NORWOOD, Mass., Jan. 29, 2018 (GLOBE NEWSWIRE) -- Blue Hills Bancorp, Inc. (the “Company” or "Blue Hills Bancorp") (NASDAQ:BHBK), the parent of Blue Hills Bank (the "Bank"), today announced net income of $1.3 million, or $0.05 per diluted share, for the fourth quarter of 2017 compared to net income of $3.8 million, or $0.16 per diluted share, for the third quarter of 2017 and net income of $4.0 million, or $0.17 per diluted share, for the fourth quarter of 2016. 

The fourth quarter of 2017 included an additional income tax expense of approximately $2.5 million, or $0.10 per diluted share, related to the Tax Cuts and Jobs Act (the “Tax Act”) which was enacted on December 22, 2017. The Tax Act provides for a reduction in the corporate income tax rate from 35% to 21% effective January 1, 2018 and this reduction in the corporate tax rate resulted in a downward revaluation to the Company's net deferred tax asset (DTA). The fourth quarter of 2017 also included a pre-tax charge of $317,000 ($188,000 after tax, or $0.01 per share) related to pension settlements. The third quarter of 2017 included a pre-tax loss of $118,000 ($73,000 after tax, or less than a penny per diluted share) from the sale of a purchased home equity loan portfolio.  Excluding these items, net income was $4.0 million, or $0.16 per share, for the fourth quarter of 2017 on a non-GAAP basis and $3.9 million, or $0.16 per share for the third quarter of 2017 on a non-GAAP basis (see pages 15 and 16 for a reconciliation of GAAP to non-GAAP measures).

For the year ended December 31, 2017, net income was $16.5 million, or $0.67 per diluted share. Excluding nonrecurring items, net income for the year ended December 31, 2017 on a non-GAAP basis was $13.8 million or $0.56 per share. For the year ended December 31, 2016, net income was $8.7 million or $0.35 per diluted share.

2017 HIGHLIGHTS

  • Revenue growth and expense discipline allowed the Company to generate strong operating leverage in 2017 which, in turn, resulted in improvements to the efficiency ratio and return on assets compared to 2016 (see page 18).
  • Loans grew 14% to $2.2 billion at December 31, 2017 from the end of 2016. Over the past three years, loans have increased $1.1 billion, or 93%, as the Company continued to execute on its balance sheet diversification strategy through an expansion of the residential mortgage, commercial real estate and commercial business loan portfolios. Since the end of 2014, commercial real estate loans are up 116%, 1-4 family residential mortgages have increased 101% and commercial business loans have grown 67%.
  • Mortgage banking capabilities have been expanded over the past few years, including the opening of several new loan offices in Eastern Massachusetts. Current plans call for opening additional offices in Marblehead and Dorchester during the first quarter of 2018. Mortgage banking income grew to $3.7 million in 2017, up $1.2 million, or 48%, from 2016. Mortgage banking revenue was just $282,000 in 2015. Mortgage originations have been strong the past two years, totaling $495 million in 2017 and $539 million in 2016 compared to $269 million in 2015.
  • Commercial loan originations (real estate and non-real estate combined) were $412 million in 2017 compared to $359 million in 2016 and $331 million in 2015. The Company has continued to expand its asset-based lending and specialized lending businesses as well as its commercial deposit taking capabilities, including converting to a new cash management platform. The combination of commercial and small business deposits totaled $359 million at December 31, 2017, up 20% from the end of 2016 and up 65% from the end of 2015.
  • Over the past few years, new retail branches were opened in Milton (fourth quarter of 2014), Westwood (fourth quarter of 2015), and the Seaport District of Boston (fourth quarter of 2016). These three branches had combined total deposits of $266 million at December 31, 2017. Deposits, excluding brokered deposits, increased 13% during 2017.
  • The Government Banking division has added to the growth in deposits over the past two years, as municipal deposits were $137 million at the end of 2017, up 32% from the end of 2016 and up 188% from the end of 2015.
  • During 2017, the Company completed the process of restructuring its securities portfolio by selling its mutual fund and corporate bond portfolios. The remaining portfolio was moved in-house saving annual investment management fees of approximately $400,000.
  • Net interest margin has improved over the last several quarters as the Company has benefited from maintaining an asset sensitive interest rate risk position while the Federal Reserve has been raising interest rates.
  • Capital deployment efforts continued as the Company has reduced its tangible common equity to tangible assets ratio to 14.6% at December 31, 2017 from 23.7% at September 30, 2014 (the Company's first quarter as a public company). During 2017, the Company paid a $0.20 per share special dividend and raised its regular quarterly dividend twice. The quarterly dividend is now $0.15 per share compared to $0.03 at the end of 2016.
  • Credit quality was strong throughout 2017 and the Company had net loan recoveries of $29,000 during the year.
  • The Company and its foundations made donations in excess of $1 million in each of the last four years to various nonprofits reflecting the Company's active involvement in the communities it serves. Most of the donations were made through the Blue Hills Bank charitable foundations which support non-profits in the fields of education and the arts, health and human services, affordable housing, financial literacy, and community services.

Commenting on the Company's results, William Parent, President and Chief Executive Officer of Blue Hills Bancorp, said, "We are very proud of the progress we have made since becoming a public company in the third quarter of 2014. Our investment spending over the past few years has allowed us to build out our retail, mortgage and commercial banking platforms while adding experienced and dedicated employees who have led the effort in improving our financial performance and customer experience. These efforts have resulted in significant improvement in earnings growth, operating leverage, revenue, return on assets and operating efficiency; however, we recognize that our work is far from done and we look forward to another year of progress in 2018."

BALANCE SHEET
Compared to September 30, 2017, total assets grew $123 million, or 5%, to $2.7 billion at December 31, 2017. The increase was mainly driven by a $119 million, or 6%, increase in loans to $2.2 billion at December 31, 2017. By category, commercial real estate loans increased $83 million, residential mortgage loans were up $21 million and commercial business loans grew $12 million.

