The Savings Bank of Walpole Annual Report is available online on or before March 31 of each year. Quarterly regulatory reports are available at www.fdic.gov by entering FDIC certificate number 18030.
2015 Annual Report
Best bank around Just ask a local. 2 0 1 5 Y E A R E N D R E P O R T around To Our Customers Communities and Employees If you ever want to know where to get the best burger in town or the best haircut or who the best carpenter is what do you doYou ask a local. Well today when you ask a local which bank around here is the most customer- and community-focused of them all odds are the answer will be Savings Bank of Walpole. This makes me proud and appreciative of our staff our corporators and trustees and our customersand I want to thank each and every one of you for the honor. Savings Bank of Walpole celebrated its 140th anniversary during 2015 and we felt strongly that our heritage and our commitment to our customers communities and employees was worthy of a celebration. In 1875 our bank was chartered to address needs unmet by larger more established banks. A decision was made to organize a mutually-held community savings bank to help improve the quality of life for the citizens of Walpole and the surrounding region by encouraging them to set a portion of their savings aside for future financial security. A Board of Trustees was formed to govern the bank protect depositors and borrowers and to align operational objectives with the goal of enhancing the prosperity of not only the individual stakeholder but the region at large. Adherence to these objectives has been unwavering for 140 years and a celebration of this commitment was in order. During this past year we held many events to honor our anniversary including pay-it-forward campaigns monthly donations to employee-designated charities treats in our lobbies for customers and free balloons available all year for children who visited our branch oces. Our hallmark event was a barbecue on the Walpole town common where over 1000 people joined us for a summer feast entertainment and fellowship. Dignitaries from around the state joined us as we commemorated the valuable work we do in and for our community. Since my last writing a year ago constant changes in the banking industry continue to present challenges for smaller community banks such as ours. The interest rate environment remains at historic lows regulations continue to pile up as the Dodd Frank Act is rolled out and loan demand in our area remains tepid as the Monadnock region is not experiencing any real growth. With all of that considered I am pleased to report that Savings Bank of Walpole had a very solid year. Prudent management of our investment portfolio allowed us to increase our yields in this area and we also experienced a modest increase in income from our loan portfolio for the first time in eight years. Deposits continue to flow into the bank due in part to our high level of customer service and low-fee account products as well as to the Federal Reserves ongoing accommodative monetary policy that creates a system awash in cash. Our lending staff did an excellent job during the year deploying these funds with 60 million in new loan originations that netted after principal payments and payoffs over 9 million in outstanding Karlie Walpole SBW customer since 2000 loans over the prior year. All of this translated to higher earnings during 2015our third consecutive year with increased earnings. On the regulatory side we successfully implemented the new Know Before You Owe or TILA RESPA Integrated Documentation TRID rules. It is unknown at this time whether or not consumers will benefit from these new disclosures but what is known is that the time to close a loan due to these new requirements has lengthened and the cost to originate a loan has increased. Over the past year we carried out two major projects to deliver enhanced banking services to our customers. These culminated in the rollout of a new e-Banking service in October and new debit card services in November. The new e-Banking platform provided consistent menus and functionality on computers tablets and mobile phones and allowed us to offer mobile check deposit on Apple and Android tablets and mobile phones. We anticipate rolling out new features on a regular basis going forward including the introduction of real-time person-to-person transfers in mid-2016. With the new debit card services we have introduced chip-enabled cards in several designs for enhanced security and will begin issuing cards in our branches in 2016 so customers can begin using their cards instantly. As we look forward in 2016 we remain optimistic about our ability to bring an even better banking experience to our customers. In addition to the new technologies we have implemented we have hired Martha Zabielski a Mortgage Loan Officer with nearly 30 years of banking and mortgage lending expertise. Our customers in the northern part of our market area will surely welcome Marthas familiar face and we are excited to have her on board. Our SBW Wealth Management Division under the leadership of Anthony Scola continues to grow as Tony builds his business network in our market area. His approach to financial advisory services has been well received by customers who have taken the opportunity to meet him. We are also proud to announce that we are building our fifth branch which is expected to break ground in mid 2016. This branch which will be located on Court Street in Keene will offer additional convenience for existing customersand will welcome new customers to the only bank branch option in the northern part