by Tanta on 4/25/2007 09:17:00 AM
Wednesday, April 25, 2007
At March 31, 2007, negative amortization, included in the balance of loans receivable, totaled $248.5 million compared to $215.8 million at December 31, 2006 and $98.5 million at March 31, 2006. Negative amortization represents unpaid interest earned by the Bank that is added to the principal balance of the loan.
Negative amortization increased by $32.7 million during the first quarter of 2007 and $150.0 million from one year ago. Negative amortization has increased over the last two years primarily due to increases in short-term interest rates. Negative amortization as a percentage of all single family loans in the Bank's portfolio totaled 4.36% at the end of the first quarter of 2007 compared to 3.44% at December 31, 2006 and 1.32% at March 31, 2006.
The portfolio of single family loans with a one-year fixed monthly payment totaled $4.4 billion at March 31, 2007 compared to $4.6 billion at December 31, 2006 and $4.7 billion at March 31, 2006. The portfolio of single family loans with three-to-five year fixed monthly payments totaled $1.5 billion at March 31, 2007 compared to $1.8 billion at December 31, 2006 and $2.5 billion at March 31, 2006.
A $3.8 million loan loss provision was recorded during the first quarter of 2007, compared to a $3.0 million provision recorded in the fourth quarter of 2006 and a $3.9 million provision recorded in the first quarter of 2006. Net loan charge-offs totaled $628 thousand for the first quarter of 2007 compared to $90 thousand in the fourth quarter of 2006 and $25 thousand in the first quarter of 2006. The ratio of non-performing assets to total assets was 0.46% at March 31, 2007 compared to 0.21% at the end of 2006 and 0.07% at March 31, 2006.
Non-performing assets have been very low over the past few years due to increases in single family home prices. The recent increase in non-performing assets results primarily from the flattening of single family real estate prices overall in California. Areas such as Sacramento or San Diego that have experienced rapid growth in housing development in the past few years have seen recent declines in single family home prices. To date, the Bank's non-performing assets are due to defaults on single-family loans and are located principally in those geographic areas where rapid development of housing has caused supply to outpace demand. It is expected that non-performing assets will continue to increase until the real estate prices in these areas reach an equilibrium between buyers and sellers.