BSB Bancorp, Inc. Reports Second Quarter Results - Year Over Year Earnings Growth of 40%

Robert M. Mahoney, President and Chief Executive Officer, said, "Strong loan demand, good fee income, expense control and credit quality combined to produce very solid quarterly results."

NET INTEREST AND DIVIDEND INCOME

Net interest and dividend income before provision for loan losses for the quarter ended June 30, 2017 was $13.95 million as compared to $11.71 million for the quarter ended June 30, 2016 or a 19.1% increase. The provision for loan losses for the quarter ended June 30, 2017 was $707,000 as compared to $741,000 for the quarter ended June 30, 2016 or a 4.6% decrease. This resulted in an increase of $2.28 million or 20.7% in net interest and dividend income after provision for loan losses for the quarter ended June 30, 2017 as compared to the quarter ended June 30, 2016. Net interest and dividend income before provision for loan losses for the six months ended June 30, 2017 was $27.21 million as compared to $22.99 million for the six months ended June 30, 2016 or an 18.4% increase. The provision for loan losses for the six months ended June 30, 2017 was $1.54 million as compared to $1.34 million for the six months ended June 30, 2016 or a 14.6% increase. This resulted in an increase of $4.02 million or 18.6% in net interest and dividend income after provision for loan losses for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016.

NONINTEREST INCOME

Noninterest income for the quarter ended June 30, 2017 was $995,000 as compared to $705,000 for the quarter ended June 30, 2016 or an increase of 41.1%.

• Customer service fees decreased $25,000 or 11.2% primarily due to declines in NSF and other fees.
• Income from bank owned life insurance increased $57,000 or 24.1% primarily due to a purchase of $5.00 million in additional bank owned life insurance policies at the end of the second quarter of 2016.
• Net gains on sales of loans increased $232,000 or 218.9% due to an increase in the number of units sold.
• Other income increased by $17,000 or 37.0% primarily due to increases in the values of investments held in a Rabbi Trust. Investments held in the Rabbi Trust are used to fund the executive and director non-qualified deferred compensation plan. Corresponding deferred compensation expense is recorded within director compensation and salaries and employee benefits.  

Noninterest income for the six months ended June 30, 2017 was $1.63 million as compared to $1.37 million for the six months ended June 30, 2016 or an increase of 18.9%.

• Customer service fees decreased $68,000 or 15.1% primarily due to declines in NSF and other fees.
• Income from bank owned life insurance increased $76,000 or 16.2% primarily due to a purchase of $5.00 million in additional bank owned life insurance policies at the end of the second quarter of 2016.
• Net gains on sales of loans increased $180,000 or 107.8% due to an increase in the number of units sold.
• Other income increased by $58,000 or 77.3% primarily due to increases in the values of investments held in a Rabbi Trust. Investments held in the Rabbi Trust are used to fund the executive and director non-qualified deferred compensation plan. Corresponding deferred compensation expense is recorded within director compensation and salaries and employee benefits. 

NONINTEREST EXPENSE

Noninterest expense for the quarter ended June 30, 2017 was $7.65 million as compared to $6.98 million for the quarter ended June 30, 2016 or an increase of 9.5%.

• Salaries and employee benefits increased $444,000 or 10.2% primarily driven by stock based compensation related to grants made during the first quarter of 2017 and a slight increase in the number of employees. 
• Director compensation increased $109,000 or 44.1% primarily driven by stock based compensation related to grants made during the first quarter of 2017.
• Deposit insurance expense increased by $129,000 or 44.9% primarily driven by asset growth and the FDIC's new assessment methodology that was first effective for the quarter ended September 30, 2016.
• Data processing fees decreased by $185,000 or 21.0% as we renegotiated certain contracts with service providers in late 2016.
• Professional fees increased by $83,000 or 44.4% primarily due to the timing of certain annual audit engagements as well as increased attorney and consultant fees.
• Marketing costs increased by $75,000, or 36.1% primarily due to an increase in digital promotion of our market leading consumer lending products as well as additional support for our business banking segment strategy.

Noninterest expense for the six months ended June 30, 2017 was $15.12 million as compared to $14.24 million for the six months ended June 30, 2016 or an increase of 6.2%.

• Director compensation increased $178,000 or 37.0% primarily driven by stock based compensation related to grants made during the first quarter of 2017.
• Deposit insurance expense increased by $251,000 or 44.3% primarily driven by asset growth and the FDIC's new assessment methodology that was first effective for the quarter ended September 30, 2016.
• Data processing fees decreased by $373,000 or 21.2% as we renegotiated certain contracts with service providers in late 2016.
• Professional fees increased by $136,000 or 32.2% primarily due to the timing of certain annual audit engagements as well as increased attorney and consultant fees.
• Marketing costs increased by $132,000, or 30.8% primarily due to an increase in digital promotion of our market leading consumer lending products as well as additional support for our business banking segment strategy.

Our efficiency ratio improved to 51.2% for the quarter ended June 30, 2017 from 56.3% for the quarter ended June 30, 2016 and to 52.4% for the six months ended June 30, 2017 from 58.5% for the six months ended June 30, 2016 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 $2.60 million for the quarter ended June 30, 2017, compared to a provision for income taxes of $1.74 million for the quarter ended June 30, 2016, reflecting effective tax rates of 39.1% and 37.0%, respectively. We recorded a provision for income taxes of $4.50 million for the six months ended June 30, 2017, compared to a provision for income taxes of $3.29 million for the six months ended June 30, 2016, reflecting effective tax rates of 37.0% and 37.4%, respectively.

BALANCE SHEET

At June 30, 2017, total assets were $2.37 billion, an increase of $212.18 million or 9.8% from $2.16 billion at December 31, 2016. The Company experienced net loan growth of $201.55 million or 10.8% from December 31, 2016 to June 30, 2017. 1-4 family residential real estate loans and commercial real estate loans increased by $162.27 million and $66.98 million, respectively. Partially offsetting these increases was a decrease in indirect auto loans of $17.29 million, driven by the suspension of new originations due to current market conditions. The asset growth was primarily funded by growth in deposits and federal home loan bank advances.

At June 30, 2017, deposits totaled $1.61 billion, an increase of $141.39 million or 9.6% from $1.47 billion at December 31, 2016. Core deposits, which we consider to include all deposits other than CDs, increased by $62.93 million from $1.13 billion at December 31, 2016 to $1.20 billion at June 30, 2017. Hal R. Tovin, Executive Vice President and Chief Operating Officer, said "Our competitive retail product offerings, the ongoing commitment to our targeted business segment strategy and our focus on commercial relationship expansion have contributed to our strong deposit growth."

Total stockholders' equity increased by $8.90 million from $160.92 million as of December 31, 2016 to $169.83 million as of June 30, 2017. This increase is primarily the result of earnings of $7.68 million and a $1.08 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, 2017 was $15.09 million and 0.73%, respectively, as compared to $13.59 million and 0.73%, respectively, as of December 31, 2016.  For the six months ended June 30, 2017, the Company recorded net charge offs of $32,000, as compared to net charge offs of $37,000 for the six months ended June 30, 2016. Total non-performing assets were $1.70 million or 0.07% of total assets as of June 30, 2017 as compared to $1.82 million or 0.08% of total assets as of December 31, 2016.

Company Profile

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, our 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.

SOURCE BSB Bancorp, Inc.

Related Links

http://www.belmontsavings.com