Atlantic Southern Financial Group (Nasdaq:ASFN) today reported a
net loss of $4.0 million, or $0.96 per diluted share, for the
second quarter of 2010 compared to net loss of $23.8 million, or
$5.65 per share, in the second quarter of 2009, which included a
$19.5 million non-cash charge for impairment of goodwill. The net
loss was primarily driven by adding $2.0 million to the allowance
for loan losses and paying approximately $1.4 million in FDIC
quarterly assessments.
Atlantic Southern's net loss for the first six months of 2010
was $5.7 million, or $1.35 per share compared to the net loss of
$23.0 million, or $5.47 per share, for the first six month of 2009
which included the non-recurring charge for goodwill
impairment.
The net interest income for the second quarter of 2010 was $3.8
million compared to $4.5 million for the same period a year
earlier, which represents a decrease of $700 thousand. The net
interest margin was 1.82 percent for the second quarter of 2010
compared to 1.94 percent for the second quarter of 2009. The net
interest income for the six months ended June 30, 2010 was $8.2
million compared to $9.9 million for the same period a year
earlier, which represents a decrease of $1.7 million. The net
interest margin was 1.95 percent for the six months ended June 30,
2010 compared to 2.19 percent for the same period a year earlier.
"Uncollected interest on non-accrual loans continued to impact the
net interest margin in the second quarter. Our cost of funds has
declined, and as credit quality improves over the next several
quarters we believe our net interest margin should rebound,"
Stevens said.
The Company's nonperforming assets increased approximately $13.1
million, or 9.53 percent, to approximately $150.1 million as of
June 30, 2010 as compared to $137.0 million as of December 31,
2009. Non-accrual loans decreased approximately $7.0 million from
December 31, 2009 to June 30, 2010, largely due to approximately
$25.1 million moving to other real estate owned and other assets,
$5.7 million in partial charge-offs on non-accrual loans and
approximately $4.6 million in pay downs. During the first six
months of 2010, there was approximately $28.4 million in loans
moved to non-accrual. All non-accrual loans are adequately
collateralized based on management's judgment and supported by
recent collateral appraisals. Other real estate owned
increased $20.7 million from December 31, 2009 to June 30,
2010. This increase is largely due to the addition of $24.3
million in foreclosed properties and $419 thousand in capitalized
improvements on several foreclosed properties being offset by the
sale of $3.6 million in foreclosed properties, resulting in a loss
of $51 thousand on these properties. The Company has written
down $350 thousand for several foreclosed properties based upon
updated appraisals. The Company continues to actively market
and continuously monitor all other real estate owned properties in
order to minimize losses. "Management is aggressively dealing
with deteriorating loans by provisioning for potential future loan
losses related to the real estate downturn. As the economy
stabilizes, we believe the loan loss provision expense should
moderate. We expect the remainder of 2010 to continue to be
challenging, but we remain committed to our strategy of asset
reduction, expense control and aggressively attacking problem
credits. We have recently reorganized our special assets division
to further increase its ability to monitor credit quality and work
with troubled borrowers," stated Stevens.
The total nonperforming assets increased to 16.46 percent of
total assets as of June 30, 2010 compared to 14.45 percent as of
December 31, 2009. Net charge-offs annualized for the second
quarter of 2010 were 2.25 percent of average loans compared to 1.16
percent for the same period a year earlier. Net charge-offs
annualized for the six months ended June 30, 2010 were 1.57 percent
compared to 0.71 percent for the same period a year
earlier. During the second quarter of 2010, the Company
charged off approximately $3.9 million primarily due to the
impairment of several real estate loans.
At June 30, 2010, the allowance for loan loss amounted to $19.3
million, or 2.91 percent of total loans outstanding compared to
$21.5 million, or 2.99 percent of total loans outstanding at
December 31, 2009. Provision for loan losses decreased
approximately $3.7 million for the second quarter of 2010 to $2.0
million compared to the same period in 2009. For the six
months ended June 30, 2010, provision for loan loss decreased $2.7
million to $3.3 million compared to the same period in
2009. While there has been an increase in nonperforming loans
and an overall decrease in loan activity for the three and six
months ended June 30, 2010 compared to the three and six months
ended June 30, 2009, the Company decreased its provision for loan
losses based on management's analysis of the allowance for loan
losses.
