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Carrollton Feels Pinch On Margin

Carrollton Bancorp, the parent company of Carrollton Bank, reported net income for the first quarter of $601,000, compared to $868,000 for the first quarter of 2006, a 31% decrease.

The company said its earning performance in the first quarter is being impacted primarily by compression of the net interest margin, which management believes is a consistent issue facing banks across the country as well as increased expenses relating to the disposition of other real estate-owned and increased legal fees.

"As we continue to experience a stationary fed funds rate and hear uncertain news about the housing market, the yield on earning assets is expected to remain fairly flat or decrease slightly," said Robert A. Altieri, president and chief executive officer.

This forecast is based on the expectation that the fed funds rate will remain unchanged in 2007. "There will be increased competition for core deposits, which will likely cause an increase in our cost of funds. The seven basis point drop in the company's net interest margin is relatively small compared to industry averages. However, the company must take an aggressive position in reducing operating expenses to improve core earnings."

In 2001, Carrollton Bancorp committed itself to a strategic focus on commercial lending, and Carrollton Bancorp's balance sheet continues to reflect this focus. Total assets for the period ended March 31, compared to March 31, 2006 reflect a 1% decrease to $347.6 million in total assets. The decrease was the result of the company utilizing its cash position to reduce Federal Home Loan Bank advances by $15 million.

During the same period, loans increased 6%, or $15.8 million, with commercial loans increasing 6%, or $3.1 million. Total deposits increased 3%, or $7.2 million, to $278 million with the majority of the increase in certificates of deposit. During the same period, stockholders' equity increased 5%, or $1.6 million, to $35.3 million, or 10.15% of total assets. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com

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