EX-99.1 2 pressrelease8k.htm PRESS RELEASE, DATED OCTOBER 19, 2017
Exhibit 99.1
 
For Immediate Release

Date: October 19, 2017
 
 
 
 
 
         
Contact:
 
Robert M. Mahoney
 
  
 
 
President and Chief Executive Officer
 
  
 
 
 
 
 
Phone:
 
617-484-6700
 
  
Email:
 
robert.mahoney@belmontsavings.com
 
  


BSB Bancorp, Inc. Reports Third Quarter Results – Year Over Year Earnings Growth of 42%

BELMONT, MA, October 19, 2017 (PR Newswire) - BSB Bancorp, Inc. (NASDAQ-BLMT) (the "Company"), the holding company for Belmont Savings Bank (the "Bank"), a state-chartered savings bank headquartered in Belmont, Massachusetts, today reported a 44.6% increase in net income to $4.60 million or $0.50 per diluted share for the quarter ended September 30, 2017 compared to net income of $3.18 million or $0.35 per diluted share for the quarter ended September 30, 2016. This is the Bank's 17th consecutive quarter of earnings growth. For the nine months ended September 30, 2017, the Company reported net income of $12.28 million or $1.33 per diluted share as compared to net income of $8.67 million or $0.97 per diluted share for the nine months ended September 30, 2016 or an increase in net income of 41.6%.
Robert M. Mahoney, President and Chief Executive Officer, said, "Our team continued to execute our strategy and delivered good growth by all measures. We are extremely proud to have been nationally recognized for our growth in revenue, assets, earnings and shareholder return. We received the prestigious 2017 Sandler O'Neill Sm-All Star Award for being a top 10% performer among over 400 small-cap banks and thrifts across the country. We were the only Massachusetts bank to achieve this award. Also, we had the honor of being ranked 41st on Fortune Magazine's 100 Fastest Growing Companies List in 2017. Here, we were compared to every company on a U.S. stock exchange. We are one of only 7 savings banks nationwide to be named to this prestigious list."
 
NET INTEREST AND DIVIDEND INCOME
Net interest and dividend income before provision for loan losses for the quarter ended September 30, 2017 was $14.18 million as compared to $12.03 million for the quarter ended September 30, 2016 or a 17.9% increase. The provision for loan losses for the quarter ended September 30, 2017 was $535,000 as compared to $443,000 for the quarter ended September 30, 2016 or a 20.8% increase. The combination of these items resulted in an increase of $2.06 million or 17.8% in net interest and dividend income after provision for loan losses for the quarter ended September 30, 2017 as compared to the quarter ended September 30, 2016. Net interest and dividend income before provision for loan losses for the nine months ended September 30, 2017 was $41.39 million as compared to $35.02 million for the nine months ended September 30, 2016 or an 18.2% increase. The provision for loan losses for the nine months ended September 30, 2017 was $2.07 million as compared to $1.78 million for the nine months ended September 30, 2016 or a 16.1% increase. The combination of these items resulted in an increase of $6.09 million or 18.3% in net interest and dividend income after provision for loan losses for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016.
NONINTEREST INCOME
Noninterest income for the quarter ended September 30, 2017 was $885,000 as compared to $680,000 for the quarter ended September 30, 2016 or an increase of 30.1%.
·
Customer service fees decreased $37,000 or 15.3% primarily due to declines in NSF and other fees.
·
Net gains on sales of loans increased $242,000 or 968.0% due to an increase in the number of loans sold.
·
Loan servicing fee income increased $22,000 or 44.9% due to both an increase in the balance of loans that we service for others as well as an improvement in the value of our mortgage servicing right asset.
·
Other income decreased by $16,000 or 22.5% primarily due to a decrease in other loan related fee income.
 
