Taylor Capital posts loss
Shares of Taylor Capital Group Inc. sank 5 percent Wednesday on the heels of news the company swung to a loss in the fourth quarter.
Rosemont-based Taylor Capital, parent of 10 Chicago area Cole Taylor Bank locations, reported a loss of $29.3 million, or $2.78 per diluted share, for the quarter ended Dec. 31, compared with net income of $12.1 million, or $1.09 per share, in the year-earlier period.
Analysts had estimated earnings of 40 cents per share.
Fitch Ratings on Wednesday cut the company's ratings to junk status and revised the rating outlook from stable to negative.
Shares of Taylor Capital closed Wednesday at $18.50, down 98 cents per share.
The causes of the loss were twofold: Taylor Capital posted a $23.2 million write-off of goodwill during the fourth quarter from shares that traded at prices below book value; and the company increased its provision for loan losses to $23 million, compared to $900,000 in the fourth quarter a year ago.
Even though Taylor Capital does not make subprime mortgages, Chairman and CEO Bruce W. Taylor said the company still has exposure to the ailing housing market through loans to residential builders whose developments have been slowed or delayed.
The company's priority in 2008, he said, will be to mitigate the risk of future losses. Taylor Capital increased its provision for loan losses nearly six-fold in the fourth quarter, bringing the total provision to $31.9 million for the year ended Dec. 31.
On a conference call with analysts, Taylor was hesitant to categorize how much risk remains in the company's residential portfolio but he said the company is taking steps to reduce nonperforming loans in 2008.
"By far, the vast majority of our borrowers have the capacity and have the willingness to support their projects during this difficult time," he said.
One analyst said the losses were not surprising and were commensurate with the company's exposure to economic conditions affecting many financial institutions.
"A loss [in the fourth quarter] was not a terribly big surprise," said analyst Brian Martin of Howe Barnes Hoefer ArnettInc.
For the full year ended Dec. 31, Taylor Capital swung to a net loss of $9.6 million, or 89 cents per share,compared with net income of $46.2 million, or $4.15 per share, in 2006. Excluding the write-off of goodwill, net operating earnings were $13.7 million, or $1.25 per share.