Naugatuck, CT, January 25, 2012. Naugatuck Valley Financial
Corporation (the "Company") (NASDAQ Global Market: "NVSL"),
the parent company of Naugatuck Valley Savings and Loan (the
"Bank"), announced net income of $556,000 for the quarter
ended December 31, 2011, compared to net income of $254,000
for the quarter ended December 31, 2010, an increase of
$302,000 or 118.9%. In addition, the Company announced net
income of $2.2 million for the year ended December 31, 2011,
compared to net income of $1.5 million for the year ended
December 31, 2010, an increase of $753,000, or 51.9%.
Earnings per share for the quarter and year ended December
31, 2011 were $0.08 and $0.33 respectively, compared to $0.03
and $0.21 for the quarter and year ended December 31, 2010,
respectively.
In addition, the Board of Directors of the Company declared a
cash dividend for the quarter ended December 31, 2011, of
$0.03 per share payable to stockholders of record on February
10, 2012. Payment of the cash dividend will be made on or
about March 1, 2012.
Net interest income for the quarter ended December 31, 2011
totaled $4.9 million compared to
$4.5 million for the quarter ended December 31, 2010, an
increase of $427,000 or 9.5%. For the year ended December 31,
2011, net interest income totaled $18.9 million, compared to
$18.3 million for the year ended December 31, 2010. The
increase in net interest income in both periods was primarily
due to a decrease in interest expense, partially offset by a
decrease in interest income. Interest expense decreased by
$818,000, or 32.6%, in the three month period, and decreased
by $2.0 million, or 19.7% year over year. The decrease was
primarily due to a decrease in the average rates paid on
interest
bearing liabilities. The average rates paid on deposits and
borrowings decreased by 55 basis points and
36 basis points in the three month and annual periods,
respectively. The rate decrease in both periods is mainly due
to certificates of deposit renewing at lower rates or being
transferred to savings accounts during the periods. The
average balances of interest bearing liabilities decreased by
5.6% and by 2.0% for the three months and year ended December
31, 2011, respectively. The decrease in interest bearing
liabilities is attributed primarily to a 26.8% and a 21.7%
decrease in borrowings, partially offset by increases of 0.1%
and 3.9% in deposit balances over the same periods. Increases
were experienced in all categories of deposits except
certificates of deposit in both the three month and annual
periods. The increases in deposits were primarily used to pay
down advances from the Federal Home Loan Bank.
Interest income decreased by $391,000, or 5.6%, in the three
month period, and decreased by
$1.4 million, or 4.8%, during the year. The decrease was
primarily due to a decrease in the average rates
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earned on interest earning assets. The average rates earned
on loans and investments decreased by 32 basis points and 29
basis points in the three month and annual periods,
respectively. The average balances of interest earning assets
increased by 0.5% for both the three months and year ended
December 31, 2011, respectively. The increase in interest
earning assets is attributed to increases in both the loan
and investment portfolios over the same periods.
The provision for loan losses decreased from $1.2 million for
the three months ended December
31, 2010 to $911,000 for the three months ended December 31,
2011. For the year ended December 31,
2011, the provision for loan losses was $3.6 million,
compared to $3.4 million for the year ended December 31,
2010. As a result of the provisions in 2010 and 2011, the
level of reserves to gross loans rose to 1.74% at December
31, 2011, as compared to 1.33% at December 31, 2010. Net loan
charge offs totaled $1.3 million, or 0.28% of average loans
outstanding during the quarter ended December 31,
2011.
Nonperforming loans increased from $17.9 million at December
31, 2010 to $25.4 million at December 31, 2011 ($1.3 million
of which at both dates are fully guaranteed by the U.S. Small
Business Administration). The December 31, 2011 amount
represents a decrease of $1.6 million from the $27.0 million
of nonperforming loans reported at September 30, 2011.
Nonperforming loans consist of nonaccrual loans and troubled
debt restructurings on nonaccrual status.
(Unaudited) (In thousands)
Balance at September 30, 2011
Additions to nonperforming loans : One-to-four family
$
$ 30
26,994
Multi-family and commercial real es tate 777
Commercial bus ines s loans 260
Home equity 78
Total additions 1,145
Removed from nonperforming loans :
Loans brought current (1,268) Paid in full (75) Foreclos ure (181) Charged off (1,295)
Total removed (2,819)
Other balance changes 83
Balance at December 31, 2011
$ 25,403
Classified assets decreased 10.4% from $62.1 million at
December 31, 2010 to $55.7 million at December 31, 2011. At
both dates, classified assets consisted primarily of loans
rated special mention or substandard in accordance with
regulatory guidance. These assets warrant and receive
increased
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management oversight and loan loss reserves (both general
reserves and, in certain cases, specific reserves) have been
established to account for the increased credit risk of these
assets.
