NewAlliance Reports Record 2010 Net Income of $58.0 million or $0.59 EPS; Excluding Merger Expenses, Record EPS of $0.71, up 50% from 2009

4Q EPS of $0.11; Excluding Merger Expenses, EPS of $0.20

NEW HAVEN, Conn.--()--NewAlliance Bancshares, Inc. (NYSE: NAL), the holding company for NewAlliance Bank, today released the results of its operations for the fourth quarter and full year 2010.

For 2010, net income was $58.0 million or $0.59 per diluted share compared to $46.4 million or $0.47 per diluted share, a 25% increase. Excluding merger-related expenses, net income would have been $69.7 million or $0.71 per diluted share, a 50% increase.

Net income for the quarter was $11.3 million or $0.11 per diluted share. This compares to $12.1 million or $0.12 per diluted share for the fourth quarter of 2009, or compared to the linked quarter, net income of $13.9 million or $0.14 per diluted share.

Excluding merger-related expenses, NewAlliance achieved record net income of $19.7 million or $0.20 per diluted share for the fourth quarter, a 63% increase over last year’s fourth quarter. Excluding merger related expenses in the third and fourth quarters, net income increased 17% on a linked quarter basis.

Revenue momentum has continued at record levels in each quarter through 2010. In the fourth quarter, revenue of $75.8 million increased over the linked quarter by over 1%, and for the year, total revenue of $295.4 million increased by nearly 13% over 2009 revenue.

“The strong results in the fourth quarter reflect the completion of a banner year with record earnings,” stated Peyton R. Patterson, Chairman, President and Chief Executive Officer. “By focusing on our strong banking fundamentals to meet our customers’ needs, we have increased both deposits and lending relationships to grow our assets to a milestone of over $9 billion – up 7% from a year ago.”

The Board of Directors voted today to pay a quarterly dividend of $0.07 per share to shareholders of record on February 4, 2011 and payable on February 15, 2011. This will be the Company’s 27th consecutive quarterly dividend payment.

2010 Year over Year Financial Highlights:

  • Net income, excluding merger related expenses, was up 50%
  • Record revenue in each quarter led to annual revenue increasing by 13%
  • Net interest margin increased to 3.02% from 2.68%
  • Loan originations of $2.16 billion increased by nearly 45%
  • Total loan balances grew to $5.09 billion, up 7%
  • Commercial loan balances were up 14% and residential loans up 6%
  • Deposits increased to $5.24 billion, up 4%
  • Core deposits were up 5%, with checking deposits up nearly 10%
  • Credit quality improved, with net charge offs down to 28 basis points

Loan and Deposit Growth

Loan originations for the fourth quarter and the full year reached record levels. For the fourth quarter, total originations were up 7% from the linked quarter to a record $640.9 million, and for the full year, originations increased by nearly 45% to $2.16 billion.

For the fourth quarter, loan balances increased slightly led by commercial loan balances that were up 2% over the linked quarter. Loan balances for the year were $5.09 billion, up 7% from a year ago. Residential balances of $2.54 billion were up 6% for the year, while commercial balances of $1.64 billion were up 14%.

For the fourth quarter, the largest gain in deposits was in checking. The increase of nearly 5% in checking deposits demonstrates that NewAlliance is continuing to attract core business and retail relationships. For the full year 2010, checking deposits increased by 10% over 2009.

Average interest-bearing deposits for the quarter were $4.60 billion compared to $4.54 billion for the third quarter, an increase of 1%. For the full year 2010, average interest-bearing deposit balances were up nearly 6% to $4.53 billion from $4.29 billion in 2009.

Net Interest Income

Net interest income before provision was $60.6 million, up slightly over the linked quarter. Comparing the full year net interest income of $234.3 million for 2010 was an increase of 15% over 2009.

Net interest margin, while down at the end of the quarter to 3.02% from 3.08% at the end of the linked quarter, increased for the full year by 34 basis points from 2.68% at the end of 2009.

The cost of deposits for the end of December 2010 was 93 basis points, the same as at the end of September. This represents a decrease of 39 basis points from 132 basis points at the end of December 2009. The cost of borrowings was reduced by 28 basis points on a linked quarter basis to 267 basis points, and lower by 129 basis points year over year.