Noninterest income for the nine months ended September 30, 2017 was $2.51 million as compared to $2.05 million for the nine months ended September 30, 2016 or an increase of 22.6%.
·
Customer service fees decreased $105,000 or 15.2% primarily due to declines in NSF and other fees.
·
Income from bank-owned life insurance increased $72,000 or 9.4% 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 $422,000 or 220.9% due to an increase in the number of loans sold.
·
Loan servicing fee income increased $35,000 or 13.8% due to an improvement in the value of our mortgage servicing right asset.
·
Other income increased by $38,000 or 25.3% 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 September 30, 2017 was $7.93 million as compared to $7.07 million for the quarter ended September 30, 2016 or an increase of 12.2%.
·
Salaries and employee benefits increased $812,000 or 18.3% driven by cash-based incentive compensation, stock-based compensation related to grants of restricted stock made during the first quarter of 2017 and a slight increase in the number of employees.
·
Director compensation increased $56,000 or 18.4% primarily driven by stock-based compensation related to grants of restricted stock made during the first quarter of 2017.
·
Deposit insurance expense increased by $110,000 or 34.2% primarily driven by asset growth.
·
Professional fees decreased by $39,000 or 15.1% primarily due to a decrease in consultant fees.
·
Marketing costs decreased by $42,000, or 19.1% primarily due to a higher proportion of our marketing budget being utilized in the first half of 2017 as part of the digital promotion of our market leading consumer lending products as well as additional support for our business banking segment strategy.
Noninterest expense for the nine months ended September 30, 2017 was $23.05 million as compared to $21.31 million for the nine months ended September 30, 2016 or an increase of 8.2%.
 
·
Salaries and employee benefits increased $1.33 million or 9.9% driven by stock-based compensation related to grants of restricted stock made during the first quarter of 2017, cash-based incentive compensation and a slight increase in the number of employees.
·
Director compensation increased $234,000 or 29.8% primarily driven by stock-based compensation related to grants of restricted stock made during the first quarter of 2017.
·
Deposit insurance expense increased by $361,000 or 40.6% 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 $378,000 or 15.5% as we renegotiated certain contracts with service providers in late 2016.
·
Professional fees increased by $98,000 or 14.4% primarily due to the timing of certain annual audit engagements as well as increased attorney and consultant fees.
·
Marketing costs increased by $91,000, or 14.0% 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 52.6% for the quarter ended September 30, 2017 from 55.6% for the quarter ended September 30, 2016 and to 52.5% for the nine months ended September 30, 2017 from 57.5% for the nine months ended September 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 $2.00 million for the quarter ended September 30, 2017, compared to a provision for income taxes of $2.02 million for the quarter ended September 30, 2016, reflecting effective tax rates of 30.3% and 38.8%, respectively. We recorded a provision for income taxes of $6.50 million for the nine months ended September 30, 2017, compared to a provision for income taxes of $5.3 million for the nine months ended September 30, 2016, reflecting effective tax rates of 34.6% and 38.0%, respectively. In both the quarter over quarter and year over year comparisons, the decrease in our effective tax rate was driven by tax benefits related to stock-based compensation.
BALANCE SHEET
At September 30, 2017, total assets were $2.50 billion, an increase of $340.99 million or 15.8% from $2.16 billion at December 31, 2016. The Company experienced net loan growth of $306.06 million or 16.4% from December 31, 2016 to September 30, 2017. 1-4 family residential real estate loans and commercial real estate loans increased by $239.95 million and $113.04 million, respectively. Partially offsetting these increases were a decrease in construction loans of $24.70 million and a decrease in indirect auto loans of $24.24 million. The decrease in indirect auto loans was 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 September 30, 2017, deposits totaled $1.71 billion, an increase of $245.34 million or 16.7% from $1.47 billion at December 31, 2016. Core deposits, which we consider to include all deposits other than CDs, increased by $130.40 million or 11.5% from $1.13 billion at December 31, 2016 to $1.26 billion at September 30, 2017. Hal R. Tovin, Executive Vice President and Chief Operating Officer, said "Consistent execution providing competitive retail deposit products, targeted business banking offerings and commercial relationship expansion continues to create new and existing customer deposit growth."
Total stockholders' equity increased by $14.64 million or 9.1% from $160.92 million as of December 31, 2016 to $175.56 million as of September 30, 2017. This increase is primarily the result of earnings of $12.28 million and a $2.17 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 September 30, 2017 was $15.62 million and 0.72%, respectively, as compared to $13.59 million and 0.73%, respectively, as of December 31, 2016.  For the nine months ended September 30, 2017, the Company recorded net charge offs of $35,000, as compared to net charge offs of $54,000 for the nine months ended September 30, 2016. Total non-performing assets were $1.64 million or 0.07% of total assets as of September 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, 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)
         
