MERCHANTS BANCSHARES,INC. SOUTH BURLINGTON, Vt., Oct. 27, 2016 /PRNewswire/ -- Merchants Bancshares, Inc. (NASDAQ: MBVT), the parent company of Merchants Bank, today announced net income of $3.9 million and $0.57 per diluted share for the third quarter of 2016 compared to net income of $4.4 million or $0.63 per diluted share in the second quarter of 2016 and $3.9 million in net income or $0.61 per diluted share in the third quarter of 2015. Excluding acquisition, merger, severance and retirement costs, net of tax, the Company's adjusted net income was $4.3 million or $0.62 per diluted share for the third quarter of 2016. This compares to adjusted net income of $4.2 million or $0.61 per diluted share on a linked quarter basis and adjusted net income of $4.3 million or $0.68 per diluted share in the third quarter of 2015.
For the nine months ended September 30, 2016, net income was $11.8 million, or $1.71 per diluted share, compared to net income of $10.3 million, or $1.62 per diluted share, for the same period in 2015. Excluding acquisition, merger, severance and retirement costs, net of tax, the Company's adjusted net income was $12.3 million or $1.79 per diluted share for the nine months of 2016. This compares to adjusted net income of $10.9 million or $1.72 per diluted share for the same period in 2015.
The return on average assets was 0.80% for the three months ended September 30, 2016, compared to 0.90% in the linked quarter and 0.88% for the same period in 2015. The return on average equity was 9.91% for the three months ended September 30, 2016, compared to 11.36% in the linked quarter and 11.93% for the same period in 2015.
The Company's Board of Directors approved a dividend of $0.28 per share, payable November 23, 2016, to stockholders of record as of November 10, 2016. Based on the closing price of $32.39 per share on September 30, 2016 and the annual dividend payout of $1.12 per share, the dividend represents an annualized yield of 3.46%.
Geoffrey Hesslink, Merchants Bancshares, Inc.'s President and Chief Executive Officer commented, "We look forward to becoming part of Community Bank System, Inc. as it enables us to further enhance the outstanding service and commitment that our customers and communities have come to expect from Merchants Bank. I thank our management team and talented employees for their continued focus on achieving our strategic priorities. We remain committed to delivering exceptional service to our customers."
Due to the pending transaction with Community Bank System, Inc., Merchants Bancshares will not have an earnings call for its third quarter results.
Third Quarter 2016 Financial Highlights
Balance Sheet:
-- Total assets were $1.99 billion as of September 30, 2016, an increase of
$95.9 million over the linked quarter and $176.3 million increase from
the third quarter of 2015. The increase over the linked quarter was
driven mainly by loan growth.
-- Gross loans at September 30, 2016 totaled $1.48 billion, an increase of
$81.9 million over the linked quarter and a $219.4 million increase from
the third quarter of 2015. The linked quarter increase in ending and
average loan balances since June 30, 2016 reflects growth in commercial
real estate loans and normal seasonal increase in municipal loans.
Municipal loans increased approximately $51.4 million from June 30,
2016. Total commercial loans, defined as commercial, commercial real
estate and construction increased $37.1 million from June 30, 2016. The
increase in loan balances from the third quarter of 2015 reflects
organic growth and the addition of the acquired NUVO Bank & Trust
Company ("NUVO") loan portfolio.
-- Total deposits were $1.50 billion for the third quarter of 2016, an
increase of $50.5 million over the linked quarter and an increase of
$116.4 million from the third quarter of 2015. The increase on a linked
quarter basis was primarily attributable to growth in money market and
demand deposit balances partially offset by planned decrease in
higher-cost NUVO time deposits. The increase from the third quarter of
2015 was primarily due to the acquisition of NUVO during the fourth
quarter of 2015.
-- Total stockholders' equity ended the quarter at $158.3 million. Tangible
book value per share increased by $0.24 to $21.80 per share at September
30, 2016 from $21.56 per share at June 30, 2016. The increase over the
linked quarter was due to growth of $0.57 per share in the net income,
partially offset by dividends paid of $0.28 per share. Reported book
value per share was $22.99 per share at September 30, 2016 as compared
to $22.74 per share at June 30, 2016 and $20.93 per share at September
30, 2015.
