NEWPORT, NH--(Marketwired - Jul 22, 2015) - Lake Sunapee Bank Group ("we," "us," "our" or the "Company") (
"We were pleased with our second quarter performance, particularly with mortgage banking activities and the continued growth in our wealth management revenue," President and Chief Executive Officer, Steve Theroux, commented. "In addition, nonperforming assets continue to stabilize as the local economy slowly recovers. Subsequent to the close of the quarter, we were pleased to announce an increase to our quarterly dividend. Perhaps most notable to the investor, in May, our stockholders approved our name change to Lake Sunapee Bank Group which reflects our continuing efforts to enhance our brand and tradition of providing exceptional financial products across a broad spectrum of consumer needs and against an expanding market place."
Year-to-Date Highlights
Highlights of the six months ended June 30, 2015 include:
- Net income available to common stockholders increased 7.12% compared to the same period in 2014.
- Return on average common equity of 7.08% and return on average assets of 0.64%.
- Book value per common share increased 1.13% to $16.15 as of June 30, 2015.
- Loans decreased $11.7 million, or 0.97%, to $1.2 billion as of June 30, 2015.
- Loans totaling $169.2 million were originated.
- Our loan servicing portfolio increased $19.9 million to $431.5 million.
- Net loan charge-offs were $723 thousand, or 0.12% (annualized) of average loans, for the six months ended June 30, 2015.
- As a percentage of total loans, nonperforming loans were 0.59%.
- Net interest margin was 2.96%.
- Noninterest income increased 3.05% to $9.8 million compared to the same period in 2014.
Second Quarter Highlights
Highlights of the three months ended June 30, 2015 (as compared to the prior quarter end and quarter to date) include:
- Net income available to common stockholders increased 5.08% compared to the previous quarter.
- Total assets increased $24.4 million, or 1.64%, to $1.5 billion.
- Loans increased $2.5 million, or 0.21%, to $1.2 billion.
- Loans totaling $109.0 million were originated.
- Our loan servicing portfolio increased $12.8 million to $431.5 million.
- Net loan charge-offs were $347 thousand, or 0.12% (annualized) of average loans, for the quarter ended June 30, 2015.
- Deposits increased $17.5 million, or 1.55%, to $1.1 billion.
- Return on average common equity of 7.15% and return on average assets of 0.65%.
- Noninterest income increased 6.45% to $5.1 million.
Earnings Summary for the Three and Six Months Ended June 30, 2015
The net income available to common stockholders for the three months ended June 30, 2015 increased $116 thousand, or 5.08%, compared to the first quarter of 2015. The increase in net income available to common stockholders resulted from an increase of $307 thousand, or 6.45%, in noninterest income offset, in part, by a decrease of $77 thousand, or 0.77%, in net interest income after provision for loan losses and an increase of $104 thousand, or 0.91%, in other noninterest expenses.
The net income available to common stockholders for the six months ended June 30, 2015 increased $311 thousand, or 7.12%, compared to the same period in 2014. The increase in net income available to common stockholders resulted from an increase of $236 thousand, or 5.26%, in net income offset by a decrease of $75 thousand, or 65.22%, in preferred stock dividends which are excluded from net income available to common stockholders.
Net Interest Income and Margin
Net interest and dividend income for the quarter ended June 30, 2015 decreased $67 thousand, or 0.65%, compared to the first quarter of 2015, primarily driven by a lower yield on the loans during the period. Interest and dividend income decreased $173 thousand, or 1.43%, to $11.9 million for the quarter ended June 30, 2015 compared to the quarter ended March 31, 2015, which included a decrease of $109 thousand, or 0.94%, in interest and fees on loans. Interest expense decreased $106 thousand, or 5.81%, including a decrease of $75 thousand in interest on deposits.
For the quarter ended June 30, 2015, our net interest margin decreased to 2.95% compared to 2.99% for the quarter ended March 31, 2015 due primarily to a decrease in the average yield on loans. The average cost of deposits for the second quarter of 2015 was 0.37% compared to 0.39% for the first quarter of 2015.
The average cost of funds for the quarter ended June 30, 2015 was 0.54% compared to 0.57% for the quarter ended March 31, 2015.
