Form 8-K BSB Bancorp, Inc. For: Jul 19

 

 

 

NET INTEREST AND DIVIDEND INCOME

Net interest and dividend income before provision for loan losses for the quarter ended June 30, 2018 was $15.1 million as compared to $13.9 million for the quarter ended June 30, 2017 or an 8.3% increase. The provision for loan losses for the quarter ended June 30, 2018 was $726,000 as compared to $707,000 for the quarter ended June 30, 2017 or a 2.7% increase. The combination of these items resulted in an increase of $1.1 million or 8.6% in net interest and dividend income after provision for loan losses for the quarter ended June 30, 2018 as compared to the quarter ended June 30, 2017.

Net interest and dividend income before provision for loan losses for the six months ended June 30, 2018 was $30.2 million as compared to $27.2 million for the six months ended June 30, 2017 or an 11.1% increase. The provision for loan losses for the six months ended June 30, 2018 was $1.0 million as compared to $1.5 million for the six months ended June 30, 2017 or a 34.8% decrease. The decrease in the provision for loan losses was driven by improvements in the factors used to estimate the allowance for loan losses as well as the elimination of the specific reserve on an impaired loan that was sold. The combination of these items resulted in an increase of $3.6 million or 13.9% in net interest and dividend income after provision for loan losses for the six months ended June 30, 2018 as compared to the six months ended June 30, 2017.

NONINTEREST INCOME

Noninterest income for the quarter ended June 30, 2018 was $1.7 million as compared to $995,000 for the quarter ended June 30, 2017 or an increase of 72.0%. This increase was driven by $1.0 million in fee income recognized on loan-level derivative agreements we entered into during the quarter. Partially offsetting this increase was a decrease in net gains on sales of loans of $314,000 due to a lower number of loans sold.

Noninterest income for the six months ended June 30, 2018 was $2.6 million as compared to $1.6 million for the six months June 30, 2017 or an increase of 60.2%. This increase was driven by loan-level derivative income of $1.0 million.

Our efficiency ratio improved to 46.4% for the quarter ended June 30, 2018 from 51.2% for the quarter ended June 30, 2017 and to 47.1% for the six months ended June 30, 2018 from 52.4% for the six months ended June 30, 2017 as we continue to grow the balance sheet and manage costs. A talented and committed colleague team along with continued operational enhancements have contributed to the improvement in our efficiency ratio.

INCOME TAXES

We recorded a provision for income taxes of $2.2 million for the quarter ended June 30, 2018, compared to a provision for income taxes of $2.6 million for the quarter ended June 30, 2017, reflecting effective tax rates of 26.8% and 39.1%, respectively. We recorded a provision for income taxes of $4.3 million for the six months ended June 30, 2018, compared to a provision for income taxes of $4.5 million for the six months ended June 30, 2017, reflecting effective tax rates of 26.2% and 37.0%, respectively. The decrease in the effective tax rate was driven by a reduction in the federal income tax rate from 35% to 21% that became effective on January 1, 2018.

BALANCE SHEET

At June 30, 2018, total assets were $2.91 billion, an increase of $232.5 million or 8.7% from $2.68 billion at December 31, 2017. The Company experienced net loan growth of $242.4 million or 10.6% from December 31, 2017 to June 30, 2018. One-to-four family residential real estate loans and commercial real estate loans increased by $187.8 million and $87.3 million, respectively. Partially offsetting these increases were decreases in construction loans of $14.6 million, indirect auto loans of $10.4 million and home equity lines of credit of $6.9 million. The asset growth was primarily funded by growth in federal home loan bank advances and deposits.

At June 30, 2018, deposits totaled $1.83 billion, an increase of $82.6 million or 4.7% from $1.75 billion at December 31, 2017. Core deposits, which we consider to include all deposits other than CDs, increased by $5.1 million or 0.4% from $1.247 billion at December 31, 2017 to $1.252 billion at June 30, 2018. Hal R. Tovin, Executive Vice President and Chief Operating Officer, said "Deposit growth continued in the first half of the year with the introduction of competitive retail products, as well as a strategic focus on not for profit customer acquisition. In addition, the implementation of cash management services continue to expand our municipal banking relationships."

Total stockholders' equity increased by $13.2 million or 7.4% from $178.0 million as of December 31, 2017 to $191.2 million as of June 30, 2018. This increase is primarily the result of earnings of $12.1 million and a $1.2 million increase in additional paid-in capital related to stock-based compensation.

