Banks serving the Sacramento region continue to churn out profits despite relatively low interest rates that have put a drag on some earnings throughout the year.
Lately, however, low rates have pretty much been trumped by an improving loan market.
Thomas Meuser, chairman and CEO of Placerville-based El Dorado Savings Bank, said earlier this year that “record-low interest rates have made it challenging to invest the funds profitably.” Yet recently rising rates on new investments helped the banking company’s bottom line in the recently completed third quarter.
The bank, which operates 32 branches in California and three in Nevada, reported a profit of $2.3 million for the quarter ended Sept. 30, up 18 percent from about $1.95 million in last year’s third quarter. Still, through nine months, the bank’s net income of $6.14 million just slightly trailed $6.21 million amassed in 2012.
“Higher rates and a steeper yield curve were beneficial to El Dorado’s performance in the third quarter,” Meuser said.
Other bank results for the most recent quarter include:
The bank saw a profit of $228,000, or 6 cents a share, in the third quarter, up from earnings of $68,000, or 3 cents a share, last year. Year-to-date earnings totaled $451,000, or 12 cents a share, compared with a loss of $524,000, or 24 cents per share, in 2012.
“The improved earnings reflect a strong net interest margin, improved asset quality and solid growth,” said Gary Gall, president and CEO.
Through the first three quarters of 2013, the bank rolled up net income of $677,342, an increase of 73.3 percent from earnings of $390,791 in the year-ago period. In the third quarter alone, the bank had a profit of $257,781, up 119.5 percent over $117,410 in the third quarter of 2012.
The bank, which commenced operations in 2007, said it has had no credit losses for the past 12 months and had no past-due loans as of Sept. 30.
Net income through nine months was $839,000, up from $463,000 in 2012.
The bank said loans grew from $83.9 million as of Sept. 30, 2012, to $105.3 million on the same date this year.
The bank said loan quality remains strong, but low interest rates have depressed quarterly earnings. John Jelavich, president and CEO, said he expects future earnings to be boosted by the company’s Grass Valley branch, which opened in the third quarter.
The bank reported strong results in almost all key divisions. Average total loans grew by 5.7 percent year over year.