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BSB Bancorp, Inc. Reports Fourth Quarter Results 2013

Posted on February 13th, 2014 at 1:00 PM

BELMONT, MA, February 13, 2014 (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 $645,000, or $0.07 per basic and diluted share, for the quarter ended December 31, 2013, compared to net income of

$485,000, or $0.05 per basic and diluted share in the fourth quarter of 2012. For the year ended December 31, 2013, the Company reported net income of $2.0 million, or $0.22 per basic and diluted share, as compared to net income of $1.4 million, or $0.16 per basic and diluted share for the same period in 2012.

Robert M. Mahoney, President and Chief Executive Officer, said, "The bank had a good year. By every measure - revenues, profits, loans and deposits, we enjoyed solid growth. Importantly, credit quality was particularly strong. The environment for customer- focused community banks is very good. We are pleased to have crossed the $1 billion mark during the year-well ahead of our long-term plan."

NET INTEREST AND DIVIDEND INCOME

Net interest and dividend income before provision for loan losses for the quarter ended December 31, 2013 was $7.6 million as compared to $5.9 million for the quarter ended December 31, 2012, a 29.2% increase. The provision for loan losses for the quarter ended December 31, 2013 was $632,000 as compared to a provision for loan losses of $696,000 for the quarter ended December 31, 2012, a 9.2% decrease. This resulted in a $1.8 million or 34.4% increase in net interest and dividend income after provision for loan losses for the quarter ended December 31, 2013 as compared to the quarter ended December 31, 2012. Net interest and dividend income before provision for loan losses for the year ended December 31, 2013 was $26.0 million as compared to $21.7 million for the year ended December 31, 2012, a 19.8% increase. The provision for loan losses for the year ended December 31, 2013 was $1.5 million, as compared to $2.7 million for the year ended December 31, 2012, a 45.3% decrease. This resulted in a $5.5 million or 29.2% increase in net interest and dividend income after provision for loan losses period over period.

NONINTEREST INCOME

Noninterest income for the quarter ended December 31, 2013 was $802,000 as compared to $1.6 million for the quarter ended December 31, 2012, a decrease of $772,000, or 49.1%. This decrease was primarily driven by a decrease in gains on sales of loans of

$957,000, partially offset by an increase in loan servicing fee income and other income of $123,000 and $111,000, respectively. For the twelve months ended December 31, 2013, noninterest income was $3.6 million as compared to $4.7 million for the twelve months ended December 31, 2012. This decrease of $1.1 million, or 23.4%, was primarily driven by a decrease in gains on sales of loans of

$1.5 million, partially offset by an increase in loan servicing fee income of $283,000 and an increase in customer service fees of $108,000.

NONINTEREST EXPENSE

Noninterest expense for the quarter ended December 31, 2013 was $6.8 million as compared to $5.9 million for the quarter ended December 31, 2012.  This increase of $857,000, or 14.4%, was largely driven by an increase in salaries and employee benefits of

$376,000 which included a full quarter’s impact of expense related to the Equity Incentive Plan adopted at the end of 2012. Marketing and data processing expenses also increased by $152,000 and $114,000, respectively, quarter over quarter. Noninterest expense for the year ended December 31, 2013 was $25.1 million as compared to $21.5 million for the year ended December 31, 2012. This increase of $3.5 million, or 16.5% was primarily driven by increases in salaries and employee benefits and director compensation of $1.9 million and $360,000, respectively, both of which had increased primarily as a result of the 2012 Equity Incentive Plan that was adopted in the fourth quarter of 2012. Data processing expenses also increased by $664,000, driven largely by increases in core, online banking and loan servicing costs related to increased loan and deposit volume.

