Aggressively Dealing with Credit Issues
- The allowance for loan losses represented 1.96 percent of total loans at Sept. 30, 2012, compared to 2.02 percent at June 30, 2012, and 2.31 percent at Sept. 30, 2011.
- Net charge-offs were $1.9 million for the quarter ended Sept. 30, 2012, compared to $5.7 million for the quarter ended Sept. 30, 2011, and $2.4 million for the second quarter of 2012. Annualized net charge-offs for the three and nine months ended Sept. 30, 2012, were 0.22 percent and 0.31 percent, respectively.
- Provision for loan losses expense decreased from $3.6 million for the third quarter of 2011 to $1.4 million for the third quarter of 2012. The results reflect substantial improvement in the credit quality of the loan portfolio compared to the same period in 2011 and a meaningful reduction in net charge-offs.
- Nonperforming assets declined by $7.9 million from June 30, 2012, a linked-quarter reduction of 11.9 percent and the ninth consecutive quarterly reduction.
- Nonperforming assets were 1.65 percent of total loans plus other real estate at Sept. 30, 2012, compared to 1.91 percent at June 30, 2012, and 3.05 percent at Sept. 30, 2011.
- Nonperforming loans declined by $4.3 million during the third quarter of 2012, a linked-quarter reduction of 10.4 percent and the 10 th consecutive quarterly reduction. Nonperforming loans are down 33.1 percent from Sept. 30, 2011. Nonperforming loan inflows were $4.6 million during the third quarter of 2012, a linked-quarter decrease of 61.7 percent. Nonperforming loan inflows were also down 73.9 percent from the third quarter a year ago.
- The ratio of the allowance for loan losses to nonperforming loans increased to 188.9 percent at Sept. 30, 2012, from 170.5 percent at June 30, 2012, and 137.0 percent at Sept. 30, 2011.
- Other real estate declined by 14.3 percent, or $3.6 million, during the third quarter of 2012, compared to the second quarter of 2012, inclusive of $1.4 million in property foreclosures.
- Troubled debt restructurings decreased by $2.5 million between June 30, 2012, and Sept. 30, 2012.
- Potential problem loans, which are classified loans that continue to accrue interest, declined by $9.9 million from June 30, 2012, a linked-quarter reduction of 8.9 percent. Potential problem loans are down from $131.0 million at Sept. 30, 2011, to $100.7 million at Sept. 30, 2012, a decrease of 23.2 percent. Potential problem loans are down by 68.3 percent from their peak in June 2010.
“One of our primary priorities for the last three years has been to rehabilitate the balance sheet and return to normalized credit metrics,” Turner said. “With an annualized net charge-off rate of 0.22 percent, minimal problem loan inflows and a nonperforming assets to total loans plus OREO ratio of 1.65 percent, we continued our forward progress toward the completion of that rehabilitation during the third quarter.”