Blue Hills Bancorp, Inc. Announces First Quarter 2015 Earnings

NORWOOD, Mass.--()--Blue Hills Bancorp, Inc. (the “Company” or "Blue Hills Bancorp") (NASDAQ: BHBK), the parent of Blue Hills Bank (the "Bank"), today announced net income of $1,306,000 for the first quarter of 2015 compared to net income, excluding certain nonrecurring items, of $2,563,000 for the fourth quarter of 2014 and net income of $435,000 for the first quarter of 2014.

The following nonrecurring items were excluded from the results discussed above for the fourth quarter of 2014 and the first quarter of 2014 (see page 12 for a reconciliation of GAAP to non-GAAP measures; no items were excluded from the first quarter of 2015).

  • A gain of $182,000 for the quarter ended December 31, 2014 related to non-taxable death benefits received on bank-owned life insurance.
  • Pre-tax expenses of $775,000 and $488,000, respectively, for the quarter ended March 31, 2014, related to the January 2014 Nantucket Bank acquisition and the Company's mutual to stock conversion. Related income tax benefits amounted to $429,000.

On a GAAP basis, which includes the nonrecurring items discussed above, the Company reported net income of $1,306,000 for the quarter ended March 31, 2015, net income of $2,745,000 for the quarter ended December 31, 2014, and a net loss of $399,000 for the quarter ended March 31, 2014.

Diluted earnings per share was $0.05 for the first quarter of 2015 compared to $0.10 for the fourth quarter of 2014. Fourth quarter 2014 earnings per share was the same with and without the nonrecurring item mentioned above. Blue Hills Bancorp was not a publicly traded company in the first quarter of 2014 and earnings per share is not applicable for that period.

Commenting on the first quarter results, William Parent, President and Chief Executive Officer of Blue Hills Bancorp, said "We continued to make progress this quarter in executing our plan of becoming a diversified full service community bank. While competition for lending business is very intense and we endured some abnormally bad weather, we were still able to grow our loan portfolio by 3%, or 12% annualized, from the end of 2014. Deposits were up slightly from the end of the year even with an expected seasonal decline in Nantucket and we are very pleased with the progress made by our Milton branch with over $25 million of deposits at the end of March from its opening in October of last year. In addition, the quarter also reflected good expense control with noninterest expense down slightly from the fourth quarter."

Mr. Parent continued, "Our mutual to stock conversion has provided us with a significant amount of capital. With a tangible common equity ratio above 23%, we are mindful of deploying the excess capital in ways that are both consistent with our long-term goals and in the best interest of our shareholders."

BALANCE SHEET

Total assets grew $30 million during the first three months of 2015 to $1.8 billion at March 31, 2015, mainly due to loans which were up $33 million, or 3%. The higher level of loans was driven primarily by growth in the commercial real estate portfolio which was up $20 million, or 5%, from December 31, 2014. Other loan categories had smaller increases the largest of which was construction loans, up $6 million, or 12%.

Compared to March 31, 2014, total assets increased $258 million, or 17%. Loans accounted for essentially all of the growth in total assets reflecting a combination of originations and participations as the Company continued to execute on its strategy to diversify its balance sheet. By category, commercial real estate loans were up $95 million, or 31%; residential mortgages were up $82 million, or 21%; commercial business loans were up $39 million, or 34%; and construction loans were up $36 million, or 150%.

Total deposits grew $8 million, or less than 1%, during the first quarter of 2015, to $1.2 billion at March 31, 2015. Compared to the end of 2014, small increases in the NOW/demand and the certificates of deposit categories were partially offset by slight declines in regular savings and money market deposits. Deposits were impacted by continued growth in our new Milton, Massachusetts branch and a seasonal decline at Nantucket Bank. Brokered deposit balances were essentially unchanged from December 31, 2014 while short-term borrowings increased $30 million during the first quarter to $70 million at March 31, 2015. Compared to March 31, 2014, deposits increased $104 million, or 9%. This included an increase of $42 million in customer deposits, which was mainly due to a higher level of money market deposits partially offset by a decline in regular savings deposits. Brokered deposits grew $62 million from a year ago.

Stockholders’ equity was $415 million at March 31, 2015 compared to $412 million at December 31, 2014 and $173 million at December 31, 2013. The increase from a year ago reflects the Company's mutual to stock conversion that was completed in July 2014. Proceeds from the stock offering were used to fund asset growth and to pay down debt and, as a result, borrowings declined to $105 million at March 31, 2015 from $195 million at March 31, 2014. As part of the conversion, the Company also (1) redeemed $18.7 million of preferred stock that had been issued to the U.S. Treasury as part of the Small Business Lending Fund Program and (2) established an employee stock ownership plan ("ESOP") which acquired 8% of the shares issued in the conversion. The $21.8 million related to the ESOP is shown as a reduction to stockholders' equity on the balance sheet. The tangible common equity to tangible assets ratio increased to 23.04% at March 31, 2015 from 9.40% at March 31, 2014 as a result of the additional capital received from the mutual to stock conversion.

