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Paragon Bank has reported a profitable third quarter of 2014, with year-to-date pre-tax earnings 35% higher than the first three quarters of 2013. The continued success was a result of double-digit loan growth, increased non-interest income and resolved non-performing assets. Adding to this news is the recent introduction of the Paragon Small Business Capital Group. The expansion aligns with Paragon’s plan to increase net income through growth of the balance sheet and to increase non-interest income.
“Our continued financial progress is due to the exceptional efforts of our Paragon team members,” said Robert Shaw, Chief Executive Officer at Paragon Bank. “We are proud to report sustained profitability, thanks to the continual execution of many of our strategic goals. We look forward to reporting a strong finish to 2014.”
Further highlights from the third quarter include:
· Non-interest income increased 91% over the second quarter of 2014 and 51% over the third quarter of 2013. Core non-interest income increased 9% over both the second quarter of 2014 and third quarter of 2013. The increase in core non-interest income over the second quarter was primarily due to mortgage banking income and commissions earned by Paragon’s Wealth Solutions group.
· Net interest income for the first three quarters of 2014 increased $1.2 million, or 18%, over the same period of 2013 due to loan growth.
· Gross loans grew $7.2 million during the third quarter of 2014, which is a 13.8% increase on an annualized basis. Since December 31, 2013, loans have increased $20 million, or 10.3%.
· Capital ratios remain strong and sufficient to support Paragon’s growth plans. As of September 30, 2014, the tier 1 leverage ratio, the tier 1 risk-based capital ratio and the total risk-based capital ratios were 10.79%, 14.38% and 15.64% respectively.
· The ratio of nonperforming assets to total assets dropped below 2% to 1.88%. At the end of 2013, the ratio was 2.88%. During the first nine months of 2014, Paragon has resolved $2.7 million in nonperforming assets with an 88% recovery rate.
· Book value per share increased to $7.85 as of September 30, 2014, compared to $7.75 at the end of second quarter.
· Non-interest expense increased 16% over the third quarter of 2014. The largest part of this increase was the start-up expenses related to the Paragon Small Business Capital Group. It is anticipated that those expenses will increase further during the fourth quarter, as the group will be part of Paragon for the entire quarter.
“Though we will incur a decrease in profitability in the fourth quarter of 2014, due to expenses incurred during the startup of the Paragon Small Business Capital Group,” said Shaw, “it’s a strategic investment that will lead to long-term improvement in earnings, enhanced shareholder value and the overall financial strength of our organization.”