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SI Financial Group, Inc. Reports Results For the Three and Six Months Ended June 30, 2015

20:00 EDT 21 Jul 2015 | Globe Newswire

WILLIMANTIC, Conn., July 22, 2015 (GLOBE NEWSWIRE) -- SI Financial Group, Inc. (the “Company”) (NASDAQ:SIFI), the holding company of Savings Institute Bank and Trust Company (the “Bank”), reported net income of $1.0 million, or $0.08 diluted earnings per share, for the quarter ended June 30, 2015 versus $914,000, or $0.07 diluted earnings per share, for the quarter ended June 30, 2014.  The Company reported net income of $1.9 million, or $0.16 diluted earnings per share, for the six months ended June 30, 2015 compared to net income of $1.8 million, or $0.15 diluted earnings per share, for the six months ended June 30, 2014.

Net interest income increased $42,000 to $9.6 million and decreased $522,000 to $19.1 million for the three and six months ended June 30, 2015, respectively, as compared to the same periods in 2014.  Lower net interest income for the six months ended June 30, 2015 was primarily due to lower rates on securities and loans versus the comparable period in 2014.

The provision for loan losses decreased $55,000 and $150,000 for the three and six months ended June 30, 2015, respectively, as a result of reductions in loan charge-offs and reserves for impaired loans compared to the same periods in 2014.  In addition, commercial loans outstanding increased as a result of a $52.3 million purchase of SBA guaranteed loans in April 2015 that do not require a valuation allowance as such loans are fully guaranteed by the U.S. government.  At June 30, 2015, nonperforming loans increased to $5.9 million, compared to $5.5 million at June 30, 2014, resulting from increases in nonperforming commercial business loans and multi-family and commercial loans of $390,000 and $261,000, respectively, offset by a decrease in nonperforming residential mortgage loans of $231,000.  Net loan charge-offs were $5,000 and $55,000 for the three and six months ended June 30, 2015, respectively, compared to $222,000 and $316,000 for the three and six months ended June 30, 2014, respectively.

Noninterest income increased $148,000 to $2.6 million for the three months ended June 30, 2015, and decreased $287,000 to $4.9 million for the six months ended June 30, 2015, versus the comparable periods in the prior year.  Other noninterest income increased $144,000 for the three months ended June 30, 2015, compared to the same period in 2014, primarily as a result of income from the debit card utilization incentive program and rental income from office space at the Newport branch location.   Other noninterest income decreased $145,000 for the six months ended June 30, 2015 compared to the same period in 2014.  Higher other noninterest income for the six months ended June 30, 2014 was primarily due to a reimbursement of $250,000 in legal fees and other foreclosure expenses.  Service fees decreased $93,000 and $163,000 for the three and six months ended June 30, 2015, respectively, compared to the same periods in the prior year, as a result of a reduction in overdraft privilege fees.  The increase in the net gains from the sale of available for sale securities of $103,000 and $68,000 for the three and six months ended June 30, 2015, respectively, compared to the three and six months ended June 30, 2014, partially offset decreases in service fees.

Noninterest expenses increased $69,000 for the three months ended June 30, 2015 and decreased $824,000 for the six months ended June 30, 2015, compared to the same periods in 2014.  Other noninterest expense declined $102,000 and $442,000 for the three and six months ended June 30, 2015, respectively.  Higher other noninterest expenses for the first half of 2014 included fraudulent debit card transactions of $245,000, impairment of small business investment companies totaling $175,000, and prepayment penalties totaling $75,000 for the early extinguishment of certain Federal Home Loan Bank borrowings.  Salaries and employee benefits increased $98,000 for the three months ended June 30, 2015, and decreased $158,000 for the six months ended June 30, 2015, compared to the same periods in 2014, resulting from a reduction in staffing levels year-over-year.  The Bank’s conversion to a state-chartered financial institution effective in December 2014 contributed to the decrease of $53,000 and $157,000 in the regulatory assessment for the three and six months ended June 30, 2015, respectively.  Decreased occupancy and equipment expense of $71,000 and $125,000 for the three and six months ended June 30, 2015, respectively, versus comparable periods in 2014, is a result of reconfiguring and optimizing telephone and data services.  Lower noninterest expenses were partially offset by increases of $145,000 and $90,000 in computer and electronic banking services for the three and six months ended June 30, 2015, respectively, resulting from the implementation of an enhanced mobile banking platform.

Total assets increased $58.8 million, or 4.4%, to $1.41 billion at June 30, 2015, principally due to increases of $55.9 million in net loans receivable and $3.6 million in Federal Reserve Bank stock, offset by a decrease of $2.2 million in available for sale securities.  The higher balance of net loans receivable reflects increases in SBA and USDA guaranteed loans of $41.8 million, construction loans of $6.0 million and multi-family and commercial real estate loans of $4.3 million.  Residential and commercial real estate loan originations increased $22.6 million and $9.8 million, respectively, during the first half of 2015 compared to the same period in 2014, offset by a decrease in consumer loan originations of $4.4 million. 

