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Chicopee Bancorp Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: March 16, 2011 12:21PM
Chicopee Bancorp Inc. (CBNK) filed Annual Report for the period ended 2010-12-31.
Highlight of Business Operations:
General. The Company s loan portfolio totaled $433.8 million at December 31, 2010 compared to $427.8 million at December 31, 2009, representing 75.6% and 78.6% of total assets, respectively. In its lending activity, the Company originates residential real estate loans secured by one-to-four family residences, commercial real estate loans, residential and commercial construction loans, commercial and industrial loans, home equity lines-of-credit, fixed rate home equity loans and other consumer loans. The Company does not originate “subprime loans” (loans that generally target borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios). While the Company makes loans throughout Massachusetts, most of its lending activities are concentrated in Hampden and Hampshire counties. Loans originated totaled $156.4 million in fiscal year 2010 and $147.0 million in 2009, including residential mortgage loans sold to the secondary market of $18.2 million and $37.0 million, respectively. Servicing rights are retained on all loans originated and sold into the secondary market.
Residential Real Estate Loans. At December 31, 2010 and 2009, the residential real estate loan portfolio totaled $132.7 million and $139.9 million, or 30.6% and 32.7%, of the total loan portfolio with an average yield of 5.28% and 5.49%, respectively. This yield calculation includes residential construction loan balances and interest income. Residential real estate loans originated totaled $40.3 million in 2010 and $56.6 million in 2009, including loans sold to the secondary market. Of the residential real estate loans outstanding at December 31, 2010, $98.5 million were adjustable rate loans, or 74.2% of the total residential real estate loan portfolio. Total loans serviced for others as of December 31, 2010 and 2009 are $75.8 million and $71.4 million, respectively. Residential real estate loans enable borrowers to purchase or refinance existing homes, most of which serve as the primary residence of the owner. We offer fixed-rate and adjustable-rate loans with terms up to 30 years. Borrower demand for adjustable-rate loans versus fixed-rate loans is a function of the level of interest rates, the expectations of changes in the level of interest rates, and the difference between the interest rates and loan fees offered for fixed-rate mortgage loans and the initial period interest rates and loan fees for adjustable-rate loans. The relative amount of fixed-rate mortgage loans and adjustable-rate mortgage loans that can be originated at any time is largely determined by the demand for each in a competitive environment. The loan fees, interest rates and other provisions of mortgage loans are determined by the demand for each in a competitive environment.
At December 31, 2010, our largest outstanding residential construction loan was $500,000, of which $240,000 was outstanding. At December 31, 2010, our largest outstanding commercial construction loan was $5.0 million, of which $4.0 million was outstanding. This loan is for the development of condominiums. These loans were performing in accordance with their original terms at December 31, 2010.
Commercial and Industrial Loans. The Company originated $54.0 million and $54.1 million in commercial loans in 2010 and 2009, respectively. As of December 31, 2010 and 2009, the Company had $72.8 million and $68.6 million in commercial loans, representing 16.8% and 16.0% of the total loan portfolio, with an average yield of 4.59% and 4.70%, respectively. We make commercial business loans primarily in our market area to a variety of professionals, sole proprietorships and small businesses. Commercial lending products include term loans, revolving lines of credit and letters of credit loans. Commercial loans and lines of credit are made with either variable or fixed rates of interest. Variable rates are based on the prime rate as published in The Wall Street Journal, plus a margin. Fixed-rate business loans are generally indexed to a corresponding U.S. Treasury rate, plus margin, or FHLB, plus margin. The Company generally does not make unsecured commercial loans.
At December 31, 2010, our largest commercial term loan was a $2.0 million loan secured by real estate and all assets in Springfield, Massachusetts. Our largest commercial relationship at December 31, 2010 was $14.1 million. This relationship includes a commercial real estate loan, of which $8.9 million was outstanding at December 31, 2010. All of these loans are secured by assets of the borrower and were performing according to their original terms at December 31, 2010.
Consumer Loans. The Company originated $10.3 million and $14.8 million of consumer loans, including home equity loans, respectively, in 2010 and 2009. Consumer loans outstanding at December 31, 2010 and 2009 totaled $33.1 million and $33.7 million, or 7.6% and 7.9%, of the total loan portfolio, with an average yield of 4.85% and 5.15%, respectively. We offer a variety of consumer loans, primarily home equity loans and lines of credit, and, to a much lesser extent, loans secured by automobiles and recreational vehicles and pools and spas and home improvement loans.
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