SI Financial Group, Inc. (the “Company”) (NASDAQ:SIFI), the holding
company of Savings Institute Bank and Trust Company (the “Bank”),
reported net income of $3.4 million, or $0.28 diluted earnings per
share, for the quarter ended June 30, 2018 versus $2.8
million, or $0.24 diluted earnings per share, for the quarter ended
June 30, 2017. The Company reported net income of $5.4
million, or $0.45 diluted earnings per share, for the six months
ended June 30, 2018 compared to $4.6 million, or $0.38 diluted
earnings per share, for the six months ended June 30, 2017.
Net interest income increased $385,000 to $11.1 million and
$812,000 to $22.0 million for the three and six months ended
June 30, 2018, respectively, as compared to the same periods
in 2017. Net interest income increased primarily as a result
of increases in the average balance of loans and the average yield
earned on loans and other interest-earning assets and a reduction
in the average balance of FHLB advances, partially offset by
increases in the average balance and rate paid on deposits and
decreases in the average balance and yield on investment
securities. The increase in yields and rates paid reflects
the rising interest rate environment.
The provision for loan losses increased $118,000 and $683,000
for the three and six months ended June 30, 2018,
respectively, compared to the same periods in 2017, primarily due
to increases in nonperforming loans, loan charge-offs, reserves for
impaired loans and an increase in commercial real estate loans,
which carry a higher degree of risk than other loans held in the
loan portfolio. At June 30, 2018, nonperforming loans
increased to $7.9 million compared to $4.7 million at June 30,
2017, resulting from increases in nonperforming multi-family and
commercial real estate, commercial business and residential real
estate loans of $2.5 million, $363,000 and $275,000,
respectively. Net loan charge-offs were $57,000 and $112,000
for the three and six months ended June 30, 2018,
respectively, compared to net loan charge-offs of $23,000 and
$3,000 for the three and six months ended June 30, 2017,
respectively.
Noninterest income decreased $320,000 to $3.3 million and
$435,000 to $5.7 million for the three and six months ended
June 30, 2018, respectively, compared to the same periods in
the prior year. The decreases were due to a pre-tax gain in
May 2017 of $795,000 on the sale of the Company's trust and asset
management business, partially offset by income of $684,000
resulting from the release of funds held in escrow related to the
December 2016 sale of the Company's ownership interest in Vantis
Life Insurance Company. Wealth management fees decreased
$183,000 and $501,000 for the three and six months ended
June 30, 2018, respectively, versus the comparable periods in
the prior year as a result of the sale of the Company's trust and
asset management business in 2017. Fees earned from mortgage
banking activities decreased $122,000 and $63,000 for the three and
six months ended June 30, 2018, respectively, primarily as a
result of lower gains on residential fixed-rate loan sales versus
the comparable periods in 2017. The cash surrender value of
bank owned life insurance increased $94,000 and $179,000 for the
three and six months ended June 30, 2018, respectively,
compared to the same periods in the prior year resulting from the
purchase of new policies in October 2017.
Noninterest expenses decreased $170,000 and $461,000 for the
three and six months ended June 30, 2018, respectively,
compared to the same periods in 2017. Other real estate
operations decreased $224,000 and $199,000 for the three and six
months ended June 30, 2018, respectively, compared to the same
periods in 2017 due to the sale of four foreclosed properties held
by the Bank. Outside professional services decreased $49,000
and $94,000 for the three and six months ended June 30, 2018,
respectively, versus the same periods in 2017 due to a decrease in
consulting expense. Regulatory assessments decreased $53,000
and $74,000 for the three and six months ended June 30, 2018,
respectively, as a result of a lower FDIC assessment rate.
Computer and electronic banking expenses decreased $2,000 and
$94,000 for the three and six months ended June 30, 2018,
respectively, versus the comparable period in 2017 as a result of
contract renegotiations with a third party provider for electronic
banking services. Occupancy and equipment decreased $44,000
for the three months ended June 30, 2018, primarily due to
lower lease expense versus an increase of $31,000 for the first six
months of 2018 compared to 2017, primarily due to higher snow
removal costs. Salaries and benefits increased $77,000 and
$79,000 for the three and six months ended June 30, 2018,
respectively, due to an increase in employee compensation, benefits
and related taxes.
Total assets increased $14.8 million, or 0.9%, to $1.60 billion
at June 30, 2018, principally due to increases of $16.1
million in net loans receivable, $3.1 million in loans held for
sale and $2.9 million in cash and cash equivalents, offset by a
decrease of $7.2 million in available for sale securities.
