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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 and Nine Months Ended December 31, 2007
ENFIELD, CT, January 29, 2008 - 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 December
31, 2007 of $395,000, or $0.07 per diluted and basic share as compared to
$264,000, or $0.05 per diluted and basic share, reported for the same quarter a
year ago. Net income for the nine months ended December 31, 2007 was $691,000,
or $0.12 per diluted and basic share, as compared to $774,000, or $0.15 per
diluted share and $0.16 per basic share for the nine months ended December 31,
2006. During the current year nine 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.
Earnings for the three and nine months ended December 31, 2007 include the
operations of Valley Bank commencing on July 12, 2007, the date that First
Valley Bancorp, Inc., the holding company for Valley Bank, was acquired by the
Company. In connection with the acquisition, each share of First Valley Bancorp,
Inc. 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, Inc., the Company
acquired $190.6 million of assets, including $141.0 million 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 December 31, 2007
increased by $1.5 million, or 60.7%, compared to the three months ended December
31, 2006. The increase for the quarter was primarily due to an increase in
average interest earning assets of $200.8 million and a 39 basis point increase
in yield on average interest earning assets, partially offset by a $187.9
million increase in average interest bearing liabilities and a 66 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 3.08% for the quarter ended December 31, 2006 to 2.81% for the
quarter ended December 31, 2007. The Company's net interest margin for the
quarter ended December 31, 2007 was 3.40% compared to 3.79% in the year earlier
period.
NONINTEREST INCOME
Noninterest income was $434,000 and $247,000 for the three months ended December
31, 2007 and 2006, respectively, and $836,000 and $673,000 for the nine months
ended December 31,
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2007 and 2006, respectively. Noninterest income for the nine months ended
December 31, 2007 was affected by 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 nine months ended December 31, 2007, Riverside Investments contributed
$48,000 and $84,000, respectively, to the Company's noninterest income.
INCOME TAX EXPENSE
Income tax expense increased from $125,000 for the three months ended December
31, 2006 to $223,000 for the three months ended December 31, 2007 and from
$352,000 for the nine months ended December 31, 2006 to $555,000 for the nine
months ended December 31, 2007. The effective tax rates were 36.1% and 32.1% for
the three months ended December 31 2007 and 2006, respectively, and 44.5% and
31.3% for the nine months ended December 31 2007 and 2006, respectively. For the
nine months ended December 31, 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 for five years to offset future capital gains, if any.
LOANS AND DEPOSITS GROW
At December 31, 2007, total assets were $502.9 million, an increase of $218.8
million, or 77.0%, from March 31, 2007. Net loans outstanding increased $174.1
million, or 87.8%, to $372.6 million at December 31, 2007 compared to March 31,
2007. At December 31, 2007, commercial real estate and commercial loans
accounted for 55.6% of the loan portfolio, residential mortgage loans accounted
for 34.5%; and consumer loans accounted for 9.9%. It has been the Company's
policy not to originate or invest in sub-prime or Alt-A loans. Total deposits
increased $178.3 million to $360.0 million at December 31, 2007 from $181.7
million at March 31, 2007. Securities sold under agreements to repurchase
increased $1.3 million from $9.2 million at March 31, 2007 to $10.4 million at
December 31, 2007. Borrowed funds increased $25.5 million to $59.1 million at
December 31, 2007 compared to $33.6 million at March 31, 2007.
STOCK REPURCHASE PROGRAM
On October 9, 2007 the Company announced the authorization of a stock repurchase
program to purchase 320,986 shares of the Company's outstanding common stock. As
of December 31, 2007 the Company has purchased 250,000 shares, at an average
price of $11.89, for a total of $3.0 million.
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
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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.
Statistical Summary
(unaudited)
(dollars in thousands, except per share data)
Income Statement Data Three Months Ended Nine Months Ended
December 31, December 31,
2007 2006 2007 2006
------ ------ ------ ------
Net interest and dividend income $3,846 $2,393 $9,894 $7,065
Provision for loan losses 38 60 208 182
Non-interest income 434 247 836 673
Non-interest expense 3,624 2,191 9,276 6,430
Net income 395 264 691 774
Earnings per share:
Basic $ 0.07 $ 0.05 $ 0.12 $ 0.16
Diluted 0.07 0.05 0.12 0.15
Dividend per share $ 0.03 $ 0.03 $ 0.09 $ 0.09
Balance Sheet Data December 31, 2007 March 31, 2007
----------------- --------------
Total assets $502,908 $284,158
Total loans, net 372,594 198,447
Loan loss reserve 3,960 1,875
Total deposits 359,955 181,675
Repurchase agreements 10,431 9,177
Borrowings 59,115 33,587
Total equity 68,869 57,266
Book value per share(1) 11.87 11.65
Tangible book value per share(2) 8.87 11.30
Key Ratios Three Months Ended Nine Months Ended
December 31, December 31,
2007 2006 2007 2006
---- ---- ---- ----
Return on average assets 0.32% 0.39% 0.22% 0.39%
Return on average equity 2.25% 1.84% 1.40% 1.81%
Net interest margin 3.40% 3.79% 3.53% 3.84%
(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 $11.16 and $10.71 at December 31, 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 $8.34 and $10.40 at December 31, 2007 and March 31, 2007,
respectively.
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