Wellesley Bancorp, Inc. (Nasdaq Capital Market: WEBK) (the “Company”), the holding company for Wellesley Bank (the “Bank”), reported net income of $436 thousand and $1.8 million for the quarter and year ended December 31, 2014, respectively, compared to net income of $434 thousand and $2.2 million for the quarter and year ended December 31, 2013, respectively. Diluted earnings per share were $0.19 and $0.77 for the quarter and year ended December 31, 2014, respectively, compared to $0.19 and $0.97 for the quarter and year ended December 31, 2013, respectively. Total assets were $535.1 million at December 31, 2014, an increase of $76.6 million, or 16.7%, from December 31, 2013 due to a $59.6 million increase in net loans and a $16 million increase in securities supported primarily by a $64.7 million increase in deposits.
Thomas J. Fontaine, President and Chief Executive Officer, said, “We are very pleased to share our year end financial results with our stockholders. Significant to this year’s accomplishments was declaring our initial cash dividend. Asset growth has been strong once again in 2014 as we surpassed $500 million in total assets during the third quarter. I would like to thank our directors, our management team and most of all our employees who continue to demonstrate that premier client service is the cornerstone of our organization.”
Fourth Quarter Earnings
Net
income for the quarter ended December 31, 2014 was consistent with the
results of the quarter ended December 31, 2013, increasing $2 thousand,
or 0.5%, as noninterest expenses increased, offset by increases in net
interest income. Net interest income increased $485 thousand, or 13.0%,
to $4.2 million for the quarter ended December 31, 2014, as compared to
$3.7 million for the quarter ended December 31, 2013. This increase was
primarily the result of increased interest income due to an increase in
the average balance of our loan portfolio, partially offset by higher
interest expense as the average balance of deposits also increased. The
yield on earning assets for the quarter ended December 31, 2014 was
4.03%, a decrease of 14 basis points from the prior year level primarily
due to lower yields on loans. Deposit and borrowing costs remained at
0.86% for the quarters ended December 31, 2014 and 2013. The net
interest margin was 3.32% for the 2014 quarter, compared to 3.47% for
the 2013 quarter, reflecting the drop in earning asset yields between
the two periods. We recorded a provision for loan losses of $60 thousand
for the quarter ended December 31, 2014, a decrease of $90 thousand over
the prior year, primarily reflecting a reduction in nonperforming loans
and a change in the mix of loan assets as compared to the prior year as
we added more residential mortgage loans to our portfolio. Noninterest
income totaled $229 thousand for the quarter ended December 31, 2014, a
decrease of $23 thousand, or 9.1%, from the prior year. Wealth
management fees decreased $33 thousand compared to 2013, while mortgage
banking income increased $16 thousand compared to the prior year. Total
noninterest expenses increased $572 thousand to $3.7 million for the
quarter ended December 31, 2014, as compared to $3.2 million for the
quarter ended December 31, 2013. The increase in operating expenses was
the result of personnel additions within our wealth management
subsidiary and additional staffing to support our commercial lending
operations. We also incurred one-time charges of $107 thousand during
the 2014 quarter for consultants to facilitate certain contract
negotiations on our behalf.
Year Earnings
Net income for
the year ended December 31, 2014 decreased $443 thousand compared to net
income for the year ended December 31, 2013 due to increased noninterest
expenses and an increased provision for loan losses, partially offset by
increased net interest income. Net interest income increased $2.2
million, or 16.2%, to $16.1 million for the year ended December 31,
2014, as compared to $13.9 million in the comparable 2013 period. The
increase was largely due to increased loan income resulting from the
growth in our portfolio. Our earning asset yield decreased 16 basis
points to 4.09% in the year ended December 31, 2014 from 4.25% in 2013
as we continued to realize the impact of lower-yielding residential
loans and lower yields on commercial real estate loans on overall
portfolio yields. Deposit and borrowing costs decreased one basis point
to 0.87% in the current period. Our net interest margin was 3.37% for
the year ended December 31, 2014, compared to 3.54% for the 2013 period.
