Naugatuck Savings Bank said its earnings in 2012 were lower than the previous year due to expenses associated with the opening of two new branches and the rising cost of providing medical and retirement benefits to its employees.
Nutmeg Financial Mutual Holding Co., the parent of both the bank and John M. Sutherland Inc., a Naugatuck-based independent insurance agency, said the bank’s net income for 2012 was $3 million compared with $3.5 million in fiscal 2011.
“Naugatuck Savings Bank had a solid year with a 3 percent increase in total assets during 2012,” said Charles Boulier III, the president and CEO of both the bank and the holding company. “We are very pleased with our 2012 results especially given the challenges faced by all community banks in a continuing environment of slow economic growth, low interest rates and more stringent and costly regulations.”
The bank opened new branches on East Main Street in Waterbury in April and on North Colony Road in Wallingford in November during 2012, which helped it register a 4 percent increase in the total number of households it serves.
As a result, Naugatuck Savings, which was established in 1870, now operates 17 full-service banking offices, including three in Naugatuck, two in both Meriden and Waterbury, and single offices in Ansonia, Cheshire, Hamden, Middlebury, Oxford, Prospect, Southbury, Wallingford, Watertown and Woodbury. It also operates two limited-service offices — at Nonnewaug High School in Woodbury and Naugatuck High School — that are open only to students and faculty.
The bank now employs 254 people in the equivalent of 225 full-time positions.
Despite the lower annual earnings, the bank had higher net interest income and non-interest income in 2012 on a year-over-year basis.
The bank lowered its provision against loan losses for the year to $2.7 million from $2.9 million in 2011 due to its improving asset quality. Non-performing loans — or loans that are more than 90 days past due — decreased to 3.14 percent of the bank’s total loan portfolio from 3.17 percent in 2011.
The lower loan-loss provision helped increase its net interest income for the year to $30.9 million, a 6 percent improvement from $29.1 million the previous year. Net interest income is the difference between the interest a bank earns on its loans and investments and the interest it pays to its depositors and on the money it borrows.
The bank also registered a 27-percent increase in non-interest, or fee-based, income, which jumped to $8.6 million from $6.8 million the previous year.
Non-interest expenses, which include items like salaries, rent, equipment costs, and taxes, increased 15 percent to $35.3 million from $30.7 million in 2011.
Boulier said the bank closed more than $140 million in residential loans in 2012 and nearly $70 million in commercial loans, of which $5.5 million were SBA, or Small Business Administration, loans.
The bank ended the year with total assets of $942 million compared with the $915.6 million it had on Dec. 31, 2011.
Total deposits increased by 2 percent to $759.3 million from $741.6 million at the close of 2011, while total loans increased 2 percent to $761.1 million from $749.7 million at the end of the previous year.