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SI FINANCIAL GROUP, INC. REPORTS RESULTS FOR THE QUARTER AND SIX MONTHS ENDED
JUNE 30, 2005
WILLIMANTIC, Connecticut--July 26, 2005--SI Financial Group, Inc. (the
"Company") (NASDAQ National Market: SIFI), the holding company of Savings
Institute Bank and Trust Company (the "Bank"), reported net income of $845,000,
or $0.07 basic and diluted earnings per common share, for the quarter ended June
30, 2005 versus net income of $392,000 for the quarter ended June 30, 2004. Net
income for the six months ended June 30, 2005 was $1.7 million, or $0.14 basic
and diluted earnings per common share, compared to $1.2 million for the six
months ended June 30, 2004. The increase in net income was primarily due to
increases in net interest and dividend income and noninterest income, offset by
an increase in noninterest expenses. Per share data is not presented for the
three months and the six months ended June 30, 2004, as the Company had no
shares outstanding prior to the Company's initial public offering on September
30, 2004.
For the three months and the six months ended June 30, 2005, net interest and
dividend income increased 16.8% to $5.4 million from $4.6 million and increased
16.9% to $10.7 million from $9.1 million, respectively, compared to the same
periods in the prior year. Net interest and dividend income rose primarily due
to an increase in the average balance of interest-earning assets, offset by an
increase in the cost of funds for both periods presented of 2005.
The provision for loan losses totaled $130,000 for the second quarter of 2005,
representing a decrease of $20,000 over the same period in 2004. The provision
for loan losses decreased $65,000 for the first half of 2005 compared to the
same period in the prior year. The lower provision reflects a high quality loan
portfolio, as evidenced by a $531,000, or 35.9%, reduction in the Bank's
nonperforming loans and net recoveries from loan losses of $75,000 for the six
months ended June 30, 2005 compared to net charge-offs of $21,000 for the six
months ended June 30, 2004.
Noninterest income was $1.6 million for the quarter ended June 30, 2005 compared
to $1.1 million for the quarter ended June 30, 2004, mainly due to an increase
in service fees of $403,000 resulting from the expansion of the Bank's
deposit-related products. To a lesser extent, noninterest income included a gain
of $72,000 from the sale of real property. Noninterest income was $3.0 million
for the first half of 2005 compared to $2.3 million for the same period of 2004.
Contributing to the rise in noninterest income were increases primarily related
to service fees of $561,000 and net gains on the sale of loans of $167,000,
offset by lower realized gains on the sale of available for sale securities of
$151,000. The net gain on the sale of loans for 2005 resulted from the sale of
$31.6 million of predominately fixed-rate residential mortgage loans. Higher
loan sales in 2005 reflect the Bank's initiative to mitigate interest rate risk
and to manage liquidity in a rising interest rate environment.
Noninterest expenses were $5.6 million for the quarter ended June 30, 2005
compared to $5.0 million for the quarter ended June 30, 2004, principally as a
result of increases in compensation costs, professional services and marketing
expenses of $540,000, $213,000 and $83,000, respectively, offset by a decrease
in occupancy costs of $251,000. Marketing costs increased in the second quarter
of 2005 in response to an aggressive marketing campaign. Occupancy costs were
higher in the second quarter of 2004 due to an impairment charge of $337,000
recorded to reduce the carrying value on a former branch facility to its
estimated net market value. Noninterest expenses increased $1.4 million for the
six months ended June 30, 2005. For both the three months and the six months
ended June 30, 2005, the increase in compensation costs primarily reflects
additional salaries, benefits and taxes for elevated staffing levels in response
to the expansion of branch facilities and the commercial lending division and
amortization of share-based compensation awards. Additionally, the increase in
professional services resulted from higher legal and auditing costs associated
with the Company's public reporting requirements.
