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Carrollton Bancorp Reports Operating Results (10-Q)

August 16, 2010 | About:

Carrollton Bancorp (CRRB) filed Quarterly Report for the period ended 2010-06-30.

Carrollton Bancorp has a market cap of $14.23 million; its shares were traded at around $5.54 with and P/S ratio of 0.48. The dividend yield of Carrollton Bancorp stocks is 2.89%.

Highlight of Business Operations:

Net income was $90,000 for the six months ended June 30, 2010, compared to $684,000 for the same period of 2009. The $594,000, or 87%, decrease in net income was primarily due an $887,000 write down on securities during the first half of 2010. For the three-month period ended June 30, 2010, the Company s net income grew 12.8%, or $25,100, compared to the second quarter of 2009. During the second quarter of 2010, we improved net interest income by approximately $138,000 while decreasing non-interest expenses by approximately $298,000. These improvements were partially offset by a reduction in mortgage related fee income resulting from decreased volume in the Company s mortgage subsidiary.

Total assets decreased $18.4 million to $405.3 million at June 30, 2010, compared to $423.8 million at the end of 2009. The decrease was due primarily to the $14.3 million decrease in federal funds sold and other interest bearing deposits and the $5.9 million decrease in investments as management focused on reducing excess balance sheet liquidity to increase the net interest margin. Loans increased by $1.6 million, or 0.56%, to $295.4 million at June 30, 2010. Total deposits decreased by $14.5 million, or 4.3%, to $321.3 million as of June 30, 2010, from $335.8 million as of December 31, 2009. The reduction in total deposits was a direct result of our efforts to reduce our cost of funds. Stockholders equity increased 2.2%, or $780,424, to $36.0 million at June 30, 2010. The increase was due primarily to a $1.1 million increase in accumulated other comprehensive income and $90,000 of net income, which was offset by $436,000 of dividends paid.

Total deposits decreased by $14.5 million, or 4.3%, to $321.3 million as of June 30, 2010, from $335.8 million as of December 31, 2009. Certificate of deposit accounts decreased $13.0 million while non-interest bearing checking and money market accounts decreased $1.2 million and $4.2 million, respectively. These decreases were partially offset by a $1.6 million increase in savings accounts and a $2.3 million increase in NOW accounts. The decrease in certificate of deposit balances is a result of lowering our rates on certificates of deposit based on management s decision to reduce excess liquidity and higher cost deposits in order to improve net interest margin by lowering the cost of funds. We had previously increased certificate of deposit rates to a level higher than many of our competitors in order to attract more of these deposits. As those certificates of deposits matured, the rates paid on renewed certificates of deposit were more typical for our market. Some of the funds from the certificate of deposit runoff were moved to savings and NOW accounts at the Bank, which contributed to the increase in these accounts during the 2010 period, and others were simply not renewed at the lower rates, causing the overall decrease in deposits for the 2010 period.

We reported net income for the first six months of 2010 of $89,988 compared to net income of $684,473 for the comparable period in 2009. Net loss attributable to common shareholders for the six months ended June 30, 2010 was $180,980 ($0.07 loss per diluted share) compared to net income available to common shareholders of $477,413 ($0.19 income per diluted share) for the prior year period. We experienced a loss on securities of $887,476 for the six months ended June 30, 2010.

Non-interest income during the first six months of 2010 was $2.6 million compared to $3.9 million for the same period in 2009, a decrease of $1.2 million, or 31.9%. This decrease was due primarily to security losses of $887,476 in the first half of 2010 compared to a $9,087 gain on the sale of securities in the same period of 2009, in addition to a $595,349 reduction of mortgage banking fees. These decreases to noninterest income were partially offset by a $146,187 increase in brokerage commissions and an $189,451 increase in electronic banking fees. The security loss resulted from three trust preferred securities held in the Company s investment portfolio that were written down through the income statement as the quarterly impairment analysis dictated. Impairments resulted from the deferral of dividends by several financial institutions or complete failure of the institutions that hold the underlying debt obligations on these securities. It is possible that continuation of the current economic environment will result in additional write-downs resulting from future deferrals or failures. While this creates volatility in our earnings, the write-downs have very little effect on the Company s and the Bank s regulatory capital position since the regulatory capital calculations allocate enough capital to cover the unrealized losses. Management is hopeful that these investments will increase in value as the economy improves and management will continuously evaluate all strategies to maximize the ultimate value realized from these investments.

Non-interest expenses of $8.8 million for the first six months of 2010 decreased by $250,913 compared to the same period in 2009. A $175,000 settlement of litigation early in 2010 increased other operating expenses for the first half of 2010 but the elimination of legal fees related to the case as well as the costs associated with the issuance of Preferred Stock in 2009 reduced professional services by $143,067 during this year compared to the same period last year. During the first half of 2010, decreased expenses related to other real estate owned contributed $97,670 to the reduction in other operating expenses for 2010 compared to the same period in 2009. Salary expense decreased by $145,000, or 4%, through June 30, 2010, compared to the same period in 2009 due to less volume-based compensation paid to mortgage loan officers and a downward adjustment in the compensation rate paid to those loan officers. Employee benefits increased $82,796 related to increased payroll taxes paid during the first six months of 2010 compared to the first half of 2009 mainly due to higher payroll tax rates and limits.

Read the The complete Report

About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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