NEWPORT, NH -- (Marketwired) -- 04/19/16 -- 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
March 31, December 31,
(Dollars in thousands except for per share data) 2016 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
----------- -----------
For additional information contact:
Laura Jacobi
Executive Vice President
Chief Financial Officer
603-863-0886
