Rome Bancorp, Inc. (the "Company") (Nasdaq:ROME), the holding
company of The Rome Savings Bank (the "Bank"), announced today the
Company's results of operations for the three and nine month
periods ended September 30, 2010.
Net income for the Company for the three-month period ended
September 30, 2010 was $838,000, or $0.13 per diluted share
compared to $908,000 or $0.14 per diluted share for the same period
in 2009. The decrease in net income from the third quarter of 2009
was primarily attributable to an increase in non-interest expense
of $453,000 and an increase in the provision for loan losses of
$75,000, which were partially offset by an increase in net interest
income before loan loss provision of $179,000, an increase in
non-interest income of $143,000 and a decrease in income tax
expense of $136,000.
The $179,000 increase in net interest income results from a
$299,000 decrease in interest expense partially offset by a
$120,000 decrease in interest income. Interest income earned on the
loan portfolio decreased by $141,000, or 3.4%, due to contraction
in the portfolio. Interest income on investments increased by
$22,000, or 14.0%, from the same period last year due to the
purchase of additional securities over the past year. The decrease
in interest expense represents a decline in the Company's average
cost of funds from 1.73% for the quarter ended September 30, 2009
to 1.31% in the same quarter of 2010. This rate decrease was
reflective of current market trends. In addition, the Company
reduced the average balance of its interest bearing liabilities to
$228.8 million during the quarter ended September 30, 2010 from
$241.5 million in the same period in 2009. Average outstanding
interest bearing deposit balances increased to $191.3 million in
the current quarter from $186.4 million in the same quarter of
2009, while the average balance of borrowings decreased to $38.6
million for the third quarter of 2010 from $55.1 million for the
same period of 2009.
The Company recorded a $75,000 provision for loan losses in the
three month period ended September 30, 2010 compared to no
provision in the same quarter of 2009. The loan loss allowance as a
percentage of total loans has increased to 0.93% at September 30,
2010 compared to 0.74% at December 31, 2009, in response to an
increase in delinquency rates. The allowance for loan losses as a
percent of non-performing loans was 125.2% at September 30, 2010,
compared to 111.4% at the previous year end. While the Company has
experienced an increase in non-performing loans this year,
management believes these loans are adequately collateralized.
Non-interest income for the third quarter of 2010 increased by
$143,000, or 21.5%, over the same period of 2009. The majority of
the increase in non-interest income was related to gains realized
on sales of residential mortgage loan originations into the
secondary market.
Non-interest expense for the third quarter of 2010 increased by
$453,000, or 17.7%, from the same period in 2009. As previously
announced, the Company has entered into a definitive merger
agreement with Berkshire Hills Bancorp, Inc., (Nasdaq:BHLB), and
the majority of the increase in non-interest expense is
attributable to professional fees incurred in relation to the
transaction. Income tax expense decreased $136,000 to $324,000 in
the third quarter of 2010. Amendments to the New York State bank
taxation statutes in 2010 resulted in a $67,000 net reduction in
income tax expense. The remainder of the third quarter income tax
expense decrease is attributable to lower pretax income.
Net income for the Company for the nine month period ended
September 30, 2010 increased to $2.7 million from $2.3 million in
the first three quarters of 2009. Year to date diluted earnings per
share increased to $0.41 in 2010, compared to $0.34 per diluted
share for the same period of 2009.
Net interest income before loan loss provision for the nine
months ended September 30, 2010 increased to $10.3 million from
$9.7 million for the nine months ended September 30, 2009. Net
interest income for the first nine months of 2010 and 2009 were
similarly impacted by the factors discussed in the third quarter
analysis above. The 2010 year to date provision for loan losses
increased to $540,000 from $200,000 for the same period of 2009.
While 2010 net loan charge-offs have remained low, the provision
was recorded to address a decline in collateral value securing a
commercial credit facility and an increase in the balance of
non-accruing loans. The increase in the balance of
non-accrual loans was largely attributable to the Company's well
collateralized mortgage portfolio.
Non-interest income for the first nine months of 2010 included
gains on the sale of real estate and securities. During the first
quarter of 2010, a gain of $419,000 was realized on the sale of a
commercial parcel owned by the Company. Gains on the sales of three
securities totaling $156,000 were recorded during the first three
quarters of 2010. During the same period of 2009, one security was
sold at a gain of $26,000. Other non-interest income increased to
$2.0 million during the first three quarters of 2010 from $1.8
million for the same period of 2009, principally due to an increase
in gains on the sale of residential mortgage originations into the
secondary market.
