Royal Financial Reports Quarterly Loss on Higher Expenses
Royal Financial in Chicago reported a fiscal third-quarter loss of $421,000, compared to earnings of $41,000 a year earlier, as noninterest expense rose.
The $108 million-asset company said Friday that for the nine months that ended March 31 it lost $342,000, compared to $257,000 in net income for the same period a year earlier.
The company’s noninterest expense rose more than 16% from a year earlier, to $1.5 million, because of elevated costs tied to foreclosed assets, salaries and employee benefits, among other things.
Royal Financials net interest income fell less than 1% from a year earlier, to $930,000. The net interest margin compressed 56 basis points from a year earlier, to 4.07%, because of a decrease in the average yields of interest earning assets. Noninterest income nearly doubled from a year earlier, to $116,000, because of higher levels of secondary mortgage market lending.
BankAtlantic, Levan Must Face SEC's Fraud Claims, Judge Says
BankAtlantic Bancorp (BBX) and its chief executive officer lost a bid to dismiss a Securities and Exchange Commission lawsuit alleging they misled investors about the extent of the losses the bank was facing because of a troubled loan portfolio.
U.S. District Judge Robert Scola in Miami ruled Tuesday that the SEC can proceed with allegations of disclosure fraud and misrepresentations or omissions in earning statements and investor conference calls. He dismissed parts of two of seven counts in the lawsuit against the bank and Chief Executive Alan Levan, while giving the agency permission to amend its complaint.
"Viewed as a whole, these allegations go beyond severe recklessness and touch upon intent to deceive," the judge wrote in reference to one count that survived his review. "The court finds that the SEC's allegations sufficiently raise a plausible inference that Bancorp and Levan made misrepresentations and omissions of material fact by the alleged failure to reclassify and write down certain loans'' in the portfolio.
The SEC said in its January complaint that BankAtlantic and Levan made misleading statements in public filings and earnings calls to hide losses on the Fort Lauderdale, Fla.-based bank's commercial and residential land holdings and improperly recorded loans they were trying to sell from the portfolio in late 2007.
According to the agency, Levan knew that a large portion of the portfolio, which consisted mainly of loans on land intended for development into single-family housing and condominiums, was worsening in early 2007 as borrowers struggled to make payments. In the first two quarters of 2007, BankAtlantic made only general warnings about risks related to Florida's real estate market and failed to disclose the downward trend already occurring in its portfolio, the SEC said.
The bank acknowledged the problem in the third quarter of 2007 by announcing a large loss, which caused the bank's stock to plunge 37 percent, the SEC said.
''BankAtlantic and Levan used accounting gimmicks to conceal from investors the losses in a critical loan portfolio," SEC Enforcement Director Robert Khuzami said in a statement when the case was filed.
Eugene Stearns, an attorney for BankAtlantic and Levan, didn't immediately respond to e-mail and phone messages seeking comment on today's ruling after regular business hours.
During a hearing last month, Stearns argued that the suit should be dismissed because the bank disclosed in filings and on analyst conference calls that it was holding loans that would be affected by a real estate downturn.
"We have a securities claim brought against a meteorologist for saying it's going to rain on Saturday, when it rained on Saturday," Stearns said.
He pointed to disclosures in the bank's first and second quarter earnings statement in 2007 and to transcripts of the earnings conference calls during that period.
"What investors were told was, 'The market is terrible and we don't know where it's going to go,'" Stearns said.
An SEC spokesman didn't immediately respond to an e-mail seeking comment after regular business hours on today's ruling.
A victory in a 2010 jury trial by shareholders who made a similar complaint was later reversed by a federal judge in Miami.
BankAtlantic is in the process of being acquired by BB&T (BBT) of Winston-Salem, N.C., for about $301 million. The sale is expected to close later this quarter.
Newly initiated foreclosures by the Federal Housing Administration jumped 247% in April from a year earlier, while the overall number of foreclosure starts fell 3.1% in the same period.
A report released Thursday by Lender Processing Services showed that FHA foreclosure starts jumped to 63,129 in April, from 18,154 a year ago. FHA foreclosure starts rose 73% in April from 36,311 in March, LPS found.
Herb Blecher, a senior vice president for LPS Applied Analytics, attributed the increase to a near-doubling of defaults on loans originated in 2008 and 2009. FHA loan volumes tripled in 2008, which, "even with low default rates, can produce larger numbers of foreclosure starts," Blecher said in a press release.
An FHA spokesman did not respond to requests for comment.
Still, the agency appears to be the exception in advancing foreclosures.
Housing experts had predicted that banks would jumpstart the foreclosure process after completing a $25 billion settlement with federal and state regulators. But instead, the settlement appears to have dramatically slowed the foreclosure process, as mortgage servicers work with troubled borrowers to modify loans or complete short sales.
Overall mortgage delinquencies rose slight to 7.1% in April, while 4.1% of all loans are in the foreclosure process, unchanged from a year earlier, the report found.
May 16, 2012
WINSTON-SALEM, N.C., May 16, 2012 /PRNewswire/ -- BB&T Corporation (NYSE: BBT) today announced that Chief Financial Officer Daryl Bible will present at Deutsche Bank's 2012 Global Financial Services Investor Conference in New York City May 22 at 11:40 a.m. EDT.
A live webcast of Bible's presentation will be available at www.BBT.com/webcasts and will be archived for 30 days.
About BB&TBB&T Corporation (NYSE: BBT) is one of the largest financial services holding companies in the U.S. with $174.8 billion in assets and market capitalization of $21.9 billion, as of March 31, 2012. Based in Winston-Salem, N.C., the company operates approximately 1,800 financial centers in 12 states and Washington, D.C., and offers a full range of consumer and commercial banking, securities brokerage, asset management, mortgage and insurance products and services. A Fortune 500 company, BB&T is consistently recognized for outstanding client satisfaction by J.D. Power and Associates, the U.S. Small Business Administration, Greenwich Associates and others. More information about BB&T and its full line of products and services is available at www.BBT.com.
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