Non-Interest Income and Non-Interest Expense

Non-interest income of $15.3 million was up 4% from the linked quarter and increased by 3% to $61.2 million for the year. Although the largest segment of non-interest income, depositor service charges, was down 6% from the linked quarter, the impact of reduced overdraft fees was somewhat mitigated by an increase in debit card fees and merchant services income. Year over year, depositor service charges were up by 3%.

Trust and brokerage fee income was up 5% on a linked quarter basis, benefitting from rising asset values through the quarter. The brokerage area also added to its professional staff and experienced more customers moving back into the market as indices began to rise. For the total year, trust and brokerage income was down by 4% from 2009.

During 2010, NewAlliance had a net securities gain of $1.2 million compared to $5.9 million in 2009. It also realized a net gain on limited partnerships of $4.0 million during 2010 compared to a loss of $575,000 in 2009.

For the fourth quarter, non-interest expense was $50.9 million, which included $7.2 million of merger related expense. The linked quarter also included $4.6 million in merger related expense. Excluding merger related expenses, non-interest expense would have been $43.7 million in the fourth quarter, compared to $45.6 million in the prior quarter.

Total non-interest expense for the year was $187.0 million, which included $12.3 million in merger related expense. Excluding the merger related expense, non-interest expense of $174.7 million compared to $172.1 million for 2009.

“Operating leverage, excluding merger related expenses and security gains, continued to improve throughout the year,” said Glenn I. MacInnes, Executive Vice President and Chief Financial Officer. “On a full year basis, revenues grew nearly 15% while expenses, excluding merger related expenses, grew just under 2%, accelerating our earnings growth momentum.”

The efficiency ratio for the year, excluding merger related expenses, was 59.79%, compared to 66.55% in 2009.

The effective tax rate for the fourth quarter was 48.85% as compared to 32.83% for the linked quarter and 33.08% for the prior year quarter. Absent merger-related activity, the effective tax rate would have been in line with the prior quarter and prior year quarter rates.

Credit Quality

“Sound underwriting practices have preserved the NewAlliance credit quality as one of the best in its peer group. Non-performing loans as a percent of total loans were 1.47% and continue to be well below industry averages,” commented Don T. Chaffee, Executive Vice President and Chief Credit Officer. “In addition, the Bank has continued to extend lending relationships to new and existing customers increasing its loan balances by 7% in 2010 without loosening credit standards.”

Total non-performing loans were $74.9 million at the end of the fourth quarter compared to $68.3 million at the end of the linked quarter and $50.5 million at the end of 2009. The allowance for loan losses remained at 1.08%, the same as at the end of the third quarter and lower than the 1.10% at the end of 2009.

Net charge-offs for the fourth quarter were $2.1 million compared to $4.4 million for the linked quarter. For the year, net charge-offs were $14.2 million, or 28 basis points, compared to $15.4 million, or 32 basis points, for 2009. The provision for loan losses for the fourth quarter was $2.7 million, down from $4.0 million in the linked quarter, and the provision for the year of $17.0 million also demonstrated a lower trend from the 2009 provision of $18.0 million.

Capital Management

The tangible common equity ratio was 10.67% and total shareholder’s equity was $1.46 billion at December 31, 2010. The Company’s Tier 1 leverage capital ratio was 10.94% and is more than double the 5% regulatory benchmark that is considered ‘well-capitalized’ for bank holding companies.

At December 31, 2010, NewAlliance Bancshares, the parent company of NewAlliance Bank, had $9.03 billion in assets and operated 88 banking offices in Connecticut and Massachusetts.

NewAlliance Bank provides a full range of consumer and commercial banking products and services, trust services and investment and insurance products and services. The Bank’s website is at www.newalliancebank.com. Shareholders are encouraged to monitor the Investor Relations section of the Company’s website.

Note: In discussing financial results, management may refer to certain non-GAAP (Generally Accepted Accounting Principles) measures. The Company’s management believes these non-GAAP measurements are essential to a proper understanding of the operating results of the Company’s core business. These non-GAAP measurements are not a substitute for operating results determined in accordance with GAAP nor do they necessarily conform to non-GAAP performance measures that may be presented by other companies. A reconciliation of GAAP and non-GAAP information is included in this release.

Statements in this news release, if any, concerning future results, performance, expectations or intentions are forward-looking statements. Actual results, performance or developments may differ materially from forward-looking statements as a result of known or unknown risks, uncertainties and other factors, including those identified from time to time in the Company’s filings with the Securities and Exchange Commission, press releases and other communications.

