Peoples Financial Corporation, parent of The Peoples Bank, has finalized several transactions to its nonperforming assets during the fourth quarter, says chairman and CEO Chevis Swetman.
One transaction made during the fourth quarter included the bank signing a contract for the sale of property in its Other Real Estate portfolio. Based on the contract price of more than $1.2 million, a write down of $625,000 in the carrying value of this asset was recorded. This transaction reduced current quarter earnings by $413,000.
Based on new information relating to the fair value of collateral securing a single residential development loan that had a balance of at least $15.2 million through 3Q13, the bank recorded an additional provision for loan losses of $4.6 million. Meanwhile, People Financial, based in Biloxi, Miss., had recorded a provision for loan losses of $3 million during the second quarter of this year on this loan. Due to the latest actions, the bank’s fourth quarter earnings fell by approximately $3 million.
On a positive note, the bank completed the sale of a gaming loan which had a principal balance of nearly $10.8 million on the open market to unknown third party entities. This loan had been on nonaccrual since Sept. 30, 2009. As a result of this transaction, the bank recognized interest income of about $1.1 million and deferred loan fee income of $355,000. Overall, the bank increased current quarter earnings by $1 million.
“Our senior management team is confident that these steps, though painful, will finally put our most problematic loans in the rear view mirror,” Swetman says. “Thanks to our strong foundation, these moves will have minimal impact on our capital base.”
Overall, nonaccrual loans, which totaled in excess of $45 million through the end of September, decreased approximately $26 million as of Dec. 16.
Despite all these transactions, it is unlikely that the holding company will declare a dividend for 2013, Swetman said.