EX-99.1 2 press_release.htm

 

For Immediate Release

Date: October 18, 2018
 
 
 
 
 
         
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 35.4%

BELMONT, MA, October 18, 2018 (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 net income of $6.2 million or $0.66 per diluted share for the quarter ended September 30, 2018 compared to net income of $4.6 million or $0.50 per diluted share for the quarter ended September 30, 2017 or an increase of 35.4% in net income. Excluding the one-time impact of the Tax Cuts and Jobs Act ("Tax Reform Act") in the fourth quarter of 2017, the Bank has attained 21 consecutive quarters of earnings growth. For the nine months ended September 30, 2018, the Company reported net income of $18.3 million or $1.95 per diluted share as compared to net income of $12.3 million or $1.33 per diluted share for the nine months ended September 30, 2017 or an increase in net income of 49.1%.
Robert M. Mahoney, President and Chief Executive Officer, said, "The quarter reflected a continuation of loan and deposit growth. Importantly, our efforts to increase fee income through residential loan sales and generate income from commercial loan interest rate swaps are bearing fruit."


NET INTEREST AND DIVIDEND INCOME
Net interest and dividend income before provision for loan losses for the quarter ended September 30, 2018 was $15.4 million as compared to $14.2 million for the quarter ended September 30, 2017 or an 8.7% increase. The provision for loan losses for the quarter ended September 30, 2018 was $191,000 as compared to $535,000 for the quarter ended September 30, 2017 or a 64.3% decrease. The decrease in the provision for loan losses was driven by lower loan growth for the quarter ended September 30, 2018 as compared to the quarter ended September 30, 2017. The combination of these items resulted in an increase of $1.6 million or 11.5% in net interest and dividend income after provision for loan losses for the quarter ended September 30, 2018 as compared to the quarter ended September 30, 2017.
Net interest and dividend income before provision for loan losses for the nine months ended September 30, 2018 was $45.7 million as compared to $41.4 million for the nine months ended September 30, 2017 or a 10.3% increase. The provision for loan losses for the nine months ended September 30, 2018 was $1.2 million as compared to $2.1 million for the nine months ended September 30, 2017 or a 42.4% 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 $5.1 million or 13.1% in net interest and dividend income after provision for loan losses for the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017.

NONINTEREST INCOME
Noninterest income for the quarter ended September 30, 2018 was $1.1 million as compared to $885,000 for the quarter ended September 30, 2017 or an increase of 28.4%. This increase was driven by $126,000 in fee income recognized on loan-level derivative agreements that we entered into during the quarter.
Noninterest income for the nine months ended September 30, 2018 was $3.7 million as compared to $2.5 million for the nine months September 30, 2017 or an increase of 49.1%. This increase was driven by loan-level derivative income of $1.2 million.
NONINTEREST EXPENSE
Noninterest expense for the quarter ended September 30, 2018 was $7.8 million as compared to $7.9 million for the quarter ended September 30, 2017 or a decrease of 1.3%.
·
Salaries and employee benefits decreased $173,000 or 3.3% driven by reduced incentive compensation expense as well as reduced stock-based compensation expense as the majority of stock awards granted under the 2012 Equity Incentive Plan were fully expensed in the fourth quarter of 2017.
·
Director compensation decreased $107,000 or 29.6% driven by reduced stock-based compensation expense as the majority of stock awards granted under the 2012 Equity Incentive Plan were fully expensed in the fourth quarter of 2017.
·
Deposit insurance expense increased by $96,000 or 22.2% driven by asset growth.
·
Marketing expense increased by $49,000 or 27.5% due to the timing of certain marketing initiatives.
Noninterest expense for the nine months ended September 30, 2018 was $23.3 million as compared to $23.0 million for the nine months ended September 30, 2017 or an increase of 1.1%.
·
Salaries and employee benefits increased $262,000 or 1.8%.
·
Director compensation decreased $344,000 or 33.7% resulting from reduced stock-based compensation expense as the majority of stock awards granted under the 2012 Equity Incentive Plan were fully expensed in the fourth quarter of 2017.
·
Deposit insurance expense increased by $262,000 or 21.0% driven by asset growth.
Our efficiency ratio improved to 47.3% for the quarter ended September 30, 2018 from 52.6% for the quarter ended September 30, 2017 and to 47.2% for the nine months ended September 30, 2018 from 52.5% for the nine months ended September 30, 2017 as we continue to grow the balance sheet and manage costs. A talented and committed colleague team combined with continued operational enhancements have contributed to the improvement in our efficiency ratio.
INCOME TAXES
We recorded a provision for income taxes of $2.3 million for the quarter ended September 30, 2018, compared to a provision for income taxes of $2.0 million for the quarter ended September 30, 2017, reflecting effective tax rates of 27.0% and 30.3%, respectively. We recorded a provision for income taxes of $6.6 million for the nine months ended September 30, 2018, compared to a provision for income taxes of $6.5 million for the nine months ended September 30, 2017, reflecting effective tax rates of 26.5% and 34.6%, 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 September 30, 2018, total assets were $2.97 billion, an increase of $295.2 million or 11.0% from $2.68 billion at December 31, 2017. The Company experienced net loan growth of $273.1 million or 11.9% from December 31, 2017 to September 30, 2018. One-to-four family residential real estate loans, commercial real estate loans and multi-family real estate loans increased by $221.2 million, $50.9 million and $39.9 million, respectively. Partially offsetting these increases were decreases in home equity lines of credit, indirect auto loans and construction loans of $14.0 million, $14.6 million and $9.6 million, respectively. The asset growth was primarily funded by growth in deposits and federal home loan bank advances.
At September 30, 2018, deposits totaled $1.9 billion, an increase of $197.1 million or 11.3% from $1.75 billion at December 31, 2017. Core deposits, which we consider to include all deposits other than CDs, increased by $34.8 million or 2.8% from $1.25 billion at December 31, 2017 to $1.28 billion at September 30, 2018. Hal R. Tovin, Executive Vice President and Chief Operating Officer, said "Deposit growth continued in Q3 despite a very competitive marketplace. Municipal relationship expansion, continued acquisition of customers in the Non Profit Sector and the ongoing introduction and advertising of retail products drove this performance."
Total stockholders' equity increased by $19.9 million or 11.2% from $178.0 million as of December 31, 2017 to $198.0 million as of September 30, 2018. This increase is primarily the result of earnings of $18.3 million and a $1.7 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, 2018 was $17.5 million and 0.68%, respectively, as compared to $16.3 million and 0.71%, respectively, as of December 31, 2017.  For the nine months ended September 30, 2018, the Company recorded net charge offs of $23,000, as compared to net charge offs of $35,000 for the nine months ended September 30, 2017. Total non-performing assets were $1.2 million or 0.04% of total assets as of September 30, 2018 and $1.4 million or 0.05% of total assets as of December 31, 2017.