Compared to December 31, 2016, total assets increased $199 million, or 8%. Loans also drove the growth in total assets in this comparison, increasing $275 million, or 14%. By category, the increase from December 31, 2016 was due to commercial real estate loans, which were up $147 million, or 22%; residential mortgage loans, which were up $72 million, or 8%; and commercial business loans, which were up $47 million, or 23%. Residential mortgage loan originations were $112 million in the fourth quarter of 2017 compared to $176 million in the fourth quarter of 2016 while commercial loans (real estate and non-real estate combined) added to the balance sheet were $156 million in the fourth quarter of 2017 compared to $93 million in the fourth quarter of 2016. The growth in loans from December 31, 2016 was partially offset by a $92 million, or 23%, decline in the combination of securities available for sale and held to maturity, primarily due to the sales of the mutual fund investment portfolio and the remaining available-for-sale corporate debt securities portfolio in the first half of 2017.

Compared to September 30, 2017, deposits grew $54 million, or 3%, to $2.0 billion at December 31, 2017. The growth from the end of the third quarter was driven by a $66 million increase in brokered deposits and a $10 million increase in deposits at the Seaport branch, partially offset by a seasonal decline of $33 million in deposits at the Nantucket Bank. Borrowings increased to $205 million at December 31, 2017 from $130 million at September 30, 2017.

Compared to December 31, 2016, deposits grew $231 million, or 13%, and included growth in all customer segments (consumer, small business, commercial and municipal). By category, the most significant increases were seen in certificates of deposit, which were up $108 million, money market deposits, which were up $73 million, and NOW and demand deposits, which were up $50 million. The growth in CDs lengthened the duration of customer deposits. These increases were partially offset by a $42 million decline in regular savings deposits. Nantucket Bank deposits increased $24 million from the end of 2016. Total brokered deposits increased $42 million from the end of 2016 while borrowings declined $46 million. 

Stockholders’ equity was $398 million at December 31, 2017 compared to $399 million at September 30, 2017 and $387 million at December 31, 2016. The increase from a year ago included net income during 2017, which added $16 million to stockholders' equity and the payment of $14 million in dividends, including a special dividend of $0.20 per common share in the second quarter of 2017. There were no share repurchases in 2017.

NET INTEREST AND DIVIDEND INCOME
Reported net interest and dividend income was $17.8 million in the fourth quarter of 2017, up $840,000, or 5%, from $17.0 million in the third quarter of 2017 and up $1.8 million, or 12%, from $16.0 million in the fourth quarter of 2016. Reported net interest margin was 2.80% in the fourth quarter of 2017, up from 2.77% in the third quarter of 2017 but down from 2.81% in the fourth quarter of 2016.

Net interest and dividend income on a fully taxable equivalent basis (referred to herein as "Reported net interest and dividend income (FTE)", a Non-GAAP measure) was $17.9 million in the fourth quarter of 2017, up $846,000, or 5%, from $17.0 million in the third quarter of 2017, and up $1.8 million, or 11%, from $16.0 million in the fourth quarter of 2016. Net interest margin on a fully taxable equivalent basis (referred to herein as "Reported net interest margin (FTE)", a Non-GAAP measure) was 2.81% in the fourth quarter of 2017 compared to 2.78% in the third quarter of 2017 and 2.82% in the fourth quarter of 2016. 

The table shown below provides a reconciliation of reported to adjusted net interest and dividend income and margin for the last five quarters (referred to herein as "adjusted net interest and dividend income (FTE)" and "adjusted net interest margin (FTE)", which are Non-GAAP measures). Commentary which follows the table focuses on changes in adjusted net interest and dividend income (FTE) and adjusted net interest margin (FTE).

      
(Unaudited, dollars in thousands)December 31, 2017September 30, 2017June 30, 2017March 31, 2017December 31, 2016
Net Interest and Dividend Income     
Reported net interest and dividend income$17,794 $16,954 $16,408 $15,881 $15,950 
FTE adjustment64 58 60 66 78 
Reported net interest and dividend income (FTE)17,858 17,012 16,468 15,947 16,028 
Mutual fund dividends (1)    (844)
Purchase accounting accretion (1)(100)(103)(181)(107)(137)
Adjusted net interest and dividend income (FTE) (2)$17,758 $16,909 $16,287 $15,840 $15,047 
      
Net Interest Margin     
Reported net interest margin2.80%2.77%2.75%2.70%2.81%
FTE adjustment0.01 0.01 0.01 0.01 0.01 
Reported net interest margin (FTE)2.81 2.78 2.76 2.71 2.82 
Mutual fund dividends (1)   0.03 (0.10)
Purchase accounting accretion (1)(0.02)(0.02)(0.03)(0.02)(0.03)
Adjusted net interest margin (FTE) (2)2.79%2.76%2.73%2.72%2.69%
      
(1) In calculating the net interest margin impact of mutual fund dividends and purchase accounting accretion, average earning assets were adjusted to remove the average balances associated with each item. In the first quarter of 2017 when the mutual fund dividend income was zero, the removal of the average balance had a positive impact on the adjusted net interest margin. Management believes this adjusted net interest margin is useful to investors because of the volatility or non-recurring nature of certain items from quarter to quarter. The Company sold its investments in mutual funds during the first quarter of 2017.
 
(2) Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully taxable equivalent basis (FTE), using a federal statutory tax rate of 35%. Therefore, management believes, these measures provide useful information to investors by allowing them to make peer comparisons.
 

Adjusted net interest and dividend income (FTE) increased $849,000, or 5%, to $17.8 million in the fourth quarter of 2017 from $16.9 million in the third quarter of 2017 and was up $2.7 million, or 18%, from $15.0 million in the fourth quarter of 2016. Adjusted net interest margin (FTE) improved to 2.79% in the fourth quarter of 2017 from 2.76% in the third quarter of 2017 and 2.69% in the fourth quarter of 2016. Adjusted net interest and dividend income (FTE) and adjusted net interest margin (FTE) benefited in both comparisons from higher floating rate loan yields related to the interest rate increases announced by the Federal Reserve Bank in June 2017, March 2017, December 2016 and, to a lesser extent, the rate hike that was announced in December 2017. The Company maintains an asset sensitive interest rate risk position. In addition, adjusted net interest and dividend income (FTE) was helped by loan growth, as average loans increased $82 million, or 4%, from the third quarter of this year and $355 million, or 19%, from the fourth quarter of last year. The increases in both comparisons were mainly driven by higher levels of commercial real estate loans, residential mortgages, and commercial business loans. Partially offsetting the improvement in adjusted net interest and dividend income (FTE) from the fourth quarter of 2016, was a $96 million, or 24%, decline in average securities reflecting the sales of the mutual fund and remaining available for sale corporate debt securities portfolios in the first half of 2017.

