Newmil Bancorp (NASDAQ:NMIL)
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The Board of Directors of NewMil Bancorp, Inc.
(NASDAQ/GS:NMIL) today announced results of its second quarter ended
June 30, 2006.
Diluted earnings were $0.45 for the second quarter ended June 30,
2006 versus $0.53 for the second quarter ended June 30, 2005. Net
income for the quarter was $1.9 million versus $2.2 million for second
quarter of 2005.
NewMil's results for the second quarter of 2006 reflect a change
in investment portfolio strategy in preparation for the previously
announced merger with Webster Financial Corporation ("Webster"), the
absence of any Federal Home Loan Bank of Boston ("FHLBB") dividend
income for the quarter, the challenging interest rate environment
affecting the entire banking industry, and from charges incurred in
connection with the pending merger with Webster. Merger expenses
amounted to $369,000, or $0.06 per share, net of taxes, for the
period. Positively impacting the period was a gain of $364,000 arising
from the termination of post retirement health care and life insurance
benefits.
During the quarter the FHLBB changed its policy for dividend
declarations such that the dividend based on net income for the second
quarter of 2006 is not expected to be declared until the third quarter
of 2006. In the first quarter NewMil recognized dividend income of
$132,000, or $0.03 per share, net of taxes, based on average FHLBB
shares outstanding of $10.2 million for the quarter. NewMil had
average FHLBB shares of $10.6 million for the second quarter.
Net interest income was $6.1 million for the quarter as compared
with $6.3 million in the first quarter of 2006 and $6.6 million in the
second quarter of 2005. Taxable equivalent net interest income was
$6.3 million for the quarter compared with $6.6 million in the first
quarter of 2006 and $6.8 million in the second quarter of 2005.
The net interest margin was 3.08% for the quarter compared to
3.19% in the first quarter of 2006 and 3.61% in the second quarter of
2005. The compression in net interest margin was mostly due to the
rise in short term rates and the prolonged flatness of the yield
curve. NewMil has sought to offset this effect by growing earning
assets. During the quarter average earning assets were up $15.1
million over the fourth quarter of 2005 and up $72.3 million over the
second quarter of 2005.
Non-interest income was $0.9 million for the quarter, as compared
with $1.0 million for the second quarter of 2005 which included a gain
of $65,000 from the sale of OREO. Non-interest expense was $4.4
million for the quarter and was substantially unchanged when compared
with the prior year period. During the quarter NewMil incurred
$369,000 of expenses related to the merger with Webster Bank. The
efficiency ratio was 61.5% for the second quarter of 2006.
NewMil's gross loans increased $17.1 million during the first six
months to $514.8 million at June 30, 2006. Asset quality remains
strong, as evidenced by nonperforming assets at 18 basis points of
total assets at June 30, 2006. Deposits grew $6.5 million during the
period to $622.5 million at June 30, 2006.
At June 30, 2006, book value and tangible book value per common
share were $12.80 and $10.84, respectively, and tier 1 leverage and
total risk-based capital ratios were 7.02% and 13.71%, respectively.
Return on average shareholders' equity was 14.4% for the second
quarter of 2006 versus 16.3% for the second quarter of 2005.
Francis J. Wiatr, NewMil's Chairman, President and CEO noted, "We
have made substantial progress during the quarter with our transition
plans for the upcoming merger (subject to regulatory and shareholder
approval) with Webster, while at the same time continuing to grow our
core franchise as evidenced by the increase in both loans and
deposits. Our commercial lending business was solid during the quarter
and we continued to build market share with this important segment of
our business. Recently released statistics by the U.S. Small Business
Administration rank NewMil Bank as one of the top originators in the
State of Connecticut for 504 loans.
"To support the company's future growth plan in the greater
Danbury area, we opened our drive-up ATM in the "Reserve" (located at
One Reserve Road, Danbury, Connecticut), which will be the future home
of a branch office as development there proceeds."
The Board of Directors also announced a quarterly dividend of
$0.22 per common share, payable on August 15, 2006 to shareholders of
record on July 28, 2006.
NewMil Bancorp is the parent company of NewMil Bank, which has
served western Connecticut since 1858, and operates 20 full-service
banking offices.
Please also refer to Webster Financial Corporation's (NYSE: WBS)
press release of April 25, 2006, which announced that the Board of
Directors of NewMil has entered into a definitive agreement with
Webster for Webster to acquire NewMil.
