Blue Hills Bancorp, Inc. Announces Second Quarter 2014 Earnings

NORWOOD, Mass.--()--Blue Hills Bancorp, Inc. (the “Company”) (NASDAQ: BHBK), parent of Blue Hills Bank (the "Bank"), today announced net income of $429,000 for the second quarter of 2014 compared to a net loss of $399,000 for the first quarter of 2014 and net income of $1,129,000 for the second quarter of 2013.

“Over the past few years, we have been making the necessary investments to assemble an experienced management team and launch key strategic initiatives as we transform the Company from an institution that had been primarily focused on deposit taking and investing in securities into a diversified, full-service community bank,” said William Parent, President and Chief Executive Officer of Blue Hills Bancorp. “These initiatives included the establishment of residential, commercial business and commercial real estate lending platforms which have shown strong growth, transformation of our retail banking franchise towards lower cost core deposits, and improved online banking capabilities. At the same time, we have strengthened our back office infrastructure and remain highly focused on ensuring that we maintain a comprehensive risk management program. Our transformation was accelerated this year by the acquisition of three branches and select assets in Nantucket in January (the "Nantucket Bank" acquisition). Deposit retention at Nantucket Bank has been high, the integration has gone well, and the acquisition has enabled us to reposition our balance sheet. We have also taken steps to increase our brand awareness, including obtaining the naming rights to the Blue Hills Bank Pavilion concert venue in the Seaport District of Boston.”

Mr. Parent continued, “The next major step in our transformation will happen next week when we complete our conversion from a mutual savings bank into a publicly traded company. Our top priorities going forward will be to prudently use the additional capital received from the stock offering in a way that is beneficial to all our stakeholders and continue to leverage the investment spending we have made over the past few years to grow revenue.”

The Company reported net income of $31,000 for the first six months of 2014 compared to net income of $2,662,000 for the first six months of 2013. Net interest income and noninterest expense levels were up significantly in the first half of 2014 vs. the first half of 2013 reflecting growth in the franchise, the Nantucket Bank acquisition in January 2014, and costs associated with the Company’s mutual to stock conversion. Noninterest income was down sharply from the first half of 2013 reflecting lower securities gains, bank-owned life insurance death benefits, and the absence of a 2013 gain from the sale of jumbo residential mortgage portfolio loans.

Blue Hills Bancorp, Inc. was formed on February 27, 2014 to serve as the stock holding company for Blue Hills Bank and Nantucket Bank, a division of Blue Hills Bank, as part of the mutual-to-stock conversion of Hyde Park Bancorp, MHC, the Massachusetts chartered mutual holding company of Blue Hills Bank. As of June 30, 2014, the conversion had not been completed and the financial information contained in this earnings release for all periods presented are the results of Hyde Park Bancorp, MHC. The Company expects the conversion to be completed on Monday, July 21 and for the stock to begin trading on Tuesday, July 22.

BALANCE SHEET
Total assets at June 30, 2014 were $1.8 billion compared to $1.5 billion at March 31, 2014. As previously announced on July 11, the subscription offering that closed in June related to the Company’s mutual-to-stock conversion was oversubscribed with the Bank receiving orders in excess of the adjusted maximum of the offering range ($277,725,000). A portion of this money was held in escrow as of June 30, 2014 and accounts for the bulk of the increase in total assets from the end of the first quarter.

Excluding the impact of the funds held in escrow and short-term investments, total assets were up less than $100 million compared to March 31, 2014. Loans of $1.0 billion at June 30, 2014 grew $78 million, or 8.4%, from the end of March driven by higher levels of residential mortgage, commercial business, construction, and commercial real estate loans. The growth in loans was partially offset by a $27 million decline in available for sale securities mainly reflecting sales of mutual funds.

Excluding the funds held in escrow at June 30, 2014 related to the conversion, total assets increased approximately $300 million from June 30, 2013. Loans grew $427 million, or 74%, reflecting a combination of originations, purchases and participations as the Company continues to execute on its strategy to diversify its balance sheet, particularly through an expansion of the residential mortgage, commercial real estate and commercial business loan portfolios. In addition, the January 2014 Nantucket Bank acquisition added approximately $100 million of primarily commercial and home equity loans. Partially offsetting the growth in loans was a $93 million decline in available for sale securities.

