Southern Connecticut Bancorp 8-K Southern Connecticut Bancorp, Inc. Reports Third Quarter 2012 Results

Southern Connecticut Bancorp, Inc. 8-K

EXHIBIT 99.1

For More Information, Contact:

Joseph J. Greco

Chief Executive Officer

Stephen V. Ciancarelli

Senior Vice President & Chief Financial Officer

(203) 782-1100

Southern Connecticut Bancorp, Inc. Reports Third Quarter 2012 Results

NEW HAVEN, CONNECTICUT (November 19, 2012) – Southern Connecticut Bancorp, Inc. (NYSE MKT: SSE) (the “Company”), the holding company for The Bank of Southern Connecticut, today announced results of operations for the third quarter of 2012.  For the three months ended September 30, 2012, the Company earned $163,000 or $0.06 per share compared to a loss of $(251,000) or $(0.09) per share for the three months ended September 30, 2011.  The quarterly results led to the Company earning $64,000 or $.02 per share for the nine months ended September 30, 2012 compared to a loss of $(711,000) or $(0.26) per share for the nine months ended September 30, 2011.

Joseph J. Greco, the Company’s Chief Executive Officer, stated that “For the first nine months of 2012, we had profitable operations by recording a lower provision for loan losses when compared to 2011, primarily due to improvement in asset quality and a decrease in net charge-offs, and controlling expenses.  During the fourth quarter of 2011, we conducted a comprehensive review of our loan portfolio to identify and adequately provide for problem loans.  As a result of this review, we significantly increased our provision for loan losses, which contributed to the net loss recorded for 2011.  In late 2011 and early 2012, we employed the services of two independent loan review companies that confirmed our assessment of the loan portfolio.  By addressing problem loans last year, we were able to focus on managing costs and returning the Company to profitability in 2012.”

As of September 30, 2012 the Company had total Shareholders’ Equity of $11.8 million, reflecting a Tier 1 Leverage Capital Ratio of 9.49%.  Net loans decreased to $104.1 million at September 30, 2012 from $111.6 million at December 31, 2011, and cash and cash equivalents, including short term investments, decreased to $10.1 million as of September 30, 2012 from $24.9 million as of December 31, 2011.  The improvement in asset quality during 2012 led to total non-accrual loans decreasing by 15% to $4,916,000 at September 30, 2012 from $5,785,000 at December 31, 2011.  Total deposits decreased to $109.1 million as of September 30, 2012 from $132.6 million as of December 31, 2011.  Chief Financial Officer Stephen V. Ciancarelli commented that “The decreases in net loans and cash and cash equivalents correspond with the decrease in deposit liabilities during the nine months ended September 30, 2012 resulting from our execution of balance sheet management strategies to improve profitability and compliance with regulatory capital directives.”

For additional details, please refer to the Company’s Quarterly Report on Form 10-Q, which was filed with the Securities and Exchange Commission on November 14, 2012 and is available on the Securities and Exchange Commission’s website at www.sec.gov.

About Southern Connecticut Bancorp, Inc.

Southern Connecticut Bancorp, Inc. is a commercial bank holding company dedicated to serving the banking needs of businesses located along the Connecticut shoreline from New Haven to Rhode Island.  Southern Connecticut Bancorp owns 100% of The Bank of Southern Connecticut, which is headquartered in New Haven, Connecticut.  The Bank of Southern Connecticut is a provider of commercial banking services to a client base of small to mid-sized 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.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts.  They often include the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.”  Forward-looking statements speak only as of the date they are made and are inherently subject to numerous risks and uncertainties.  A number of factors could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements.  Given these uncertainties, readers are cautioned not to place any undue reliance on such forward-looking statements.  The Company disclaims 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. AND SUBSIDIARIES
Highlights
September 30, 2012 and December 31, 2011 (unaudited)
	September 30,			December 31,
BALANCE SHEET DATA	2012			2011
Loans Receivable (net of ALLL)	$	104,089,774		$	111,644,142
Cash and Cash Equivalents		10,066,774			24,932,203
Investment Securities		2,914,771			3,849,847
Deposits:
Checking - Non Interest Bearing		29,861,639			31,003,581
Checking - Interest Bearing		8,464,114			5,149,535
Money Market		35,916,740			47,728,069
Savings		3,031,105			2,838,736
Time Deposits, less than $100,000		10,648,800			19,657,059
Time Deposits, $100,000 or more		21,204,446			26,253,701
Total Deposits		109,126,844			132,630,681
Total Assets		122,665,699			145,969,905
Total Shareholders' Equity		11,766,586			11,545,933
Shares outstanding at end of period		2,772,816			2,697,902
Book Value per Share	$	4.24		$	4.28
Tangible Book Value per Share	$	4.24		$	4.28
Tier 1 Leverage Capital Ratio		9.49	%		7.41	%
ALLL / (ALLL+Gross Loans, net of unearned income)		2.10	%		2.02	%
Non-Accruing Loans	$	4,915,927		$	5,785,355
ALLL / Non-Accruing Loans	.45 times			.40 times
Note: ALLL = Allowance for Loan and Lease Losses
	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
STATEMENT OF OPERATIONS DATA	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
Interest Income	$	1,490,654		$	1,785,568		$	4,666,041		$	5,453,025
Interest Expense		246,319			509,376			846,723			1,537,133
Net Interest Income		1,244,335			1,276,192			3,819,318			3,915,892
Provision for Loan Losses		30,000			373,152			240,254			1,039,212
Net Interest Income after
Provision for Loan Losses		1,214,335			903,040			3,579,064			2,876,680
Noninterest Income		181,719			150,526			500,934			422,237
Noninterest Expense		1,232,767			1,304,636			4,016,023			4,009,753
Net Income (Loss)	$	163,287		$	(251,070	)	$	63,975		$	(710,836	)
Net Interest Margin		4.36	%		3.85	%		4.31	%		3.88	%
PER SHARE DATA
Basic and Diluted Income (Loss) per Share	$	0.06		$	(0.09	)	$	0.02		$	(0.26	)