NET INTEREST AND DIVIDEND INCOME

Net interest and dividend income was $10.7 million in the first quarter of 2015, down $1.9 million, or 15%, from $12.6 million in the fourth quarter of 2014. Net interest margin declined to 2.62% in the first quarter of 2015 from 3.07% in the fourth quarter of 2014. The decline in net interest income and margin from the fourth quarter was due to a $2.1 million drop in dividend income reflecting a lower level of dividends received on mutual fund investments. The vast majority of dividends from the mutual fund investments is typically received in the second half of the year. Excluding the decline in mutual fund dividends, net interest income increased $221,000, or 2%, from the fourth quarter of 2014 while net interest margin improved 7 basis points to 2.67% in the first quarter of 2015 from 2.60% in the fourth quarter of 2014. The improvement, was due in part to a repositioning of our debt securities portfolio which has resulted in a higher yield. In addition, net interest income benefited from a $30 million, or 3%, increase in average loans. Partially offsetting these improvements was a 4 basis point increase in the cost of interest bearing liabilities to 0.69% in the first quarter of 2015 due primarily to the impact of promotional rate deposit pricing programs. Net interest income and margin in both quarters were impacted by purchase accounting accretion related to the January 2014 Nantucket Bank acquisition. Accretion in the first quarter of 2015 contributed $220,000 to net interest income compared to $186,000 in the fourth quarter of 2014. Nantucket accretion also added approximately 5 basis points to net interest margin in each quarter. The $3.4 million remaining balance of accretable yield at March 31, 2015 is expected to be recorded to net interest income in future quarters.

Compared to the first quarter of 2014, net interest and dividend income increased $2.2 million, or 25%, while net interest margin improved 10 basis points. The improvement in net interest income reflects a $298 million, or 34%, increase in average loans driven by higher levels of loans in all categories, with the biggest growth seen in the residential mortgage and commercial real estate portfolios. The bulk of the loan growth was funded with a significant increase in noninterest bearing funds, which benefited both net interest income and margin. Average equity increased $241 million due to the Company's mutual to stock conversion while average noninterest bearing deposits increased $30 million, or 31%, to $126 million in the first quarter of 2015. Purchase accounting accretion related to the January 2014 Nantucket Bank acquisition contributed $220,000 to net interest income and 5 basis points to net interest margin in the first quarter of 2015 compared to $190,000 and 6 basis points, respectively, in the first quarter of 2014. These benefits were partially offset by an 11 basis point increase in the cost of interest bearing liabilities from the first quarter of last year.

NONINTEREST INCOME

Noninterest income was $2.2 million in the first quarter of 2015 compared to $2.1 million in the fourth quarter of 2014, excluding a $182,000 bank-owned life insurance death benefit that was recognized last quarter. Securities gains increased $884,000 to $1.3 million in the first quarter of 2015. This increase was partially offset by (1) lower deposit account fees and interchange and ATM fees due to seasonality, (2) a decline in mortgage banking income mainly due to lower gains on the sale of jumbo residential loans, and (3) a decline in loan level derivative income reflecting fewer conversions of commercial loans from floating to fixed rate. In addition, the Company reported negative miscellaneous income in the first quarter as a decline in interest rates resulted in higher negative marks on commercial loan customer interest rate swap contracts. While these interest rate marks create quarterly volatility in the results which is at times significant, barring unforeseen circumstances there is no net impact to earnings over the life of each contract. Miscellaneous income was also impacted by the absence of income recorded in the fourth quarter of 2014 from a commercial loan prepayment and the settlements of class action lawsuits related to legacy investments.

Compared to the first quarter of 2014, noninterest income increased $555,000, or 34%, due mainly to a $777,000 increase in securities gains. In addition, deposit account fees and interchange and ATM fees improved due to changes in the fee structure, debit card activity, and a full quarter of fees from Nantucket Bank in 2015 vs. a partial quarter in 2014. Mortgage banking income also increased from a year ago due mainly to higher gains from the sale of conventional residential mortgage loans. These improvements were partially offset by some of the factors discussed above including a lower level of loan derivative income and a higher negative mark on commercial loan customer interest rate swap contracts related to changes in interest rates.

