consists primarily of service charges on deposit accounts, income derived from bank owned life insurance, loan servicing fees, gains or losses on the sale of loans, gains or losses on the sale of
available-for-sale
investment securities, loan level derivative income and other income.
Non-interest
expense consists primarily
of salaries and employee benefits, director compensation, occupancy and equipment expenses, data processing expenses, legal expenses, accounting and exam fees, FDIC insurance premiums and other operating expenses. Our results of operations may also
be significantly affected by competitive conditions, changes in market interest rates, governmental policies, general and local economic conditions, and actions of regulatory authorities.
Management evaluates the Companys operating results and financial condition using measures that include net income, earnings per share, return on assets
and equity, efficiency ratio, net interest margin, tangible book value per share, asset quality indicators, and many others.
These metrics help
management make key decisions regarding the Banks balance sheet, liquidity, interest rate risk position, and capital resources and assist with identifying areas to improve.
In 2009, the Bank reorganized into the mutual holding company structure. In 2010, the Board of Directors approved a new strategic plan designed to increase
growth and long-term profitability of the Bank. On October 4, 2011, we completed our initial public offering of common stock in connection with BSB Bancorp, MHCs
mutual-to-stock
conversion, selling 8,993,000 shares of common stock at $10.00 per share, including 458,643 shares sold to Belmont Savings Banks employee stock
ownership plan, and raising approximately $89.9 million of gross proceeds. In addition, we issued 179,860 shares of our common stock and contributed $200,000 in cash to the Belmont Savings Bank Foundation.
Further, following a comprehensive strategic review of the Banks management and operations, the Board of Directors of the Bank approved a new strategic
plan designed to increase the growth and profitability of the Bank. The strategic plan contemplated significant growth in assets and liabilities over the next several years with the intent of building upon the Banks leading market share in
Belmont and the surrounding communities, striving to be the Bank of Choice for small businesses in its market area and the trusted lending partner for area commercial real estate investors, developers and managers. The strategic plan was
intended to take advantage of the sound eastern Massachusetts economy, which had not been as negatively affected by the recent recession as other regions of the United States. Our current strategy also includes striving to be the Bank of
Choice for cash driven small businesses, municipalities and nonprofit organizations in the Banks market area.
The current strategic plan
includes growth in
one-to-four
family residential real estate loans, increased home equity lending and increased commercial real estate and multi-family real estate
lending. Our portfolios of commercial real estate loans, multi-family real estate loans and
one-to-four
family residential real estate loans have increased in accordance
with the strategic plan, and we intend to continue this strategy of growing these asset classes, while selling a portion of the loans that we originate from time to time as conditions warrant. We have also suspended originations of indirect auto
loans due to the current market conditions and low interest rate environment.
Our emphasis on conservative loan underwriting has resulted in relatively
low levels of delinquency and
non-performing
assets. Our
non-performing
assets totaled $1.2 million, or 0.04% of total assets, at December 31, 2018, compared
to $1.4 million, or 0.05% of total assets, at December 31, 2017, and $1.8 million, or 0.08% of total assets, at December 31, 2016. Total loan delinquencies of 60 days or more as of December 31, 2018, 2017 and 2016 were
$1.0 million, $294,000 and $1.1 million, respectively. Our provision for loan losses was $1.7 million, $2.8 million and $2.4 million for the years ended December 31, 2018, 2017 and 2016, respectively. For the years
ending December 31, 2018, 2017 and 2016 we experienced net charge offs of $30,000, $35,000 and $40,000, respectively.
Management pays close
attention to the ongoing operating expenses incurred by the Company while making needed capital expenditures and prudently investing in our infrastructure. The Companys primary expenses are related to salaries and employee benefits, data
processing costs, deposit insurance costs and expenses associated with buildings and equipment. During the year ended December 31, 2018, noninterest expense was managed well and we continued to make improvements in our efficiency ratio.
Critical Accounting Policies
Critical
accounting policies are defined as those that involve significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. We believe that
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