Net interest and dividend income for the six months ended June 30, 2015 decreased $518 thousand, or 2.48%, compared to the same period in 2014, primarily driven by the additional interest expense related to the issuance of subordinated debt in the fourth quarter of 2014. Interest and dividend income decreased $199 thousand, or 0.82%, to $23.9 million for the six months ended June 30, 2015 compared to the same period in 2014, which included an increase of $86 thousand, or 0.37%, in interest and fees on loans and decreases of $149 thousand and $150 thousand in interest on debt securities and other interest income, respectively. Interest expense increased $319 thousand, or 9.90%, which included a decrease of $113 thousand, or 5.21%, in interest on deposits and an increase of $432 thousand, or 41.06%, in interest on advances and other borrowed money which includes the subordinated debt expense.
For the six months ended June 30, 2015, our net interest margin decreased to 2.96% compared to 3.14% for the same period in 2014. The average yield on interest-earning assets for the six months ended June 30, 2015 was 3.48% compared to 3.63% for the same period in 2014. The average cost of deposits for the six months ended June 30, 2015 was 0.35% compared to 0.41% for the same period in 2014. The average cost of funds for the six months ended June 30, 2015 was 0.51% compared to 0.52% for the same period in 2014.
Provision for Loan Losses
During the second quarter of 2015, we recognized an increase of $10 thousand in the provision for loan losses compared to the first quarter of 2015. Net loan charge-offs were $347 thousand, or 0.12% (annualized) of average loans, for the second quarter of 2015, compared to net loan charge-offs of $376 thousand, or 0.12% (annualized) of average loans, for the first quarter of 2015.
During the six months ended June 30, 2015, we recognized provision for loan losses of $419 thousand compared to $709 thousand for the same period in 2014. Net loan charge-offs were $723 thousand, or 0.12% (annualized) of average loans, for the six months ended June 30, 2015.
Noninterest Income
Noninterest income for the second quarter of 2015 was $5.1 million, an increase of $307 thousand, or 6.45%, compared to the first quarter of 2015. The increase was primarily due to increases of $76 thousand in customer service fees, $425 thousand in mortgage banking activity income, $159 thousand in trust and investment management fees, and $231 thousand in other income which represents distributions from limited partnership investments and periodic changes in the fair value of derivative loan commitments and forward loan sales commitments, partially offset by decreases of $372 thousand in gains on sales and calls of securities and $227 thousand in insurance commissions due, in part, to receipt of $135 thousand of contingency commissions during the previous quarter.
Noninterest income for the six month period ended June 30, 2015 was $9.8 million, an increase of $291 thousand, or 3.05%, compared to the same period in 2014. The increase was primarily due to increases of $381 thousand in mortgage banking activity income, $119 thousand in trust and investment management fees, and $206 thousand in other income which represents distributions from limited partnership investments and periodic changes in the fair value of derivative loan commitments and forward loan sales commitments, partially offset by decreases of $117 thousand in customer service fees, $70 thousand in gains on sales and calls of securities, and $198 thousand in net gain on other real estate and property owned, compared to the same period in 2014.
Noninterest Expense
Noninterest expense for the second quarter of 2015 increased $104 thousand, or 0.91%, compared to the first quarter of 2015. The increase included increases of $97 thousand in advertising and promotion expense, $95 thousand in professional services, and $53 thousand in supplies, partially offset by decreases of $58 thousand in salaries and employee benefits, and $92 thousand in occupancy expense due to the prior quarter including seasonal increases for snow removal and heating fuel.
Noninterest expense for the six month period ended June 30, 2015 decreased $427 thousand, or 1.83%, compared to the same period in 2014. The decrease included decreases of $93 thousand in salaries and employee benefits, $67 thousand in depositors' insurance, $88 thousand in outside services, $60 thousand in professional services, $25 thousand in supplies, $26 thousand in telephone expenses, and $93 thousand in amortization of intangible assets, partially offset by increases of $19 thousand in occupancy expense and $15 thousand in advertising and promotion expense.
Income Tax Provision
Income tax expense for the second quarter of 2015 increased $11 thousand, or 1.03%, to $1.1 million compared to the first quarter of 2015 primarily due to the increase in taxable income during the second quarter. Our effective tax rate was 30.86% for the quarter ended June 30, 2015.
Income tax expense for the six months ended June 30, 2015 increased $254 thousand to $2.1 million compared to the same period in 2014 primarily due to the increase in taxable income between comparative periods. Our effective tax rate was 31.26% for the six month period ended June 30, 2015.
Loans and Credit Quality
During the second quarter of 2015, loans increased $2.5 million, or 0.21%, to $1.2 billion at June 30, 2015 compared to March 31, 2015. The second quarter increase reflects increases of $3.2 million in construction and land loans, $5.5 million in commercial and industrial loans, and $462 thousand in home equity loans, partially offset by decreases of $5.4 million in commercial real estate and land loans, $1.3 million in conventional real estate loans, and $413 thousand in consumer loans.
During the six months ended June 30, 2015, loans decreased $11.7 million, or 0.97%, compared to December 31, 2014. The year-to-date decrease reflects decreases of $11.5 million in conventional real estate loans, $5.9 million in commercial real estate loans, and $1.2 million in consumer loans, partially offset by an increase of $6.7 million in construction and land loans.
At June 30, 2015, nonperforming loans totaled $7.0 million, or 0.59% of total loans, compared to $6.8 million, or 0.57% of total loans, at March 31, 2015. The allowance for loan losses to nonperforming loans at June 30, 2015 was 126.50% compared to 132.62% at March 31, 2015 and 119.74% at December 31, 2014.
Deposits and Funding
Deposits increased $17.5 million, or 1.55%, to $1.1 billion at June 30, 2015 compared to March 31, 2015. While there was a shift of deposits from maturity to non-maturity deposits, the second quarter increase was primarily due to the addition of $20.0 million in short-term brokered deposits. Our noninterest-bearing deposits increased $11.4 million, or 10.47%, and interest-bearing deposits increased $6.1 million, or 0.60%, comparing balances at June 30, 2015 to balances at March 31, 2015.
Deposits decreased $4.0 million, or 0.34%, compared to December 31, 2014. Our interest-bearing deposits increased $2.3 million, or 1.95%, and noninterest-bearing deposits decreased $6.3 million, or 0.60%, including a decrease of $19.8 million in time deposits, comparing balances at June 30, 2015 to balances at December 31, 2014.
Quarterly Dividend
On July 9, 2015, the Company declared a regular quarterly cash dividend of $0.14 per share payable July 31, 2015 to stockholders of record as of July 24, 2015. This dividend represents an increase of 7.69% compared to the previous dividend declared.
About Lake Sunapee Bank Group
Lake Sunapee Bank Group is the holding company of Lake Sunapee Bank, fsb, a federally chartered savings bank that provides a wide range of life-cycle banking and financial services. Lake Sunapee Bank has four wholly owned subsidiaries: Lake Sunapee Financial Services Corp.; Lake Sunapee Group, Inc., which owns and maintains all buildings and investment properties; McCrillis & Eldredge Insurance, Inc., a full-line independent insurance agency; and Charter Holding Corp., which wholly owns Charter Trust Company, a trust services and wealth management company. Lake Sunapee Bank Group, through its direct and indirect subsidiaries, operates 30 offices in New Hampshire in Grafton, Hillsborough, Merrimack and Sullivan counties and 16 offices in Vermont in Orange, Rutland and Windsor counties.
Forward-Looking Statements
The Company wishes to caution readers not to place undue reliance on any such forward-looking statements contained in this press release, which speak only as of the date made. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors discussed under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014, and in subsequent filings with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release represent our views as of the date of this release. The Company and the Bank do not undertake and specifically decline any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
| Lake Sunapee Bank Group | |||||||||||||||||
| Selected Financial Highlights | |||||||||||||||||
| Three Months Ended June 30, |
Six Months Ended June 30, |
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| (Dollars in thousands except for per share data) | 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net Income | $ | 2,418 | $ | 2,342 | $ | 4,721 | $ | 4,485 | |||||||||
| Per Common Share Data: | |||||||||||||||||
| Basic Earnings | 0.29 | 0.28 | 0.57 | 0.53 | |||||||||||||
| Diluted Earnings (1) | 0.29 | 0.28 | 0.56 | 0.53 | |||||||||||||
| Dividends Paid | 0.13 | 0.13 | 0.26 | 0.26 | |||||||||||||
| Dividend Payout Ratio | 44.83 | % | 46.43 | % | 46.43 | % | 49.06 | % | |||||||||
