Connecticut Bancshares, Inc. Reports 26% Increase in Net Income for
the Third Quarter and Declares Quarterly Dividend of $0.18 Per
Share MANCHESTER, Conn., Oct. 27 /PRNewswire-FirstCall/ --
Connecticut Bancshares, Inc. (the "Company") , the holding company
for The Savings Bank of Manchester (the "Bank"), reported net
income of $8.51 million for the third quarter of 2003, compared to
net income of $6.74 million for the third quarter of 2002,
representing a 26.26% increase. Earnings per diluted share for the
quarter ended September 30, 2003 were $0.79 based on 10.75 million
weighted average shares outstanding, compared to earnings per
diluted share for the quarter ended September 30, 2002 of $0.62
based on 10.81 million weighted average shares outstanding. Net
income for the nine months ended September 30, 2003 was $23.33
million, as compared to net income of $18.43 million for the nine
months ended September 30, 2002, representing a 26.59% increase.
Earnings per diluted share for the nine months ended September 30,
2003 were $2.16 based on 10.79 million weighted average shares
outstanding, compared to earnings per diluted share for the nine
months ended September 30, 2002 of $1.71 based on 10.80 million
weighted average shares outstanding. The Company also declared a
quarterly cash dividend of $0.18 per share on the outstanding
shares of its common stock. The dividend will be paid on or about
November 24, 2003 to stockholders of record as of the close of
business on November 10, 2003. On July 16, 2003, the Company
announced it entered into an Agreement and Plan of Merger with The
New Haven Savings Bank ("NHSB"). The Company's stockholders will
receive $52.00 in cash in exchange for each share of the Company's
common stock held. If the transaction closes after March 31, 2004,
the merger price is subject to increase based on the Company's
earnings less dividends paid from that date to the end of the month
preceding the closing date of the merger. As a condition precedent
to the merger, NHSB will convert from a Connecticut-chartered
mutual savings bank to a Connecticut-chartered stock savings bank
and simultaneously form a holding company. Net interest income for
the third quarter of 2003 was $19.75 million, a $612,000, or 3.00%,
decrease from $20.36 million for the third quarter of 2002. Average
interest-earning assets were $2.43 billion for the quarter ended
September 30, 2003 compared to $2.33 billion for the prior year
quarter. The Company's net interest margin was 3.30% for the
quarter ended September 30, 2003 compared to 3.55% for the quarter
ended September 30, 2002. The decrease in net interest income from
the prior year quarter was primarily due to lower yields on loans
and investments partially offset by a lower cost of funds on
interest-bearing liabilities and a higher volume of loans. The
yield on interest-earning assets declined from 6.06% for the
quarter ended September 30, 2002 to 5.22% for the quarter ended
September 30, 2003. Loan yields declined from 6.64% for the quarter
ended September 30, 2002 to 5.78% for the quarter ended September
30, 2003. Investment yields declined from 4.95% for the quarter
ended September 30, 2002 to 3.94% for the quarter ended September
30, 2003. The reductions in yield were primarily due to a lower
interest rate environment. The cost of funds decreased from 2.83%
for the quarter ended September 30, 2002 to 2.17% for the quarter
ended September 30, 2003. The reduction was primarily due to a
lower interest rate environment. Average gross loans increased
$160.22 million, or 10.50%, from $1.53 billion for the quarter
ended September 30, 2002 to $1.69 billion for the quarter ended
September 30, 2003. The increase in average gross loans was
primarily in residential and commercial real estate loans.
Noninterest income for the third quarter of 2003 was $9.22 million,
a $4.46 million, or 93.70%, increase from $4.76 million for the
third quarter of 2002. The increase in noninterest income over the
prior year quarter was primarily due to an increase in gains on
sales of securities, an increase in service charges and fees and a
decrease in charges for other than temporary impairment of
investment securities. Gains on sales of securities increased $3.33
million from the prior year quarter as the Company sold $13.64
million of common and preferred stock, realizing a $3.95 million
gain during the 2003 quarter. At September 30, 2003, the Company
had $1.00 million (fair value) of preferred stock and no common
stock remaining in its portfolio. Service charges and fees
increased $854,000 as compared to the prior year quarter primarily
due to increases in checking account and commercial real estate
loan prepayment fees. During the third quarter of 2003 there were
no charges recorded for other than temporary impairment, while in
the prior year quarter a charge for other than temporary impairment
totaling $410,000 was recorded for two equity securities.