For the second quarter of 2010, noninterest income was $897
thousand compared to $2.1 million for the second quarter of
2009. Noninterest income for the six months ended June 30,
2010 was $1.8 million compared to $3.3 million for the same period
a year earlier. The decrease is primarily attributed to the
Company reporting a small gain of $43 thousand on the calls of
investment securities during the second quarter of 2010 compared to
a gain of $1.1 million on the sales of several mortgage-backed
securities during the second quarter of 2009. Also, the
Company's mortgage department experienced a decrease in mortgage
closing volume during the first six months of 2010 compared to the
same period in 2009.
Noninterest expense for the second quarter of 2010 was $6.7
million compared to $7.7 million for the second quarter of 2009,
excluding the goodwill impairment charge. Noninterest expense
for the six months ended June 30, 2010 was $12.3 million compared
to $13.0 million for the same period a year earlier, excluding the
goodwill impairment charge. The decrease was mostly due to the
Company absorbing a significant loss on sales of other real estate
properties during the second quarter of 2009 with one particular
property loss amounting to $1.3 million. For the first six
months of 2010 when compared to the same period in 2009, the
Company has experienced an increase of $965 thousand in other real
estate expenses and an increase of $1.2 million in quarterly FDIC
assessments with an offset of a decrease in salaries and employee
benefits of $865 thousand. At the end of the second quarter of
2010, the Company held a total of 92 foreclosed properties compared
to 37 properties at the end of the second quarter of
2009. Since the Bank entered into the Cease and Desist Order
with the FDIC in September 2009, the Bank has experienced higher
assessments due to the Bank's risk classification with the FDIC.
When comparing the first six months of 2010 to the first six months
of 2009, the decrease in salaries and employee benefits is
attributed to a four percent reduction in staff, a bank officer one
day per quarter furlough, and no accrual for bonuses and a
reduction in the accrual for the Company's salary continuation
plan.
At June 30, 2010, total gross loans were $663.9 million, down
$54.6 million or 7.60 percent, from December 31, 2009. Total
deposits at June 30, 2010 were $835.1 million, a decrease of $26.0
million, or 3.02 percent, from December 31, 2009. The Company
was able to increase its retail time deposits at June 30, 2010 by
$23.2 million from December 31, 2009 due to management's aggressive
efforts to increase core deposits obtained both locally and through
a national rate-listing service. Non-interest bearing and
interest bearing deposits decreased at June 30, 2010 by $19.1
million from December 31, 2009. Management continued to
significantly reduce its exposure to, and reliance on, wholesale
deposit funding by decreasing wholesale deposits at June 30, 2010
by $30.1 million from December 31, 2009.
Total shareholders' equity was $24.2 million at June 30,
2010. The Bank's total risk-based capital ratio at June 30,
2010 was 5.83 percent compared to 6.19 percent at December 31,
2009. The Company and the Bank were considered "significantly
undercapitalized" by bank regulatory authorities as of June 30,
2010.
About Atlantic Southern Financial Group, Inc. and Atlantic
Southern Bank
With headquarters in Macon, Georgia, Atlantic Southern Financial
Group, Inc. operates nine banking locations in the middle Georgia
markets of Macon and Warner Robins, five locations in the coastal
markets of Savannah, Darien, Brunswick, one location in the south
Georgia market of Valdosta, Georgia and one location in the
northeast Florida market of Jacksonville, Florida. The Company
specializes in commercial real estate and small business
lending.
Safe Harbor
This news release contains forward-looking statements, as
defined by Federal Securities Laws, including statements about
financial outlook and business environment. These statements
are provided to assist in the understanding of a future financial
performance and such performance involves risks and uncertainties
that may cause actual results to differ materially from those in
such statements. Any such statements are based on current
expectations and involve a number of risks and
uncertainties. For a discussion of factors that may cause such
forward-looking statements to differ materially from actual
results, please refer to the section entitled "Forward-Looking
Statements" in Atlantic Southern Financial Group, Inc.'s annual
report filed on Form 10-K with the Securities and Exchange
Commission.