BALANCE SHEET

At December 31, 2013, total assets were $1.1 billion, an increase of $216.5 million or 25.8% from December 31, 2012. Investments in held-to-maturity securities have increased by $55.8 million or 87.2% from December 31, 2012. The Company also experienced net loan growth, excluding loans held for sale, of $184.7 million, or 28.2%, from December 31, 2012. Commercial real estate loans, residential mortgage loans, home equity loans, and indirect auto loans increased by $54.1 million, $85.8 million, $25.5 million and

$19.5 million, respectively. The asset growth was funded by deposits and borrowings from the Federal Home Loan Bank.

At December 31, 2013, deposits totaled $764.8 million, an increase of $156.9 million or 25.8% from December 31, 2012. Core deposits, which we consider to include all deposits other than CD’s and brokered CD’s, increased by $132.0 million from December 31, 2012. Hal R. Tovin, Executive Vice President and Chief Operating Officer, said, “This strong growth was due to the impact of our business banking programs focused on deposit driven businesses as well as the effective cross selling of deposit relationships of new and existing borrowers by our commercial real estate lenders. In addition, this performance reflects the expanding customer base of our two new branches in Newton and Cambridge.”

Total stockholders’ equity decreased by $2.9 million from $133.3 million as of December 31, 2012 to $130.4 million as of December 31, 2013. This decrease is primarily the result of the Stock Repurchase Program that was adopted on December 12, 2012. During the twelve months ended December 31, 2013, the Company purchased 476,622 shares of its common stock for $6.5 million and completed the Stock Repurchase Program. This was partially offset by earnings of $2.0 million and a $1.6 million positive effect on additional paid-in capital related to stock-based compensation.

ASSET QUALITY

The allowance for loan losses in total and as a percentage of total loans as of December 31, 2013 equaled $8.0 million and 0.95%, respectively, as compared to $6.4 million and 0.98%, respectively, as of December 31, 2012. For the year ended December 31, 2013 the Company recorded net recoveries of $20,000 compared to $1.1 million in net charge offs for the year ended December 31, 2012. Total non-performing assets were $4.1 million, or 0.39% of total assets, as of December 31, 2013, as compared to $4.3 million, or 0.52% of total assets, as of December 31, 2012.

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 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, legislative and regulatory changes that adversely affect the businesses in which the Company is engaged, changes in the securities market, and other factors that may be 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.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

December 31, 2013

 

December 31, 2012

(unaudited)

 

 

ASSETS

 

 

 

Cash and due from banks

$                    2,196

 

$                   1,433

Interest-bearing deposits in other banks

35,839

 

51,279

Cash and cash equivalents

38,035

 

52,712

Interest-bearing time deposits with other banks

119

 

119

Investments in available-for-sale securities

21,921

 

22,621

Investments in held-to-maturity securities, at cost

119,776

 

63,984

Federal Home Loan Bank stock, at cost

7,712

 

7,627

Loans held-for-sale

-

 

11,205

Loans, net of allowance for loan losses of $7,958 as of

 

 

 

12/31/2013 (unaudited) and $6,440 as of 12/31/2012

839,013

 

654,295

Premises and equipment, net

3,327

 

2,902

Accrued interest receivable

2,241

 

2,217

Deferred tax asset, net

5,146

 

4,025

Income taxes receivable

-

 

806

Bank-owned life insurance

13,325

 

12,884

Other real estate owned

-

 

661

Other assets

4,004

 

2,024

Total assets

$           1,054,619

 

$               838,082

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:

Noninterest-bearing

$               139,733

 

$               126,760

Interest-bearing

625,020

 

481,105

Total deposits

764,753

 

607,865

Federal Home Loan Bank advances

142,100

 

83,100

Securities sold under agreements to repurchase

2,127

 

3,404

Other borrowed funds

1,113

 

1,156

Accrued interest payable

683

 

455

Deferred compensation liability

5,137

 

4,685

Income taxes payable

178

 

-

Other liabilities

8,107

 

4,109

Total liabilities

924,198

 

704,774

 

Stockholders' Equity:

 

 

 

Common stock

91

 

95

Additional paid-in capital

85,449

 