NONINTEREST INCOME
Noninterest income was $2.9 million in the fourth quarter of 2017, up $104,000, or 4%, from $2.8 million in the third quarter of 2017. The improvement reflects a $949,000 increase in loan level derivative income, which is related to a higher volume of new commercial loan customer back-to-back interest rate swap contracts. The amount of revenue in the loan level derivative income category can be volatile since it is a function of the amount of commercial loans that customers opt to convert from floating to fixed rate via interest rate swaps in any given quarter. This improvement was partially offset by a $594,000 drop in mortgage banking income due to seasonality and a $328,000 drop in miscellaneous income mainly reflecting lower income on CRA-qualified Small Business Investment Company investments.

Compared to the fourth quarter of 2016, noninterest income declined $877,000, or 23%. This was mainly due to a $1.2 million decline in miscellaneous income which reflects the absence of large positive valuation adjustments recorded in 2016 on the portfolio of commercial loan customer back-to-back interest rate swap contracts and the absence of $298,000 of securities gains recorded a year ago. These declines were partially offset by a $465,000 increase in loan level derivative income and smaller increases in mortgage banking income, deposit account fees and interchange and ATM fees.

NONINTEREST EXPENSE
Noninterest expense was $14.2 million in the fourth quarter of 2017, up $830,000, or 6%, from $13.4 million in the third quarter of 2017 and up $676,000, or 5%, from $13.5 million in the fourth quarter of 2016. The fourth quarter of 2017 includes a $317,000 charge related to pension settlements and excluding such item, noninterest expense was up $513,000, or 4%, from the third quarter of 2017 and up $359,000, or 3%, from the fourth quarter of 2016. In addition, and as a result of the Tax Act, the Company recorded an expense of $70,000 in the fourth quarter of 2017 related to awarding a $1,000 bonus to each employee with a functional title below the Assistant Vice President level. The Company also took action to raise the hourly pay rate to $15 for a small number of hourly employees not already at that pay level. The linked quarter comparison also reflects a $200,000 increase in occupancy and equipment expense due mainly to non-capitalized equipment purchases made in the fourth quarter.

The fourth quarter of 2017 also includes a charge related to a settlement agreement that was reached between the Company and a former employee from a previously disclosed complaint filed by the former employee on December 30, 2014. Both parties provided mutual releases of all claims and executed a confidentiality agreement.

INCOME TAXES
The Company's effective tax rate in the fourth quarter of 2017 was 78% and included a charge of approximately $2.5 million charge related to the Tax Act which was enacted on December 22, 2017. The Tax Act provides for a reduction in the corporate income tax rate from 35% to 21% effective January 1, 2018 and this reduction in the corporate tax rate resulted in a downward revaluation of the Company's net deferred tax asset which has an adjusted balance of $6.0 million at December 31, 2017. Excluding this charge, the Company's effective tax rate was 35% in the fourth quarter of 2017 compared to 38% in the third quarter of 2017. The decline in the effective tax rate in the fourth quarter was due to the tax effect associated with equity-based compensation transactions. As a result of the Tax Act, the Company expects its effective tax rate to be approximately 25% in 2018.

ASSET QUALITY
The provision for loan losses reflects management’s assessment of risks inherent in the loan portfolio. The provision for loan losses was $681,000 in the fourth quarter of 2017 compared to $242,000 in the third quarter of 2017 and $927,000 in the fourth quarter of 2016.  Loan growth and loan mix impact the level of provision needed each quarter and the linked quarter increase in the provision reflects loan growth of 6% in the fourth quarter of 2017 compared to growth of 1% in the third quarter.

The allowance for loan losses as a percentage of total loans was 0.95% at December 31, 2017 compared to 0.97% at September 30, 2017 and December 31, 2016. The Company had net loan charge-offs of $52,000 in the fourth quarter of 2017 compared to net loan recoveries of $89,000 in the third quarter of 2017 and net loan recoveries of $93,000 in the fourth quarter of 2016. Net loan recoveries for the year ended December 31, 2017 were $29,000 compared to net charge-offs of $3.2 million in 2016, which included a $3.2 million net charge-off related to one commercial customer.

Nonperforming assets were $11.5 million at December 31, 2017 and September 30, 2017 compared to $9.0 million at December 31, 2016. The increase in nonperforming assets from the fourth quarter of last year was mainly due to loans secured by one income property that were placed back on nonaccrual in the first quarter of 2017. Nonperforming assets as a percentage of total assets were 0.43% at December 31, 2017 compared to 0.45% at September 30, 2017 and 0.36% at December 31, 2016.

ABOUT BLUE HILLS BANCORP
Blue Hills Bancorp, Inc., with corporate headquarters in Norwood, MA, had assets of $2.7 billion at December 31, 2017 and operates 11 retail branch offices in Boston, Dedham, Hyde Park, Milton, Nantucket, Norwood, West Roxbury, and Westwood, Massachusetts. Blue Hills Bank is a full service, community bank with its main office in Hyde Park, Massachusetts. The Bank's three branches in Nantucket, Massachusetts operate under the name, Nantucket Bank, a division of Blue Hills Bank. The Bank provides consumer, commercial and municipal deposit and loan products in Eastern Massachusetts through its branch network, loan production offices and eCommerce channels. The Bank offers commercial business 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. Blue Hills Bank has been serving area residents for over 145 years. For more information about Blue Hills Bank, visit www.bluehillsbank.com.

