SI Financial Group, Inc. (the “Company”) (NASDAQ:SIFI), the holding
company of Savings Institute Bank and Trust Company (the “Bank”),
reported net income of $2.8 million, or $0.24 diluted earnings per
share, for the quarter ended June 30, 2017 versus $1.7
million, or $0.15 diluted earnings per share, for the quarter ended
June 30, 2016. The Company reported net income of $4.6
million, or $0.38 diluted earnings per share, for the six months
ended June 30, 2017 compared to $3.3 million, or $0.28 diluted
earnings per share, for the six months ended June 30,
2016. Contributing to the higher net income for the three and
six months ended June 30, 2017 was a pre-tax gain of $795,000
on the sale of the Company's trust and asset management business in
May 2017.
Net interest income increased $525,000 to $10.7 million and
$849,000 to $21.2 million for the three and six months ended
June 30, 2017, respectively, as compared to the same periods
in 2016. Net interest income increased primarily as a result
of increases in the average balance of loans and the average yield
earned on other interest-earning assets, partially offset by a
higher average balance of deposits as well as increases in the
average rates paid on deposits and borrowings.
The provision for loan losses decreased $412,000 and $563,000
for the three and six months ended June 30, 2017,
respectively, compared to the same periods in 2016, primarily due
to reductions in nonperforming loans. At June 30, 2017,
nonperforming loans decreased to $4.7 million compared to $7.0
million at June 30, 2016, resulting from a decrease in
nonperforming multi-family and commercial real estate loans of $1.0
million, offset by an increase in nonperforming commercial business
loans of $470,000. In addition, a nonperforming accruing loan
past due 90 days or more of $1.5 million guaranteed by the U.S.
government was included in the balance at June 30, 2016.
Net loan charge-offs were $23,000 and $3,000 for the three and six
months ended June 30, 2017, respectively, compared to net loan
charge-offs of $72,000 and $113,000 for the three and six months
ended June 30, 2016, respectively.
Noninterest income increased $1.1 million to $3.6 million and
$860,000 to $6.1 million for the three and six months ended
June 30, 2017, respectively, compared to the same periods in
the prior year. Contributing to the higher noninterest income
for the three and six months ended June 30, 2017 was a pre-tax
gain of $795,000 on the sale of the Company's trust and asset
management business. Service fees increased $189,000 and
$229,000 for the three and six months ended June 30, 2017,
respectively, due to higher overdraft charges. Fees earned
from mortgage banking activities increased $67,000 for the quarter
ended June 30, 2017 due to a higher volume of loan sales as
well as an increase in the gains on loans sold and decreased
$48,000 for the six months ended June 30, 2017 primarily as a
result of decreases in derivative loan commitments versus the
comparable periods in 2016. Wealth management fees decreased
$110,000 and $82,000 for the three and six months ended
June 30, 2017, respectively, versus the comparable periods in
the prior year as a result of the sale of the Company's trust
accounts.
Noninterest expenses increased $443,000 and $519,000 for the
three and six months ended June 30, 2017, respectively,
compared to the same periods in 2016, primarily due to an increase
in salaries and benefits of $582,000 and $612,000 for the three and
six months ended June 30, 2017, respectively, compared to
lower deferred compensation resulting from a post-retirement
benefit payout for the same periods in 2016. Other
noninterest expense increased $314,000 for the six months ended
June 30, 2017 primarily due to fraudulent debit card
transactions of $373,000, but decreased $103,000 for the quarter
ended June 30, 2017 compared to the same periods in 2016.
Other real estate operations increased $188,000 and $242,000 for
the three and six months ended June 30, 2017, respectively,
primarily due to a reduction in the carrying value of a property
held by the Bank. Computer and electronic banking expenses
decreased $186,000 and $274,000 for the three and six months ended
June 30, 2017, respectively, versus the comparable periods in
2016 as a result of reconfiguration of the telecommunication
infrastructure and contract renegotiations with a third party
provider. Outside professional services decreased $221,000
for the six months ended June 30, 2017 versus the same period
in 2016 due to decreases in legal and audit fees and consulting
expenses related to the noncompete agreements from the merger with
Newport Federal.
