GTWN Georgetown Bancorp, Inc.

Georgetown Bancorp, Inc. (NASDAQ: GTWN) (the “Company”), holding company for Georgetown Bank (the “Bank”), reported net income for the three months ended September 30, 2016 of $35,000, or $0.02 per basic and diluted share, compared to net income of $425,000, or $0.24 per basic and diluted share, for the three months ended September 30, 2015. Net income for the nine months ended September 30, 2016 amounted to $267,000, or $0.15 per basic and diluted share, compared to net income of $1,038,000, or $0.59 per basic and diluted share, for the nine months ended September 30, 2015.

Robert E. Balletto, President and Chief Executive Officer, said, “Our earnings for the three and nine months ended September 30, 2016 reflect continued earnings pressure primarily due to overhead costs and a compression of our net interest margin percentage. The increase in overhead was primarily due to the enhancement of our regulatory compliance staff and compliance programs and the additional commercial lending support staff we added in late 2015, in line with continued commercial loan growth. The decrease in net interest margin percentage was primarily due to an increase in our cost of funds. Also negatively impacting net income was $136,000 in merger related expenses that are not tax deductible for income tax purposes.”

As previously reported, on October 6, 2016, Salem Five Bancorp, parent of Salem Five Cents Savings Bank and the Company, jointly announced that they had signed a definitive agreement whereby Salem Five Bancorp agreed to acquire the Company and the Bank, in an all cash transaction valued at approximately $49.2 million, or $26.00 per share. The transaction is subject to receipt of state and federal regulatory approvals and approval by shareholders of the Company and is expected to close during the first quarter of 2017.

The Company also announced that its Board of Directors has declared a regular quarterly cash dividend of $0.05 per share of common stock. The dividend will be paid on or about November 21, 2016, to stockholders of record as of the close of business on November 7, 2016.

         

Georgetown Bancorp, Inc.

Selected Financial Data   At or for the At or for the

 

Nine Months Ended Year Ended September 30, 2016 December 31, 2015 (Dollars in thousands, except share data) Condensed Consolidated Balance Sheet: Cash and cash equivalents $ 9,006 $ 7,758 Investment securities 23,905 25,133 Loans receivable 274,553 256,391 Allowance for loan losses (2,551) (2,408) Premises and equipment 4,232 3,837 Other assets   5,825   5,791 Total assets $ 314,970 $ 296,502   Deposits $ 240,150 $ 207,726 FHLB advances 38,350 50,600 Other liabilities   4,030   6,268 Total liabilities 282,530 264,594 Total stockholders' equity   32,440   31,908 Total liabilities & stockholders' equity $ 314,970 $ 296,502   Stockholders' equity to total assets at end of period 10.30 % 10.76 % Total shares outstanding 1,840,920 1,828,238 Book value per share $ 17.62 $ 17.45   Asset Quality Data: Total non-performing loans $ 964 $ 776 Other real estate owned — — Total non-performing assets 964 776 Non-performing loans to total loans 0.35 % 0.30 % Non-performing assets to total assets 0.31 % 0.26 % Allowance for loan losses to non-performing loans 264.63 % 310.31 % Allowance for loan losses to total loans 0.93 % 0.94 % Loans charged off $ 2 $ 26 Recoveries on loans previously charged off 4 5                         Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (Dollars in thousands, except per share data) Condensed Consolidated Income Statement: Interest and dividend income $ 3,176 $ 2,989 $ 9,533 $ 8,726 Interest expense   628   431   1,806   1,237 Net interest and dividend income 2,548 2,558 7,727 7,489 Provision for loan losses   67   111   141   138 Net interest and dividend income after provision for loan losses 2,481 2,447 7,586 7,351 Non-interest income 244 374 741 839 Non-interest expense   2,586   2,127   7,824   6,523 Income before income taxes 139 694 503 1,667 Income tax provision   104   269   236   629 Net income $ 35 $ 425 $ 267 $ 1,038   Net income per share: basic $ 0.02 $ 0.24 $ 0.15 $ 0.59 Net income per share: diluted $ 0.02 $ 0.24 $ 0.15 $ 0.59   Performance Ratios: Return on average assets 0.05 % 0.61 % 0.12 % 0.51 % Return on average stockholders' equity 0.45 % 5.59 % 1.15 % 4.58 % Interest rate spread 3.24 % 3.61 % 3.33 % 3.62 % Interest rate spread - tax equivalent basis (1) 3.25 % 3.62 % 3.34 % 3.63 % Net interest margin 3.43 % 3.77 % 3.52 % 3.77 % Net interest margin - tax equivalent basis (1) 3.44 % 3.78 % 3.53 % 3.78 % Efficiency ratio (2) 92.64 % 72.57 % 92.40 % 78.32 % Non-interest expense to average total assets 3.38 % 3.04 % 3.46 % 3.18 %  

