Exhibit 99.6
The
Hibernia
Savings
Bank
Annual Report
1995
FINANCIAL HIGHLIGHTS
12/31/95 12/31/94
- -------------------------------------------------------------------------------
BALANCE SHEET DATA
Total assets $346,865,213 $286,428,660
Securities 125,300,270 111,581,925
Allowance for possible loan losses 2,541,997 2,241,286
Loans, net 208,326,723 163,370,536
Deposits 282,787,249 256,339,791
Stockholders' equity 22,824,616 19,786,097
OPERATING DATA
Net interest income $ 10,229,233 $ 9,230,102
Provision for possible loan losses 300,000 135,000
Pretax core earnings 3,904,144 3,433,615
Net income 2,719,235 2,067,626
PER SHARE DATA
Earnings per share $1.76 1.41
Weighted average shares outstanding 1,545,297 1,468,758
Book value per share $14.89 $13.68
Outstanding shares 1,532,431 1,446,737
OTHER DATA
Yield on average earning assets 7.94% 7.31%
Cost of funds 4.55% 3.71%
Net interest margin 3.39% 3.60%
Return on average assets 0.88% 0.78%
Return on average equity 12.42% 10.98%
Leverage capital to assets ratio at year end 6.58% 6.91%
Risk-based capital to assets ratio at year end 12.69% 13.41%
LETTER TO STOCKHOLDERS
DEAR STOCKHOLDER: It is my distinct pleasure to have this opportunity to
detail for you our continued success during 1995 in improving the financial
performance of your Bank, the increases achieved in the volume of our core
business activities and the geographic expansion of our franchise.
Net income for 1995 totaled $2.72 million, an increase of 31.5% from $2.07
million earned in 1994. Earnings per share for 1995 totaled $1.76, an increase
of 24.8% from earnings per share of $1.41 for 1994. Stockholders' equity
increased by 15.4% from $19.79 million at December 31, 1994 to $22.82 million at
December 31, 1995 and book value per share increased from $13.68 to $14.89.
During the past year our local operating environment was characterized by
strong competition for both quality lending opportunities and retail deposits.
The condition of our local real estate market continued to improve as both real
estate values and the volume of sales increased modestly. Business activity in
our market area continued to expand.
Against this background we achieved substantial growth during the past year
in each of our major business lines. Total assets increased by 21.1% to $346.87
million, earning assets grew by 21.7% to $335.76 million, loans outstanding
increased by 27.5% to $208.33 million and total deposits grew by 10.3% to
$282.79 million. The volume of transactions generated by our core business
activities and the number of customers serviced continued to expand throughout
the year. A combination of factors contributed to the continuing improvement in
our operating results.
Our yield on average earning assets increased during 1995 to 7.9% from 7.3%
in 1994, even though competition for quality lending opportunities during the
past year limited our ability to more aggressively price our loan products and
services. As a result of a restrictive monetary policy adopted by the Federal
Reserve Bank that prevailed throughout the first 9 months of 1995, interest
rates rose and our average cost of funds increased steadily throughout the year
to 4.5% from 3.7% for 1994. Consequently, our net interest margin decreased
modestly during 1995 to 3.4% from 3.6% for 1994. A number of positive
achievements combined to more than offset the decrease in our net interest
margin.
Total earning assets increased by $59.82 million or 21.7% from $275.94
million at year end 1994 to $335.76 million at year end 1995. The increase
achieved during 1995 in earning assets, which was primarily in loans
outstanding, was the most significant positive factor in the 42.2% increase in
pretax earnings for the year. Our ratio of average earning assets to average
total assets improved from 96.8% for 1994 to 97.1% for 1995.
The net result of the foregoing factors was that interest and dividend
income generated from our aggregate investment in loans and securities for 1995
increased by 27.9% or $5.22 million to $23.95 million from $18.73 million for
1994 while total interest expense increased by 44.4% or $4.22 million from $9.50
million in 1994 to $13.72 million for 1995. Consequently, even though our net
interest margin declined slightly by 21 basis points or 5.8%, our net interest
income increased by $1.0 million or 10.8% from $9.23 million for 1994 to $10.23
million for 1995.
