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TOLLAND BANK REPORTS SECOND QUARTER EARNINGS

 TOLLAND BANK REPORTS SECOND QUARTER EARNINGS
 VERNON, Conn., July 28 /PRNewswire/ -- Tolland Bank (AMEX: TBK)


today reported net income of $58,000 for the second quarter of 1992, or $.05 per share, versus a net loss of $122,000, or $.11 per share, in the second quarter of 1991. For the first half of 1992, the bank reported a net loss of $64,000, or $.06 per share, compared to a net loss of $315,000, or $.27 per share, in the first half of 1991.
 Chairman and Chief Executive Officer Guy Cambria Jr. stated, "We are pleased that the bank has earned a profit for the second quarter. The bank earned a record level of net interest income in the current favorable interest rate environment, leading to a substantial improvement in first half results compared to last year. Additions to foreclosed assets during the second quarter declined to the lowest level in more than a year. For the coming quarters, we are hopeful that interest income will continue to provide the basis for improved results compared to last year."
 Total nonperforming assets were $13.5 million, or 6.9 percent of total assets at June 30, 1992, up from $12.1 million, or 6.2 percent of total assets, at June 30, 1991. The start of foreclosure on one business mortgage was primarily responsible for the increase in nonperforming loans (a subset of nonperforming assets) to $4.2 million at June 30, 1992, from $3.0 million at June 30, 1991. Foreclosed assets were $9.3 million at June 30, 1992, up from $9.1 million at the same time a year ago. During the second quarter of 1992, the bank entered into an agreement and obtained a court order which establishes an expedited plan for the sale or other disposition of the collateral securing the bank's largest problem asset.
 At June 30, 1992, the allowance for loan losses was $2.1 million, a level equal to 1.57 percent of total loans, compared to $1.4 million, or 1.04 percent, a year ago. At June 30, 1992, the allowance equaled 50 percent of nonperforming loans, and 127 percent of annualized chargeoffs for the first six months of this year. Net chargeoffs were $821,000 in the first six months of 1992, or 1.22 percent of loans on an annualized basis. Net chargeoffs increased to $546,000 in the second quarter, primarily due to a loss associated with one loan in the process of foreclosure on which the bank had established reserves in the prior quarter. Additionally, business loan chargeoffs have increased in 1992, reflecting the impact of the economy on some local businesses. On the other hand, consumer loan losses have fallen sharply, due in part to the bank's diligent collections and recovery efforts.
 Other significant developments in the second quarter include:
 -- Net interest income reached a record of $1.823 million, resulting in a 4.19 percent net interest margin. This represented a 10 percent gain over the $1.655 million net interest income reported in the second quarter of 1991. Reflecting the Federal Reserve's lowering of short term interest rates and the bank's pricing strategies, the bank reduced interest expense by 29 percent in the second quarter of 1992, compared to the same quarter of the previous year. Interest income declined by 14 percent, reflecting the slower adjustment of loan yields; most of the bank's variable rate loans are adjusted once a year on the loan's anniversary.
 -- The bank lengthened the maturity of its liabilities in the second quarter of 1992, in order to reduce its sensitivity to higher interest costs if short term rates increase over the next year or two. During the quarter, the bank introduced the ValuePlus CD, which offers a higher rate on selected certificates of deposit to those customers who have ValuePlus checking accounts, which are the bank's primary retail transaction account.
 -- The bank changed the focus of its consumer lending, shifting resources to residential mortgage lending from installment lending. The bank hired a new mortgage loan officer and reorganized this function. The bank also downsized its indirect installment lending program, limiting it to auto dealers in its primary market. While the bank has increased its fixed rate loan originations, the overall fixed rate asset portfolio is being managed to minimize interest rate risk. As a result, during the second quarter, the bank sold certain fixed rate investment securities, producing a $30,000 gain on securities for the quarter.
 -- Total second quarter noninterest expense was down 1.3 percent from the same quarter a year ago. This primarily reflected a 33 percent decrease in problem asset related expenses, due to decreases in consulting costs and operating chargeoffs. The basic operating expenses of the bank increased by 5.5 percent from last year. Salary and benefits expense increased due to the reorganization of the lending department, which resulted in an increase in the lending staff, and reduced loan volume during the transition period (reducing the amount of originations related salary expense deferred under FASB 91). Other non- salary related operating expenses were basically flat from year to year, with lower equipment and data processing costs offsetting increased FDIC premiums.
