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8-K - FORM 8-K 10-28-11 - BSB Bancorp, Inc.form8k_102811.htm
BSB Bancorp, Inc. Reports Third Quarter Results for Fiscal Year 2011
 
 
BELMONT, Mass., Oct. 27, 2011 /PRNewswire/ -- BSB Bancorp, Inc. (NASDAQ: BLMT) (the "Company") today announced the results for the quarter ended September 30, 2011.
 
The Company was organized by BSB Bancorp, MHC to facilitate its conversion from mutual to stock form of organization, which was completed on October 4, 2011. The results for the third quarter are the results of BSB Bancorp, MHC, the former mutual holding company for Belmont Savings Bank (the "Bank"). In connection with the conversion, the Company issued 8,993,000 shares of common stock which raised approximately $84.3 million of new capital. The Company also contributed $200,000 in cash and 179,860 shares of its common stock to Belmont Savings Bank Foundation, a not-for-profit charitable foundation that the Bank established coincident with the stock offering.
 
For the quarter ended September 30, 2011, the Company reported net income of $295,000, as compared to $906,000 for the third quarter of 2010. Net income for the nine months ended September 30, 2011 and 2010 each totaled $1.6 million. These quarterly results correspond to a return on average assets and average equity of 0.21% and 2.48%, respectively, for the third quarter of 2011 and 0.72% and 8.00%, respectively, for the third quarter of 2010. The 2011 year-to-date results correspond to a return on average assets and average equity of 0.41% and 4.64%, respectively, as compared to 0.44% and 4.94% in 2010, respectively.
 
Robert M. Mahoney, President and Chief Executive Officer, said, "We are pleased with the results of the quarter. Our initiatives to prudently build new commercial and consumer deposit and loan businesses are working as planned. Solid growth was experienced in each of our new strategic business lines. We are equally proud of our community engagement which together with our focus on customer service resulted in the Bank being named Gatehouse Media's #1 choice for community banking in Belmont and winning the Watertown Belmont Chamber of Commerce Business Award."
 
Net interest and dividend income before provision for loan losses for the quarter ended September 30, 2011 increased $915,000 or 27.2% as compared to the quarter ended September 30, 2010. This increase in net interest and dividend income was partially offset by an increase in the provision for loan losses of $353,000, resulting in a $562,000 or 16.5% increase in net interest and dividend income after provision for loan losses. Net interest and dividend income before provision for loan losses for the nine months ended September 30, 2011 increased $1.4 million or 13.4% as compared to the nine months ended September 30, 2010. This increase in net interest and dividend income was partially offset by an increase in the provision for loan losses of $1.3 million.
 
The Company's net interest margin increased to 3.16% for the quarter ended September 30, 2011, from 2.87% for the quarter ended September 30, 2010, an improvement of 29 basis points or 10.10%. For the nine months ended September 30, 2011, the Company's net interest margin increased to 3.08% from 2.93% for the nine months ended September 30, 2010, an improvement of 15 basis points or 5.12%. The margin improvement was the result of shifting asset focus onto higher yielding loans, focusing deposit growth on lower cost core deposits and the replacement of maturing advances with lower cost advances.
 
Non-interest income for the quarter ended September 30, 2011 totaled $438,000 as compared to $1.4 million for the third quarter of 2010. The third quarter of 2010 included $1.0 million in net realized gains on investment securities, as compared to none in the same period of 2011. For the nine months ended September 30, 2011, non-interest income amounted to $4.0 million as compared to $1.4 million for the nine months ended September 30, 2010. This increase was a result of $2.8 million in net realized gains on investment securities as a result of the liquidation of the equity portfolio in the first quarter of 2011, as compared to $377,000 in net realized gains in the same period of 2010.
 
Non-interest expense for the quarter ended September 30, 2011 amounted to $4.0 million as compared to $3.5 million for the third quarter of 2010. Non-interest expense for the nine months ended September 30, 2011 amounted to $11.6 million, an increase of $2.6 million from the same period 2010. These increases were primarily the result of new staff added to execute the Company's commercial and consumer business strategies.
 
