SOUTH BURLINGTON, Vt., April 28, 2016 /PRNewswire/ -- Merchants Bancshares, Inc. (NASDAQ: MBVT), the parent company of Merchants Bank, today announced net income of $3.49 million, or $0.51 per basic share and $0.50 per diluted share for the first quarter of 2016. Excluding merger costs and severance expense, net of tax, the Company's core net income was $3.82 million or $0.56 per basic share and $0.55 per diluted share. This compares to core net income of $3.94 million or $0.61 per basic and diluted share on a linked quarter basis.
The return on average assets was 0.71% for the three months ended March 31, 2016, compared to 0.78% for the same period in 2015. The return on average equity was 9.32% for the three months ended March 31, 2016, compared to 10.56% for the same period in 2015. The Company's Board of Directors approved a dividend of $0.28 per share, payable May 26, 2016, to stockholders of record as of May 12, 2016.
Geoffrey Hesslink, Merchants Bancshares, Inc.'s President and Chief Executive Officer commented, "This quarter we completed the integration of NUVO Bank into Merchants with a very successful systems conversion. Further we are seeing benefits of the roll out of Merchants deposit pricing to customers in the Springfield market. Our material merger related expenses and activities are behind us and we are focused on serving our new customers and growing our business in western Massachusetts." Mr. Hesslink also noted, "Competitive loan markets and the current interest rate environment present industry challenges. We remain disciplined with our credit and return standards. We are confident this discipline will benefit our stockholders over the long term."
First Quarter 2016 Financial Highlights
Balance Sheet:
-- The investment portfolio ended the first quarter of 2016 at $413.3 million, an increase of $6.4 million from the fourth quarter of 2015 and an increase of $25.7 million from the first quarter of 2015. -- Loans at March 31, 2016 totaled $1.4 billion, an increase of $7.3 million on a linked quarter basis. Total commercial loans, defined as commercial, commercial real estate and construction, increased $15.9 million, while residential real estate and installment loans decreased $7.4 million and $1.1 million, respectively. Loan balances increased $221.4 million from the first quarter of 2015, which reflects organic growth and the acquired NUVO loan portfolio which totaled $146.7 million at March 31, 2016. -- The allowance for loan losses ("ALL") as of March 31, 2016 was $12.2 million, or 0.86% of gross loans, compared to $12.0 million, or 0.85% of gross loans, on a linked quarter basis and $12.0 million, or 1.00% of gross loans, as of March 31, 2015. ALL as a percentage of gross loans remained flat on a linked quarter basis. The decrease in ALL as a percentage of gross loans from the first quarter in 2015 was due to the increase in loan balances acquired from NUVO Bank & Trust Company ("NUVO"). These loans were acquired at fair value on the acquisition date. -- Total deposits were $1.5 billion for the first quarter of 2016, a decrease of $24.7 million on a linked quarter basis and an increase of $197.0 million from the first quarter of 2015. The decrease on a linked quarter basis was primarily attributable to maturing NUVO time deposits. The increase from the first quarter of 2015 was due to higher retail and trust account deposits as well as the acquired NUVO deposits. -- Total stockholders' equity ended the quarter at $152.6 million. The tangible book value per share at March 31, 2016 was $21.06 per share, an increase of $0.68 from $20.38 at December 31, 2015. The major components of the linked quarter increase were $0.51 of earnings and $0.41 mark to market securities gains, offset by $0.28 of dividends paid.
Income Statement:
-- Net interest income on a fully-taxable basis was $14.27 million for the three months ended March 31, 2016, compared to $13.25 million for the quarter ending December 31, 2015, and $12.06 million for the same period in 2015. The increases in net interest income reflect higher loan balances. -- The Company recorded a $205 thousand provision for credit losses during the first quarter of 2016 reflecting a modest decline in credit quality. The full year 2015 provision for credit losses was $250 thousand. -- Noninterest income for the first quarter of 2016 was $2.9 million, a decrease of $163.0 thousand on a linked quarter basis and an increase of $254 thousand from the first quarter of 2015. The decrease on a linked quarter basis was attributable to lower debit card and other fee income. The increase from the first quarter of 2015 was due to higher service charges on deposit accounts. -- Excluding merger, severance and retirement costs, noninterest expense was $11.5 million for the first quarter of 2016, an increase of $644 thousand on a linked quarter basis which is primarily attributable to a full quarter of operating as a combined entity with NUVO. -- The effective tax rate was 23% for the three months ended March 31, 2016, compared to 20% for three months ended December 31, 2015, and 21% for the first quarter of 2015. The increase in the effective tax rate on a linked quarter basis and from the first quarter of 2015 reflects reduced Low Income Housing Partnership tax credits.