Total deposits of $1.2 billion at June 30, 2014 increased by $35 million, or 3%, from March 31, 2014 as higher levels of brokered deposits and commercial deposits were offset by declines in consumer deposits. The decline in consumer deposits is due, in part, to the Company’s strategy of reducing its reliance on higher priced deposits as evidenced by the yield on interest bearing deposits declining to 0.53% in the second quarter of 2014 from 0.88% in the second quarter of 2013.

Compared with June 30, 2013, deposits increased $284 million, or 33%. The increase was primarily due to the $275 million of deposits assumed in the Nantucket Bank acquisition in January 2014. Approximately 10% of the deposits assumed in the Nantucket Bank acquisition were certificates of deposit and the remainder was demand, savings and money market deposits. In addition, the growth in deposits from a year ago reflects a higher level of commercial deposits and brokered CDs, partially offset by a decline in the higher-yielding categories of consumer deposits. The growth in commercial deposits is due to the Company’s increased emphasis on leveraging commercial lending relationships, including those in Nantucket.

Stockholders’ equity was $176.2 million at June 30, 2014 compared to $173.2 million at March 31, 2014 and $170.4 million at June 30, 2013. The increases from both prior periods were primarily related to fluctuations in accumulated other comprehensive income caused mainly by increases in net unrealized gains on securities available for sale. The tangible common equity to tangible assets ratio was 7.91% at June 30, 2014; however, the ratio will increase significantly following the completion of the mutual-to-stock conversion next week. As previously announced on July 11, the Company redeemed $18.7 million of preferred stock that Hyde Park Bancorp issued to the U. S. Treasury as part of the Small Business Lending Fund Program. The Company’s intention to redeem this preferred stock was first disclosed in the prospectus dated May 14, 2014, as filed with the Securities and Exchange Commission on May 23, 2014.

NET INTEREST INCOME
Net interest income was $9.9 million in the second quarter of 2014, up $1.4 million, or 16.0%, from $8.5 million in the first quarter of 2014. Net interest margin improved to 2.67% in the second quarter of 2014 from 2.52% in the first quarter of 2014. The improvement in net interest income and margin from the first quarter included the impact of purchase accounting accretion related to the January 2014 Nantucket Bank acquisition. Accretion in the second quarter contributed $779,000 to net interest income and 21 basis points to net interest margin. This compares with $190,000 and 6 basis points, respectively, in the first quarter. The approximately $4 million remaining balance of accretable yield at June 30, 2014 is expected to be recorded to net interest income in future quarters. The growth in net interest income from the first quarter was also helped by an $89 million, or 10%, increase in average loans while there was a negative impact on net interest margin in the second quarter of 7 basis points from funds related to the Company’s subscription offering, which were temporarily invested in low yielding liquid assets.

Compared to the second quarter of 2013, net interest income increased $4.1 million, or 72%, while net interest margin improved 53 basis points. The improvement is due, in part, to the transformation of the Company’s consumer deposits and the January 2014 Nantucket Bank acquisition, including the impact of purchase accounting accretion mentioned above. Average loans were up $454 million, or 88.1%, from the second quarter of 2013 driven by higher levels of loans in all categories, mainly residential mortgages and commercial real estate. The yield on average interest bearing liabilities declined to 0.55% in the second quarter of 2014 from 0.92% in the second quarter of 2013 reflecting execution of the Company’s strategic initiative to reduce reliance on higher yielding deposits.

NONINTEREST INCOME
Noninterest income was $2.3 million for the second quarter of 2014, compared to $1.6 million in the first quarter of 2014. The increase of $681,000, or 42%, from the first quarter was mainly due to a $650,000 increase in gains from the sales of securities. In addition, deposit account fees increased $52,000, or 18%, and Interchange and ATM fees were up $86,000, or 30%, reflecting seasonality and a full quarter of activity after the Nantucket Bank acquisition. These improvements were mainly offset by a $93,000, or 62%, decline in loan level derivative income reflecting a lower level of commercial customer interest in converting floating rate loans to fixed rate via interest rate swaps. Commercial loan originations, however, remain strong.

