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 year and three month period
ended December 31, 2010 (unaudited).
Net income for the Company for the twelve month period ended
December 31, 2010 decreased to $2.3 million, or $0.35 per diluted
share, compared to $3.1 million or $0.47 per diluted share for
2009. Earnings for the year were negatively impacted by an increase
in the provision for loan losses of $1.5 million and an increase in
non-interest expense of $1.2 million, which were partially offset
by increases in net interest income before the provision for loan
losses and non-interest income of $629,000 and $828,000,
respectively, and a decrease in income tax expense of $385,000.
Interest income for the twelve months ended December 31, 2010
decreased by $604,000 to $16.7 million from $17.3 million in the
previous year due to decreases in both the average balances and
yields of earning assets. The average balance of earning assets
decreased to $300.3 million in 2010 from $308.0 million in the
previous year while the yields earned on these assets decreased to
5.56% in 2010 from 5.62% in 2009. Interest expense decreased by
$1.2 million to $3.0 million in 2010 compared to $4.2 million in
the previous year. Interest expense related to deposit accounts
decreased $600,000 to $1.8 million in 2010 from $2.4 million in
2009. Average balances of deposit accounts increased by $5.4
million, or 2.9%, over 2009 levels of $183.7 million, and the cost
of these funds decreased to 0.97% in 2010 from 1.32% in 2009.
Interest expense related to borrowings decreased by $633,000 from
2009. The average cost of the Company's borrowings decreased to
3.06% in 2010 from 3.25% in 2009, as the Company utilized deposit
inflows and loan sale proceeds to reduce fixed rate advances upon
maturity. Average outstanding borrowings decreased to $39.0 million
in 2010 compared to $56.2 million in 2009. The decrease in yields
earned on assets and the cost of funds is consistent with decreases
in underlying market rates over the past year.
The Company recorded a $1.8 million provision for loan losses in
2010 compared to a $300,000 provision in 2009. The higher provision
was necessitated due to the write-off of a large commercial loan
and to address a decline in collateral value securing another
commercial credit facility. Additionally, during 2010, the Company
saw an increase in the balance of non-performing loans. The
majority of the Company's non-performing loans are in the single
family residential loan portfolio and management believes that
these loans are generally well-collateralized. The allowance for
loan losses as a percentage of non-performing loans was 81.9% at
December 31, 2010, as compared to 111.4% at the previous year end.
The allowance for loan losses as a percentage of total loans
increased to 0.92% at December 31, 2010 compared to 0.74% at
December 31, 2009.
Total non-interest income increased $828,000 for the year ended
December 31, 2010 compared to the prior year. 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 in 2010, while two
securities were sold in 2009 resulting in gains of $73,000. Other
non-interest income in 2010 increased by $326,000, or 13.3%, over
the prior year primarily due to an increase in gains realized on
sales of residential loan originations into the secondary
market.
Non-interest expense increased by $1.2 million, to $11.9 million
in 2010 compared to $10.7 million in the prior year, primarily due
to $878,000 of expenses incurred in relation to the Company's
strategic planning initiatives which resulted in the previously
announced impending merger with Berkshire Hills Bancorp, Inc. In
addition, employee benefit expenses increased by $216,000, or
11.4%, over 2009 benefit expense of $1.9 million, as a result of an
increase in the Company's stock price and the impact on share based
benefit plans. The decrease in 2010 tax expense is attributable to
the Company's lower pre-tax income, partially offset by the
non-deductible nature of some acquisition costs.
For the three month period ended December 31, 2010, the Company
recorded a net loss of $(417,000) or $(0.06) per diluted share
compared to income of $825,000 or $0.13 per diluted share for the
same period in 2009. The decrease in quarterly earnings was
attributable to a $1.2 million increase in the provision for loan
losses and an increase in non-interest expense of $765,000,
partially offset by a $29,000 increase in net interest income
before provision for loan losses, a $90,000 increase in
non-interest income and a $560,000 decrease in income tax
expense.