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, nonprofit organizations, 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 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, 2018
   
December 31, 2017
 
    
 
(unaudited)
       
ASSETS
           
Cash and due from banks
 
$
1,676
   
$
1,771
 
Interest-bearing deposits in other banks
   
131,945
     
109,117
 
Cash and cash equivalents
   
133,621
     
110,888
 
Interest-bearing time deposits with other banks
   
5,229
     
2,440
 
Investments in available-for-sale securities
   
4,035
     
16,921
 
Investments in held-to-maturity securities (fair value of $146,658 as of
September 30, 2018 and $158,385 as of December 31, 2017)
   
150,981
     
160,090
 
Federal Home Loan Bank stock, at cost
   
37,412
     
32,382
 
Loans held for sale
   
6,214
     
-
 
Loans, net of allowance for loan losses of $17,481 as of
September 30, 2018 and $16,312 as of December 31, 2017
   
2,570,105
     
2,296,958
 
 
               
Premises and equipment, net
   
2,305
     
2,254
 
Accrued interest receivable
   
7,666
     
6,344
 
Deferred tax asset, net
   
6,114
     
5,794
 
Income taxes receivable
   
276
     
53
 
Bank-owned life insurance
   
37,770
     
36,967
 
Other assets
   
10,079
     
5,474
 
Total assets
 
$
2,971,807
   
$
2,676,565
 
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Deposits:
               
Noninterest-bearing
 
$
201,966
   
$
221,462
 
Interest-bearing
   
1,746,362
     
1,529,789
 
Total deposits
   
1,948,328
     
1,751,251
 
Federal Home Loan Bank advances
   
794,250
     
723,150
 
Securities sold under agreements to repurchase
   
2,254
     
3,268
 
Accrued interest payable
   
1,914
     
1,594
 
Deferred compensation liability
   
8,454
     
7,919
 
Other liabilities
   
18,657
     
11,354
 
Total liabilities
   
2,773,857
     
2,498,536
 
Stockholders' Equity:
               
Common stock; $0.01 par value per share, 100,000,000 shares authorized; 9,753,797 and
9,707,665 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively
    98       97  
Additional paid-in capital
   
96,241
     
94,590
 
Retained earnings
   
105,171
     
86,884
 
Accumulated other comprehensive (loss) income
   
(42
)
   
89
 
Unearned compensation - ESOP
   
(3,518
)
   
(3,631
)
Total stockholders' equity
   
197,950
     
178,029
 
Total liabilities and stockholders' equity
 
$
2,971,807
   
$
2,676,565
 
 
               
 
               
Asset Quality Data:
               
