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This press release contains statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. First Litchfield Financial Corporation intends for these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of complying with these safe harbor provisions. These forward-looking statements are based on current plans and expectations, which are subject to a number of risk factors and uncertainties that could cause future results to differ materially from historical performance or future expectations. These differences may be the result of various factors, including, among others: (1) failure of the parties to satisfy the closing conditions in the merger agreement in a timely manner or at all; (2) failure to obtain governmental approvals of the merger, or imposition of adverse regulatory conditions in connection with such approvals; (3) disruptions to the parties’ businesses as a result of the announcement and pendency of the merger; and (4) costs or difficulties related to the integration of the businesses following the merger.

 

For further information on these risk factors and uncertainties, please see First Litchfield Financial Corporation’s filings with the Securities and Exchange Commission, including First Litchfield Financial Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008. First Litchfield Financial Corporation undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or other changes.

 

 

 

 

Litchfield, Connecticut, November 17, 2009, First Litchfield Financial Corporation (Trading Symbol: FLFL.OB) (the “Company”) the holding company for The First National Bank of Litchfield (the “Bank”) reported financial results for the three (3) and nine (9) months ended September 30, 2009. Net loss available to common shareholders for the third quarter of 2009 totaled $2,253,000 versus a net loss of $5,426,000 for the third quarter of 2008. Basic and diluted net loss per common share for the third quarter of 2009 were both $0.96, compared to basic and diluted net loss per share of $2.30 for the third quarter of 2008. Net loss available to common shareholders for the nine months ended September 30, 2009 totaled $1,878,000 versus net loss of $4,311,000 for the nine months ended September 30, 2008. Basic and diluted net loss per common share for the nine months ended September 30, 2009 were both $0.80, compared to basic and diluted net loss per share of $1.82 for the nine months ended September 30, 2008.  

Third quarter 2009 net interest income, decreased 4.07% year-over-year to $3,727,000 from $3,885,000 in the third quarter of 2008.  For the first nine months of 2009, net interest income was $11,700,000, up 4.70% from $11,175,000 in the first nine months of 2008. For each comparison, the increase in the volume of earning assets resulted in the improvement in net interest income.

The third quarter 2009 provision for loan and lease losses totaled $2,683,000 as compared to $155,000 provided for the third quarter of 2008. The provision for the nine months ended September 30, 2009 totaled $3,470,000, which is an increase of $3,103,000 from the nine months ended September 30, 2008. The year-over-year increase in the provision for loan and lease loss is due to economic uncertainty, the continued downturn in the real estate markets both regionally and nationally, analysis of the risk within the loan portfolio, as well as the growth in the loan and lease portfolio. Despite the major increases in the reserves, the Company’s actual loan losses and delinquencies remain relatively low and manageable. The ratio of the allowance for such loan and lease losses to total loans and leases at September 30, 2009 was 1.59% as compared with 1.00% at December 31, 2008 and .64% at September 30, 2008. At September 30, 2009, the allowance for loan and lease losses was equivalent to 48% of total nonperforming assets as compared with 66% of total nonperforming assets at December 31, 2008 and 48% of total nonperforming assets at September 30, 2008.

 

Noninterest income for the three and nine months ended September 30, 2009 totaled $1,215,000 and $3,260,000 respectively as compared to noninterest loss for the same periods in 2008, which were $(5,808,000) and $(4,018,000), respectively. The change in noninterest income is primarily attributable to the Other Than Temporarily Impaired losses totaling $(6,946,000) recorded in the third quarter of 2008. During the three and nine months ended September 30, 2009 the Company originated and sold residential mortgages in the secondary market, which resulted in gains on sales of loans totaling $349,000 and $510,000, respectively, compared to similar sales transacted during the three and nine months ended September 30, 2008, which resulted in gains totaling $17,000 and $35,000, respectively.

Trust income for the third quarter ended September 30, 2009 totaled $345,000, compared to third quarter 2008 trust income of $319,000. For the first nine months of 2009, trust income totaled $893,000, compared to the nine months ended September 30, 2008 trust income of $992,000. The increase from third quarter 2008 levels is due to new asset management business. The decrease on the year-to date basis reflects declines in the market value of assets under management and the resulting reduction in fees from such decline. 

Noninterest expense increased 35.94% for the third quarter of 2009 and increased 19.25% year-over-year.  The majority of the increase is a result of higher 2009 costs for FDIC insurance and loss due to dishonored items. The impact of these increases was mitigated by cost containment efforts for advertising, salaries, insurance, travel, and memberships. In addition to boosting its regular insurance fees, the FDIC levied a special assessment on all banks to bolster its insurance fund.  In addition to the $260,000 special FDIC assessment levied in the second quarter, regulatory assessments increased by $120,000 to $211,000 for the third quarter of 2009 from $91,000 paid in the third quarter a year ago. For the nine months ended September 30, 2009, these costs totaled $930,000 compared to $184,000 for the first nine months of 2008.

 

On October 26, 2009, Union Savings Bank, a Connecticut-chartered mutual savings bank, and the Company jointly announced a definitive agreement for the merger of the Company and the Bank with and into Union Savings Bank.

 

Under terms of the agreement, upon completion of the merger, each shareholder of the Company will receive $15.00 per share in cash, giving the transaction a value of approximately $35 million. The definitive agreement has been unanimously approved by the Boards of Union Savings Bank, the Company and the Bank.