The Company intends any forward-looking statements to be covered by the Litigation Reform Act of 1995 and is including this statement for purposes of said safe harbor provisions. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this news release. Except as required by applicable law or regulation, the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances that occur after the date as of which such statements are made.

NewAlliance Bancshares, Inc.
Consolidated Statements of Income (Unaudited)
           
Three Months Ended Twelve Months Ended
December 31, December 31,
(In thousands, except share data)   2010     2009     2010     2009
 
Interest and dividend income $ 87,932 $ 90,695 $ 350,812 $ 371,799
Interest expense   27,373       37,169       116,525       168,592  
 
Net interest income before provision for loan losses 60,559 53,526 234,287 203,207
Provision for loan losses   2,700       3,467       17,000       18,000  
      Net interest income after provision for loan losses   57,859       50,059       217,287       185,207  
 
Non-interest income
Depositor service charges 6,784 7,176 28,159 27,351
Loan and servicing income 990 321 2,348 819
Trust fees 1,547 1,571 6,311 5,790
Investment management, brokerage & insurance fees 1,504 1,208 5,639 6,723
Bank owned life insurance 803 896 5,934 3,548
 
Other-than-temporary impairment losses on securities - (1,741 ) (30 ) (4,263 )
  Less: Portion of loss recognized in other comprehensive income (before taxes)   (250 )     970       (1,150 )     2,866  
Net impairment losses on securities recognized in earnings (250 ) (771 ) (1,180 ) (1,397 )
  Net gain on sale of securities   790       1,175       2,339       7,314  
Net gain on securities 540 404 1,159 5,917
 
Mortgage origination activity & loan sale income 1,253 818 3,702 5,586
Net gain (loss) on limited partnerships 876 (200 ) 3,979 (575 )
  Other       960       1,049       3,930       4,087  
      Total non-interest income   15,257       13,243       61,161       59,246  
 
Non-interest expense
Salaries and employee benefits 23,833 24,365 95,642 89,646
Occupancy 4,437 4,516 17,632 18,202
Furniture and fixtures 1,614 1,461 5,872 5,808
Outside services 4,664 5,513 18,810 20,098
Advertising, public relations, and sponsorships 1,219 1,680 6,015 5,664
Amortization of identifiable intangible assets 1,953 2,122 7,811 8,501
FDIC insurance premiums 1,974 1,761 7,620 10,479
Merger related charges 7,236 57 12,325 84
  Other       4,005       3,710       15,282       13,731  
      Total non-interest expense   50,935       45,185       187,009       172,213  
 
      Income before income taxes   22,181       18,117       91,439       72,240  
 
Income tax provision   10,835       5,992       33,471       25,797  
 
      Net income $ 11,346     $ 12,125     $ 57,968     $ 46,443  
 
Earnings per share
Basic $ 0.12 $ 0.12 $ 0.59 $ 0.47
Diluted 0.11 0.12 0.59 0.47
 
Weighted average shares outstanding
Basic 98,403,406 99,092,896 98,515,056 99,162,929
Diluted 98,897,653 99,254,938 98,783,866 99,176,152
NewAlliance Bancshares, Inc.
Consolidated Statements of Income (Unaudited)
                   
Three Months Ended
December 31, September 30, June 30, March 31, December 31,
(In thousands, except share data)     2010       2010     2010     2010     2009
 
Interest and dividend income $ 87,932 $ 88,420 $ 87,061 $ 87,399 $ 90,695
Interest expense     27,373         28,074       29,320       31,758     37,169  
 
Net interest income before provision for loan losses 60,559 60,346 57,741 55,641 53,526
Provision for loan losses     2,700         4,000       5,500       4,800     3,467  
      Net interest income after provision for loan losses     57,859         56,346       52,241       50,841     50,059  
 
Non-interest income
Depositor service charges 6,784 7,210 7,457 6,707 7,176
Loan and servicing income 990 689 351 317 321
Trust fees 1,547 1,590 1,573 1,602 1,571
Investment management, brokerage & insurance fees 1,504 1,319 1,302 1,514 1,208
Bank owned life insurance 803 822 847 3,462 896
 
