Frank Leto
Analyst · KBW. Please go ahead
Thanks, David and I would like to thank all of you for joining the conference call today. I hope you had a chance to review our second quarter earnings release, which was issued yesterday after the market close. With net income of $8.1 million for the second quarter, we continue to produce consistent, strong results. Excluding merger costs and security gains, our core earnings have improved by $1.2 million from the second quarter of last year. One of the most promising indicators from the second quarter was the excellent loan growth that we experienced. Portfolio loans grew by a net $64.7 million, or 3.1% during the second quarter, with C&I, commercial mortgage and construction loans accounting for the lion’s share of the growth. This loan growth was net of $54.3 million of pay-downs during the quarter of acquired loans and is the result of many new loan relationships created through the bank’s expanded footprint. And while the growth was significant, it was not at the expense of credit quality which remains very strong, with non-performing loans making up only 42 basis points of total portfolio loans, down 61 basis points from the end of 2014. Our strategic initiatives, which we announced at the beginning of the year, have begun to generate promising results, with consumer loan applications up by approximately 20%. Our mortgage banking initiative, which was introduced in the first quarter, is well on its way of reaching or possibly exceeding its goal of originating $251 million of residential mortgage loans in 2015. Wealth assets, which reached a new high of $8.5 billion in the second quarter, continues to produce strong revenue levels, while our insurance division, which was further bolstered by our April 1 acquisition, continues to add an important source of non-interest income to the bank. In regards to capital planning, during the second quarter, the corporation repurchased 88,800 shares of common stock under its February 2006 stock buyback program at an average share price of $29.58 per share. The repurchase was made in order to offset share issuances in connection with our various stock-based compensation awards, which totaled 98,473 shares during the quarter. In addition on June 30, 2015, the Kroll Bond Rating Agency assigned a senior unsecured long-term rating of A-, a subordinated debt rating of BBB+ and a short-term debt rating of K2 to Bryn Mawr Bank Corporation. We engaged Kroll to perform their due diligence and issued the ratings as part of our ongoing capital planning strategies. The Kroll rating will allow us to more readily explore a broad range of capital opportunities as they may arise. When we entered into the merger with Continental, we were well aware that this first year would be a challenging period for earnings growth. Redundant systems as well as staffing are beginning to wind down, which we grow nearer to the full integration and the scheduled late October 2015 core banking systems conversion. Once we have crossed that hurdle, we expect to realize further the anticipated cost savings related to the combined institutions. In addition to the core banking system conversions, several large system upgrades are at various stages of completion. These upgrades include the commercial lending portfolio management tool, which was placed and used during the first quarter and has begun to streamline the workflow as well as enhance the monitoring of our commercial credits. On June 17, we rolled out our new online and mobile banking tool, which puts BMT on the leading end of consumer banking solutions, enabling us to compete more effectively in the space. Not far behind the consumer offering will be our business online banking product, which will also put us on equal footing with our larger competitors. In addition, a companywide imaging solution is nearing completion, which will vastly improve our efficiencies throughout the organization. And finally, a new desktop platform will be introduced, which will enhance the customer experience at our branches. All of these infrastructure improvements will help build a strong foundation for our future growth. For the past 89 consecutive quarters, we paid dividends to our shareholders and we are very proud of this record and feel very fortunate to have the continued loyalty and support of our shareholders. Therefore, I am pleased to announce on July 23, 2015, the Board of Directors of the corporation declared a quarterly dividend of $0.20 per share, payable on September 1, 2015 to shareholders of record as of August 4, 2015. This represents a 5.3% increase from last quarter and is indicative of the Board’s confidence in management’s ability to deliver strong results. In summary, we believe our business model is sound with an improving economy, locally and nationally. We are in an excellent position to take advantage of opportunities for continued profitable growth and strong performance. As we, along with other community banks, continue to be squeezed by tightening interest margins, we strive to identify new ways to diversify and expand our non-interest revenue streams. We continually evaluate acquisition opportunities as they arise with a focus on quality and compatibility and we believe we are poised for continued profitability and growth. And with that, we will open up the lines for questions. Andrew?