SOUTHERN CONNECTICUT BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (unaudited)
September 30, 2012 and December 31, 2011
	September 30,			December 31,
ASSETS	2012			2011
Cash and due from banks	$	6,425,119		$	18,167,794
Short term investments		3,641,655			6,764,409
Cash and cash equivalents		10,066,774			24,932,203
Interest bearing certificates of deposit		655,265			99,426
Available for sale securities (at fair value)		2,914,771			3,849,847
Federal Home Loan Bank stock		60,600			66,100
Loans receivable
Loans receivable		106,318,106			113,943,767
Allowance for loan losses		(2,228,332	)		(2,299,625	)
Loans receivable, net		104,089,774			111,644,142
Accrued interest receivable		402,800			434,302
Premises and equipment		1,940,975			2,014,665
Other real estate owned		631,786			374,211
Other assets held for sale		315,000			315,000
Other assets		1,587,954			2,240,009
Total assets	$	122,665,699		$	145,969,905
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Noninterest bearing deposits	$	29,861,639		$	31,003,581
Interest bearing deposits		79,265,205			101,627,100
Total deposits		109,126,844			132,630,681
Repurchase agreements		253,163			68
Capital lease obligations		1,156,167			1,161,938
Accrued expenses and other liabilities		362,939			631,285
Total liabilities		110,899,113			134,423,972
Commitments and Contingencies
Shareholders' Equity
Preferred stock, no par value; shares authorized: 500,000;
none issued		—			—
Common stock, par value $.01; shares authorized: 5,000,000;
shares issued and outstanding: 2012 2,772,816; 2011 2,697,902		27,728			26,979
Additional paid-in capital		22,725,494			22,569,489
Accumulated deficit		(10,986,407	)		(11,050,382	)
Accumulated other comprehensive loss - net unrealized loss
on available for sale securities		(229	)		(153	)
Total shareholders' equity		11,766,586			11,545,933
Total liabilities and shareholders' equity	$	122,665,699		$	145,969,905
See Notes to Consolidated Financial Statements

SOUTHERN CONNECTICUT BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
For the Three Months and Nine Months Ended September 30, 2012 and 2011
	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012			2011
Interest Income:
Interest and fees on loans	$	1,477,497	$	1,761,112		$	4,625,896		$	5,383,869
Interest on securities		559		72			1,008			274
Interest on federal funds sold and short-term and other investments				24,384			39,137			68,882
Total interest income		1,490,654		1,785,568			4,666,041			5,453,025
Interest Expense:
Interest expense on deposits		205,141		466,458			721,850			1,407,319
Interest expense on capital lease obligations		41,138		42,737			124,677			129,144
Interest expense on repurchase agreements and other borrowings				181			196			670
Total interest expense		246,319		509,376			846,723			1,537,133
Net interest income		1,244,335		1,276,192			3,819,318			3,915,892
Provision for loan losses		30,000		373,152			240,254			1,039,212
Net interest income after provision for loan losses		1,214,335		903,040			3,579,064			2,876,680
Noninterest Income:
Service charges and fess		94,562		108,089			262,468			315,839
Loan prepayment fees		46,308		—			91,516			—
Other noninterest income		40,849		42,437			146,950			106,398
Total noninterest income		181,719		150,526			500,934			422,237
Noninterest Expenses:
Salaries and benefits		671,629		596,944			2,198,504			1,976,617
Occupancy and equipment		162,404		158,615			458,379			501,084
Professional services		92,990		108,311			369,528			281,874
Data processing and other outside services		69,469		98,077			206,029			304,084
FDIC Insurance		50,824		65,609			158,230			182,973
Directors fees		43,175		74,950			122,375			236,650
Insurance		32,043		10,638			96,896			38,899
(Gain) loss on sale of other real estate owned		—		51,141			(2,896	)		51,141
Other operating expenses		110,233		140,351			408,978			436,431
Total noninterest expenses		1,232,767		1,304,636			4,016,023			4,009,753
Net income (loss)	$	163,287	$	(251,070	)	$	63,975		$	(710,836	)
Basic and diluted income (loss) per share	$	0.06	$	(0.09	)	$	0.02		$	(0.26	)
See Notes to Consolidated Financial Statements