NONINTEREST EXPENSE

Noninterest expense was $10.6 million in the first quarter of 2015 compared to $10.7 million in the fourth quarter of 2014.

The decline from last quarter reflected a $257,000 drop in expenses related to the employee stock ownership plan (ESOP) that was implemented last year in connection with the mutual to stock conversion. The equivalent of a full year of ESOP expense was recorded in the final two quarters of 2014 and the ESOP expense in the first quarter of 2015 is more representative of a normal quarterly cost for this plan. In addition, advertising expense declined $153,000. These declines were partially offset by higher occupancy and equipment expense due, in part, to a significant increase in snow removal costs related to the severe winter weather experienced throughout our service area.

Noninterest expense of $10.3 million in the first quarter of 2014 included $775,000 of one-time costs related to the January 2014 Nantucket Bank acquisition and $488,000 related to the Company's mutual to stock conversion. Excluding these items, noninterest expense was $9.0 million in the first quarter of 2014, compared to $10.6 million in the first quarter of 2015. The $1.6 million increase reflects (1) a full quarter of operating expenses and core deposit intangible amortization for Nantucket Bank in the first quarter of 2015 vs. a partial quarter a year ago, (2) higher advertising expense, (3) the opening of the Milton, Massachusetts branch and the establishment of a loan production office in Plymouth, Massachusetts, (4) higher expenses related to the ESOP which went into effect at the time of the mutual to stock conversion, and (5) an increase in snow removal costs.

ASSET QUALITY

The provision for loan losses was $279,000 in the first quarter of 2015 compared to $270,000 in the fourth quarter of 2014 and $714,000 in the first quarter of 2014. The provisions in all quarters reflect management’s assessment of the risks inherent in the loan portfolio. Provisions in each of the three quarters were significantly higher than net chargeoffs. The Company had net loan chargeoffs of $14,000 in the first quarter of 2015, $19,000 in the fourth quarter of 2014 and $39,000 in the first quarter of 2014.

The allowance for loan losses as a percentage of total loans was 1.12% at March 31, 2015 compared to 1.13% at December 31, 2014, and 1.12% at March 31, 2014. The allowance for loan losses as a percentage of nonaccrual loans was 278% at March 31, 2015 compared to 290% at December 31, 2014 and 268% at March 31, 2014.

Nonperforming assets were $4.8 million at March 31, 2015 compared to $4.5 million at December 31, 2014 and $3.9 million at March 31, 2014. Nonperforming assets as a percentage of total assets were 0.27% at March 31, 2015 compared to 0.26% at both December 31, 2014 and March 31, 2014.

ABOUT BLUE HILLS BANCORP

Blue Hills Bancorp, Inc., with corporate headquarters in Norwood MA, had assets of $1.8 billion at March 31, 2015 and operates 10 branch offices in Brookline, Dedham, Hyde Park, Milton, Nantucket, Norwood and West Roxbury, Massachusetts. Blue Hills Bank is a full service, community bank with its main office in Hyde Park, Massachusetts. The three branches in Nantucket, Massachusetts operate under the name, Nantucket Bank, a division of Blue Hills Bank. The Bank provides consumer and commercial deposit and loan products to Eastern Massachusetts through a growing branch network and eCommerce channels. The Bank offers commercial and industrial and commercial real estate loans in addition to cash management services and commercial deposit accounts. The Bank also serves consumers through a full suite of consumer banking products including checking accounts, mortgage loans, equity lines of credit and traditional savings and certificate of deposit accounts. The Bank has invested substantially in online technology including online account opening and funding, online mortgage applications, online banking, mobile banking, bill pay and mobile deposits. Previously known as Hyde Park Savings Bank, Blue Hills Bank has been serving area residents for over 140 years. For more information about Blue Hills Bank, visit the Blue Hills web site at www.bluehillsbank.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release, as well as other written communications made from time to time by the Company and its subsidiaries and oral communications made from time to time by authorized officers of the Company, may contain statements relating to the future results of the Company (including certain projections and business trends) that are considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 (the PSLRA). Such forward-looking statements may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "intend" and "potential." For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the PSLRA.

The Company cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: our ability to implement successfully our new business strategy, which includes significant asset and liability growth; changes that could adversely affect the business in which the Company and the Bank are engaged; prevailing economic and geopolitical conditions; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive, governmental, regulatory and technological factors affecting the Company's operations, pricing, products and services. For additional information on some of the risks and important factors that could affect the Company’s future results and financial condition, see “Risk Factors” in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission. The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

 
 

Blue Hills Bancorp, Inc.

