Executives with Paragon National Bank laid out for shareholders this week a set of strategic objectives for 2013 that included making continued progress toward wringing problem assets out of the bank and improving the bank’s earnings power.
At Paragon’s annual meeting at one of the bank’s East Memphis branches, CEO Robert Shaw also pointed toward several metrics, trend lines and results from 2012 as cumulatively suggesting the bank is on the right track.
Since December 2008, for example, Shaw noted that Paragon has disposed of $40 million of non-performing assets. Non-performing assets were down 20 percent in 2012 and are down 46 percent since 2009, and among other evidence of success the bank presented was the fact that the Office of the Comptroller of the Currency has not downgraded a credit at Paragon since 2009.
“I feel very good about where we are,” Shaw said.
Furthermore, the bank is investing in technology. In 2012 Paragon joined the ranks of local financial institutions in launching a smartphone app. And that app joined an existing suite of mobile banking products for Paragon customers that included mobile texting and a mobile website.
To that end, in April alone the bank handled more than 500 mobile Web and mobile text transactions.
“We’ve also been working diligently as a team to change our asset mix but also to originate new loan volume.”
Chief operating officer, Paragon National Bank
Shaw, meanwhile, assured shareholders that Paragon’s employees have a stake in the bank’s performance, partly because they own about 20 percent of the bank.
And speaking of employees, the bank has made some recent additions on that front. Paragon has added some new hires in its sales force and in mortgage support and sales support roles.
Because of planned expenses and executing other components of its strategic plan in 2012, the bank’s profitability was down last year. However, Paragon was still profitable, as it has been for several quarters.
Paragon – which had $257 million in assets at year’s end – reported a profit of $688,000 in 2012, down from $923,000 in 2011. The bank’s efficiency ratio also is above 90 percent, meaning the bank essentially is now spending 90 cents for every dollar it makes.
Shaw said the bank is working to bring that ratio down.
“We’ve also been working diligently as a team to change our asset mix but also to originate new loan volume,” said Mike Edwards, a former First Tennessee Bank executive who joined Paragon as chief operating officer at the beginning of 2012.
On one hand, Paragon originated more loans in 2012 – $62 million, up 54 percent over 2011. At the same time, the bank is shifting the kinds of loans it’s making.
Paragon’s commercial loan volume was down almost $12 million in 2012, and its residential construction volume was $2 million less in 2012.
A chunk of Paragon’s loan portfolio includes floating rate loans, which will put the bank in a stronger position when interest rates inevitably rise.
“Ultimately, we’re one bank of 50 in Shelby County,” is how Edwards summed it up. “As far as competition goes, the big banks are still providing us with opportunities.”
A lot of loans at competing banks, he added, are getting approved by out-of-town decision makers, providing a window for community banks like Paragon to shine with customer service. There also have been contractions in the staffs of some of Memphis’ largest banks lately.
“There’s been a lot of movement at First Tennessee, SunTrust and Regions,” Edwards said. “And turnover in their staff means potential turnover in customers.”