Chicopee Bancorp, Inc. (the “Company”) (NASDAQ - CBNK), the holding company for Chicopee Savings Bank (the “Bank”), announced the results of operations for the three months ended March 31, 2010.

The Company reported a net loss for the three months ended March 31, 2010 of $50,000, or ($0.01) loss per share, as compared to a net profit of $114,000, or $0.02 earnings per share, for the same period in 2009. The decrease in net income was primarily due to an increase in the provision for loan losses of $179,000 and an increase in non-interest expense of $298,000, partially offset by an increase of $391,000, or 10.4%, in net interest income for the three months ended March 31, 2010 compared to the three months ended March 31, 2009.

The increase in the loan loss provision for the quarter ended March 31, 2010 compared to the same quarter in 2009, primarily resulted from an increase in specific reserves and growth in the commercial and industrial portfolio. Non-interest income, decreased $79,000, or 11.5%, to $607,000 for the three months ended March 31, 2010 compared to $686,000 for the three months ended March 31, 2009. The decrease in non-interest income was due to an $116,000 decrease in net loan sales and servicing resulting from significantly reduced residential real estate refinancing volume in the first three months of 2010. Residential loan volume was at record levels for the Company during the quarter ended March 31, 2009. The Company also reported a $13,000 non-cash charge for an other-than-temporarily impaired security in the first quarter of 2010. These decreases in non-interest income were offset by a $95,000, or 28.4%, increase in service charges, fees and commissions during the period. For the three months ended March 31, 2010, non-interest expense increased $298,000, or 7.0%, to $4.5 million from $4.2 million at March 31, 2009. The increase in non-interest expense was mainly due to an increase in FDIC insurance expense of $198,000 and an increase of $184,000 in salaries and employee benefits.

The Company’s total assets increased $1.6 million, or 0.3%, from $544.2 million at December 31, 2009 to $545.8 million at March 31, 2010. Net loans increased $2.2 million, or 0.5%, from $424.7 at December 31, 2009 to $426.8 million at March 31, 2010. Commercial and industrial loans increased $3.6 million, or 5.2%, from $68.5 million to $72.1 million, construction loans increased $1.2 million, or 3.3%, from $38.3 million at December 31, 2009 to $39.6 million at March 31, 2010. These increases were partially offset by a decrease in commercial real estate loans of $1.8 million, or 1.4%, and a decrease in one- to four-family residential of $2.4 million, or 1.6%. The decrease in one- to four-family residential loans was primarily due to prepayments and refinancing activity attributed to the decline in interest rates to historically low levels. In accordance with the Company’s asset/liability management strategy and in an effort to reduce interest rate risk, the Company sold $3.4 million of fixed rate residential real estate loans originated in the first quarter of 2010 to the secondary market with servicing rights retained.

The investment portfolio increased by 5.4%, or $3.4 million, from $63.5 million at December 31, 2009 to $66.9 million at March 31, 2010. The portfolio consists of $537,000 in available-for-sale securities and $66.3 million in held-to-maturity securities. The increase in the investment portfolio was concentrated in the held-to-maturity portfolio which increased $3.4 million, or 5.3%, to $66.3 million due to the purchase of a $10.0 million tax-exempt industrial revenue bond and purchases of $3.4 million in U.S. Treasury securities, partially offset by maturities of U.S. Treasury securities of $9.7 million and pay downs of collateralized mortgage obligations and bonds of $363,000.