Compared to the second quarter of 2013, noninterest income declined $1.4 million, or 37%. The decline was driven by a $1.5 million drop in gains from bank-owned life insurance due to the absence in 2014 of death benefits received in 2013, the absence of a $618,000 gain from the sale of jumbo residential mortgage portfolio loans recorded in 2013, a $292,000 decline in mortgage banking income reflecting a lower level of conforming loan sales, and a $125,000 drop in loan level derivative income from fewer conversions of commercial loans from floating to fixed rate. These declines were offset by a $1.0 million increase in securities gains and increases of $209,000 in deposit account fees and $161,000 in Interchange and ATM fees primarily driven by the Nantucket Bank acquisition.

NONINTEREST EXPENSE
Noninterest expense was $10.7 million in the second quarter of 2014 compared to $10.3 million in the first quarter. The second quarter included $330,000 related to costs associated with the Company’s mutual-to-stock conversion and $173,000 related to one-time costs associated with the Nantucket Bank acquisition, compared to $488,000 and $775,000, respectively, in the first quarter. Excluding these items, noninterest expense increased $1.2 million from the first quarter. The main drivers of this increase were higher levels of advertising and professional fees as well as a full quarter’s impact of Nantucket’s operating expenses in the second quarter following the January 2014 acquisition.

Compared to the second quarter of 2013, noninterest expense increased $3.0 million. The increase in noninterest expense was mainly due to the January 2014 Nantucket Bank acquisition including operating expenses, core deposit intangible amortization, and one-time acquisition costs. In addition, operating expenses were boosted by higher costs related to the Company becoming a diversified community bank, including a continued expansion of the management team and other infrastructure to meet the needs associated with the current business plan as well and the mutual to stock conversion costs. On a full time equivalent basis, total employees were 215 at June 30, 2014 compared to 153 at June 30, 2013.

ASSET QUALITY
The provision for loan losses was $959,000 in the second quarter vs. $714,000 in the first quarter of 2014 and $1.1 million in the second quarter of 2013. The provisions in all quarters reflect management’s assessment of the risks inherent in the loan portfolio.

The allowance for loan losses as a percentage of total loans was 1.13% at June 30, 2014, and 1.12% March 31, 2014, compared to 1.32% at June 30, 2013. The decline in the allowance coverage ratio from June 30, 2013 reflects placing the loans obtained in the Nantucket Bank acquisition on the balance sheet at estimated fair value. As a result, there was no associated allowance for loan losses established on the Nantucket Bank loans which resulted in an overall lower allowance coverage ratio for the Company.

The Company had net loan chargeoffs of $13,000 in the second quarter of 2014, representing 0.01% of average loans. This compares to $39,000 and 0.02%, respectively, in the first quarter of 2014. In the second quarter of 2013, the Company had net recoveries of $136,000 which represented 0.11% of average loans.

Nonperforming assets were $4.8 million at June 30, 2014 compared to $4.1 million at March 31, 2014 and $3.0 million at June 30, 2013. Nonperforming assets as a percentage of total assets were 0.26% at June 30, 2014, 0.28% at March 31, 2014 and 0.24% at June 30, 2013.

ABOUT BLUE HILLS BANCORP

Blue Hills Bancorp, Inc. had assets of $1.8 billion at June 30, 2014 and operates 9 branch offices in Brookline, Dedham, Hyde Park, Nantucket, Norwood and West Roxbury, Massachusetts. Blue Hills Bank is a full service, community bank with its main office in Hyde Park, MA. 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: delays in consummation of the stock offering in connection with the mutual-to-stock conversion of Hyde Park Bancorp, MHC, 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 of 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 prospectus dated May 14, 2014, as filed with the Securities and Exchange Commission on May 23, 2014. 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

June 30,
2014

 

March 31,
2014

 

June 30,
2013

 

June 14 vs.
March 14

 

