CBT Reports Results for Third Quarter

HARTFORD, Conn., Oct. 29, 2010 (GLOBE NEWSWIRE) -- The Connecticut Bank and Trust Company ("CBT" or "Bank") (Nasdaq:CTBC) reported a net loss of $135,000 for the third quarter of 2010 compared to net income of $204,000 for the comparable period a year earlier. Net loss attributable to common shareholders, after accounting for $97,000 of preferred dividends, was $232,000 or $.06 per diluted share compared to net income of $176,000 or $0.05 per diluted share, respectively.

Total assets at September 30, 2010 were $272 million compared to $268 million at the start of the quarter. Loans outstanding increased $10 million to $219 million. Investment securities increased $3 million. Funding for the increases was primarily provided by $4 million increase in deposits and $8 million reduction in Federal funds sold.

The Bank reported net income of $372,000 for nine months ended September 30, 2010 compared to net income of $125,000 for the same period in the prior year. Net income available to common shareholders after $291,000 for preferred dividends was $81,000 or $0.02 per diluted share compared to net income of $39,000 or $0.01 per diluted share after $86,000 for preferred dividends for the first nine months of 2009.  

Chairman and CEO David A. Lentini remarked, "The impact of the prolonged recession continues to touch all sectors of the regional economy, including housing, retail sales and manufacturing. We are concerned that there has been very little improvement in the local economy. Our provision for loan losses of $587,000 this quarter is in direct response to this lack of improvement. While Connecticut is faring better than most areas of the country, I believe it is prudent to take action now to strengthen the balance sheet."  

Operating Results for the Quarter Ended September 30, 2010Net interest income for the quarter ended September 30, 2010, increased $273,000 or 12% over the same period in 2009 and $121,000 or 5% on a linked quarter basis. The net interest margin for the quarter was 3.89% compared to 4.13% for the comparable period a year ago. Growth in average earning assets, principally loans, overcame compression of the margin caused by lower interest rates. The volume related changes increased net interest income $301,000 and were partially offset by $31,000 reduction from rate related changes. 

Noninterest income amounted to $186,000 in the quarter, compared to $153,000 for the comparable period a year ago. With generally no price increases during the period, the increase of $33,000 resulted primarily from increased volumes of deposit and fees from the origination and sales of mortgage loans. 

Operating expenses for the quarter totaled $2.3 million, an increase of $212,000, from the same period last year. Compensation costs, including staff additions, benefits, and related taxes, rose $44,000, for the three month period ended September 30, 2010. Professional services increased $29,000 from the prior year primarily resulting from the introduction of servicing fees on a consumer loan portfolio. All other general and administrative costs rose $110,000 from the comparable period a year prior primarily due to higher prices for goods and services and collection expenses on problem assets. FDIC insurance increased $17,000 compared to the prior period due to increased insurable deposits. 

Operating Results for the Nine Months Ended September 30, 2010Net interest income for the nine months ended September 30, 2010, increased $1.3 million or 20% over the same period in 2009. The increase was divided evenly between changes related to changes in rates and changes related to changes in volumes.  Loan growth and lower time deposit rates were the principal drivers for this outcome. At 3.86%, in 2010, the net interest margin was virtually unchanged from 3.88% report for the same period in 2009.

Noninterest income increased $71,000 to $544,000 for the nine month period ended September 30, 2010 compared to $473,000 for the comparable period a year ago.  Brokerage, deposit operations, and loans originated for sale all contributed to this increase.

Included in noninterest income were net security gains of $60,000 and gains on loans originated for sale of $33,000 for the nine month period ending September 30, 2010 compared to $56,000 and $15,000, respectively, in the same periods a year prior. The Bank also realized a loss of $4,000 on the sale of other real estate owned during the current year.   

Operating expenses for the nine months ended September 30, 2010 totaled $6.8 million, an increase of $575,000, or 9% from the same period last year. Compensation costs, including merit increases, staff additions, and the increased cost of benefits rose $224,000, for the nine month period ended September 30, 2010. Professional services increased $105,000 from the prior year primarily resulting from the introduction of servicing fees on a consumer loan portfolio and legal and accounting guidance. All other general and administrative costs rose $246,000 due to collection efforts on problem assets, the inception of director fees and higher prices for goods and services. All other categories of expense exhibited only modest changes from the prior year.    