Other-than-temporary impairment losses on securities - - (30 ) - (1,741 )
  Less: Portion of loss recognized in other comprehensive income (before taxes)     (250 )       (378 )     (522 )     -     970  
Net impairment losses on securities recognized in earnings (250 ) (378 ) (552 ) - (771 )
  Net gain on sale of securities     790         799       750       -     1,175  
Net gain on securities 540 421 198 - 404
 
Mortgage origination activity and loan sale income 1,253 1,150 571 728 818
Net gain (loss) on limited partnerships 876 399 2,372 331 (200 )
  Other       960         1,018       1,215       739     1,049  
      Total non-interest income     15,257         14,618       15,886       15,400     13,243  
 
Non-interest expense
Salaries and employee benefits 23,833 25,606 23,982 22,221 24,365
Occupancy 4,437 4,480 4,094 4,621 4,516
Furniture and fixtures 1,614 1,487 1,426 1,345 1,461
Outside services 4,664 4,279 4,718 5,149 5,513
Advertising, public relations, and sponsorships 1,219 1,779 1,486 1,530 1,680
Amortization of identifiable intangible assets 1,953 1,953 1,953 1,953 2,122
FDIC insurance premiums 1,974 1,891 1,898 1,857 1,761
Merger related charges 7,236 4,585 503 1 57
  Other       4,005         4,186       3,568       3,523     3,710  
      Total non-interest expense     50,935         50,246       43,628       42,200     45,185  
 
      Income before income taxes     22,181         20,718       24,499       24,041     18,117  
 
Income tax provision     10,835         6,802       8,226       7,608     5,992  
 
      Net income   $ 11,346       $ 13,916     $ 16,273     $ 16,433   $ 12,125  
 
Earnings per share
Basic $ 0.12 $ 0.14 $ 0.16 $ 0.17 $ 0.12
Diluted 0.11 0.14 0.16 0.17 0.12
 
Weighted average shares outstanding
Basic 98,403,406 98,284,937 98,780,567 99,020,399 99,092,896
Diluted 98,897,653 98,486,667 98,859,822 99,057,937 99,254,938
NewAlliance Bancshares, Inc.
Consolidated Balance Sheets (Unaudited)
             
December 31, September 30, June 30, March 31, December 31,
(In thousands)     2010     2010     2010     2010     2009
Assets
Cash and due from banks $ 108,538 $ 122,334 $ 97,693 $ 100,020 $ 96,927
Short-term investments 25,000 50,000 20,000 60,000 50,000
Investment securities available for sale 2,551,883 2,335,362 2,403,317 2,261,915 2,327,855
Investment securities held to maturity 275,872 298,495 323,255 270,839 240,766
Loans held for sale 43,290 27,229 13,362 9,479 14,659
Loans
Residential real estate 2,535,060 2,538,559 2,491,161 2,391,575 2,396,303
Commercial real estate 1,361,478 1,319,323 1,261,818 1,271,177 1,233,250
Commercial business 510,499 513,931 473,329 415,458 411,211
    Consumer     684,179       696,869       702,063       713,938       721,281  
Total loans 5,091,216 5,068,682 4,928,371 4,792,148 4,762,045
    Less allowance for loan losses     (55,223 )     (54,582 )     (54,945 )     (54,164 )     (52,463 )
Total loans, net 5,035,993 5,014,100 4,873,426 4,737,984 4,709,582
Federal Home Loan Bank of Boston stock 120,821 120,821 120,821 120,821 120,821
Premises and equipment, net 59,731 58,395 58,651 57,387 57,083
Cash surrender value of bank owned life insurance 136,668 135,877 135,054 134,207 140,153
Goodwill 527,167 527,167 527,167 527,167 527,167
Identifiable intangible assets 27,548 29,501 31,454 33,406 35,359
  Other assets     115,337       106,994       107,897       187,678       113,941  
    Total assets   $ 9,027,848     $ 8,826,275     $ 8,712,097     $ 8,500,903     $ 8,434,313  
 
