Bad boat loans caused a 35.8% decline in Annapolis Bancorp Inc.'s fourth-quarter net income, to $531,000.
The $362 million-asset Maryland company said Tuesday that it had set aside $295,000 to cover loan losses in the quarter, partly for $141,000 of net chargeoffs, mainly boat loans.
Annapolis said the rest of the provision was needed to reserve against a small number of deteriorating credits with balances totaling less than $1 million.
The year earlier, the company made no provision for credit losses.
"We don't believe that these isolated credit-quality issues are indicative of a broader or burgeoning problem in our loan portfolio," Richard M. Lerner, the company's chairman and CEO, said in a press release.
The company said that, though the provision was increased, nonperforming assets held steady at $1.1 million. This was 0.44% of total gross loans at Dec. 31, compared to 0.49% the previous year.
Total loans rose 11%, to $244 million, as the company shifted its asset mix away from overnight investments toward higher-yielding commercial and real estate loans.