Provision for Loan Losses. The provision for loan losses for the 2010 quarter was $587,000 and increased the reserves to total loans ratio to 1.48% at September 30, 2010 compared to 1.35% at December 31, 2009. Growth in the loan portfolio and internally identified problem loans were the principal factors in determining the need for provisions. At September 30, 2010, the allowance was $3.2 million compared to $2.7 million at December 31, 2009.  

Asset Quality.  All loans are subject to internal risk rating, which is independently reviewed on an annual basis. Internal risk ratings are an integral component in the calculation of reserving for loan losses. Total nonaccrual loans were $3.1 million and represented 1.4% of total loans outstanding at September 30, 2010, compared to $2.0 million, or 1.0% of total loans at December 31, 2009. The coverage ratio of the allowance for loan losses to nonperforming loans was 105% at September 30, 2010. Loans past due 90 days or more and still accruing interest totaled $1.3 million as of September 30, 2010. Charged-off loans amounted to $288,000 for the quarter ended September 30, 2010 and $100,000 in the comparable period a year earlier.      

Balance Sheet Performance. Total assets were $272.3 million at September 30, 2010, up $12.0 million from December 31, 2009 and up $34.0 million or 14% year over year.  Outstanding loans increased $18.0 million from December 31, 2009 to conclude the quarter at $218.8 million. Securities available for sale increased $4.1 million primarily invested in short term mortgage-backed securities. Cash and cash equivalents declined $10.1 million due to the employment of funds into higher yielding assets. Total deposits grew $12.2 million from December 31, 2009 to end the quarter at $213.0 million and fully supported the asset growth during the period. Short-term borrowings declined $1.0 million and borrowings from the Federal Home Loan Bank Boston remained consistent at $30.5 million. The Bank is considered well-capitalized with stockholders' equity of $24.9 million at September 30, 2010.

Selected Performance Data
Quarter Ended
Dollars in thousands, Sep 30, Dec 31, Mar 31, Jun 30, Sep 30,
except per share data 2009 2009 2010 2010 2010
Total assets (EOP)  $ 238,263  $ 260,254  $ 266,661  $ 267,531  $ 272,292
Net income (loss)  $ 204  $ 232  $ 246  $ 261  $ (135)
Net income (loss) available to common shareholders  $ 176  $ 135  $ 149  $ 164  $ (232)
Net interest margin 4.13% 4.06% 3.97% 3.74% 3.89%
Net interest spread 3.72% 3.77% 3.62% 3.44% 3.58%
Ratio of total stockholders' equity to total assets (EOP) 10.22% 9.24% 9.25% 9.42% 9.14%
Weighted avg shares outstanding (basic) (1)  3,572  3,572  3,604  3,621  3,621
Income (loss) per common share (basic)  $ 0.05  $ 0.04  $ 0.04  $ 0.05  $ (0.06)
Income (loss) per common share (diluted)  $ 0.05  $ 0.04  $ 0.04  $ 0.04  $ (0.06)
Book value per common share (EOP)  $ 5.44  $ 5.36  $ 5.43  $ 5.57  $ 5.48
Allowance for loan losses to total loans (EOP) 1.55% 1.35% 1.37% 1.40% 1.48%
Nonperforming loans to total loans 1.36% 1.03% 0.87% 1.70% 1.41%
(1) Prior periods restated in accordance with adoption of ASC 260-10-45-49A (Formerly EITF 06-3-1) 

Caution concerning forward-looking statements:
Statements contained in this release, which are not historical facts, may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated, due to a number of factors which include, without limitation, the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, changes in the interest rates, the effects of competition, and other factors that could cause actual results to differ materially from those provided in any such forward-looking statements. CBT does not undertake to update its forward-looking statements. 

See financial statements accompanying this release for additional data.