Liabilities
Deposits
Regular savings $ 1,679,821 $ 1,705,787 $ 1,798,881 $ 1,807,008 $ 1,817,787
Money market 1,019,592 993,569 915,510 934,376 790,453
NOW 408,432 398,436 406,069 385,800 400,176
Demand 617,039 581,293 568,414 533,841 534,180
    Time     1,514,491       1,459,775       1,447,872       1,393,912       1,481,446  
Total deposits 5,239,375 5,138,860 5,136,746 5,054,937 5,024,042
Borrowings
Federal Home Loan Bank of Boston advances 2,113,813 1,994,811 1,900,561 1,790,960 1,755,533
Repurchase agreements 106,629 105,606 100,951 102,149 112,095
Junior subordinated debentures 21,135 21,135 21,135 21,135 21,135
Other borrowings 1,002 1,044 1,085 1,126 1,165
  Other liabilities     86,922       91,451       87,448       88,584       85,390  
Total liabilities 7,568,876 7,352,907 7,247,926 7,058,891 6,999,360
 
  Stockholders' equity     1,458,972       1,473,368       1,464,171       1,442,012       1,434,953  
 
    Total liabilities and stockholders' equity   $ 9,027,848     $ 8,826,275     $ 8,712,097     $ 8,500,903     $ 8,434,313  
NewAlliance Bancshares, Inc.          
Selected Financial Highlights (Unaudited)
   
Three Months Ended
December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands, except per share data)     2010       2010       2010       2010       2009  
Net interest income before provision for loan losses $ 60,559 $ 60,346 $ 57,741 $ 55,641 $ 53,526
Net income 11,346 13,916 16,273 16,433 12,125
Shares outstanding (end of period) 104,959,982 105,077,475 105,079,540 105,964,553 106,050,464
Weighted average shares outstanding:
Basic 98,403,406 98,284,937 98,780,567 99,020,399 99,092,896
Diluted 98,897,653 98,486,667 98,859,822 99,057,937 99,254,938
Earnings per share:
Basic $ 0.12 $ 0.14 $ 0.16 $ 0.17 $ 0.12
Diluted 0.11 0.14 0.16 0.17 0.12
Shareholders' equity (end of period) 1,458,972 1,473,368 1,464,171 1,442,012 1,434,953
Book value per share (end of period) 13.90 14.02 13.93 13.61 13.53
Tangible book value per share (end of period) 8.62 8.72 8.62 8.32 8.23
 
Ratios & Other Information
 

Net interest margin (net interest income as a % of average earnings assets)

3.02 % 3.08 % 3.02 % 2.97 % 2.82 %

Net interest spread (yield on earning assets minus yield on interest-bearing liabilities)

2.77 2.82 2.74 2.66 2.46
Average yield on interest-earning assets 4.39 4.51 4.55 4.66 4.77
Average rate paid on interest-bearing liabilities 1.62 1.69 1.81 2.00 2.31
 
Return on average assets 0.51 0.64 0.76 0.78 0.57
Return on average equity 3.07 3.79 4.49 4.57 3.39
 

At period end:

Tier 1 leverage capital ratio 10.94 % 11.05 % 11.17 % 11.34 % 11.05 %
 

Asset Quality Information

Nonperforming loans $ 74,883 $ 68,293 $ 68,295 $ 64,894 $ 50,507
Total nonperforming assets 78,424 71,396 70,943 68,242 54,212
Nonperforming loans as a % of total loans 1.47 % 1.35 % 1.39 % 1.35 % 1.06 %
Nonperforming assets as a % of total assets 0.87 0.81 0.81 0.80 0.64
Allowance for loan losses as a % of total loans 1.08 1.08 1.11 1.13 1.10
Allowance for loan losses as a % of nonperforming loans 73.75 79.92 80.45 83.47 103.87
 
Provision for loan losses $ 2,700 $ 4,000 $ 5,500 $ 4,800 $ 3,467
 
Banking offices 88 88 88 87 87
 
Non-GAAP Financial Information and Ratios (1)
 
Noninterest income (2) $ 13,841 $ 13,798 $ 13,316 $ 15,069 $ 13,039

Noninterest income as a percent of operating revenue (2)

18.60 % 18.61 % 18.74 % 21.31 % 19.59 %
Efficiency ratio (3) 68.09 67.29 61.05 59.35 67.39
Expenses to average assets (4) 1.96 2.08 2.01 2.00 2.12
Return on average tangible assets 0.54 0.68 0.81 0.84 0.61
Return on average tangible equity 4.93 6.11 7.31 7.50 5.61
Tangible common equity/tangible assets 10.67 11.09 11.11 11.10 11.08
 