Total assets increased $45.6 million, or 2.9%, to $1.60 billion
at June 30, 2017, principally due to increases of $22.1
million in cash and cash equivalents, $15.9 million in available
for sale securities and $7.4 million in net loans receivable.
The higher balance of net loans receivable reflects increases of
$27.0 million in multi-family and commercial real estate loans and
$13.4 million in other commercial business loans, offset by
decreases of $13.7 million in SBA and USDA guaranteed loans, $10.2
million in construction loans and $8.3 million in residential
mortgage loans. Commercial business and residential real
estate loan originations increased $21.4 million and $10.1 million,
respectively, while commercial real estate loan originations
decreased $3.8 million during the first half of 2017 compared to
the same period in 2016.
Total liabilities increased $41.3 million, or 3.0%, to $1.43
billion at June 30, 2017 compared to $1.39 billion at
December 31, 2016, primarily due to an increase in deposits of
$70.1 million, or 6.2%, which included increases in NOW and money
market accounts of $32.5 million, certificates of deposit of $23.8
million and noninterest-bearing deposits of $15.3 million, offset
by a decrease in savings accounts of $1.6 million. Deposit
growth remained strong due to marketing and promotional initiatives
and competitively-priced deposit products. Borrowings
decreased $30.7 million from $226.0 million at December 31,
2016 to $195.4 million at June 30, 2017, resulting from
repayments of Federal Home Loan Bank advances with funds from
excess deposits.
Total shareholders' equity increased $4.3 million from $164.7
million at December 31, 2016 to $169.0 million at
June 30, 2017. The increase in shareholders' equity was
primarily attributable to net income of $4.6 million, partially
offset by dividends paid of $1.2 million. At June 30,
2017, the Bank’s regulatory capital exceeded the amounts required
for the Bank to be considered “well-capitalized” under applicable
regulatory capital guidelines.
“Results for the quarter and year to date continue to reflect
our efforts to restructure the balance sheet and improve asset
quality and overall performance. Strong deposit growth has allowed
us to fund growth in loans and securities while reducing
borrowings,” commented Rheo A. Brouillard, President and Chief
Executive Officer.
SI Financial Group, Inc. is the holding company for Savings
Institute Bank and Trust Company. Established in 1842,
Savings Institute Bank and Trust Company is a community-oriented
financial institution headquartered in Willimantic,
Connecticut. Through its twenty-four branch locations, the
Bank offers a full-range of financial services to individuals,
businesses and municipalities within its market area.
Forward-Looking StatementsThis release contains
“forward-looking statements” that are based on assumptions and may
describe future plans, strategies and expectations of the
Company. These forward-looking statements are generally
identified by the use of the words “believe,” “expect,” “intend,”
“anticipate,” “estimate,” “project” or similar expressions.
The Company’s ability to predict results or the actual effect of
future plans or strategies is inherently uncertain. Factors
that could have a material adverse effect on the operations of the
Company and its subsidiaries include, but are not limited to,
changes in market interest rates, regional and national economic
conditions, legislative and regulatory changes, monetary and fiscal
policies of the United States government, including policies of the
United States Treasury and the Federal Reserve Board, the quality
and composition of the loan or investment portfolios, demand for
loan products, deposit flows, competition, demand for financial
services in the Company’s market area, changes in the real estate
market values in the Company’s market area and changes in relevant
accounting principles and guidelines. For discussion of these
and other risks that may cause actual results to differ from
expectations, refer to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2016, including the section
entitled “Risk Factors,” and subsequent Quarterly Reports on Form
10-Q filed with the SEC. These risks and uncertainties should be
considered in evaluating any forward-looking statements and undue
reliance should not be placed on such statements. Except as
required by applicable law or regulation, the Company does not
undertake, and specifically disclaims any obligation, to release
publicly the result of any revisions that may be made to any
forward-looking statements to reflect events or circumstances after
the date of the statements or to reflect the occurrence of
anticipated or unanticipated events.