June 14 vs.
June 13

Assets    
Cash and due from banks $ 15,308 $ 17,811 $ 8,941 (14.1

)%

71.2 %
Short term investments 281,618     29,402     29,444     857.8 %   856.5 %
Total cash and cash equivalents 296,926 47,213 38,385 528.9 % 673.5 %
Trading assets 23,252 % -100.0%
Securities available for sale, at fair value 417,581 444,959 510,571 (6.2 )% (18.2 )%
Federal Home Loan Bank stock, at cost 11,702 11,246 9,286 4.1 % 26.0 %
Loans held for sale 22,398 874 909 2,462.7 % 2,364.0 %
Loans 1,001,645 923,769 574,431 8.4 % 74.4 %
Allowance for loan losses (11,292 )   (10,346 )   (7,622 )   9.1 %   48.2 %
Loans, net of allowance for loan losses 990,353 913,423 566,809 8.4 % 74.7 %
Premises and equipment, net 18,209 18,281 7,779 (0.4 )% 134.1 %
Goodwill 9,182 9,182 % %
Core deposit intangible 5,179 5,688 (8.9 )% %
Accrued interest receivable 4,127 3,906 3,872 5.7 % 6.6 %
Net deferred tax asset 1,020 1,859 2,915 (45.1 )% (65.0 )%
Bank-owned life insurance 30,326 30,080 29,611 0.8 % 2.4 %
Other assets 16,102     12,816     57,938     25.6 %   (72.2 )%
Total assets $ 1,823,105     $ 1,499,527     $ 1,251,327     21.6 %   45.7 %
Liabilities and Equity
NOW and demand 237,586 242,544 91,642 (2.0 )% 159.3 %
Regular savings 343,697 351,040 364,903 (2.1 )% (5.8 )%
Money market 195,264 195,713 81,907 (0.2 )% 138.4 %
Certificates of deposit 293,516 306,759 313,469 (4.3 )% (6.4 )%
Brokered deposits 81,205     20,705     15,705     292.2 %   417.1 %
Total deposits 1,151,268 1,116,761 867,626 3.1 % 32.7 %
Stock subscriptions 283,958 % %
Short-term borrowings 160,000 150,000 85,000 6.7 % 88.2 %
Long-term debt 35,000 45,000 45,000 (22.2 )% (22.2 )%
Other liabilities 16,724     14,601     83,269     14.5 %   (79.9 )%
Total liabilities 1,646,950 1,326,362 1,080,895 24.2 % 52.4 %
Preferred stock 18,724 18,724 18,724 % %
Retained earnings 149,959 149,742 150,555 0.1 % (0.4 )%
Accumulated other comprehensive income 7,472     4,699     1,153     59.0 %   548.0 %
Total equity 176,155     173,165     170,432     1.7 %   3.4 %
Total liabilities and equity $ 1,823,105     $ 1,499,527     $ 1,251,327     21.6 %   45.7 %
 
Blue Hills Bancorp, Inc.
Consolidated Balance Sheet Trend
   
(Dollars in thousands) June 30,   March 31,   December 31,   September 30,   June 30,
2014   2014   2013   2013   2013
Assets
Cash and due from banks $ 15,308 $ 17,811 $ 8,151 $ 9,721 $ 8,941
Short term investments 281,618     29,402     32,165     34,088     29,444  
Total cash and cash equivalents 296,926 47,213 40,316 43,809 38,385
Trading assets 750 829 23,252
Securities available for sale, at fair value 417,581 444,959 441,306 438,184 510,571
Federal Home Loan Bank stock, at cost 11,702 11,246 10,766 9,466 9,286
Loans held for sale 22,398 874 765 468 909
Loans 1,001,645 923,769 774,253 680,621 574,431
Allowance for loan losses (11,292 )   (10,346 )   (9,671 )   (8,681 )   (7,622 )
Loans, net of allowance for loan losses 990,353 913,423 764,582 671,940 566,809
Premises and equipment, net 18,209 18,281 7,478 7,437 7,779
Goodwill 9,182 9,182
Core deposit intangible 5,179 5,688
Accrued interest receivable 4,127 3,906 4,290 3,376 3,872
Net deferred tax asset 1,020 1,859 2,831 2,677 2,915
Bank-owned life insurance 30,326 30,080 29,831 29,571 29,611
Other assets 16,102     12,816     11,372     12,100     57,938  
Total assets $ 1,823,105     $ 1,499,527     $ 1,314,287     $ 1,219,857     $ 1,251,327  
Liabilities and Equity
NOW and demand $ 237,586 $ 242,544 $ 118,648 $ 104,665 $ 91,642
Regular savings 343,697 351,040 332,518 344,293 364,903
Money market 195,264 195,713 75,716 81,982 81,907
Certificates of deposit 293,516 306,759 296,718 309,800 313,469
Brokered deposits 81,205     20,705     91,623     80,670     15,705  
Total deposits 1,151,268 1,116,761 915,223 921,410 867,626
Stock subscriptions 283,958
Short-term borrowings 160,000 150,000 170,000 65,000 85,000
Long-term debt 35,000 45,000 45,000 45,000 45,000
Other liabilities 16,724     14,601     12,530     16,378     83,269  
Total liabilities 1,646,950     1,326,362     1,142,753     1,047,788     1,080,895  
Preferred stock 18,724 18,724 18,724 18,724 18,724
Retained earnings 149,959 149,742 150,345 151,049 150,555
Accumulated other comprehensive income 7,472     4,699     2,465     2,296     1,153  
Total equity 176,155     173,165     171,534     172,069     170,432  
Total liabilities and equity $ 1,823,105     $ 1,499,527     $ 1,314,287     $ 1,219,857     $ 1,251,327  
 
