River Forest Bancorp reported a 52% increase in first- quarter net income, but its nonperforming assets also shot up.
The company earned $11.5 million in the quarter, up from $7.6 million in the same period last year. River Forest attributed the rise in part to a nearly 41% increase in net interest income.
At the same time, the $2.2 billion-asset company's efficiency ratio, which measures the cost to produce $1 of revenue, improved dramatically, to 36.5% from 55.4%.
However, nonperforming assets totaled $30 million at March 31, up from $8.9 million on the same date the year before. The increases included nonperforming residential mortgage and commercial real estate loans.
"The commercial real estate's attributable almost entirely to one transaction that's gone beyond 90 days," said Tim H. Taylor, senior vice president, saying the credit has "zero loss potential."
He said the surge in bad mortgages was caused by the historically conservative company's new willingness to book some riskier credits at better rate spreads. He also pointed to the industrywide uptick in home equity loan delinquencies.