Noninterest income was $1.33 million for the quarter ended
December 31, 2011 compared to
$1.29 million for the quarter ended December 31, 2010, an
increase of 3.4%. For the twelve months ended December 31,
2011 noninterest income was $5.0 million compared to $3.3
million for the period ended December 31, 2010, an increase
of 52.7%. The increase in both periods is primarily due to an
increase in income generated by increased sales of mortgage
loans in the secondary mortgage market, combined with
increases in fees for other services and income from
investment advisory services. These increases were partially
offset by a decrease in fees for services related to deposit
accounts and income from bank owned life insurance.
Additionally, $655,000, representing a partial recovery with
respect to Fannie Mae auction rate pass-through certificates
on which an other-than-temporary impairment charge was
recorded in the third quarter of 2008, is included in
noninterest income for the year ended December
31, 2011.
Noninterest expense was $4.4 million for the quarter ended
December 31, 2011 compared to
$4.4 million for the quarter ended December 31, 2010. For the
year ended December 31, 2011 noninterest expense was $17.0
million, compared to $15.9 million for the year ended
December 31,
2010. The increases were the result of increases in
compensation, professional fees, loss on foreclosed real
estate, advertising and offices supplies over the 2010
periods. These increases were partially offset by decreases
in office occupancy, FDIC insurance premiums and computer
processing. Additionally,
$518,000 and $782,000 of costs related to the previously
announced terminated merger agreement are included in the
three months and year ended December 31, 2010, respectively.
Total assets were $572.6 million at December 31, 2011
compared to $568.3 million at December
31, 2010, an increase of $4.3 million or 0.8%. Cash and due
from depository institutions increased from
$11.7 million at December 31, 2010 to $15.4 million at
December 31, 2011. The balance in investments increased by
$3.3 million to $50.3 million, while loans receivable
decreased by $5.8 million to $467.7 million at December 31,
2011. Total liabilities were $489.8 million at December 31,
2011 compared to
$516.0 million at December 31, 2010. Deposits at December 31,
2011 were $410.9 million, an increase of $5.0 million or 1.2%
from $405.9 million at December 31, 2010. Borrowed funds
decreased from
$102.8 million at December 31, 2010 to $70.8 million at
December 31, 2011.
Total stockholders' equity increased to $82.9 million at
December 31, 2011 from $52.3 million at December 31, 2010,
primarily due to net stock offering proceeds of $31.2
million. At December 31,
2011, the Bank's regulatory capital exceeded the levels
required to be categorized as "well capitalized"
under applicable regulatory capital guidelines.
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John C. Roman, President and CEO, commented: "2011 was a
successful year for Naugatuck Valley Financial Corporation.
We strengthened capital through our second step conversion,
increased earnings and bolstered loan loss reserves. Although
nonperforming assets increased year over year, we remain
focused on our efforts to improve asset quality and to reduce
nonperforming assets as experienced in the fourth quarter of
2011."
Naugatuck Valley Savings and Loan is headquartered in Naugatuck, Connecticut with nine other branches in Southwest Connecticut. The Bank is a community-oriented financial institution dedicated to serving the financial service needs of consumers and businesses within its market area.
Forward-Looking Statements
This news release may contain forward-looking statements, which can be identified by the use of words such as "believes," "expects," "anticipates," "estimates" or similar expressions. Such forward-looking statements and all other statements that are not historic facts are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors. These factors include, but are not limited to, general economic conditions, changes in the interest rate environment, legislative or
regulatory changes that may adversely affect our business, changes in accounting policies and practices, changes in competition and demand for financial services, adverse changes in the securities markets, changes in deposit flows and changes in the quality or composition of the Company's loan or investment portfolios. Additionally, other risks and uncertainties may be described in the Company's annual report on Form 10-K, its quarterly reports on Form 10-Q or its other reports as filed with the Securities and Exchange Commission which are
available through the SEC's website at www.sec.gov. Should one or more of these risks materialize, actual results may vary from those anticipated, estimated or projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as may be
required by applicable law or regulation, the Company assumes no obligation to update any forward-looking statements.