Consolidated Balance Sheets

         
 
(Dollars in thousands)       % Change
March 31, 2015     December 31, 2014     March 31, 2014    

March 31, 2015 vs.
December 31, 2014

   

March 31, 2015 vs.
March 31, 2014

Assets            
Cash and due from banks $ 10,045 $ 15,345 $ 17,811 (34.5 )% (43.6 )%
Short term investments 26,966       44,801       29,402       (39.8 )     (8.3 )
Total cash and cash equivalents 37,011 60,146 47,213 (38.5 ) (21.6 )
Securities available for sale, at fair value 429,551 416,447 444,959 3.1 (3.5 )
Federal Home Loan Bank stock, at cost 11,702 11,702 11,246 4.1
Loans held for sale 17,681 14,591 874 21.2 1,923.0
Loans:
1-4 family residential 463,334 461,719 381,613 0.3 21.4
Home equity 63,276 61,508 63,433 2.9 (0.2 )
Commercial real estate 405,670 385,228 310,266 5.3 30.7
Construction 59,513       53,258       23,787       11.7       150.2  
Total real estate loans 991,793 961,713 779,099 3.1 27.3
Commercial business 154,367 151,521 115,099 1.9 34.1
Consumer 32,845       32,653       29,571       0.6       11.1  
Total loans 1,179,005 1,145,887 923,769 2.9 27.6
Allowance for loan losses (13,238 )     (12,973 )     (10,346 )     2.0       28.0  
Loans, net 1,165,767 1,132,914 913,423 2.9 27.6
Premises and equipment, net 18,869 18,788 18,281 0.4 3.2
Accrued interest receivable 4,793 4,433 3,906 8.1 22.7
Goodwill and core deposit intangible 12,955 13,392 14,870 (3.3 ) (12.9 )
Net deferred tax asset 5,172 6,233 1,859 (17.0 ) 178.2
Bank-owned life insurance 30,848 30,595 30,080 0.8 2.6
Other assets 23,535       18,907       12,816       24.5       83.6  
Total assets $ 1,757,884       $ 1,728,148       $ 1,499,527       1.7 %     17.2 %
Liabilities and Stockholders' Equity
NOW and demand $ 256,746 $ 245,117 $ 242,544 4.7 % 5.9 %
Regular savings 301,932 303,834 351,040 (0.6 ) (14.0 )
Money market 269,164 280,139 195,713 (3.9 ) 37.5
Certificates of deposit 310,672 301,755 306,759 3.0 1.3
Brokered money market 23,991 23,166 3.6 100.0
Brokered certificates of deposit 58,705       58,705       20,705             183.5  
Total deposits 1,221,210 1,212,716 1,116,761 0.7 9.4
Short-term borrowings 70,000 40,000 150,000 75.0 (53.3 )
Long-term debt 35,000 35,000 45,000 (22.2 )
Other liabilities 16,730       28,826       14,601       (42.0 )     14.6  
Total liabilities 1,342,940       1,316,542       1,326,362       2.0       1.2  
Preferred stock 18,724 (100.0 )
Common stock 285 285 100.0
Additional paid-in capital 281,094 281,035 100.0
Unearned compensation- ESOP (21,825 ) (22,014 ) (0.9 ) 100.0
Retained earnings 151,029 149,723 149,742 0.9 0.9
Accumulated other comprehensive income 4,361       2,577       4,699       69.2       (7.2 )
Total stockholders' equity 414,944       411,606       173,165       0.8 %     139.6 %
Total liabilities and stockholders' equity $ 1,757,884       $ 1,728,148       $ 1,499,527       1.7 %     17.2 %
 
 
                             
 

Blue Hills Bancorp, Inc.

Consolidated Balance Sheet Trend

 
 
