In a letter to shareholders this month, First Chatham Bank interim CEO Kenneth Farrell said the bank continued to improve its profitability and reduce non-performing assets in 2016.
Pre-tax net income for 2016 produced a profit of $2.37 million, compared to a loss of $1.2 million in 2015. The improvement in 2016 was due mostly to a loan loss provision that was $2.1 million smaller than the year before coupled with a $1.8 million increase in SBA loan sales revenue, Farrell said.
The bankruptcy in 2015 of a local businessman – and bank customer – forced First Chatham to take a large charge-off and loan loss provision that year.
In 2016, First Chatham continued to grow its SBA product line, which contributed about $2 million to its bottom line and increased net revenue by nearly $700,000.
“(We) continue to focus on relationship banking within the communities we serve,” Farrell said, adding that the bank now has nearly 19,000 transactional accounts, which drive non-interest income.
The bank also made good progress in reducing non-performing loans and bank-owned properties in 2016. Net charge-offs were down 48 percent and, at the end of 2016, there were no loans past due more than 90 days.
First Chatham’s non-accruing loans decreased by $5.6 million, while accruing loans increased by the same amount, improving profitability, Farrell said. Deposits increased $15.6 million to $342.4 million, although $10 million of that was in temporary year-end deposits.
Capital ratios continue to improve and, at the end of 2016, the bank was “adequately capitalized.”
“The bank has made great progress in 2016 and will continue to be focused on increasing profitability, decreasing non-performing assets and improving capital ratios,” he said.
While it was a good year, Farrell said, “we are optimistic that 2017 will be even better.”