EXHIBIT 99.1
NAUGATUCK VALLEY FINANCIAL CORPORATION REPORTS
2006 YEAR END AND FOURTH QUARTER RESULTS
Naugatuck, CT, January 23, 2007. 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 $150,000 for the
quarter ended December 31, 2006 versus net income of $546,000 for the quarter
ended December 31, 2005. In addition, for the year ended December 31, 2006, the
Company reported net income of $1.4 million compared to net income of $1.9
million for the year ended December 31, 2005. Earnings per share for the quarter
and year ended December 31, 2006 was $.02 and $.20 respectively. Earnings per
share for the quarter and year ended December 31, 2005 was $.07 and $.26
respectively.
John C. Roman, President and CEO commented: "The costs of opening three
new branch offices along with the challenging interest rate environment
experienced during the year adversely affected 2006 operating results.
Management and the board continue to be committed to the pursuit of initiatives
that will balance long-term growth and income considerations in order to
optimize shareholder value."
Net interest income for the quarter ended December 31, 2006 totaled
$2.80 million compared to $2.88 million for the quarter ended December 31, 2005.
For the twelve month period ended December 31, 2006, net interest income totaled
$11.40 million compared to $10.97 million for the twelve months ended December
31, 2005, an increase of $433,000 or 3.9%. Although net interest income in the
three month period was relatively flat, the company experienced an increase in
the average balances of interest earning assets of 19.0%. The increase in net
interest income in the twelve month period was the result of an increase in the
average balances of interest earning assets of 23.6%, combined with an increase
in the average rate earned on these assets of 31 basis points over the 2005
rates. The increase in interest earning assets for the three month and twelve
month periods is attributed primarily to an increase in the loan and investment
portfolios. The average balances in the loan portfolio increased by 20.3% in the
three month period and increased by 23.0% in the twelve month period. The
average balance of investments increased by 11.0% and 26.6% over the same
periods. The increases in interest income were offset by increases in interest
expense in both periods. Interest expense increased by 70.7% in the three month
period and by 89.2% in the twelve month period, due to rising rates on deposits
and borrowings along with increases in the average balances of deposits and
borrowings.
Non interest income was $502,000 for the quarter ended December 31,
2006 compared to $425,000 for the quarter ended December 31, 2005, an increase
of 18.1%. The increase was caused primarily by a $72,000 or 24.4% increase in
fees for services and a $4,000 or 22.2% increase in fees from investment
advisory services. Non interest income was $1.9 million for the twelve months
ended December 31, 2006 compared to $1.5 million for the period ended December
31, 2005. The twelve month period includes increases in fees for services of
45.1%, an increase in income from investments in Bank Owned Life Insurance of
39.4%, partially offset by decreases in income from investment advisory services
of 41.3% and decreases in gains on the sale of investments of 87.2%.
Non interest expense was $ 3.0 million for the quarter ended December
31, 2006 compared to $2.6 million for the quarter ended December 31, 2005. The
increase was primarily the result of an increase of $260,000 in compensation
costs and an increase of $101,000 in office occupancy expenses over the 2005
period. Non interest expense was $11.5 million for the year ended December 31,
2006 compared to $10.1 million for the year ended December 31, 2005. This
increase was primarily due to an increase of $1.0 million in compensation costs,
an increase of $219,000 in office occupancy expenses and an increase of $149,000
in advertising expenditures. Compensation costs in the twelve month period of
2006 include a full year of expenses related to the awards made under the equity
incentive plan previously approved by shareholders, while the 2005 period
included only five months of these expenses. The balance of the increase in
compensation costs along with the increases in occupancy expenses and
advertising expenditures can be attributed to the opening of three new branch
offices in 2006.
Total assets were $413.7 million at December 31, 2006 compared at
$355.3 million at December 31, 2005, an increase of $58.4 million or 16.4%.
Total liabilities were $362.6 million at December 31, 2006 compared to $304.4
million at December 31, 2005. Deposits at December 31, 2006 were $289.2 million,
an increase of $48.4 million or 20.1% over December 31, 2005. Deposits increased
primarily due to the three new branches. Advances from the Federal Home Loan
Bank of Boston increased from $57.1 million at December 31, 2005 to $68.5
million at December 31, 2006. These deposits and borrowings were used to fund
growth in investments and loans.
