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NEW ENGLAND BANCSHARES, INC.
855 Enfield Street
Enfield, CT 06082
For Immediate Release
CONTACT: Scott D. Nogles, Chief Financial Officer
(860) 253-5200
New England Bancshares, Inc. Reports Earnings for the
Three Months Ended June 30, 2007
ENFIELD, CT, August 1, 2007 - New England Bancshares, Inc. (the "Company")
(Nasdaq GM: NEBS), the holding company for Enfield Federal Savings and Loan
Association and Valley Bank, reported net income for the quarter ended June 30,
2007 of $49,000, or $0.01 per diluted share as compared to $270,000, or $0.05
per diluted share, reported for the same quarter a year ago. During the current
year quarter, the Company sold $6.4 million of securities, recording a loss of
$222,000 ($199,000 on an after-tax basis), as it restructures its balance sheet
to provide a better yield on investments. Exclusive of the loss on the sale of
these securities, net income for the quarter would have been $248,000. Earnings
for the quarter ended June 30, 2007 do not include the operations of Valley
Bank, which was acquired on July 12, 2007. In connection with the acquisition,
each share of First Valley Bancorp, Inc., the former parent of Valley Bank, was
converted into $9.00 in cash and 0.8907 shares of the Company, resulting in the
issuance of 1,068,885 shares and $10.8 million in cash.
NET INTEREST AND DIVIDEND INCOME IMPROVES OVER PRIOR YEAR
Net interest and dividend income for the three months ended June 30, 2007
increased by $72,000, or 3.0%, compared to the three months ended June 30, 2006.
The increase for the quarter was primarily due to an increase in average
interest earning assets of $27.1 million and a 37 basis point increase in yield
on average interest earning assets, partially offset by a $24.7 million increase
in average interest bearing liabilities and an 80 basis point increase in the
rate paid on average interest bearing liabilities. The changes of the yield on
average interest earning assets and the rate paid on average interest bearing
liabilities caused the Company's interest rate spread to decrease from 3.29% for
the quarter ended June 30, 2006 to 2.86% for the quarter ended June 30, 2007.
The Company's net interest margin for the quarter ended June 30, 2007 was 3.60%
compared to 3.89% in the year earlier period.
LOANS AND DEPOSITS GROW
At June 30, 2007, total assets were $292.5 million, an increase of $8.3 million,
or 2.9%, from March 31, 2007. Net loans outstanding increased $777,000, or 0.4%,
to $199.2 million at June 30, 2007 compared to March 31, 2007. The increase in
loans was primarily due to an increase of $1.8 million in commercial mortgage
loans, a $1.1 million increase in commercial loans and a $927,000 increase in
consumer loans, partially offset by a $1.5 million decrease in multi-family
loans and a $1.2 million decrease in construction loans. At June 30, 2007
commercial real estate and commercial loans accounted for 31.8% of the loan
portfolio. Total deposits increased $3.2
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million, or 1.8%, to $184.9 million at June 30, 2007 from $181.7 million at
March 31, 2007. Securities sold under agreements to repurchase increased $4.9
million from $9.2 million at March 31, 2007 to $14.1 million at June 30, 2007.
Federal Home Loan Bank advances decreased $653,000, or 1.9%, to $32.9 million at
June 30, 2007 compared to $33.6 million at March 31, 2007.
NONINTEREST INCOME
Affecting noninterest income for the three months ended June 30, 2007 was a
$225,000 loss on sale of investments, of which $222,000 was related to the sale
of two mutual funds, totaling $6.4 million. One of these mutual funds has been
owned for over 15 years and the other for over 5 years. Based on the forecasts
for interest rates and the continued loss position of the funds, the Company
decided to sell the funds and reinvest the proceeds in loans and other
investments. Besides the loss on sale of investments, all other noninterest
income categories were consistent.
INCOME TAX EXPENSE
Income tax expense increased from $120,000 for the three months ended June 30,
2006 to $148,000 for the three months ended June 30, 2007. The effective tax
rates were 75.1% and 30.8% for the three months ended June 30 2007 and 2006,
respectively. The $225,000 loss on sale of the mutual funds described above is
considered a capital loss and can only be offset by capital gains. The Company
was able to offset $68,000 of the loss from a capital gain recorded two years
ago; however the Company is not able to record a tax benefit on the remaining
$154,000 capital loss. The $154,000 is allowed to be carried forward to offset
future capital gains, if any.
Statements contained in this news release, which are not historical facts, are
forward-looking statements as that term is defined in the Private Securities
Litigation reform Act of 1995. Such forward-looking statements are subject to
risks and uncertainties, which could cause actual results to differ materially
from those currently anticipated due to a number of factors, which include, but
are not limited to, factors discussed in documents filed by the Company with the
Securities and Exchange Commission from time to time. Subject to applicable laws
and regulation, the Company does not undertake - and specifically disclaims any
obligation - to publicly release the results of any revisions which may be made
to any forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events.
New England Bancshares, Inc. is headquartered in Enfield, Connecticut, and
operates Enfield Federal Savings and Loan Association with eight banking centers
servicing the communities of Enfield, Manchester, Suffield, East Windsor,
Ellington and Windsor Locks and Valley Bank with four banking centers serving
the communities of Bristol, Terryville and Southington. For more information
regarding Enfield Federal's products and services, please visit
www.enfieldfederal.com and for more information regarding Valley Bank's products
and services, please visit www.valleybankct.com.
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Statistical Summary
(unaudited)
(dollars in thousands, except per share data)
Income Statement Data Three Months Ended
- --------------------- ------------------
June 30,
--------
2007 2006
------- -------
Net interest and dividend income $ 2,392 $ 2,320
Provision for loan losses $ 62 $ 61
Noninterest income $ (30) $ 209
Noninterest expense $ 2,103 $ 2,078
Net income $ 49 $ 270
Earnings per share:
Basic $ 0.01 $ 0.05
Diluted $ 0.01 $ 0.05
Dividend per share $ 0.03 $ 0.03
Balance Sheet Data June 30, 2007 March 31, 2007
- ------------------ ------------- --------------
Total assets $292,507 $284,158
Total loans, net $199,224 $198,447
Allowance for loan losses $ 1,935 $ 1,875
Total deposits $184,886 $181,675
Repurchase agreements $ 14,143 $ 9,177
FHLB advances $ 32,934 $ 33,587
Total equity $ 56,953 $ 57,266
Book value per share(1) $ 11.53 $ 11.65
Key Ratios Three Months Ended
- ---------- ------------------
June 30,
--------
2007 2006
---- ----
Return on average assets 0.07% 0.41%
Return on average equity 0.34% 1.88%
Net interest margin 3.60% 3.85%
(1) Calculation excludes unallocated ESOP shares and unvested incentive stock
grants. Including these shares in the calculation causes book value per share to
decrease to $10.64 and $10.71 at June 30, 2007 and March 31, 2007.
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