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EXHIBIT 99.1
[NAUGATUCK VALLEY FINANCIAL CORPORATION LOGO]
NAUGATUCK VALLEY FINANCIAL CORPORATION REPORTS THIRD QUARTER EARNINGS
AND ANNOUNCES CASH DIVIDEND FOR THE QUARTER ENDED SEPTEMBER 30, 2007
Naugatuck, CT, October 17, 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 $354,000 for the
quarter ended September 30, 2007 versus net income of $414,000 for the quarter
ended September 30, 2006, a decrease of $60,000 or 14.5%. In addition, for the
nine month period ended September 30, 2007, the Company announced net income of
$941,000 compared to net income of $1.3 million for the nine months ended
September 30, 2006. Earnings per share for the quarter and nine months ended
September 30, 2007 were $.05 and $.13, respectively, compared to $.06 and $.18
for the quarter and nine months ended September 30, 2006.
Net interest income for the quarter ended September 30, 2007 totaled $3.0
million compared to $2.8 million for the quarter ended September 30, 2006, an
increase of $151,000 or 5.3%. For the nine month period ended September 30,
2007, net interest income totaled $8.7 million compared to $8.6 million for the
nine months ended September 30, 2006, an increase of $115,000 or 1.3%. Net
interest income increased slightly in both the three and nine month periods due
to an increase in the average balances of interest earning assets of 15.2% in
the three month period and an increase of 16.2% in the nine month period,
combined with an increase in the average rate earned on these assets of 24 basis
points and 29 basis points during the same periods over the 2006 rates. The
increase in interest earning assets for the three and nine month periods is
attributed primarily to an increase in the loan portfolio. The average balances
in the loan portfolio increased by 19.9% in both the three and nine month
periods. The largest increases were in the commercial mortgage portfolio
followed by the residential mortgage portfolio. The increase in interest income
was partially offset by an increase in interest expense. Interest expense
increased by $904,000, or 36.3% in the three month period and increased by $3.2
million, or 48.9% in the nine month period due to rising rates on deposits and
borrowings along with increases in the average balances of deposits and
borrowings. The average balances of deposits increased by 16.6% and 18.6% in the
three and nine month periods, respectively. The average balance of borrowings
increased by 16.4% in both periods due to increased loan demand. The Company
experienced increases of 51 basis points and 71 basis points in the average
rates paid on deposits and borrowing in the three and nine month periods
respectively. The largest increases in deposits were in certificates of deposit,
followed by smaller increases in money market accounts and checking accounts,
partially offset by a decrease in savings accounts. The increase in certificates
of deposit was due to our three new offices combined with promotional rate
accounts.
Noninterest income was $577,000 for the quarter ended September 30, 2007
compared to $514,000 for the quarter ended September 30, 2006, an increase of
12.3%. For the nine months ended September 30, 2007, the increase was 20.4% to
$1.7 million compared to $1.4 million for the period ended September 30, 2006.
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The largest increases in noninterest income in both periods were in income from
fees for services related to deposit accounts and fees for other services, as a
result of product growth in these areas. The nine month period also showed an
increase in income from investment advisory. The company also experienced gains
on the sale of investments in both 2007 periods.
Noninterest expense was $3.2 million for the quarter ended September 30,
2007 compared to $3.0 million for the quarter ended September 30, 2006. For the
nine months ended September 30, 2007 noninterest expense was $9.3 million
compared to $8.4 million for the nine months ended September 30, 2006. The
increases in both periods were primarily the result of increases in compensation
costs, office occupancy expenses and computer processing costs over the 2006
periods. These increases were partially offset by a decrease in advertising
expense. All of the increases are primarily related to the opening of three new
branch offices in the third quarter of 2006.
Total assets were $444.7 million at September 30, 2007 compared to $413.9
million at December 31, 2006, an increase of $30.1 million or 7.4%. Total
liabilities were $394.5 million at September 30, 2007 compared to $362.8 million
at December 31, 2006. Deposits at September 30, 2007 were $325.1 million, an
increase of $32.4 million or 11.1% over December 31, 2006. The increase in
deposits was primarily due to the opening of the three new branch offices.
Borrowed funds decreased from $68.5 million at December 31, 2006 to $67.8
million at September 30, 2007. The increase in deposits was primarily used to
fund growth in loans.