Non-interest expense for the nine months ended September 30,
2010 increased to $8.4 million from $8.0 million for the same
period of 2009, primarily due to an increase in professional fees
related to strategic planning initiatives resulting in the
aforementioned merger agreement with Berkshire Hills Bancorp, Inc.
Current year to date income tax expense increased by $175,000 due
to the increase in pre-tax income.
Total assets increased to $331.6 million at September 30, 2010
from $329.9 million at December 31, 2009. Over the past nine months
the loan portfolio has decreased from $287.7 million at year end to
$277.8 million, principally due to increased sales of new loan
originations into the secondary market. Over the same period, cash
and securities have increased by $8.4 million and $3.4 million,
respectively. Deposits increased to $226.9 million at September 30,
2010 from $216.6 million at year end 2009.
Charles M. Sprock, Chairman, CEO and President commented,
"Despite the current challenging financial environment the Bank
continues to deliver an enviable level of net interest margin,
while growing non-interest revenue. We look for our upcoming merger
with Berkshire Hills Bancorp to build upon our successful community
banking model, delivering increased value to our shareholders and
expanded services to our loyal customer base."
The Company also announced that its Board of Directors has
declared a quarterly cash dividend on its common stock of 9 cents
($0.09) per share for stockholders of record at the close of
business on November 5, 2010. The dividend is payable on
November 19, 2010.
Subsequent Events
On October 12, 2010, Berkshire Hills Bancorp, Inc., the parent
company of Berkshire Bank, and the Company entered into an
Agreement and Plan of Merger pursuant to which the Company will
merge with and into Berkshire Hills Bancorp, Inc. Concurrent
with the merger, it is expected that the Bank will merge with and
into Berkshire Bank. The transaction is subject to customary
closing conditions, including the receipt of regulatory approvals
and approval by the shareholders of the Company, and is currently
expected to be completed in the first quarter of 2011.
Forward-Looking Statements
Statements included in this press release that are not
historical or current fact, are "forward-looking statements" made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, and are subject to certain risks and
uncertainties that could cause actual results to differ materially
from historical earnings and those presently anticipated or
projected. The Company wishes to caution readers not to place
undue reliance on such forward-looking statements, which speak only
as of the date made. The Company disclaims any obligation to
subsequently revise any forward-looking statements to reflect
events or circumstances after the date of such statements, or to
reflect the occurrence of anticipated or unanticipated events.
The proposed transaction with Berkshire Hills Bancorp, Inc. will
be submitted to the Company's stockholders for their
consideration. Berkshire Hills Bancorp, Inc. will file with
the SEC a Registration Statement on Form S-4 that will include a
Proxy Statement of the Company and a Prospectus of Berkshire Hills
Bancorp, Inc., as well as other relevant documents concerning the
proposed transaction with the SEC. Stockholders of the Company
are urged to read the Registration Statement and the Proxy
Statement/Prospectus when it becomes available and any other
relevant documents filed with the SEC, as well as any amendments or
supplements to those documents, because they will contain important
information. A free copy of the Registration Statement, Proxy
Statement/Prospectus, as well as other filings containing
information about Berkshire Hills Bancorp, Inc. and the Company
will be available at the SEC's Internet site
(http://www.sec.gov).
Berkshire Hills Bancorp, Inc. and the Company and certain of
their directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders
of the Company in connection with the proposed
merger. Information about the directors and executive officers
of the Company is set forth in the proxy statement, dated April 1,
2010, for the Company's 2010 annual meeting of stockholders, as
filed with the SEC on Schedule 14A. Information about the
directors and executive officers of Berkshire Hills Bancorp, Inc.
is set forth in the proxy statement, dated March 26, 2010, for
Berkshire Hills Bancorp, Inc.'s 2010 annual meeting of
stockholders, as filed with the SEC on Schedule
14A. Additional information regarding the interests of such
participants and other persons who may be deemed participants in
the transaction may be obtained by reading the Proxy
Statement/Prospectus when it becomes available. Free copies of
this document may be obtained as described in the above
paragraph.