Net Income/Loss
[GRAPH]
Earnings (Loss) Per Share
[GRAPH]
Total Assets
[GRAPH]
1
LETTER TO STOCKHOLDERS
Our loan loss provision for 1995 increased to $300,000 as compared to
$135,000 for 1994. The increase in the loan loss provision for 1995 was
necessary to maintain adequate reserves due to the exceptional growth rate
achieved in loans outstanding. Also during 1995, our collection activities
resulted in net recoveries, as compared to $374,595 in net charge-offs during
1994.
Noninterest income in 1995 rose 125.7% from $570,926 in 1994 to $1.29
million. Gains from the sale of loan servicing rights totaling $763,806 in 1995
accounted for the increase in noninterest income. Net gains on the sale of
securities totaled $90,993 during the year compared to $193,577 in net gains
realized during 1994. Losses on the sale of other real estate owned declined
from $170,177 in 1994 to just $42,872 in 1995.
Noninterest operating expenses rose modestly by $256,427 or 3.9% from $6.60
million for 1994 to $6.85 million for 1995. The increase was primarily a result
of increases in compensation and benefits expense of 11.8% to $3.42 million in
1995 from $3.06 million in 1994. The increase in compensation and benefits
expense is the direct result of the expansion of our staff from 73 employees at
December 31, 1994 to 94 employees at December 31, 1995. Our lending staff was
increased in order to achieve and manage our growth in loans outstanding and
additional branch personnel were required to staff our two new full service
branch offices opened during 1995 in Hingham and Stoughton. Related to the same
factors, we also experienced during 1995 a 14.1% or $124,895 increase in
occupancy and equipment expense from $883,639 for 1994 to $1.01 million. The
operating expense increases for compensation and benefits and for occupancy and
equipment were partially offset by a reduction in expenses related to the
management and disposition of nonperforming assets which totaled $300,796 as
compared to $387,058 for the previous year, a reduction of 22.3%, along with a
substantial decline in our FDIC assessment of $290,279 from $623,431 in 1994 to
$333,152 in 1995. While we believe the effective control of operating expenses
and increased productivity and efficiency are integral factors in the
achievement of increases in future profitability, we also believe that it is
essential that our staffing level be sufficient to ensure that the various
business initiatives and strategies we undertake can be completed efficiently
and successfully.
Net earnings before taxes totaled $4.37 million for 1995, an increase of
42.2% from $3.07 million for 1994. After accruing our tax liability for 1995 of
$1.65 million our Bank earned $2.72 million in net income, an increase of 31.5%
from net income of $2.07 million for 1994.
As previously noted, total assets increased by $60.44 million or 21.1% from
$286.43 million at December 31, 1994 to $346.87 million at December 31, 1995, a
rate of growth well in excess of the industry average.
Our investment in securities increased by $13.72 million or 12.3% from
$111.58 million at December 31, 1994 to $125.30 million. Of our total portfolio
at year end 1995, $77.57 million was invested in short term balloon payment
FHLMC mortgage backed securities which are classified as held to maturity and
$39.94 million in callable U.S. Government Agency notes which are classified as
available for sale
Earning Assets
[GRAPH]
Total Loans, Net
[GRAPH]
Net Interest Income
[GRAPH]
2
LETTER TO STOCKHOLDERS
and are available to provide liquidity as needed. The balance of our portfolio
is invested in equity securities.
Our continuing business focus on originating residential, commercial real
estate loans and business loans for inclusion in our loan portfolio as our
primary investment vehicle produced very strong results during the past year.