90,188

Retained earnings

49,312

 

47,352

Accumulated other comprehensive (loss) income

(188)

 

68

Unearned compensation - ESOP

(4,243)

 

(4,395)

Total stockholders' equity

130,421

 

133,308

Total liabilities and stockholders' equity

$           1,054,619

 

$               838,082

 

Asset Quality Data:

 

 

Total non-performing assets

4,115

4,325

Total non-performing loans

4,115

3,621

Non-performing loans to total loans

0.49%

0.55%

Non-performing assets to total assets

0.39%

0.52%

Allowance for loan losses to non-performing loans

193.39%

177.86%

Allowance for loan losses to total loans

0.95%

0.98%

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

Three months ended December 31,

Twelve months ended December 31,

2013                   2012                    2013                    2012

 

(unaudited)                       (unaudited)

Interest and dividend income:

 

Interest  and fees on loans

$        7,982

 

$        6,537

 

$      28,407

 

$      24,568

Interest  on taxable debt securities

865

 

584

 

2,455

 

2,124

Dividends

7

 

9

 

28

 

47

Other interest income

21

 

13

 

82

 

85

Total interest  and dividend income

8,875

 

7,143

 

30,972

 

26,824

Interest expense:

 

 

 

 

 

 

 

Interest  on deposits

1,103

 

1,076

 

4,215

 

4,125

Interest on Federal Home Loan Bank  advances

204

 

204

 

735

 

958

Interest  on securities sold under agreements to repurchase

1

 

1

 

4

 

8

Interest on other borrowed funds

8

 

10

 

33

 

42

Total interest expense

1,316

 

1,291

 

4,987

 

5,133

Net interest and dividend  income

7,559

 

5,852

 

25,985

 

21,691

Provision for loan losses

632

 

696

 

1,498

 

2,736

Net  interest  and dividend income after provision for loan losses                                                                                             

6,927                  5,156                24,487                 18,955 Noninterest income:

Customer  service fees

228

 

217

 

938

 

830

Income from bank-owned life  insurance

122

 

123

 

435

 

439

Net gain on sales of loans

56

 

1,013

 

1,024

 

2,520

Net gain on sales and calls of  securities

-

 

59

 

34

 

59

Loan servicing fee income

260

 

137

 

750

 

467

Other income

136

 

25

 

425

 

390

Total noninterest income

802

 

1,574

 

3,606

 

4,705

Noninterest expense:

 

 

 

 

 

 

 

Salaries and employee benefits

4,086

 

3,710

 

15,207

 

13,305

Director compensation

195

 

174

 

889

 

529

Occupancy expense

266

 

215

 

951

 

801

Equipment expense

196

 

131

 

650

 

450

Deposit insurance

145

 

134

 

575

 

500

Data processing

738

 

624

 

2,777

 

2,113

Professional fees

307

 

305

 

929

 

1,036

Marketing

337

 

185

 

999

 

928

Other expense

527

 

462

 

2,114

 

1,884

Total noninterest expense

6,797

 

5,940

 

25,091

 

21,546

Income before income tax expense

932

 

790

 

3,002

 

2,114

Income tax expense

287

 

305

 

1,042

 

713

Net income

$           645

 

$           485

 

$        1,960

 

$        1,401

Earnings per share

 

 

 

 

 

 

 

Basic

$          0.07

 

$          0.05

 

$          0.22

 

$          0.16

Diluted

$          0.07

 

$          0.05

 

$          0.22

 

$          0.16

Return on average  assets

0.25%

 

0.23%

 

0.21%

 

0.19%

Return on average  equity

2.00%

 

1.46%

 

1.51%

 

1.06%

Interest  rate spread

2.81%

 

2.62%

 

2.69%

 

2.68%

Net  interest margin

2.98%

 

2.90%

 

2.90%

 

2.96%

Efficiency ratio

81.28%

 

79.99%

 

84.79%

 

81.62%

 

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