(Dollars in thousands) March 31, 2015       December 31, 2014       September 30, 2014       June 30, 2014       March 31, 2014
Assets
Cash and due from banks $ 10,045 $ 15,345 $ 14,632 $ 15,308 $ 17,811
Short term investments 26,966   44,801   39,229   281,618   29,402  
Total cash and cash equivalents 37,011 60,146 53,861 296,926 47,213
Securities available for sale, at fair value 429,551 416,447 417,164 417,581 444,959
Federal Home Loan Bank stock, at cost 11,702 11,702 11,702 11,702 11,246
Loans held for sale 17,681 14,591 2,465 22,398 874
Loans:
1-4 family residential 463,334 461,719 466,963 408,528 381,613
Home equity 63,276 61,508 62,958 62,508 63,433
Commercial real estate 405,670 385,228 368,069 334,647 310,266
Construction 59,513   53,258   56,939   45,192   23,787  
Total real estate loans 991,793 961,713 954,929 850,875 779,099
Commercial business 154,367 151,521 138,357 120,313 115,099
Consumer 32,845   32,653   32,210   30,457   29,571  
Total loans 1,179,005 1,145,887 1,125,496 1,001,645 923,769
Allowance for loan losses (13,238 ) (12,973 ) (12,721 ) (11,292 ) (10,346 )
Loans, net 1,165,767 1,132,914 1,112,775 990,353 913,423
Premises and equipment, net 18,869 18,788 18,616 18,209 18,281
Accrued interest receivable 4,793 4,433 4,367 4,127 3,906
Goodwill and core deposit intangible 12,955 13,392 13,854 14,361 14,870
Net deferred tax asset 5,172 6,233 4,456 1,020 1,859
Bank-owned life insurance 30,848 30,595 30,576 30,326 30,080
Other assets 23,535   18,907   16,775   16,102   12,816  
Total assets $ 1,757,884   $ 1,728,148   $ 1,686,611   $ 1,823,105   $ 1,499,527  
Liabilities and Stockholders' Equity
NOW and demand $ 256,746 $ 245,117 $ 252,439 $ 237,586 $ 242,544
Regular savings 301,932 303,834 318,557 343,697 351,040
Money market 269,164 280,139 233,392 195,264 195,713
Certificates of deposit 310,672 301,755 289,384 293,516 306,759
Brokered money market 23,991 23,166
Brokered certificates of deposit 58,705   58,705   58,705   81,205   20,705  
Total deposits 1,221,210 1,212,716 1,152,477 1,151,268 1,116,761
Stock subscriptions 283,958
Short-term borrowings 70,000 40,000 75,000 160,000 150,000
Long-term debt 35,000 35,000 35,000 35,000 45,000
Other liabilities 16,730   28,826   14,068   16,724   14,601  
Total liabilities 1,342,940   1,316,542   1,276,545   1,646,950   1,326,362  
Preferred stock 18,724 18,724
Common stock 285 285 285
Additional paid-in capital 281,094 281,035 280,926
Unearned compensation- ESOP (21,825 ) (22,014 ) (22,393 )
Retained earnings 151,029 149,723 146,979 149,959 149,742
Accumulated other comprehensive income 4,361   2,577   4,269   7,472   4,699  
Total stockholders' equity 414,944   411,606   410,066   176,155   173,165  
Total liabilities and stockholders' equity $ 1,757,884   $ 1,728,148   $ 1,686,611   $ 1,823,105   $ 1,499,527  
 
 
           
 

Blue Hills Bancorp, Inc.

Consolidated Statement of Operations-Quarters

 
         
(Dollars in thousands, except share data) Quarters Ended       % Change
March 31, 2015       December 31, 2014       March 31, 2014      

March 31, 2015 vs.
December 31, 2014

     

March 31, 2015
vs. March 31, 2014

Interest and fees on loans $ 10,427       $ 10,207       $ 8,051 2.2 %       29.5 %
Interest on securities 2,136 2,027 1,937 5.4 % 10.3 %
Dividends 100 2,221 166 (95.5 )% (39.8 )%
Other 19         30         15         (36.7 )%       26.7 %
Total interest and dividend income 12,682         14,485         10,169         (12.4 )%       24.7 %
Interest on deposits 1,763 1,675 1,351 5.3 % 30.5 %
Interest on borrowings 254         243         304         4.5 %       (16.4 )%
Total interest expense 2,017         1,918         1,655         5.2 %       21.9 %
Net interest and dividend income 10,665 12,567 8,514 (15.1 )% 25.3 %
Provision for loan losses 279         270         714         3.3 %       (60.9 )%
Net interest and dividend income, after provision for loan losses 10,386 12,297 7,800 (15.5 )% 33.2 %
Deposit account fees 333 342 291 (2.6 )% 14.4 %
Interchange and ATM fees 326 351 285 (7.1 )% 14.4 %
Mortgage banking 101 300 68 (66.3 )% 48.5 %
Loan level derivative income 4 157 150 (97.5 )% (97.3 )%
Realized securities gains and impairment losses, net 1,318 434 541 203.7 % 143.6 %
Gain on trading assets, net 25 % (100.0 )%
Bank-owned life insurance income 253 261 249 (3.1 )% 1.6 %
Bank-owned life insurance death benefit gains 182 (100.0 )% %
Miscellaneous (151 )       267         20         (156.6 )%       (855.0 )%
Total noninterest income 2,184         2,294         1,629         (4.8 )%       34.1 %
Salaries and employee benefits 5,489 5,543 5,129 (1.0 )% 7.0 %
Occupancy and equipment 1,498 1,256 1,601 19.3 % (6.4 )%
Data processing 819 878 605 (6.7 )% 35.4 %
Professional fees 632 575 1,159 9.9 % (45.5 )%
Advertising 500 653 301 (23.4 )% 66.1 %
FDIC deposit insurance 292 532 178 (45.1 )% 64.0 %
Directors' fees 124 30 150 313.3 % (17.3 )%
Amortization of core deposit intangible 437 461 353 (5.2 )% 23.8 %
Other general and administrative 835         814         780         2.6 %       7.1 %
Total noninterest expense 10,626         10,742         10,256         (1.1 )%       3.6 %
Income (loss) before income taxes 1,944 3,849 (827 ) (49.5 )% 335.1 %
Provision (benefit) for income taxes 638         1,104         (428 )       (42.2 )%       249.1 %
Net income (loss) $ 1,306         $ 2,745         $ (399 )       (52.4 )%       427.3 %
 