Total liabilities increased $63.9 million, or 5.4%, to $1.26 billion at June 30, 2015 compared to $1.19 billion at December 31, 2014.  Deposits increased $19.4 million, or 1.9%, at June 30, 2015, which included increases in NOW and money market accounts of $25.9 million, noninterest-bearing demand deposits of $4.9 million and certificates of deposit of $4.4 million, partially offset by a decrease in savings accounts of $15.9 million.  Deposit growth remained strong due to marketing and promotional initiatives and competitively-priced deposit products.  Borrowings increased $43.9 million from $156.5 million at December 31, 2014 to $200.4 million at June 30, 2015, resulting from the need to fund increased commercial lending for the $52.3 million purchase of SBA guaranteed loans in April 2015.

Total shareholders' equity decreased $5.1 million from $157.7 million at December 31, 2014 to $152.6 million at June 30, 2015.  The decrease in shareholders' equity was attributable to the repurchase of common shares totaling $10.2 million and dividends of $973,000, offset by the exercise of stock options of $3.3 million and net income of $1.9 million.  At June 30, 2015, the Bank’s regulatory capital exceeded the amounts required for it to be considered “well-capitalized” under applicable regulatory capital guidelines.

“We are pleased to announce improved earnings for the quarter.  We continue to focus on controlling costs and identifying areas of cost reduction that will positively impact future periods.  Additionally, growth in both loans and deposits reflects our ability to serve our customers in the markets we operate,” 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-six branch locations, the Bank offers a full-range of financial services to individuals, businesses and municipalities within its market area.

Forward-Looking Statements
This 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, 2014, 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) 2015 2014
     
ASSETS    
Noninterest-bearing cash and due from banks $16,693  $18,965 
Interest-bearing cash and cash equivalents 22,892  20,286 
Securities 185,386  183,373 
Loans held for sale 1,240  747 
Loans receivable, net 1,100,772  1,044,864 
Bank-owned life insurance 21,609  21,306 
Premises and equipment, net 22,130  21,711 
Intangible assets 18,396  18,697 
Deferred tax asset 7,861  8,048 
Other real estate owned, net 1,420  1,271 
Other assets 10,950  11,265 
  Total assets $1,409,349  $1,350,533 
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Liabilities    
  Deposits $1,030,128  $1,010,713 
  Borrowings 200,441  156,525 
  Other liabilities 26,159  25,556 
  Total liabilities 1,256,728  1,192,794 
     
Shareholders' equity 152,621  157,739 
  Total liabilities and shareholders' equity $1,409,349  $1,350,533 


SELECTED OPERATING DATA:

  Three Months Ended Six Months Ended
  June 30, June 30,
(In Thousands / Unaudited) 20152014 20152014
       
Interest and dividend income $11,790 $11,683  $23,260 $23,754 
Interest expense 2,145 2,080  4,192 4,164 
  Net interest income 9,645 9,603  19,068 19,590 
       
Provision for loan losses 360 415  695 845 
  Net interest income after provision for loan losses 9,285 9,188  18,373 18,745 
       
Noninterest income 2,610 2,462  4,947 5,234 
Noninterest expenses 10,406 10,337  20,467 21,291 
  Income before income taxes 1,489 1,313  2,853 2,688 
       
Income tax provision 484 399  927 868 
  Net income $1,005 $914  $1,926 $1,820 


SELECTED OPERATING DATA - Concluded:

 Three Months Ended Six Months Ended
 June 30, June 30,
(Unaudited)20152014 20152014
      
Earnings per share:     
  Basic$0.08 $0.07  $0.16 $0.15 
  Diluted$0.08 $0.07  $0.16 $0.15 
      
Weighted average shares outstanding:     
  Basic12,006,510 12,341,727  12,160,268 12,318,604 
  Diluted12,031,613 12,387,433  12,192,140 12,365,583 


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)2015 2014  2015 2014 
          
Selected Performance Ratios:         
Return on average assets (1)0.29 %0.27 % 0.28 %0.27 %
Return on average equity (1)2.60  2.35   2.48  2.36  
Interest rate spread2.84  2.90   2.87  2.99  
Net interest margin2.98  3.04   3.00  3.13  
Efficiency ratio (2)85.84  85.88   85.70  85.99  
          
Asset Quality Ratios:         
Allowance for loan losses     $8,437  $7,445  
Allowance for loan losses as a percent of total loans (3)     0.76 %0.71 %
Allowance for loan losses as a percent of nonperforming loans     143.07  135.88  
Nonperforming loans     $5,897  $5,479  
Nonperforming loans as a percent of total loans (3)     0.53 %0.52 %
Nonperforming assets (4)     $7,317  $7,143  
Nonperforming assets as a percent of total assets     0.52 %0.53 %
          
Per Share Data:         
Book value per share     $12.48  $12.15  
Less: Intangible assets per share(5)     (1.50) (1.48) 
Tangible book value per share (5)     10.98  10.67  
Dividends declared per share     $0.08  $0.06  
 
(1) Ratios for the three and six months have been annualized.
(2) Represents noninterest expenses divided by the sum of net interest and noninterest income, less any realized gains or losses on the sale of securities and other-than-temporary impairment on securities.
(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 $18.4 million and $19.0 million at June 30, 2015 and 2014, respectively. 
Catherine Pomerleau, Executive Assistant/Investor Relations Administrator
Email:  investorrelations@banksi.com
(860) 456-6514

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