Noninterest expense for the third quarter of 2003 was $15.86
million, a $1.18 million, or 8.04%, increase from $14.68 million
for the third quarter of 2002. The increase in noninterest expense
from the prior year quarter was primarily due to merger expenses
and an increase in employee benefits partially offset by decreases
in amortization of other intangible assets and salaries. The
Company incurred $1.24 million in expenses, primarily professional
fees, relating to the merger with NHSB in the quarter ended
September 30, 2003. Employee benefits increased primarily due to
increased restricted stock, pension and ESOP expenses. In
conjunction with the 2001 acquisition of First Federal Savings and
Loan Association of East Hartford ("First Federal"), the Bank
recorded an intangible asset for noncompete agreements with former
First Federal executives. The agreements were amortized over their
twelve-month term through the third quarter of 2002. Salary expense
decreased primarily due to higher cost deferrals relating to the
origination of residential mortgages. Net interest income for the
nine months ended September 30, 2003 was $61.13 million, a $1.59
million, or 2.67%, increase from $59.54 million for the nine months
ended September 30, 2002. Average interest-earning assets were
$2.41 billion for the nine months ended September 30, 2003 compared
to $2.32 billion for the prior year period. The Company's net
interest margin was 3.41% for the nine months ended September 30,
2003 compared to 3.45% for the nine months ended September 30,
2002. The increase in net interest income from the prior year
period was primarily due to a lower cost of funds on
interest-bearing liabilities and a higher volume of loans partially
offset by lower yields on loans and investments. The cost of funds
decreased from 2.97% for the nine months ended September 30, 2002
to 2.29% for the nine months ended September 30, 2003. The
reduction was primarily due to a lower interest rate environment.
Average gross loans increased $145.85 million, or 9.76%, from $1.49
billion for the nine months ended September 30, 2002 to $1.64
billion for the nine months ended September 30, 2003. The increase
in average gross loans was primarily in residential and commercial
real estate loans. The yield on interest-earning assets declined
from 6.10% for the nine months ended September 30, 2002 to 5.44%
for the nine months ended September 30, 2003. Loan yields declined
from 6.75% for the nine months ended September 30, 2002 to 6.01%
for the nine months ended September 30, 2003. Investment yields
declined from 4.93% for the nine months ended September 30, 2002 to
4.23% for the nine months ended September 30, 2003. The reductions
in yield were primarily due to a lower interest rate environment.
Noninterest income for the first nine months of 2003 was $19.98
million, a $6.01 million, or 43.02%, increase from $13.97 million
for the first nine months of 2002. The increase in noninterest
income over the prior year was primarily due to an increase in
gains on sales of securities and an increase in service charges and
fees. Gains on sales of securities increased $3.79 million from the
prior year as the Company sold $13.64 million of common and
preferred stock, realizing a $3.95 million gain during the third
quarter of 2003. Service charges and fees increased $2.21 million
as compared to the prior year primarily due to increases in
checking account, commercial real estate loan prepayment and
merchant services fees. Noninterest expense for the first nine
months of 2003 was $45.21 million, a $166,000, or 0.38%, increase
from $45.05 million for the first nine months of 2002. The increase
in noninterest expense from the prior year period was primarily due
to merger expenses and an increase in employee benefits, partially
offset by decreases in amortization of other intangible assets,
fees and services, salaries, furniture and equipment and marketing
expenses. The Company incurred $1.72 million in expenses, primarily
professional fees, relating to the merger with NHSB in the nine
months ended September 30, 2003. Employee benefits increased
primarily due to increased restricted stock, pension and ESOP
expenses. In conjunction with the 2001 acquisition of First
Federal, the Bank recorded an intangible asset for noncompete
agreements with former First Federal executives. The agreements
were amortized over their twelve-month term through the third
quarter of 2002. Fees and services decreased primarily due to lower
consulting fees for information technology and investments. Salary
expense decreased primarily due to higher cost deferrals relating
to the origination of residential mortgages. Furniture and
equipment expenses decreased as certain assets became fully
depreciated. Marketing expenses decreased as the Bank reduced its
expense related to various media advertising. The Company did not