|
Rome Bancorp,
Inc. |
Selected Financial
Data |
(Unaudited) |
(Dollars in
thousands) |
|
|
|
|
|
|
|
|
As
of |
|
|
|
September 30, |
December 31, |
|
|
|
2010 |
2009 |
Selected Financial Condition
Data: |
|
|
|
|
Total assets |
|
|
$ 331,607 |
$ 329,922 |
Loans, net |
|
|
275,238 |
285,617 |
Securities |
|
|
18,065 |
14,677 |
Cash and cash equivalents |
|
|
15,999 |
7,574 |
Total deposits |
|
|
226,877 |
216,638 |
Borrowings |
|
|
37,873 |
47,869 |
Total shareholders' equity |
|
|
61,820 |
60,365 |
Allowance for loan losses |
|
|
2,595 |
2,132 |
Non-performing loans |
|
|
2,072 |
1,915 |
Non-performing assets |
|
|
2,072 |
1,915 |
|
|
|
|
|
|
For the three months
ended |
For the nine months
ended |
|
September
30, |
September
30, |
|
2010 |
2009 |
2010 |
2009 |
|
|
|
|
|
Selected Operating
Data: |
|
|
|
|
Interest income |
$ 4,189 |
$ 4,309 |
$ 12,637 |
$ 12,996 |
Interest expense |
753 |
1,052 |
2,300 |
3,259 |
Net interest income |
3,436 |
3,257 |
10,337 |
9,737 |
Provision for loan losses |
75 |
-- |
540 |
200 |
Net interest income after provision for loan
losses |
3,361 |
3,257 |
9,797 |
9,537 |
Non-interest income: |
|
|
|
|
Service charges and other income |
773 |
639 |
1,996 |
1,806 |
Net gain on sale of real estate and
investments |
35 |
26 |
575 |
26 |
Total non-interest income |
808 |
665 |
2,571 |
1,832 |
Non-interest expense |
3,007 |
2,554 |
8,417 |
8,010 |
Income before income taxes |
1,162 |
1,368 |
3,951 |
3,359 |
Income tax expense |
324 |
460 |
1,272 |
1,097 |
Net income |
$ 838 |
$ 908 |
$ 2,679 |
$ 2,262 |
|
|
|
|
|
|
|
|
|
|
Rome Bancorp,
Inc. |
Selected Financial
Data |
(Unaudited) |
(Dollars in thousands,
except per share data) |
|
|
|
|
|
|
For the three months
ended |
For the nine months
ended |
|
September
30, |
September
30, |
|
2010 |
2009 |
2010 |
2009 |
Selected Financial Ratios and Other
Data: |
|
|
|
|
|
|
|
|
|
Performance Ratios: |
|
|
|
|
Basic earnings per share |
$0.13 |
$0.14 |
$0.41 |
$0.34 |
Diluted earnings per share |
$0.13 |
$0.14 |
$0.41 |
$0.34 |
Return on average assets |
1.02% |
1.08% |
1.09% |
0.90% |
Return on average equity |
5.58% |
6.18% |
5.97% |
5.14% |
Net interest rate spread -1 |
4.26% |
3.83% |
4.29% |
3.83% |
Net interest margin -1 |
4.57% |
4.20% |
4.61% |
4.23% |
Non-interest expense to average assets |
3.65% |
3.02% |
3.43% |
3.19% |
Efficiency ratio -1 |
71.44% |
65.53% |
68.23% |
69.33% |
Average interest-earning assets to average
interest-bearing liabilities |
130.44% |
127.46% |
131.33% |
128.25% |
|
|
|
|
|
|
|
|
As
of |
|
|
|
September 30, |
December 31, |
|
|
|
2010 |
2009 |
Equity Ratios: |
|
|
|
|
Equity to assets |
|
|
18.64% |
18.30% |
Book value per share |
|
|
$9.12 |
$8.88 |
|
|
|
|
|
Asset Quality Ratios: |
|
|
|
|
Nonperforming loans as percent of loans |
|
|
0.75% |
0.67% |
Nonperforming assets as percent of total
assets |
|
|
0.62% |
0.58% |
Allowance for loan losses as a percent of
loans |
|
|
0.93% |
0.74% |
Allowance for loan losses as a percent of
non- performing loans |
|
|
125.2% |
111.4% |
Notes: |
|
|
|
|
1. Includes tax equivalent
adjustment for the Company's tax-exempt municipal
securities. |
CONTACT: Rome Bancorp, Inc.
David Nolan, Executive Vice President and
Chief Financial Officer
(315) 336-7300
Rome Bancorp, Inc. (MM) (NASDAQ:ROME)
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