Harvard Illinois Bancorp, the holding company for Harvard Savings Bank, announced its unaudited results of operations for the three months ended March 31, 2015.
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The company reported unaudited net income of $136,000, compared to unaudited net income of $234,000 for the three months ended March 31, 2014.
Net income decreased $98,000, or 41.9%, during the first quarter of 2015, compared to the first quarter of 2014.
The decrease in net income was due to an increase in noninterest expense of $151,000 and a decrease in interest and dividend income of $175,000, partially offset by an increase in noninterest income of $28,000 and decreases in interest expense, provision for loan losses, and the provision for income taxes of $41,000, $45,000 and $114,000, respectively.
The increase in noninterest expense was primarily due to an increase in legal and professional fees of $275,000 related to the recently announced transaction with The State Bank Group, ongoing regulatory issues, and recovery efforts with respect to the defaulted repurchase agreement purchased through Pennant Management, Inc.
The decrease in interest and dividend income was primarily due to a decrease of $7.7 million in average interest-earning assets, and a decrease in the average yield on interest-earning assets of 24 basis points to 4%.
The decrease in interest expense was primarily due to deposits and borrowings re-pricing at current lower rates as the average cost of interest-bearing liabilities decreased 14 basis points to 0.85%, partially offset by an increase in average interest-bearing liabilities of $3.3 million.
The decrease in the provision for income taxes to zero reflected the impact of the non-recurring decrease in valuation allowances recorded for deferred tax assets.
Stockholders' equity. Total stockholders' equity increased $183,000 to $10.3 million at March 31, 2015 from $10.1 million at December 31, 2014, primarily as a result of the net income of $136,000 for the three months ended March 31, 2015.
Non-performing assets increased $16.8 million to $19.7 million or 12.21% as a percent of total assets at March 31, 2015, compared to $2.9 million or 1.72% as a percent of total assets at March 31, 2014.
Included in non-performing assets were non-performing loans which increased $8.7 million to $11.5 million or 9.48% as a percent of loans at March 31, 2015, compared to $2.9 million or 2.47% as a percent of loans at March 31, 2014.
Non-performing assets at March 31, 2015 included $13.4 million related to the Bank's investment in the defaulted repurchase agreement purchased through Pennant Management, Inc., $6.0 million of which was included in non-performing loans.
At March 31, 2015, the net recognized receivable for the defaulted repurchase agreement totaled $7.5 million, net of a valuation allowance of $5.9 million recognized. ■