At September 30, 2011, assets totaled $688.6 million, an increase of $188.3 million or 37.6% from December 31, 2010. Throughout 2011, we increased our commercial real estate loans, home equity lines of credit, commercial business loans and indirect automobile loans, while attracting favorably priced deposits. As a result of the public offering the Company had $116.1 million in escrow within savings deposits as of September 30, 2011, which was predominately invested in short-term investments at the balance sheet date.
 
During the nine months ended September 30, 2011 the Company experienced loan growth of $104.4 million, or 31.0%, from December 31, 2010 which was primarily the result of significant increases to the commercial real estate portfolio and the indirect auto portfolio, which have increased $36.9 million and $59.0 million, respectively. The Company does not anticipate continuing the rapid pace of growth with the indirect auto portfolio that took place in the first nine months of 2011, as we expect to sell more of the originations going forward. The substantial loan growth was funded through growth in deposits, as well as through investment maturities and the liquidation of the Bank's marketable equities portfolio.
 
At September 30, 2011, deposits totaled $537.3 million, an increase of $190.4 million from December 31, 2010, of which $116.1 million were escrow deposits related to the offering. This strong deposit growth was a result of our new customer-centric, relationship-based, product line coupled with increased marketing and sales efforts. These initiatives have resulted in an increase in customer relationships throughout our franchise. Business checking accounts grew by $9.8 million or 71.2% from December 31, 2010 to September 30, 2011. In addition, consumer checking accounts have increased by $9.4 million, or 22.0%. Savings and money market accounts have also increased $171.1 million since December 31, 2010 (including the $116.1 million in escrow mentioned above), and certificates of deposit increased $92,000 from December 31, 2010. Total borrowed funds decreased by $2.8 million or 2.8% from December 31, 2010 and totaled $97.8 million at September 30, 2011.
 
 
 

 
The allowance for loan losses in total and as a percentage of total loans as of September 30, 2011 equaled $4.0 million and 0.91%, respectively, as compared to $2.9 million and 0.85%, respectively, as of December 31, 2010. The Company recorded a provision for loan losses of $1.5 million in the first nine months of 2011 as compared to $247,000 in the first nine months of 2010. This increase reflected changes in loan volume and composition in each period as well as higher specific allocations established against certain loans in 2011. Additionally, as part of a continuous review and analysis of current market and economic conditions by management, the Company adjusted the reserve ratio applied to certain loan categories in 2011. Although non-performing loans have increased to $4.1 million at September 30, 2011 from $1.7 million at December 31, 2010, $1.8 million of the non-performing loans were paid current and $961,000 were less than 90 days past due as of September 30, 2011.
 
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 and businesses through its four full-service branch offices located in Belmont and Watertown 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 NASD 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, legislative and regulatory changes that adversely affect the businesses in which BSB Bancorp, Inc. is engaged and changes in the securities market. 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.
 
BSB BANCORP, MHC *
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 

 
                             
September 30, 2011
         
December 31, 2010
 
                             
(unaudited)
             
ASSETS
                               
Cash and due from banks
          $ 1,416           $ 3,149  
Federal funds sold
            -             2,525  
Money market mutual funds
            2,493             7,762  
Interest-bearing deposits in other banks
            119,300             7,552  
           
Cash and cash equivalents
            123,209             20,988  
Interest-bearing time deposits with other banks
            119             119  
Investments in available-for-sale securities
            -             14,274  
Investments in held-to-maturity securities (fair value of $91,626 as of
                         
 
September 30, 2011 (unaudited) and $95,761 as of December 31, 2010
          89,851             93,899  
Federal Home Loan Bank stock, at cost
            8,038             8,038  
Loans held-for-sale
            2,663             3,775  
Loans, net of allowance for loan losses of $4,043 as of
                         
 
September 30, 2011 (unaudited) and $2,889 as of December 31, 2010
            441,340             336,936  
Premises and equipment, net
            1,974             1,939  
Accrued interest receivable
            2,060             2,121  
Deferred tax asset, net
            3,188             2,913  
Income taxes receivable
            682             908  
Bank-owned life insurance
            12,296             11,954  
Other assets
            3,216             2,423  
           
Total assets
          $ 688,636           $ 500,287  
                                             
LIABILITIES AND EQUITY
                         
Deposits:
                         