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Total assets grew $33.3 million, representing a 5.3% increase, to $657.9 million
at June 30, 2005 from $624.6 million at December 31, 2004. Contributing to the
increase in assets at June 30, 2005 were increases of $26.3 million in loans
receivable, $4.4 million in investment securities and $2.6 million in other
assets. The increase in loans receivable reflects strong loan originations,
offset by increased loan sales over the prior year. Increases in investment
securities consisted primarily of shorter-term U.S. government and agency
obligations and corporate debt securities. The rise in other assets resulted
from an increase in capital expenditures associated with branch expansion during
the first six months of 2005.
Total liabilities were $576.2 million at June 30, 2005 compared to $543.8
million at December 31, 2004. Deposits increased $26.9 million, or 5.9%, from
year-end, reflecting a rise in NOW and money market accounts and certificates of
deposit. Borrowings increased from $79.9 million at December 31, 2004 to $86.5
million at June 30, 2005, resulting from an increase in FHLB advances used to
fund loan demand and to invest in securities yielding greater returns than the
cost of borrowings.
Total stockholders' equity increased $971,000 from $80.8 million at December 31,
2004 to $81.8 million at June 30, 2005. The increase in equity related primarily
to current year's earnings of $1.7 million, offset by an increase of $348,000 in
unrealized losses on available for sale securities (net of taxes) and a decrease
of $112,000 related to stock options and restricted share awards granted under
the Company's new equity incentive plan, which received shareholder approval
during the second quarter of 2005. The Company's investment securities
portfolio, which includes primarily U.S. government and agency obligations and
mortgage-backed securities, was unfavorably affected by market rates, and
resulted in higher unrealized losses on available for sale securities for the
period. As previously announced, the Company declared a cash dividend of $0.03
per outstanding common share, at a total cost of $158,000, on June 23, 2005 to
be paid on or about July 29, 2005 to shareholders of record as of July 8, 2005.
The total amount of the dividend reflects SI Bancorp, MHC's, the Company's
mutual holding company parent, waiver of receipt of its dividend.
The Company continues to utilize its proceeds from the initial public offering
to invest in loans and securities, branch expansion and the development of the
Company's infrastructure and employees. The Bank recently opened its sixteenth
branch office in Tolland, Connecticut and relocated its branch in Stonington,
Connecticut. The Bank anticipates the opening of new branch locations in South
Windsor, Connecticut during the second half of 2005 and East Lyme, Connecticut
in early 2006.
"We are pleased with the success of both our Stonington and Tolland branch
offices," said President and Chief Executive Officer, Rheo A. Brouillard. "The
overwhelming response to these two new offices validates the Company's strategic
expansion and growth plans."
Savings Institute Bank and Trust Company is headquartered in Willimantic,
Connecticut, with sixteen offices in eastern Connecticut. The Bank continues to
explore other locations for further expansion. The Bank is a full service
community-oriented financial institution dedicated to servicing the financial
service needs of consumers and businesses within its market area.
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THIS RELEASE CONTAINS "FORWARD-LOOKING STATEMENTS" WHICH MAY DESCRIBE FUTURE
PLANS AND STRATEGIES, INCLUDING OUR EXPECTATIONS OF FUTURE FINANCIAL RESULTS.
MANAGEMENT'S ABILITY TO PREDICT RESULTS OR THE EFFECT OF FUTURE PLANS OR
STRATEGIES IS INHERENTLY UNCERTAIN. AMONG THE FACTORS THAT COULD AFFECT OUR
ACTUAL RESULTS INCLUDE MARKET INTEREST RATE TRENDS, THE GENERAL REGIONAL AND
NATIONAL ECONOMIC MARKET, OUR ABILITY TO CONTROL COSTS AND EXPENSES, OUR ABILITY
TO OPERATE NEW BRANCH OFFICES PROFITABLY, ACTIONS BY OUR COMPETITORS AND THEIR
PRICING, LOAN DELINQUENCY RATES AND CHANGES IN FEDERAL AND STATE REGULATION. AS
WE HAVE NO CONTROL OVER ANY OF THESE FACTORS, THEY SHOULD BE CONSIDERED IN
EVALUATING ANY FORWARD-LOOKING STATEMENTS AND UNDUE RELIANCE SHOULD NOT BE
PLACED ON SUCH STATEMENTS. EXCEPT AS REQUIRED BY APPLICABLE LAW OR REGULATION,
SI FINANCIAL GROUP, INC. DISCLAIMS ANY OBLIGATION TO UPDATE SUCH FORWARD-LOOKING
STATEMENTS.