The provision for loan losses increased to $640 thousand for the year
ended December 31, 2014, as compared to $500 thousand in 2013, primarily
due to loan growth. For the year ended December 31, 2014, noninterest
expenses increased $2.9 million to $13.6 million, as compared to $10.7
million in 2013. Salaries and employee benefits were $8.0 million for
the year ended December 31, 2014, as compared to $6.4 million in 2013,
reflecting staff additions in all areas of the organization throughout
the year. Occupancy and equipment expense increased $604 thousand to
$2.1 million for the year ended December 31, 2014, as compared to $1.5
million in 2013. These increases primarily reflect the costs associated
with a full year of operation of our office opened in Boston in November
2013. Professional service fees increased $374 thousand as we incurred
one-time charges of $295 thousand for consultants to facilitate certain
staffing and contract negotiations on our behalf during 2014.
Balance Sheet Growth
Total
assets were $535.1 million at December 31, 2014, representing an
increase of $76.6 million compared to $458.5 million at December 31,
2013. The increase was primarily related to loan growth during the year,
supported primarily by growth in deposits.
Net loans totaled $443.3 million at December 31, 2014, an increase of $59.6 million, as compared to December 31, 2013. Residential mortgage loans increased $51.5 million to $233.3 million at December 31, 2014, primarily due to growth in our adjustable-rate mortgage portfolio, as we continue to capitalize on strong residential loan demand within our marketplace. Commercial real estate loans increased $12.3 million to $94.7 million, compared to $82.4 at December 31, 2013 as we have refocused our efforts to grow that segment of our portfolio. Securities available for sale increased $16.0 million to $52.7 million at December 31, 2014 as compared to $36.7 million at December 31, 2013 as we seek to rebalance our overall mix of assets. Deposits increased $64.7 million to $422.2 million at December 31, 2014. The increase was primarily attributable to an increase in savings deposits of $52.2 million, an increase of $15.8 million in money market deposits, and an increase of $13.9 million in demand deposits. Longer-term FHLB advances increased $16.0 million to $59.5 million as we funded a portion of our loan growth with lower cost, long-term advances. Short-term borrowings, which consist entirely of advances from the FHLB, totaled $2.0 million at December 31, 2014, a reduction of $7.0 million from December 31, 2013 as retail and commercial deposit growth provided funds for short-term liquidity needs.
Stockholders’ equity increased $2.6 million to $49.3 million, primarily due to earnings, the impact of stock compensation plans, and an increase in accumulated other comprehensive income during the twelve month period. At December 31, 2014 the Company’s ratio of stockholders’ equity to total assets was 9.22% as compared to 10.21% at December 31, 2013.
About Wellesley Bancorp
The
Company is the holding company for Wellesley Bank, a community-oriented
financial institution. Wellesley Bank has been serving Wellesley and the
greater Boston area since 1911. Our team of highly experienced and
knowledgeable bankers provide exceptional and trusted advice to
successful individuals, families, businesses, private partnerships,
nonprofit organizations, foundations and trusts. We do so with the
greatest degree of personal attention and confidentiality.
Forward Looking Statements
This
press release contains certain forward-looking statements about the
Company and the Bank. Forward-looking statements include statements
regarding anticipated future events and can be identified by the fact
that they do not relate strictly to historical or current facts. They
often include words such as “believe,” “expect,” “anticipate,”
“estimate,” and “intend” or future or conditional verbs such as “will,”
“would,” “should,” “could,” or “may.” Forward-looking statements, by
their nature, are subject to risks and uncertainties. Certain factors
that could cause actual results to differ materially from expected
results include increased competitive pressures, changes in the interest
rate environment, general economic conditions or conditions within the
securities markets, and legislative and regulatory changes that could
adversely affect the business in which the Company and the Bank are
engaged.