ASSET QUALITY

Asset quality remains strong. The allowance for loan losses in total and as a percentage of total loans as of June 30, 2018 was $17.3 million and 0.68%, respectively, as compared to $16.3 million and 0.71%, respectively, as of December 31, 2017.  For the six months ended June 30, 2018, the Company recorded net charge offs of $17,000, as compared to net charge offs of $32,000 for the six months ended June 30, 2017. Total non-performing assets were $773,000 or 0.03% of total assets as of June 30, 2018 and $1.4 million or 0.05% of total assets as of December 31, 2017.

BSB Bancorp, Inc. is headquartered in Belmont, Massachusetts and is the holding company for Belmont Savings Bank. The Bank provides financial services to individuals, families, municipalities and businesses through its six full-service branch offices located in Belmont, Watertown, Cambridge, Newton and Waltham in Southeast Middlesex County, Massachusetts. The Bank's primary lending market includes Essex, Middlesex, Norfolk and Suffolk Counties, Massachusetts. The Company's common stock is traded on the NASDAQ Capital Market under the symbol "BLMT." For more information, visit the Company's website at www.belmontsavings.com.

Forward-looking statements

Certain statements herein constitute "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, as amended. These statements are based on the beliefs and expectations of management, as well as the assumptions made using information currently available to management. Since these statements reflect the views of management concerning future events, these statements involve risks, uncertainties and assumptions. As a result, actual results may differ from those contemplated by these statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may." Certain factors that could cause actual results to differ materially from expected results include changes in the interest rate environment, changes in general economic conditions, the Company's ability to continue to increase loans and deposit growth, legislative and regulatory changes that adversely affect the businesses in which the Company is engaged, changes in the securities market, and other factors that are described in the Company's annual report on Form 10-K and quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company disclaims any intent or obligation to update any forward-looking statements, whether in response to new information, future events or otherwise, except as may be required by law.

BSB BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share and per share data)

 

 

		Three months ended								Six months ended
		June 30,								June 30,
		2018				2017				2018				2017
	(unaudited)								(unaudited)
Interest and dividend income:
Interest and fees on loans		$	22,320			$	17,508			$	43,018			$	33,895
Interest on taxable debt securities			823				849				1,771				1,624
Dividends			450				290				834				546
Other interest income			289				117				678				205
Total interest and dividend income			23,882				18,764				46,301				36,270
Interest expense:
Interest on deposits			5,427				2,988				9,849				5,601
Interest on Federal Home Loan Bank advances			3,350				1,827				6,209				3,458
Interest on securities sold under agreements to repurchase			2				1				3				2
Total interest expense			8,779				4,816				16,061				9,061
Net interest and dividend income			15,103				13,948				30,240				27,209
Provision for loan losses			726				707				1,001				1,536
Net interest and dividend income after provision
for loan losses			14,377				13,241				29,239				25,673
Noninterest income:
Customer service fees			205				199				406				382
Income from bank-owned life insurance			261				294				529				546
Net gain on sales of loans			24				338				336				347
Loan servicing fee income			88				101				205				217
Loan level derivative income			1,032				-				1,032				-
Other income			101				63				96				133
Total noninterest income			1,711				995				2,604				1,625
Noninterest expense:
Salaries and employee benefits			5,022				4,789				9,883				9,447
Director compensation			227				356				422				659
Occupancy expense			236				232				500				498
Equipment expense			93				103				175				227
Deposit insurance			495				416				984				818
Data processing			729				694				1,463				1,388
Professional fees			283				270				544				558
Marketing			248				283				514				561
Other expense			463				502				991				965
Total noninterest expense			7,796				7,645				15,476				15,121
Income before income tax expense			8,292				6,591				16,367				12,177
Income tax expense			2,224				2,579				4,289				4,499
Net income		$	6,068			$	4,012			$	12,078			$	7,678
Earnings per share
Basic		$	0.68			$	0.45			$	1.35			$	0.87
Diluted		$	0.65			$	0.43			$	1.29			$	0.83
Return on average assets			0.87	%			0.69	%			0.89	%			0.68	%
Return on average equity			12.93	%			9.56	%			13.14	%			9.32	%
Interest rate spread			1.97	%			2.30	%			2.04	%			2.31	%
Net interest margin			2.16	%			2.44	%			2.22	%			2.45	%
Efficiency ratio			46.37	%			51.16	%			47.12	%			52.44	%
Net charge-offs		$	14			$	-			$	17			$	32