Earnings per common share:
Basic $ 0.05 $ 0.10 n/a n/a n/a
Diluted $ 0.05 $ 0.10 n/a n/a n/a
Weighted average shares outstanding:
Basic 26,274,738 26,243,957 n/a n/a n/a
Diluted 26,274,738 26,243,957 n/a n/a n/a
 
 
 
 
Blue Hills Bancorp Inc.
Consolidated Statements of Operations - Trend
      Quarters Ended
(Dollars in thousands, except share data) March 31,       December 31,       September 30,       June 30,       March 31,
2015       2014       2014       2014       2014
Interest and fees on loans $ 10,427 $ 10,207 $ 9,725 $ 9,399 $ 8,051
Interest on securities 2,136 2,027 1,892 2,003 1,937
Dividends 100 2,221 1,388 119 166
Other 19         30         65         30         15  
Total interest and dividend income 12,682         14,485         13,070         11,551         10,169  
Interest on deposits 1,763 1,675 1,376 1,348 1,351
Interest on borrowings 254         243         275         326         304  
Total interest expense 2,017         1,918         1,651         1,674         1,655  
Net interest and dividend income 10,665 12,567 11,419 9,877 8,514
Provision for loan losses 279         270         1,438         959         714  
Net interest and dividend income, after provision for loan losses 10,386 12,297 9,981 8,918 7,800
Deposit account fees 333 342 337 343 291
Interchange and ATM fees 326 351 390 371 285
Mortgage banking 101 300 341 75 68
Loan level derivative income 4 157 296 57 150
Realized securities gains and impairment losses, net 1,318 434 349 1,191 541
Gains on trading assets, net 25
Bank-owned life insurance income 253 261 250 246 249
Bank-owned life insurance death benefit gains 182
Pension curtailment gain 1,304
Miscellaneous (151 )       267         107         27         20  
Total noninterest income 2,184         2,294         3,374         2,310         1,629  
Salaries and employee benefits 5,489 5,543 5,424 5,212 5,129
Occupancy and equipment 1,498 1,256 1,150 1,298 1,601
Data processing 819 878 805 701 605
Professional fees 632 575 694 1,123 1,159
Advertising 500 653 815 658 301
FDIC deposit insurance 292 532 360 196 178
Directors' fees 124 30 150 156 150
Amortization of core deposit intangible 437 461 485 509 353
Charitable Foundation contribution 7,000
Other general and administrative 835         814         865         809         780  
Total noninterest expense 10,626         10,742         17,748         10,662         10,256  
Income (loss) before income taxes 1,944 3,849 (4,393 ) 566 (827 )
Provision (benefit) for income taxes 638         1,104         (1,435 )       137         (428 )
Net income (loss) $ 1,306         $ 2,745         $ (2,958 )       $ 429         $ (399 )
 
Earnings per common share:
Basic $ 0.05 $ 0.10 n/a n/a n/a
Diluted $ 0.05 $ 0.10 n/a n/a n/a
Weighted average shares outstanding:
Basic 26,274,738 26,243,957 n/a n/a n/a
Diluted 26,274,738 26,243,957 n/a n/a n/a
 
 
 
 
Blue Hills Bancorp Inc.
Average Balances/Yields
(Dollars in thousands)       Quarters Ended
March 31, 2015         December 31, 2014       March 31, 2014
Average balance       Interest       Yield/

