SOURCE: Lake Sunapee Bank Group

Lake Sunapee Bank Group

April 19, 2016 16:00 ET

Lake Sunapee Bank Group Reports 2016 First Quarter Results

NEWPORT, NH--(Marketwired - Apr 19, 2016) - Lake Sunapee Bank Group ("we," "us," "our" or the "Company") (NASDAQ: LSBG), the holding company for Lake Sunapee Bank, fsb (the "Bank"), today announced results for the quarter ended March 31, 2016. Consolidated net income for the first quarter of 2016 was $2.5 million, or $0.29 per diluted common share, compared to $2.3 million, or $0.28 per diluted common share, for the same period in 2015 and $2.2 million, or $0.26 per diluted common share, for the fourth quarter of 2015.

"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