In 1995, we saw a continuation of the trend towards the consolidation of our
local banking industry. The consolidation process has drastically reduced the
number of community based banks within our market area. We view this as a
significant business opportunity for us not only for the coming year, but for
many years to come. We feel that our institution provides a superior level of
personalized service that many customers demand and that our larger regional
competitors are unable to provide. In order to take better advantage of these
business opportunities we introduced new loan products and hired additional
lending staff during 1995.
Throughout 1995 residential mortgage lending was the strongest performing
business line of our Bank. For the year we originated, through our Retail Loan
Department, 483 residential first mortgage loans totaling $60.74 million as
compared to 351 residential loans totaling $33.04 million originated in 1994.
During the year, 126 residential fixed rate mortgage loans totaling $12.92
million were sold into the secondary mortgage market as compared to 66
residential mortgage loans totaling $6.85 million sold during 1994. We were
able to achieve significant growth of $28.90 million or 34.6%, in our
residential mortgage loan portfolio which totaled $83.59 million at December 31,
1994 and $112.49 million at December 31, 1995.
During the past year our Retail Loan Department also originated 384
consumer loans, including Visa credit cards, totaling $2.04 million as compared
to 639 loans totaling $2.71 million originated during 1994. Consumer loans
outstanding totaled $2.51 million at December 31, 1995 as compared to $2.41
million at December 31, 1994.
During 1995, our Commercial Real Estate Loan Department originated 47
commercial real estate loans totaling $27.22 million as compared to 68 loans
totaling $29.20 million originated in 1994. Our focus is investing in
commercial real estate loans secured by multi-family residential properties,
retail space, office buildings and certain types of industrial properties held
for investment purposes. Even though there was a modest decline in the volume
of loans originated during last year from the previous year our commercial real
estate loan outstandings increased by $7.63 million or 10.7% to $79.11 million
at December 31, 1995 from $71.48 million a year earlier.
During the past year our Commercial Loan Department originated 48
commercial and industrial business loans totaling $13.76 million as compared to
26 business loans totaling $5.12 million in 1994. Commercial and industrial
loans outstanding increased during 1995 by $8.44 million or 100.2% to $16.86
million at December 31, 1995 from $8.42 million a year earlier. Our continuing
corporate commitment of additional resources to this department is directed at
accomplishing, over time, a substantial increase in both the volume of our
commercial and industrial business loan originations and in our total commercial
loan portfolio outstandings.
Total Operating Expenses
[GRAPH]
Loan Originations
[GRAPH]
Total Deposits
[GRAPH]
3
LETTER TO STOCKHOLDERS
During 1995, 962 loans of all types were originated totaling $103.76
million as compared to 1,084 loans totaling $70.07 million in 1994. Total loans
outstanding, net for the year, increased by $44.96 million or 27.5% from $163.37
on December 31, 1994 to $208.33 million on December 31, 1995. The number of
loans in our portfolio increased from 2,427 at December 31, 1994 to 2,686 at
December 31, 1995. We were one of the most active real estate lenders in our
market area during 1995. According to the latest statistical information
available from the Banker & Tradesman, we were the highest volume originator of
purchase money mortgages, and the third highest volume originator overall of
real estate loans, in the Quincy, Braintree and Weymouth area. Our origination
volume of purchase money mortgages was the second highest in our entire market
area which includes the City of Boston and extends south to Marshfield. The
substantial increase in total loans outstanding generated during 1995
represented the achievement of a very important business goal which is a major
factor in the improvement in our core earnings capacity. Our success in
achieving this goal will have a substantial impact on our net earnings for 1996.
Overall asset quality continued to improve during 1995. Nonperforming
assets declined by $746,861 or 44.5% from $1.68 million at December 31, 1994 to
$930,766 as of December 31, 1995 and declined as a percent of assets from 0.6%
to 0.3% as of the same dates. The continuing improvement in our asset quality
resulted in net recoveries in 1995, lower losses on the sale of other real
estate owned and reduced expenses related to the management and disposition of
nonperforming assets.
