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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 Increase of
$352,000 for the Three Months Ended December 31, 2008
ENFIELD, CT, January 28, 2009- 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, 2008 of $747,000, or $0.13 per diluted share as compared to net income of
$395,000, or $0.07 per diluted share, reported for the same quarter a year ago,
an increase of $352,000, or 89.1%. The Company reported a net loss of $795,000,
or $0.14 per diluted share, for the nine months ended December 31, 2008 as
compared to net income of $691,000, or $0.12 per diluted share, for the nine
months ended December 31, 2007.
Key Items for the Quarter:
o The Company recognized a $639,000 tax benefit on the $1.7 million
other-than-temporary impairment charge taken in the previous quarter
on pass-through auction rate securities issued by trusts with assets
consisting solely of Fannie Mae and Freddie Mac preferred stock. The
Company recorded an additional $105,000 other-than-temporary
impairment pre-tax charge in the current quarter on these
securities. At December 31, 2008 these securities have a book value
of $28,000.
o Net interest margin on a fully tax equivalent basis was 3.38% for
the quarter ended December 31, 2008 compared to 3.40% in the same
quarter a year ago and 3.38% for the quarter ended September 30,
2008. The Company's margin, which remained flat, has been negatively
impacted by the historically low interest rates, including a Federal
Funds rate which has a target between 0% and 0.25%.
o The Company recorded a $565,000 provision for loan losses. See Asset
Quality below.
o Expenses of $247,000 were recorded for severance benefits in
conjunction with the merger of the Company's two subsidiaries. See
Merger below.
o Capital remains strong with an equity to assets ratio of 11.8%. In
addition the Tier 1 capital ratio was 7.86% for Enfield Federal
Savings and Loan Association and 9.42% for Valley Bank.
Key Balance Sheet Changes at December 31, 2008 compared to March 31, 2008:
o Total assets increased $33.9 million, or 6.5%, to $552.1 million at
December 31, 2008.
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o Net loans increased $35.6 million, or 9.6%, to $407.3 million at
December 31, 2008. This increase was comprised of a $21.5 million
increase in commercial business loans, an $11.5 million increase in
commercial mortgage loans and a $6.4 million increase in residential
mortgage loans, partially offset by a $3.7 million decrease in
construction mortgage loans.
o Deposits increased $27.9 million, or 7.5%, from $370.3 million at
March 31, 2008 to $398.2 million at December 31, 2008. The increase
is comprised of a $28.4 million increase in certificate of deposits
and a $6.6 million increase in noninterest-bearing demand deposits,
partially offset by a $7.9 million increase in money market demand
deposits. At December 31, 2008 certificate of deposits comprised
57.5% of deposits.
o Federal Home Loan Bank ("FHLB") advances increased from $61.9
million at Match 31, 2008 to $67.6 million at December 31, 2008, an
increase of $5.7 million, or 9.2%. During the year the Company
borrowed from the FHLB as an alternative to competing with above
market-rate deposit rates offered by competitors in our market. The
Company was able to reduce the rate paid on liabilities and was able
to lock the rates in for a longer time period.
Asset Quality:
Total nonaccrual loans were $6.6 million at December 31, 2008, an increase of
$5.4 million from $1.2 million at March 31, 2008. Of this increase, $4.4 million
was comprised of commercial business loans and commercial mortgage loans. Net
charge-offs were $154,000 and $277,000 for the three and nine months ended
December 31, 2008, respectively. During the quarter and nine months ended
December 31, 2008 the Company provided $565,000 and $872,000, respectively, in
loan loss provisions. The allowance for loan losses as a percentage of gross
loans outstanding increased from 1.08% at March 31, 2008 to 1.13% at December
31, 2008.
Merger:
On January 5, 2009, the Company announced its intention to merge its
wholly-owned federal savings bank subsidiary, Enfield Federal Savings and Loan
Association ("Enfield"), with and into its wholly-owned Connecticut commercial
banking subsidiary, Valley Bank ("Valley"), and rename the combined bank "New
England Bank." The Company will retain the name of each bank at their respective
branches and operate the branches as a division of New England Bank. The
subsidiary merger is designed to improve the efficiencies of the Company by
eliminating the additional regulatory and administrative costs of maintaining
two separately chartered banking subsidiaries with similar products, services
and operations. The consolidation will allow the Company to reduce its operating
expenses while maintaining the financial products and services offered by both
banks. The combined structure will also assist the combined bank in offering a
higher level of customer service. It is anticipated that the merger will allow
the Company to reduce annual expenses in excess of $750,000. The merger of the
banking subsidiaries is subject to regulatory approval and is expected to be
completed in the second quarter of 2009.
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Acquisition:
On January 14, 2009 the Company announced its intention to acquire Apple Valley
Bank & Trust Company of Cheshire, Connecticut. As part of the acquisition, Apple
Valley Bank will be merged into New England Bancshares' wholly-owned banking
subsidiary, Valley Bank. The transaction will increase New England Bancshares'
assets from $541 million at September 30, 2008 to approximately $624 million and
increase its banking offices from 12 to 15. Under the terms of the transaction,
shareholders of Apple Valley Bank will be entitled to elect to receive either
one share of New England Bancshares common stock or $8.50 in cash for each share
of Apple Valley Bank common stock, subject to an aggregate allocation of 60%
stock and 40% cash. Based upon the $8.50 per share price, the consideration is
approximately 119% of Apple Valley Bank's tangible book value and represents a
2% franchise premium to core deposits. New England Bancshares expects the
transaction to be accretive to earnings per share in the first full year of
combined operations. It is expected that the transaction will close in the
second quarter of 2009.
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 Savings and Loan Association'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 Nine Months Ended
December 31, December 31,
------------------- --------------------
2008 2007 2008 2007
-------- -------- -------- --------
Net interest and dividend income $ 4,022 $ 3,846 $ 11,854 $ 9,894
Provision for loan losses 565 38 872 208
Non-interest income (charge) 438 434 (1,089) 836
Non-interest expense 3,863 3,624 11,025 9,276
Net (loss) income 747 395 (795) 691
Earnings (loss) per share:
Basic 0.13 $ 0.07 $ (0.14) $ 0.12
Diluted 0.13 0.07 (0.14) 0.12
Dividend per share $ 0.04 $ 0.03 $ 0.11 $ 0.09
Balance Sheet Data December 31, 2008 March 31, 2008
----------------- --------------
Total assets $552,085 $518,179
Total loans, net 407,332 371,769
Allowance for loan losses 4,641 4,046
Total deposits 398,199 370,312
Repurchase agreements 11,213 8,555
FHLB advances 67,623 61,928
Total equity 65,361 68,737
Book value per share(1) 11.60 11.96
Tangible book value per share(2) 8.59 8.94
Key Ratios Three Months Ended Nine Months Ended
December 31, December 31,
------------------- --------------------
2008 2007 2008 2007
Return on average assets 0.54% 0.32% (0.20)% 0.22%
Return on average equity 4.58% 2.25% (1.58)% 1.40%
Net interest margin 3.38% 3.40% 3.39% 3.53%
(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 $11.00 and $11.27 at December 31, 2008 and March 31, 2008,
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 $8.14 and $8.42 at December 31, 2008 and March 31, 2008,
respectively.
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