Paragon National Bank has reported that the third quarter of 2013 was the most profitable quarter in the bank’s nearly eight-year history and marked its eleventh consecutive quarter of profitability. This sustained success was a direct result of the bank’s improved asset quality, growth in the balance sheet, improved net margin and a reduction in expenses.
Adding to this news is Paragon’s announcement in August that the formal agreement between the bank and the Officer of the Comptroller of the Currency was terminated.
“We are pleased with our continued progress and attribute the third quarter’s record profits to several positive trends,” said Robert Shaw, Chief Executive Officer at Paragon National Bank. “Our team has made great strides in building our loan program, minimizing our criticized assets and reducing our expenses. We look forward to continuing this momentum as we close out the year and head into 2014.”
Additional highlights for the third quarter include:
• Net income for the third quarter was $381,000, which was 40% higher than the second quarter of 2013 and 8% higher than the third quarter of 2012.
• Net interest income increased by more than 11% over the previous quarter due to growth in the balance sheet and a higher net interest margin.
• Loans increased from $180.1 million to $192.3 million, which represents a 6.75% increase. Loan volumes can be attributed to the continued new business efforts of the Paragon team, as well as a reduction in loan payoffs that the bank has experienced over the last several quarters.
• The net interest margin increased to 3.59% and was positively impacted by improvement in the mix of earning assets and a reduction in the rate paid on deposits.
• Classified assets, which include loans Paragon has identified as having a weakness and foreclosed real estate owned by the bank, decreased by 10%. During the first nine months of the year, the bank has experienced a 30% total decrease in classified assets.
• So far this year, nonperforming assets have decreased by 45% and Paragon has resolved $7.9 million in nonperforming assets with a 93% recovery rate.
• Non-interest expenses decreased by $93,000 from the second quarter to the third quarter. The most significant expense reductions relate to the bank’s improved asset quality, including expenses for FDIC insurance, bank-owned real estate and professional fees.