NEWPORT, NH--(Marketwired - Apr 19, 2016) - Lake Sunapee Bank Group ("we," "us," "our" or the "Company") (
"During the quarter, we employed our strong capital position to implement an investment strategy to strengthen earnings," President and Chief Executive Officer, Steve Theroux, commented. "The overall increase in earnings was driven by net interest income, continued strong performance from our Trust and Insurance Agency subsidiaries, and expense management."
First Quarter Highlights
Highlights of the first quarter of 2016 include:
- Net income was $2.5 million, or $0.29 per diluted common share.
- Return on average common stockholders' equity was 7.12% and return on average assets was 0.64%.
- Common Equity Tier 1 capital remained strong at 9.46%.
- Total assets increased $45.4 million, or 2.99%, to $1.6 billion.
- Loans decreased $5.3 million, or 0.43%, to $1.2 billion.
- Loans totaling $60.3 million were originated.
- As a percentage of total loans, non-performing loans decreased to 0.45%.
- Net loan charge-offs were $304 thousand, or 0.10% (annualized), of average loans.
- Deposits decreased $15.9 million, or 1.37%, to $1.1 billion.
- Book value per common share increased 1.96% to $16.66.
Earnings Summary
Net income increased $308 thousand, or 14.25%, compared to the fourth quarter of 2015. The increase in net income for the quarter ended March 31, 2016 compared to the quarter ended December 31, 2015 resulted from increases of $139 thousand, or 1.33%, in net interest income, $144 thousand, or 3.25%, in noninterest income, and a decrease of $505 thousand in provision for loan losses, offset, in part, by an increase of $475 thousand, or 86.84%, in provision for income taxes due to significant tax credits recorded in the fourth quarter of 2015.
Net Interest Income and Margin
Net interest and dividend income for the quarter ended March 31, 2016 increased $139 thousand, or 1.33%, compared to the fourth quarter of 2015, primarily driven by the increase in securities during the period. Interest and dividend income increased $309 thousand, or 2.55%, to $12.4 million for the quarter ended March 31, 2016 compared to the quarter ended December 31, 2015, which included an increase of $335 thousand, or 90.54%, in interest income on taxable debt securities and a decrease of $32 thousand, or 0.28%, in interest and fees on loans. Interest expense increased $170 thousand, or 10.07%, reflecting an increase in interest on advances and other borrowed money of $144 thousand, or 51.25%, as we increased advances by $50.4 million during the first quarter of 2016 to fund investment activity and deposit outflow.
For the quarter ended March 31, 2016, our net interest margin decreased to 2.99% compared to 3.07% for the quarter ended December 31, 2015. The average cost of deposits for the first quarter of 2016 was 0.34% compared to 0.33% for the fourth quarter of 2015. The average cost of funds for the quarter ended March 31, 2016 was 0.55% compared to 0.52% for the quarter ended December 31, 2015.
Provision for Loan Losses
We recognized a decrease of $505 thousand in the provision for loan losses compared to the fourth quarter of 2015. Net loan charge-offs were $304 thousand, or 0.10% (annualized) of average loans for the quarter ended March 31, 2016 compared to net loan charge-offs of $304 thousand, or 0.11% (annualized) of average loans for the fourth quarter of 2015.
Noninterest Income
Noninterest income for the first quarter of 2016 was $4.6 million, an increase of $144 thousand, or 3.25%, compared to the fourth quarter of 2015. The increase was primarily due to increases of $249 thousand in insurance commissions due, in part, to receipt of $171 thousand of contingency commissions during the first quarter of 2016, $71 thousand in bank-owned life insurance income, and $90 thousand in other income which includes a distribution of $86 thousand in a limited partnership, partially offset by decreases of $78 thousand in customer service fees, $179 thousand in mortgage banking activities due primarily to the recognition of $124 thousand of periodic impairment and a lower volume of sales consistent with first quarter expectations, and $78 thousand in trust and management fees. Additionally, there were no losses on sales and calls of securities and no losses on sales and disposals of premises and equipment during the first quarter of 2016 compared to $26 thousand and $84 thousand, respectively, during the fourth quarter of 2015.
Noninterest Expense
Noninterest expense for the first quarter of 2016 increased $5 thousand, or 0.04%, compared to the fourth quarter of 2015. The increase included increases of $147 thousand in salaries and employee benefits driven by higher health insurance expenses and FICA expenses during the first quarter of 2016, $22 thousand in ATM processing fees, and $22 thousand in supplies, partially offset by decreases of $23 thousand in occupancy expense, $44 thousand in advertising and promotion, $42 thousand in outside services, $56 thousand in professional services, and $26 thousand for other expenses.
Income Tax Provision
Income tax expense for the first quarter of 2016 increased $475 thousand to $1.0 million compared to the fourth quarter of 2015 primarily due to the recognition of tax benefits during the fourth quarter of 2015. Our effective tax rate was 29.27% for the quarter ended March 31, 2016.
