BankAtlantic protests too much

BankAtlantic (BBX) isn’t the next IndyMac, and it’s willing to sue to prove the point. The Fort Lauderdale, Fla., bank sued Ladenburg Thalmann and analyst Dick Bove Monday, alleging he defamed BankAtlantic by including it in a report last week discussing which banks might follow in the footsteps of IndyMac, the California lender that failed earlier this month. Ladenburg, which employs Bove thanks to its acquisition earlier this year of the Punk Ziegel brokerage, said it will “defend ourselves against this meritless lawsuit.”

BankAtlantic’s press release on the subject doesn’t make clear how Bove’s report supposedly hurt the bank. There’s no mention of any deposit flight or evidence of a run on its stock, which has been in steep decline for months as the Florida real estate market turns into a bloodbath for lenders. BankAtlantic does say Bove’s July 14 “Who Is Next?” report is mistaken when it suggests BankAtlantic isn’t well capitalized. The bank says that as of March 31, BankAtlantic “met all regulatory ‘well capitalized’ capital requirements.” CEO Alan Levan continues, “Based on these facts - indeed, undisputed facts - no one would ever conclude that BankAtlantic belongs to any list of ‘next.’”

Oddly, however, the market seems to have concluded otherwise. BankAtlantic shares were up 10% on the news of Levan’s legal offensive, but the stock has still lost 80% of its value over the past year amid fears about how its loans in the free-falling Florida real estate market will hold up. The bank’s provision for loan losses soared to $42.9 million in the first quarter ended March 31 from $7.5 million a year earlier, and the per-share continuing operations loss at the holding company rose more than tenfold. Bove’s report aside, it’s all too easy to understand how skeptical investors might wonder about BankAtlantic’s health.