EXHIBIT 99.1
For More Information Contact:
John H. Howland
President & Chief Operating Officer
Stephen V. Ciancarelli
Senior Vice President & Chief Financial Officer
(203) 782-1100
Southern Connecticut Bancorp, Inc. Reports Results for 2008
NEW HAVEN, Conn. ( February 6, 2009) – Southern Connecticut Bancorp, Inc. (AMEX:SSE) (the “Company”), the holding company for The Bank of Southern Connecticut, announced earnings for the year ended December 31, 2008 of $133,749 or $.05 per share versus a loss of $(573,681) or $(.19) per share for the year ended December 31, 2007. For the three months ended December 31, 2008, the Company reported a loss of $(236,116) or $(.09) per share compared to a loss of $(439,842) or $(.15) per share for the three months ended December 31, 2007.
Southern Connecticut Bancorp, Inc. and The Bank of Southern Connecticut implemented several initiatives during 2008 designed to enhance the performance and operation of the Company:
| · | In April 2008, John H. Howland was appointed President & Chief Operating Officer of the Company and Bank; |
| · | In February 2008, The Bank of Southern Connecticut completed the sale of its New London branch office, significantly reducing overhead and allowing the Company to focus its resources in the greater New Haven area. The Bank of Southern Connecticut realized a gain of $874,912 from this sale; |
| · | In July 2008, the Bank eliminated five positions as part of a plan to reduce operational expenses throughout the Bank; |
| · | In August 2008, the Company launched its mortgage brokerage operation through its wholly owned subsidiary SCB Capital, Inc. SCB Capital, Inc. brokers residential and commercial mortgages for third party financial institutions; and |
| · | Over the course of 2008, the Company repurchased 288,312 shares of its common stock in connection with its previously announced stock repurchase programs. The repurchase program contributed to the improvement in the Company’s book value per share, which increased from $6.76 at December 31, 2007 to $6.90 at December 31, 2008. |
As of December 31, 2008, the Company had total Shareholders’ Equity of $18.5 million, reflecting a Tier 1 Leverage Capital Ratio of 15.64% (in excess of the regulatory minimum of 4.0%).
Net loans increased 3.8% during the year to $89.2 million from $86.0 million at December 31, 2007. Net of the sale of the New London branch, net loans increased by $10.1 million or 12.7% for the year ended December 31, 2008. Total non-accrual loans increased to $881,948 (0.77% of total assets) at December 31, 2008 from $530,246 at December 31, 2007.
In December 2008, the Bank received preliminary approval to receive funds from the U.S. Treasury Department’s Capital Purchase Program. After due consideration, the Board of Directors and Management determined that The Bank of Southern Connecticut should not participate in the program, and subsequently withdrew its application for participation in the program.
The conservative operation of the Bank allowed the avoidance of problems which impacted other financial services companies in 2008, including, among other things, problems related to subprime mortgages as well as exposure to securities issued by Fannie Mae or Freddie Mac. All of the investment securities held by the Bank are classified as available-for-sale, and therefore are reported on the balance sheet at the then-current market value.
About Southern Connecticut Bancorp, Inc.
Southern Connecticut Bancorp, Inc. is a commercial bank holding company dedicated to serving the banking needs of businesses located in the greater New Haven area. Southern Connecticut Bancorp owns 100% of The Bank of Southern Connecticut headquartered in New Haven
Connecticut. The Bank of Southern Connecticut is a provider of commercial banking services to a client base of small to midsized companies with annual sales typically ranging from $1,000,000 to $30,000,000. The Bank’s services include a wide range of deposit, loan and other basic commercial banking products along with a variety of consumer banking products. The Bank currently operates four branches, two in New Haven, Connecticut, one in Branford, Connecticut and one in North Haven, Connecticut. Southern Connecticut Bancorp, Inc. also operates a mortgage brokerage business through Evergreen Financial Services, a division of SCB Capital, Inc., a wholly owned subsidiary of the Company.
Certain statements contained in this release and in other written materials and statements we may issue, including without limitation statements containing the word “believes”, “anticipates”, “intends”, “expects”, “estimates”, “could”, “would”, “will”, or words of similar import, constitute forward-looking statements within the meaning of the federal securities laws.
Such forward-looking statements involve risks, uncertainties and other factors that may cause our actual future results, performance or achievements to be materially different from any future results expressed or implied by such forward-looking statements. Such factors include, among others, a limited operating history and volatility of earnings, our dependence on our executive management and Board of Directors, our business concentration in small to midsized businesses in the New Haven, Connecticut area, as well as changes in our business, competitive market and regulatory conditions and strategies. Additional information concerning factors that could impact forward-looking statements can be found in the company’s periodic public filings with the Securities and Exchange Commission and in the section captioned “Risk Factors” in our prospectus filed on June 17, 2004. Given these uncertainties, readers are cautioned not to place any undue reliance on such forward-looking statements. We disclaim any intent or obligation to update these forward-looking statements to reflect facts, assumptions, circumstances or events that occur after the date on which such forward-looking statements were made.
