Naugatuck Savings Bank reports growth

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Naugatuck Savings Bank will open its second Waterbury branch, which was under construction in this photo, on East Main Street in April. –CONTRIBUTED

NAUGATUCK — At a time when many of its larger competitors are consolidating their retail branch networks and closing branches, Naugatuck Savings Bank has opted to take the road less traveled.

The Naugatuck-based bank, which opened two new branches in 2011 while relocating a third branch to a new and larger site, will open two more new branches in 2012 as it continues to “fill in” its retail footprint in central Connecticut, according to Charles J. Boulier III, president and chief financial office of both the bank and its parent, Nutmeg Financial Mutual Holding Co.

The bank opened new branches on Route 10 in Hamden and at Naugatuck High School in 2011 and relocated one of its two Meriden branches from Hanover Street to 500 West Main St.

In 2012, the bank is planning to open a new branch at 3670 East Main St. on April 28 and another at 665 North Colony Road, Route 5, in Wallingford, in the fall, Boulier said.

The opening of the new Wallingford branch will give the bank 19 banking officers, including three in Naugatuck, two each in Waterbury and Meriden, single offices in Ansonia, Cheshire, Hamden, Middlebury, Oxford, Prospect, Southbury, Wallingford, Watertown and Woodbury and two limited-service branches at Naugatuck and Nonnewaug high schools.

The bank reported a slight drop in net income for fiscal 2011 because of higher noninterest expenses due primarily to costs related to the opening of the three new branches and a $300,000 contribution to the bank’s charitable arm. At its recent annual meeting, the bank reported net income of $3.5 million in 2011 compared with $3.6 million in 2010.

Noninterest expenses, which also include items such as salaries, rent, equipment costs and taxes, jumped to $30.4 million for the year from $29 million, an increase of 5 percent.

The bank reported $32 million in net interest income for the year before its provision for loan losses, a 4 percent increase from $30.8 million in 2010. 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 or on the money it borrows.

Its loan loss provision for the year dropped to $2.9 million from $3 million the previous year.

Its net interest income after the provision was $29.1 million, a 5 percent improvement from $27.8 million in 2010.

Noninterest income for the year slipped to $6.5 million from $6.7 million.

The bank closed the year with total assets of $915.6 million, an 8 percent increase from $851.6 million at the close of 2010. Total deposits climbed 7 percent to $741.6 million while gross loans increased 11 percent to $750.6 million.

The bank increased its commercial loan portfolio by about 50 percent in 2011, closing about $60 million in new commercial loans compared with $40 million in 2010, Boulier said. About $17 million of the bank’s commercial lending activity in 2011 was through Small Business Association lending programs, prompting the SBA to honor the bank with an Eagle Award that designated it an “emerging lender.”

The bank is expecting to close about $70 million in commercial loans in 2012, he said.

Naugatuck Savings Bank is a state-chartered community bank that was established in 1870. The bank was converted from a mutual bank to a stock bank whose shares are not publicly traded but are owned by a mutual holding company — Nutmeg Financial — in 2004. It employs about 237 people.