 

  The First National Bank of Litchfield is a community bank operating full-service banking offices in Canton, Goshen, Litchfield, Marble Dale, New Milford, Roxbury, Washington and two in Torrington. The Bank maintains a full service Trust Department that offers asset management, custody and estate settlement services to individuals, non-profit and commercial customers. Additionally, the Bank offers non-deposit retail investment products such as mutual funds, annuities and insurance through its relationship with Infinex Investments, Inc.   The Bank’s subsidiary, First Litchfield Leasing Corporation, provides middle market equipment leasing/financing to the commercial markets of Connecticut and Massachusetts.   The Company’s website address is www.fnbl.com. This press release does not constitute a solicitation of proxies. The Company will file a proxy statement and other relevant documents concerning the proposed transaction with the Securities and Exchange Commission ("SEC"). Shareholders of the Company are urged to read the proxy statement and all other documents which will be filed with the SEC, and any amendments or supplements to those documents, because they will contain important information which you should consider before making any decision regarding the transaction. You will be able to obtain a free copy of the proxy statement, as well as other filings containing information about the Company, at the SEC's website (www.sec.gov), and at the Company’s website (www.fnbl.com). Copies of the proxy statement may also be obtained without charge, when available, by directing a request to First Litchfield Financial Corporation, 13 North Street, P. O. Box 578, Litchfield, CT 06759.

The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of the Company in connection with the acquisition. Information about the directors and executive officers of the Company and their ownership of the Company common stock is set forth in its proxy statement for its 2009 annual meeting of shareholders, dated April 27, 2009, filed with the SEC which is available at the Company and SEC websites noted above. Additional information regarding the interests of such participants in the transaction will be contained in the proxy statement when it becomes available.

 

 

 

 

 

 

 

 

 

Danbury, CT and Litchfield, CT, October 26, 2009 – Union Savings Bank, a Connecticut-chartered mutual savings bank, and First Litchfield Financial Corporation (Symbol: FLFL) jointly announced today that they have entered into a definitive agreement for the merger of First Litchfield Financial Corporation and The First National Bank of Litchfield with and into Union Savings Bank.

 

Under terms of the agreement, upon completion of the merger, each First Litchfield shareholder will receive $15.00 per share in cash, giving the transaction a value of approximately $35 million. The definitive agreement has been unanimously approved by the Boards of Union Savings Bank, First Litchfield and The First National Bank of Litchfield.

 

First Litchfield Financial Corporation, a bank holding company headquartered in Litchfield, Connecticut, is the parent company of The First National Bank of Litchfield, a national bank with assets of approximately $520 million and 9 branches in Litchfield and Hartford counties. First Litchfield's common stock is quoted on the NASD Over the Counter Bulletin Board by several member firms under the symbol: FLFL.OB.

 

Union Savings Bank is a Connecticut-chartered mutual savings bank headquartered in Danbury, Connecticut currently with $2.0 billion in assets. Through its branch network in Fairfield, Litchfield and New Haven counties, the bank provides financial services to individuals, businesses, not-for-profit organizations and government entities through its commercial, residential and consumer lending divisions, corporate services, retail banking, investment management and trust services. For more information, please visit www.unionsavings.com.

 

When the proposed transaction is completed, Union Savings Bank will have approximately $2.5 billion in assets, $1.7 billion in deposits and 28 branches in Connecticut -- 13 branches in Fairfield County, 13 branches in Litchfield County and one each in New Haven and Hartford counties.

 

“The merger of The First National Bank of Litchfield with Union Savings Bank will significantly expand our market share in Litchfield County and enables us to extend our presence into Hartford County,” said Union Savings Bank President & CEO John Kline. “This acquisition will further our vision of becoming the bank of choice in western Connecticut. We look forward to the opportunity to broaden the reach of our mutual mission which has as its cornerstone a focus on exceeding the expectations of our customers, treating our employees with care and respect, and giving back to the community through generous donations and volunteer time. Because we are not a public company, we can focus on serving our three important constituents—customers, communities, and employees—in the form of great rates and service, donations to the community through Union Savings Bank and the USB Foundation, and generous employee benefits and a great work environment.”

 

Jay Lent, Executive VP & COO of Union Savings Bank stated, “This will be a perfect strategic fit as Union Savings Bank seeks to grow its community banking footprint in contiguous markets. Together, we will be better able to serve the personal and business needs of First National Bank’s customers with expanded financial resources and lending capacity, but with the same community banking approach. The two banks will fit together perfectly from a branch location standpoint, overlapping only in New Milford where First National has a branch and Union Savings Bank has two branches. We do not expect any branch closures as a result of the transaction and anticipate offering employment to all employees of First National Bank.”

 

First Litchfield President & CEO Joseph Greco echoed those sentiments by saying, “Both banks have a rich history. The First National Bank of Litchfield is the oldest bank in Connecticut, continuously in business since 1814, while Union Savings Bank was founded in 1866. Union Savings Bank shares our commitment to the community, emphasis on above and beyond customer service, and to helping local businesses grow and prosper.”

 

Greco went on to say, “Union Savings Bank’s commitment to mutuality allows it to focus solely on customers, employees and the community, and with its wide range of products and services for consumers, businesses, not-for-profits, and government entities, I am certain our customers and employees will be well served by this combination. We believe joining forces with Union Savings Bank will allow us to remain locally controlled and focused because of its commitment to mutuality. The combined bank will be a larger and stronger institution which will provide greater opportunities for our employees and more convenience for our customers.”

 

The transaction is subject to approval by the shareholders of First Litchfield, as well as customary regulatory approvals including the Office of the Comptroller of the Currency, State of Connecticut Department of Banking and the Federal Deposit Insurance Corporation. The transaction is expected to close in the first quarter of 2010.

 

Union Savings Bank was advised by Sandler O’Neill & Partners, New York, NY, and its legal counsel was Hinkley, Allen & Snyder LLP, Hartford, CT. First Litchfield was advised by Raymond James & Associates, Inc., New York, NY, and its legal counsel was Cranmore, FitzGerald & Meaney, Hartford, CT.