Chicopee Bancorp, Inc. (the “Company”) (NASDAQ - CBNK), the holding company for Chicopee Savings Bank (the “Bank”), announced today the results of operations for the three and twelve months ended December 31, 2011.
The Company reported net income of $379,000, or $0.07 earnings per share, for the three months ended December 31, 2011, an increase of $174,000, or 84.9%, compared to net income of $205,000, or $0.04 earnings per share, for the same period in 2010. The increase in net income was due to an increase in net interest income of $349,000, or 8.3%, and a decrease in the provision for loan losses of $196,000, or 42.4%, partially offset by a decrease in non-interest income of $125,000, or 15.2%, an increase in non-interest expense of $130,000, or 2.9%, and a decrease in the income tax benefit of $116,000, or 82.9%.
The increase in net interest income of $349,000, or 8.3%, to $4.6 million at December 31, 2011, was due to a $377,000, or 19.3%, decrease in interest expense primarily due to a $282,000, or 19.3%, decrease in deposit costs and a decrease of $95,000, or 19.5%, in the cost of borrowings, which include Federal Home Loan Bank (FHLB) advances and repurchase agreements. The decrease in interest expense was partially offset by a decrease in interest income of $28,000, or 0.50%, as compared to the same period in 2010 due to the continuation of low market interest rates.
The net interest margin increased 6 basis points from 3.34% for the three months ended December 31, 2010, to 3.40% for the three months ended December 31, 2011. The interest rate spread increased 11 basis points from 3.01% for the three months ended December 31, 2010, to 3.12% for the three months ended December 31, 2011. The average cost of funds decreased 42 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. In addition, the average balance of demand deposits, an interest free source of funds, increased $18.2 million, or 40.8%, for the three months ended December 31, 2011 compared to the three months ended December 31, 2010.
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