Blue Hills Bancorp, Inc.
Consolidated Statements of Operations - Quarters
(Dollars in thousands)   Quarters Ended   % Change

June 30,
2014

 

March 31,
2014

 

June 30,
2013

 

June 14 vs.
March 14

 

June 14 vs.
June 13

Statements of Operations        
Interest and fees on loans $ 9,399 $ 8,051 $ 4,894 16.7 % 92.1 %
Interest on securities 2,003 1,937 2,455 3.4 % (18.4 )%
Dividends 119 166 475 (28.3 )% (74.9 )%
Other 30     15     26     100.0 %   15.4 %
Total interest and dividend income 11,551 10,169 7,850 13.6 % 47.1 %
Interest on deposits 1,348 1,351 1,827 (0.2 )% (26.2 )%
Interest on borrowings 326     304     266     7.2 %   22.6 %
Total interest expense 1,674     1,655     2,093     1.1 %   (20.0 )%
Net interest and dividend income 9,877 8,514 5,757 16.0 % 71.6 %
Provision for loan losses 959     714     1,092     34.3 %   (12.2 )%
Net interest and dividend income, after provision for loan losses 8,918 7,800 4,665 14.3 % 91.2 %
Deposit account fees 343 291 134 17.9 % 156.0 %
Interchange and ATM fees 371 285 210 30.2 % 76.7 %
Mortgage banking 75 68 367 10.3 % (79.6 )%
Gain on sale of jumbo residential mortgage portfolio loans 618 % %
Loan level derivative income 57 150 182 (62.0 )% (68.7 )%
Net realized securities gains and impairment losses 1,191 541 86 120.1 % 1,284.9 %
Gains on trading assets, net 25 107 % %
Bank-owned life insurance 246 249 1,714 (1.2 )% (85.6 )%
Miscellaneous 27     20     247     35.0 %   (89.1 )%
Total noninterest income 2,310     1,629     3,665     41.8 %   (37.0 )%
Salaries and employee benefits 5,212 5,129 3,870 1.6 % 34.7 %
Occupancy and equipment 1,298 1,601 945 (18.9 )% 37.4 %
Data processing 701 605 399 15.9 % 75.7 %
Professional fees 1,123 1,159 712 (3.1 )% 57.7 %
Advertising 658 301 654 118.6 % 0.6 %
FDIC deposit insurance 196 178 128 10.1 % 53.1 %
Directors' fees 156 150 120 4.0 % 30.0 %
Amortization of core deposit intangible 509 353 44.2 % %
Other general and administrative 809     780     794     3.7 %   1.9 %
Total noninterest expense 10,662 10,256 7,622 4.0 % 39.9 %
Income (loss) before income taxes 566 (827 ) 708 168.4 % (20.1 )%
Provision (benefit) for income taxes 137     (428 )   (421 )   132.0 %   132.5 %
Net income (loss) $ 429     $ (399 )   $ 1,129     207.5 %   (62.0 )%
 
     
Blue Hills Bancorp, Inc.
Consolidated Statements of Operations - Year to Date
(Dollars in thousands) Year to Date

