Income Statement Review
On a per share basis, the net loss was $1.30 for the year ended December 31, 2010 compared to a net loss of $5.02 for the year ended December 31, 2009. The improvement in pretax results compared to the prior year is largely due to an improvement in the net interest margin of $3.5 million during the year and a reduction in the provision for loan losses of $5.4 million. This was partially offset by a decrease in noninterest income of $0.6 million and an increase in noninterest expenses of $1.8 million for the year.
For the fourth quarter of 2010 net interest income was $5.1 million as compared to $4.7 million in the fourth quarter a year ago. For the full year, the net interest income increased $3.5 million, or 19%, to $22.1 million for the year as compared to $18.6 million for 2009. The primary driver for the improvement in net interest income is the decrease in the overall cost of funds. The average rate on interest bearing liabilities decreased 101 basis points, or 35%, to 1.87% for the year ended December 31, 2010 from 2.88% for the year ended December 31, 2009. The Company expects to realize further improvement in the cost of funds resulting from rate decreases executed during the fourth quarter of 2010 and the first quarter of 2011.
The provision for loan losses for the year was $7.7 million and represents an improvement of $5.4 million, or 41%, compared to the same period last year. This decrease reflects the improvement in the credit quality of the loan portfolio.Noninterest income was $2.4 million for the year, a decrease of $592,000 compared to last year. This decrease is attributable to a gain recorded on the sale of investment securities in 2009; there were no such sales during 2010. Noninterest expenses were $31.9 million in 2010, compared to $30.1 million in 2009. Increased expenses were attributed to carrying costs associated with other real estate owned and higher employee expenses, some of which related to loan workout activities. The increased costs were partially offset by declines in professional and other outside services and regulatory assessments.
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