Income Statement:
-- Taxable equivalent net interest income was $14.4 million for the three
months ended September 30, 2016, which is consistent with the $14.4
million for the quarter ending June 30, 2016, but an increase from $12.6
million for the same period in 2015. GAAP net interest income in the
third quarter of 2016 was $13.8 million, compared to $13.8 million in
the linked quarter and $12.1 million in the third quarter of 2015. The
increase in the net interest margin over the same period year ago is
driven by the acquisition of NUVO.
-- The taxable equivalent net interest margin for the three months ended
September 30, 2016 was 3.03%, a decrease of 5 basis points on a linked
quarter basis and an increase of 7 basis points from the third quarter
of 2015. The linked quarter decrease reflected lower asset yields.
Interest earning assets increased by $8.7 million over the linked
quarter, mainly driven by the increase in average loan balances. The
increase in the net interest margin from the same period in 2015 was
driven by higher loan yields and changes in the loan mix.
-- Provision for credit losses was $500 thousand in the third quarter of
2016, compared to $200 thousand in the linked quarter and $150 thousand
in the third quarter of 2015. Provision expense was elevated in the
third quarter mainly due to new loan growth.
-- Noninterest income for the third quarter of 2016 was $3.1 million, a
decrease of $90 thousand on a linked quarter basis and a decline of $318
thousand from the third quarter of 2015. The decrease on a linked
quarter basis was attributable to lower debit card and other fee income.
The decrease from the third quarter of 2015 was primarily due to a
non-recurring miscellaneous income of $440 thousand in the same period
year ago.
-- Noninterest expense was $11.4 million for the third quarter of 2016,
compared to $10.8 million in the second quarter of 2016 and $10.6
million in the third quarter of 2015. Noninterest expense increased by
$587 thousand over the linked quarter primarily due to increase in
compensation expense. Noninterest expense grew by $829 thousand over the
third quarter of 2015 mainly due to the acquisition of NUVO in December
2015. Adjusted noninterest expense (excl. merger, acquisition, severance
and retirements costs) was $10.9 million in the third quarter, compared
to $11.0 million in the linked quarter and $10.0 million in the third
quarter 2015.
-- The effective tax rate was 24% for the nine months ended on September
30, 2016 compared to 20% for the corresponding period in 2015, mainly
due to changes in business mix composition which increased the taxable
portion of pre-tax income and related tax provision.
Credit Quality and Capital Ratios:
-- The allowance for loan losses ("ALL") as of September 30, 2016 was $12.5
million, or 0.85% of gross loans, compared to $12.4 million, or 0.89% of
gross loans, on a linked quarter basis and $12.2 million, or 0.97% of
gross loans, as of September 30, 2015. ALL as a percentage of gross
loans decreased on a linked quarter basis due to a charge-off on a
purchased loan in the third quarter. ALL as a percentage of gross loans
for the third quarter of 2016 has decreased from the third quarter in
2015 due to the addition of loan balances acquired from NUVO. These
loans were acquired at fair value on the acquisition date, without
carryover of any of NUVO's allowance for loan losses as required by
accounting standards.
-- Nonperforming loans were $4.2 million, or 0.29% of total loans, at
September 30, 2016, compared to 0.32% of total loans at June 30, 2016
and 0.06% of total loans at September 30, 2015. ALL as a percentage of
nonperforming loans was 296% at September 30, 2016 compared to 1600% at
September 30, 2015. Accruing loans past due 31-90 days were 0.06% for
the third quarter of 2016 compared to 0.06% in the second quarter of
2016 and 0.01% in the third quarter of 2015. Merchants Bank continues to
experience excellent credit quality.
-- Estimated regulatory capital ratios at September 30, 2016:
-- Common Equity Tier 1 - 12.78%
-- Tier 1 Leverage - 8.84%
-- Total Risk-Based Capital - 15.59%
-- Tangible Capital - 7.55%
Proposed Transaction with Community Bank System, Inc.
On October 22, 2016, Merchants Bancshares and Community Bank System, Inc. (NYSE: CBU) entered into a definitive agreement under which Community Bank System, Inc. will acquire Merchants Bancshares in a cash and stock transaction for total consideration valued at approximately $304 million. The combination will provide natural market extension for both companies, joining two high-quality, low-risk franchises with long histories of service to their customers and communities.