Deposit growth for the year totaled $26.45 million or 10.3% as deposits
increased from $256.34 million on December 31, 1994 to $282.79 million on
December 31, 1995. The number of deposit accounts open increased by 1,552 or
7.9% from 19,550 accounts as of December 31, 1994 to 21,102 accounts as of
December 31, 1995.
The growth in retail deposits achieved during 1995 was somewhat
disappointing. Retail deposits increased by only $8.48 million or 3.3% from
$254.31 million at December 31, 1994 to $262.79 million at December 31, 1995.
Retail deposit growth was achieved in Money Market Deposit Account balances
which increased by $21.99 million or 185.9% to $33.82 million at December 31,
1995 from $11.83 million at December 31, 1994. NOW Account and Checking Account
balances increased by 19.7% or $3.62 million to $22.01 million from $18.39
million as of the same dates. The increase in NOW, Checking and Money Market
Account balances was offset by a decline in Passbook Savings Account balances of
28.8% or $18.63 million to $46.04 million at December 31, 1995 from $64.67
million at December 31, 1994.
Wholesale deposits increased from $2.03 million to $20.00 million as of the
same dates. We utilized wholesale deposit sources for funding as part of a
business strategy to control our funding costs while at the same time locking in
whenever possible, what represented in our view, a cyclically low cost of
deposits by the issuance of longer term certificates of deposit which
effectively extended the average maturity of our liabilities. As a result,
certificates of deposit of all types increased by $19.48 million or 12.1% from
$161.44 million at
Stockholder's Equity
[GRAPH]
Liverage Capital Ratio
[GRAPH]
Year End Stock Price
[GRAPH]
4
LETTER TO STOCKHOLDERS
December 31, 1994 to $180.92 million at December 31, 1995.
Borrowings increased during 1995 by $29.97 million or 333.0% from $9.00
million at December 31, 1994 to $38.97 million at December 31, 1995. During
most of 1995, borrowings, particularly Federal Home Loan Bank Advances, were a
more economical means of funding our asset growth than retail deposits.
Aggressive price competition for retail deposits within our local market area
dictated, from a cost perspective, that we utilize borrowings as a funding
resource.
Stockholders' equity increased by $3.03 million or 15.4% from $19.79
million as of year end 1994 to $22.82 million as of year end 1995. The return
on average stockholders' equity for 1995 was 12.42% and our return on average
assets was 0.88% as compared to 10.98% and 0.78%, respectively in 1994. Our
leverage capital ratio declined modestly to 6.6% at December 31, 1995 from 6.9%
at December 31, 1994 and our risk-based capital ratio was 12.7% and 13.4% as of
the same respective dates.
In addition to the positive financial achievements, there were several
other significant business developments that occurred in 1995.
We opened our 6th branch office at 274 Main Street in Hingham on July 17,
1995 and as of December 31, 1995 new deposit accounts with balances totaling
$7.8 million were open. These results are well ahead of our original
projections. On December 21, 1995 we opened our 7th branch office at 397
Washington Street in Stoughton and, as of year end, new deposit accounts with
balances totaling $269,401 had been opened. We believe that the most effective
business strategy available to us to expand both the scope of our business
activities and our franchise is the continued expansion of our branch network.
Accordingly, we plan to open at least one additional full service branch office
during 1996.
One 1995 accomplishment that we are particularly proud of is the
achievement of an "Outstanding" Community Reinvestment Act rating. This
achievement is a result of hard work and the dedication of our entire staff to
the principles of CRA. Further, our "Outstanding" rating is a reflection of our
corporate commitment to meet the financial needs of the communities we serve.
On February 1, 1995, we declared a three for two stock split which we
believe has enhanced the liquidity in the marketplace and value of our common
stock. On the same date, we reinstituted a quarterly cash dividend of $0.05 per
share to our stockholders. Since that time, due to the continuing improvement
in our core earning capacity, two increases in our cash dividend have been
announced bringing our quarterly dividend rate to $0.07 per share. For the
year, dividends paid totaled $0.22 per share.