June 30,
2014

June 30,
2013

% Change
June 14 vs. June 13

Statements of Operations
Interest and fees on loans $ 17,450 $ 9,758 78.8 %
Interest on securities 3,940 4,744 (16.9 )%
Dividends 284 649 (56.2 )%
Other 46   47   (2.1 )%
Total interest and dividend income 21,720 15,198 42.9 %
Interest on deposits 2,699 3,639 (25.8 )%
Interest on borrowings 630   558   12.9 %
Total interest expense 3,329   4,197   (20.7 )%
Net interest and dividend income 18,391   11,001   67.2 %
Provision for loan losses 1,673     1,956   (14.5 )%
Net interest and dividend income, after provision for loan losses 16,718 9,045 84.8 %
Deposit account fees 633 267 137.1 %
Interchange and ATM fees 657 398 65.1 %
Mortgage banking 143 581 (75.4 )%
Gain on sale of jumbo residential mortgage portfolio loans 618 (100.0 )%
Loan level derivative income 207 270 (23.3 )%
Net realized securities gains and impairment losses 1,732 4,376 (60.4 )%
Gains on trading assets, net 25 278 (91.0 )%
Bank-owned life insurance 495 1,987 (75.1 )%
Miscellaneous 47   332   (85.8 )%
Total noninterest income 3,939 9,107 (56.7 )%
Salaries and employee benefits 10,341 7,794 32.7 %
Occupancy and equipment 2,899 1,938 49.6 %
Data processing 1,306 823 58.7 %
Professional fees 2,282 1,350 69.0 %
Advertising 959 1,212 (20.9 )%
FDIC deposit insurance 375 296 26.7 %
Directors' fees 306 250 22.4 %
Amortization of core deposit intangible 862 %
Other general and administrative 1,588   1,430   11.0 %
Total noninterest expense 20,918 15,093 38.6 %
Income (loss) before income taxes (261 ) 3,059 (108.5 )%
Provision (benefit) for income taxes (292 )   397   (173.6 )%
Net income (loss) $ 31     $ 2,662   (98.8 )%
 
Blue Hills Bancorp Inc.
Consolidated Statements of Operations - Trend
  Quarters Ended
(Dollars in thousands) June 30,   March 31,   December 31,   September 30,   June 30,
2014   2014   2013   2013   2013
Statements of Operations
Interest and fees on loans $ 9,399 $ 8,051 $ 6,453 $ 5,663 $ 4,894
Interest on securities 2,003 1,937 1,994 2,081 2,455
Dividends 119 166 1,450 230 475
Other 30     15     10     10     26  
Total interest and dividend income 11,551 10,169 9,907 7,984 7,850
Interest on deposits 1,348 1,351 1,490 1,674 1,827
Interest on borrowings 326     304     305     305     266  
Total interest expense 1,674     1,655     1,795     1,979     2,093  
Net interest and dividend income 9,877     8,514     8,112     6,005     5,757  
Provision for loan losses 959     714     1,001     1,136     1,092  
Net interest and dividend income, after provision for loan losses 8,918 7,800 7,111 4,869 4,665
Deposit account fees 343 291 164 148 134
Interchange and ATM fees 371 285 209 214 210
Mortgage banking 75 68 86 87 367
Gain on sale of jumbo residential mortgage portfolio loans (81 ) 618
Loan level derivative income 57 150 507 615 182
Net realized securities gains and impairment losses 1,191 541 (633 ) 1,253 86
Gains on trading assets, net 25 (55 ) 283 107
Bank-owned life insurance 246 249 260 648 1,714
Miscellaneous 27     20     223     (21 )   247  
Total noninterest income 2,310 1,629 761 3,146 3,665
Salaries and employee benefits 5,212 5,129 5,159 3,949 3,870
Occupancy and equipment 1,298 1,601 1,110 948 945
Data processing 701 605 646 466 399
Professional fees 1,123 1,159 700 1,298 712
Advertising 658 301 269 342 654
FDIC deposit insurance 196 178 95 128 128
Directors' fees 156 150 312 125 120
Amortization of core deposit intangible 509 353
Other general and administrative 809     780     664     354     794  
Total noninterest expense 10,662 10,256 8,955 7,610 7,622
Income (loss) before income taxes 566 (827 ) (1,083 ) 405 708
Provision (benefit) for income taxes 137     (428 )   (468 )   (214 )   (421 )
Net income (loss) $ 429     $ (399 )   $ (615 )   $ 619     $ 1,129  
 
Blue Hills Bancorp Inc.
Average Balances/Yields
(Dollars in thousands)   Quarters Ended
June 30, 2014   March 31, 2014   June 30, 2013

Average
balance

  Interest   Yield/

Cost

 

Average
balance

  Interest   Yield/

Cost

 