Net interest income before provision for loan losses was $3.3
million in the fourth quarters of both 2010 and 2009. Fourth
quarter interest income decreased by $245,000, or 5.7%, to $4.0
million in 2010 compared to $4.3 million in the fourth quarter of
2009. The decrease in interest income is attributable to a decrease
in yields on earning assets to 5.41% for the fourth quarter of 2010
compared to 5.56% in the same period of 2009. Additionally, the
balance of average earning assets decreased to $296.9 million in
the fourth quarter of 2010 from $305.9 million in the last quarter
of 2009. Interest expense decreased by $274,000, or 27.6%, to
$718,000 compared to $992,000 in the same quarter of 2009. This
decrease is primarily due to a decline in the average outstanding
balance of borrowings from $55.9 million in the fourth quarter of
2009 to $36.6 million in the same period of 2010. Partially
offsetting the decrease in interest expense, average deposit
balances increased to $189.9 million in the fourth quarter of 2010
from $183.7 million in the same period of 2009. The Company's cost
of funds decreased to 1.26% for the fourth quarter of 2010 compared
to 1.64% during the same period of 2009.
The Company recorded a $1.3 million provision for loan losses in
the fourth quarter of 2010, as compared to a provision of $100,000
in the same period of 2009. This increased provision was recorded
primarily to address the write-off of a single commercial
loan. During the fourth quarter of 2010, uncertainty arose
regarding the future sources of repayment of this unsecured credit
facility. Based upon these fact patterns, the Company classified
this loan as doubtful and charged it off. The higher provision
also addressed an increase in the balance of non-performing loans
during the fourth quarter of 2010 compared to the previous
quarter.
Total non-interest income increased to $780,000 for the quarter
ended December 31, 2010 from $690,000 for the quarter ended
December 31, 2009. During the fourth quarter of 2009, the Company
sold one investment security at a gain of $47,000. Other
non-interest income recorded in the fourth quarter of 2010
increased by $137,000 to $780,000 in 2010 from $643,000 in the same
period of 2009 due to increased gains realized on the sale of
residential mortgage loans.
Fourth quarter non-interest expense increased $765,000, or
28.6%, over 2010 for the same reasons elaborated in the twelve
month discussion above. The Company recognized income tax benefits
of $171,000 in the fourth quarter of 2010, compared to income tax
expense of $389,000 in the same period of 2009, reflecting lower
pre-tax income, partially offset by an increase in non-deductible
expenses related to the Company's impending merger.
Total assets decreased to $327.2 million at December 31, 2010
compared to $329.9 million at December 31, 2009. Net loans
decreased by $18.7 million to $266.9 million at December 31, 2010
from $285.6 million at December 31, 2009, resulting from the
decision to sell the majority of the residential mortgage loans
originated during 2010 into the secondary market. Deposit balances
increased by $8.7 million, or 4.0%, throughout 2010.
As previously reported, 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 following important factors, among
others, in some cases have affected and in the future could affect
the Company's actual results, and could cause the Company's actual
financial performance to differ materially from that expressed in
any forward-looking statement: (1) competitive pressures among
depository and other financial institutions may increase
significantly; (2) revenues may be lower than expected; (3) changes
in the interest rate environment may reduce interest margins; (4)
general economic conditions, either nationally or regionally, may
be less favorable than expected, resulting in, among other things,
a deterioration in credit quality and/or a reduced demand for
credit; (5) legislative or regulatory changes, including changes in
accounting standards, may adversely affect the business in which
the Company is engaged; (6) competitors may have greater financial
resources and developed products that enable such competitors to
compete more successfully than the Company; and (7) adverse changes
may occur in the securities markets or with respect to
inflation. The foregoing list should not be construed as
exhaustive, and 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.