In addition, we recently adopted an Automatic Dividend Reinvestment & Stock
Purchase Plan that enables each of you as stockholders to purchase additional
shares of common stock directly from your Bank in an economical fashion and
which allows our company to raise incremental capital on a continuing basis to
support the continuing future expansion of our business activities and our
franchise. We wish to encourage all of our stockholders to take advantage of
this opportunity.
From our mutual perspective as stockholders, one of the most important
results achieved during 1995 was a 52.3% increase in the price per share of the
common stock of our Bank, from $10.67, split adjusted, at December 31, 1994 to
$16.25 at December 31, 1995.
The continuing consolidation of our industry has created unprecedented
business opportunities for this institution. To take advantage of those
business opportunities we must continue to aggressively seek to increase our
market share. There are voids in our local marketplace for banking products and
services which we can, and intend to, fill.
Over the past year, our dedicated staff has worked diligently and
successfully to achieve our business goals and improve both the financial and
competitive position of our Bank. I would like to personally thank each and
every member of our staff and our Board of Directors for their efforts over the
past year. I also wish to thank all of our stockholders for their continuing
support and confidence. I am looking forward to sharing our future successes
with you.
Best Regards,
/s/ Mark A. Osborne
Mark A. Osborne
Chairman of the Board & Chief Executive Officer
5
SELECTED HISTORICAL FINANCIAL DATA
At December 31 1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------
(Dollars in Thousands, except per share data)
BALANCE SHEET DATA:
Total assets $346,865 $286,429 $249,827 $229,792 $216,575
Loans, net 208,327 163,371 135,661 134,584 144,143
Securities 125,300 111,582 105,735 80,449 56,277
Deposits 282,787 256,340 221,950 205,921 187,102
Borrowings 38,968 9,000 8,530 8,531 16,606
Stockholders' equity 22,825 19,786 17,312 13,954 11,953
Book value per share $ 14.89 $ 13.68 $ 12.92 $ 10.89 $ 9.96
For the year ended December 31, 1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------
(Dollars in Thousands, except per share data)
OPERATING DATA:
Interest and dividend income $ 23,949 $ 18,728 $ 18,157 $ 18,805 $ 19,698
Interest expense 13,720 9,498 8,950 10,569 13,779
------- ------- ------- ------- -------
Net interest income 10,229 9,230 9,207 8,236 5,919
Add
Noninterest income 579 549 719 364 216
Gain (loss) on sale of loans (52) (1) 20 320 24
Less
Provision for possible loan losses 300 135 2,080 2,270 2,850
Noninterest expenses 6,552 6,209 5,680 4,835 4,695
------- ------- ------- ------- -------
Pretax core earnings 3,904 3,434 2,186 1,815 (1,386)
Net gain on sale of securities 91 193 3,952 2,188 768
Gain on sale of loan servicing 764 - - - -
Loss on sale of fixed assets (50) - - - -
Net loss on sale of other real estate owned (43) (170) (666) (511) (561)
Real estate owned expense 301 387 1,194 1,643 972
------- ------- ------- ------- -------
Income (loss) before income taxes 4,365 3,070 4,278 1,849 (2,151)
Provision (benefit) for income taxes 1,646 1,002 1,198 265 (673)
------- ------- ------- ------- -------
Net income (loss) $ 2,719 $ 2,068 $ 3,080 $ 1,584 $ (1,478)
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Earnings (loss) per share $ 1.76 $ 1.41 $ 2.14 $ 1.21 $ (1.23)
Weighted average number of common shares
and common equivalents 1,545,297 1,468,758 1,437,092 1,306,610 1,200,000
Dividends declared per share $ 0.22 $ - $ - $ - $ -
6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion should be read in conjunction with the
accompanying consolidated financial statements and notes included within this
Annual Report.