Net income, GAAP $ 11,346 $ 13,916 $ 16,273 $ 16,433
Tax-exempt life insurance proceeds - - - 2,600
Gain on limited partnership, net of tax - - 1,677 -
Merger related charges, net of tax (5)   8,380   2,980   327     -
Proforma net income $ 19,726 $ 16,896 $ 14,923 $ 13,833
 
Proforma net income per share - basic $ 0.20 $ 0.17 $ 0.15 $ 0.14
Proforma net income per share - diluted 0.20 0.17 0.15 0.14
 
 
Proforma return on average assets (6) 0.88 % 0.77 % 0.70 % 0.66 %
Proforma return on average equity (6) 5.35 4.60 4.12 3.85
Proforma return on average tangible assets (6) 0.94 0.82 0.74 0.70
Proforma return on average tangible equity (6) 8.58 7.42 6.71 6.32
Proforma efficiency ratio (3) (7) 58.37 61.11 60.34 61.61
(1) Non-GAAP Financial Information and Ratios are not financial measurements required by generally accepted accounting principles, however, management believes such information is useful to investors in evaluating Company performance.
(2) Excludes total net gains or losses on securities and limited partnerships
(3) Excludes total net gains or losses on securities and limited partnerships and other real estate owned expenses
(4) Excludes severance and merger costs (Where applicable)
(5) Includes tax expense of $3.7 million for the three months ended December 31, 2010
(6) Excludes tax-exempt life insurance proceeds, gain on limited partnership and merger related costs, net of tax
(7) Excludes tax-exempt life insurance proceeds and merger related costs
NewAlliance Bancshares, Inc.            
Average Balance Sheets (Unaudited)
     
Three Months Ended
December 31, 2010 December 31, 2009
Average Average
Average Yield/ Average Yield/
(Dollars in thousands)     Balance     Interest   Rate     Balance     Interest   Rate
 
Interest-earning assets
Loans
Residential real estate $ 2,563,596 $ 29,574 4.61 % $ 2,424,730 $ 30,761 5.07 %
Commercial real estate 1,329,886 19,219 5.78 1,222,779 17,880 5.85
Commercial business 525,573 8,263 6.29 416,230 5,361 5.15
    Consumer     691,596     7,645   4.42       728,347     8,386   4.61  
Total Loans 5,110,651 64,701 5.06 4,792,086 62,388 5.21
Fed funds sold and other short-term investments 80,567 45 0.22 88,920 45 0.20
Federal Home Loan Bank of Boston stock 120,821 - - 120,821 - -
  Investment securities     2,701,808     23,186   3.43       2,602,925     28,262   4.34  
Total interest-earning assets 8,013,847 $ 87,932 4.39 % 7,604,752 $ 90,695 4.77 %
Non-interest-earning assets 921,657 909,781
Total assets $ 8,935,504 $ 8,514,533
 
Interest-bearing liabilities
Deposits
Money market $ 1,023,649 $ 2,455 0.96 % $ 771,971 $ 2,670 1.38 %
NOW 391,498 223 0.23 372,238 292 0.31
Savings 1,688,661 2,336 0.55 1,835,047 4,756 1.04
    Time     1,499,424     7,241   1.93       1,511,417     9,915   2.62  
Total interest-bearing deposits 4,603,232 12,255 1.06 4,490,673 17,633 1.57
Repurchase agreements 109,696 351 1.28 125,861 362 1.15
  FHLB advances and other borrowings     2,042,217     14,767   2.89       1,825,600     19,174   4.20  
Total interest-bearing liabilities 6,755,145 27,373 1.62 % 6,442,134 37,169 2.31 %
Non-interest-bearing demand deposits 611,179 541,513
Other non-interest-bearing liabilities 93,176 102,107
Total liabilities 7,459,500 7,085,754
Equity 1,476,004 1,428,779
Total liabilities and equity $ 8,935,504 $ 8,514,533
Net interest-earning assets $ 1,258,702 $ 1,162,618
Net interest income $ 60,559 $ 53,526
Interest rate spread 2.77 % 2.46 %

Net interest margin (net interest income as a percentage of total interest-earning assets)

3.02 % 2.82 %
 

Ratio of total interest-earning assets to total interest-bearing liabilities

              118.63 %               118.05 %
NewAlliance Bancshares, Inc.
Average Balance Sheets (Unaudited)
                 