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

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

Media and Investor Contact:
William Parent, 617-360-6520

     
Blue Hills Bancorp, Inc.
Consolidated Balance Sheets
     
(Unaudited; dollars in thousands)   % Change
 December 31, 2017September 30, 2017December 31, 2016December 31, 2017
vs.
September 30, 2017
December 31, 2017
vs.
December 31, 2016
Assets     
Cash and due from banks$16,149 $16,171 $14,752       (0.1)%         9.5 %
Short term investments30,018 22,192 15,744 35.3 %90.7 %
Total cash and cash equivalents46,167 38,363 30,496 20.3 %51.4 %
Securities available-for-sale, at fair value9,720 9,943 204,836 (2.2)%(95.3)%
Securities held-to-maturity, at amortized cost303,716 302,833 201,027 0.3 %51.1 %
Federal Home Loan Bank stock, at cost12,105 9,410 13,352 28.6 %(9.3)%
Loans held for sale8,992 12,268 2,761 (26.7)%225.7 %
Loans:       
1-4 family residential926,117 905,585 854,478 2.3 %8.4 %
Home equity81,358 77,819 79,132 4.5 %2.8 %
Commercial real estate833,978 751,209 686,522 11.0 %21.5 %
Construction90,712 88,979 75,950 1.9 %19.4 %
Total real estate loans1,932,165 1,823,592 1,696,082 6.0 %13.9 %
Commercial business253,001 240,801 205,832 5.1 %22.9 %
Consumer21,858 23,142 29,707 (5.5)%(26.4)%
Total loans2,207,024 2,087,535 1,931,621 5.7 %14.3 %
Allowance for loan losses(20,877)(20,248)(18,750)3.1 %11.3 %
Loans, net2,186,147 2,067,287 1,912,871 5.7 %14.3 %
Premises and equipment, net21,573 21,850 22,034 (1.3)%(2.1)%
Accrued interest receivable6,438 5,802 6,057 11.0 %6.3 %
Goodwill and core deposit intangible9,717 9,892 10,560 (1.8)%(8.0)%
Net deferred tax asset6,000 9,295 10,146 (35.4)%(40.9)%
Bank-owned life insurance33,078 32,800 32,015 0.8 %3.3 %
Other assets24,867 25,673 23,537 (3.1)%5.7 %
Total assets$2,668,520 $2,545,416 $2,469,692 4.8 %8.1 %
Liabilities and Stockholders' Equity       
Deposits:       
NOW and demand$381,316 $376,864 $331,508 1.2 %15.0 %
Regular savings221,004 244,662 262,984 (9.7)%(16.0)%
Money market646,603 666,388 573,204 (3.0)%12.8 %
Certificates of deposit448,382 420,765 340,114 6.6 %31.8 %
Brokered money market92,798 41,768 53,357 122.2 %73.9 %
Brokered certificates of deposit249,766 235,106 247,520 6.2 %0.9 %
Total deposits2,039,869 1,985,553 1,808,687 2.7 %12.8 %
Short-term borrowings100,000 20,000 146,000 NM (31.5)%
Long-term debt105,000 110,000 105,000 (4.5)% %
Other liabilities25,845 30,829 23,098 (16.2)%11.9 %
Total liabilities2,270,714 2,146,382 2,082,785 5.8 %9.0 %
Common stock259 259 259  % %
Additional paid-in capital254,759 254,034 249,317 0.3 %2.2 %
Unearned compensation- ESOP(19,737)(19,927)(20,496)(1.0)%(3.7)%
Retained earnings163,978 166,282 161,896 (1.4)%1.3 %
Accumulated other comprehensive loss(1,453)(1,614)(4,069)(10.0)%(64.3)%
Total stockholders' equity397,806 399,034 386,907 (0.3)%2.8 %
Total liabilities and stockholders' equity$2,668,520 $2,545,416 $2,469,692 4.8 %8.1 %
              


 
Blue Hills Bancorp, Inc.
Consolidated Balance Sheet Trend
 
      
(Unaudited; dollars in thousands)December 31, 2017September 30, 2017June 30, 2017March 31, 2017December 31, 2016
Assets     
Cash and due from banks$16,149 $16,171 $17,292 $15,594 $14,752 
Short term investments30,018 22,192 33,819 19,555 15,744 
Total cash and cash equivalents46,167 38,363 51,111 35,149 30,496 
Securities available-for-sale, at fair value9,720 9,943 10,437 173,834 204,836 
Securities held-to-maturity, at amortized cost303,716 302,833 283,672 201,684 201,027 
Federal Home Loan Bank stock, at cost12,105 9,410 11,943 14,828 13,352 
Loans held for sale8,992 12,268 6,789 1,675 2,761 
Loans:     
1-4 family residential926,117 905,585 895,015 896,951 854,478 
Home equity81,358 77,819 84,615 80,427 79,132 
Commercial real estate833,978 751,209 756,093 701,463 686,522 
Construction90,712 88,979 78,062 70,855 75,950 
Total real estate loans1,932,165 1,823,592 1,813,785 1,749,696 1,696,082 
Commercial business253,001 240,801 227,262 210,328 205,832 
Consumer21,858 23,142 25,047 27,325 29,707 
Total loans2,207,024 2,087,535 2,066,094 1,987,349 1,931,621 
Allowance for loan losses(20,877)(20,248)(19,917)(18,875)(18,750)
Loans, net2,186,147 2,067,287 2,046,177 1,968,474 1,912,871 
Premises and equipment, net21,573 21,850 22,004 21,858 22,034 
Accrued interest receivable6,438 5,802 5,362 5,994 6,057 
Goodwill and core deposit intangible9,717 9,892 10,091 10,313 10,560 
Net deferred tax asset6,000 9,295 8,184 8,751 10,146 
Bank-owned life insurance33,078 32,800 32,533 32,271 32,015 
Other assets24,867 25,673 25,606 21,779 23,537 
Total assets$2,668,520 $2,545,416 $2,513,909 $2,496,610 $2,469,692 
Liabilities and Stockholders' Equity     
Deposits:     
NOW and demand$381,316 $376,864 $359,877 $342,118 $331,508 
Regular savings221,004 244,662 246,484 265,116 262,984 
Money market646,603 666,388 674,593 622,852 573,204 
Certificates of deposit448,382 420,765 362,261 348,042 340,114 
Brokered money market92,798 41,768 44,728 50,129 53,357 
Brokered certificates of deposit249,766 235,106 277,320 228,465 247,520 
Total deposits2,039,869 1,985,553 1,965,263 1,856,722 1,808,687 
Short-term borrowings100,000 20,000  118,000 146,000 
Long-term debt105,000 110,000 130,000 105,000 105,000 
Other liabilities25,845 30,829 21,328 19,944 23,098 
Total liabilities2,270,714 2,146,382 2,116,591 2,099,666 2,082,785 
Common stock259 259 259 259 259 
Additional paid-in capital254,759 254,034 252,504 250,976 249,317 
Unearned compensation- ESOP(19,737)(19,927)(20,117)(20,306)(20,496)
Retained earnings163,978 166,282 166,033 168,160 161,896 
Accumulated other comprehensive loss(1,453)(1,614)(1,361)(2,145)(4,069)
Total stockholders' equity397,806 399,034 397,318 396,944 386,907 
         Total liabilities and stockholders' equity$2,668,520 $2,545,416 $2,513,909 $2,496,610 $2,469,692 
                