September 30, 2017
December 31, 2016
         
(unaudited)
    
ASSETS
        
Cash and due from banks
  
 $                 1,788
  
 $                 2,211
Interest-bearing deposits in other banks
  
                  74,658
  
                  56,665
     
Cash and cash equivalents
  
                  76,446
  
                  58,876
Interest-bearing time deposits with other banks
  
                   2,440
  
                      234
Investments in available-for-sale securities
  
                  22,108
  
                  22,048
Investments in held-to-maturity securities (fair value of $138,701 as of
        
   
September 30, 2017 and $129,465 as of December 31, 2016)
  
                139,291
  
                130,197
Federal Home Loan Bank stock, at cost
  
                  28,317
  
                  25,071
Loans held for sale
  
                      642
  
                        -
Loans, net of allowance for loan losses of $15,620 as of
        
   
September 30, 2017 and $13,585 as of December 31, 2016
  
             2,172,099
  
             1,866,035
Premises and equipment, net
  
                   2,314
  
                   2,355
Accrued interest receivable
  
                   5,711
  
                   4,635
Deferred tax asset, net
  
                   8,803
  
                   8,321
Income taxes receivable
  
                        13
  
                      423
Bank-owned life insurance
  
                  36,681
  
                  35,842
Other assets
  
                   4,833
  
                   4,667
     
Total assets
  
 $          2,499,698
  
 $          2,158,704
               
LIABILITIES AND STOCKHOLDERS' EQUITY
        
Deposits:
        
   
Noninterest-bearing
  
 $             201,357
  
 $             208,082
   
Interest-bearing
  
             1,513,406
  
             1,261,340
     
Total deposits
  
             1,714,763
  
             1,469,422
Federal Home Loan Bank advances
  
                587,250
  
                508,850
Securities sold under agreements to repurchase
  
                   1,861
  
                   1,985
Accrued interest payable
  
                   1,434
  
                   1,023
Deferred compensation liability
  
                   7,694
  
                   7,043
Other liabilities
  
                  11,135
  
                   9,460
     
Total liabilities
  
             2,324,137
  
             1,997,783
Stockholders' Equity:
        
 
Common stock; $0.01 par value per share, 100,000,000 shares authorized; 9,714,775 and 9,110,077
   
shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively
                        97
  
                        91
 
Additional paid-in capital
  
                  94,186
  
                  92,013
 
Retained earnings
  
                  84,776
  
                  72,498
 
Accumulated other comprehensive income
  
                      172
  
                      103
 
Unearned compensation - ESOP
  
                  (3,670)
  
                  (3,784)
     
Total stockholders' equity
  
                175,561
  
                160,921
     
Total liabilities and stockholders' equity
  
 $          2,499,698
  
 $          2,158,704
Asset Quality Data:
        
Total non-performing assets
  
 $                 1,644
  
 $                 1,822
Total non-performing loans
  
 $                 1,626
  
 $                 1,819
Non-performing loans to total loans
  
0.07%
  
0.10%
Non-performing assets to total assets
  
0.07%
  
0.08%
Allowance for loan losses to non-performing loans
  
960.64%
  
746.84%
Allowance for loan losses to total loans
  
0.72%
  
0.73%
Share Data:
        
Outstanding common shares
  
             9,714,775
  
             9,110,077
Book value per share
  
 $                 18.07
  
 $                 17.66
Consolidated Capital Ratios:
        
