Baylake (BYLK) Misses Q2 EPS by 2c

Baylake (NASDAQ: BYLK) reported Q2 EPS of $0.25, $0.02 worse than the analyst estimate of $0.27.

SECOND QUARTER HIGHLIGHTS

• Improved earnings. Both net interest income and net income after-tax increased for the second quarter and first six months of 2015 compared to the same periods in 2014. The second quarter of 2015 included several one-time income and expense items. Interest income includes non-recurring prepayment penalty income associated with both the loan and investment portfolios. One-time expense items included $0.1 million after-tax of legal and accounting costs related to the pending acquisition of NEW Bancshares, Inc. ("NEW") and a $0.2 million after-tax, make-whole payment to the other member of United Financial Services, LLC, ("UFS"), a data processing company in which the Bank indirectly owns a 49.8% membership interest. This payment was pursuant to a Make-Whole Agreement between the Bank and the other member and related to the Bank's pro rata share of the tax liability resulting from a reorganization transaction involving UFS that occurred in the fourth quarter of 2014, but was not finally settled until the second quarter of 2015.
• Increased return on average assets. Return on average assets ("ROAA") for the quarter ending June 30, 2015 increased to 0.98% from 0.88% for the same period in 2014.
• Strong loan growth. Total loans increased 8.9% on a year-over-year basis and 2.0% (not annualized) on a sequential quarter basis. Second quarter loan growth was broadly distributed across commercial (both syndicated and other), commercial real estate and tax exempt loans.
• Expanded net interest margin. Net interest margin was 3.77% for the quarter ending June 30, 2015 compared to 3.63% for the same quarter in 2014, and 3.66% for the first quarter of 2015.
• Asset quality improved. Non-performing assets declined to $8.8 million at June 30, 2015 compared to $9.4 million at December 31, 2014 and $12.1 million at June 30, 2014.
• Previously announced acquisition. On May 8, 2015, the Company announced that it had entered into a definitive agreement to purchase NEW in a cash and stock transaction. NEW had approximately $87.6 million in total assets, $47.9 million in loans and $77.4 million in deposits at March 31, 2015.
• Operating expenses remained well-controlled. Excluding the make-whole tax payment related to the UFS reorganization transaction mentioned previously, the efficiency ratio (non-GAAP) improved to 65.04% at June 30, 2015, compared to 68.72% at June 30, 2014.

For earnings history and earnings-related data on Baylake (BYLK) click here.

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