BRYN MAWR, Pa., July 21, 2016 (GLOBE NEWSWIRE) -- Bryn Mawr Bank Corporation (NASDAQ:BMTC), parent of The Bryn Mawr Trust Company, today reported net income of $8.9 million and diluted earnings per share of $0.52 for the three months ended June 30, 2016, as compared to $8.3 million, or $0.49 diluted earnings per share for the three months ended March 31, 2016 and $8.1 million, or $0.45 diluted earnings per share for the three months ended June 30, 2015.

On a non-GAAP basis, core net income, which excludes certain non-core income and expense items, as detailed in the appendix to this earnings release, was also $8.9 million, or $0.53 diluted earnings per share for the three months ended June 30, 2016 as compared to $8.3 million, or $0.49 diluted earnings per share for the three months ended March 31, 2016 and $9.0 million, or $0.50 diluted earnings per share for the three months ended June 30, 2015. Management believes the core net income measure is important in evaluating the Corporation’s performance on a more comparable basis between periods. A reconciliation of this and other non-GAAP to GAAP performance measures is included in the appendix to this earnings release.

“The results for the second quarter are promising, with the full effect of the first quarter loan growth having a significant impact on our net interest income,” commented Frank Leto, President and Chief Executive Officer, continuing, “in addition, our credit quality continues to be strong, with low charge-off and delinquency levels which are reflected in the reduced provision recorded this quarter.” Mr. Leto added, “As we saw in the first quarter of this year, we continue to experience the positive results stemming from the strategic decisions we made in 2015. We are beginning to reap the benefits of our significant investment in new technology, and the addition of new teams and talent to the organization.”

On July 21, 2016, the Board of Directors of the Corporation elected to increase the quarterly dividend by 5%, declaring a quarterly dividend of $0.21 per share, payable September 1, 2016 to shareholders of record as of August 2, 2016.

SIGNIFICANT ITEMS OF NOTE
Results of Operations – Second Quarter 2016 Compared to First Quarter 2016

• Net income for the three months ended June 30, 2016 was $8.9 million, as compared to $8.3 million for the three months ended March 31, 2016. Largely accounting for the increase in net income was a $725 thousand increase in net interest income, a $965 thousand decrease in provision for loan and lease losses (the “Provision”) and a $599 thousand increase in fees for wealth management services between the periods. Partially offsetting these items were a $431 thousand decrease in insurance revenue, a $516 thousand increase in impairment of mortgage servicing rights (“MSRs”), and a $459 thousand increase in salaries and wages.
• Net interest income for the three months ended June 30, 2016 was $26.6 million, an increase of $725 thousand from $25.9 million for the three months ended March 31, 2016. Portfolio loan balances as of June 30, 2016 increased by $45.0 million from March 31, 2016, however, the average balance of portfolio loans for the three months ended June 30, 2016 increased $101.7 million from the three months ended March 31, 2016, indicating that the loan growth during the first quarter of 2016 was weighted more toward the end of the quarter. Partially funding this growth in portfolio loans was an $83.6 million increase, during the second quarter of 2016, in average interest-bearing deposits, largely concentrated in the retail time deposit segment of the deposit portfolio.
• The tax-equivalent net interest margin of 3.81% for the second quarter of 2016 decreased 6 basis points from 3.87% for the first quarter of 2016. The decrease was the result of a 4 basis point decrease in tax-equivalent yield earned on loans, coupled with increases in the tax-equivalent rates paid on interest-bearing deposits and borrowings of 7 basis points and 4 basis points, respectively. The contribution of fair value mark accretion to the tax equivalent net interest margin accounted for 17 basis points of the margin for the second quarter of 2016 as compared to 16 basis points for the first quarter of 2016.
• Non-interest income for the three months ended June 30, 2016 increased $612 thousand from the first quarter of 2016. The increase was related to increases of $599 thousand and $136 thousand in fees for wealth management services and gain on sale of loans, respectively. Fees for wealth management services increased largely as a result of a rebound, during the second quarter, of the asset balances in wealth accounts whose fees are tied to market values. In addition, fees for tax services charged during the second quarter augmented this growth. Further, the gain on sale of loans increased as the mortgage banking strategic initiative continues to build. Partially offsetting these increases was a decrease of $431 thousand in insurance revenues. During the first quarter of 2016, the insurance division received a $434 thousand contingent commission from the insurance carriers which was not repeated in the second quarter of 2016.
• Non-interest expense for the three months ended June 30, 2016 increased $1.2 million, to $26.3 million, as compared to $25.1 million for the first quarter of 2016. Largely contributing to the increase was the $516 thousand increase in impairment of MSRs recorded during the second quarter. This impairment was the result of increased expectations for the continuation of the low interest rate environment, partially driven by international events, which caused interest rates to fall at the end of the quarter. In addition, salaries and wages increased by $459 thousand from the first quarter of 2016, largely due to incentive accruals.
• For the three months ended June 30, 2016, net loan and lease charge-offs totaled $254 thousand, as compared to $422 thousand for the first quarter of 2016. The Provision for the three months ended June 30, 2016 was $445 thousand, as compared to $1.4 million for the first quarter of 2016. As of June 30, 2016, certain metrics related to the credit quality of the loan portfolio, which included delinquency and nonperforming percentages, had improved from levels seen at March 31, 2016, resulting in a lower level of allowance for loan and lease losses (the “Allowance”).