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S ELECTED FINANCIAL CONDITION DATA December 31, December 31, 2011 2010(Unaudited) (In thousands)
AS SETS | |||
Cas h and due from depos itory ins titutions | $ 15,436 | $ 11,686 | |
Inves tment in federal funds | 2,633 | 2,577 | |
Inves tment s ecurities | 50,343 | 47,017 | |
Loans held for s ale | 2,993 | 81 | |
Loans receivable, net | 467,674 | 473,521 | |
Deferred income taxes | 2,472 | 2,413 | |
Other assets | 31,088 | 30,958 |
$ 572,639 $
568,253
LIABILITIES AND STOCKHOLDERS' EQUITYLiabilities
Depos its | $ 410,887 | $ 405,875 | |
Borrowed funds | 70,817 | 102,842 | |
Other liabilities | 8,059 | 7,276 | |
Total liabilities | 489,763 | 515,993 | |
Total s tockholders ' equity | 82,876 | 52,260 |
$ 572,639 $
568,253
SELECTED OPERATIONS DATA Three Months Ended December 31, For the Year Ended December 31, 2011 2010 2011 2010(Unaudited)
(In thousands, except per share data)
Total interes t income | $ 6,606 | $ 6,997 | $ 27,165 | $ 28,538 | |||
Total interes t expens e | 1,691 | 2,509 | 8,252 | 10,279 | |||
Net interes t income | 4,915 | 4,488 | 18,913 | 18,259 | |||
Provis ion for loan los s es | 911 | 1,196 | 3,584 | 3,360 | |||
(1) Earnings per share for t he t hree and t welve mont hs ended December 31, 2010 have been rest at ed t o reflect t he effect of t he
Company's st ock offering and concurrent second-st ep conversion effect ive June 29, 2011 at an exchange rat io of 0.9978.
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SELECTED PERFORMANCE RATIOS: (1) S ELECTED FINANCIAL RATIOS For the Three Months Ended December 31, For the Year Ended December 31, 2011 2010 2011(Unaudited)
2010Return on average as s ets | 0.39 % | 0.18 % | 0.38 % | 0.25 % |
Return on average equity | 2.68 | 1.92 | 3.22 | 2.79 |
Interes t rate s pread | 3.60 | 3.37 | 3.47 | 3.40 |
Net interes t margin | 3.70 | 3.40 | 3.55 | 3.45 |
Efficiency ratio (2) | 69.83 | 75.28 | 70.95 | 73.71 |
(Unaudited) (Dollars in thousands)
At December 31, 2010Allowance for loan los s es | $ 8,291 | $ 8,722 | $ 7,609 | $ 6,684 | $ 6,393 | |
Allowance for loan los s es as a percent of total loans | 1.74 % | 1.80 % | 1.55 % | 1.38 % | 1.33 % | |
Allowance for loan los s es as a percent of | ||||||
nonperforming loans | 32.64 % | 32.31 % | 45.66 % | 39.00 % | 35.74 % | |
Net charge-offs to average loans | ||||||
outs tanding during the period | 0.28 % | 0.02 % | 0.02 % | 0.03 % | 0.20 % | |
Nonperforming loans (3) | $ 25,403 | $ 26,994 | $ 16,664 | $ 17,140 | $ 17,888 | |
Nonperforming loans as a percent of total loans | 5.34 % | 5.56 % | 3.39 % | 3.54 % | 3.73 % | |
Nonperforming as s ets (4) | $ 26,276 | $ 28,027 | $ 17,454 | $ 17,668 | $ 18,309 | |
Nonperforming as s ets as a percent of total as s ets | 4.59 % | 4.83 % | 2.93 % | 3.13 % | 3.22 % |
(1) All applicable quart erly rat ios reflect annualized figures.
(2) Represent s non int erest expense (less int angible amort izat ion) divided by t he sum of net int erest income and nonint erest income.
(3) Nonperforming loans consist of nonaccrual loans and t roubled debt rest ruct urings on nonaccrual st at us. At
December 31, 2011, nonaccrual loans t ot aled $17.6 million and t roubled debt rest ruct urings on nonaccrual
st at us t ot aled $8.5 million, compared t o $11.1 million and $6.8 million, respect ively, at December 31, 2010. (4) Nonperforming asset s consist of nonperforming loans, foreclosed real est at e and ot her repossessed asset s.
Contact: Naugatuck Valley Financial Corporation
John C. Roman or Lee R. Schlesinger
1-203-720-5000
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