Loans and Credit Quality
Loans decreased $5.3 million, or 0.43%, to $1.2 billion at March 31, 2016 compared to $1.2 billion at December 31, 2015. The decrease reflects increases of $2.2 million in conventional real estate mortgage loans and $10.9 million in commercial real estate mortgage loans, offset by decreases of $13.4 million in construction and land loans, and $4.7 million in commercial and industrial loans. We originated $60.3 million in loans during the first quarter of 2016 while $11.2 million were sold to the secondary market, and $31.7 million were paid off with the remaining change in net loans due to normal amortization and fluctuations in the outstanding balances in line of credits.
At March 31, 2016, nonperforming loans totaled $5.5 million, or 0.45%, of total loans compared to $6.0 million, or 0.49%, of total loans at December 31, 2015. The allowance for loan losses to nonperforming loans at March 31, 2016 was 158.42% compared to 147.51% at December 31, 2015.
Deposits and Funding
Deposits decreased $15.9 million, or 1.37%, to $1.1 billion at March 31, 2016 compared to December 31, 2015. The historically consistent first quarter decrease was primarily due to decreases of $37.7 million in nonmaturity accounts, partially offset by an increase of $21.8 million in time deposits. Our noninterest-bearing deposits decreased $5.6 million, or 4.36%, and interest-bearing deposits decreased $10.3 million, or 1.00%, comparing balances at March 31, 2016 to balances at December 31, 2015.
Quarterly Dividend
On April 12, 2016, the Company declared a regular quarterly cash dividend of $0.14 per share payable April 29, 2016 to stockholders of record as of April 22, 2016.
Annual Meeting
The 2016 Annual Meeting of Stockholders will be held on May 12, 2016 at the Lake Sunapee Bank Building, 1868 Room, 9 Main Street, Newport, New Hampshire at 10:00 a.m.
About Lake Sunapee Bank Group
Lake Sunapee Bank Group is the holding company of Lake Sunapee Bank, 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 15 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, 2015, 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 March 31, |
|||||||||
| (Dollars in thousands except for per share data) | 2016 | 2015 | |||||||
| Net Income | $ | 2,469 | $ | 2,303 | |||||
| Per Common Share Data: | |||||||||
| Basic Earnings | 0.29 | 0.28 | |||||||
| Diluted Earnings (1) | 0.29 | 0.28 | |||||||
| Dividends Paid | 0.14 | 0.13 | |||||||
| Dividend Payout Ratio | 48.28 | % | 46.43 | % | |||||
| As of | |||||||||
| (Dollars in thousands except for per share data) | March 31, 2016 | December 31, 2015 | |||||||
| Total Assets | $ | 1,563,960 | $ | 1,518,521 | |||||
| Total Securities (2) | 182,493 | 130,161 | |||||||
| Loans, Net | 1,212,187 | 1,217,461 | |||||||
| Total Deposits | 1,141,486 | 1,157,352 | |||||||
| Federal Home Loan Bank Advances | 203,350 | 150,000 | |||||||
| Stockholders' Equity | 139,681 | 136,708 | |||||||
| Book Value per Common Share | $ | 16.66 | $ | 16.31 | |||||
| Common Shares Outstanding | 8,381,713 | 8,376,841 | |||||||
| Leverage (Tier I) Capital | 8.72 | % | 9.02 | % | |||||
| Number of Offices: | |||||||||
| Banking Offices | 35 | 34 | |||||||
| 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 | |||||||||||
| March 31, | December 31, | ||||||||||
| (Dollars in thousands, except per share data) | 2016 | 2015 | |||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Cash and due from banks | $ | 17,760 | $ | 16,426 | |||||||
| Overnight deposits | 20,907 | 26,140 | |||||||||
| Cash and cash equivalents | 38,667 | 42,566 | |||||||||
| Securities available-for-sale | 170,290 | 120,198 | |||||||||
| Federal Home Loan Bank stock | 12,203 | 9,963 | |||||||||
| Loans held-for-sale | 1,244 | 2,188 | |||||||||
| Loans receivable, net of allowance for loan losses of $8.7 million as of March 31, 2016 and $8.9 million as of December 31, 2015 | 1,212,187 | 1,217,461 | |||||||||
| Accrued interest receivable | 3,664 | 2,431 | |||||||||
| Bank premises and equipment, net | 24,870 | 24,421 | |||||||||
| Investments in real estate | 3,355 | 3,392 | |||||||||
| Other real estate owned | 799 | 904 | |||||||||
| Goodwill | 44,576 | 44,576 | |||||||||
| Other intangible assets | 7,476 | 7,822 | |||||||||
| Bank-owned life insurance | 31,061 | 30,833 | |||||||||
| Other assets | 13,568 | 11,766 | |||||||||
| Total assets | $ | 1,563,960 | $ | 1,518,521 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| LIABILITIES | |||||||||||