Total non-performing assets
 
$
1,205
   
$
1,376
 
Total non-performing loans
 
$
1,194
   
$
1,376
 
Non-performing loans to total loans
   
0.05
%
   
0.06
%
Non-performing assets to total assets
   
0.04
%
   
0.05
%
Allowance for loan losses to non-performing loans
   
1464.07
%
   
1185.47
%
Allowance for loan losses to total loans
   
0.68
%
   
0.71
%
 
               
Share Data:
               
Outstanding common shares
   
9,753,797
     
9,707,665
 
Book value per share
 
$
20.29
   
$
18.34
 
 
               
Consolidated Capital Ratios:
               
Common Equity Tier 1 Risk-Based Capital Ratio
   
10.74
%
   
10.35
%
Tier 1 Risk-Based Capital Ratio
   
10.74
%
   
10.35
%
Total Risk-Based Capital Ratio
   
11.69
%
   
11.30
%
Leverage Ratio
   
6.76
%
   
6.97
%
 
 

 
BSB BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
 
    
 
Three months ended
September30
   
Nine months ended
September30,
 
 
 
2018
   
2017
   
2018
   
2017
 
    
 
(unaudited)
   
(unaudited)
 
Interest and dividend income:
                       
Interest and fees on loans
 
$
23,778
   
$
18,432
   
$
66,796
   
$
52,328
 
Interest on taxable debt securities
   
857
     
829
     
2,628
     
2,452
 
Dividends
   
525
     
320
     
1,359
     
866
 
Other interest income
   
484
     
177
     
1,162
     
382
 
Total interest and dividend income
   
25,644
     
19,758
     
71,945
     
56,028
 
Interest expense:
                               
Interest on deposits
   
6,498
     
3,391
     
16,346
     
8,992
 
Interest on Federal Home Loan Bank advances
   
3,736
     
2,187
     
9,945
     
5,645
 
Interest on securities sold under agreements to repurchase
   
1
     
1
     
4
     
3
 
Total interest expense
   
10,235
     
5,579
     
26,295
     
14,640
 
Net interest and dividend income
   
15,409
     
14,179
     
45,650
     
41,388
 
Provision for loan losses
   
191
     
535
     
1,192
     
2,070
 
Net interest and dividend income after provision
                               
for loan losses
   
15,218
     
13,644
     
44,458
     
39,318
 
Noninterest income:
                               
Customer service fees
   
221
     
205
     
628
     
586
 
Income from bank-owned life insurance
   
274
     
287
     
803
     
834
 
Net gain on sales of loans
   
305
     
267
     
642
     
613
 
Loan servicing fee income
   
77
     
71
     
282
     
288
 
Loan level derivative income
   
126
     
-
     
1,158
     
-
 
Other income
   
133
     
55
     
229
     
188
 
Total noninterest income
   
1,136
     
885
     
3,742
     
2,509
 
Noninterest expense:
                               
Salaries and employee benefits
   
5,071
     
5,244
     
14,954
     
14,692
 
Director compensation
   
254
     
361
     
676
     
1,020
 
Occupancy expense
   
242
     
242
     
742
     
741
 
Equipment expense
   
101
     
100
     
277
     
327
 
Deposit insurance
   
528
     
432
     
1,512
     
1,250
 
Data processing
   
687
     
674
     
2,150
     
2,062
 
Professional fees
   
212
     
220
     
757
     
779
 
Marketing
   
227
     
178
     
742
     
739
 
Other expense
   
504
     
478
     
1,495
     
1,439
 
Total noninterest expense
   
7,826
     
7,929
     
23,305
     
23,049
 
Income before income tax expense
   
8,528
     
6,600
     
24,895
     
18,778
 
Income tax expense
   
2,300
     
2,001
     
6,589
     
6,500
 
Net income
 
$
6,228
   
$
4,599
   
$
18,306
   
$
12,278
 
Earnings per share
                               
Basic
 
$
0.70
   
$
0.52
   
$
2.05
   
$
1.39
 
Diluted
 
$
0.66
   
$
0.50
   
$
1.95
   
$
1.33
 
 
                               
Return on average assets
   
0.84
%
   
0.76
%
   
0.87
%
   
0.71
%
Return on average equity
   
12.65
%
   
10.51
%
   
12.96
%
   
9.74
%
Interest rate spread (1)
   
1.89
%
   
2.20
%
   
1.99
%
   
2.27
%
Net interest margin (1)
   
2.07
%
   
2.36
%
   
2.17
%
   
2.41
%
Efficiency ratio
   
47.30
%
   
52.64
%
   
47.18
%
   
52.51
%
Net charge-offs
 
$
6
   
$
4
   
$
23
   
$
36
 
 
                               
(1) Does not include dividends on FHLB stock of $525,000 and $1.4 million and $320,000 and $866,000
for the three and nine months ended September 30, 2018 and 2017 (unaudited), respectively.