Income Statement Review
Patriot’s second quarter net interest income was $4.4 million, compared to $5.0 million in the second quarter a year ago. Interest income decreased 12.0% compared to the second quarter a year ago as a result of the lower interest rate environment, excess liquidity due to the loan sale in the first quarter of 2012 and the overall loan mix. Interest expense decreased 9.3% compared to the second quarter a year ago due to the reduction in interest bearing deposits and the increase in non-interest bearing deposits. In the first six months of 2012, net interest income was $9.5 million compared to $10.0 million in the first six months of 2011, primarily as the result of the overall lower rate environment and the balance sheet mix.
The net interest margin in the second quarter of 2012 was 2.81%, compared to 3.16% in the second quarter a year ago, due to a high level of balance sheet liquidity resulting from the first quarter loan sale and overall lower rates. In the first six months of the year the net interest margin was 3.03% compared to 3.00% in the first six months of 2011.
Second quarter non-interest income was $455,000 compared to $710,000 for the second quarter of 2011. Second quarter 2011 non-interest income included $111,000 in interest received from federal tax refunds and $80,000 from the gain on sale of loans. In the first six months of the year, non-interest income was $1.2 million compared to $1.3 million in the same period a year ago.Non-interest expenses declined 45.8% to $6.2 million in the second quarter of 2012, compared to $11.4 million in the second quarter a year ago. Second quarter 2011 non-interest expenses included $3.0 million of restructuring charges associated with management’s turnaround plan. Excluding these charges, non-interest expense in the second quarter of 2011 would have been approximately $8.4 million, or 35% higher than the current quarter’s expense level. Year-to-date, non-interest expenses decreased 34.5% to $12.4 million compared to $19.0 million in the same period a year earlier.