The Bank consistently strives to maintain a strong credit culture by using
what it believes are conservative loan underwriting standards. Residential
mortgages with loan-to-value ratios in excess of 80% require private mortgage
insurance. The Bank has not originated or purchased any low doc or no income/no
asset verified mortgages. Nonperforming loans remain at low levels, totaling
$744,000, or 0.21% of total loans at September 30, 2007 compared to $889,000, or
0.27% of total loans at June 30, 2007.
Total stockholders' equity was $50.2 million at September 30, 2007
compared to $51.1 million at December 31, 2006, due to net income of $941,000
for the nine month period, dividends of $445,000 paid to stockholders, stock
repurchases of $1.9 million, a net decrease to the unrealized loss on available
for sale securities of $84,000 and $432,000 in capital adjustments related to
the Company's 2005 Equity Incentive Plan. At September 30, 2007, the Bank's
regulatory capital exceeded the levels required to be categorized as "well
capitalized" under applicable regulatory capital guidelines.
In addition, on October 16, 2007, the Board of Directors of the Company
declared a cash dividend for the quarter ended September 30, 2007, of $.05 per
share to stockholders of record on November 5, 2007. Payment of the cash
dividend will be made on or about December 1, 2007. Naugatuck Valley Mutual
Holding Company, the Company's mutual holding company, will waive receipt of the
dividend.
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.
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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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<Table>
<Caption>
SELECTED FINANCIAL CONDITION DATA
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SEPTEMBER 30, DECEMBER 31,
2007 2006
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(Unaudited)
(In thousands)
ASSETS
Cash and due from depository institutions $ 9,322 $ 7,911
Investment in federal funds 2,110 31
Investment securities 60,435 70,267
Loans receivable, net 345,315 308,376
Deferred income taxes 1,406 1,450
Other assets 26,113 25,820
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TOTAL ASSETS $444,701 $413,855
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LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits $325,076 $292,693
Borrowed funds 67,823 68,488
Other liabilities 1,605 1,590
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TOTAL LIABILITIES 394,504 362,771
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Total stockholders' equity 50,197 51,084
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TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $444,701 $413,855
========= =========
</Table>
<Table>
<Caption>
SELECTED OPERATIONS DATA
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Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2007 2006 2007 2006
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(Unaudited)
(In thousands, except per share data)
Total interest income $ 6,384 $ 5,329 $18,398 $15,105
Total interest expense 3,394 2,490 9,679 6,501
------- ------- ------- -------
Net interest income 2,990 2,839 8,719 8,604
------- ------- ------- -------
Provision for loan losses - - 51 130
------- ------- ------- -------
Net interest income after provision
for loan losses 2,990 2,839 8,668 8,474
------- ------- ------- -------
Noninterest income 577 514 1,707 1,418
Noninterest expense 3,158 2,993 9,319 8,444
------- ------- ------- -------
Income before provision
for income taxes 409 360 1,056 1,448
Provision for income taxes 55 (54) 115 150
------- ------- ------- -------
Net Income $ 354 $ 414 $ 941 $ 1,298
------- ------- ------- -------
Earnings per common share -
basic and diluted $ 0.05 $ 0.06 $ 0.13 $ 0.18
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</Table>
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<Table>
<Caption>
SELECTED FINANCIAL RATIOS
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FOR THE THREE MONTHS
SELECTED PERFORMANCE RATIOS: (1) ENDED SEPTEMBER 30,
2007 2006
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(Unaudited)
Return on average assets 0.32 % 0.43 %
Return on average equity 2.77 3.19
Interest rate spread 2.76 3.02
Net interest margin 2.94 3.22
Efficiency ratio (2) 88.31 89.02
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</Table>
<Table>
<Caption>
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ASSET QUALITY RATIOS AT SEPTEMBER 30, AT DECEMBER 31,
2007 2006
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(Unaudited)
(Dollars in thousands)
Allowance for loan losses $ 2,071 $ 2,071
Allowance for loan losses as a percent of
loans 0.60% 0.67%
Allowance for loan losses as a percent of
nonperforming loans 278.36% 103.03%
Net charge-offs to average loans
outstanding during the period - -
Nonperforming loans $ 744 $ 2,010
Nonperforming loans as a percent of total loans 0.21% 0.65%
Nonperforming assets $ 744 $ 2,010
Nonperforming assets as a percent of total assets 0.17% 0.49%
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</Table>
(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
Lee R. Schlesinger
1-203-720-5000