The higher balance of net loans receivable reflects increases of
$57.2 million, $4.3 million and $2.3 million in multi-family and
commercial real estate loans, condominium association loans and
construction loans, respectively, offset by decreases of $21.1
million, $15.5 million, $7.2 million and $5.0 million in
residential mortgage loans, SBA and USDA guaranteed loans,
timeshare loans and consumer loans, respectively. The
reduction in residential mortgage loans reflects the sale of $40.9
million of long-term fixed-rate loans in the secondary
market. Multi-family and commercial real estate originations
increased $72.3 million for the first half of 2018 compared to the
same period in 2017. Originations of commercial business
loans, consumer loans and residential real estate loans decreased
$14.1 million, $2.8 million and $2.7 million, respectively, during
the first half of 2018 compared to the same period in 2017.
Total liabilities increased $15.1 million, or 1.1%, to $1.43
billion at June 30, 2018, primarily due to increases in
deposits of $17.7 million, or 1.5%, which included increases in NOW
and money market accounts of $11.8 million, certificates of deposit
of $6.7 million and noninterest-bearing deposits of $2.4 million,
offset by a decrease in savings accounts of $2.8 million.
Although market competition has intensified, deposit growth
remained strong due to competitively-priced deposit products and
marketing initiatives. Borrowings decreased $6.6 million from
$178.3 million at December 31, 2017 to $171.7 million at
June 30, 2018, resulting from repayments of Federal Home Loan
Bank advances with funds from excess deposits.
Total shareholders' equity decreased $224,000 from $168.5
million at December 31, 2017 to $168.3 million at
June 30, 2018. The decrease in shareholders' equity was
attributable to the repurchase of common shares totaling $3.2
million, dividends paid of $1.4 million and unrealized losses on
securities included in other comprehensive income of $1.4 million,
partially offset by net income of $5.4 million. At
June 30, 2018, the Bank’s regulatory capital exceeded the
amounts required for the Bank to be considered “well-capitalized”
under applicable regulatory capital guidelines.
“We continue to have success implementing the Company's
strategic plan by migrating the balance sheet to a more
commercial-focused loan portfolio. Deposit and commercial
loan growth, coupled with lower operating expenses, have resulted
in improved earnings and earnings per share year over year,"
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-three 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, 2017, 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) |
|
2018 |
|
2017 |
|
|
|
|
|
ASSETS |
|
|
|
|
Noninterest-bearing
cash and due from banks |
|
$ |
16,664 |
|
|
$ |
16,872 |
|
Interest-bearing cash
and cash equivalents |
|
69,736 |
|
|
66,614 |
|
Securities |
|
160,358 |
|
|
167,545 |
|
Loans held for
sale |
|
3,900 |
|
|
835 |
|
Loans receivable,
net |
|
1,253,315 |
|
|
1,237,174 |
|
Bank-owned life
insurance |
|
34,167 |
|
|
33,726 |
|
Premises and equipment,
net |
|
19,151 |
|
|
19,409 |
|
Intangible assets |
|
16,592 |
|
|
16,893 |
|
Deferred tax asset |
|
6,808 |
|
|
6,412 |
|
Other real estate
owned, net |
|
625 |
|
|
1,226 |
|
Other assets |
|
14,483 |
|
|
14,250 |
|
Total
assets |
|
$ |
1,595,799 |
|
|
$ |
1,580,956 |
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
Liabilities |
|
|
|
|
Deposits |
|
$ |
1,225,770 |
|
|
$ |
1,208,047 |
|
Borrowings |
|
171,739 |
|
|
178,342 |
|
Other
liabilities |
|
30,033 |
|
|
26,086 |
|
Total