repurchase any shares of its common stock during the third quarter
of 2003, and has repurchased a total of 558,641 shares of its
common stock since it's initial public offering on March 2, 2000 at
a weighted average price of $38.92 per share. Established in 1905,
The Savings Bank of Manchester is one of Connecticut's oldest and
largest banks. The Bank is headquartered in Manchester,
Connecticut, with 28 branch offices serving 22 communities
throughout central and eastern Connecticut. 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 regulations, 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. Contact: Connecticut
Bancshares, Inc. Michael J. Hartl Senior Vice President and Chief
Financial Officer (860) 646-1700 CONNECTICUT BANCSHARES, INC. AND
SUBSIDIARY Consolidated Statements of Condition (unaudited)
(dollars in thousands) September 30, September 30, December 31,
2003 2002 2002 ASSETS Cash and due from banks: Non-interest-bearing
deposits and cash $26,137 $17,300 $16,346 Short-term investments
89,454 64,361 8,918 Cash and cash equivalents 115,591 81,661 25,264
Securities available for sale, at fair value 627,450 759,393
841,622 Loans held for sale - 35 - Loans: One- to four-family
residential mortgages 996,319 893,037 907,188 Construction
mortgages 65,922 83,531 64,182 Commercial and multi-family
mortgages 308,611 261,593 275,818 Commercial business 184,874
176,080 180,612 Installment 138,947 121,101 128,939 Total loans,
gross 1,694,673 1,535,342 1,556,739 Allowance for loan losses
16,487 15,344 16,172 Total loans, net 1,678,186 1,519,998 1,540,567
Federal Home Loan Bank Stock, at cost 30,783 30,783 30,783 Premises
and equipment, net 16,115 18,181 17,793 Accrued interest receivable
10,549 12,828 12,613 Other real estate owned 112 - - Cash surrender
value of life insurance 45,587 43,204 43,803 Current and deferred
income taxes 7,410 - 58 Goodwill 19,488 19,488 19,488 Other
intangible assets 8,417 9,693 9,598 Other assets 6,345 6,409 5,953
Total assets $2,566,033 $2,501,673 $2,547,542 LIABILITIES AND
STOCKHOLDERS' EQUITY Deposits: Savings and money market $618,294
$592,614 $592,386 Certificates of deposit 592,421 662,497 643,201
NOW accounts 230,495 213,564 230,293 Demand deposits 151,052
121,982 130,099 Total deposits 1,592,262 1,590,657 1,595,979
Short-term borrowed funds 120,332 119,532 121,052 Mortgagors'
escrow accounts 12,205 7,862 15,097 Advances from Federal Home Loan
Bank 554,759 472,681 533,890 Current and deferred income taxes - 38
- Accrued benefits and other liabilities 30,216 57,397 29,964 Total
liabilities 2,309,774 2,248,167 2,295,982 Stockholders' equity:
Common stock 115 113 113 Additional paid-in capital 120,079 110,217
110,345 Retained earnings 167,331 143,693 149,554 ESOP unearned
compensation (6,979) (7,599) (7,444) Restricted stock unearned
compensation (8,731) (5,196) (10,880) Treasury stock, at cost
(21,744) (5,522) (5,522) Accumulated other comprehensive income
6,188 17,800 15,394 Total stockholders' equity 256,259 253,506
251,560 Total liabilities and stockholders' equity $2,566,033
$2,501,673 $2,547,542 CONNECTICUT BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Operations (dollars in thousands, except
earnings per share) For the Three Months Ended September 30, 2003
2002 (unaudited) Interest and dividend income: Interest income on
loans $24,371 $25,354 Interest and dividends on investment
securities 7,137 9,754 Total interest and dividend income 31,508
35,108 Interest expense: Interest on deposits and escrow 5,439
8,452 Interest on short-term borrowed funds 184 442 Interest on
advances from Federal Home Loan Bank 6,139 5,856 Total interest
expense 11,762 14,750 Net interest income 19,746 20,358 Provision
for loan losses 300 375 Net interest income after provision for
loan losses 19,446 19,983 Noninterest income: Service charges and
fees 4,156 3,302 Income from cash surrender value of life insurance
598 616 Brokerage commission income 327 468 Gains on sales of
securities, net 3,949 619 Other than temporary impairment of
investment securities - (410) Gains on mortgage loan sales, net 54
41 Other 134 119 Total noninterest income 9,218 4,755 Noninterest
expense: Salaries 4,905 5,342 Employee benefits 3,816 2,745 Fees
and services 1,645 1,732 Occupancy, net 968 985 Furniture and
equipment 848 961 Marketing 478 475 Amortization of other
intangible assets 394 942 Foreclosed real estate (income) expense
(2) 88 Net gains on sales of repossessed assets (37) (8) Merger
expenses 1,235 - Other operating expenses 1,611 1,417 Total
noninterest expense 15,861 14,679 Income before provision for
income taxes 12,803 10,059 Provision for income taxes 4,289 3,320
Net income $8,514 $6,739 Earnings per share: Basic $0.86 $0.66
Diluted $0.79 $0.62 Weighted average shares outstanding: Basic
9,854,969 10,134,565 Diluted 10,750,447 10,814,817 CONNECTICUT