Cost

        Average balance       Interest       Yield/

Cost

      Average balance       Interest       Yield/

Cost

Interest-earning assets                                                  
Total loans $ 1,178,716 $ 10,427 3.59 % $ 1,148,744 $ 10,207 3.53 % $ 880,754 $ 8,051 3.71 %
Securities 422,092 2,185 2.10 416,867 4,205 4.00 443,084 2,066 1.89
Other interest earning assets and FHLB stock 50,603         70         0.56   59,028         73         0.49   46,176         52         0.46  
Total interest-earning assets 1,651,411 12,682 3.11 % 1,624,639 14,485 3.54 % 1,370,014 10,169 3.01 %
Non-interest-earning assets 97,427   92,241   71,684  
Total assets $ 1,748,838   $ 1,716,880   $ 1,441,698  
 
Interest-bearing liabilities
NOW $ 122,226 $ 14 0.05 % $ 136,210 $ 31 0.09 % $ 114,927 $ 21 0.07 %
Regular savings 301,135 319 0.43 310,591 342 0.44 350,377 354 0.41
Money market 297,359 508 0.69 279,622 469 0.67 170,283 209 0.50
Certificates of deposit 353,480         922         1.06   356,255         833         0.93   355,463         767         0.88  
Total interest-bearing deposits 1,074,200 1,763 0.67 1,082,678 1,675 0.61 991,050 1,351 0.55
Borrowings 108,556         254         0.95   83,054         243         1.16   165,333         304         0.75  
Total interest-bearing liabilities 1,182,756 2,017 0.69 % 1,165,732 1,918 0.65 % 1,156,383 1,655 0.58 %
Non-interest-bearing deposits 125,915 122,263 96,193
Other non-interest-bearing liabilities 25,681   16,876   15,682  
Total liabilities 1,334,352 1,304,871 1,268,258
Stockholders' equity 414,486   412,009   173,440  
Total liabilities and stockholders' equity $ 1,748,838   $ 1,716,880   $ 1,441,698  
     
Net interest and dividend income $ 10,665   $ 12,567   $ 8,514  
Net interest rate spread 2.42 % 2.89 % 2.43 %
Net interest margin 2.62 % 3.07 % 2.52 %
Total deposit cost 0.60 % 0.55 % 0.50 %
 

No tax equivalent yield adjustments have been made as the effect of such adjustments would not be material.

 
 
 
Blue Hills Bancorp, Inc.
Average Balances - Trend
    Quarters ended
(Dollars in thousands) March 31,       December 31,       September 30,       June 30,       March 31,
2015       2014       2014       2014       2014
Interest-earning assets
Total loans $ 1,178,716 $ 1,148,744 $ 1,085,951 $ 969,417 $ 880,754
Securities 422,092 416,867 414,864 422,335 443,084
Other interest earning assets and FHLB stock 50,603         59,028         113,163         94,149         46,176
Total interest-earning assets 1,651,411 1,624,639 1,613,978 1,485,901 1,370,014
Non-interest-earning assets 97,427         92,241         91,717         90,026         71,684
Total assets $ 1,748,838         $ 1,716,880         $ 1,705,695         $ 1,575,927         $ 1,441,698
 
Interest-bearing liabilities
NOW $ 122,226 $ 136,210 $ 124,846 $ 121,263 $ 114,927
Regular savings 301,135 310,591 336,151 345,837 350,377
Money market 297,359 279,622 197,500 191,972 170,283
Certificates of deposit 353,480         356,255         346,807         359,668         355,463
Total interest-bearing deposits 1,074,200 1,082,678 1,005,304 1,018,740 991,050
Borrowings 108,556         83,054         145,848         206,077         165,333
Total interest-bearing liabilities 1,182,756 1,165,732 1,151,152 1,224,817 1,156,383
Non-interest-bearing deposits 125,915 122,263 117,393 112,849 96,193
Other non-interest-bearing liabilities 25,681         16,876         78,377         63,496         15,682
Total liabilities 1,334,352 1,304,871 1,346,922 1,401,162 1,268,258
Stockholders' equity 414,486         412,009         358,773         174,765         173,440
Total liabilities and stockholders' equity $ 1,748,838         $ 1,716,880         $ 1,705,695         $ 1,575,927         $ 1,441,698
 
 
 
 
Blue Hills Bancorp, Inc.
Yield Trend
      Quarters Ended
March 31,       December 31,       September 30,       June 30,       March 31,
2015       2014       2014       2014       2014
Interest-earning assets
Total loans 3.59 % 3.53 % 3.55 % 3.89 % 3.71 %
Securities 2.10 % 4.00 % 3.10 % 1.98 % 1.89 %
Other interest earning assets and FHLB stock 0.56 % 0.49 % 0.38 % 0.30 % 0.46 %
Total interest-earning assets 3.11 % 3.54 % 3.21 % 3.12 % 3.01 %
 
