The decrease in net interest and dividend income in Q1-12 compared to Q1-11 reflected a planned reduction in the size of the Bank's balance sheet as well as fewer suitable lending opportunities during the period. In Q1-12, total average interest-earning assets decreased by $110 million from Q1-11, reflecting a $164 million decrease in average loans, partially offset by a $54 million net increase in average security and overnight investments. At the same time, average deposits and borrowed funds decreased by $101 million and $11 million, respectively, while average stockholders' equity increased by $12 million. The reduction in the balance sheet positively impacted the Bank's regulatory capital ratios. The slightly higher net interest margin was attributable to lower rates paid on deposit accounts and the run off of higher-cost CDs and borrowings, largely offset by payoffs of higher yielding loans and calls of security investments due to declining interest rates, coupled with the re-investment of a large portion of these cash inflows into new securities and loans at lower market interest rates. Overall, the average cost of funds decreased by 42 basis points to 2.54% in Q1-12, from 2.96% in Q1-11, while the average yield on earning assets decreased at a slower pace by 38 basis points to 4.50% in Q1-12, from 4.88% in Q1-11.
Total assets at March 31, 2012 decreased to $1.91 billion from $1.97 billion at December 31, 2011, primarily reflecting a decrease in security investments, partially offset by an increase in cash and short-term investments.
Cash and short-term investments increased to $90 million at March 31, 2012 from $30 million at December 31, 2011. This category will fluctuate based on various factors, including liquidity needs, loan demand, deposit flows, calls of securities, repayments of borrowed funds and alternative investment opportunities. The Bank expects to utilize a large portion of the balance to fund new loans over the next several quarters. At March 31, 2012, the Bank had $41 million of potential new real estate loans in its origination pipeline.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV