Southern Connecticut Bancorp Inc Reports Operating Results (10-Q)

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May 15, 2012
Southern Connecticut Bancorp Inc (SSE, Financial) filed Quarterly Report for the period ended 2012-03-31.

Southern Ct Bcp has a market cap of $4.9 million; its shares were traded at around $1.8 with and P/S ratio of 0.6.

Highlight of Business Operations:

Interest income on loans is the most important component of the Company s net interest income. The loan portfolio is the largest component of earning assets, and it, therefore, generates the largest portion of revenues. The Company s net loan portfolio was $106.7 million at March 31, 2012 versus $111.6 million at December 31, 2011, a decrease of $4.9 million. The Company attributes the decline in loan balances during the first three months of 2012 to a decline in loan demand. The Bank s loans have been made to small to medium-sized businesses, primarily in the Greater New Haven Market. There are no other significant loan concentrations in the loan portfolio.

The Company s average total interest earning assets were $123.0 million during the quarter ended March 31, 2012 compared to $138.2 million for the same period in 2011, a decrease of $15.2 million or 11.0%. The decrease in average interest earning assets of $15.2 million during the quarter ended March 31, 2012 was comprised of decreases in average balances of loans of $15.6 million, as well as decreases in average balances of short-term and other investments of $1.1 million, which were partially offset by increases in investments of $1.5 million.

The yield on average interest earning assets for the quarter ended March 31, 2012 was 5.08% compared to 5.32% for the same period in 2011, a decrease of 25 basis points. The decrease in the yield on average interest earning assets was attributable to lower yields on the Bank s loan portfolio because of the lower interest rate environment, as well as an increase in non-performing loans.

The decrease in net interest income during the first quarter of 2012 reflected a $15.2 million decrease in total average interest earning asset balances to $123.0 million for the three months ended March 31, 2012 compared to $138.3 million for the same period of 2011 and a decrease in the yields on interest earning assets to 5.08% for the three months ended March 31, 2012 from 5.32% in the same period of 2011. The combined effects of these unfavorable changes were partially offset by favorable decreases in rates on interest bearing liabilities to 1.34% for the three months ended March 31, 2012 from 1.81% for the same period in 2011, as well as a $13.7 million decrease in average interest bearing liabilities to $98.1 million in the first quarter of 2011 from $111.8 million in the first quarter of 2011. Overall, the decrease in net interest income attributed to volume changes was $143,000 which was partially offset by a net increase attributed to interest rate changes of $41,000. Interest income from interest earning assets in the first quarter of 2012 when compared to the same period in 2011 decreased by $277,000 because of the combined effects of a $57,000 decrease due to a decline in interest rates and a $220,000 decrease due to volume considerations. Variances in the cost of interest bearing liabilities during the three months ended March 31, 2012 in comparison to the same period in 2011 were due to decreased rate considerations of $98,000 and decreased volume considerations of $77,000.

Total noninterest income increased $54,000 to $176,000 for the three months ended March 31, 2012 from $122,000 for the same period in 2011. This increase was primarily due to loan prepayment fees of $52,000 recognized in the first quarter of 2012, with no such revenue in 2011, as well as a $15,000 increase in other noninterest income to $50,000 for the three months ended March 31, 2012 from $35,000 in the same period in 2011. The combined effects of these favorable changes were partially offset by a $13,000 decrease in service charges and fees due to changes in business practices of customers of the Bank during the first quarter of 2012 as compared to the same period in 2011.

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