Other Items:
-- The taxable equivalent net interest margin for the three months ended March 31, 2016 was 3.02%, an increase of 13 basis points on a linked quarter basis. This increase reflects the impact of a full quarter of NUVO loans which were accretive to loan yield and a more favorable asset mix, partially offset by a full quarter impact of NUVO deposits. -- Nonperforming loans were $4.85 million, or 0.34% of total loans, at March 31, 2016, compared to 0.30% of total loans at December 31, 2015 and 0.11% of total loans at March 31, 2015. Total nonperforming loans increased $652 thousand on a linked quarter basis. This increase is attributed to the loan portfolio acquired with NUVO. -- Regulatory Capital Ratios at March 31, 2016: -- Common Equity Tier 1 - 12.95% -- Tier 1 Leverage - 8.53% -- Total Risk-Based Capital - 15.85% -- Tangible Capital - 7.39%
Geoffrey R. Hesslink, President and Chief Executive Officer, Eric A. Segal, Interim PFO, PAO and Treasurer, and Marie Thresher, Executive Vice President and Chief Operating Officer, will host a conference call to discuss these earnings results, business and outlook at 10:00 a.m. Eastern Time on Friday, April 29, 2016. Interested parties may participate in the conference call by dialing U.S. number (866) 218-2405, Canada number (855) 669-9657, or international number (412) 902-4124. The title of the call is Merchants Bancshares, Inc. Q1 2016 Earnings Call. Participants are asked to call a few minutes prior to register. A replay will be available until 12:01 a.m. Eastern Time on Friday, May 13, 2016. The U.S. replay dial-in telephone number is (877) 344-7529. The Canada replay telephone number is (855) 669-9658, the international replay telephone number is (412) 317-0088. The replay access code for all replay telephone numbers is 10068680. Additionally, a recording of the call will be available on Merchants website at www.mbvt.com
Non-GAAP Financial Measure. In addition to results presented in accordance with generally accepted accounting principles ("GAAP"), this press release contains certain non-GAAP financial measures, such as core net income, tangible capital ratio and fully taxable equivalent net interest income. Net interest income is presented on a fully taxable equivalent basis, specifically included in interest income was tax-exempt interest income from certain tax-exempt loans. An amount equal to the tax benefit derived from this tax exempt income is added back to the interest income total, to produce net interest income on a fully taxable equivalent basis. Merchants Bancshares believes that the supplemental non-GAAP information is utilized by regulators and market analysts to evaluate a company's financial condition and therefore such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. Additionally, capital ratios as presented are preliminary and will not be finalized until the Bank completes and files its regulatory reporting.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements, which are based on certain assumptions and describe Merchants Bancshares' future plans, strategies and expectations, can generally be identified by the use of the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "target" and similar expressions. Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. Actual results could differ materially from those projected in the forward-looking statements as a result of, among others; costs or difficulties related to the integration of NUVO; weakness in general, national, regional or local economic conditions, the performance of the investment portfolio, quality of credits or the overall demand for services; changes in loan default and charge-off rates which could affect the allowance for credit losses; declines in the equity and financial markets; reductions in deposit levels which could necessitate increased and/or higher cost borrowing to fund loans and investments; declines in mortgage loan refinancing, equity loan and line of credit activity which could reduce net interest and non-interest income; changes in the domestic interest rate environment and inflation; changes in the carrying value of investment securities and other assets; misalignment of interest-bearing assets and liabilities; increases in loan repayment rates affecting interest income and the value of mortgage servicing rights; changing business, banking, or regulatory conditions or policies, or new legislation affecting the financial services industry that could lead to changes in the competitive balance among financial institutions, restrictions on bank activities, changes in costs (including deposit insurance premiums), increased regulatory scrutiny, declines in consumer confidence in depository institutions, or changes in the secondary market for bank loan and other products; and changes in accounting rules, federal and state laws, IRS regulations, and other regulations and policies governing financial holding companies and their subsidiaries which may impact Merchants Bancshares' ability to take appropriate action to protect financial interests in certain loan situations.
You should not place undue reliance on forward-looking statements, and are cautioned that forward- looking statements are inherently uncertain. Actual performance and results of operations may differ materially from those projected or suggested in the forward-looking statements due to certain risks and uncertainties, which are included in more detail in the Annual Report on Form 10-K, as updated by Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission. Merchants Bancshares' does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.