Rome Bancorp, Inc. |
Selected Financial
Data |
(Unaudited) |
(Dollars in
thousands) |
|
|
|
|
|
|
|
|
As
of |
|
|
|
December 31, |
December 31, |
|
|
|
2010 |
2009 |
Selected Financial Condition
Data: |
|
|
|
|
Total assets |
|
|
$ 327,211 |
$ 329,922 |
Loans, net |
|
|
266,857 |
285,617 |
Securities |
|
|
17,871 |
14,677 |
Cash and cash equivalents |
|
|
18,805 |
7,574 |
Total deposits |
|
|
225,325 |
216,638 |
Borrowings |
|
|
35,661 |
47,869 |
Total shareholders' equity |
|
|
60,655 |
60,365 |
Allowance for loan losses |
|
|
2,490 |
2,132 |
Non-performing loans |
|
|
3,039 |
1,915 |
Non-performing assets |
|
|
3,039 |
1,915 |
|
|
|
|
|
|
For the three months
ended |
For the twelve months
ended |
|
December
31, |
December
31, |
|
2010 |
2009 |
2010 |
2009 |
|
|
|
|
|
Selected Operating
Data: |
|
|
|
|
Interest income |
$ 4,050 |
$ 4,295 |
$ 16,687 |
$ 17,291 |
Interest expense |
718 |
992 |
3,017 |
4,250 |
Net interest income |
3,332 |
3,303 |
13,670 |
13,041 |
Provision for loan losses |
1,256 |
100 |
1,796 |
300 |
Net interest income after provision for loan
losses |
2,076 |
3,203 |
11,874 |
12,741 |
Non-interest income: |
|
|
|
|
Service charges and other income |
780 |
643 |
2,775 |
2,449 |
Net gain on sale of real estate and
investments |
(0) |
47 |
575 |
73 |
Total non-interest income |
780 |
690 |
3,350 |
2,522 |
Non-interest expense |
3,444 |
2,679 |
11,861 |
10,689 |
Income (loss) before income taxes |
(588) |
1,214 |
3,362 |
4,574 |
Income tax expense (benefit) |
(171) |
389 |
1,101 |
1,486 |
Net income (loss) |
$ (417) |
$ 825 |
$ 2,261 |
$ 3,088 |
|
|
|
|
|
|
|
|
|
|
Rome Bancorp,
Inc. |
Selected Financial
Data |
(Unaudited) |
(Dollars in thousands,
except per share data) |
|
|
|
|
|
|
For the three months
ended |
For the twelve months
ended |
|
December
31, |
December
31, |
|
2010 |
2009 |
2010 |
2009 |
Selected Financial Ratios and Other
Data: |
|
|
|
|
|
|
|
|
|
Performance Ratios: |
|
|
|
|
Basic earnings (loss) per share |
-$0.06 |
$0.13 |
$0.35 |
$0.47 |
Diluted earnings per (loss) share |
-$0.06 |
$0.13 |
$0.35 |
$0.47 |
Return on average assets |
-0.51% |
0.98% |
0.69% |
0.92% |
Return on average equity |
-2.82% |
5.66% |
3.80% |
5.27% |
Net interest rate spread -1 |
4.15% |
3.93% |
4.25% |
3.85% |
Net interest margin -1 |
4.45% |
4.29% |
4.55% |
4.24% |
Non-interest expense to average assets |
4.20% |
3.19% |
3.61% |
3.18% |
Efficiency ratio -1 |
83.74% |
67.84% |
72.11% |
68.95% |
Average interest-earning assets to average
interest-bearing liabilities |
131.08% |
127.64% |
131.71% |
128.39% |
|
|
|
|
|
|
|
|
As
of |
|
|
|
December 31, |
December 31, |
|
|
|
2010 |
2009 |
Equity Ratios: |
|
|
|
|
Equity to assets |
|
|
18.54% |
18.30% |
Book value per share |
|
|
$8.95 |
$8.88 |
|
|
|
|
|
Asset Quality Ratios: |
|
|
|
|
Nonperforming loans as percent of loans |
|
|
1.13% |
0.67% |
Nonperforming assets as percent of total
assets |
|
|
0.93% |
0.58% |
Allowance for loan losses as a percent of
loans |
|
|
0.92% |
0.74% |
Allowance for loan losses as a percent of
non- performing loans |
|
|
81.9% |
111.4% |
Notes: |
|
|
|
|
1. Includes tax equivalent adjustment for the
Company's tax-exempt municipal securities. |
|
|
|
|
CONTACT: David Nolan
Executive Vice President and Chief Financial Officer
(315) 336-7300
Rome Bancorp, Inc. (MM) (NASDAQ:ROME)
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