted share.
Notable highlights of the third quarter included:
- Net loss for the 2012 third quarter decreased compared with the linked quarter primarily due to a lower provision for loan losses and lower non-interest expense, as well as higher gains on investment security sales, which helped offset a decrease in net interest income. The quarterly net loss increased compared with the year-earlier quarter primarily due to lower net interest income and a lesser amount of gains from investment security sales, partially offset by lower provision for loan losses and non-interest expense.
- Non-performing assets decreased 16.2% to $34.2 million, or 4.35% of total assets, at September 30, 2012, from $40.8 million on a linked-quarter basis at June 30, 2012, and 34.7% from $52.4 million at December 31, 2011.
- Annualized net charge-offs to average loans decreased to 2.43% for the third quarter of 2012 from 3.69% in the second quarter of 2012, but increased from 1.99% for the year-earlier third quarter.
- Total assets were $784.8 million at September 30, 2012, compared with $789.0 million and $792.4 million at December 31, 2011, and September 30, 2011, respectively, as the Company has continued to manage asset size consistent with its overall capital management strategy.
- In July 2012, the Company modified its agreement with one of the counterparties to its reverse repurchase agreement debt. The changes to the agreement significantly reduced the Company's exposure to the risk of loss by removing the counterparty's option to terminate the debt at market value in the event the Bank becomes less than adequately capitalized, or as occurred in August 2012, enters into a consent order with the Office of the Comptroller of the Currency (the "OCC").
Commenting on the third quarter results, G. Thomas Frankland, President and Chief Executive Officer, said, "Following on the progress we made in the first two quarters of the year, we are again pleased to report additional reductions in our non-performing asset levels – now over a third less than the amounts at the beginning of 2012. Our strategy to be opportunistic in dealing with problem loans has proven effective. Also, our warehouse lending had a strong quarter with the end-of-quarter balance increasing by 41% to $72 million from the second quarter-end amount, and our retail banking team performed well with their deposit retention and growth campaign. Like many banks, our net interest income is softening given the extended low interest rate environment. However, our tactics to reduce deposit costs and operating expenses have helped offset what is proving to be an ongoing issue for the industry. Still, many challenges remain ahead, including uncertainties about the economy in general, regulatory issues and the conditions of the real estate market. While much of this is beyond our control, we remain focused on activities within our control, such as working through problem loans, achieving better expense control, growing our core deposit base, and capitalizing on opportunities to generate increased revenues from our warehouse and small business lending platforms."