Total capital was $51.08 million at December 31, 2006 compared to
$50.96 million at December 31, 2005, due to net income of $1.4 million for the
twelve month period, stock repurchases of $1.5 million, year-to-date dividends
of $617,000 paid to stockholders, a net decrease to the unrealized loss on
available for sale securities of $125,000, $433,000 in capital adjustments
related to the Company's 2005 Equity Incentive Plan and $221,000 in capital
adjustments related to the release of 19,889 shares of the Company's Employee
Stock Ownership Plan. At December 31, 2006, the Bank's regulatory capital
exceeded the levels required to be categorized as "well capitalized" under
applicable regulatory capital guidelines.
Naugatuck Valley Savings and Loan is headquartered in Naugatuck,
Connecticut with eight 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.
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. 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, actions by our
competitors and their pricing, loan delinquency rates, and changes in federal
and state regulation. As we have no control over 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, Naugatuck Valley Financial Corporation disclaims any obligation to
update such forward-looking statements.
SELECTED FINANCIAL CONDITION DATA
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DECEMBER 31, DECEMBER 31,
2006 2005
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(UNAUDITED)
(in thousands)
ASSETS
Cash and due from depository institutions $ 7,911 $ 8,922
Investment in federal funds 31 29
Investment securities 70,267 63,049
Loans receivable, net 308,376 259,427
Deferred income taxes 1,375 1,331
Other assets 25,736 22,588
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TOTAL ASSETS $ 413,696 $ 355,346
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LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits $ 289,198 $ 240,846
Advances from Federal Home Loan Bank of Boston 68,488 57,059
Other liabilities 4,926 6,477
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TOTAL LIABILITIES 362,612 304,382
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Total stockholders' equity 51,084 50,964
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 413,696 $ 355,346
================ =================
SELECTED OPERATIONS DATA
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FOR THE YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------ -------------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
(UNAUDITED)
(Dollars in thousands)
Total interest income $ 20,750 $ 15,908 $ 5,645 $ 4,545
Total interest expense 9,350 4,941 2,849 1,669
----------- ----------- ----------- -----------
Net interest income 11,400 10,967 2,796 2,876
----------- ----------- ----------- -----------
Provision for loan losses 192 32 62 -
----------- ----------- ----------- -----------
Net interest income after provision for loan losses 11,208 10,935 2,734 2,876
----------- ----------- ----------- -----------
Noninterest income 1,948 1,517 502 425
Noninterest expense 11,504 10,097 3,032 2,604
----------- ----------- ----------- -----------
Income before provision
for income taxes 1,652 2,355 204 697
Provision for income taxes 204 450 54 151
----------- ----------- ----------- -----------
Net Income $ 1,448 $ 1,905 $ 150 $ 546
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Earnings per common share - basic and diluted $ 0.20 $ 0.26 $ 0.02 $ 0.07
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SELECTED FINANCIAL RATIOS
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For the Three Months For the year
SELECTED PERFORMANCE RATIOS: (1) Ended December 31, Ended December 31,
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2006 2005 2006 2005
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Return on average assets 0.15% 0.64% 0.38% 0.62%
Return on average equity 1.16 4.26 2.79 3.66
Interest rate spread 2.79 3.45 3.07 3.68
Net interest margin 2.98 3.64 3.26 3.87
Efficiency ratio (2) 91.69 78.64 85.93 80.61
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ASSET QUALITY RATIOS: AT DECEMBER 31,
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2006 2005
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(DOLLARS IN THOUSANDS)
Allowance for loan losses $ 2,071 $ 1,878
Allowance for loan losses as a percent of total loans 0.67% 0.72%
Allowance for loan losses as a percent of
nonperforming loans 103.03 638.78
Net charge-offs to average loans
outstanding during the period - -
Nonperforming loans $ 2,010 $ 294
Nonperforming loans as a percent of total loans 0.65 0.11
Nonperforming assets $ 2,010 $ 341
Nonperforming assets as a percent of total assets 0.49 0.10
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(1) All applicable quarterly ratios reflect annualized figures.
(2) Represents non interest expense (less intangible amortization)
divided by the sum of net interest income and noninterest income.
Contact: Naugatuck Valley Financial Corporation
John C. Roman or Lee R. Schlesinger
1-203-720-5000