Average
balance

  Interest Yield/

Cost

Interest-earning assets          
Total loans $ 969,417 $ 9,399 3.89 % $ 880,754 $ 8,051 3.71 % $ 515,279 $ 4,894 3.81 %
Securities 422,335 2,081 1.98 443,084 2,066 1.89 513,909 2,921 2.28
Other interest earning assets 94,149     71     0.30   46,176     52     0.46   52,347     35   0.27  
Total interest-earning assets 1,485,901 11,551 3.12 1,370,014 10,169 3.01 1,081,535 7,850 2.91
Non-interest-earning assets 90,026   71,684   63,123  
Total assets $ 1,575,927   $ 1,441,698   $ 1,144,658  
 
Interest-bearing liabilities
NOW and demand accounts $ 121,263 $ 19 0.06 % $ 114,927 $ 21 0.07 % $ 63,721 $ 18 0.11 %
Regular savings accounts 345,837 329 0.38 350,377 354 0.41 360,608 715 0.80
Money market accounts 191,972 251 0.52 170,283 209 0.50 80,727 148 0.74
Certificates of deposit 359,668     749     0.84   355,463     767     0.88   331,168     946   1.15  
Total interest-bearing deposits 1,018,740 1,348 0.53 991,050 1,351 0.55 836,224 1,827 0.88
Borrowings 206,077     326     0.63   165,333     304     0.75   77,725     266   1.37  
Total interest-bearing liabilities 1,224,817 1,674 0.55 1,156,383 1,655 0.58 913,949 2,093 0.92
Non-interest-bearing deposits 112,849 96,193 28,263
Other non-interest-bearing liabilities 63,496   15,682   23,870  
Total liabilities 1,401,162 1,268,258 966,082
Equity 174,765   173,440   178,576  
Total liabilities and equity $ 1,575,927   $ 1,441,698   $ 1,144,658  
 
Net interest and dividend income $ 9,877 $ 8,514 $ 5,757
Net interest rate spread 2.57 % 2.43 % 1.99 %
Net interest margin 2.67 % 2.52 % 2.14 %
Total deposit cost 0.48 % 0.50 % 0.85 %

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

Blue Hills Bancorp Inc.
Average Balances/Yields
(Dollars in thousands)   Year to Date
June 2014   June 2013

Average
balance

  Interest   Yield/

Cost

 

Average
balance

  Interest   Yield/

Cost

Interest-earning assets        
Total loans $ 925,331 $ 17,450 3.80 % $ 508,865 $ 9,758 3.87 %
Securities 432,652 4,147 1.93 523,123 5,375 2.07
Other interest earning assets 70,295     123     0.35   57,966     65     0.23  
Total interest-earning assets 1,428,278 21,720 3.07 1,089,954 15,198 2.81
Non-interest-earning assets 83,328   61,650  
Total assets $ 1,511,606   $ 1,151,604  
 
Interest-bearing liabilities
NOW and demand accounts $ 118,113 $ 40

0.07

%

$ 63,560 $ 35 0.11 %
Regular savings accounts 348,094 684 0.40 344,284 1,395 0.82
Money market accounts 181,187 460 0.51 82,305 309 0.76
Certificates of deposit 357,577     1,515     0.85   331,991     1,900     1.15  

Total interest-bearing deposits

1,004,971 2,699 0.54 822,140 3,639 0.89
Borrowings 185,818     630     0.68   102,936     558     1.09  
Total interest-bearing liabilities 1,190,789   3,329 0.56 925,076   4,197 0.91
Non-interest-bearing deposits 104,567 26,730
Other non-interest-bearing liabilities 42,143   21,494  
Total liabilities 1,337,499 973,300
Equity 174,107   178,304  
Total liabilities and equity $ 1,511,606   $ 1,151,604  
 
Net interest and dividend income $ 18,391 $ 11,001
Net interest rate spread 2.51 % 1.90%
Net interest margin 2.60 % 2.04 %
Total deposit cost 0.49 % 0.86%

*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
   
(Dollars in thousands) June 30, March 31, December 31, September 30, June 30,
2014   2014   2013   2013   2013
Interest-earning assets
Total loans $ 969,417 $ 880,754 $ 720,615 $ 626,905 $ 515,279
Securities 422,335 443,084 445,584 510,972 513,909
Other interest earning assets 94,149     46,176     38,191     29,586     52,347
Total interest-earning assets 1,485,901 1,370,014 1,204,390 1,167,463 1,081,535
Non-interest-earning assets 90,026     71,684     49,358     51,344     63,123
Total assets $ 1,575,927     $ 1,441,698     $ 1,253,748     $ 1,218,807     $ 1,144,658
 