 

 
Blue Hills Bancorp, Inc.
Consolidated Statements of Net Income - Quarters
   
(Unaudited; dollars in thousands, except share data)Quarters Ended% Change
 December 31, 2017September 30, 2017December 31, 2016December 31, 2017
vs.
September 30, 2017
December 31, 2017
vs.
December 31, 2016
Interest and fees on loans$20,883 $19,721 $16,099 5.9 %29.7 %
Interest on securities1,763 1,565 2,325 12.7 %(24.2)%
Dividends189 194 990 (2.6)%(80.9)%
Other40 65 20 (38.5)%100.0 %
Total interest and dividend income22,875 21,545 19,434 6.2 %17.7 %
Interest on deposits4,349 4,089 2,980 6.4 %45.9 %
Interest on borrowings732 502 504 45.8 %45.2 %
Total interest expense5,081 4,591 3,484 10.7 %45.8 %
Net interest and dividend income17,794 16,954 15,950 5.0 %11.6 %
Provision for loan losses681 242 927 181.4 %(26.5)%
Net interest and dividend income, after
provision for loan losses
17,113 16,712 15,023 2.4 %13.9 %
Deposit account fees372 385 356 (3.4)%4.5 %
Interchange and ATM fees418 455 388 (8.1)%7.7 %
Mortgage banking552 1,146 436 (51.8)%26.6 %
Loss on sale of purchased home equity portfolio
 (118) NM NM 
Loan level derivative fee income1,105 156 640 608.3 %72.7 %
Realized securities gains, net  298 NM NM 
Bank-owned life insurance income277 268 272 3.4 %1.8 %
Miscellaneous206 534 1,417 (61.4)%(85.5)%
Total noninterest income2,930 2,826 3,807 3.7 %(23.0)%
Salaries and employee benefits7,755 7,979 7,234 (2.8)%7.2 %
Pension settlement charges317   NM NM 
Occupancy and equipment2,224 2,024 2,291 9.9 %(2.9)%
Data processing1,067 1,016 988 5.0 %8.0 %
Professional fees540 340 736 58.8 %(26.6)%
Advertising503 563 677 (10.7)%(25.7)%
FDIC deposit insurance220 226 157 (2.7)%40.1 %
Directors' fees382 382 377  %1.3 %
Amortization of core deposit intangible175 199 271 (12.1)%(35.4)%
Other general and administrative1,002 626 778 60.1%28.8 %
Total noninterest expense14,185 13,355 13,509 6.2 %5.0 %
Income before income taxes5,858 6,183 5,321 (5.3)%10.1 %
Provision for income taxes4,565 2,342 1,323 94.9 %245.0 %
Net income$1,293 $3,841 $3,998 (66.3)%(67.7)%
      
Earnings per common share:     
Basic$0.05 $0.16 $0.17   
Diluted$0.05 $0.16 $0.17   
Weighted average shares outstanding:     
Basic24,104,329
 23,973,116
 23,919,483
   
Diluted24,795,366
 24,510,092
 24,032,613
   
      
Regular dividends declared per share$0.15 $0.15 $0.03   
Special dividends declared per share$ $ $   
            


 
Blue Hills Bancorp, Inc.
Consolidated Statements of Net Income-Year to Date
 
(Unaudited; dollars in thousands, except share data)Year to Date
 December 31, 2017December 31, 2016% Change
Interest and fees on loans$76,701 $58,953 30.1 %
Interest on securities7,110 8,895 (20.1)%
Dividends733 1,596 (54.1)%
Other231 94 145.7 %
Total interest and dividend income84,775 69,538 21.9 %
Interest on deposits15,215 10,488 45.1 %
Interest on borrowings2,523 2,088 20.8 %
Total interest expense17,738 12,576 41.0 %
Net interest and dividend income67,037 56,962 17.7 %
Provision for loan losses2,098 4,885 (57.1)%
Net interest and dividend income, after provision for loan losses64,939 52,077 24.7 %
Deposit account fees1,418 1,327 6.9 %
Interchange and ATM fees1,609 1,546 4.1 %
Mortgage banking3,657 2,473 47.9 %
Loss on sale of purchased home equity portfolio

(118) NM 
Loan level derivative fee income2,792 2,371 17.8 %
Realized securities gains (losses), net(94)1,280 (107.3)%
Gain on exchange of investment in Northeast Retirement Services5,947  NM 
Bank-owned life insurance income1,063 1,048 1.4 %
Bank-owned life insurance death benefit gains 506 NM 
Miscellaneous808 1,576 (48.7)%
Total noninterest income17,082 12,127 40.9 %
Salaries and employee benefits30,961 28,853 7.3 %
Pension settlement charges317  NM 
Occupancy and equipment8,393 7,370 13.9 %
Data processing4,149 3,460 19.9 %
Professional fees2,275 2,638 (13.8)%
Advertising1,922 2,423 (20.7)%
FDIC deposit insurance881 1,125 (21.7)%
Directors' fees1,566 1,458 7.4 %
Amortization of core deposit intangible843 1,225 (31.2)%
Other general and administrative2,999 3,194 (6.1)%
Total noninterest expense54,306 51,746 4.9 %
Income before income taxes27,715 12,458 122.5 %
Provision for income taxes11,226 3,805 195.0 %
Net income$16,489 $8,653 90.6 %
    
Earnings per common share:   
Basic$0.69 $0.35  
Diluted$0.67 $0.35  
Weighted average shares outstanding:   
Basic23,985,822
 24,420,405
  
Diluted24,482,414
 24,540,929
  
    
Regular dividends declared per share$0.40 $0.11  
Special dividends declared per share$0.20 $  
        


