Chicopee Bancorp, Inc. Reports Third Quarter Results

Business Wire, Oct 22, 2007

CHICOPEE, Mass. -- Chicopee Bancorp, Inc. (the "Company") (Nasdaq: CBNK), the holding company for Chicopee Savings Bank (the "Bank"), announced the results of operations for the three and nine months ended September 30, 2007. The Company's net income for the three months ended September 30, 2007 was $348,000 compared to a net loss of $3.6 million for the same period in 2006. For the nine months ended September 30, 2007, net income increased $4.4 million from a net loss of $2.9 million for the nine months ended September 30, 2006 to net income of $1.5 million with earnings per share of $0.23. The Company's net loss in the third quarter of 2006 was a result of a charitable contribution of the Company's common stock in the amount of $5.5 million to the Chicopee Savings Bank Charitable Foundation in connection with the Company's public offering.

The Company's assets increased by $13.6 million, or 3.0%, from $450.0 million at December 31, 2006 to $463.6 million at September 30, 2007, primarily as a result of an increase in federal funds sold of $7.1 million as well as an increase in loans of $6.2 million. The increase in federal funds sold was primarily due to an increase in deposits of $12.5 million offset by loan growth. Net loans increased to $375.1 million at September 30, 2007 from $369.0 million at December 31, 2006, with one-to-four family real estate loans increasing $6.2 million, or 4.3% and consumer loans increasing $2.2 million, or 8.9% which was offset by decreases in commercial real estate loans of $1.2 million or 1.2% and commercial loans of $1.5 million or 3.2%.

Financial highlights include:

* The investment portfolio decreased by $1.1 million, or 2.3%, to $44.2 million as of September 30, 2007 compared to $45.3 million at December 31, 2006, primarily due to maturities of held-to-maturity securities.

* Total deposits were $324.1 million at September 30, 2007 compared to $311.6 million at December 31, 2006, an increase of $12.5 million or 4.0%. During the period certificates of deposit increased by $9.0 million, or 4.7%, and money market deposits increased by $4.5 million, or 13.1%, offset slightly by a decrease in NOW accounts of $1.6 million, or 9.5%. The growth in deposits was a result of aggressive deposit pricing.

* The allowance for loan losses at September 30, 2007 was $3.1 million, or 0.81% of total loans, compared to $2.9 million, or 0.78% of total loans as of December 31, 2006. Nonperforming loans at September 30, 2007 were $2.4 million, or 0.63% of total loans, increasing $678,000 from $1.7 million, or 0.46% of total loans as of December 31, 2006.

* There was no provision for loan losses for the three months ended September 30, 2007 compared to $75,000 for the same period in 2006. For the nine months ended September 30, 2007, the provision for loan losses decreased to $214,000 from $335,000 for the nine months ended September 30, 2006. The decrease in the provision for loan losses was due in part to the decrease in commercial real estate and commercial loans and consistent asset quality.

* During the quarter ended September 30, 2007, the net interest margin decreased to 3.29%, as compared to 3.60% for the third quarter of 2006. The decrease of 31 basis points was primarily due to an increase in the cost of funds of 64 basis points offset by the increase in assets yield of 21 basis points. For the nine months ended September 30, 2007, net interest margin was 3.36% compared to 3.50% for the nine months ended September 30, 2006, a decrease of 14 basis points due to the cost of funds increasing faster than the yield on assets.

* Non-interest income was $570,000 for the quarter ended September 30, 2007 compared to $380,000 for the quarter ended September 30, 2006. The increase during the period was primarily attributable to the gain of $126,000 from the sale of available-for-sale securities and an increase in service charges, fees and commissions of $81,000. For the nine months ended September 30, 2007, non-interest income was $2.1 million, an increase of $792,000 or 61.1%, compared to $1.3 million for the same period in 2006. The increase for the first nine months of 2007 was primarily due to an increase of $683,000 in gain on sales of available-for-sale securities and an increase of $232,000 in service charges, fees and commissions. The increase was partially offset by a decrease in loan sales and servicing.

* Non-interest expense for the three and nine months ended September 30, 2007 was $3.7 million and $10.4 million compared to $8.7 million and $14.6 million, respectively, for the same periods in 2006. The decreases in non-interest expense for the three and nine months ended September 30, 2007 are primarily due to the establishment and funding of the Chicopee Savings Bank Charitable Foundation with 551,064 shares of the Company's common stock resulting in a charitable contribution expense of $5.5 million during the third quarter of 2006. This was partially offset by an increase in salaries and employee benefit expense of $493,000 and $1.1 million, for the three and nine months ended September 30, 2007 respectively, attributable to additional staffing needs to support the requirements of a public company and increased benefit costs associated with the Bank's Employee Stock Ownership Plan and the Company's Equity Incentive Plan.