Paragon Sets Record Profit in Third Quarter

By Andy Meek

The good news keeps coming for Paragon National Bank.

Between July and September, the Memphis-based community bank completed the most profitable quarter in its nearly eight-year history. It also was the bank’s 11th straight quarter of profitability, and Paragon attributed the result to things such as improved asset quality, balance sheet growth, expense reduction and better net interest margin.

Also during the quarter, the bank announced it has shown enough progress to be able to end its special oversight arrangement with the Office of the Comptroller of the Currency. That agreement was dissolved Aug. 14 and had been in place since September 2008.

Measures taken by the bank to address items defined within the OCC agreement included drastically reducing the level of problem assets, improving the bank’s concentration risk management program, developing a better framework within which to identify and control non-accruing loans, and maintaining an adequate allowance for losses.


Looking back at the quarter, Paragon CEO Robert Shaw said the bank had made big strides in working its way through problem assets, cutting expenses and building its loan program.

“It was really a combination of things,” Shaw said. “We saw continued improvement in asset quality, which causes expenses to go down. There’s also been a really active calling effort on the part of our bankers. And we’re also seeing balance sheet growth, in terms of loans and deposits.”

Looking at another piece of the business, last month Paragon’s mortgage volume nearly doubled October’s – and represented an even bigger jump over November 2012’s total. The bank’s mortgage volume in November was nearly $2.5 million, according to the latest figures from real estate information company Chandler Reports,

That compares to a volume of $321,190 in November 2012. The average mortgage volume last month was $225,605, up from $160,595 a year earlier.

Those jumps were likewise pronounced from October to November. Volume during that period grew to $2.5 million from almost $1.4 million, and the average mortgage amount rose to $225,605 from $135,124.

Over the entirety of the third quarter, Paragon saw its mortgage volume rise to almost $7.5 million from $3.5 million during the third quarter last year, according to the Chandler Reports numbers.

As the quarter wound down, Paragon president and chief operating officer Mike Edwards said the bank has a robust mortgage pipeline and is happy with its volume levels. Highlights of the quarter included Paragon earning net income of $381,000, which was 40 percent higher than in the second quarter and 8 percent higher than in the third quarter of 2012.

During the quarter, loans grew to $192.3 million, with Paragon attributing that growth to new business efforts as well as a reduction in loan payoffs.

Nonperforming assets have fallen by 45 percent so far this year, and Paragon has resolved $7.9 million in nonperforming assets.

The results underscored statements made earlier this year at Paragon’s annual meeting. There, executives laid out the themes they were trying to execute for 2013, one of which was continuing to take more problem assets off the bank’s balance sheet.

Even before the recent run of good news, Shaw confidently told shareholders at the annual meeting, “I feel good about where we are,” noting that at that point Paragon had disposed of $40 million in nonperforming assets since December 2008.

Shaw said in recent days he sees “incremental improvement” in the economy and pointed to small-business lending and Paragon’s active private banking section as areas of growth for the bank.