 
Blue Hills Bancorp Inc.
Consolidated Statements of Net Income - Trend
 Quarters Ended
(Unaudited; dollars in thousands, except share data)December 31,September 30,June 30,March 31,December 31,
 20172017201720172016
Interest and fees on loans$20,883 $19,721 $18,715 $17,382 $16,099 
Interest on securities1,763 1,565 1,572 2,210 2,325 
Dividends189 194 193 157 990 
Other40 65 94 32 20 
Total interest and dividend income22,875 21,545 20,574 19,781 19,434 
Interest on deposits4,349 4,089 3,523 3,254 2,980 
Interest on borrowings732 502 643 646 504 
Total interest expense5,081 4,591 4,166 3,900 3,484 
Net interest and dividend income17,794 16,954 16,408 15,881 15,950 
Provision for loan losses681 242 1,118 57 927 
Net interest and dividend income, after provision for
loan losses
17,113 16,712 15,290 15,824 15,023 
Deposit account fees372 385 341 320 356 
Interchange and ATM fees418 455 388 348 388 
Mortgage banking552 1,146 1,219 740 436 
Loss on sale of purchased home equity portfolio

 (118)   
Loan level derivative fee income1,105 156 1,367 164 640 
Realized securities gains (losses), net  928 (1,022)298 
Gain on exchange of investment in Northeast Retirement
Services
   5,947  
Bank-owned life insurance income277 268 261 257 272 
Miscellaneous206 534 6 62 1,417 
Total noninterest income2,930 2,826 4,510 6,816 3,807 
Salaries and employee benefits7,755 7,979 7,664 7,563 7,234 
Pension settlement charges317     
Occupancy and equipment2,224 2,024 2,030 2,115 2,291 
Data processing1,067 1,016 1,022 1,044 988 
Professional fees540 340 526 869 736 
Advertising503 563 489 367 677 
FDIC deposit insurance220 226 223 212 157 
Directors' fees382 382 428 374 377 
Amortization of core deposit intangible175 199 222 247 271 
Other general and administrative1,002 626 762 609 778 
Total noninterest expense14,185 13,355 13,366 13,400 13,509 
Income before income taxes5,858 6,183 6,434 9,240 5,321 
Provision for income taxes4,565 2,342 2,566 1,753 1,323 
Net income$1,293 $3,841 $3,868 $7,487 $3,998 
      
Earnings per common share:     
Basic$0.05 $0.16 $0.16 $0.31 $0.17 
Diluted$0.05 $0.16 $0.16 $0.31 $0.17 
Weighted average shares outstanding:     
Basic24,104,329
 23,973,116
 23,952,443
 23,911,419
 23,919,483
 
Diluted24,795,366
 24,510,092
 24,346,553
 24,275,665
 24,032,613
 
      
Regular dividends declared per share$0.15 $0.15 $0.05 $0.05 $0.03 
Special dividends declared per share$ $ $0.20 $ $ 
                


 
Blue Hills Bancorp Inc.
Average Balances/Yields
(Unaudited; dollars in thousands)Quarters Ended
 December 31, 2017 September 30, 2017 December 31, 2016
 Average
balance
InterestYield/
Cost
 Average
balance
InterestYield/
Cost
 Average
balance
InterestYield/
Cost
Interest-earning assets           
Total loans (1)$2,178,388 $20,947 3.81% $2,096,034 $19,779 3.74% $1,823,046 $16,161 3.53%
Securities (1)312,313 1,836 2.33  301,484 1,609 2.12  408,351 3,206 3.12 
Other interest earning assets and
FHLB stock
28,842 156 2.15  32,051 215 2.66  29,235 145 1.97 
Total interest-earning assets2,519,543 22,939 3.61% 2,429,569 21,603 3.53% 2,260,632 19,512 3.43%
Non-interest-earning assets96,781    101,188    104,188   
Total assets$2,616,324    $2,530,757    $2,364,820   
            
Interest-bearing liabilities           
NOW$160,371 $17 0.04% $153,224 $17 0.04% $144,520 $18 0.05%
Regular savings235,864 183 0.31  243,680 191 0.31  265,589 225 0.34 
Money market718,489 1,823 1.01  708,748 1,769 0.99  597,891 1,319 0.88 
Certificates of deposit653,573 2,326 1.41  653,339 2,112 1.28  526,433 1,418 1.07 
Total interest-bearing deposits1,768,297 4,349 0.98  1,758,991 4,089 0.92  1,534,433 2,980 0.77 
Borrowings202,255 732 1.44  133,788 502 1.49  223,693 504 0.90 
Total interest-bearing liabilities1,970,552 5,081 1.02% 1,892,779 4,591 0.96% 1,758,126 3,484 0.79%
Non-interest-bearing deposits220,167    213,459    188,797   
Other non-interest-bearing liabilities23,602    23,603    29,861   
Total liabilities2,214,321    2,129,841    1,976,784   
Stockholders' equity402,003    400,916    388,036   
Total liabilities and stockholders'
equity
$2,616,324    $2,530,757    $2,364,820   
            
Net interest and dividend income (FTE) 17,858    17,012    16,028  
Less: FTE adjustment (64)   (58)   (78) 
Net interest and dividend income (GAAP) $17,794    $16,954    $15,950  
            
Net interest rate spread (FTE)  2.59%   2.57%   2.64%
Net interest margin (FTE)  2.81%   2.78%   2.82%
Total deposit cost  0.87%   0.82%   0.69%
               

(1) Interest income on tax-exempt securities and loans was adjusted to a fully taxable-equivalent (FTE) basis using a federal statutory tax rate of 35%.