Financial highlights include:
  • Total deposits decreased $13.9 million, or 3.8%, from $365.5 million at December 31, 2009 to $351.6 million at March 31, 2010. During the period certificate of deposits decreased $12.5 million, or 6.0%, and demand deposits decreased $5.2 million, or 12.2%, offset by an increase of $2.1 million, or 4.8%, in passbooks and $1.6 million, or 3.0%, in money market accounts. The decrease in certificate of deposits was concentrated in municipal accounts due to the fluctuation in their operating cash flow cycle.
  • Borrowings, including repurchase agreements of $18.4 million and Federal Home Loan Bank (“FHLB”) advances of $80.9 million, increased by $15.2 million, or 18.1%, to $99.3 million at March 31, 2010, compared to $84.1 million at December 31, 2009. Due to the low interest rate environment, the Company was able to obtain lower cost longer-term advances from the FHLB. The average weighted remaining maturity and weighted average rate of the advances are 4 years and 2.69%, respectively.
  • Total stockholders’ equity increased $411,000, or 0.4%, to $94.6 million at March 31, 2010 from $94.2 million at December 31, 2009. At March 31, 2010, the Company’s balance sheet continues to be strong and regulatory capital ratios continue to exceed the levels required to be considered “well-capitalized” under applicable federal banking regulations with a capital to total asset ratio of 17.3%. Our capital management strategies have allowed us to increase our book value per share by $0.07, from $14.76 at December 31, 2009 to $14.83 at March 31, 2010.
  • Non-performing assets decreased slightly by $37,000 from December 31, 2009 to March 31, 2010, but remained relatively consistent at $4.9 million, or 0.90%, as a percentage of total assets. Non-performing assets included $80,000 of other real estate owned at March 31, 2010 and December 31, 2009. Non-performing loans as a percentage of total loans decreased from 1.13% at December 31, 2009 to 1.11% at March 31, 2010.
  • The loan loss provision for the first quarter of 2010 was $273,000, as compared to $94,000 for the first quarter of 2009. The allowance for loan loss for the three months ended March 31, 2010 and March 31, 2009 was $4.3 million and $3.4 million, respectively. Management reviews the level of the allowance for loan losses on a monthly basis and establishes the provision for loan losses based upon the volume and types of lending, delinquency levels, loss experience, the amount of impaired and classified assets, general economic conditions and other factors related to the collectability of the loan portfolio. The increase in the loan loss provision at March 31, 2010 compared to March 31, 2009 primarily resulted from growth in the commercial and industrial portfolio and an increase in specific reserves due to the general economic conditions.
  • Net interest income and margin remained strong during the quarter, due to continued proactive balance sheet management that resulted in lower funding costs and mitigated the impact of historically low market rates on asset yields. Net interest income increased to $4.2 million for the quarter ended March 31, 2010 from $3.8 million for the quarter ended March 31, 2009, an increase of 10.4%. As a result of the continued low interest rate environment, the average cost of interest-bearing liabilities decreased 36 basis points to 2.01% at March 31, 2010 from 2.37% at March 31, 2009 while the average yield on interest-earning assets decreased 14 basis points from 5.20% to 5.06% for the same period. The net interest margin improved 22 basis points from 3.21% at March 31, 2009 to 3.43% at March 31, 2010. We will continue to monitor the cost of funds in an effort to protect the net interest margin during this unprecedented low interest rate environment.

Although we reported a net loss for the quarter, we are encouraged by the stability in asset quality and the prospects for improved performance for the remainder of 2010. The banking industry continues to feel the pressure of the economy and is faced with increased costs associated with FDIC insurance expense and increased loan loss provisions. We believe that we are on the right track with positive trends in performance and problem assets. Our core earnings remain positive driven largely by our lower cost of funds as we continue to position ourselves for a return to stronger performance as the economy improves.

While non-performing assets as a percentage of total assets remained at 0.90% at December 31, 2009 and March 31, 2010 and net loan charge-offs to date remain relatively low at 0.01% of average loans, we felt it was prudent to continue to fund our provision for loan losses and allocate specific reserves due to the ongoing difficult economic conditions. We increased the allowance for loan losses by 26.0% from $3.4 million at March 31, 2009 to $4.3 million at March 31, 2010. The provision for loan losses increased by $179,000, or 190.4%, from March 31, 2009 to March 31, 2010. Management is committed to preserving asset quality and focused on diligently reducing problem loans as they arise. We have been proactive in our efforts to promptly identify and resolve non-performing assets during these challenging times.