Under the terms of the agreement, shareholders of Merchants Bancshares will have the option to receive, at their election, consideration per share equal to (i) 0.963 shares of Community Bank System, Inc. common stock, (ii) $40.00 in cash or (iii) the combination of 0.6741 shares of Community Bank System, Inc. common stock and $12.00 in cash, subject to an overall proration to 70% stock and 30% cash. The cash and stock consideration would be equivalent to $44.02 for each share of Merchants Bancshares common stock based upon the closing price of Community Bank System, Inc. common stock as of October 21, 2016. The merger is expected to close in the second quarter of 2017 and is subject to customary closing conditions, including approval by the shareholders of Merchants Bancshares and required regulatory approvals. Additional information about the transaction can be found in the joint press release issued on October 24, 2016, which is available on the Investor Relations section of the Company's website at www.mbvt.com.
Non-GAAP Financial Measures. 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 Company 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; 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; the ability of the Company and Community Bank System, Inc. ("CBU") to satisfy the conditions set forth in the Merger Agreement (as defined and discussed below), disruptions to the Company's business during the pendency of the Merger (as defined and discussed below; and the proposed merger with CBU.
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 ("SEC"). 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.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger with CBU, CBU will file with the SEC a registration statement on Form S-4 that will include a proxy statement of the Company and a prospectus of CBU, as well as other relevant documents concerning the proposed merger. Investors and stockholders are urged to read the registration statement and the proxy statement/prospectus and the other relevant materials filed with the SEC when they become available, as well as any amendments or supplements to those documents, because they will contain important information. A free copy of the proxy statement/prospectus, when available, as well as other filings containing information about the Company and CBU, may be obtained at the SEC's Internet site (http://www.sec.gov). You will also be able to obtain these documents, when available, free of charge from the Company at http://www.mbvt.com/ under the heading "Investor Relations" and then "SEC Filings" or from CBU by accessing its website at www.communitybankna.com under the heading of "Investor Relations" and then "SEC Filings & Annual Report." Copies of the proxy statement/prospectus can also be obtained, free of charge and when available, by directing a request to Merchants Bancshares, Inc., P.O. Box 1009, Burlington, Vermont 05402, Attention: Investor Relations, Telephone: (900) 322-5222 or to Community Bank System, Inc., 5790 Widewaters Parkway, DeWitt, New York 13214, Attention: Investor Relations, Telephone: (315) 445-2282.
PARTICIPANTS IN SOLICITATION
The Company and CBU and certain of their respective directors and executive officers may be deemed to participate in the solicitation of proxies from the stockholders of the Company in connection with the proposed merger. Information about the directors and executive officers of the Company and their ownership of the Company common stock is set forth in the proxy statement for its 2016 annual meeting of stockholders, as filed with the SEC on Schedule 14A on April 15, 2016 and the definitive additional proxy soliciting materials for the Company's 2016 annual meeting of stockholders, as filed with the SEC on May 3, 2016. Information about the directors and executive officers of CBU and their ownership of CBU common stock is set forth in the proxy statement for its 2016 annual meeting of stockholders, as filed with the SEC on Schedule 14A on April 1, 2016. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the proxy statement/prospectus regarding the proposed merger when it becomes available. Free copies of this document when available may be obtained as described in the preceding paragraph.
Merchants Bancshares, Inc
Financial Highlights (unaudited)
(Dollars in thousands except share and per share data)
September 30, June 30, December 31, September 30,
2016 2016 2015 2015
---- ---- ---- ----
Balance Sheets - Period End
Cash and due from banks $31,166 $29,469 $30,605 $21,541
Interest earning cash and other short-term investments 47,551 30,053 104,578 89,918
Fed funds sold - - 15,000 -
Investments-available for sale, taxable 298,973 280,078 283,454 282,083
Investments-held to maturity, taxable 90,672 111,070 119,674 123,929
Loans 1,477,285 1,395,393 1,414,280 1,257,932
Allowance for loan losses ("ALL") 12,540 12,420 12,040 12,210
Net loans 1,464,745 1,382,973 1,402,240 1,245,722
Federal Home Loan Bank ("FHLB") stock 4,844 7,036 3,797 4,378
