Loan losses hit SI Financial hard

In a reversal of fortune, Willimantic-based SI Financial Group reported a $700,000 loss in the third quarter, compared with a $700,000 gain in the same period last year.

SI Financial, holding company of the Savings Institute Bank & Trust Co., nevertheless held firm with a dividend of 3 cents a share, payable around Nov. 26 to shareholders of record by the close of business Nov. 5.

Savings Institute's profit miss was blamed primarily on a $1.1 million increase in the provision for loan losses tied largely to impaired and restructured commercial and real estate loans combined with a loss of $466,000 on the sale of securities.

"The results for the third quarter continue to reflect the efforts made during 2012 to both reposition the balance sheet and reduce expenses by eliminating unprofitable operations," Rheo A. Brouillard, president and chief executive of the bank, said in a statement.

Among the bank's cutbacks include the pending closure of its New London branch by the end of the year.

Net interest income decreased by $142,000 in the third quarter compared with the same period last year.

"The balance sheet includes an increase of nearly $50 million in loans, primarily commercial loans, the repayment of borrowings and the reduction of lower yielding securities and non-performing loans," Brouillard said. "We are confident that these changes will have a positive impact on future periods."

l.howard@theday.com