We have taken steps to protect our strong capital position, preserve liquidity and improve the net interest margin in a historically low interest rate environment. Over the last year, we have focused on replacing and succeeding our higher-cost funding with lower cost, longer-term funding sources. Due to this success, we have managed to reduce the overall funding costs to mitigate the impact of lower asset yields. As we approach the second quarter of 2010, we have attempted to better position the balance sheet for the long-awaited increase in interest rates.

With the uncertainty in the current economy, we believe that Chicopee Savings Bank is well-positioned and well capitalized to weather this financial storm and prosper in the future. We are committed to providing new loans to businesses and consumers, and our lenders continue to work aggressively to meet the borrowing needs of the communities we serve. We will continue to evaluate opportunities to expand our customer base and grow the company in a disciplined manner taking into consideration the value of the bank’s capital in the current environment.

Chicopee Bancorp, Inc. is a publicly owned bank holding company and the parent corporation of Chicopee Savings Bank, a Massachusetts stock savings bank headquartered at 70 Center Street, Chicopee, MA 01013. Chicopee Savings Bank provides a wide variety of financial products and services through its main office, seven branch offices located in Chicopee, Ludlow, South Hadley, Ware, and West Springfield in Western Massachusetts, and lending and operations center. For more information regarding the Bank’s products and services, please visit our web site at www.chicopeesavings.com.

This news release may contain forward-looking statements, which can be identified by the use of words such as "believes," "expects," "anticipates," "estimates" or similar expressions. Such forward-looking statements and all other statements that are not historic facts are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors. These factors include, but are not limited to, general economic conditions, changes in the interest rate environment, legislative or regulatory changes that may adversely affect our business, changes in accounting policies and practices, changes in competition and demand for financial services, adverse changes in the securities markets, changes in deposit flows and changes in the quality or composition of the Company's loan or investment portfolios. Additionally, other risks and uncertainties may be described in the Company's quarterly reports on Form 10-Q and its annual report on Form 10-K, each filed with the Securities and Exchange Commission, which are available through the SEC's website at www.sec.gov. Should one or more of these risks materialize, actual results may vary from those anticipated, estimated or projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company assumes no obligation to update any forward-looking statements.
CHICOPEE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars In Thousands)
   
 
March 31, December 31,
Assets 2010 2009
(Unaudited)
 
Cash and due from banks $ 6,888 $ 9,757
Short-term investments - 16
Federal funds sold   9,179     10,302  
Total cash and cash equivalents 16,067 20,075
 
Securities available-for-sale, at fair value 537 503

Securities held-to-maturity, at cost (fair value $66,443 and $63,130 at March 31, 2010 and December 31, 2009, respectively)
66,347 62,983
Federal Home Loan Bank stock, at cost 4,489 4,306

Loans, net of allowance for loan losses ($4,303 at March 31, 2010 and $4,077 at December 31, 2009)
426,821 424,655
Loans held for sale 621 534
Other real estate owned 80 80
Mortgage servicing rights 306 297
Bank owned life insurance 12,717 12,610
Premises and equipment, net 10,524 10,652
Accrued interest and dividends receivable 1,668 1,629
Deferred income tax asset 2,095 2,112
FDIC prepaid insurance expense 1,688 1,900
Other assets   1,805     1,814  
Total assets $ 545,765   $ 544,150  
 
Liabilities and Stockholders' Equity
 
Deposits
Non-interest-bearing $ 37,432 $ 42,629
Interest-bearing   314,161     322,869  
Total deposits 351,593 365,498
 
Securities sold under agreements to repurchase 18,435 20,422
Federal Home Loan Bank of Boston advances 80,907 63,675
Accrued expenses and other liabilities   247     383  
Total liabilities   451,182     449,978  
 
