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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 Results For The
Three and Twelve Months Ended March 31, 2009 and
Announces Dividend
ENFIELD, CT, May 13, 2009- New England Bancshares, Inc. (the "Company") (NASDAQ
GM: NEBS), the holding company for Enfield Federal Savings and Loan Association
and Valley Bank, reported a net loss for the quarter ended March 31, 2009 of
$1.0 million, or $0.18 per diluted share as compared to net income of $524,000,
or $0.09 per diluted share, reported for the same quarter a year ago. The
Company reported a net loss of $1.8 million, or $0.32 per diluted share, for the
fiscal year ended March 31, 2009 as compared to net income of $1.2 million, or
$0.21 per diluted share, for the fiscal year ended March 31, 2008. The Company
also declared a dividend of $0.02 per share for the quarter ended March 31,
2009, see Dividend below.
David J. O'Connor, the Company's President and Chief Executive Officer stated,
"Our results reflect the stresses affecting the economy. We increased our
allowance for loan losses to reflect the difficulties faced by our borrowers and
as with many institutions, an impairment charge on securities had a significant
impact on our operating results. Our core earnings, and in particular net
interest income, remains solid and increased over 13% for the fiscal year ended
March 31, 2009. Capital remains strong at the Company and its banking
subsidiaries with Tier 1 capital ratios of 7.52% and 8.98% for Enfield Federal
Savings and Loan Association and Valley Bank, respectively, and 8.12% on a
consolidated basis."
Key Items for the Year:
o The Company recorded a $2.9 million provision during the fiscal year
ended March 31, 2009 compared to $307,000 in the prior fiscal year.
See Asset Quality below.
o Net interest margin on a fully tax equivalent basis was 3.18% for
the fiscal year ended March 31, 2009 compared to 3.53% in the prior
fiscal year. The Company's net interest margin 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 Expenses of $247,000 were recorded for severance benefits in
conjunction with the merger of the Company's two banking
subsidiaries as a result of the consolidation. See Subsidiary Merger
below.
o Expenses of $164,000 were recorded for fees in the acquisition of
Apple Valley Bank & Trust Company.
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o The Company recorded a $2.7 million other-than-temporary impairment
charge on certain investment securities, primarily consisting of
pass-through auction rate securities issued by trusts with assets
consisting solely of Fannie Mae and Freddie Mac preferred stock.
Key Balance Sheet Changes at March 31, 2009 compared to March 31, 2008:
o Total assets increased $53.5 million, or 10.3%, to $571.7 million at
March 31, 2009.
o Net loans increased $41.8 million, or 11.2%, to $413.6 million at
March 31, 2009. This increase was comprised of a $25.0 million
increase in commercial business loans and a $24.3 million increase
in commercial mortgage loans, partially offset by a $5.5 million
decrease in construction mortgage loans and a $2.4 million increase
in the allowance for loan losses.
o Deposits increased $49.1 million, or 13.3%, from $370.3 million at
March 31, 2008 to $419.4 million at March 31, 2009. The increase is
comprised of a $47.7 million increase in certificate of deposits, a
$3.2 million increase in savings accounts and a $1.1 million
increase in NOW and money market accounts, partially offset by a
$2.9 million decrease in noninterest-bearing demand deposits. At
March 31, 2009 certificates of deposit comprised 59.2% of deposits.
o Federal Home Loan Bank ("FHLB") advances increased from $61.9
million at March 31, 2008 to $66.8 million at March 31, 2009, an
increase of $4.9 million, or 7.9%. During the year the Company
borrowed from the FHLB as an alternative to competing with
above-market 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 $11.9 million at March 31, 2009 compared to $1.2
million at March 31, 2008. The balance at March 31, 2009 is comprised of $5.6
million of commercial business loans, $3.9 million of commercial mortgage loans,
$1.9 million of residential mortgage loans, $440,000 of construction mortgage
loans and $28,000 of consumer loans. Net charge-offs were $517,000 for the
fiscal year ended March 31, 2009. During the fiscal year ended March 31, 2009
the Company recorded a $2.9 million loan loss provision. The allowance for loan
losses as a percentage of gross loans outstanding increased from 1.08% at March
31, 2008 to 1.54% at March 31, 2009.
Subsidiary 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
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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 subsidiary merger
will allow the Company to reduce annual expenses approximately $750,000. The
merger of the banking subsidiaries was completed on April 30, 2009.
Dividend:
The Company's Board of Directors declared a cash dividend for the quarter ended
March 31, 2009 of $0.02 per share. The cash dividend will be payable on June 19,
2009 to stockholders of record on June 1, 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 Twelve Months
March 31, Ended March 31,
2009 2008 2009 2008
-------- -------- -------- --------
Net interest and dividend income $ 3,864 $ 3,967 $ 15,718 $ 13,861
Provision for loan losses 2,057 99 2,929 307
Noninterest income (charges) 539 502 (550) 1,338
Noninterest expense 3,932 3,673 14,957 12,949
Net (loss) income (1,007) 524 (1,802) 1,215
Earnings (loss) per share:
Basic (0.18) $ 0.09 $ (0.32) $ 0.22
Diluted (0.18) 0.09 (0.32) 0.21
Dividend per share $ 0.04 $ 0.03 $ 0.15 $ 0.12
Balance Sheet Data March 31, 2009 March 31, 2008
Total assets $571,664 $518,179
Total loans, net 413,566 371,769
Allowance for loan losses 6,458 4,046
Total deposits 419,436 370,312
Repurchase agreements 12,069 8,555
FHLB advances 66,833 61,928
Total equity 63,954 68,737
Book value per share(1) 11.47 11.96
Tangible book value per share(2) 8.44 8.94
Key Ratios Three Months Ended Twelve Months
March 31, Ended March 31,
2009 2008 2009 2008
Return on average assets (0.18)% 0.36% (0.33)% 0.27%
Return on average equity (1.56)% 3.04% (2.71)% 1.83%
Net interest margin, tax
equivalent basis 3.14% 3.49% 3.18% 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 $10.87 and $11.27 at March 31, 2009 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 $8.00 and $8.42 at March 31, 2009 and March 31, 2008, respectively.
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