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SELECTED FINANCIAL CONDITION DATA:
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(DOLLARS IN THOUSANDS / UNAUDITED) June 30, December 31,
2005 2004
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ASSETS
Noninterest-bearing cash and due from banks $ 18,860 $ 21,647
Interest-bearing cash and cash equivalents 11,946 9,128
Investment securities 129,268 124,870
Loans held for sale - 200
Loans receivable, net 474,241 447,957
Cash surrender value of life insurance 7,698 7,561
Other assets 15,922 13,286
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Total assets 657,935 $ 624,649
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LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits 484,696 $ 457,758
Borrowings 86,529 79,891
Other liabilities 4,930 6,191
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Total liabilities 576,155 543,840
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Stockholders' equity 81,780 80,809
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Total liabilities and stockholders' equity $ 657,935 $ 624,649
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SELECTED OPERATIONS DATA:
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(DOLLARS IN THOUSANDS, EXCEPT PER SHARE Three Months Ended Six Months Ended
DATA / UNAUDITED) June 30, June 30,
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2005 2004 2005 2004
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Interest and dividend income $ 8,192 $ 6,903 $ 16,084 $ 13,686
Interest expense 2,824 2,307 5,416 4,557
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Net interest and dividend income 5,368 4,596 10,668 9,129
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Provision for loan losses 130 150 235 300
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Net interest and dividend income 10,433
after provision for loan losses 5,238 4,446 8,829
Noninterest income 1,629 1,069 2,956 2,304
Noninterest expenses 5,611 4,958 10,805 9,391
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Income before provision for income 2,584
taxes 1,256 557 1,742
Provision for income taxes 411 165 837 546
Net income $ 845 $ 392 $ 1,747 $ 1,196
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SELECTED OPERATIONS DATA - CONTINUED:
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(DOLLARS IN THOUSANDS, EXCEPT PER SHARE Three Months Ended Six Months Ended
DATA / UNAUDITED) June 30, June 30,
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2005 2004 2005 2004
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Earnings per common share:
Basic $ 0.07 N/A $ 0.14 N/A
Diluted $ 0.07 N/A $ 0.14 N/A
Weighted-average common shares outstanding:
Basic 12,087,104 N/A 12,083,278 N/A
Diluted 12,095,709 N/A 12,093,218 N/A
SELECTED FINANCIAL RATIOS:
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At or For the Three At or For the Six
(DOLLARS IN THOUSANDS) Months Ended Months Ended
June 30, June 30,
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2005 2004 2005 2004
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SELECTED PERFORMANCE RATIOS: (1)
Return on average assets 0.53 % 0.29 % 0.56 % 0.45 %
Return on average equity 4.16 4.51 4.33 6.91
Interest rate spread 3.26 3.46 3.30 3.52
Net interest margin 3.61 3.63 3.64 3.68
Efficiency ratio (2) 80.36 87.55 79.51 83.50
ASSET QUALITY RATIOS:
Allowance for loan losses $3,510 $2,967
Allowance for loan losses as a percent of total
loans 0.74 % 0.72 %
Allowance for loan losses as a percent of
nonperforming loans 369.47 200.34
Nonperforming loans $ $1,481
950
Nonperforming loans as a percent of total
loans 0.20 % 0.36 %
Nonperforming assets (3) $ 950 $1,749
Nonperforming assets as a percent of total
assets 0.14 % 0.32 %
(1) Quarterly ratios have been annualized.
(2) Represents noninterest expense divided by the sum of net interest income
and noninterest income, less any realized gains or losses on the sale of
securities.
(3) Nonperforming assets consist of nonperforming loans and other real estate
owned.
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CONTACT:
SI Financial Group, Inc.
Sandra Mitchell: (860) 423-4581