SELECTED FINANCIAL CONDITION DATA: |
|
|
|
|
|
|
|
June 30, |
|
December 31, |
(In Thousands /
Unaudited) |
|
2017 |
|
2016 |
|
|
|
|
|
ASSETS |
|
|
|
|
Noninterest-bearing
cash and due from banks |
|
$ |
15,412 |
|
|
$ |
18,225 |
|
Interest-bearing cash
and cash equivalents |
|
79,890 |
|
|
54,961 |
|
Securities |
|
191,132 |
|
|
175,153 |
|
Loans held for
sale |
|
1,588 |
|
|
1,393 |
|
Loans receivable,
net |
|
1,227,741 |
|
|
1,220,323 |
|
Bank-owned life
insurance |
|
21,555 |
|
|
21,293 |
|
Premises and equipment,
net |
|
19,805 |
|
|
19,884 |
|
Intangible assets |
|
17,193 |
|
|
17,494 |
|
Deferred tax asset |
|
9,507 |
|
|
9,658 |
|
Other real estate
owned, net |
|
1,043 |
|
|
1,466 |
|
Other assets |
|
11,634 |
|
|
11,040 |
|
Total
assets |
|
$ |
1,596,500 |
|
|
$ |
1,550,890 |
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
Liabilities |
|
|
|
|
Deposits |
|
$ |
1,200,796 |
|
|
$ |
1,130,685 |
|
Borrowings |
|
195,350 |
|
|
226,007 |
|
Other
liabilities |
|
31,332 |
|
|
29,471 |
|
Total liabilities |
|
1,427,478 |
|
|
1,386,163 |
|
|
|
|
|
|
Shareholders'
equity |
|
169,022 |
|
|
164,727 |
|
Total
liabilities and shareholders' equity |
|
$ |
1,596,500 |
|
|
$ |
1,550,890 |
|
SELECTED OPERATING DATA: |
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
(In Thousands /
Unaudited) |
|
2017 |
2016 |
|
2017 |
2016 |
|
|
|
|
|
|
|
Interest and dividend
income |
|
$ |
13,498 |
|
$ |
12,675 |
|
|
$ |
26,700 |
|
$ |
25,317 |
|
Interest expense |
|
2,817 |
|
2,519 |
|
|
5,521 |
|
4,987 |
|
Net
interest income |
|
10,681 |
|
10,156 |
|
|
21,179 |
|
20,330 |
|
|
|
|
|
|
|
|
Provision for loan
losses |
|
170 |
|
582 |
|
|
330 |
|
893 |
|
Net
interest income after provision for loan losses |
|
10,511 |
|
9,574 |
|
|
20,849 |
|
19,437 |
|
|
|
|
|
|
|
|
Noninterest income |
|
3,639 |
|
2,586 |
|
|
6,148 |
|
5,288 |
|
Noninterest
expenses |
|
10,023 |
|
9,580 |
|
|
20,365 |
|
19,846 |
|
Income
before income taxes |
|
4,127 |
|
2,580 |
|
|
6,632 |
|
4,879 |
|
|
|
|
|
|
|
|
Income tax
provision |
|
1,285 |
|
852 |
|
|
2,071 |
|
1,610 |
|
Net
income |
|
$ |
2,842 |
|
$ |
1,728 |
|
|
$ |
4,561 |
|
$ |
3,269 |
|
SELECTED OPERATING DATA - Concluded: |
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
(Unaudited) |
2017 |
2016 |
|
2017 |
2016 |
|
|
|
|
|
|
Earnings per
share: |
|
|
|
|
|
Basic |
$ |
0.24 |
|
$ |
0.15 |
|
|
$ |
0.39 |
|
$ |
0.28 |
|
Diluted |
$ |
0.24 |
|
$ |
0.15 |
|
|
$ |
0.38 |
|
$ |
0.28 |
|
|
|
|
|
|
|
Weighted
average shares outstanding: |
|
|
|
|
|
Basic |
11,847,905 |
