SI Financial Group, Inc. - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 0-50801

SI FINANCIAL GROUP, INC.

(Exact name of registrant as specified in its charter)


Federal		84-1655232
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


803 Main Street, Willimantic, Connecticut		06226
(Address of principal executive offices)		(Zip Code)

(860) 423-4581

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of November 12, 2004, there were 12,563,750 shares of the Registrant’s Common Stock outstanding.

SI FINANCIAL GROUP, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements of SI Financial Group, Inc. and Subsidiaries

	Consolidated Statements of Financial Condition at September 30, 2004 and December 31, 2003 (unaudited)	2

	Consolidated Statements of Operations for the three and nine months ended September 30, 2004 and 2003 (unaudited)	3

	Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2004 and 2003 (unaudited)	4

	Consolidated Statements of Cash Flows for the nine months ended September 30, 2004 and 2003 (unaudited)	5

	Notes to Unaudited Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27

Item 4.	Controls and Procedures	29

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3.	Defaults upon Senior Securities	30

Item 4.	Submission of Matters to a Vote of Security Holders	30

Item 5.	Other Information	30

Item 6.	Exhibits	31

SIGNATURES

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

SI FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in Thousands)


	September 30, 2004			December 31, 2003
ASSETS:
Cash and due from banks:
Noninterest bearing deposits and cash	$	35,340		$	20,336
Interest bearing deposits		13,681			4,441
Federal funds sold		3,000			4,800

Cash and cash equivalents		52,021			29,577
Available for sale securities, at fair value (note 5)		97,461			77,693
Held to maturity securities, at cost (note 5)		—			1,728
Loans receivable, net (note 6)		422,952			386,924
Accrued interest receivable on loans		1,667			1,580
Accrued interest receivable on investment securities		773			658
Federal Home Loan Bank Stock, at cost		4,101			2,858
Cash surrender value of life insurance		7,487			7,258
Other real estate owned		—			328
Premises and equipment, net		6,463			6,675
Core deposit intangible		316			389
Deferred tax asset, net		944			601
Other assets		1,937			1,872

TOTAL ASSETS	$	596,122		$	518,141

LIABILITIES AND STOCKHOLDERS’ EQUITY:
Liabilities:
Deposits: (note 7)
Noninterest bearing	$	44,741		$	40,371
Interest bearing		400,369			374,719

Total deposits		445,110			415,090
Mortgagors’ and investors’ escrow accounts		900			2,221
Federal Home Loan Bank advances (note 8)		60,851			57,168
Subordinated debt		7,217			7,217
Accrued expenses and other liabilities		2,155			2,346

TOTAL LIABILITIES		516,233			484,042

Commitments and contingencies		—			—
Stockholders’ Equity:
Preferred stock ($.01 par value; 1,000,000 shares authorized; none issued or outstanding)		—			—
Common stock ($.01 par value; 75,000,000 shares authorized; 12,563,750 shares issued and outstanding at September 30, 2004)		126			—
Additional paid-in capital		50,935			—
Unallocated common shares held by ESOP		(4,925	)		—
Retained earnings (including surplus of $1,000 at December 31, 2003)		33,768			33,582
Accumulated other comprehensive income (loss) (note 9)		(15	)		517

TOTAL STOCKHOLDERS’ EQUITY		79,889			34,099

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	596,122		$	518,141

See accompanying notes to unaudited interim consolidated financial statements.

SI FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Amounts)


	For The Three Months Ended September 30,					For The Nine Months Ended September 30,
	2004			2003		2004			2003
Interest and dividend income:
Loans, including fees	$	6,115		$	6,171	$	17,980		$	18,066
Investment securities:
Taxable interest		880			906		2,572			2,912
Tax-exempt interest		6			6		18			20
Dividends		39			33		93			93
Other		111			26		174			133

TOTAL INTEREST AND DIVIDEND INCOME		7,151			7,142		20,837			21,224

Interest expense:
Deposits		1,614			1,606		4,647			5,100
Federal Home Loan advances		669			582		2,017			1,701
Subordinated debt		91			89		267			272
Other borrowings		—			18		—			55

TOTAL INTEREST EXPENSE		2,374			2,295		6,931			7,128

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES		4,777			4,847		13,906			14,096
Provision for loan losses		100			340		400			1,482

NET INTEREST AND DIVIDEND INCOME AFTER PROVISION FOR LOAN LOSSES		4,677			4,507		13,506			12,614

Noninterest income:
Service fees		818			796		2,423			2,336
Wealth management fees		240			210		727			626
Net gain (loss) on available for sale securities		(355	)		15		(169	)		129
Net gain (loss) on sale of loans		11			58		(9	)		245
Other		40			63		86			224

TOTAL NONINTEREST INCOME		754			1,142		3,058			3,560

Noninterest expenses:
Salaries and employee benefits		2,500			2,405		7,336			6,824
Occupancy		517			490		1,965			1,535
Furniture and equipment		215			211		723			701
Computer services		237			208		750			634
Electronic banking fees		168			140		495			413
Outside professional services		87			93		346			239
Marketing		143			81		364			289
Supplies		73			50		221			213
FDIC deposit insurance and state assessment		19			19		61			58
Impairment charge – other asset		—			—		51			—
Contribution to SI Financial Group Foundation		2,513			—		2,513			—
Other real estate operations		(73	)		13		12			1
Other		598			457		1,551			1,560

TOTAL NONINTEREST EXPENSES		6,997			4,167		16,388			12,467

INCOME (LOSS) BEFORE INCOME TAXES		(1,566	)		1,482		176			3,707
Income tax provision (benefit)		(556	)		503		(10	)		1,260

NET INCOME (LOSS)	$	(1,010	)	$	979	$	186		$	2,447

Net loss per share:
Basic	$	(7.40	)		N/A		N/A			N/A
Diluted	$	(7.40	)		N/A		N/A			N/A
Weighted-average shares outstanding:
Basic		136,563			N/A		N/A			N/A
Diluted		136,563			N/A		N/A			N/A

See accompanying notes to unaudited interim consolidated financial statements.

SI FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

(Dollar in Thousands, Except Per Share Amounts)