Results of Operations – Second Quarter 2016 Compared to Second Quarter 2015

• Net income for the three months ended June 30, 2016 was $8.9 million, or $0.52 diluted earnings per share, as compared to $8.1 million, or $0.45 diluted earnings per share for the same period in 2015. Significantly contributing to the increase in net income was a $1.6 million increase in net interest income, a $1.3 million reduction in due diligence, merger-related and merger integration costs, and a $405 thousand decrease in the Provision. Partially offsetting these improvements was a $621 thousand increase in impairment of MSRs, a $169 thousand decrease in fees for wealth management services and increases of $1.1 million and $407 thousand in salaries and wages and furniture, fixtures and equipment expense, respectively. In addition to the effect of the increase in net income, the $0.07 increase in diluted earnings per share was also partially the result of the share repurchase which occurred between June 30, 2015 and June 30, 2016.
• Net interest income for the three months ended June 30, 2016 was $26.6 million, an increase of $1.6 million, or 6.2%, from $25.0 million for the same period in 2015. The increase in net interest income was largely related to the growth in average loan balances between the periods. Average loans and leases for the three months ended June 30, 2016 increased by $294.5 million from the same period in 2015. The increase in average loan balances was offset by a 22 basis point decrease in tax-equivalent yield earned on loans and leases. The net effect of the yield decrease and volume increase on average loans and leases was a $2.1 million increase in interest income on loans. On the liability side, an $88.5 million increase in average interest-bearing deposits and a $13.4 million increase in average borrowings resulted in a $736 thousand increase in interest expense between the periods. The tax-equivalent rate paid on deposits increased 7 basis points while that of borrowings increased by 49 basis points.
• The tax-equivalent net interest margin of 3.81% for the three months ended June 30, 2016 was unchanged from the same period in 2015. The contribution of fair value mark accretion to the tax equivalent net interest margin accounted for 17 basis points of the margin for the second quarter of 2016 as compared to 23 basis points for the second quarter of 2015.
• Non-interest income for the three months ended June 30, 2016 decreased $357 thousand as compared to the same period in 2015. Contributing to this decrease was a $169 thousand decrease in fees for wealth management services. In addition, decreases of $75 thousand and $58 thousand in gain on sale of OREO and loan servicing and other fees, respectively, also contributed to the decrease between periods. Partially offsetting these decreases was a $118 thousand increase in gain on sale of loans.
• Non-interest expense for the three months ended June 30, 2016 increased $277 thousand, to $26.3 million, as compared to $26.0 million for the same period in 2015. Factors contributing to the increase were the $1.1 million increase in salaries and wages which were related to staff additions, incentive accruals and annual increases, a $621 thousand increase in impairment of MSRs related to the quarter-end market interest rate drop, which affected prepayment speeds, and a $407 thousand increase in furniture, fixtures and equipment expense, primarily related to the depreciation of the infrastructure improvements which were completed in 2015. Partially offsetting these increases was a $1.3 million decrease in due diligence, merger-related and merger integration costs.
• The Provision for the three months ended June 30, 2016 of $445 thousand was a $405 thousand decrease from the same period in 2015. Although net loan and lease charge-offs for the second quarter of 2016 increased by $68 thousand from the same period in 2015, certain metrics related to the credit quality of the loan portfolio, which included delinquency and nonperforming percentages, improved as of June 30, 2016 as compared to June 30, 2015, resulting in a lower level of Allowance.