 At June 30, 1992, Tier 1 capital (net worth minus intangible assets) to average total assets measured 6.6 percent, a level in excess of the 6 percent regulatory requirement. The risk based capital ratio exceeded 10 percent, also in excess of the minimum guideline of 8 percent which is required to be achieved by year-end.
 Tolland Bank is a Connecticut-chartered savings bank located in Tolland, Conn. with executive offices in Vernon, Conn. Total assets at June 30, 1992, were $195.8 million, a 1 percent increase from last year, and total deposits were $176.2 million, a 2 percent decrease from a year ago. The bank's net worth at June 30, 1992, was $14.2 million.
 TOLLAND BANK
 Selected Financial Highlights (Unaudited)
 Periods ended Three Months Six Months
 June 30 1992 1991 1992 1991
 OPERATING DATA ($000 omitted)
 Net interest income $1,823 $1,655 $3,614 $3,191
 Provision for loan losses 256 294 691 540
 Total non-interest income 223 224 358 387
 Total non-interest expense 1,694 1,717 3,371 3,391
 Net income (loss) $ 58 $ (122) $ (64) $ (315)
 Net inc. (loss) per com. & com.
 equivalent share $0.05 $(0.11) $(0.06) $(0.27)
 KEY RATIOS (in percent)
 Net interest spread
 (fully taxable equivalent) 4.07 3.72 4.03 3.55
 Net interest margin
 (fully taxable equivalent) 4.19 3.93 4.15 3.77
 Return on assets 0.12 (0.26) (0.06) (0.17)
 Return on equity 1.62 (3.24) (0.90) (2.07)
 Equity pct. assets - period end 7.27 7.74 7.27 7.74
 Book value per share - period
 end 12.38 13.09 12.38 13.09
 TOLLAND BANK
 Statements of Income
 (Unaudited -- in thousands)
 Periods Ended Three Months Six Months
 June 30 1992 1991 Change 1992 1991 Change
 Interest on loans $3,045 $3,682 $(637) $6,241 $7,518 $(1,277)
 Int. on investment
 securities 545 528 17 1,120 1,010 110
 Interest on other
 earning assets 77 53 24 149 130 19
 Total int. income 3,667 4,263 (596) 7,510 8,658 (1,148)
 Interest on deposits 1,793 2,570 (777) 3,808 5,238 (1,430)
 Int. on borrowings 51 38 13 88 229 (141)
 Total int. expense 1,844 2,608 (764) 3,896 5,467 (1,571)
 Net interest income 1,823 1,655 169 3,614 3,191 423
 Prov. for loan losses 256 294 (38) 691 540 151
 Net interest income
 after provision for
 loan losses 1,567 1,361 206 2,923 2,651 272
 Service charges and
 fees 193 200 (7) 394 376 18
 Securities trading inc. 1 -- 1 (92) (3) (89)
 Gain/(loss) on
 investment securities 30 22 8 145 12 133
 Gain/(loss) on assets (1) 2 (3) (89) 2 (91)
 Total non-interest
 income 223 224 (1) 358 387 (29)
 Salaries & benefits 726 650 76 1,438 1,338 100
 Occupancy 139 137 2 287 276 11
 Equipment 94 118 (24) 195 237 (42)
 Data processing
 services 135 158 (23) 307 317 (10)
 Other expense 600 654 (54) 1,144 1,223 (79)
 Total non-interest
 expense 1,694 1,717 (23) 3,371 3,391 (20)
 Income (loss) before
 income taxes 96 (132) 228 (90) (353) 263
 Income tax expense
 (benefit) 38 (10) 48 (26) (38) 12
 Net income (loss) $ 58 $ (122) $ 180 $ (64) $ (315) $ 251
 TOLLAND BANK
 Statements of Financial Condition
 (Unaudited -- In thousands)
 6/30/92 12/31/91 6/30/91
 ASSETS
 Cash & due from banks $ 5,445 $ 4,912 $ 5,694
 Overnight investments 7,871 6,868 9,183
 Total cash & cash equivalents 13,316 11,780 14,877
 Trading account securities 964 4,071 --
 U.S. government & agency securities 9,558 5,130 2,995
 Other debt securities 22,331 22,180 19,495
 FHLBB stock 618 558 558
 Total investment securities 32,507 27,868 23,048
 Permanent residential mortgage
 loans 41,052 37,957 37,009
 Permanent business mortgage loans 36,738 37,636 38,522
 Consumer loans 34,623 39,249 40,177
 Commercial loans 20,267 21,922 23,426
 Total loans 132,680 136,764 139,134
 Plus: Net deferred costs 1,043 1,251 1,201
 Loss: Allowance for loan losses (2,085) (2,215) (1,445)
 Net loans 131,638 135,800 138,890
 Net property & equipment 5,377 5,492 5,708
 Foreclosed assets 9,295 9,479 9,175
 Other assets 2,715 2,946 2,838
 Total assets $195,812 $197,436 $194,536
 LIABILITIES AND STOCKHOLDERS' EQUITY
 Demand deposits $ 12,308 $ 10,855 $ 14,166
 Interest bearing transaction
 deposits 17,440 16,894 15,559
 Money market deposits 9,561 11,017 12,939
 Savings deposits 46,015 37,757 34,413
 Time deposits 90,852 102,216 101,806
 Total deposits 176,176 178,739 178,883
 FHLBB borrowings 5,000 4,000 0
 Other liabilities 401 398 601
 Total liabilities 181,577 183,137 179,484
 Common stock (par value $1) 1,150 1,150 1,150
 Paid-in capital 8,746 8,746 8,746
 Retained earnings 4,339 4,403 5,156
 Total stockholders' equity 14,235 14,299 15,052
 Total liabilities and
 stockholders' equity $195,812 $197,436 $194,536
 -0- 7/28/92
 /CONTACT: Joel E. Hyman, senior vice president, treasurer and CFO of Tolland Bank, 203-875-2500/
 (TBK) CO: Tolland Bank ST: Connecticut IN: FIN SU: ERN


GK-OP -- NY063 -- 4149 07/28/92 14:03 EDT
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