BSB Bancorp, Inc. (NASDAQ-BLMT), the holding company for Belmont Savings Bank, a state-chartered savings bank headquartered in Belmont, Massachusetts, today reported net income of $6.1 million or $0.65 per diluted share for the quarter ended June 30, 2018 compared to net income of $4.0 million or $0.43 per diluted share for the quarter ended June 30, 2017 or an increase of 51.2% in net income.Excluding the one-time impact of the Tax Cuts and Jobs Act in the fourth quarter of 2017, the Bank has had 20 consecutive quarters of earnings growth. For the six months ended June 30, 2018, the Company reported net income of $12.1 million or $1.29 per diluted share as compared to net income of $7.7 million or $0.83 per diluted share for the six months ended June 30, 2017 or an increase in net income of 57.3%.

Robert M. Mahoney, President and Chief Executive Officer, said, "Strong loan growth, good expense control and solid credit risk management continue to drive our consistent earnings growth. Competition for deposits is keen and has impacted our margin.”

NET INTEREST AND DIVIDEND INCOME

Net interest and dividend income before provision for loan losses for the quarter ended June30, 2018 was $15.1 million as compared to $13.9 million for the quarter ended June30, 2017or an8.3% increase. Theprovision for loan losses for the quarter ended June30, 2018 was $726,000 as compared to $707,000for the quarter ended June30, 2017 or a 2.7% increase.The combination of these items resulted in an increase of $1.1 million or 8.6% in net interest and dividend income after provision for loan losses for the quarter ended June 30, 2018 as compared to the quarter ended June30, 2017.

Net interest and dividend income before provision for loan losses for the six months ended June 30, 2018 was $30.2 million as compared to $27.2 million for the six months ended June 30, 2017 or an11.1% increase. The provision for loan losses for the six months ended June 30, 2018 was $1.0 million as compared to $1.5 million for the six months ended June 30, 2017 or a 34.8% decrease. The decrease in the provision for loan losses was driven by improvements in the factors used to estimate the allowance for loan losses as well as the elimination of the specific reserve onan impaired loan that was sold. The combination of these items resulted in an increase of $3.6 million or 13.9% in net interest and dividend income after provision for loan losses for the six months ended June 30, 2018 as compared to the six months ended June 30, 2017.

NONINTEREST INCOME

Noninterest income for the quarter ended June 30, 2018 was $1.7 million as compared to $995,000 for the quarter ended June 30, 2017 or an increase of 72.0%. This increase was driven by $1.0 million in fee income recognized on loan-level derivative agreements we entered into during the quarter.Partially offsetting this increase was a decrease innet gains on sales of loans of $314,000 due to alower number of loans sold.

Noninterest income for the six months ended June 30, 2018 was $2.6 million as compared to $1.6 million for the six monthsJune 30, 2017 or an increase of 60.2%. This increase was driven by loan-level derivative income of $1.0 million.

NONINTEREST EXPENSE

Noninterest expense for the quarter ended June 30, 2018was $7.8 million as compared to $7.6million for the quarter ended June30, 2017 or anincrease of2.0%.

• Salaries and employee benefits increased $233,000 or 4.9% driven bymerit increases, additional staffing and commissions related to higher loan originations.
• Director compensation decreased $129,000 or 36.2% driven by reduced stock-based compensation expense as the majority of stock awards granted under the 2012 Equity Incentive Plan were fully expensed in the fourth quarter of 2017.
• Deposit insurance expense increased by $79,000 or 19.0% driven by asset growth.

Noninterest expense for the six months ended June 30, 2018 was $15.5 million as compared to $15.1 million for the six months ended June 30, 2017 or an increase of 2.3%.

• Salaries and employee benefits increased $436,000 or 4.6% driven by merit increases, additional staffing and commissions related to higher loan originations.
• Director compensation decreased $237,000 or 36.0% driven by reduced stock-based compensation expense as the majority of stock awards granted under the 2012 Equity Incentive Plan were fully expensed in the fourth quarter of 2017.
• Deposit insurance expense increased by $166,000 or 20.3% driven by asset growth.

Our efficiency ratio improved to 46.4% for the quarter ended June 30, 2018 from 51.2% for the quarter ended June 30, 2017 and to 47.1% for the six months ended June 30, 2018 from 52.4% for the six months ended June 30, 2017as we continue to grow the balance sheet and manage costs.A talented and committed colleague team along with continued operational enhancements have contributed to the improvement in our efficiency ratio.

INCOME TAXES

We recorded a provision for income taxes of $2.2 million for the quarter ended June 30, 2018, compared to a provision for income taxes of $2.6 million for the quarter ended June 30, 2017, reflecting effective tax rates of 26.8% and 39.1%, respectively. We recorded a provision for income taxes of $4.3 million for the six months ended June 30, 2018, compared to a provision for income taxes of $4.5 million for the six months ended June 30, 2017, reflecting effective tax rates of 26.2% and 37.0%, respectively.The decrease in the effective tax rate was driven by a reduction in the federal income tax rate from 35% to 21% that became effective on January 1, 2018.

BALANCE SHEET

At June30, 2018, total assets were $2.91billion, an increase of $232.5 million or 8.7% from $2.68 billion at December 31, 2017. The Companyexperienced net loan growth of $242.4 million or 10.6% from December 31, 2017 to June 30, 2018.One-to-four family residentialreal estate loans and commercial real estate loansincreased by $187.8 million and $87.3 million, respectively.Partially offsetting theseincreases weredecreases in construction loans of $14.6 million, indirect auto loans of $10.4million and home equity lines of credit of $6.9 million. The asset growth was primarily funded by growth in federal home loan bank advances and deposits.

At June 30, 2018, deposits totaled $1.83 billion, an increase of $82.6 million or 4.7% from $1.75billion at December 31, 2017. Core deposits, which we consider to include all deposits other than CDs, increased by $5.1million or 0.4% from $1.247 billion at December 31, 2017 to $1.252 billion at June 30, 2018.Hal R. Tovin, Executive Vice President and Chief Operating Officer, said“Deposit growth continued in the first half of the year with the introduction of competitive retail products, as well as a strategic focus on not for profit customer acquisition. In addition, the implementation of cash management services continue to expand our municipal banking relationships.”

Total stockholders’ equity increased by $13.2 million or 7.4%from $178.0 million as of December 31, 2017 to $191.2 million as of June30, 2018. This increase is primarily the result of earnings of $12.1 millionand a $1.2millionincrease in additional paid-in capital related to stock-based compensation.

ASSET QUALITY

Asset quality remains strong. The allowance for loan losses in total and as a percentage of total loans as of June30, 2018was $17.3 million and 0.68%, respectively, as compared to $16.3 million and 0.71%, respectively, as of December 31, 2017. For the six months ended June 30, 2018, the Company recorded net charge offsof $17,000, as compared to netcharge offsof $32,000 for the six months endedJune 30, 2017.Total non-performing assets were $773,000 or 0.03% of total assets as of June 30, 2018and $1.4 million or0.05% of total assets as of December 31, 2017.

Company Profile

BSB Bancorp, Inc. is headquartered in Belmont, Massachusetts and is the holding company for Belmont Savings Bank. The Bank provides financial services to individuals, families, municipalities and businesses through its six full-service branch offices located in Belmont, Watertown, Cambridge, Newton and Waltham in Southeast Middlesex County, Massachusetts. The Bank's primary lending market includes Essex, Middlesex, Norfolk and Suffolk Counties, Massachusetts. The Company’s common stock is traded on the NASDAQ Capital Market under the symbol “BLMT.” For more information, visit the Company’s website at www.belmontsavings.com.