Naugatuck Valley Financial Corp., parent of Naugatuck Valley Savings and Loan, reported a loss of more than $5 million for the fourth quarter of 2012, and a loss of more than $15 million for the year, due primarily to increases in its provision against loan losses.
The Naugatuck-based bank reported a net loss of $5.7 million, or 86 cents per diluted share, for the fourth quarter, compared with a loss of $6,000, or 1 cent per diluted share, for the fourth quarter of 2011.
For the year, the bank reported a net loss of $15.2 million, or $2.31 per diluted share, compared with earnings of $1.6 million, or 24 cents per diluted share, for 2011.
The loan-loss provision — the money the bank sets aside as a hedge against bad loans — jumped to $17.7 million for the year, a more than 300 percent increase from $4.3 million in 2011.
The loan-loss provision decreased in the fourth quarter, however, dropping to $720,000 from $1.6 million in the fourth quarter of 2011.
William Calderara, the bank’s president and CEO, called 2012 “the beginning of a rebuilding period” for the company.
“We have a strong capital base, and during the year we bolstered loan-loss reserves,” he said. “Although nonperforming assets increased year over year, we remain focused on our efforts to improve asset quality and to reduce nonperforming assets.”
Naugatuck Valley Savings and Loan is a federally chartered community savings bank with 10 retail banking offices throughout Southwestern Connecticut and total assets of about $526 million. The bank has two offices in both Naugatuck and Southbury, and single branches in Beacon Falls, Cheshire, Derby, Seymour, Shelton and Waterbury.
Net interest income in the fourth quarter slipped to $4.6 million from $4.9 million in the fourth quarter of 2011. Net interest income is the difference between the interest a bank earns on its loans and investments and the interest it pays to depositors and on the money it borrows.
The lower loan-loss provision in the quarter helped increase net interest income after the loan-loss provision to $3.8 million, a 16 percent improvement from $3.3 million in the fourth quarter of 2011.
Non-interest, or fee-based, income improved by 11 percent, jumping to $1.5 million from $1.3 million in the same quarter of 2011.
Non-interest expenses, which includes items like salaries, rent, equipment costs, and taxes, increased 28 percent to $5.8 million from $4.5 million in the fourth quarter of 2011.
Net interest income for the fiscal year dipped slightly to $18.7 million from $18.9 million in 2011. Net interest income after the steep loan-loss provision fell to $1.01 million from $14.6 million the previous year.
Non-interest income for the year increased 2 percent, to $5.1 million from $5 million in 2011. Non-interest expenses for the year jumped 24 percent to $21.2 million from $17.1 million the previous year.