“Credit quality improved significantly in 2012,” President Daigneault said. “Net loan chargeoffs were $8.3 million or 0.95% of average loans, down $2.5 million from net chargeoffs of $10.9 million or 1.23% of average loans in 2011. The improvement in credit quality enabled a $2.7 million lower provision for loan losses in 2012 compared to 2011, and the allowance for loan losses stood at 1.44% of total loans as of December 31, 2012, compared to 1.50% a year ago. Non-performing assets stood at 1.89% of total assets as of December 31, 2012, well below 2.32% of total assets at December 31, 2011 and just above the 1.87% low in the past three years. Past-due loans were 2.67% of total loans as of December 31, 2012, the lowest year-end total in the past five years and well below 3.07% of total loans as of December 31, 2011.”
“We posted good asset growth in 2012, with total assets increasing $42.5 million or 3.1%,” observed the Company’s Chief Financial Officer, F. Stephen Ward. “The loan portfolio increased $4.3 million or 0.5% – excellent results given the volume of mortgages which refinanced in 2012 to take advantage of record low interest rates. At the same time, the investment portfolio increased $25.1 million or 5.9% in 2012. On the funding side, low-cost deposits were up $59.7 million or 19.1% year to date. We continue to see an inflow of low-cost deposits due to the low interest rate environment and had a $25 million lift in low-cost deposits in the fourth quarter with the acquisition of the former Bank of America branch in Rockland.
“We remain very well capitalized,” Mr. Ward said, “with a leverage capital ratio for the Bank of 8.30%, and tier one and tier two risk-based capital ratios of 14.55% and 15.80% as of December 31, 2012. These are all well above the FDIC’s well-capitalized requirements. Our core operating ratios remain healthy, with a return on average assets of 0.90% in 2012 and a return on average tangible common equity of 10.42%. These compare to a return on average assets of 0.87% and 0.89%, and a return on average tangible common equity of 11.05% and 10.83% for 2011 and 2010, respectively. Our efficiency ratio remains a critical component in our overall performance and at 50.53% in 2012, is only slightly above the 49.75% and 48.15% posted for 2011 and 2010, respectively and much better than our UBPR peer group average of 66.06%.”