| Deposits: | |||||||||||
| Noninterest-bearing | $ | 121,870 | $ | 127,428 | |||||||
| Interest-bearing | 1,019,616 | 1,029,924 | |||||||||
| Total deposits | 1,141,486 | 1,157,352 | |||||||||
| Federal Home Loan Bank advances | 203,350 | 150,000 | |||||||||
| Securities sold under agreements to repurchase | 20,259 | 17,957 | |||||||||
| Subordinated debentures | 37,620 | 37,620 | |||||||||
| Accrued expenses and other liabilities | 21,564 | 18,884 | |||||||||
| Total liabilities | 1,424,279 | 1,381,813 | |||||||||
| STOCKHOLDERS' EQUITY | |||||||||||
| Common stock, $.01 par value per share: 30,000,000 shares authorized, 8,816,042 shares issued, and 8,381,713 shares outstanding at March 31, 2016 and 30,000,000 shares authorized, 8,811,170 shares issued, and 8,376,841 shares outstanding at December 31, 2015 | 88 | 88 | |||||||||
| Paid-in capital | 80,316 | 80,252 | |||||||||
| Retained earnings | 69,640 | 68,344 | |||||||||
| Unearned restricted stock awards | (1,363 | ) | (1,375 | ) | |||||||
| Accumulated other comprehensive loss | (2,249 | ) | (3,850 | ) | |||||||
| Treasury stock, 434,329 shares as of March 31, 2016 and December 31, 2015, at cost | (6,751 | ) | (6,751 | ) | |||||||
| Total stockholders' equity | 139,681 | 136,708 | |||||||||
| Total liabilities and stockholders' equity | $ | 1,563,960 | $ | 1,518,521 | |||||||
| Lake Sunapee Bank Group | ||||||||||
| Consolidated Statements of Income (unaudited) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | March 31, | |||||||||
| (Dollars in thousands, except for per share data) | 2016 | 2015 | ||||||||
| Interest and dividend income | ||||||||||
| Interest and fees on loans | $ | 11,526 | $ | 11,590 | ||||||
| Interest on debt securities: | ||||||||||
| Taxable | 705 | 313 | ||||||||
| Tax exempt | 83 | 86 | ||||||||
| Dividends | 85 | 48 | ||||||||
| Other | 23 | 19 | ||||||||
| Total interest and dividend income | 12,422 | 12,056 | ||||||||
| Interest expense | ||||||||||
| Interest on deposits | 932 | 1,066 | ||||||||
| Interest on advances and other borrowed money | 425 | 281 | ||||||||
| Interest on debentures | 477 | 461 | ||||||||
| Interest on securities sold under agreements to repurchase | 25 | 15 | ||||||||
| Total interest expense | 1,859 | 1,823 | ||||||||
| Net interest and dividend income | 10,563 | 10,233 | ||||||||
| Provision for loan losses | 111 | 205 | ||||||||
| Net interest and dividend income after provision for loan losses | 10,452 | 10,028 | ||||||||
| Noninterest income | ||||||||||
| Customer service fees | 1,416 | 1,374 | ||||||||
| Gain on sales of securities, net | - | 373 | ||||||||
| Mortgage banking activities | 112 | 128 | ||||||||
| Net loss on other real estate and property owned | (15 | ) | (3 | ) | ||||||
| Rental income | 168 | 169 | ||||||||
| Trust and investment management fee income | 2,052 | 2,043 | ||||||||
| Insurance and brokerage service income | 537 | 523 | ||||||||
| Bank owned life insurance income | 219 | 146 | ||||||||
| Other income | 92 | 3 | ||||||||
| Total noninterest income | 4,581 | 4,756 | ||||||||
| Noninterest expenses | ||||||||||
| Salaries and employee benefits | 6,221 | 6,035 | ||||||||
| Occupancy and equipment | 1,502 | 1,681 | ||||||||
| Advertising and promotion | 142 | 169 | ||||||||
| Depositors' insurance | 238 | 238 | ||||||||
| Outside services | 633 | 592 | ||||||||
| Professional services | 295 | 282 | ||||||||
| ATM processing fees | 188 | 188 | ||||||||
| Supplies | 148 | 110 | ||||||||
| Telephone expense | 271 | 269 | ||||||||
| Amortization of intangible assets | 349 | 390 | ||||||||
| Other expenses | 1,555 | 1,459 | ||||||||
| Total noninterest expense | 11,542 | 11,413 | ||||||||
| Income before provision for income taxes | 3,491 | 3,371 | ||||||||
| Provision for income taxes | 1,022 | 1,068 | ||||||||
| Net income | $ | 2,469 | $ | 2,303 | ||||||
| Net income applicable to common stock | $ | 2,441 | $ | 2,283 | ||||||
| Earnings per common share, basic | $ | 0.29 | $ | 0.28 | ||||||
| Weighted average number of shares, basic | 8,286,289 | 8,261,383 | ||||||||
| Earnings per common share, assuming dilution | $ | 0.29 | $ | 0.28 | ||||||
| Weighted average number of shares, assuming dilution | 8,290,984 | 8,275,690 | ||||||||
| Dividends declared per common share | $ | 0.14 | $ | 0.13 | ||||||
Contact Information:
For additional information contact:
Laura Jacobi
Executive Vice President
Chief Financial Officer
603-863-0886