|
11,803,156 |
|
|
11,838,075 |
|
11,796,099 |
|
Diluted |
11,940,639 |
|
11,861,969 |
|
|
11,927,968 |
|
11,855,485 |
|
SELECTED FINANCIAL RATIOS: |
|
|
|
|
|
|
|
|
At or For the |
|
|
At or For the |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
June 30, |
|
|
June 30, |
|
(Dollars in Thousands,
Except per Share Data / Unaudited) |
2017 |
|
2016 |
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
Selected
Performance Ratios: (1) |
|
|
|
|
|
|
|
|
|
Return on average
assets |
0.72 |
|
% |
0.46 |
|
% |
|
0.58 |
|
% |
0.44 |
|
% |
Return on average
equity |
6.75 |
|
|
4.38 |
|
|
|
5.48 |
|
|
4.17 |
|
|
Interest rate
spread |
2.67 |
|
|
2.70 |
|
|
|
2.68 |
|
|
2.73 |
|
|
Net interest
margin |
2.87 |
|
|
2.86 |
|
|
|
2.88 |
|
|
2.88 |
|
|
Efficiency ratio
(2) |
69.99 |
|
|
75.18 |
|
|
|
74.52 |
|
|
77.47 |
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality
Ratios: |
|
|
|
|
|
|
|
|
|
Allowance for loan
losses |
|
|
|
|
|
$ |
12,147 |
|
|
$ |
10,643 |
|
|
Allowance for loan
losses as a percent of total loans (3) |
|
|
|
|
|
0.98 |
|
% |
0.92 |
|
% |
Allowance for loan
losses as a percent of nonperforming loans |
|
|
|
|
|
258.28 |
|
|
152.50 |
|
|
Nonperforming
loans |
|
|
|
|
|
$ |
4,703 |
|
|
$ |
6,979 |
|
|
Nonperforming loans as
a percent of total loans (3) |
|
|
|
|
|
0.38 |
|
% |
0.60 |
|
% |
Nonperforming assets
(4) |
|
|
|
|
|
$ |
5,746 |
|
|
$ |
8,145 |
|
|
Nonperforming assets as
a percent of total assets |
|
|
|
|
|
0.36 |
|
% |
0.54 |
|
% |
|
|
|
|
|
|
|
|
|
|
Per Share
Data: |
|
|
|
|
|
|
|
|
|
Book value per
share |
|
|
|
|
|
$ |
13.82 |
|
|
$ |
13.00 |
|
|
Less: Intangible assets
per share(5) |
|
|
|
|
|
(1.41 |
) |
|
(1.46 |
) |
|
Tangible book value per
share (5) |
|
|
|
|
|
12.41 |
|
|
11.54 |
|
|
Dividends declared per
share |
|
|
|
|
|
$ |
0.10 |
|
|
$ |
0.08 |
|
|
|
|
(1)
Quarterly ratios have been annualized. |
(2)
Represents noninterest expenses divided by the sum of net interest
and noninterest income. |
(3) Total
loans exclude deferred fees and costs. |
(4)
Nonperforming assets consist of nonperforming loans and other real
estate owned. |
(5)
Tangible book value per share equals book value per share less the
effect of intangible assets, which consisted of goodwill and other
intangibles of $17.2 million and $17.8 million at June 30, 2017 and
2016, respectively. |
CONTACT:
Catherine Pomerleau, Executive Assistant/Investor Relations Administrator
Email: investorrelations@banksi.com
(860) 456-6514
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