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Chicopee Bancorp, Inc. (the “Company”) (NASDAQ – CBNK), the holding company for Chicopee Savings Bank (the “Bank”), announced the unaudited results of operations for the three and six months ended June 30, 2012.
Net income increased $146,000, or 47.7%, from $306,000, or $0.06 earnings per share, for the three months ended June 30, 2011 to $452,000, or $0.09 earnings per share, for the three months ended June 30, 2012. This increase was primarily due to an increase in non-interest income of $186,000, or 31.5%, an increase in net interest income of $129,000, or 2.9%, and a decrease in the provision for loan losses of $55,000, or 46.2%. These increases were partially offset by an increase in non-interest expense of $149,000, or 3.2%, and an increase in income tax expense of $75,000, or 416.7%.
Non-interest income increased $186,000, or 31.5%, from $591,000 at June 30, 2011 to $777,000 at June 30, 2012. Income from customer service fees and commissions increased $89,000, or 20.0%, income from loan sales and servicing, net increased $64,000, or 128.0%, and income on the sale of an OREO residential property increased $34,000.
The increase in net interest income of $129,000, or 2.9%, from $4.489 million at June 30, 2011 to $4.618 million at June 30, 2012 was primarily due to the $308,000, or 17.2%, decrease in interest expense directly attributed to a $224,000, or 16.6%, decrease in deposit costs and a $84,000, or 19.0%, decrease in borrowing costs, including Federal Home Loan Bank (“FHLB”) advances and repurchase agreements. The decrease in interest expense was offset by the $179,000, or 2.8%, decrease in interest income due to the continued low interest rate environment.
The net interest margin increased 2 basis points from 3.48% for the three months ended June 30, 2011 to 3.50% for the three months ended June 30, 2012. The interest rate spread increased 7 basis points from 3.17% for the three months ended June 30, 2011 to 3.24% for the three months ended June 30, 2012. The average cost of funds decreased 31 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 deposit accounts, an interest free source of funds, increased $13.1 million, or 27.0%, for the three months ended June 30, 2012 compared to June 30, 2011.