Financial Condition – June 30, 2016 Compared to December 31, 2015

• Total portfolio loans and leases of $2.42 billion as of June 30, 2016 increased by $154.8 million, or 6.8%, from December 31, 2015. Loan growth was concentrated in the commercial mortgage, commercial and industrial, and construction categories, which increased $91.7 million, $14.2 million and $42.9 million, respectively, since December 31, 2015.
• The Allowance as of June 30, 2016 was $17.0 million, or 0.70% of portfolio loans as compared to $15.9 million, or 0.70% of portfolio loans and leases, as of December 31, 2015. In addition to the ratio of Allowance to portfolio loans, management also calculates two non-GAAP measures: the Allowance as a percentage of originated loans and leases, which was 0.81% as of June 30, 2016, as compared to 0.84% as of December 31, 2015, and the Allowance plus the remaining loan mark as a percentage of gross loans, which was 1.30% as of June 30, 2016, as compared to 1.44% as of December 31, 2015. A reconciliation of these and other non-GAAP to GAAP performance measures is included in the appendix to this earnings release.
• Available for sale investment securities as of June 30, 2016 were $365.5 million, an increase of $16.5 million from December 31, 2015. Increases of $34.6 million in mortgage-related securities were partially offset by decreases of $15.4 million in U.S. government securities and $2.4 million in municipal obligations.
• Total assets as of June 30, 2016 were $3.09 billion, an increase of $59.1 million from December 31, 2015. Increases in loans and leases and available for sale investment securities were partially offset by reductions in interest-bearing deposits with banks, which decreased by $104.1 million.
• Wealth assets under management, administration, supervision and brokerage totaled $9.63 billion as of June 30, 2016, an increase of $1.27 billion, or 15.2%, from December 31, 2015. Despite this growth in assets, income related to these services grew only 4.9%, as more of the portfolio was comprised of assets held in lower-yielding fixed-fee accounts. Although the balances of wealth accounts whose fees are tied to their asset values are decreasing relative to the balances of fixed-fee accounts due to the strong growth of the latter, the growth in balances in the market-based accounts has been muted, in part, due to normal attrition of funds from these accounts, primarily through beneficiary spending, offsetting very solid new business development and strong account retention.
• Deposits of $2.41 billion as of June 30, 2016 increased $157.0 million from December 31, 2015. Noninterest-bearing deposits increased by $62.5 million, retail time deposits and savings deposits increased by $49.8 million and $30.6 million, respectively, and wholesale time deposits increased by $60.1 million. These increases were partially offset by a $31.6 million decrease in money market accounts.
• The capital ratios for the Bank and the Corporation, as of June 30, 2016, as shown in the attached tables, indicate levels well above the regulatory minimum to be considered “well capitalized.” At the Bank level, all capital ratios have increased from their December 31, 2015 levels, primarily due to increases in retained earnings, other comprehensive income and the $15.0 million capital infusion received from the Corporation in the first quarter of 2016. At the Corporation level, most capital levels remain below their December 31, 2015 levels largely due to asset growth, although most have increased from the March 31, 2016 levels.