liabilities |
|
1,427,542 |
|
|
1,412,475 |
|
|
|
|
|
|
Shareholders'
equity |
|
168,257 |
|
|
168,481 |
|
Total
liabilities and shareholders' equity |
|
$ |
1,595,799 |
|
|
$ |
1,580,956 |
|
|
|
|
|
|
|
|
|
|
SELECTED OPERATING DATA:
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
(In Thousands /
Unaudited) |
|
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and dividend
income |
|
$ |
14,063 |
|
$ |
13,498 |
|
|
$ |
27,817 |
|
$ |
26,700 |
|
Interest expense |
|
2,997 |
|
2,817 |
|
|
5,826 |
|
5,521 |
|
Net interest
income |
|
11,066 |
|
10,681 |
|
|
21,991 |
|
21,179 |
|
|
|
|
|
|
|
|
Provision for loan
losses |
|
288 |
|
170 |
|
|
1,013 |
|
330 |
|
Net interest
income after provision for loan losses |
|
10,778 |
|
10,511 |
|
|
20,978 |
|
20,849 |
|
|
|
|
|
|
|
|
Noninterest income |
|
3,319 |
|
3,639 |
|
|
5,713 |
|
6,148 |
|
Noninterest
expenses |
|
9,853 |
|
10,023 |
|
|
19,904 |
|
20,365 |
|
Income before
income taxes |
|
4,244 |
|
4,127 |
|
|
6,787 |
|
6,632 |
|
|
|
|
|
|
|
|
Income tax
provision |
|
891 |
|
1,285 |
|
|
1,428 |
|
2,071 |
|
Net income |
|
$ |
3,353 |
|
$ |
2,842 |
|
|
$ |
5,359 |
|
$ |
4,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED OPERATING DATA - Concluded:
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(Unaudited) |
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
Earnings per
share: |
|
|
|
|
|
Basic |
$ |
0.28 |
|
$ |
0.24 |
|
|
$ |
0.45 |
|
$ |
0.39 |
|
Diluted |
$ |
0.28 |
|
$ |
0.24 |
|
|
$ |
0.45 |
|
$ |
0.38 |
|
|
|
|
|
|
|
Weighted
average shares outstanding: |
|
|
|
|
|
Basic |
11,867,248 |
|
11,847,905 |
|
|
11,888,023 |
|
11,838,075 |
|
Diluted |
11,954,990 |
|
11,940,639 |
|
|
11,975,029 |
|
11,927,968 |
|
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) |
2018 |
|
2017 |
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
Selected
Performance Ratios: (1) |
|
|
|
|
|
|
|
|
|
Return on average
assets |
0.84 |
|
% |
0.72 |
|
% |
|
0.68 |
|
% |
0.58 |
|
% |
Return on average
equity |
7.92 |
|
|
6.75 |
|
|
|
6.36 |
|
|
5.48 |
|
|
Interest rate
spread |
2.75 |
|
|
2.67 |
|
|
|
2.78 |
|
|
2.68 |
|
|
Net interest
margin |
2.97 |
|
|
2.87 |
|
|
|
2.98 |
|
|
2.88 |
|
|
Efficiency ratio
(2) |
68.49 |
|
|
69.99 |
|
|
|
71.85 |
|
|
74.52 |
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality
Ratios: |
|
|
|
|
|
|
|
|
|
Allowance for loan
losses |
|
|
|
|
|
$ |
13,235 |
|
|
$ |
12,147 |
|
|
Allowance for loan
losses as a percent of total loans (3) |
|
|
|
|
|
1.05 |
|
% |
0.98 |
|
% |
Allowance for loan
losses as a percent of nonperforming loans |
|
|
|
|
|
167.49 |
|
|
258.28 |
|
|
Nonperforming
loans |
|
|
|
|
|
$ |
7,902 |
|
|
$ |
4,703 |
|
|
Nonperforming loans as
a percent of total loans (3) |
|
|
|
|
|
0.63 |
|
% |
0.38 |
|
% |
Nonperforming assets
(4) |
|
|
|
|
|
$ |
8,527 |
|
|
$ |
5,746 |
|
|
Nonperforming assets as
a percent of total assets |
|
|
|
|
|
0.53 |
|
% |
0.36 |
|
% |
|
|
|
|
|
|
|
|
|
|
Per Share
Data: |
|
|
|
|
|
|
|
|
|
Book value per
share |
|
|
|
|
|
$ |
13.98 |
|
|
$ |
13.82 |
|
|
Less: Intangible assets
per share(5) |
|
|
|
|
|
(1.38 |
) |
|
(1.41 |
) |
|
Tangible book value per
share (5) |
|
|
|
|
|
12.60 |
|
|
12.41 |
|
|
Dividends declared per
share |
|
|
|
|
|
$ |
0.12 |
|
|
$ |
0.10 |
|
|
|
|
(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 $16.6 million and $17.2 million at June 30, 2018 and
2017, respectively. |
CONTACT:Catherine Pomerleau, Executive
Assistant/Investor Relations AdministratorEmail:
investorrelations@banksi.com (860) 456-6514
Grafico Azioni SI Financial Grp., Inc. (NASDAQ:SIFI)
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