Merchants Bancshares, Inc. Financial Highlights (unaudited) (Dollars in thousands except share and per share data) March 31, December 31, March 31, 2016 2015 2015 ---- ---- ---- Balance Sheets - Period End Total assets $1,963,630 $2,021,237 $1,694,985 Cash and due from banks 27,586 30,605 25,627 Interest earning cash and other short-term investments 38,054 104,578 42,292 Fed funds sold 15,000 15,000 - Investments-available for sale, taxable 294,048 283,454 248,987 Investments-held to maturity, taxable 115,392 119,674 134,245 Loans 1,421,603 1,414,280 1,200,170 Allowance for loan losses ("ALL") 12,173 12,040 11,989 Net loans 1,409,430 1,402,240 1,188,181 Federal Home Loan Bank ("FHLB") stock 3,863 3,797 4,378 Bank premises and equipment, net 14,532 15,030 15,581 Bank owned life insurance 10,606 10,551 10,372 Goodwill 6,872 6,967 - Investment in real estate limited partnerships 5,827 5,687 5,470 Core deposit intangible 1,309 1,360 - Other assets 21,111 22,294 19,852 Non-interest bearing deposits 620,190 631,244 583,486 Savings, interest bearing checking and money market accounts 677,600 665,623 541,878 Time deposits 228,998 254,572 204,433 Total deposits 1,526,788 1,551,439 1,329,797 Securities sold under agreement to repurchase, short-term 249,003 286,639 206,386 Other long-term debt 4,716 5,238 2,300 Junior subordinated debentures issued to unconsolidated subsidiary trust 20,619 20,619 20,619 Other liabilities 9,903 9,248 7,422 Stockholders' equity 152,601 148,054 128,461 Balance Sheets - Quarter-to- Date Averages Total assets $1,973,472 $1,891,143 $1,718,309 Cash and due from banks 31,058 28,380 25,478 Interest earning cash and other short-term investments 74,294 106,681 102,394 Investments-available for sale, taxable 279,327 279,416 225,277 Investments-held to maturity, taxable 117,390 122,924 136,404 Loans 1,417,710 1,306,613 1,187,278 Allowance for loan losses 12,073 12,269 11,892 Net loans 1,405,637 1,294,344 1,175,386 FHLB stock 3,784 3,571 4,378 Bank owned life insurance 10,571 10,515 10,334 Other assets 51,411 45,312 38,658 Non-interest bearing deposits 616,553 610,499 582,573 Savings, interest bearing checking and money market accounts 671,823 632,481 540,846 Time deposits 239,818 210,527 207,849 Total deposits 1,528,194 1,453,507 1,331,268 Securities sold under agreement to repurchase, short-term 259,999 268,614 230,113 Other long-term debt 4,833 3,255 2,307 Junior subordinated debentures issued to unconsolidated subsidiary trust 20,619 20,619 20,619 Other liabilities 9,973 7,972 7,708 Stockholders' equity 149,854 137,176 126,294 Earning assets 1,892,505 1,819,205 1,655,731 Interest bearing liabilities 1,197,092 1,135,496 1,001,734
Merchants Bancshares, Inc. Financial Highlights (unaudited) (Dollars in thousands except share and per share data) March 31, December 31, March 31, 2016 2015 2015 ---- ---- ---- Ratios and Supplemental Information -Period End Book value per share $22.25 $21.59 $20.30 Tangible book value per share $21.06 $20.38 $20.30 Common Equity Tier 1 12.95% 12.86% 13.85% Tier I leverage ratio 8.53% 8.77% 8.95% Total risk-based capital ratio 15.85% 15.77% 17.17% Tangible capital ratio (1) 7.39% 6.94% 7.58% Period end common shares outstanding 6,858,473 6,855,294 6,328,818 Credit Quality - Period End Nonperforming loans ("NPLs") $4,847 $4,195 $1,298 Nonperforming assets ("NPAs") $4,918 $4,207 $1,298 NPLs as a percent of total loans 0.34% 0.30% 0.11% NPAs as a percent of total assets 0.25% 0.21% 0.08% ALL as a percent of NPLs 251% 287% 924% ALL as a percent of total loans 0.86% 0.85% 1.00% ______________________________________ (1) The tangible capital ratio is calculated by dividing tangible equity by tangible assets. See Non-GAAP reconciliation on page 7.
