TBO.com - TBO is Tampa Bay Online

Bank Accuses Lutz Analyst Of Defamation

ADVERTISEMENT

By MICHAEL SASSO

The Tampa Tribune

Published: July 22, 2008

TAMPA - Last week, Lutz-based banking analyst Richard Bove was in hot demand by media outlets eager to know how safe the nation's banks really are.

Now Bove stands accused of defaming one of those banks, Fort Lauderdale-based BankAtlantic, which claims the analyst erred by saying it is in more financial trouble than it is. The bank has filed a defamation suit against Bove and his investment banking firm, Ladenburg Thalmann, in circuit court in Broward County.

On July 13, Bove issued a research report titled "Who is Next?" that tried to identify potential bank failures. The report came in the wake of the failure of California-based IndyMac Bank and the troubles among mortgage giants Fannie Mae and Freddie Mac.

Last week, Bove told the Tribune that he had meant the report to be reassuring. Overall, he found the banking system was much stronger than it was in the late 1980s and early 1990s during the savings and loan crisis. However, many people instead focused on the report's negative aspects, he said at the time.

Bove measured more than 100 large publicly traded banks according to their "nonperforming assets," such as loans delinquent by more than 90 days and foreclosed assets. He then compared the nonperforming assets to the banks' outstanding loans. If a bank's nonperforming assets came to more than 5 percent of its outstanding loans it "suggests danger," Bove wrote in his report.

By that measurement, only seven large banks out of more than 100 fall in this so-called danger zone. BankAtlantic Bancorp fell just outside the danger zone, with nonperforming assets that were 4.4 percent of outstanding loans, Bove's data showed.

In a statement Monday, BankAtlantic said its ratio of nonperforming loans to outstanding loans is "an enviable" 1.25 percent. The bank also is "well-capitalized," it noted.

Eugene Stearns, an attorney for BankAtlantic, said it appears that Bove erred by using the wrong numbers; instead of using capital levels from BankAtlantic, he appears to have taken the capital figures for a related company called BFC Financial Corp. BFC is a holding company that owns 23 percent of BankAtlantic stock.

"He used meaningless information," Stearns said of Bove's report. Although the report may have created the wrong impression, Stearns said it wasn't clear Monday whether it caused BankAtlantic harm.

Bove's assistant referred media calls to a Ladenburg Thalmann spokesman.

"We will defend ourselves against this meritless lawsuit," Jonathan Doorley said.

Bove has become a nationally known banking analyst. He frequently is quoted in financial newspapers and magazines, and has appeared on CNBC. He was an analyst with investment banking firm Punk, Ziegel and Co. before it was bought in March by Miami-based Ladenburg Thalmann.

According to financial reports, BankAtlantic lost $23.4 million in the quarter ended March 31. The company's shares closed at $1.89 on Monday, up 21 cents.

Reporter Michael Sasso can be reached at msasso@tampatrib.com. or (813) 259-7865.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT