First Chatham Bank grows value in 2018

First Chatham Bank, through reductions in non-performing assets and the termination of the regulatory order that the Bank had been under since 2010, increased shareholder value in 2018, the bank reported recently in a letter to shareholders.

The bank reported pre-tax net income in 2018 was $4 million compared to $2.4 million in 2017. The after-tax net income for 2018 was $3,043,000, which was just shy of the bank’s all-time best results back in 2007, which was $3,086,000.

During 2018 FCB focused on improving branch performance, reducing non-performing assets and growing the Small Business Administration product line.

According to the report, the SBA fee income was lower in 2018 while the growth in SBA loans increased loan interest income by $600,000. The increase in interest rates by the Fed improved the bank’s interest margin and profitability.

“We continue to focus on relationship banking within the communities we serve and the Bank now has more than 19,500 transaction accounts, which drives non-interest income,” the report states.

The bank made additional progress in reducing non-performing loans and bank owned properties, shrinking the costs that go along with them. The adversely classified assets were reduced by 25 percent or $6.2 million down to $18.5 million. Net charge-offs totaled $87,000, down dramatically from the $1.4 million in 2017.

During 2018 the total assets of the bank remained flat at about $363 million and the bank reduced Other Real Estate Owned (OREO) by $6.8 million and was refunded $4 million that the SBA was holding in an escrow account due to the regulatory order. That action freed up $10.8 million in non-earning assets to convert into earning assets.

Total loans decreased $3.6 million to $242.7 million due to the sale of the guaranteed portion of several SBA loans. Deposits remained relatively flat, ending the year at $328 million, but the mix improved with checking account balances increasing by $6.4 million and the more expensive retail CDs and savings/money market accounts decreasing $9.9 million.