Tuesday, The South Financial Group, Inc. (TSFG) reported a net loss for the first quarter hurt by the credit crisis that lead to higher provision for credit losses higher and impairment charges. The stock reacted negatively on the financial results.
The Greenville, South Carolina-based company reported net loss for the first quarter of $201.3 million or $2.77 per share compared to a net income of $20.5 million or $0.27 per share in the year-ago quarter.
Operating loss for the quarter was $14.5 million, or $0.20 per share compared to operating earnings of $22.6 million, or $0.30 per share in the previous year quarter. The operating loss for the latest quarter excluded a non-cash goodwill impairment charge of $188.4 million pre-tax and other non-operating items.
On average, 15 analysts polled by First Call/Thomson Financial expected the company to earn $0.20 per share.
Net interest income for the quarter was $94.2 million, lower than $96.50 million reported in the year ago period. The decline in net interest income is due to slight compression in the net interest margin, lower earning assets, and one fewer day in the first quarter.
Net interest margin decreased 2 basis points to 3.07% from 3.09% for fourth quarter 2007, primarily from higher nonperforming loans and the associated reversal of previously accrued interest income.
Total non-interest income increased to $30.92 million from $26.97 million in the comparable period prior year. The noninterest for the latest quarter included a $1.9 million gain from the Visa IPO shares redeemed and a $396 thousand net gain on other security transactions.
Total revenue, sum of net interest income and noninterest income, for the current year quarter was $ 125.12million. Wall Street analysts' revenue consensus estimate was $123.13 million.
Provision for credit losses for the current year quarter amounted $73.3 million and he exceeded net loan charge-offs by $48.3 million. The higher provision largely reflected credit deterioration due to continued weakness in housing markets, particularly in Florida, and additional specific reserves for nonperforming loans and the overall land development portfolios in Florida.
At March 31, 2008, nonperforming assets increased to $232.0 million, or 2.26% of loans held for investment and foreclosed property, from $89.9 million, or 0.88%, at December 31, 2007.
TSFG closed Tuesday's regular trade at $10.87, down $0.55 or 4.82% on a volume of 2.53 million shares on the Nasdaq. Further, the stock lost $1.87 or 17.20% in the after hour trade.
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