ONEIDA — Third-quarter earnings fell at Oneida Financial Corp. (NASDAQ: ONFC) as an asset impairment combined with a decrease in interest income and an increase in the provision for loan losses.
Oneida reported net income for the quarter of $65,000, or 1 cent per share, down 93 percent from $956,000, or 14 cents per share, a year earlier.
During the quarter, the company showed a loss of $1.9 million on an asset associated with its insurance subsidiary. The company had contributed surplus notes between 2004 and 2011 to an insurance company specializing in professional liability for long-term-care facilities. Surplus support of the company developed a specialty insurance sales line for Oneida that generated $3.9 million in commission revenue since 2004.
However, recent underwriting losses have rendered Oneida’s asset in the venture as fully impaired, a press release from the company read. Oneida maintains numerous other insurance outlets and expects to maintain the commission revenue it has developed in this specialty line, the release read.
The company’s operating income for the period, which excludes non-cash charges like the third quarter’s asset impairment, totaled $1.7 million, up from $1.5 million a year earlier.
“Oneida Financial Corp. continues to report strong operating earnings and has maintained consistent net interest margins despite historically low interest rates,” Oneida President and CEO Michael Kallet said in the release. “Although the company recorded an impairment charge on an asset associated with our insurance activities, net income through nine months of 2012 is down just 2.4 percent.”
The company’s insurance and financial-services subsidiaries showed a combined 9.8 percent increase in revenue, he said.
“The result is a strong and vital financial institution, fully prepared to meet the economic challenges of the future,” he said.
Net interest income for the quarter was $4.9 million, down slightly from $5 million a year ago, while noninterest income increased to $6.1 million, up from $5.7 million in 2011. A $506,000 increase to $4.8 million in insurance and other non-banking revenue was the primary driver of that increase.
Noninterest expense increased during the quarter to $9 million, up from $8.8 million in 2011. Oneida’s provision for loan losses rose from $50,000 in the third quarter of 2011 to $180,000 this year. The company cited an increase in net loans receivable as the reason behind the increase.
Headquartered in Oneida, Oneida Financial Corp. (www.oneidafinancial.com) is the holding company for The Oneida Savings Bank, with 12 branches in Madison, Oneida, and Onondaga counties; the State Bank of Chittenango, a limited-purpose commercial bank; Bailey, Haskell & LaLonde Agency, an insurance and risk-management company; Benefit Consulting Group, an employee-benefits consulting and retirement-plan administration firm; and Workplace Health Solutions, a risk-management company specializing in workplace injury-claims management.
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