March 31, December 31, March 31, 2016 2015 2015 ---- ---- ---- Loan Portfolios- Period End Commercial, financial and agricultural $247,074 $237,451 $195,782 Municipal loans 105,433 105,421 91,410 Real estate loans - commercial 556,836 558,004 419,500 Real estate loans - residential 461,009 468,443 461,459 Real estate loans - construction 42,209 34,802 28,512 Installment Loans 9,009 10,115 3,454 All other loans 33 44 53 Total Loans $1,421,603 $1,414,280 $1,200,170
Merchants Bancshares, Inc. Financial Highlights (unaudited) (Dollars in thousands except share and per share data) For the Three Months Ended -------------------------- March 31, December 31, March 31, 2016 2015 2015 ---- ---- ---- Operating Results Interest income Interest and fees on loans $12,804 $11,609 $10,623 Interest and dividends on investments 1,997 1,995 1,910 Interest on interest earning deposits with banks and other short- term investments 81 94 73 Total interest and dividend income 14,882 13,698 12,606 Interest expense Savings, interest bearing checking and money market accounts 440 358 367 Time deposits $100 thousand and greater 118 105 122 Other time deposits 273 232 212 Total deposits 831 695 701 Securities sold under agreement to repurchase and other short-term borrowings 109 108 155 Long-term debt 210 202 197 Total interest expense 1,150 1,005 1,053 Net interest income 13,732 12,693 11,553 Provision for credit losses 205 - - Net interest income after provision for credit losses 13,527 12,693 11,553 Noninterest income Trust division income 867 858 895 Net, debit card income 649 779 693 Overdraft income 631 678 446 Service charges on deposits 415 396 340 Other noninterest income 362 376 296 Total noninterest income 2,924 3,087 2,670 Noninterest expense Compensation and benefits 6,308 6,133 5,048 Occupancy expense 1,139 1,023 1,143 Equipment expense 719 747 766 Telephone expense 198 179 217 Legal and professional fees 593 596 442 Mobile & internet banking 366 402 386 Core / Item processing 517 476 406 Marketing expenses 192 125 152 State franchise taxes 398 408 286 FDIC insurance 254 233 218 Merger costs 133 1,511 - Core deposit intangible amortization 51 17 - Other noninterest expense 1,051 1,042 943 Total noninterest expense 11,919 12,892 10,007 Income before provision for income taxes 4,532 2,888 4,216 Provision for income taxes 1,042 579 880 Net income $3,490 $2,309 $3,336 Amounts reported for prior periods are reclassified, where necessary, to be consistent with the current period presentation.
Merchants Bancshares, Inc. Financial Highlights (unaudited) (Dollars in thousands except share and per share data) For the Three Months Ended -------------------------- March 31, December 31, March 31, 2016 2015 2015 ---- ---- ---- Ratios and Supplemental Information Weighted average common shares outstanding 6,855,975 6,493,154 6,328,623 Weighted average diluted shares outstanding 6,965,886 6,525,559 6,342,490 Basic earnings per common share $0.51 $0.36 $0.53 Diluted earnings per common share $0.50 $0.36 $0.53 Return on average assets 0.71% 0.49% 0.78% Return on average stockholders' equity 9.32% 6.73% 10.56% Average yield on loans 3.78% 3.69% 3.80% Average yield on investments 2.01% 1.97% 2.12% Average yield of earning assets 3.28% 3.12% 3.21% Average cost of interest bearing deposits 0.37% 0.35% 0.38% Average cost of borrowed funds 0.45% 0.42% 0.57% Average cost of interest bearing liabilities 0.39% 0.35% 0.43% Net interest rate spread 2.89% 2.77% 2.78% Net interest margin 3.02% 2.89% 2.95% Net interest income on a fully taxable equivalent basis $14,265 $13,247 $12,057 Net (charge-offs) recoveries to average loans (0.02)% (0.01)% (0.03)% Net (charge-offs) recoveries $(82) $(43) $(76) Efficiency ratio (1) 64.27% 63.70% 65.89% ______________________________________ (1) The efficiency ratio excludes amortization of intangibles, OREO expenses, gain/loss on sales of securities, state franchise taxes, and any significant nonrecurring items.
Non-GAAP Reconciliation: March 31, December 31, Core Net Interest Income - Period End 2016 2015 ---- ---- Merger related expenses and retirement costs $422 $2,039 Tax effect 97 408 --- --- Merger related expenses and retirement costs, net of tax $325 $1,631 GAAP net income as reported 3,490 2,309 ----- ----- Core net income $3,815 $3,940 Weighted average common shares outstanding 6,856 6,493 Weighted average diluted shares outstanding 6,966 6,526 Core basic earnings per common share $0.56 $0.61 Core diluted earnings per common share $0.55 $0.61
Tangible Capital Ratio: March 31, December 31, March 31, Period End 2016 2015 2015 ---- ---- ---- Total assets $1,963,630 $2,021,237 $1,694,985 Core deposit intangible 1,309 1,360 - Goodwill 6,872 6,967 - Tangible assets 1,955,449 2,012,910 1,694,985 Total stockholders' equity 152,601 148,054 128,461 Core deposit intangible 1,309 1,360 - Goodwill 6,872 6,967 - Tangible stockholders' equity 144,420 139,727 128,461 Tangible capital ratio 7.39% 6.94% 7.58%
Contact: Jamie Oberle, Merchants Bank, at (802) 865-1603
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