BRYN MAWR, Pa., January 29, 2018 – H.R. 1, originally known as the “Tax Cuts and Jobs Act” (“Tax Reform”), signed into law on December 22, 2017, reduced the top federal corporate income tax rate from 35% to 21%. As a result, Bryn Mawr Bank Corporation (NASDAQ: BMTC) (the “Corporation”), parent of The Bryn Mawr Trust Company (the “Bank”) was required to re-measure its net deferred tax asset to this lower rate, resulting in a one-time income tax charge of $15.2 million, or $0.85 diluted earnings per share. Additionally, the Corporation incurred after-tax due diligence and merger-related expenses of $2.3 million during the fourth quarter of 2017. As a result, the Corporation today reported a net loss of $6.2 million and diluted earnings per share of ($0.35) for the three months ended December 31, 2017, as compared to net income of $10.7 million, or $0.62 diluted earnings per share, for the three months ended September 30, 2017, and $9.4 million, or $0.55 diluted earnings per share, for the three months ended December 31, 2016. For the twelve months ended December 31, 2017, the Corporation posted net income of $23.0 million, or $1.32 diluted earnings per share, as compared to $36.0 million, or $2.12 diluted earnings per share for the same period in 2016.
On a non-GAAP basis, core net income, which excludes this one-time income tax charge, due diligence and merger-related expenses and certain other non-core income and expense items, as detailed in the appendix to this earnings release, was $11.3 million, or $0.63 diluted earnings per share, for the three months ended December 31, 2017 as compared to $11.2 million, or $0.65 diluted earnings per share, for the three months ended September 30, 2017 and $9.4 million, or $0.55 diluted earnings per share, for the three months ended December 31, 2016. For the twelve months ended December 31, 2017, core net income was $42.1 million, or $2.42 per share, as compared to $36.1 million, or $2.12 diluted earnings per share for the same period in 2016. 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.
“We were pleased to finish the year on a strong note with core net income at record levels for both the quarter and full year,” commented Frank Leto, President and Chief Executive Officer. “The fourth quarter was an excellent period for BMT, as we continued to benefit from our focus on new business development, as evidenced by the Wealth Division’s reaching almost $13 billion in AUM, while also issuing $70 million of subordinated notes, which will qualify for Tier 2 regulatory capital, and successfully completing our merger with Royal Bank with minimal disruption to normal operations. As the merger was a mid-December close, the full impact of the business combination on the Corporation’s results will not be evident until the first quarter of 2018,” added Mr. Leto.
“The income tax charge related to Tax Reform was experienced by many throughout the industry. While we expect to recoup this expense in less than two years, we are also analyzing how to deploy the increased after-tax earnings within a framework that is focused on improving long-term shareholder value while also continuing to serve the communities in which we do business,” Mr. Leto concluded.
The Board of Directors of the Corporation declared a quarterly dividend of $0.22 per share, payable March 1, 2018 to shareholders of record as of February 9, 2018.