 
Blue Hills Bancorp Inc.
Average Balances/Yields
(Unaudited; dollars in thousands)Year to Date
 December 31, 2017 December 31, 2016
 Average
balance
InterestYield/
Cost
 Average
balance
InterestYield/
Cost
Interest-earning assets       
Total loans (1)$2,070,513 $76,932 3.72% $1,688,878 $59,174 3.50%
Securities (1)329,369 7,306 2.22  415,220 10,068 2.42 
Other interest earning assets and FHLB stock32,345 785 2.43  33,427 603 1.80 
Total interest-earning assets2,432,227 85,023 3.50% 2,137,525 69,845 3.27%
Non-interest-earning assets99,333    102,868   
Total assets$2,531,560    $2,240,393   
        
Interest-bearing liabilities       
NOW$152,469 $67 0.04% $139,829 $67 0.05%
Regular savings249,256 800 0.32  275,347 938 0.34 
Money market692,474 6,780 0.98  517,474 4,321 0.84 
Certificates of deposit612,486 7,568 1.24  472,985 5,162 1.09 
Total interest-bearing deposits1,706,685 15,215 0.89  1,405,635 10,488 0.75 
Borrowings199,004 2,523 1.27  249,226 2,088 0.84 
Total interest-bearing liabilities1,905,689 17,738 0.93% 1,654,861 12,576 0.76%
Non-interest-bearing deposits201,715    163,403   
Other non-interest-bearing liabilities25,477    29,459   
Total liabilities2,132,881    1,847,723   
Stockholders' equity398,679    392,670   
Total liabilities and stockholders' equity$2,531,560    $2,240,393   
        
Net interest and dividend income (FTE) 67,285    57,269  
Less: FTE adjustment (248)   (307) 
Net interest and dividend income (GAAP) $67,037    $56,962  
        
Net interest rate spread (FTE)  2.57%   2.51%
Net interest margin (FTE)  2.77%   2.68%
Total deposit cost  0.80%   0.67%
          

(1) Interest income on tax-exempt securities and loans was adjusted to a fully taxable-equivalent (FTE) basis using a federal statutory tax rate of 35%.

 
Blue Hills Bancorp, Inc.
Average Balances - Trend
(Unaudited; dollars in thousands)Quarters Ended
 December 31,September 30,June 30,March 31,December 31,
 20172017201720172016
Interest-earning assets     
Total loans$2,178,388 $2,096,034 $2,046,288 $1,958,647 $1,823,046 
Securities312,313 301,484 309,909 398,201 408,351 
Other interest earning assets and FHLB stock28,842 32,051 36,768 31,842 29,235 
Total interest-earning assets2,519,543 2,429,569 2,392,965 2,388,690 2,260,632 
Non-interest-earning assets96,781 101,188 102,750 93,397 104,188 
Total assets$2,616,324 $2,530,757 $2,495,715 $2,482,087 $2,364,820 
      
Interest-bearing liabilities     
NOW$160,371 $153,224 $150,711 $145,396 $144,520 
Regular savings235,864 243,680 255,255 262,578 265,589 
Money market718,489 708,748 688,600 653,165 597,891 
Certificates of deposit653,573 653,339 573,997 567,642 526,433 
Total interest-bearing deposits1,768,297 1,758,991 1,668,563 1,628,781 1,534,433 
Borrowings202,255 133,788 204,786 256,500 223,693 
Total interest-bearing liabilities1,970,552 1,892,779 1,873,349 1,885,281 1,758,126 
Non-interest-bearing deposits220,167 213,459 189,180 183,520 188,797 
Other non-interest-bearing liabilities23,602 23,603 33,664 21,035 29,861 
Total liabilities2,214,321 2,129,841 2,096,193 2,089,836 1,976,784 
Stockholders' equity402,003 400,916 399,522 392,251 388,036 
Total liabilities and stockholders' equity$2,616,324 $2,530,757 $2,495,715 $2,482,087 $2,364,820 
                


 
Blue Hills Bancorp, Inc.
Yield Trend
(Unaudited; dollars in thousands)Quarters Ended
 December 31,September 30,June 30,March 31,December 31,
 20172017201720172016
Interest-earning assets     
Total loans (1)3.81%3.74%3.68%3.61%3.53%
Securities (1)2.33%2.12%2.10%2.28%3.12%
Other interest earning assets and FHLB stock2.15%2.66%2.65%2.18%1.97%
Total interest-earning assets3.61%3.53%3.46%3.37%3.43%
      
Interest-bearing liabilities     
NOW0.04%0.04%0.05%0.04%0.05%
Regular savings0.31%0.31%0.33%0.34%0.34%
Money market1.01%0.99%0.97%0.94%0.88%
Certificates of deposit1.41%1.28%1.14%1.07%1.07%
Total interest-bearing deposits0.98%0.92%0.85%0.81%0.77%
Borrowings1.44%1.49%1.26%1.02%0.90%
Total interest-bearing liabilities1.02%0.96%0.89%0.84%0.79%
      
Net interest rate spread (FTE) (1)2.59%2.57%2.57%2.53%2.64%
Net interest margin (FTE) (1)2.81%2.78%2.76%2.71%2.82%
Total deposit cost0.87%0.82%0.76%0.73%0.69%
           

(1) Interest income on tax-exempt securities and loans was adjusted to a fully taxable-equivalent (FTE) basis using a federal statutory tax rate of 35%.

 
Blue Hills Bancorp Inc.
Reconciliation of GAAP to Non-GAAP Net Income
(Unaudited; dollars in thousands, except share data)Quarter Ended
 December 31, 2017
 Income Before
Income Taxes
 Provision for
Income Taxes
 Net Income Earnings per
Common Share
(diluted)
GAAP basis$5,858  $4,565  $1,293  $0.05 
Add pension settlement charges317  129  188  0.01 
Add impact of tax reform on DTA valuation  (2,500) 2,500  0.10 
Non-GAAP basis$6,175  $2,194  $3,981  $0.16 
 Quarter Ended
 September 30, 2017
 Income Before
Income Taxes
 Provision for
Income Taxes
 Net Income Earnings per
Common Share
(diluted)
GAAP basis$6,183  $2,342  $3,841  $0.16 
Add loss on sale of purchased home equity portfolio118  45  73   
Non-GAAP basis$6,301  $2,387  $3,914  $0.16 
 Quarter Ended
 June 30, 2017
 Income Before
Income Taxes
 Provision for
Income Taxes
 Net Income Earnings per
Common Share
(diluted)
GAAP basis$6,434  $2,566  $3,868  $0.16 
Less  realized gain on sale of remaining available-for-
sale debt securities portfolio
(928) (333) (595) (0.02)
Non-GAAP basis$5,506  $2,233  $3,273  $0.14 
 Quarter Ended
 March 31, 2017
 Income Before
Income Taxes
 Provision for
Income Taxes
 Net Income Earnings per
Common Share
(diluted)
GAAP basis$9,240  $1,753  $7,487  $0.31 
Less gain on exchange of investment in Northeast
Retirement Services
(5,947) (2,133) (3,814) (0.16)
Add realized loss on sale of mutual funds1,054  378  676  0.03 
Less reversal of state tax valuation allowance  1,697  (1,697) (0.07)
Non-GAAP basis$4,347  $1,695  $2,652  $0.11 
        