BANCSHARES, INC. AND SUBSIDIARY Consolidated Statements of
Operations (dollars in thousands, except earnings per share) For
the Nine Months Ended September 30, 2003 2002 (unaudited) Interest
and dividend income: Interest income on loans $73,877 $75,541
Interest and dividends on investment securities 23,918 30,020 Total
interest and dividend income 97,795 105,561 Interest expense:
Interest on deposits and escrow 17,584 27,007 Interest on
short-term borrowed funds 582 1,304 Interest on advances from
Federal Home Loan Bank 18,496 17,708 Total interest expense 36,662
46,019 Net interest income 61,133 59,542 Provision for loan losses
975 1,125 Net interest income after provision for loan losses
60,158 58,417 Noninterest income: Service charges and fees 11,415
9,211 Income from cash surrender value of life insurance 1,784
1,808 Brokerage commission income 1,120 1,286 Gains on sales of
securities, net 5,458 1,671 Other than temporary impairment of
investment securities (359) (680) Gains on mortgage loan sales, net
125 190 Other 433 488 Total noninterest income 19,976 13,974
Noninterest expense: Salaries 14,584 15,016 Employee benefits
11,323 8,536 Fees and services 4,857 5,578 Occupancy, net 2,962
3,535 Furniture and equipment 2,511 2,978 Marketing 1,220 1,567
Amortization of other intangible assets 1,181 2,914 Foreclosed real
estate expense 83 179 Net gains on sales of repossessed assets (42)
(16) Merger expenses 1,722 - Other operating expenses 4,811 4,759
Total noninterest expense 45,212 45,046 Income before provision for
income taxes 34,922 27,345 Provision for income taxes 11,588 8,920
Net income $23,334 $18,425 Earnings per share: Basic $2.36 $1.82
Diluted $2.16 $1.71 Weighted average shares outstanding: Basic
9,885,825 10,137,470 Diluted 10,787,029 10,802,544 CONNECTICUT
BANCSHARES, INC. AND SUBSIDIARY Selected Financial Data (dollars in
thousands, except per share amounts) For the Three Months For the
Nine Months Ended September 30, Ended September 30, 2003 2002 2003
2002 (unaudited) (unaudited) Operating ratios: Return on average
assets 1.32% 1.08% 1.22% 1.00% Return on average stockholders'
equity 13.39% 10.52% 12.27% 9.96% Average stockholders' equity to
average assets 9.83% 10.30% 9.95% 10.07% Yields (1): Net interest
rate spread 3.05% 3.23% 3.15% 3.13% Net interest margin 3.30% 3.55%
3.41% 3.45% Gross loans 5.78% 6.64% 6.01% 6.75% Securities and
short term investments 3.94% 4.95% 4.23% 4.93% Total
interest-earning assets 5.22% 6.06% 5.44% 6.10% Interest-bearing
deposits and escrow 1.48% 2.27% 1.61% 2.43% Short-term borrowed
funds 0.62% 1.47% 0.66% 1.54% Advances from Federal Home Loan Bank
4.25% 4.93% 4.39% 4.98% Total interest-bearing liabilities 2.17%
2.83% 2.29% 2.97% Allowance for loan losses summary: Allowance for
loan losses, beginning of period $16,354 $15,325 $16,172 $15,228
Provision for loan losses 300 375 975 1,125 Loans charged off 292
433 900 1,261 Recoveries of loans previously charged off (125) (77)
(240) (252) Net charge offs 167 356 660 1,009 Allowance for loan
losses, end of period $16,487 $15,344 $16,487 $15,344 Net charge
offs to average gross loans (annualized) 0.04% 0.09% 0.05% 0.09%
Allowance for loan losses to: Total gross loans 0.97% 1.00% 0.97%
1.00% Total nonperforming loans 803.85% 155.87% 803.85% 155.87% At
September 30, At December 31, 2003 2002 2002 Other selected data:
(unaudited) (unaudited) Loans past due 90 days and still accruing:
One- to four family mortgages $390 $670 $527 Commercial and
multifamily mortgages - 605 395 Commercial business 187 1,394 313
Installment 244 228 108 Total loans past due 90 days and still
accruing 821 2,897 1,343 Loans on nonaccrual: One- to four family
mortgages 125 393 306 Construction mortgages - 2,393 - Commercial
and multifamily mortgages 286 393 393 Commercial business 819 3,763
852 Installment - 5 - Total loans on nonaccrual 1,230 6,947 1,551
Total nonperforming loans 2,051 9,844 2,894 Other real estate owned
112 - - Total nonperforming assets $2,163 $9,844 $2,894 Total
nonperforming loans as a percentage of total gross loans 0.12%
0.64% 0.19% Total nonperforming assets as a percentage of total
assets 0.08% 0.39% 0.11% Shares outstanding (excludes treasury
stock) 10,972,670 11,101,942 11,105,546 Book value per share $23.35
$22.83 $22.65 Tangible book value per share $20.81 $20.21 $20.03
Market value per share $51.25 $37.03 $38.45 (1) Yields are
calculated on a fully taxable-equivalent basis assuming a 35%
Federal income tax rate. Security yields are calculated on
amortized cost and exclude the impact of unrealized gains and
losses on available for sale securities. DATASOURCE: Connecticut
Bancshares, Inc. CONTACT: Michael J. Hartl, Senior Vice President
and Chief Financial Officer of Connecticut Bancshares, Inc.,
+1-860-646-1700 Web site: http://www.sbmct.com/
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