Three Months Ended
December 31, 2010 September 30, 2010
Average Average
Average Yield/ Average Yield/
(Dollars in thousands)     Balance     Interest   Rate     Balance     Interest   Rate
 
Interest-earning assets
Loans
Residential real estate $ 2,563,596 $ 29,574 4.61 % $ 2,548,169 $ 30,288 4.75 %
Commercial real estate 1,329,886 19,219 5.78 1,290,757 18,994 5.89
Commercial business 525,573 8,263 6.29 498,386 6,846 5.49
    Consumer     691,596     7,645   4.42       699,089     7,826   4.48  
Total Loans 5,110,651 64,701 5.06 5,036,401 63,954 5.08
Fed funds sold and other short-term investments 80,567 45 0.22 81,825 46 0.22
Federal Home Loan Bank of Boston stock 120,821 - - 120,821 - -
  Investment securities     2,701,808     23,186   3.43       2,598,638     24,420   3.76  
Total interest-earning assets 8,013,847 $ 87,932 4.39 % 7,837,685 $ 88,420 4.51 %
Non-interest-earning assets 921,657 924,054
Total assets $ 8,935,504 $ 8,761,739
 
Interest-bearing liabilities
Deposits
Money market $ 1,023,649 $ 2,455 0.96 % $ 950,315 $ 2,109 0.89 %
NOW 391,498 223 0.23 383,105 210 0.22
Savings 1,688,661 2,336 0.55 1,741,628 2,255 0.52
    Time     1,499,424     7,241   1.93       1,460,894     7,433   2.04  
Total interest-bearing deposits 4,603,232 12,255 1.06 4,535,942 12,007 1.06
Repurchase agreements 109,696 351 1.28 102,960 348 1.35
  FHLB advances and other borrowings     2,042,217     14,767   2.89       1,986,248     15,719   3.17  
Total interest-bearing liabilities 6,755,145 27,373 1.62 % 6,625,150 28,074 1.69 %
Non-interest-bearing demand deposits 611,179 582,066
Other non-interest-bearing liabilities 93,176 85,407
Total liabilities 7,459,500 7,292,623
Equity 1,476,004 1,469,116
Total liabilities and equity $ 8,935,504 $ 8,761,739
Net interest-earning assets $ 1,258,702 $ 1,212,535
Net interest income $ 60,559 $ 60,346
Interest rate spread 2.77 % 2.82 %

Net interest margin (net interest income as a percentage of total interest-earning assets)

3.02 % 3.08 %
 

Ratio of total interest-earning assets to total interest-bearing liabilities

              118.63 %               118.30 %
NewAlliance Bancshares, Inc.
Average Balance Sheets (Unaudited)
                 
Twelve Months Ended
December 31, 2010 December 31, 2009
Average Average
Average Yield/ Average Yield/
(Dollars in thousands)     Balance     Interest   Rate       Balance     Interest   Rate  
 
Interest-earning assets
Loans
Residential real estate $ 2,483,550 $ 119,135 4.80 % $ 2,497,784 $ 131,119 5.25 %
Commercial real estate 1,286,185 75,128 5.84 1,216,121 70,735 5.82
Commercial business 469,013 25,893 5.52 436,674 22,019 5.04
    Consumer     703,766     31,554   4.48       736,764     34,207   4.64  
Total Loans 4,942,514 251,710 5.09 4,887,343 258,080 5.28
Fed funds sold and other short-term investments 80,469 157 0.20 92,253 387 0.42
Federal Home Loan Bank of Boston stock 120,821 - - 120,821 - -
  Investment securities     2,606,640     98,945   3.80       2,493,186     113,332   4.55  
Total interest-earning assets 7,750,444 $ 350,812 4.53 % 7,593,603 $ 371,799 4.90 %
Non-interest-earning assets 923,482 894,857
Total assets $ 8,673,926 $ 8,488,460
 