 
Common Equity Tier 1 Risk-Based Capital Ratio
  
10.59%
  
10.80%
 
Tier 1 Risk-Based Capital Ratio
  
10.59%
  
10.80%
 
Total Risk-Based Capital Ratio
  
11.53%
  
11.72%
 
Leverage Ratio
  
7.28%
  
7.63%
 
BSB BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
 
                 
Three months ended
  
Nine months ended
                 
September 30,
  
September 30,
                 
2017
  
2016
  
2017
  
2016
                 
(unaudited)
  
(unaudited)
Interest and dividend income:
                      
 
Interest and fees on loans
        
 $         18,432
 
 $        14,696
 
 $         52,328
 
 $        42,247
 
Interest on taxable debt securities
        
                836
  
                784
  
             2,469
  
             2,413
 
Dividends
        
                320
  
                193
  
                866
  
                534
 
Other interest income
        
                170
  
                  53
  
                365
  
                136
     
Total interest and dividend income
        
            19,758
  
           15,726
  
            56,028
  
           45,330
Interest expense:
                      
 
Interest on deposits
        
             3,391
  
             2,427
  
             8,992
  
             6,899
 
Interest on Federal Home Loan Bank advances
        
             2,187
  
             1,271
  
             5,645
  
             3,407
 
Interest on securities sold under agreements to repurchase
    
                    1
  
                   1
  
                    3
  
                   3
 
Interest on other borrowed funds
        
                  -
  
                  -
  
                  -
  
                   5
     
Total interest expense
        
             5,579
  
             3,699
  
            14,640
  
           10,314
     
Net interest and dividend income
        
            14,179
  
           12,027
  
            41,388
  
           35,016
Provision for loan losses
        
                535
  
                443
  
             2,070
  
             1,783
     
Net interest and dividend income after provision
                      
       
 for loan losses
        
            13,644
  
           11,584
  
            39,318
  
           33,233
Noninterest income:
                      
 
Customer service fees
        
                205
  
                242
  
                586
  
                691
 
Income from bank-owned life insurance
        
                287
  
                293
  
                834
  
                762
 
Net gain on sales of loans
        
                267
  
                  25
  
                613
  
                191
 
Loan servicing fee income
        
                  71
  
                  49
  
                288
  
                253
 
Other income
        
                  55
  
                  71
  
                188
  
                150
     
Total noninterest income
        
                885
  
                680
  
             2,509
  
             2,047
Noninterest expense:
                      
 
Salaries and employee benefits
        
             5,257
  
             4,445
  
            14,732
  
           13,404
 
Director compensation
        
                361
  
                305
  
             1,020
  
                786
 
Occupancy expense
        
                242
  
                250
  
                741
  
                742
 
Equipment expense
        
                100
  
                112
  
                327
  
                326
 
Deposit insurance
        
                432
  
                322
  
             1,250
  
                889
 
Data processing
        
                674
  
                679
  
             2,062
  
             2,440
 
Professional fees
        
                220
  
                259
  
                779
  
                681
 
Marketing
        
                178
  
                220
  
                739
  
                648
 
Other expense
        
                465
  
                474
  
             1,399
  
             1,389
     
Total noninterest expense
        
             7,929
  
             7,066
  
            23,049
  
           21,305
     
Income before income tax expense
        
             6,600
  
             5,198
  
            18,778
  
           13,975
Income tax expense
        
             2,001
  
             2,018
  
             6,500
  
             5,304
       
Net income
        
 $           4,599
  
 $          3,180
  
 $         12,278
  
 $          8,671
 
Earnings per share
                      
       
Basic
        
 $            0.52
  
 $            0.36
  
 $            1.39
  
 $            1.00
       
Diluted
        
 $            0.50
  
 $            0.35
  
 $            1.33
  
 $            0.97
                               
Return on average assets
        
0.76%
  
0.63%
  
0.71%
  
0.60%
Return on average equity
        
10.51%
  
8.12%
  
9.74%
  
7.62%
Interest rate spread
        
2.21%
  
2.29%
  
2.27%
  
2.34%
Net interest margin
        
2.36%
  
2.43%
  
2.41%
  
2.48%
Efficiency ratio
        
52.64%
  
55.61%
  
52.51%
  
57.48%