February 3, 2012
Relatively speaking, the bank did quite well in 2011 and we are optimistic about a better year in 2012.
- Tier 1 Capital is 6.74%, up from 6.05% on 12/31/2010. The Capital level was increased in the second quarter by $1.5 million by action taken by the Board.
- “Bad Bank” expenses totaled $3,567,262:
$1,238,035 Provision expense
$1,547,139 Write-downs due to impairment, REO sales
$521,901 REO expenses
$260,187 Problem loan expenses
- “Good Bank” earnings in 2011 of $2,201,000 allowed the bank to post a lesser loss of $1,365,000.
- Loss of $1,365,000 in 2011 compares to a Loss of $3,779,000 in 2010.
- Adverse Assets (Non-accrual Loans, Troubled Debt Restructurings and Real Estate Owned have declined from $35,944,000 as of 6/30/10 to $25,469,000 as of 6/30/11 (last Safety & Soundness exam) to a current level of $17,066,000.
- Adverse Assets are 120% of Tier 1 Capital and LLR, down from 194% as of 6/30/10 and 165% as of 6/30/11(last Safety & Soundness exam). NPAs are down to 6.77% of Total Assets. Texas Ratio is down to 81%; 138% as of 12/31/10.
- Criticized Loans (Classified Loans and Special Mention), a key article in our Consent Order, have declined from $ 31,215,000 as of 6/30/10 to $20,911,000 as of 6/30/11(last Safety & Soundness exam) to a current level of $14,884,000.
- Past dues are .40% of Loans.
- The LLR/Loans is 2.36%. The rolling 12 month c/o rate for the four quarters of 2011 (chronologically listed) was at 3.03%, 1.81%, 1.55% and 1.70%.
- The bank’s net interest margin in 2011 improved to 3.72%. Tactics in place will lead to further improvement.
- Core deposits are 88% of assets. There are no brokered deposits and Liquidity remains strong. Contingent Liquidity Funds are at a higher level than in 2010.
- Our newly adopted strategic plan has the bank at 8% Tier 1 Capital by June, 2013. This will be achieved with a smaller asset base and reduced expenses associated with asset quality problems.
Dennis Burnette
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