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

 
Blue Hills Bancorp Inc.
Reconciliation of GAAP to Non-GAAP Net Income
(Unaudited; dollars in thousands, except share data)Year to Date
 December 31, 2017
 Income Before
Income Taxes
 Provision for
Income Taxes
 Net Income Earnings per
Common Share
(diluted)
GAAP basis$27,715  $11,226  $16,489  $0.67 
Less gain on exchange of investment in Northeast
Retirement Services
(5,947) (2,133) (3,814) (0.16)
Less realized gain on sale of remaining available-
for-sale debt securities portfolio
(928) (333) (595) (0.02)
Add realized loss on sale of mutual funds1,054  378  676  0.03 
Add loss on sale of purchased home equity portfolio118  45  73   
Add pension settlement charges317  129  188  0.01 
Less reversal of state tax valuation allowance  1,697  (1,697) (0.07)
Add impact of tax reform on DTA valuation  (2,500) 2,500  0.10 
Non-GAAP basis$22,329  $8,509  $13,820  $0.56 
        

The Company's management believes that the presentation of net income on a non-GAAP basis, excluding nonrecurring items, provides useful information for evaluating the Company's operating results and any related trends that may be affecting the Company's business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP. There we no nonrecurring items in the year ended December 31, 2016.

 
Blue Hills Bancorp, Inc.
Selected Financial Highlights
(Unaudited; dollars in thousands, except share data)Quarters Ended
 December 31,September 30,June 30,March 31,December 31,
 20172017201720172016
Performance Ratios (annualized)     
      
Diluted EPS     
GAAP$0.05 $0.16 $0.16 $0.31 $0.17 
Non-GAAP$0.16 $0.16 $0.14 $0.11 n/a
 
      
Return on average assets (ROAA)     
GAAP0.20%0.60%0.62%1.22%0.67%
Non-GAAP0.60%0.61%0.53%0.43%n/a
 
      
Return on average equity (ROAE)     
GAAP1.28%3.80%3.88%7.74%4.10%
Non-GAAP3.93%3.87%3.29%2.74%n/a
 
      
Return on average tangible common equity
(ROATCE) (1) (3)
     
GAAP1.31%3.90%3.99%7.95%4.22%
Non-GAAP4.03%3.97%3.37%2.82%n/a
 
      
Efficiency ratio (2) (3)     
GAAP68%68%64%59%68%
Non-GAAP67%67%67%75%n/a
 
           

(1) Average tangible common equity equals average total equity less goodwill and intangibles.

(2) Efficiency ratio equals noninterest expense divided by net interest and dividend income and noninterest income.

(3) ROATCE and the efficiency ratio are non-GAAP measures and may not be comparable to similar non-GAAP measures used by other companies. Management believes that these non-GAAP measures are meaningful because it is standard practice for companies in the banking industry to disclose these measures. Therefore, management believes these measures provide useful information to investors by allowing them to make peer comparisons.

See page 15 for Non-GAAP financial measures.

 
Blue Hills Bancorp, Inc.
Selected Financial Highlights
(Unaudited; dollars in thousands, except share data)Year to Date
 December 31, 2017December 31, 2016
Performance Ratios  
   
Diluted EPS  
GAAP$0.67 $0.35 
Non-GAAP0.56 n/a
 
   
Return on average assets (ROAA)  
GAAP0.65%0.39%
Non-GAAP0.55%n/a
 
   
Return on average equity (ROAE)  
GAAP4.14%2.20%
Non-GAAP3.47%n/a
 
   
Return on average tangible common equity (ROATCE) (1) (3)  
GAAP4.24%2.27%
Non-GAAP3.56%n/a
 
   
Efficiency ratio (2) (3)65%75%
GAAP69%n/a
 
Non-GAAP  

(1) Average tangible common equity equals average total equity less goodwill and intangibles.

(2) Efficiency ratio equals noninterest expense divided by net interest and dividend income and noninterest income.

(3) ROATCE and the efficiency ratio are non-GAAP measures and may not be comparable to similar non-GAAP measures used by other companies. Management believes that these non-GAAP measures are meaningful because it is standard practice for companies in the banking industry to disclose these measures. Therefore, management believes these measures provide useful information to investors by allowing them to make peer comparisons.

See page 16 for Non-GAAP financial measures.

 
Blue Hills Bancorp, Inc.
Selected Financial Highlights
(Unaudited; dollars in thousands, except share data) At or for the Quarters Ended At or for the Year Ended
 December 31,September 30,December 31, December 31,December 31,
 201720172016 20172016
Asset Quality      
Non-performing Assets$11,523 $11,540 $8,983  $11,523 $8,983 
Non-performing Assets/ Total Assets0.43%0.45 %0.36 % 0.43%0.36%
Allowance for Loan Losses/ Total Loans0.95%0.97 %0.97 % 0.95%0.97%
Net Charge-offs (Recoveries)$52 $(89)$(93) $(29)$3,237 
Annualized Net Charge-offs (Recoveries)/ Average Loans0.01%(0.02)%(0.02)% %0.19%
Allowance for Loan Losses/ Nonperforming Loans181%175 %209 % 181%209%
       
Capital/Other      
Common shares outstanding26,827,660 26,869,088 26,759,953    
Book value per share$14.83 $14.85 $14.46    
Tangible book value per share$14.47 $14.48 $14.06    
Tangible Common Equity/Tangible Assets (1) (2)14.60%15.35 %15.30 %   
Full-time Equivalent Employees237 232 228    

(1) Tangible common equity equals total equity less goodwill and core deposit intangibles, Tangible assets equals total assets less goodwill and core deposit intangibles.

(2) Tangible common equity/tangible assets is a non-GAAP measure and may not be comparable to similar non-GAAP measures used by other companies. Management believes that this non-GAAP measure is meaningful because it is standard practice for companies in the banking industry to disclose this measure. Therefore, management believes this measure provides useful information to investors by allowing them to make peer comparisons.