SOUTHERN CONNECTICUT BANCORP, INC. | | | | | | |
| Financial Highlights | | | | | | |
| | | December 31, | | | December 31, | |
| BALANCE SHEET DATA | | 2008 | | | 2007 | |
| Loans Receivable (net of ALLL) | | $ | 89,241,432 | | | $ | 85,995,128 | |
| Loans Held for Sale, Fair Value | | | - | | | | 354,606 | |
| Money Market / CD's | | | 10,280,062 | | | | 8,355,686 | |
| Investment Securities | | | 5,130,005 | | | | 5,265,679 | |
| Deposits: | | | | | | | | |
| Checking - Non Interest Bearing | | | 28,214,381 | | | | 27,798,388 | |
| Checking - Interest Bearing | | | 331,615 | | | | 1,286,356 | |
| NOW | | | 5,353,875 | | | | 4,506,137 | |
| Money Market | | | 26,578,024 | | | | 40,721,374 | |
| Savings | | | 1,492,378 | | | | 1,654,000 | |
| Time Deposits | | | 31,999,751 | | | | 31,456,137 | |
| Total Deposits | | | 93,970,024 | | | | 107,422,392 | |
| | | | | | | | | |
| Total Assets | | | 114,916,562 | | | | 130,564,261 | |
| | | | | | | | | |
| Total Shareholders' Equity | | | 18,540,954 | | | | 20,084,483 | |
| | | | | | | | | |
| Book Value per Share | | $ | 6.90 | | | $ | 6.76 | |
| Tier 1 Leverage Capital Ratio | | | 15.64 | % | | | 15.08 | % |
| ALLL / (ALLL+Net Loans+Loans Held for Sale) | | | 1.31 | % | | | 1.43 | % |
| Note: ALLL = Allowance for Loan and Lease Losses | | | | | | | | |
| | | | | | | | | |
| | | Twelve Months | | | Twelve Months | |
| | | Ended | | | Ended | |
| STATEMENT OF OPERATIONS DATA | | December 31, 2008 | | | December 31, 2007 | |
| Interest Income | | $ | 7,000,100 | | | $ | 9,143,381 | |
| Interest Expense | | | 2,240,045 | | | | 3,377,776 | |
| | | | | | | | | |
| Net Interest Income | | | 4,760,055 | | | | 5,765,605 | |
| Provision for Loan Losses | | | 226,019 | | | | 538,480 | |
| Net Interest Income after Provision | | | 4,534,036 | | | | 5,227,125 | |
| | | | | | | | | |
| Noninterest Income | | | 1,666,625 | | | | 960,495 | |
| | | | | | | | | |
| Noninterest Expense | | | 6,066,912 | | | | 6,761,301 | |
| | | | | | | | | |
| Net Income | | $ | 133,749 | | | $ | (573,681 | ) |
| | | | | | | | | |
| Net Interest Margin | | | 4.46 | % | | | 4.89 | % |
| | | | | | | | | |
| PER SHARE DATA | | | | | | | | |
| Basic Income per Share | | $ | 0.05 | | | $ | (0.19 | ) |
| Diluted Income per Share | | $ | 0.05 | | | $ | (0.19 | ) |
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SOUTHERN CONNECTICUT BANCORP, INC. | | | | | | |
| Consolidated Balance Sheets | | | | | | |
| December 31, 2008 and December 31, 2007 (unaudited) | | | | | | |
| | | December 31, | | | December 31, | |
| | | 2008 | | | 2007 | |
| Assets | | | | | | |
| Cash and due from banks | | $ | 5,267,439 | | | $ | 3,891,258 | |
| Federal funds sold | | | - | | | | 21,100,000 | |
| Short-term and other investments | | | 10,280,062 | | | | 8,355,686 | |
| Cash and cash equivalents | | | 15,547,501 | | | | 33,346,944 | |
| | | | | | | | | |
| Available for sale securities | | | 5,130,005 | | | | 5,265,679 | |
| Federal Home Loan Bank Stock | | | 66,100 | | | | 66,100 | |
| Loans receivable (net of allowance for loan losses) | | | | | | | | |
| $1,183,369 in 2008 and $1,256,965 in 2007) | | | 89,241,432 | | | | 85,995,128 | |
| Loans held for sale | | | - | | | | 354,606 | |
| Accrued interest receivable | | | 411,729 | | | | 533,690 | |
| Premises and equipment, net | | | 2,754,153 | | | | 3,577,720 | |
| Other assets | | | 1,765,642 | | | | 1,424,394 | |
| Total assets | | $ | 114,916,562 | | | $ | 130,564,261 | |
| | | | | | | | | |
| Liabilities and Stockholders’ Equity | | | | | | | | |
| Liabilities | | | | | | | | |
| Deposits | | | | | | | | |
| Noninterest bearing deposits | | $ | 28,214,381 | | | $ | 27,798,388 | |
| Interest bearing deposits | | | 65,755,643 | | | | 79,624,004 | |
| Total deposits | | | 93,970,024 | | | | 107,422,392 | |
| | | | | | | | | |
| Repurchase agreements | | | 214,391 | | | | 544,341 | |
| Accrued expenses and other liabilities | | | 1,010,255 | | | | 1,327,002 | |