 
Stockholders' equity

Common stock (no par value, 20,000,000 shares authorized, 7,439,368 shares issued at March 31, 2010 and December 31, 2009)
72,479 72,479

Treasury stock, at cost (1,060,438 shares at March 31, 2010 and 1,060,338 shares at December 31, 2009)
(13,953 ) (13,951 )
Additional paid-in-capital 1,916 1,765
Unearned compensation (restricted stock awards) (2,062 ) (2,269 )
Unearned compensation (Employee Stock Ownership Plan) (4,687 ) (4,761 )
Retained earnings 40,793 40,843
Accumulated other comprehensive loss   97     66  
Total stockholders' equity   94,583     94,172  
Total liabilities and stockholders' equity $ 545,765   $ 544,150  
 
CHICOPEE BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except for Number of Shares and Per Share Amounts)
(Unaudited)
   
Three Months Ended
March 31,
2010 2009
 
Interest and dividend income:
Loans, including fees $ 5,918 $ 5,898
Interest and dividends on securities 261 203
Other interest-earning assets   5       4  
Total interest and dividend income   6,184       6,105  
 
Interest expense:
Deposits 1,487 1,880
Securities sold under agreements to repurchase 27 59
Other borrowed funds   518       405  
Total interest expense   2,032  

 
  2,344

 
 
Net interest income 4,152 3,761
Provision for loan losses   273       94  
 
Net interest income, after provision for loan losses   3,879       3,667  
 
Non-interest income:
Service charges, fees and commissions 430 335
Loan sales and servicing, net 83 199
Net gain on sales of securities available-for-sale - 36
Other than temporary impairment charge (13 ) -
Income from bank owned life insurance   107       116  
Total non-interest income   607  

 
  686

 
 
Non-interest expenses:
Salaries and employee benefits 2,536 2,352
Occupancy expenses 429 468
Furniture and equipment 268 278
FDIC insurance assessment 221 23
Data processing 279 279
Professional fees 125 125
Advertising 125 110
Stationery, supplies and postage 89 106
Other non-interest expense   464       497  
Total non-interest expense   4,536  

 
  4,238

 
 
Income (loss) before income taxes (50 )

 
115

 
Income tax expense (benefit)   -       1  
Net income (loss) $ (50 )

 
$ 114

 
 
Earnings (loss) per share: (1)
Basic ($0.01 ) $ 0.02
Diluted ($0.01 ) $ 0.02
 
Adjusted weighted average shares outstanding:
Basic 5,726,836 5,741,744
Diluted 5,726,836 5,741,744
 

(1) Common stock equivalents are excluded from the computation of diluted net loss per share for the three months ended March 31, 2010, since the inclusion of such equivalents would be anti-dilutive.
CHICOPEE BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA AND RATIOS
(Unaudited)
   
Three Months Ended
March 31,
2010 2009
Performance Ratios:
 
Return on Average Assets -0.04% 0.09%
Return on Average Equity -0.21% 0.49%
Interest Rate Spread 3.05% 2.83%
Net Interest Margin 3.43% 3.21%
Non-Interest Expense to Average Assets 3.37% 3.27%
Efficiency Ratio 95.31% 95.30%

Average Interest-Earning Assets to Average Interest-Bearing Liabilities
123.05% 119.70%
Average Equity to Average Assets 17.43% 17.95%
 
 
At March 31, At December 31,
2010 2009
Asset Quality Ratios:
 

Allowance for loan losses as a percent of total loans
1.00% 0.95%

Allowance for loan losses as a percent of total nonperforming loans
89.52% 84.17%

Net charge-offs to average outstanding loans during the period
0.01% 0.04%

Nonperforming loans as a percent of total loans
1.11% 1.13%
 
Other Data:
 
Number of Offices 9 9
 

(1) Efficiency Ratio includes total non-interest expenses divided by the sum of net interest income plus total non-interest income.

Copyright Business Wire 2010

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