Bank premises and equipment, net 13,624 14,052 15,030 15,019
Bank owned life insurance 10,709 10,659 10,551 10,492
Goodwill 7,011 6,872 6,967 -
Investment in real estate limited partnerships 5,352 5,768 5,687 5,982
Core deposit intangible 1,207 1,258 1,360 -
Other assets 18,801 19,422 22,294 19,277
Total assets 1,994,655 1,898,710 2,021,237 1,818,341
Non-interest bearing deposits 632,847 606,200 631,244 575,492
Savings, interest bearing checking and money market accounts 661,962 627,883 665,623 620,224
Time deposits 209,031 219,247 254,572 191,757
Total deposits 1,503,840 1,453,330 1,551,439 1,387,473
Short-term borrowings 22,000 70,000 - -
Securities sold under agreement to repurchase, short-term 276,083 184,920 286,639 267,794
Other long-term debt 3,673 3,694 5,238 2,258
Junior subordinated debentures issued to unconsolidated subsidiary trust 20,619 20,619 20,619 20,619
Other liabilities 10,153 9,854 9,248 7,551
Total liabilities 1,836,368 1,742,417 1,873,183 1,685,695
Stockholders' equity 158,287 156,293 148,054 132,646
Balance Sheets - Quarter-to-Date Averages
Cash and due from banks $30,221 $26,684 $28,380 $26,049
Interest earning cash and other short-term investments 40,879 37,018 106,681 52,795
Investments-available for sale, taxable 274,990 285,723 279,416 264,633
Investments-held to maturity, taxable 102,868 113,403 122,924 126,549
Loans 1,451,612 1,426,966 1,306,613 1,245,861
Allowance for loan losses 12,468 12,249 12,269 12,223
Net loans 1,439,144 1,414,717 1,294,344 1,233,638
FHLB stock 7,786 6,292 3,571 4,378
Bank owned life insurance 10,680 10,626 10,515 10,456
Other assets 51,214 52,487 45,312 41,245
Total assets 1,957,782 1,946,950 1,891,143 1,759,743
Non-interest bearing deposits 620,142 609,454 610,499 586,773
Savings, interest bearing checking and money market accounts 662,250 665,271 632,481 613,337
Time deposits 213,853 222,782 210,527 195,044
Total deposits 1,496,245 1,497,507 1,453,507 1,395,154
Short-term borrowings 63,130 24,906 - 9,649
Securities sold under agreement to repurchase, short-term 206,181 235,927 268,614 195,410
Other long-term debt 3,680 4,196 3,255 2,265
Junior subordinated debentures issued to unconsolidated subsidiary trust 20,619 20,619 20,619 20,619
Other liabilities 10,131 10,022 7,972 7,388
Total liabilities 1,799,986 1,793,177 1,753,967 1,630,485
Stockholders' equity 157,796 153,773 137,176 129,258
Earning assets 1,878,135 1,869,402 1,819,205 1,694,216
Interest bearing liabilities 1,169,713 1,173,701 1,135,496 1,036,324
Merchants Bancshares, Inc
Financial Highlights (unaudited)
(Dollars in thousands except share and per share data)
For the Nine Months Ended
-------------------------
September 30, September 30,
2016 2015
---- ----
Balance Sheets - Year-to-Date Averages
Cash and due from banks $29,324 $25,066
Interest earning cash and other short-term investments 50,695 73,630
Investments-available for sale, taxable 279,995 243,048
Investments-held to maturity, taxable 111,190 131,604
Loans 1,432,167 1,218,067
Allowance for loan losses 12,264 12,065
Net loans 1,419,903 1,206,002
FHLB stock 5,961 4,378
Bank owned life insurance 10,626 10,395
Other assets 51,702 42,400
Total assets 1,959,396 1,736,523
Non-interest bearing deposits 615,401 581,351
Savings, interest bearing checking and money market accounts 666,433 577,006
Time deposits 225,442 201,601
Total deposits 1,507,276 1,359,958
Short-term borrowings 29,469 5,285
Securities sold under agreement to repurchase, short-term 233,934 212,859
Other long-term debt 4,234 2,286
Junior subordinated debentures issued to unconsolidated subsidiary trust 20,619 20,619
Other liabilities 10,042 7,640
Total liabilities 1,805,574 1,608,647
Stockholders' equity 153,822 127,876
Earning assets 1,880,008 1,670,727
Interest bearing liabilities 1,180,131 1,019,656
Ratios and Supplemental Information:
September 30, June 30, December 31, September 30,
2016 2016 2015 2015
---- ---- ---- ----
Ratios and Supplemental Information - Period End
Book value per share $22.99 $22.74 $21.59 $20.93
Tangible book value per share $21.80 $21.56 $20.38 $20.93
Common Equity Tier 1 12.78% 13.02% 12.86% 13.83%
Tier I leverage ratio 8.84% 8.77% 8.77% 8.93%
Total risk-based capital ratio 15.59% 15.91% 15.77% 17.10%
Tangible capital ratio (1) 7.55% 7.84% 6.94% 7.29%
Period end common shares outstanding 6,883,644 6,871,642 6,855,294 6,338,158
Credit Quality - Period End
Nonperforming loans ("NPLs") (2) $4,236 $4,489 $3,985 $763
Nonperforming assets ("NPAs") (2) $4,236 $4,549 $3,997 $763
NPLs as a percent of total loans (2) 0.29% 0.32% 0.28% 0.06%
NPAs as a percent of total assets (2) 0.21% 0.24% 0.20% 0.04%
ALL as a percent of NPLs (2) 296% 277% 302% 1600%
ALL as a percent of total loans 0.85% 0.89% 0.85% 0.97%
Accruing loans 31 to 90 days past due as a percent of total loans 0.06% 0.06% 0.05% 0.01%
(1) The tangible capital ratio is calculated by dividing tangible equity by tangible assets. See Tangible Capital Ratio reconciliation below.
