Updated August 28 at 4:28pm

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banking

NewportFed sees asset quality, profit drop in 2011

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NEWPORT – Newport Bancorp Inc., parent of Newport Federal Savings Bank, reported net income of $1.5 million for 2011, a decline of 19.4 percent on the 2010 total, as total interest and non-interest revenue fell 4.2 percent to $23.7 million. Earnings per diluted share dipped to 44 cents from 2010’s 52 cents.

The bank noted in a statement that assets increased $4.2 million to $453.9 million on the year, driven by a $21.7 million, or 232 percent, increase in cash and cash equivalents, partially offset by declines in securities and net loans.

NewportFed noted that its loan portfolio registered declines of 31.9 percent in commercial loans, 18.9 percent in multi-family mortgages, 15.2 percent in home equity loans and lines of credit and 3.2 percent in commercial mortgages, which were partially offset by increases of 1.9 percent in residential mortgages and 1.4 percent in commercial loans.

Non-performing assets totaled $2.7 million, or 0.61 percent of total assets, as of Dec. 31, compared with $208,000 at the end of 2010. The increase was driven by residential mortgages and foreclosed real estate. At the same time, the net charge-offs for the year totaled $1.1 million, compared with $751,000 for 2010, while the loan-loss provision for the year increased to $1.1 million from $956,000.

The bank reported that the low interest rate environment drove down the cost of interest-bearing liabilities to 1.76 percent from 2.03 percent in 2010, although a decline in average balance of interest-bearing deposits of 0.9 percent kept NewportFed from reaping too much advantage from the cost decline. The company's interest rate margin declined 2 basis points to 3.49 percent on the year.

For the fourth quarter, NewportFed posted net income of $432,000, a decline of 45.1 percent compared with the 2010 fourth quarter, on revenue of $5.7 million, which represented a decline of 8 percent year over year. Earnings per diluted share were nearly halved to 13 cents from 24 cents in 2010.

newport bancorp, newport federal savings bank, newportfed, decline in earnings, net charge-off, loan loss provision, non-performing assets, interest rate margin

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