Atlantic Coast Financial Corp (fka ACFC)

[Enterprising Investor]

Atlantic Coast Financial Corporation Announces Fourth Quarter and Full Year 2013 Results (1/29/14)

Atlantic Coast Bank is Well Positioned to Move Forward in 2014

JACKSONVILLE, Fla.--(BUSINESS WIRE)--Atlantic Coast Financial Corporation (the “Company”) (NASDAQ: ACFC), the holding company for Atlantic Coast Bank (the “Bank”), today reported strong capital levels and superior asset quality at December 31, 2013. A non-performing asset sale reduced problem assets to pre-recession levels. A capital raise resulted in best-in-class capital ratios.

Commenting on the announcement, John K. Stephens, Jr., President and Chief Executive Officer, said, “We are very pleased with the position of the Bank at December 31, 2013. We recently raised more than $45 million in a public offering that was very well received by investors. During the fourth quarter, we also disposed of most of our non-performing assets. We anticipate completing the sale of two additional other real estate owned assets in the first quarter; with those dispositions, on which we do not expect to take additional losses, non-performing assets will represent less than 1% of total assets. Our capital ratios are now very strong, exceeding those of almost all community banks in our market area. These actions, coupled with recent additions to staff in new business development roles, have left us well positioned to move the Company forward, serve our customers, and create value for our stockholders.”

Significant developments in the fourth quarter included:
• On December 3, 2013, the Company completed an underwritten offering of its common stock. The Company raised $48.3 million in gross proceeds ($45.0 million in net proceeds) by issuing 12.9 million shares of its common stock, including the underwriter’s over-allotment option in full, at a price to the public of $3.75 per share. As a result of the capital raise, Tier 1 capital ratio was 9.73% of adjusted total assets and total risk-based capital ratio was 20.47% of risk-weighted assets.
• On December 27, 2013, the Company disposed of $13.2 million non-performing assets through a bulk sale transaction. As a result, the Company recognized a loss of $6.3 million, $2.4 million of which was charged off against reserves for non-performing loans.
• Non-performing assets decreased 74% to $8.6 million or 1.17% of total assets at December 31, 2013, from $33.0 million or 4.26% of total assets at December 31, 2012, and decreased 65% from $25.1 million or 3.51% of total assets at September 30, 2013.
• Total assets were $733.6 million at December 31, 2013, compared with $772.6 million at December 31, 2012, as the Company managed asset size prior to the successful completion of its capital raise on December 3, 2013.

For the fourth quarter of 2013, the Company reported a net loss of $6.9 million or $1.05 per diluted share compared with a net loss of $0.3 million or $0.12 per diluted share in the year-earlier quarter and a net loss of $0.9 million or $0.38 per diluted share in the third quarter of 2013. For the full year 2013, the net loss totaled $11.4 million or $3.23 per diluted share compared with a net loss for 2012 of $6.7 million or $2.67 per diluted share.

The Company’s results through December 31, 2013 included costs associated with the previously announced merger with Bond Street Holdings, Inc., which stockholders rejected at a special meeting in June 2013. Additionally, the Company’s results for the fourth quarter ended December 31, 2013 included a loss associated with a bulk sale of a significant portion of the Company’s non-performing assets and the expected sale of additional non-performing assets in the first quarter of 2014, as discussed below. In order to more clearly assess the fundamental operations of the Company, management believes it is appropriate to adjust the reported net losses for the fourth quarter and full year 2013 to exclude these merger-related costs, incremental provision and losses related to the sale of non-performing loans. On this basis, the adjusted net loss was $0.8 million or $0.12 per diluted share for the three months ended December 31, 2013, compared to $0.3 million or $0.12 per diluted share for the three months ended December 31, 2012, and $4.0 million or $1.13 per diluted share for the year ended December 31, 2013, compared to $6.7 million or $2.67 per diluted share for the year ended December 31, 2012. Adjusted net loss is a non-GAAP measurement; see page 5 for reconciliation of GAAP and non-GAAP measures.

James D. Hogan, Executive Vice President and Chief Financial Officer, commented, “With strong capital ratios and a clean balance sheet, we believe we are well positioned to return to profitability. In the first quarter of 2014, our long-term debt will begin to mature, which will help reduce our cost of funds. We also should generate significant savings in expenses from having a very low level of non-performing assets. As a result, we expect that the Bank will return to profitability in 2014.”

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http://www.businesswire.com/news/home/20140129006290/en/Atlantic-Coast-Financial-Corporation-Announces-Fourth-Quarter#.Uun9_h6YaUk