Chicopee Bancorp, Inc. (the “Company”) (NASDAQ - CBNK), the holding company for Chicopee Savings Bank (the “Bank”), announced the results of operations for the three and six months ended June 30, 2011.
The Company reported net income of $306,000, or $0.06 earnings per share, for the three months ended June 30, 2011, an increase of $179,000, or 140.9%, as compared to net income of $127,000, or $0.02 earnings per share, for the same period in 2010. The increase in net income for the three months ended June 30, 2011 compared to the three months ended June 30, 2010, was primarily due to an increase in net-interest income of $213,000, or 5.0%, partially offset by an increase in non-interest expense of $53,000, or 1.2%, and an increase in the provision for loan losses of $7,000, or 6.3%.
The increase in net interest income of $213,000, or 5.0%, from $4.3 million at June 30, 2010 to $4.5 million at June 30 2011 was primarily due to the $215,000, or 10.7%, decrease in interest expense directly attributed to a $113,000, or 7.7%, decrease in deposit costs and a $102,000, or 18.8%, decrease in cost of borrowing, which include repurchase agreements.
The net interest margin increased 2 basis points from 3.49%, for the three months ended June 30, 2010, to 3.51% for the three months ended June 30, 2011. The interest rate spread increased 6 basis points from 3.15% for the three months ended June 30, 2010 to 3.21% for the three months ended June 30, 2011. The average cost of funds decreased 27 basis points due to the continuation of low market interest rates, which allowed the Company to renew or replace maturing time deposits at lower costs. The average balance of demand deposits, an interest free source of funds, increased $11.6 million, or 31.4%, for the three months ended June 30, 2011 compared to the three months ended June 30, 2010.
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