Atlantic Southern
Financial Group, Inc. |
Financial
Highlights |
(unaudited) |
(In Thousands, Except
Per Share Data) |
|
|
|
|
|
|
Three Months
Ended |
Six Months
Ended |
|
June 30, 2010 |
June 30, 2009 |
June 30, 2010 |
June 30, 2009 |
|
|
|
|
|
EARNINGS (LOSS)
SUMMARY |
|
|
|
|
Interest and dividend
income |
$ 8,949 |
$ 11,702 |
$ 18,730 |
$ 24,249 |
Interest expense |
5,167 |
7,208 |
10,538 |
14,358 |
Net interest income |
3,782 |
4,494 |
8,192 |
9,891 |
Provision for loan
losses |
2,034 |
5,718 |
3,336 |
6,068 |
Noninterest income |
897 |
2,081 |
1,766 |
3,343 |
Operating expenses (1) |
6,683 |
7,701 |
12,293 |
13,014 |
Operating loss before
taxes |
(4,038) |
(6,844) |
(5,671) |
(5,848) |
Income tax benefit |
-- |
2,596 |
-- |
2,342 |
Net operating loss (1) |
(4,038) |
(4,248) |
(5,671) |
(3,506) |
Noncash goodwill impairment
charge |
-- |
19,534 |
-- |
19,534 |
Net loss |
$ (4,038) |
$ (23,782) |
$ (5,671) |
$ (23,040) |
|
|
|
|
|
|
Three Months
Ended |
Six Months
Ended |
|
June 30, 2010 |
June 30, 2009 |
June 30, 2010 |
June 30, 2009 |
PERFORMANCE
MEASURES |
|
|
|
|
Per Share Data: |
|
|
|
|
Net loss |
$ (0.96) |
$ (5.65) |
$ (1.35) |
$ (5.47) |
Diluted net loss |
(0.96) |
(5.65) |
(1.35) |
(5.47) |
Book value |
5.65 |
15.42 |
5.65 |
15.42 |
Tangible book value |
5.09 |
14.77 |
5.09 |
14.77 |
|
|
|
|
|
Key Performance Ratios |
|
|
|
|
Return on average assets
(2) |
-1.73% |
-8.75% |
-1.22% |
-4.41% |
Return on average equity
(2) |
-60.98% |
-106.61% |
-41.04% |
-51.83% |
Net interest margin, tax equivalent
(2) |
1.82% |
1.94% |
1.95% |
2.19% |
|
|
|
|
|
(1) Excludes the
non-recurring goodwill impairment charge of $19.5 million in the
second quarter of 2009. |
(2) Annualized |
|
|
|
|
|
|
June 30,
2010 |
December 31,
2009 |
ASSET
QUALITY |
|
|
Non-performing assets/loans &
OREO |
21.27% |
18.52% |
Allowance for loan losses/total
loans |
2.91% |
2.99% |
Allowance for loan
losses/non-performing loans |
17.84% |
18.53% |
Net charge-offs to average loans
(3) |
1.59% |
4.27% |
|
|
|
AT PERIOD END |
|
|
Loans |
$ 663,948 |
$ 718,559 |
Earning Assets |
830,304 |
892,065 |
Total Assets |
911,587 |
948,380 |
Deposits |
835,108 |
861,157 |
Shareholders' Equity |
24,167 |
29,639 |
|
|
|
AVERAGE BALANCES |
|
|
Loans |
$ 697,908 |
$ 779,790 |
Earning Assets |
855,017 |
967,271 |
Total Assets |
939,008 |
1,070,628 |
Deposits |
855,962 |
927,405 |
Shareholders' Equity |
27,865 |
74,504 |
|
|
|
(3) June 30, 2010 is annualized. |
|
|
|
|
|
CONTACT: Atlantic Southern Financial Group, Inc.
Mark Stevens
478-330-5800
mstevens@atlanticsouthernbank.com
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