Interest-bearing liabilities
NOW and demand accounts $ 121,263 $ 114,927 $ 74,777 $ 64,322 $ 63,721
Regular savings accounts 345,837 350,377 337,315 353,231 360,608
Money market accounts 191,972 170,283 79,398 80,925 80,727
Certificates of deposit 359,668     355,463     385,674     353,171     331,168
Total interest-bearing deposits 1,018,740 991,050 877,164 851,649 836,224
Borrowings 206,077     165,333     153,728     149,602     77,725
Total interest-bearing liabilities 1,224,817 1,156,383 1,030,892 1,001,251 913,949
Non-interest-bearing deposits 112,849 96,193 36,980 29,629 28,263
Other non-interest-bearing liabilities 63,496     15,682     12,162     16,831     23,870
Total liabilities 1,401,162 1,268,258 1,080,034 1,047,711 966,082
Equity 174,765     173,440     173,714     171,096     178,576
Total liabilities and equity $ 1,575,927     $ 1,441,698     $ 1,253,748     $ 1,218,807     $ 1,144,658

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

Blue Hills Bancorp, Inc.
Yield Trend
  Quarters Ended
June 30,   March 31,   December 31,   September 30,   June 30,
2014   2014   2013   2013   2013
Interest-earning assets
Total loans 3.89% 3.71% 3.55% 3.58% 3.81%
Securities 1.98% 1.89% 3.06% 1.79% 2.28%
Other interest earning assets 0.30%   0.46%   0.19%   0.25%   0.27%
Total interest-earning assets 3.12%   3.01%   3.26%   2.71%   2.91%
 
Interest-bearing liabilities
NOW and demand accounts 0.06% 0.07% 0.08% 0.12% 0.11%
Regular savings accounts 0.38% 0.41% 0.53% 0.65% 0.80%
Money market accounts 0.52% 0.50% 0.49% 0.61% 0.74%
Certificates of deposit 0.84%   0.88%   0.96%   1.07%   1.15%
Total interest-bearing deposits 0.53% 0.55% 0.67% 0.78% 0.88%
Borrowings 0.63%   0.75%   0.79%   0.81%   1.37%
Total interest-bearing liabilities 0.55%   0.58%   0.69%   0.78%   0.92%
 
Net interest rate spread 2.57% 2.43% 2.57% 1.93% 1.99%
Net interest margin 2.67% 2.52% 2.67% 2.04% 2.14%
Total deposit cost 0.48% 0.50% 0.65% 0.75% 0.85%
 
Blue Hills Bancorp, Inc.
Selected Financial Highlights
(Dollars in thousands)   At or for Quarters Ended  

At or for the Six
Months Ended

June 30,   March 31,   June 30, June 30,   June 30,
2014   2014   2013 2014   2013
 

Asset Quality

Nonperforming Assets $ 4,766 $ 4,132 $ 3,008 $ 4,766 $ 3,008
Nonperforming Assets/Total Assets

0.26

%

0.28

%

0.24

%

0.26

%

0.24

%

Allowance for Loan Losses/Total Loans 1.13 %

1.12

%

1.32 % 1.13 % 1.32 %
Net Chargeoffs (Recoveries) $ 13 $ 39 $ (136 ) $ 51 $ (116 )
Annualized Chargeoffs (Recoveries)/Average Loans

0.01

%

0.02

%

(0.11

%)

0.01

%

(0.05

%)

 

Performance Ratios

Return (loss) on Average Assets (ROAA) 0.11 % (0.11 )% 0.40 % % 0.47 %
Return (loss) on Average Equity (ROAE) 0.82 % (0.93 )% 2.54 % 0.04 % 3.01 %
Return (loss) on Average Tangible Common Equity (ROATCE) 1.22 % (1.15 )% 2.83 % 0.04 % 3.36 %
Net Interest Margin 2.67 % 2.52 % 2.14 % 2.60 % 2.04 %
Efficiency Ratio 87.5 % 101.1 % 80.9 % 93.7 % 75.1 %
 

Capital/Other

Tangible Common Equity/Tangible Assets 7.91 % 9.40 % 12.12 % 7.91 % 12.12 %
Full-time Equivalent Employees 215 200 153 215 153

Contacts

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

Sharing

Contacts

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