Interest-bearing liabilities
NOW 0.05 % 0.09 % 0.06 % 0.06 % 0.07 %
Regular savings 0.43 % 0.44 % 0.42 % 0.38 % 0.41 %
Money market 0.69 % 0.67 % 0.54 % 0.52 % 0.50 %
Certificates of deposit 1.06 % 0.93 % 0.83 % 0.84 % 0.88 %
Total interest-bearing deposits 0.67 % 0.61 % 0.54 % 0.53 % 0.55 %
Borrowings 0.95 % 1.16 % 0.75 % 0.63 % 0.75 %
Total interest-bearing liabilities 0.69 % 0.65 % 0.57 % 0.55 % 0.58 %
 
Net interest rate spread 2.42 % 2.89 % 2.64 % 2.57 % 2.43 %
Net interest margin 2.62 % 3.07 % 2.81 % 2.67 % 2.52 %
Total deposit cost 0.60 % 0.55 % 0.49 % 0.48 % 0.50 %
 
 
No tax equivalent yield adjustments have been made as the effect of such adjustments would not be material.
 
 
 
 
Blue Hills Bancorp Inc.
Reconciliation of GAAP to Non-GAAP Net Income (Loss)
              Quarters Ended
(Dollars in thousands) March 31,       December 31,       September 30,       June 30,       March 31,
2015       2014       2014       2014       2014
 
Net income (loss)-GAAP basis $ 1,306 $ 2,745 $ (2,958 ) $ 429 $ (399 )
Noninterest income adjustments:
Less gain on bank-owned life insurance death benefits (182 )
Less pension curtailment gain (1,304 )
Noninterest expense adjustments:
Add Nantucket Bank acquisition expenses 2 173 775
Add expenses related to mutual to stock conversion 51 330 488
Add Charitable Foundation contribution                 7,000                  
Income tax effects                 (1,955 )       (171 )       (429 )
Net income-Non-GAAP basis $ 1,306         $ 2,563         $ 836         $ 761         $ 435  
 
 

The Company’s management believes that the presentation of net income on a non-GAAP basis excluding nonrecurring items provides useful information for evaluating the Company’s operating results and any related trends that may be affecting the Company’s business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP.

 
 
Blue Hills Bancorp, Inc.
Selected Financial Highlights
      Quarters Ended
(Dollars in thousands, except share data) March 31,       December 31,       September 30,       June 30,       March 31,
2015       2014       2014       2014       2014

Performance Ratios (annualized)

Basic and diluted EPS
GAAP $ 0.05 $ 0.10 n/a n/a n/a
Non-GAAP(1) $ 0.05 $ 0.10 n/a n/a n/a
Return (loss) on average assets (ROAA):
GAAP 0.30 % 0.63 % (0.69 )% 0.11 % (0.11 )%
Non-GAAP(1) 0.30 % 0.59 % 0.19 % 0.19 % 0.12 %
Return (loss) on average equity (ROAE):
GAAP 1.28 % 2.64 % (3.27 )% 0.98 % (0.93 )%
Non-GAAP(1) 1.28 % 2.47 % 0.92 % 1.75 % 1.02 %
Return (loss) on average tangible common equity (ROATCE):
GAAP 1.32 % 2.73 % (3.53 )% 1.21 % (1.12 )%
Non-GAAP(1) 1.32 % 2.55 % 1.00 % 2.14 % 1.22 %
Efficiency Ratio:
GAAP 83 % 72 % 120 % 87 % 101 %
Non-GAAP(1) 83 % 73 % 79 % 83 % 89 %

(1) See page 12 for a reconciliation of Non-GAAP financial measures

      At or for the Quarters Ended
March 31,       December 31,       March 31,
2015       2014       2014

Asset Quality

Nonperforming Assets $ 4,766 $ 4,481 $ 3,857
Nonperforming Assets/Total Assets 0.27 % 0.26 % 0.26 %
Allowance for Loan Losses/Total Loans 1.12 % 1.13 % 1.12 %
Net Chargeoffs (Recoveries) $ 14 $ 19 $ 39
Annualized Chargeoffs Net (Recoveries)/Average Loans % % 0.02 %
Allowance for Loan Losses/ Nonperforming Loans 278 % 290 % 268 %
 

Capital/Other

Common shares outstanding 28,466,813 28,466,813 n/a
Book value per share $ 14.58 $ 14.46 n/a
Tangible book value per share $ 14.12 $ 13.99 n/a
Tangible Common Equity/Tangible Assets 23.04 % 23.22 % 9.40 %
Full-time Equivalent Employees 204 202 200

Contacts

Media and Investor Contact:
Blue Hills Bancorp, Inc.
William Parent, 617-360-6520

Blue Hills Bancorp, Inc.