of the city. Of special note on June 30 2015 we recognized our friend and co-worker Wally Reney who celebrated his own significant milestonehis 50th anniversary in community banking. For the day we changed the name of the bank to Savings Bank of Wally Kendall W. Lane Mayor of the City of Keene proclaimed the day as Wally Reney Day and our staff and hundreds of well-wishers from the community paid their respects for his dedication to serving our customers and our community in his role as a banker for a half century. Thank you Wally for the care you have given our customers and for making our community a better place to call home. Our mission of serving our customers and community remains as deep and entrenched into the fabric of our institution as the day our bank was founded. We know that this commitment is valued as we continue to experience an increase in the number of customers who choose to do business with Savings Bank of Walpole. We remain humbled by this level of support and thank you for putting your trust in us. As always I welcome your feedback on how we are doing and how you think we can do better. Sincerely Gregg R. Tewksbury President CEO Savings Bank of Walpole Carol and Jeff Marlborough SBW customers since 1999 2015 Financial Highlights Net income of 1021612 was 375759 or 58.2 above 2014 net income of 645853. The increase in net income was driven by an increase in net interest income and one-time non-interest income items. Interest and dividend income of 9525015 was 384781 or 4.2 above 2014. Interest expense which is essentially interest on deposits decreased 175564 or 14.8 to 1011972. As a result of the increase in interest and dividend income and decrease in interest expense net interest income increased 560345 or 7.0 to 8513043 in 2015.This was the second consecutive increase in net interest income after three years of decreases. The spread between the banks yield on earning assets and its cost of funds was 2.50 up from 2.38 in 2014. The banks net yield on average earning assets or net interest margin was 2.54 up from 2.43 in 2014. Net interest income increased because of higher volumes of business and the increase in spread. No provision for loan losses was taken against income in either 2015 or 2014 due to the quality of the banks loan portfolio. The allowance for loan losses of 2532232 was 3828 or .2 above year- end 2014.This represented 1.18 of total loans at year-end 2014 as compared to 1.23 of total loans at year-end 2014. Non-performing assets composed of nonaccrual loans and troubled debt restructurings were .83 and .69 of assets at year-end 2015 and 2014 respectively. Total non-interest income of 2962195 was 438571 or 17.4 above 2014. One-time items provided 425000 of income which accounted for substantially all of the increase. Total non-interest expense of 10142749 was 483077 or 5.0 above 2014. Compensation and benefits increased 155535 or 2.7 due to salary rate increases. Expenses from the Banks debit card program were 99437 above 2014 due to one-time vendor conversion related expenses. Software maintenance expense increased 49056 or 10.7 due to ongoing enhancements to the Banks technology products and infrastructure. Other general and administrative expenses were 162097 or 9.3 above 2014 due to an investment in the banks self-service banking platform advertising and marketing expenses in support of greater lending activity the celebration of the banks 140th anniversary and the promotion of the banks brand in the face of increased local competition. Total assets of 360973965 on December 31 2015 were 21054812 or 6.2 above year-end 2014. This follows an increase of 6118517 or 1.8 in 2014. Year-end deposits of 331272098 were 20524275 or 6.6 above the prior year.This follows an increase of 5396353 or 1.8 in 2014.The financial crisis the resulting recession and the monetary policy response to both have been key factors in the growth of deposits throughout the banking system. Despite extremely low interest rates bank deposits have grown steadily as customers continue to keep their money in safe liquid investments like checking savings and NOW accounts. In recent years the bank took a number of steps to slow the growth of savings and control the growth of CD deposits.This is necessary as banks must maintain deposits in proportion to their capital base especially in an interest rate environment that provides minimal returns on additional deposits. Investment Securities ended the year at 103881214 which was 6291717 or 6.4 above year-end 2014. This follows an increase of 4586885 or 4.9 in 2014. Investment Securities have grown the past few years as part of a strategy to redeploy funds held at the Federal Reserve Bank into higher yielding assets.The bank has held a portfolio of high quality short-term fixed income investments and a high level of liquidity in order to maintain a strong asset-sensitive balance sheet. At year-end 2015 the bank had short-term liquidity investments of 26721346 in overnight deposits at the Federal Reserve Bank. Net loans ended the year at 212107322 which was 9291403 or 4.6 above year-end 2014. This follows an increase of 7230337 or 3.7 in 2014.The banks loan growth over the past two years despite the challenging lending environment reflects a desire by consumers and businesses to maintain local banking relationships. Capital at year-end of 28081292 was 895530 or 3.3 above year-end 2014. This follows an increase of 729878 or 2.8 in 2014.The banks capital-to-asset ratio at year-end 2015 was 7.78 as compared with 8.00 at year-end 2014.The decrease in 2015 was due to the high level of asset growth late in the