(2) Non-performing loans have been updated to exclude accruing troubled debt-restructure loans. Prior periods have been reclassified to be consistent with the current
period presentation.
Merchants Bancshares, Inc
Financial Highlights (unaudited)
(Dollars in thousands except share and per share data)
Loan Portfolios:
September 30, June 30, December 31, September 30,
2016 2016 2015 2015
---- ---- ---- ----
Period End
Commercial, financial and agricultural $268,530 $260,167 $237,451 $207,067
Municipal loans 112,007 60,590 105,421 108,423
Real estate loans - residential 450,584 456,132 468,443 448,632
Real estate loans - commercial 584,392 560,056 558,004 450,673
Real estate loans - construction 55,210 50,788 34,802 40,748
Installment loans 6,547 7,629 10,115 2,370
All other loans 15 31 44 19
--- --- --- ---
Total Loans $1,477,285 $1,395,393 $1,414,280 $1,257,932
---------- ---------- ---------- ----------
Tangible Capital Ratio:
Period Ended
September 30, June 30, December 31, September 30,
Period End 2016 2016 2015 2015
---- ---- ---- ----
Total assets $1,994,655 $1,898,710 $2,021,237 $1,818,341
Core deposit intangible 1,207 1,258 1,360 -
Goodwill 7,011 6,872 6,967 -
----- ----- ----- ---
Tangible assets 1,986,437 1,890,580 2,012,910 1,818,341
Total stockholders' equity 158,287 156,293 148,054 132,646
Core deposit intangible 1,207 1,258 1,360 -
Goodwill 7,011 6,872 6,967 -
----- ----- ----- ---
Tangible stockholders' equity 150,069 148,163 139,727 132,646
Tangible capital ratio 7.55% 7.84% 6.94% 7.29%
Merchants Bancshares, Inc.
Financial Highlights (unaudited)
(Dollars in thousands except share and per share data)
For the Three Months Ended For the Nine Months Ended
-------------------------- -------------------------
September 30, June 30, September 30, September 30, September 30,
2016 2016 2015 2016 2015
---- ---- ---- ---- ----
Operating Results
Interest income
Interest and fees on loans $13,058 $12,897 $11,055 $38,759 $32,478
Interest and dividends on investments 1,818 1,988 1,961 5,803 5,784
Interest on interest earning deposits with banks and other short-term investments 54 58 25 193 157
Total interest and dividend income 14,930 14,943 13,041 44,755 38,419
Interest expense
Savings, interest bearing checking and money market accounts 413 424 354 1,277 1,075
Time deposits 321 340 318 1,052 975
Total deposits 734 764 672 2,329 2,050
Short-term borrowings 79 31 8 110 13
Securities sold under agreement to repurchase, short-term 107 103 89 319 390
Long-term debt 213 214 199 637 595
Total interest expense 1,133 1,112 968 3,395 3,048
Net interest income 13,797 13,831 12,073 41,360 35,371
Provision for credit losses 500 200 150 905 250
Net interest income after provision for credit losses 13,297 13,631 11,923 40,455 35,121
Noninterest income
Trust division income 843 835 886 2,545 2,666
Net, debit card income 765 812 796 2,226 2,301
Overdraft income 667 677 548 1,975 1,327
Service charges on deposits 427 424 390 1,266 1,108
Other noninterest income 429 473 829 1,264 1,470
Total noninterest income 3,131 3,221 3,449 9,276 8,872
Noninterest expense
Compensation and benefits 5,785 5,456 5,508 17,549 15,746
Occupancy expense 1,050 1,025 1,036 3,214 3,228
Equipment expense 676 704 726 2,099 2,224
Telephone expense 187 192 206 577 609
Legal and professional fees 651 731 414 1,975 1,394