Interest-bearing liabilities
Deposits
Money market $ 940,556 $ 9,106 0.97 % $ 579,806 $ 9,170 1.58 %
NOW 383,017 933 0.24 363,621 1,069 0.29
Savings 1,757,322 10,832 0.62 1,756,246 23,881 1.36
    Time     1,450,151     29,737   2.05       1,591,055     46,561   2.93  
Total interest-bearing deposits 4,531,046 50,608 1.12 4,290,728 80,681 1.88
Repurchase agreements 105,711 1,389 1.31 138,219 1,663 1.20
  FHLB advances and other borrowings     1,922,206     64,528   3.36       2,038,012     86,248   4.23  
Total interest-bearing-liabilities 6,558,963 116,525 1.78 % 6,466,959 168,592 2.61 %
Non-interest-bearing demand deposits 570,555 518,264
Other non-interest-bearing liabilities 86,139 96,212
Total liabilities 7,215,657 7,081,435
Equity 1,458,269 1,407,025
Total liabilities and equity $ 8,673,926 $ 8,488,460
Net interest-earning assets $ 1,191,481 $ 1,126,644
Net interest income $ 234,287 $ 203,207
Interest rate spread 2.75 % 2.29 %

Net interest margin (net interest income as a percentage of total interest-earning assets)

3.02 % 2.68 %
 

Ratio of total interest-earning assets to total interest-bearing liabilities

              118.17 %               117.42 %
NewAlliance Bancshares, Inc.
Asset Quality (Unaudited)
             
December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands)     2010     2010     2010     2010     2009
Nonperforming assets
Residential real estate $ 46,633 $ 49,133 $ 46,663 $ 39,873 $ 31,140
Commercial real estate 21,201 10,951 9,959 13,111 8,595
Commercial business 4,158 5,667 9,093 9,510 8,497
    Consumer     2,891     2,542     2,580     2,400     2,275  
Total nonperforming loans 74,883 68,293 68,295 64,894 50,507
 
Other nonperforming assets, net     3,541     3,103     2,648     3,348     3,705  
 
Total nonperforming assets   $ 78,424   $ 71,396   $ 70,943   $ 68,242   $ 54,212  
 
Allowance for loan losses   $ 55,223   $ 54,582   $ 54,945   $ 54,164   $ 52,463  
 
 
 
Three Months Ended
December 31, September 30, June 30, March 31, December 31,
          2010     2010     2010     2010     2009
Net loan charge-offs
Residential real estate $ 892 $ 1,261 $ 1,285 $ 1,049 $ 883
  Commercial real estate     1,402     1,301     2,076     871     738  
Total real estate 2,294 2,562 3,361 1,920 1,621
Commercial business (367) 1,443 1,183 902 890
  Consumer     132     358     175     277     213  
Total net charge-offs   $ 2,059   $ 4,363   $ 4,719   $ 3,099   $ 2,724  
 
Provision for loan losses   $ 2,700   $ 4,000   $ 5,500   $ 4,800   $ 3,467  
 
 
At or For the Three Months Ended
December 31, September 30, June 30, March 31, December 31,
          2010     2010     2010     2010     2009
Ratios
Allowance for loan losses to total loans 1.08 % 1.08 % 1.11 % 1.13 % 1.10 %
Allowance for loan losses to nonperforming loans 73.75 79.92 80.45 83.47 103.87
Nonperforming loans to total loans 1.47 1.35 1.39 1.35 1.06
Nonperforming assets to total assets 0.87 0.81 0.81 0.80 0.64
  Net charge-offs to average loans (annualized)     0.16     0.35     0.39     0.26     0.23  
NewAlliance Bancshares, Inc.
Reconciliation Table-Non-GAAP Financial Information (Unaudited)
 
Year Ended
(Dollars in thousands, except per share data)   December 31, 2010
Net income, GAAP $ 57,968
 
Effect of merger related charges, net of tax (1)   11,688  
Proforma net income $ 69,656  
 
Basic earnings per share, GAAP $ 0.59
 
Effect of merger related charges, net of tax   0.12  
Proforma basic earnings per share $ 0.71  
 
Diluted earnings per share, GAAP $ 0.59
 
Effect of merger related charges, net of tax   0.12  
Proforma diluted earnings per share $ 0.71  
 
Return on average assets, GAAP 0.67 %
 
Effect of merger related charges, net of tax   0.13  
Proforma return on average assets   0.80 %
 
Return on average equity, GAAP 3.98 %
 
Effect of merger related charges, net of tax   0.80  
Proforma return on average equity   4.78 %
 
 
(1) Includes tax expense of $3.7 million

Contacts

NewAlliance Bank
Glenn MacInnes, 203-789-2639
Executive Vice President and
Chief Financial Officer

Contacts

NewAlliance Bank
Glenn MacInnes, 203-789-2639
Executive Vice President and
Chief Financial Officer