THE CONNECTICUT BANK AND TRUST COMPANY
Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands, except per share data) 2010 2009 2010 2009
Interest and dividend income:
Interest and fees on loans   $ 3,159  $ 2,887  $ 9,269  $ 8,359
Debt securities  237  317  728  1,001
Dividends/other  23  12  70  29
Total interest and dividend income  3,419  3,216  10,067  9,389
Interest expense:
Deposits  559  629  1,731  2,265
Borrowed funds   277  277  816  831
Total interest expense  836  906  2,547  3,096
Net interest income  2,583  2,310  7,520  6,293
Provision for loan losses  587  154  896  420
Net interest income, after provision for loan losses  1,996  2,156  6,624  5,873
Noninterest income:
Service charges and fees  103  75  249  211
Brokerage commissions  63  71  206  191
Gains from sales of available-for-sale securities, net  --  --  60  56
Loss on sale of other real estate owned  (4)  --  (4)  --
Gains on loans originated for sale, net  24  7  33  15
Total noninterest income  186  153  544  473
Noninterest expenses:
Salaries and benefits  1,131  1,087  3,394  3,170
Occupancy and equipment  452  443  1,323  1,348
Data processing  90  82  248  230
Marketing  100  105  286  268
Professional services  163  134  497  392
FDIC assessment  99  82  289  300
Other general and administrative  282  172  759  513
Total noninterest expenses  2,317  2,105  6,796  6,221
Net income (loss)  (135)  204  372  125
Dividends and accretion of discount on preferred stock issuance  (97)  (28)  (291)  (86)
Net income (loss) available to common shareholders  $ (232)  $ 176  $ 81  $ 39
Net income (loss) per share:
Basic  $ (0.06)  $ 0.05  $ 0.02  $ 0.01
Diluted  $ (0.06)  $ 0.05  $ 0.02  $ 0.01
Shares outstanding (in thousands):
Average basic common shares issued and outstanding  3,621  3,572  3,615  3,572
Average diluted common shares issued and outstanding  3,621  3,572  3,635  3,572
THE CONNECTICUT BANK AND TRUST COMPANY
Balance Sheets
(Unaudited)
ASSETS
September 30, December 31, September 30,
2010 2009 2009
(Dollars in thousands)
Cash and due from banks   $ 4,161  $ 4,317  $ 13,639
Federal funds sold  12,900  22,800  --
Cash and cash equivalents  17,061  27,117  13,639
Certificates of deposit  79  78  78
Securities available for sale, at fair value  31,554  27,431  29,017
Federal Reserve Bank stock, at cost  762  724  710
Federal Home Loan Bank stock, at cost  2,057  2,057  2,057
Loans  218,777  200,780  191,869
Less: allowance for loan losses  (3,247)  (2,702)  (2,973)
Loans, net  215,530  198,078  188,896
Premises and equipment, net  1,930  2,096  2,203
Accrued interest receivable  1,148  933  894
Prepaid FDIC insurance  835  1,069  --
Other assets   1,336  671  769
Total assets  $ 272,292  $ 260,254  $ 238,263
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing deposits  $ 34,653  $ 34,442  $ 31,407
Interest-bearing deposits  178,302  166,330  149,961
Short-term borrowings  2,989  3,988  1,173
Long-term debt  30,450  30,450  30,450
Other liabilities  1,001  991  922
 Total liabilities  247,395  236,201  213,913
Stockholders' equity:
Preferred stock, no par value; 1,000,000 shares authorized; 5,448 shares
issued and outstanding; aggregate liquidation preference of $5,448
 5,448  5,448  5,448
Discount on preferred stock  (402)  (489)  (518)
Common stock, $1.00 par value; 10,000,000 shares authorized; 3,620,950
and 3,572,450 shares issued and outstanding at September 30, 2010 and
December 31, 2009, respectively
 3,621  3,572  3,572
Common stock warrants  1,405  1,405  1,405
Additional paid-in capital  30,069  29,858  29,839
Restricted stock unearned compensation  (176)  (29)  (49)
Retained deficit  (15,363)  (15,444)  (15,579)
Accumulated other comprehensive income (loss)  295  (268)  232
Total stockholders' equity   24,897  24,053  24,350
Total liabilities and stockholders' equity  $ 272,292  $ 260,254  $ 238,263
CONTACT:  The Connecticut Bank and Trust Company
          David A. Lentini
          860-748-4250
          dlentini@thecbt.com
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