A first half strategy meant to lower the overall cost of deposits at Chicopee Bancorp in Chicopee, holding company for Chicopee Savings Bank, seems to have paid off after the bank more than doubled its year-over-year net income in the second quarter.
Chicopee reported second quarter net income of $306,000, a more than 140 percent jump from $127,000 in the second quarter of 2010. The company largely attributed the gains to a 5 percent year-over-year increase in net interest income, which was in turn attributed to a 10.7 percent drop in interest expense and an 18.8 percent fall in borrowing costs.
Net interest income in the second quarter totaled $4.5 million, up from $4.3 million a year earlier. Year-over-year deposit costs and costs of borrowing fell $113,000 and $102,000, respectively, according to a statement.
Total deposits at the bank rose in the first half of the year, to $404.2 million from $391.9 million at the end of 2010. That increase, however, was tempered by a 4.8 percent decrease in more expensive (for the bank) certificates of deposit (CDs). The decrease in CDs was mainly attributed to the strategic run-off of high cost accounts as a result of management’s focus to lower the cost of deposits and allow higher cost, short-term time deposits to mature without renewals. The decrease in certificates of deposit was partially offset by a $22.6 million jump in lower-cost, relationship-focused, transaction and savings accounts, the bank said.
The bank also made gains in cleaning up its portfolio. Non-performing loans as a percentage of total assets fell to 1.01 percent, or $5.8 million, from 1.18 percent as of Dec. 31, 2010. Non-performing assets at the end of the second quarter included $5.3 million of non-performing loans and $529,000 of other real estate owned, according to a statement. The allowance for loan losses remained substantially unchanged from Dec. 31, 2010, to June 30, but decreased as a percentage of total loans – from 1.02 percent at the end of last year to 1 percent at June 30.
Total assets increased $6.3 million, or 1.1 percent, to $580 million at the end of the second quarter, from $573.7 million at Dec. 31, 2010.