| As of | |||||||
| (Dollars in thousands except for per share data) | June 30, 2015 | December 31, 2014 | |||||
| Total Assets | $ | 1,511,504 | $ | 1,503,786 | |||
| Total Securities (2) | 130,107 | 126,460 | |||||
| Loans, Net | 1,195,165 | 1,206,845 | |||||
| Total Deposits | 1,148,755 | 1,152,714 | |||||
| Federal Home Loan Bank Advances | 145,996 | 140,992 | |||||
| Stockholders' Equity | 142,755 | 139,836 | |||||
| Book Value per Common Share | $ | 16.15 | $ | 15.97 | |||
| Common Shares Outstanding | 8,344,389 | 8,258,031 | |||||
| Bank Leverage (Tier I) Capital | 9.27% | 8.43% | |||||
| Number of Offices: | |||||||
| Banking Offices | 36 | 36 | |||||
| Insurance Offices | 3 | 3 | |||||
| Trust Offices | 7 | 7 | |||||
| (1) | Diluted earnings per share are calculated using the weighted-average number of shares outstanding for the period, including common stock equivalents, as appropriate. | ||
| (2) | Includes available-for-sale securities shown at fair value and Federal Home Loan Bank stock at cost. | ||
| Lake Sunapee Bank Group | |||||||||||
| Consolidated Balance Sheets | |||||||||||
| June 30, | December 31, | ||||||||||
| (Dollars in thousands, except per share data) | 2015 | 2014 | |||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Cash and due from banks | $ | 32,931 | $ | 24,957 | |||||||
| Overnight deposits | 32,260 | 26,163 | |||||||||
| Cash and cash equivalents | 65,191 | 51,120 | |||||||||
| Interest-bearing time deposits with other banks | - | 747 | |||||||||
| Securities available-for-sale | 119,345 | 115,698 | |||||||||
| Federal Home Loan Bank stock | 10,762 | 10,762 | |||||||||
| Loans held-for-sale | 3,257 | 2,000 | |||||||||
| Loans receivable, net of allowance for loan losses of $9.0 million as of June 30, 2015 and $9.3 million as of December 31, 2014 | 1,195,165 | 1,206,845 | |||||||||
| Accrued interest receivable | 3,253 | 2,576 | |||||||||
| Bank premises and equipment, net | 24,663 | 24,391 | |||||||||
| Investments in real estate | 3,463 | 3,533 | |||||||||
| Other real estate owned | 660 | 251 | |||||||||
| Goodwill | 44,576 | 44,576 | |||||||||
| Other intangible assets | 8,556 | 9,332 | |||||||||
| Bank-owned life insurance | 20,503 | 20,187 | |||||||||
| Other assets | 12,110 | 11,768 | |||||||||
| Total assets | $ | 1,511,504 | $ | 1,503,786 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| LIABILITIES | |||||||||||
| Deposits: | |||||||||||
| Noninterest-bearing | $ | 120,186 | $ | 117,889 | |||||||
| Interest-bearing | 1,028,569 | 1,034,825 | |||||||||
| Total deposits | 1,148,755 | 1,152,714 | |||||||||
| Federal Home Loan Bank advances | 145,996 | 140,992 | |||||||||
| Securities sold under agreements to repurchase | 19,546 | 16,756 | |||||||||
| Subordinated debentures | 37,620 | 37,620 | |||||||||
| Accrued expenses and other liabilities | 16,832 | 15,868 | |||||||||
| Total liabilities | 1,368,749 | 1,363,950 | |||||||||
| STOCKHOLDERS' EQUITY | |||||||||||
| Preferred stock, $.01 par value per share: 2,500,000 shares authorized, non-cumulative perpetual Series B; 8,000 shares issued and outstanding at June 30, 2015 and December 31, 2014; liquidation value $1,000 per share | -- | -- | |||||||||
| Common stock, $.01 par value per share: 30,000,000 shares authorized, 8,778,718 shares issued, and 8,344,389 shares outstanding at June 30, 2015 and 10,000,000 shares authorized, 8,692,360 shares issued, and 8,258,031 shares outstanding at December 31, 2014 | 88 | 87 | |||||||||
| Paid-in capital | 87,838 | 86,561 | |||||||||
| Retained earnings | 66,408 | 63,876 | |||||||||
| Unearned restricted stock awards | (1,421 | ) | (598 | ) | |||||||
| Accumulated other comprehensive loss | (3,407 | ) | (3,339 | ) | |||||||
| Treasury stock, 434,329 shares as of June 30, 2015 and December 31, 2014, at cost | (6,751 | ) | (6,751 | ) | |||||||
| Total stockholders' equity | 142,755 | 139,836 | |||||||||