The Company’s summary income statements and other data follow:
Wellesley Bancorp, Inc. and Subsidiary | ||||||||||||||||||
Consolidated Statements of Net Income | ||||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Three Months Ended |
Years Ended | |||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||
Interest and dividend income: | ||||||||||||||||||
Interest and fees on loans | $ | 4,863 | $ | 4,302 | $ | 18,559 | $ | 15,902 | ||||||||||
Other interest and dividend income | 256 | 186 | 986 | 758 | ||||||||||||||
Total interest and dividend income | 5,119 | 4,458 | 19,545 | 16,660 | ||||||||||||||
Interest expense | 900 | 754 | 3,425 | 2,785 | ||||||||||||||
Net interest income | 4,219 | 3,734 | 16,120 | 13,875 | ||||||||||||||
Provision for loan losses | 60 | 150 | 640 | 500 | ||||||||||||||
Net interest income, after provision for loan losses | 4,159 | 3,584 | 15,480 | 13,375 | ||||||||||||||
Total noninterest income | 229 | 252 | 959 | 949 | ||||||||||||||
Noninterest expenses: | ||||||||||||||||||
Salaries and employee benefits | 2,130 | 1,852 | 8,011 | 6,358 | ||||||||||||||
Occupancy and equipment | 582 | 441 | 2,095 | 1,491 | ||||||||||||||
Professional fees | 259 | 119 | 825 | 451 | ||||||||||||||
Other general and administrative | 753 | 740 | 2,627 | 2,399 | ||||||||||||||
Total noninterest expenses | 3,724 | 3,152 | 13,558 | 10,699 | ||||||||||||||
Income before income taxes | 664 | 684 | 2,881 | 3,625 | ||||||||||||||
Provision for income taxes | 228 | 250 | 1,104 | 1,405 | ||||||||||||||
Net income | $ | 436 | $ | 434 | $ | 1,777 | $ | 2,220 | ||||||||||
Other Data: | ||||||||||||||||||
Return on average assets (1) | 0.34% | 0.39% | 0.36% | 0.55% | ||||||||||||||
Return on average equity (1) | 3.59% | 3.90% | 3.70% | 5.09% | ||||||||||||||
Net interest margin (1) | 3.32% | 3.47% | 3.37% | 3.54% | ||||||||||||||
Earnings per common share: | ||||||||||||||||||
Basic | $ | 0.19 | $ | 0.19 | $ | 0.78 | $ | 0.97 | ||||||||||
Diluted | $ | 0.19 | $ | 0.19 | $ | 0.77 | $ | 0.97 | ||||||||||
Weighted average shares outstanding: | ||||||||||||||||||
Basic | 2,300,380 | 2,289,247 | 2,292,984 | 2,288,245 | ||||||||||||||
Diluted | 2,310,137 | 2,289,247 | 2,299,033 | 2,288,245 | ||||||||||||||
Stockholders’ equity to total assets at end of period | 9.22% | 10.21% | 9.22% | 10.21% | ||||||||||||||
Book value per common share at end of period | $ | 20.07 | $ | 19.06 | $ | 20.07 | $ | 19.06 | ||||||||||
Nonperforming loans to total loans | 1.08% | 1.59% | 1.08% | 1.59% | ||||||||||||||
(1) Annualized for the three month periods | ||||||||||||||||||
The Company’s summary balance sheets follow:
Wellesley Bancorp, Inc. and Subsidiary | ||||||||||||
Consolidated Balance Sheets | ||||||||||||
(In thousands) | ||||||||||||
(Unaudited) | ||||||||||||
December 31, |
December 31, | |||||||||||
Assets | ||||||||||||
Cash and cash equivalents | $ | 19,271 | $ | 19,067 | ||||||||
Certificates of deposit | 100 | 100 | ||||||||||
Securities available for sale, at fair value | 52,681 | 36,672 | ||||||||||
Federal Home Loan Bank of Boston stock, at cost | 3,660 | 3,176 | ||||||||||
Loans held for sale | 537 | 825 | ||||||||||
Loans | 448,084 | 387,931 | ||||||||||
Less allowance for loan losses | (4,738 | ) | (4,213 | ) | ||||||||
Loans, net | 443,346 | 383,718 | ||||||||||
Bank-owned life insurance | 6,841 | 6,607 | ||||||||||
Premises and equipment, net | 3,753 | 3,805 | ||||||||||
Other assets | 4,926 | 4,550 | ||||||||||
Total assets | $ | 535,115 | $ | 458,520 | ||||||||
| ||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||
Deposits: | ||||||||||||
Noninterest-bearing | $ | 58,859 | $ | 44,864 | ||||||||
Interest-bearing | 363,386 | 312,654 | ||||||||||
422,245 | 357,518 | |||||||||||
Short-term borrowings | 2,000 | 9,000 | ||||||||||
Long-term debt | 59,500 | 43,500 | ||||||||||
Accrued expenses and other liabilities | 2,024 | 1,713 | ||||||||||
Total liabilities | 485,769 | 411,731 | ||||||||||
Stockholders’ equity | 49,346 | 46,789 | ||||||||||
Total liabilities and stockholders’ equity | $ | 535,115 | $ | 458,520 |