| Capital lease obligations | | | 1,180,938 | | | | 1,186,043 | |
| Total liabilities | | | 96,375,608 | | | | 110,479,778 | |
| | | | | | | | | |
| Commitments and Contingencies | | | - | | | | - | |
| | | | | | | | | |
| Stockholders’ Equity | | | | | | | | |
| Preferred stock, no par value; 500,000 shares authorized; | | | | | | | | |
| none issued | | | | | | | | |
| Common stock, par value $.01; 5,000,000, shares authorized; | | | | | | | | |
| shares issued and outstanding: 2008 2,688,152; 2007 2,969,714 | | | 26,882 | | | | 29,697 | |
| Additional paid-in capital | | | 22,521,164 | | | | 24,263,531 | |
| Accumulated deficit | | | (4,169,051 | ) | | | (3,595,370 | ) |
| Current Earnings (Loss) | | | 133,749 | | | | (573,681 | ) |
| Accumulated other comprehensive gain (loss) – net unrealized | |
| gain (loss) on available for sale securities | | | 28,210 | | | | (39,694 | ) |
| Total stockholders' equity | | | 18,540,954 | | | | 20,084,483 | |
| | | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 114,916,562 | | | $ | 130,564,261 | |
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SOUTHERN CONNECTICUT BANCORP, INC. | | | | | | |
| Consolidated Statement of Operations | | | | | | |
| For the Three and Twelve Months Ended December 31, 2008 and 2007 (unaudited) | |
| | | | | | | |
| | | | Three Months Ended | Twelve Months Ended |
| | | | December 31, | December 31, |
| | | | 2008 | 2007 | 2008 | 2007 |
| Interest Income | | | | | | |
| Interest and fees on loans | | $ | 1,564,348 | $ 1,964,058 | $ 6,333,993 | $ 7,539,044 |
| Interest on securities | | | 59,657 | 63,413 | 195,748 | 259,052 |
| Interest on federal funds sold and short-term investments | | | 87,532 | 334,336 | 470,359 | 1,345,285 |
| Total interest income | | | 1,711,537 | 2,361,807 | 7,000,100 | 9,143,381 |
| | | | | | | |
| Interest Expense | | | | | | |
| Interest on deposits | | | 478,346 | 796,523 | 2,055,427 | 3,192,322 |
| Interest on capital lease obligations | | | 44,005 | 44,014 | 176,110 | 175,796 |
| Interest on repurchase agreements | | | 1,728 | 2,919 | 8,508 | 9,658 |
| Total interest expense | | | 524,079 | 843,456 | 2,240,045 | 3,377,776 |
| | | | | | | |
| Net interest income | | | 1,187,458 | 1,518,351 | 4,760,055 | 5,765,605 |
| | | | | | | |
| Provision for Loan Losses | | | 290,101 | 92,018 | 226,019 | 538,480 |
| Net interest income after | | | | | | |
| provision for loan losses | | | 897,357 | 1,426,333 | 4,534,036 | 5,227,125 |
| | | | | | | |
| Noninterest Income: | | | | | | |
| Service charges and fees | | | 173,842 | 157,436 | 576,801 | 609,888 |
| Gains and fees from sales and referrals of SBA loans | | - | - | - | 45,286 |
| Gains from sale of branch | | | - | - | 874,912 | - |
| Other noninterest income | | | 39,184 | 56,494 | 214,912 | 305,321 |
| Total noninterest income | | | 213,026 | 213,930 | 1,666,625 | 960,495 |
| | | | | | | |
| Noninterest Expense | | | | | | |
| Salaries and benefits | | | 730,998 | 859,899 | 3,688,383 | 3,460,037 |
| Occupancy and equipment | | | 156,292 | 217,923 | 684,817 | 852,504 |
| Professional services | | | 102,239 | 260,150 | 358,122 | 786,449 |
| Data processing and other outside services | | | 96,250 | 107,588 | 397,464 | 420,806 |
| Advertising and promotional expense | | | 24,490 | 19,685 | 73,641 | 38,898 |
| Forms, printing and supplies | | | 24,850 | 28,471 | 106,826 | 88,433 |
| FDIC Insurance | | | 19,590 | 30,058 | 79,068 | 124,155 |
| Other operating expenses | | | 191,797 | 556,331 | 678,591 | 990,019 |
| Total noninterest expenses | | | 1,346,506 | 2,080,105 | 6,066,912 | 6,761,301 |
| | | | | | | |
| Net (loss) income | | $ | (236,123) | $ (439,842) | $ 133,749 | $ (573,681) |
| | | | | | | |
| Basic (Loss) Income per Share | | $ | (0.09) | $ (0.15) | $ 0.05 | $ (0.19) |
| Diluted (Loss) Income per Share | | $ | (0.09) | $ (0.15) | $ 0.05 | $ (0.19) |
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| Dividends per Share | | $ | - | $ - | $ - | $ - |
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