| Total liabilities and stockholders' equity | $ | 1,511,504 | $ | 1,503,786 | |||||||
| Lake Sunapee Bank Group | |||||||||||||||
| Consolidated Statements of Income (unaudited) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | June 30, | June 30, | ||||||||||||
| (In thousands, except share and per share data) | 2015 | 2014 | 2015 | 2014 | |||||||||||
| Interest and dividend income | |||||||||||||||
| Interest and fees on loans | $ | 11,481 | $ | 11,635 | $ | 23,071 | $ | 22,985 | |||||||
| Interest on debt securities: | |||||||||||||||
| Taxable | 258 | 395 | 571 | 720 | |||||||||||
| Dividends | 47 | 46 | 95 | 81 | |||||||||||
| Other | 97 | 181 | 202 | 352 | |||||||||||
| Total interest and dividend income | 11,883 | 12,257 | 23,939 | 24,138 | |||||||||||
| Interest expense | |||||||||||||||
| Interest on deposits | 991 | 1,068 | 2,057 | 2,170 | |||||||||||
| Interest on advances and other borrowed money | 726 | 526 | 1,484 | 1,052 | |||||||||||
| Total interest expense | 1,717 | 1,594 | 3,541 | 3,222 | |||||||||||
| Net interest and dividend income | 10,166 | 10,663 | 20,398 | 20,916 | |||||||||||
| Provision for loan losses | 215 | 709 | 419 | 709 | |||||||||||
| Net interest and dividend income after provision for loan losses | 9,951 | 9,954 | 19,979 | 20,207 | |||||||||||
| Noninterest income | |||||||||||||||
| Customer service fees | 1,454 | 1,511 | 2,828 | 2,945 | |||||||||||
| Gain on sales and calls of securities, net | 1 | 435 | 373 | 443 | |||||||||||
| Mortgage banking activities | 553 | 172 | 681 | 303 | |||||||||||
| Net gain (loss) on sales of other real estate and property owned | - | 197 | (3 | ) | 195 | ||||||||||
| Net gain on sales of premises and equipment | 3 | 10 | 3 | 12 | |||||||||||
| Rental income | 168 | 172 | 337 | 347 | |||||||||||
| Trust and investment management fee income | 2,202 | 2,072 | 4,246 | 4,127 | |||||||||||
| Insurance and brokerage service income | 296 | 318 | 819 | 802 | |||||||||||
| Bank-owned life insurance income | 152 | 153 | 298 | 302 | |||||||||||
| Other income | 235 | 29 | 238 | 53 | |||||||||||
| Total noninterest income | 5,064 | 5,069 | 9,820 | 9,529 | |||||||||||
| Noninterest expense | |||||||||||||||
| Salaries and employee benefits | 5,975 | 6,095 | 12,010 | 12,103 | |||||||||||
| Occupancy and equipment | 1,533 | 1,524 | 3,214 | 3,195 | |||||||||||
| Advertising and promotion | 271 | 276 | 440 | 425 | |||||||||||
| Depositors' insurance | 236 | 270 | 474 | 541 | |||||||||||
| Outside services | 591 | 619 | 1,183 | 1,271 | |||||||||||
| Professional services | 377 | 447 | 659 | 719 | |||||||||||
| ATM processing fees | 231 | 199 | 419 | 420 | |||||||||||
| Supplies | 163 | 134 | 273 | 298 | |||||||||||
| Telephone | 271 | 271 | 540 | 566 | |||||||||||
| Amortization of intangible assets | 386 | 434 | 776 | 869 | |||||||||||
| Other expenses | 1,484 | 1,418 | 2,943 | 2,951 | |||||||||||
| Total noninterest expense | 11,518 | 11,687 | 22,931 | 23,358 | |||||||||||
| Income before provision for income taxes | 3,497 | 3,336 | 6,868 | 6,378 | |||||||||||
| Provision for income taxes | 1,079 | 994 | 2,147 | 1,893 | |||||||||||
| Net income | $ | 2,418 | $ | 2,342 | $ | 4,721 | $ | 4,485 | |||||||
| Net income available to common stockholders | $ | 2,398 | $ | 2,284 | $ | 4,681 | $ | 4,370 | |||||||
| Earnings per common share, basic | $ | 0.29 | $ | 0.28 | $ | 0.57 | $ | 0.53 | |||||||
| Weighted average number of shares, basic | 8,285,521 | 8,228,090 | 8,273,519 | 8,223,304 | |||||||||||
| Earnings per common share, assuming dilution | $ | 0.29 | $ | 0.28 | $ | 0.56 | $ | 0.53 | |||||||
| Weighted average number of shares, assuming dilution | 8,298,584 | 8,239,501 | 8,287,204 | 8,235,080 | |||||||||||
| Dividends declared per common share | $ | 0.13 | $ | 0.13 | $ | 0.26 | $ | 0.26 | |||||||
Contact Information:
For additional information contact:
Laura Jacobi
Executive Vice President
Chief Financial Officer
603-863-0886