For the first three quarters of 1995, the Federal Reserve Board of
Governors adopted a more restrictive monetary policy. Despite the progressive
tightening of monetary policy throughout the year, both the national and local
economy continued to expand. The condition of the local real estate market
continued to improve as both real estate values and sales volume increased
modestly during the year. Within this economic and operating environment, the
Bank was able to achieve substantial growth in core earnings and in residential
and commercial real estate loans and commercial business loans outstanding
during 1995.
The Bank has retail banking facilities in Boston, Braintree, Quincy,
Weymouth, Hingham and Stoughton and considers its primary market area to be
these six communities and the surrounding cities and towns south of Boston. In
addition, the Bank maintains Loan Centers in Braintree and Quincy. The Bank is
primarily engaged in the lending business with an emphasis on residential and
commercial real estate loans and commercial business loans. The Bank's assets
are funded primarily by attracting retail deposits through its branch network.
The Bank's ultimate success is very dependent on the conditions of both the
local economy and the local real estate market.
ASSET/LIABILITY MANAGEMENT
The overall interest rate sensitivity of the Bank is dependent upon the
Bank's ability to reprice its interest rate sensitive assets and liabilities.
The ability to successfully manage the repricing of assets and liabilities,
significantly helps reduce the interest rate risk in any interest rate
environment. As of December 31, 1995, the Bank is net asset sensitive for the
following one year period, net liability sensitive for the next one to two year
and two to three year periods, net asset sensitive for the three to five year
time horizons, liability sensitive in the five to ten year time horizon and
asset sensitive thereafter. The Bank's management monitors and manages interest
rate risk as an integral part of its overall business strategy.
Certain investments in the Bank's portfolio have call options which in
management's opinion are likely to be exercised. The schedule below reflects
the Bank's Gap position based on the call dates of these investments. All
investments are reported at amortized cost. The Interest Rate Sensitivity Gap
Analysis at December 31, 1995 is as follows:
1-180 181-364 1-2 2-3 3-5 5-10 Over 10
Interest Rate Sensitivity Period Days Days Years Years Years Years Years Total
- ---------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
EARNING ASSETS:
Fixed rate mortgages $ 83 $ 9 $ 373 $ 126 $ 1,310 $ 3,477 $ 11,774 $ 17,152
Variable rate mortgages 78,967 33,564 25,504 5,737 19,400 3,246 7,526 173,944
Commercial loans 13,734 287 622 409 1,805 - - 16,857
Consumer loans 1,255 323 569 211 35 - 115 2,508
Investments 42,947 15,481 17,352 19,550 7,310 20,360 2,199 125,199
-------- -------- -------- -------- -------- -------- -------- --------
Total earning assets 136,986 49,664 44,420 26,033 29,860 27,083 21,614 335,660
Interest-bearing liabilities:
NOW deposits and money
market accounts 8,961 8,961 17,922 - - 10,097 - 45,941
Passbook and escrow deposits 7,070 7,070 14,140 619 1,201 17,033 - 47,133
Time deposits 64,973 46,870 32,734 19,253 13,479 3,609 - 180,918
Borrowed funds 12,300 4,000 - 15,000 7,668 - - 38,968
-------- -------- -------- -------- -------- -------- -------- --------
Total interest-bearing
liabilities 93,304 66,901 64,796 34,872 22,348 30,739 - 312,960
-------- -------- -------- -------- -------- -------- -------- --------
Interest rate sensitivity gap $ 43,682 $(17,237) $(20,376) $ (8,839) $ 7,512 $ (3,656) $21,614 $ 22,700
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ANALYSIS OF FINANCIAL CONDITION
Total assets of the Bank increased by $60,436,553 or 21.1% to $346,865,213
at December 31, 1995 from $286,428,660 as of December 31, 1994. The growth in
assets was primarily due to the increase achieved in the Bank's loans
outstanding.