     
Noninterest-bearing
          $ 47,053           $ 30,210  
     
Interest-bearing
            490,208             316,689  
           
Total deposits
            537,261             346,899  
Federal Home Loan Bank advances
            93,000             92,800  
Securities sold under agreements to repurchase
            3,256             2,654  
Other borrowed funds
            1,565             5,199  
Accrued interest payable
            146             223  
Deferred compensation liability
            3,973             3,929  
Other liabilities
            2,146             1,656  
           
Total liabilities
            641,347             453,360  
 
 
 

 
Equity:
                         
     
Retained earnings
            47,288             45,652  
     
Accumulated other comprehensive income
            1             1,275  
           
Total equity
            47,289             46,927  
           
Total liabilities and equity
          $ 688,636           $ 500,287  
                                             
Asset Quality Data:
                         
Total non-performing loans
            4,073             1,707  
Non-performing loans to total loans
            0.92 %           0.50 %
Non-performing assets to total assets
            0.59 %           0.34 %
Allowance for loan losses to non-performing loans
            99.26 %           169.24 %
Allowance for loan losses to total loans
            0.91 %           0.85 %
                                                             
 
 
BSB BANCORP, MHC *
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
 

 
                                   
Three months ended
         
Nine months ended
 
                                   
September 30,
         
September 30,
 
                                      2011             2010             2011             2010  
                                   
(unaudited)
         
(unaudited)
 
Interest and dividend income:
                                                 
     
Interest and fees on loans
          $ 4,912           $ 4,405           $ 14,079           $ 13,714  
     
Interest on debt securities:
                                                 
           
Taxable
            701             716             1,862             2,267  
     
Dividends
            5             65             108             208  
     
Other interest income
            6             3             16             7  
          Total interest and dividend income             5,624             5,189             16,065             16,196  
Interest expense:
                                                 
     
Interest on deposits
            906             951             2,762             2,942  
     
Interest on Federal Home Loan Bank advances
            422             802             1,562             2,768  
     
Interest on securities sold under agreements to repurchase
            3             10             12             27  
     
Interest on other borrowed funds
            12             60             69             178  
            Total interest expense             1,343             1,823             4,405             5,915  
            Net interest and dividend income             4,281             3,366             11,660             10,281  
Provision (benefit) for loan losses
            320             (33 )           1,538             247  
           
Net interest and dividend income after provision  (benefit) for 
loan  losses

  3,961             3,399             10,122             10,034  
Noninterest income:
                                                 
     
Customer service fees
            187             110             437             349  
     
Income from bank-owned life insurance
            115             114             311             353  
     
Net gain on sales of loans
            91             115             308             203  
     
Net gain on sales and calls of securities
            -             -             2,788             -  
     
Net (loss) on trading securities
            -             1,020             -             377  
     
Other income
                  45             77             112             140  
            Total noninterest income             438             1,436             3,956             1,422  
Noninterest expense:
                                                 
     
Salaries and employee benefits
            2,549             2,376             7,374             5,629  
     
Trustee fees
            68             73             227             231  
     
Occupancy expense
            188             180             569             526  
     
Equipment expense
            87             57             248             162  
     
Deposit insurance
            106             140             331             409  
     
Data processing
            248             125             725             697  
     
Professional fees
            182             194             488             451  
     
Marketing
            215             99             697             274  
     
Other expense
            347             212             971             628  
            Total noninterest expense             3,990             3,456             11,630             9,007  
            Income before income tax expense             409             1,379             2,448             2,449  
Income tax expense
                  114             473             812             800  
                      Net income           $ 295           $ 906           $ 1,636           $ 1,649  
                                                                           
Performance Ratios:
                                                 
Return on assets
            0.21 %           0.72 %           0.41 %           0.44 %
Return on equity
            2.48 %           8.00 %           4.64 %           4.94 %
Interest rate spread
            3.00 %           2.71 %           2.91 %           2.77 %
Net interest margin
            3.16 %           2.87 %           3.08 %           2.93 %
Efficiency ratio
            84.55 %           71.97 %           74.47 %           76.96 %
                                                                                                     
* The financial data presented herein is financial data for BSB Bancorp, MHC. BSB Bancorp, Inc. became the holding company for BSB Bancorp, MHC on October 4, 2011.
 
CONTACT: Robert M. Mahoney, President, Chief Executive Officer and Director, +1-617-484-6700, robert.mahoney@belmontsavings.com