year. It is challenging for mutual banks to significantly increase their capital levels in the current low-rate environment. Statements of Income December 31 2015 December 31 2014 Interest and dividend income Loans including fees 8363526 8142782 Debt securities Taxable 833225 667041 Tax-exempt 247231 239661 Interest bearing deposits 81033 090750 Total Interest and Dividend Income 9525015 9140234 Interest expense Deposits 1011931 1186683 Other liabilities 41 853 Total Interest Expense 1011972 1187536 Net Interest Income 8513043 7952698 Non-interest income Customer service fees 516595 545557 Net gain on sales of securities 163523 221805 Net gain on sales of loans 169969 124522 Bank-owned life insurance 177298 097773 Financial services commissions 155363 228718 Interchange revenue 1092616 1054168 Other 686831 251081 Total Non-Interest Income 2962195 2523624 Non-interest expenses Compensation and benets 5891899 5736364 Occupancy and equipment 945993 946994 Deposit insurance 236516 218563 Debit cardATM network 647672 548235 Software maintenance 508436 459380 Other general and administrative 1912233 1750136 Total Non-Interest Expenses 10142749 9659672 Income before income taxes 1332489 816650 Provision for income taxes 310877 170797 Net Income 1021612 645853 Net interest margin is total interest income and dividends less total interest expense divided by average interest earning assets. Balance Sheets December 31 2015 December31 2014 Assets Cash and due from banks 4152898 4654540 Interest bearing deposits 26721346 20982583 Total Cash and Cash Equivalents 30874244 25637123 Securities available for sale 103881214 97589497 Loans held for sale 68000 Loans net of allowance for loan losses of 2532232 in 2015 and 2528404 in 2014 212107322 202815919 Premises and equipment net 4172260 4256632 Accrued interest receivable 941281 833626 Deferred tax asset 1407085 1168232 Bank-owned life insurance 6275071 6097773 Other assets 1247488 1520351 Total Assets 360973965 339919153 Liabilities and Capital Deposits 331272098 310747823 Other liabilities 1620575 1985568 Total Liabilities 332892673 312733391 Capital Guaranty Fund 10000000 10000000 Undivided prots 18224452 17202840 Accumulated other comprehensive loss 143160 17078 Total Capital 28081292 27185762 Total Liability and Capital 360973965 339919153 Selected Ratios Return on average assets 0.29 0.19 Equity to assets 7.78 8.00 Average yield on earning assets 2.84 2.79 Average cost of interest bearing liabilities 0.34 0.41 Interest rate spread 2.50 2.38 Net interest margin 2.54 2.43 Trustees Kinyon Esq. Gary J. Chairman of the Board Tewksbury Gregg R. President CEO Coneeny Joseph A. Houston Jason D. McBeth Sylvia M. Robbins Linda W. Rust Lynn C. Ryder Steven J. Shaw Dr. Charles P. Tisdale Donald J. Jeff Keene SBW customer since 2003 Ocers Executive and Administration Tewksbury Gregg R. President CEO Richardson Tamara W. Vice President HRO Curtis Martha A. Bank Officer Finance Bodin Mark G. Senior Vice President CFO Smith Jeffrey P. Treasurer Information Technology Guild Matthew W. Vice President CIO Gouger Heidi L. Assistant Vice President Wilson Damian P. Web Design Development Officer Lending Bianco Stephen M. Senior Vice President Senior Lender Kebalka Chris T. Vice President Commercial Loan Officer Lehr Amy L. Vice President Commercial Loan Officer Greenwood Christine B. Mortgage Officer Hayward Michelle A. Mortgage Officer Zabielski Martha L. Mortgage Officer Operations Tewksbury Julie A. Senior Vice President Operations Hurd Margaret E. Assistant Vice President Deposit Operations Officer Martin Dawn M. Assistant Vice President Loan Compliance Operations Officer Sullivan Cynthia M.S. Deposit Compliance BSA Officer Ayala Ingrid eBanking Officer Retail Perkins Dominic A. Vice President Retail Administration Reney Wallace A. Assistant Vice President Hanks Katherine M. Branch Manager Howard Michelle E. Branch Manager SBW Wealth Management located at Savings Bank of Walpole Scola Anthony J. Vice President Luse Zachary T.C. McBeth Sylvia M. Miller Robert F. Neal James H. OMeara William R. Perry Robert S. Potter Edward R. Putnam Mark A. Reardon Jr. Edward F. Robbins Linda W. Rust Lynn C. Ryder Steven J. Shaw Dr. Charles P. Snide Michael P. Szmit Frederick A. Tewksbury Gregg R. Tisdale Donald J. Tyson William C. Walier Joseph C. Whittemore Peter T. Wichland David P. Wilson Richard A. Corporators Bates Thomas S. Batty Jill I. Bradeen Sarah A. Coneeny Joseph A. Curtis Martha A. Davis Philip J. Dunbar Bradley P. Dunbar Jayson B. Duncan Dayton R. Fitz-Simon James E. Galloway Jerome S. Gavin Mark A. Harrington Kathleen A. Hicks Kelley F. Hicks Randall P. Houston Jason D. Howard Susan L. Jacobs Ruth F. Johnson David B. Kimball Robert I. Kinyon Esq. Gary J. Koson Peter D. Lacey Linda A. Corporators Emeriti Burr I. Tucker Daniels Randall Fletcher William S. Houghton Donald C. Securities offered through Infinex Investments Inc. Member FINRASIPC Non-deposit investment products including insurance are not insured by the FDIC or any other agency or instrumentality of the federal government not deposits or other obligations of or guaranteed by the bank or any affiliate of the bank subject to investment risk including possible loss of principal invested. Hubbard John A. Macri Jr. Gregory J. McMahon Esq. Lewis A. Trask Paul S. The savings bank of you. 68 Ames Plaza Lane Walpole NH 03608 603.756.4771 11 Westminster Street Walpole NH 03608 603.756.4771 84 Marlboro Street Keene NH 03431 603.352.1822 400 West Street Keene NH 03431 603.355.1881 Equal Housing Lender Member FDIC walpolebank.com On the cover Grace and Marilyn Keene SBW customers since 2012