(1) Presented on a tax-equivalent basis using a tax rate of 34% resulting in an adjustment of $10,000 and $7,000 to investment security income for the three months ended September 30, 2016 and 2015, respectively, and $29,000 and $22,000 for the nine months ended September 30, 2016 and 2015, respectively.(2) The efficiency ratio represents non-interest expense divided by the sum of net interest and dividend income and non-interest income.

About Georgetown Bancorp, Inc.

Georgetown Bancorp, Inc. is the holding company for Georgetown Bank. Georgetown Bank, with branch offices in Georgetown, North Andover and Rowley, Massachusetts, as well as Stratham, New Hampshire, is committed to making a positive difference in the markets we serve. Our highest priority is to provide exceptional personal service, act with high ethical standards and in the best interest of our customers, employees, shareholders and business partners. We strive to help each of our customers achieve their unique financial goals through a competitive array of financial products and services. To learn more about Georgetown Bank, visit www.georgetownbank.com or call 978-352-8600.

Forward-looking statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements include statements regarding the anticipated closing date of the transaction and anticipated future results. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Certain factors that could cause actual results to differ materially from expected results include delays in completing the merger, including delays in obtaining regulatory or shareholder approval, difficulties in achieving cost savings from the merger or in achieving such cost savings from the merger or in achieving such cost savings within the expected time frame, difficulties in integrating Georgetown Bancorp, Inc. and Salem Five Bancorp, increased competitive pressures, changes in the interest rate environment, changes in general economic conditions, legislative and regulatory changes that adversely affect the business in which Georgetown Bancorp, Inc. and Salem Five Bancorp are engaged, changes in the securities markets and other risks and uncertainties.

This press release does not constitute a solicitation of proxies.

Georgetown Bancorp, Inc. will provide its shareholders with a proxy statement and other relevant documents concerning the proposed transaction. Shareholders of Georgetown Bancorp are urged to read the proxy statement and any amendments or supplements to those documents, because they will contain important information which should be considered before making any decision regarding the transaction. Shareholders of Georgetown Bancorp will also be able to obtain a copy of the proxy statement, without charge, when it becomes available, by directing a request to:

Robert E. BallettoPresident and Chief Executive OfficerGeorgetown Bancorp, Inc.2 East Main StreetGeorgetown, MA 01833

Georgetown Bancorp, Inc. and certain of its directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Georgetown Bancorp in connection with the merger. Information about the directors and executive officers of Georgetown Bancorp, their ownership of Georgetown Bancorp common stock along with additional information regarding the interests of such participants in the transaction and any agreements with such persons to vote shares of Georgetown Bancorp for approval of this merger with Salem Five will be contained in the proxy statement when it becomes available.

Persons seeking additional information regarding Georgetown Bancorp, Salem Five Bancorp or the transaction may wish to visit the websites of each institution:

Georgetown Bancorp, Inc. - http://www.georgetownbank.com/Salem Five Bancorp - https://www.salemfive.com/

View source version on businesswire.com: http://www.businesswire.com/news/home/20161025006271/en/

Georgetown Bancorp, Inc.Joseph W. Kennedy, 978-352-8600Senior Vice President/CFOjoe.kennedy@georgetownbank.com