Financial highlights are attached.
Statements in this news release concerning future results,
performance, expectations or intentions are forward-looking
statements. Actual results, performance or developments may differ
materially from forward-looking statements as a result of known or
unknown risks, uncertainties, and other factors, including those
identified from time to time in the Company's other filings with the
Securities and Exchange Commission, press releases and other
communications.
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NewMil Bancorp, Inc
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands except ratios and per share amounts)
(unaudited)
Three month Six month
period ended period ended
June 30 June 30
STATEMENT OF INCOME 2006 2005 2006 2005
---- ---- ---- ------
Interest and dividend income $11,464 $9,836 $22,720 $19,115
Interest expense 5,368 3,285 10,340 6,004
Net interest income 6,096 6,551 12,380 13,111
Provision for loan losses - - - -
Non-interest income
Service fees on deposit accounts 695 741 1,351 1,443
Gains on sales of mortgage loans 47 39 58 91
Gain on sale of OREO - 65 200 65
Other non-interest income 206 196 404 389
Total non-interest income 948 1,041 2,013 1,988
Non-interest expense
Compensation 2,059 2,441 4,478 4,753
Occupancy and equipment 842 783 1,633 1,570
Postage and telecommunication 162 145 307 278
Professional services, collection
& OREO 188 188 370 414
Printing and office supplies 93 113 190 217
Marketing 72 81 139 148
Service bureau EDP 96 97 188 190
Amortization of intangible assets 24 36 49 73
Merger Expense 369 - 369 -
Other 511 536 1,000 1,032
Total non-interest expense 4,416 4,420 8,723 8,675
Income before income taxes 2,762 3,172 5,804 6,424
Provision for income taxes 735 923 1,559 1,940
Net income $ 1,893 $ 2,249 $ 4,111 $ 4,484
Per common share
Diluted earnings $ 0.45 $ 0.53 $ 0.99 $ 1.04
Basic earnings 0.46 0.53 1.01 1.07
Cash dividends 0.22 0.20 0.44 0.40
Statistical data
Net interest margin,
(fully tax equivalent) 3.08% 3.61% 3.13% 3.68%
Efficiency ratio 62.69 58.22 60.61 57.45
Return on average assets 0.88 1.13 0.95 1.16
Return on average common
shareholders' equity 14.38 16.34 15.60 16.21
Weighted average equivalent
common shares outstanding,
diluted 4,177 4,275 4,163 4,298
NewMil Bancorp, Inc.
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands except ratios and per share amounts)
June 30, June 30, December 31,
2006 2005 2005
---- ---- ----
Unaudited Unaudited
FINANCIAL CONDITION
Total assets $864,060 $812,312 $872,991
Loans, net 509,895 490,255 492,763
Allowance for loan losses 4,900 4,981 4,949
Securities 289,256 264,162 322,343
Cash and cash equivalents 27,036 24,091 22,564
Intangible assets 8,044 8,167 8,093
Deposits 622,514 603,577 615,995
Federal Home Loan Bank advances 165,988 128,836 174,266
Repurchase agreements 10,265 12,416 15,491
Long term debt 9,896 9,836 9,866
Shareholders' equity 52,494 54,541 53,016
Non-performing assets 1,571 280 1,590
Deposits
Demand (non-interest bearing) $ 79,677 $ 76,549 $ 77,383
NOW accounts 77,036 79,316 82,400
Money market 114,505 146,571 146,007
Savings and other 95,266 84,903 88,142
Certificates of deposit 256,030 216,238 222,063
Total deposits 622,514 603,577 615,995
Per common share
Book value $ 12.80 $ 13.18 $ 12.98
Tangible book value 10.84 11.21 10.99
Statistical data
Non-performing assets
to total assets 0.18% 0.03% 0.18%
Allowance for loan losses
to total loans 0.95 1.01 0.99
Allowance for loan losses
to non-performing loans 311.90 1778.93 311.26
Common shareholders' equity
to assets 6.08 6.71 6.07
Tangible common shareholders'
equity to assets 5.14 5.71 5.15
Tier 1 leverage capital 7.02 7.14 6.81
Total risk-based capital 13.71 13.12 13.09
Common shares outstanding,
net (period end) 4,101 4,138 4,086
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