Lower net interest income, aggravated by “extremely keen competition” for business loans, contributed to lower income for First Evanston Bancorp, Inc. for the first nine months of 2012, compared with the same period last year, the bank holding company reported.
Net income for the company, whose major bank subsidiary is Evanston’s First Bank & Trust, was $2,663,000, or $1.76 a share, for the nine months ending Sept. 30, 2012, compared with $2,948,000, or $1.96 a share, for the same period in 2011, or a decline of about 10 percent.
Managing director and chief executive officer Robert R. Yohanan, in his regular quarterly letter to stockholders, said that higher than planned expenses for the opening of the bank’s two newest full-service branches, in Itasca and Naperville, also contributed to the decline.
The company’s balance sheet continued to show gains in loans, deposits, and total assets.
At the end of September, net loans totaled $532,728,000, compared with $479,126,000, deposits were $695,927,000, compared with $582,356,000, and assets were $771,012,000, compared with $651,202,000 on the same date a year ago.
A bank earns profits chiefly by investing customer deposits in loans to businesses and individuals.
In the last 12 months, the bank’s deposits increased by more than $113 million, while its loans increased by less than $54 million. This lowers the bank’s net interest margin and its profits for the period.
“Better returns for the banking industry will be realized only when the economy expands again and loan demand picks up,” Yohanan said. He said the Federal Reserve Board’s policy of keeping interest rates low also adversely affects bank earnings.
On the brighter side, the bank maintained its five-star superior rating for strength and stability from BauerFinancial, Inc., as of June 30, and “continues to be the only bank on the North Shore and one of the few in the State of Illinois with this high rating,” according to Yohanan.
“While earnings are down from last year,” Yohanan wrote, “our general performance against both local and national peers is very favorable, which has provided us with the ability to continue to attract new business and individual relationships.”