Mobile & internet banking 345 336 399 1,047 1,195
Core / Item processing 425 459 450 1,401 1,289
Marketing expenses 196 207 148 595 437
State franchise taxes 399 398 404 1,195 1,094
FDIC insurance 248 281 218 783 653
Community Bank System, Inc. merger costs 476 - - 476 -
NUVO Bank & Trust Company acquisition costs - (72) 215 61 363
Core deposit intangible amortization 51 51 - 153 -
Other noninterest expense 931 1,065 867 3,047 2,847
Total noninterest expense 11,420 10,833 10,591 34,172 31,079
Income before provision for income taxes 5,008 6,019 4,781 15,559 12,914
Provision for income taxes 1,097 1,653 925 3,792 2,606
Net income 3,911 4,366 3,856 11,767 10,308
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 For the Nine Months Ended
-------------------------- -------------------------
September 30, June 30, September 30, September 30, September 30,
2016 2016 2015 2016 2015
---- ---- ---- ---- ----
Ratios and Supplemental Information
Weighted average common shares outstanding 6,877,536 6,865,598 6,337,778 6,866,418 6,332,663
Weighted average diluted shares outstanding 6,899,116 6,886,607 6,349,086 6,886,253 6,345,554
Basic earnings per common share $0.57 $0.64 $0.61 $1.71 $1.63
Diluted earnings per common share $0.57 $0.63 $0.61 $1.71 $1.62
Return on average assets 0.80% 0.90% 0.88% 0.80% 0.79%
Return on average stockholders' equity 9.91% 11.36% 11.93% 10.20% 10.75%
Average yield on loans 3.74% 3.79% 3.69% 3.77% 3.73%
Average yield on investments 1.89% 1.97% 1.98% 1.95% 2.04%
Average yield of earning assets 3.29% 3.33% 3.19% 3.30% 3.20%
Average cost of interest bearing deposits 0.33% 0.35% 0.33% 0.35% 0.35%
Average cost of borrowed funds 0.54% 0.49% 0.52% 0.49% 0.55%
Average cost of interest bearing liabilities 0.39% 0.38% 0.37% 0.38% 0.40%
Net interest rate spread 2.90% 2.95% 2.82% 2.92% 2.80%
Net interest margin 3.03% 3.08% 2.96% 3.05% 2.95%
Net interest income on a fully taxable equivalent basis $14,386 $14,371 $12,601 $43,022 $36,906
Net (charge-offs) recoveries to average loans (0.06)% 0.00% 0.00% (0.03)% (0.01)%
Net (charge-offs) recoveries $(226) $(7) $(43) $(315) $(67)
Efficiency ratio (1) 59.80% 59.72% 64.09% 61.24% 64.12%
(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:
For the Three Months Ended For the Nine Months Ended
-------------------------- -------------------------
September 30, June 30, September 30, September 30, September 30,
2016 2016 2015 2016 2015
---- ---- ---- ---- ----
Adjusted Net Income
Community Bank System, Inc. merger related expenses $476 $ - $ - $476 $ -
NUVO Bank & Trust Company acquisition related expenses - (72) 215 61 363
Severance and retirement costs 9 (112) 342 186 407
Tax effect 106 (51) 110 152 154
--- --- --- --- ---
Adjustments, net of tax $379 $(133) $447 $571 $616
GAAP net income as reported 3,911 4,366 3,856 11,767 10,308
----- ----- ----- ------ ------
Adjusted net income $4,290 $4,233 $4,303 $12,338 $10,924
Weighted average common shares outstanding 6,878 6,866 6,338 6,866 6,333
Weighted average diluted shares outstanding 6,899 6,887 6,349 6,886 6,346
Adjusted basic earnings per common share $0.62 $0.62 $0.68 $1.80 $1.73
Adjusted diluted earnings per common share $0.62 $0.61 $0.68 $1.79 $1.72
CONTACT: Jamie Oberle, Merchants Bank, at (802) 865-1603
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SOURCE Merchants Bancshares, Inc.
