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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 September 30, 2007
ENFIELD, CT, October 29, 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 September
30, 2007 of $247,000, or $0.04 per diluted share as compared to $240,000, or
$0.05 per diluted share, reported for the same quarter a year ago. Net income
for the six months ended September 30, 2007 was $296,000, or $0.05 per diluted
share, as compared to $510,000, or $0.10 per diluted share for the six months
ended September 30, 2006. During the current year six month period, the Company
sold $6.4 million of securities, recording a loss of $222,000 ($199,000 on an
after-tax basis), as it restructured its balance sheet to provide a better yield
on investments. Exclusive of the loss on the sale of these securities, net
income for the six months ended September 30, 2007 would have been $495,000.
Earnings for the three and six months ended September 30, 2007 include the
operations of Valley Bank commencing on July 12, 2007, the date that First
Valley Bancorp was acquired by the Company. 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 the payment of $10.8 million in cash. Through
the acquisition of First Valley Bancorp, the Company acquired $190.6 million of
assets, including $141.0 of net loans, and $178.4 million of liabilities,
including $168.4 million of deposits and $8.5 million of borrowings.
NET INTEREST AND DIVIDEND INCOME IMPROVES OVER PRIOR YEAR
Net interest and dividend income for the three months ended September 30, 2007
increased by $1.3 million, or 55.4%, compared to the three months ended
September 30, 2006. The increase for the quarter was primarily due to an
increase in average interest earning assets of $161.5 million and a 70 basis
point increase in yield on average interest earning assets, partially offset by
a $152.3 million increase in average interest bearing liabilities and an 89
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 3.15% for the quarter ended September 30, 2006 to 2.97% for the
quarter ended September 30, 2007. The Company's net interest margin for the
quarter ended September 30, 2007 was 3.59% compared to 3.82% in the year earlier
period.
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NONINTEREST INCOME
Affecting noninterest income for the six months ended September 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. 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. The
Company's composition of noninterest income has changed with the acquisition of
Valley Bank, primarily due to its investment services subsidiary, Riverside
Investments. For the three and six months ended September 30, 2007, Riverside
Investments contributed $36,000 to the Company's noninterest income.
INCOME TAX EXPENSE
Income tax expense increased from $107,000 for the three months ended September
30, 2006 to $184,000 for the three months ended September 30, 2007 and from
$227,000 for the six months ended September 30, 2006 to $332,000 for the six
months ended September 30, 2007. The effective tax rates were 42.7% and 30.8%
for the three months ended September 30 2007 and 2006, respectively, and 52.9%
and 30.8% for the six months ended September 30 2007 and 2006, respectively. For
the six months ended September 30, 2007, 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.
LOANS AND DEPOSITS GROW
At September 30, 2007, total assets were $486.8 million, an increase of $202.7
million, or 71.3%, from March 31, 2007. Net loans outstanding increased $151.6
million, or 76.4%, to $350.0 million at September 30, 2007 compared to March 31,
2007. At September 30, 2007, commercial real estate and commercial loans
accounted for 37.9% of the loan portfolio, residential mortgage loans accounted
for 52.0%; and consumer loans accounted for 10.1%. Total deposits increased
$176.6 million to $358.2 million at September 30, 2007 from $181.7 million at
March 31, 2007. Securities sold under agreements to repurchase increased $3.7
million from $9.2 million at March 31, 2007 to $12.9 million at September 30,
2007. Borrowed funds increased $7.6 million to $41.2 million at September 30,
2007 compared to $33.6 million at March 31, 2007.
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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Income Statement Data Three Months Ended Six Months Ended
September 30, September 30,
--------------------- ---------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Net interest and dividend income $ 3,656 $ 2,352 $ 6,048 $ 4,672
Provision for loan losses 108 62 170 123
Non-interest income 432 218 402 427
Non-interest expense 3,549 2,161 5,652 4,239
Net income 247 240 296 510
Earnings per share:
Basic $ 0.04 $ 0.05 $ 0.05 $ 0.10
Diluted 0.04 0.05 0.05 0.10
Dividend per share $ 0.03 $ 0.03 $ 0.06 $ 0.06
Balance Sheet Data September 30, 2007 March 31, 2007
------------------ --------------
Total assets $ 486,846 $ 284,158
Total loans, net 350,007 198,447
Loan loss reserve 4,015 1,875
Total deposits 358,226 181,675
Repurchase agreements 12,860 9,177
Borrowings 41,197 33,587
Total equity 70,764 57,266
Book value per share(1) 11.76 11.65
Tangible book value per share(2) 8.84 11.30
Key Ratios Three Months Ended Six Months Ended
September 30, September 30,
-------------------- --------------------
2007 2006 2007 2006
-------- -------- -------- --------
Return on average assets 0.21% 0.36% 0.16% 0.39%
Return on average equity 1.35% 1.68% 0.91% 1.79%
Net interest margin 3.59% 3.82% 3.63% 3.86%
(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 $11.02 and $10.71 at September 30, 2007 and March 31, 2007,
respectively.
(2) Calculation excludes unallocated ESOP shares and unvested incentive stock
grants. Including these shares in the calculation causes book value per share to
decrease to $8.29 and $10.40 at September 30, 2007 and March 31, 2007,
respectively.
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