Vernon lender Rockville Financial said Tuesday its net income for the second quarter plummeted as a balance sheet restructuring ate into the company’s earnings.
The parent of Rockville Bank said its net income for the quarter ended June 30 was $43,000, or 0 cents per diluted share, compared to $3.5 million, or 12 cents per diluted share in the year ago period.
For the first six-months of the year, the bank has posted a net loss of $979,000.
The decline in earnings was largely related to the bank’s recent balance sheet restructuring, which piad down $122.2 million of Federal Home Loan Ban advances and substantially liquidated the entire common and preferred stock portfolios.
That move cost the bank $8.9 million in prepayment penalties to the Federal Home Loan Bank of Boston. Higher salary and benefit expenses also hit the bottom line.
Despite the lower earnings, Rockville Bank President and CEO William (Bill) H. W. Crawford, IV said the community lender still has “excellent asset quality and solid operating performance.”
“I am pleased about the transition the Company is making from a mutual holding company,” Crawford said.
Net interest income during the quarter increased 4.6 percent to $13.8 million. The bank also set aside fewer funds in the quarter to cover loans that may go bad in the future. Rockville Financial’s provision for loan losses declined $155,000 to $754,000 during the second quarter compared to $909,000 for the comparable 2010 period.Â
