Newport Bancorp Inc. Reports Operating Results (10-K)
Newport Bancorp Inc. has a market cap of $49.3 million; its shares were traded at around $14.14 with a P/E ratio of 26.6 and P/S ratio of 2. Newport Bancorp Inc. had an annual average earning growth of 118.5% over the past 5 years.
Highlight of Business Operations:Construction Loans. Newport Federal originates construction loans for one-to-four family homes and commercial, multi-family and other nonresidential purposes. The Bank s residential construction loans generally provide for the payment of only interest during the construction phase, which is usually six to twelve months. At the end of the construction phase, the loan converts to a permanent mortgage loan. One-to-four family residential construction loans are made with a maximum loan to value ratio of 80% of the market value of the real estate and improvements. Commercial, multi-family and other nonresidential loans can be made with a maximum loan to value ratio of 75% of the upon completion market value of the real estate and improvements. At December 31, 2010, the largest construction loan was for $2.9 million, of which $2.1 million was advanced. This loan was performing according to its original terms at December 31, 2010. Construction loans to individuals are generally made on the same terms as Newport Federal s one-to-four family mortgage loans.
Loan Approval Procedures and Authority. Newport Federal s lending activities follow written, non-discriminatory, underwriting standards and loan origination procedures established by the Board of Directors and management. The President, Chief Lending Officer and Chief Operating Officer have authority to approve secured loans in amounts up to $2.8 million and unsecured loans up to $300,000. Secured loans from $2.8 million to $3.2 million must be approved by four of the following persons: Commercial Loan Manager, Retail Loan Manager, Chief Lending Officer, President, Chief Operating Officer or one non-employee member of the Board of Directors. Secured loans from $3.2 million to $3.6 million must be approved by a majority of the Executive Committee of the Board of Directors. Unsecured loans over $600,000 and secured loans greater than $3.6 million up to the legal lending limit must be approved by a majority vote of the Board of Directors. Smaller loans may be approved by individual loan officers.
Loans to One Borrower. The maximum amount the Bank may lend to one borrower and the borrower s related entities is limited, by regulation, to generally 15% of its unimpaired capital and surplus. At December 31, 2010, Newport Federal s regulatory limit on loans to one borrower was $6.8 million. At that date, the Bank s largest lending relationship was $4.1 million and was secured by real property. This relationship consists of three commercial real estate loans, which were performing in accordance with their original terms at December 31, 2010.
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