The securities portfolio, which includes securities held to maturity,
securities available for sale and short-term investments, increased by
$13,718,345 or 12.3% and totaled $125,300,270 or 36.1% of total assets at
December 31, 1995 compared to $111,581,925 or 39.0% of total assets at December
31, 1994. The Bank utilizes its securities portfolio as a source of liquidity
to fund loans and meet short-term cash needs. At December 31, 1995 the Bank's
investment portfolio included Federal Home Loan Mortgage Corporation (FHLMC)
Participation Certificates classified as held to maturity. Predominantly, the
FHLMC Participation Certificates owned were short-term with maturities in the
four to six year range. The cash flow received from these obligations of
$18,635,268 during 1995 was used primarily to fund the growth in commercial
business loans and the growth in residential and commercial mortgage loans. The
investment portfolio can, at December 31, 1995, be broken down into three major
components. The first component, securities held to maturity, consists solely
of Federal Home Mortgage Corporation Participation Certificates totaling
$77,565,687 or 61.9% of total securities, all of which mature within six years.
These obligations, although being held to maturity, can be used as collateral
for short-term borrowings if required. The second component consists of
callable FHLB and FHLMC Bonds and Notes and Common Stock, which totaled
$40,676,183 or 32.5% of total securities and which are designated as available
for sale. The third component is short-term investments and FHLB stock,
totaling $7,058,400 or 5.6% of total securities. With the exception of
securities designated as available for sale, the Bank's intention is to hold all
investment securities to maturity, and accordingly, investments are carried at
cost, adjusted for amortization of premiums and accretion of discounts.
Loans continue to be the primary earning asset of the Bank and represent
60.1% of total assets. As of December 31, 1995, 91.9% of total loans
outstanding or $191,503,175 were secured by residential and commercial real
estate, and of this amount, $112,485,567 or 58.7% were secured by residential
properties. During 1995, our efforts to originate residential and commercial
real estate loans and commercial business loans produced substantial growth in
our asset size. In 1995, the Bank originated $87,955,986 in residential and
commercial real estate mortgage loans, of which only $12,915,640 were sold into
the secondary market. In addition, the Bank originated $13,761,138 in business
loans and $2,039,608 in consumer loans. As a result, net loans for 1995
increased by $44,956,187 or 27.5% to $208,326,723 at December 31, 1995 from
$163,370,536 at December 31, 1994.
The provision for possible loan losses was $300,000 in 1995 as compared to
$135,000 in 1994 and $2,080,000 in 1993. The increase in the loan loss
provision for 1995 was necessary to maintain adequate reserves given the 27.5%
growth in loans achieved in 1995. For 1995, the Bank had net recoveries of $711
compared to net charge-offs of $374,595 in 1994 and $2,655,455 in 1993. As of
December 31, 1995, the Bank's allowance for possible loan losses totaled
$2,541,997 as compared to $2,241,286 at December 31, 1994.
Continued uncertainty exists as to the ultimate realization in full of
certain of the Bank's loans due to the current conditions of the Massachusetts
economy. Based upon management's assessment of the quality of loan production,
and the current condition of the Massachusetts economy, management believes that
the allowance for loan losses as of December 31, 1995 is adequate to absorb the
current estimation of future losses in the loan portfolio. However, any
deterioration in future periods could result in the Bank experiencing increased
levels of nonperforming loans and charge-offs, and additional provisions for
loan losses may be required.
Other real estate owned increased by $297,000 or 223.3% to $430,000 at
December 31, 1995 from $133,000 at December 31, 1994. Other real estate owned
consists of assets that were acquired by foreclosure, or assets that were
acquired by the acceptance of a deed in lieu of foreclosure during the year.
Other real estate owned is carried on the Bank's books at the lower of the
preforeclosure loan balance or the fair value less cost to sell.
During 1995, deposits increased by $26,447,458 or 10.3% to $282,787,249 at
December 31, 1995 from $256,339,791 at December 31,
8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1994. The growth in deposits during 1995 was primarily in wholesale term
certificates of deposits which increased by $17,972,586. The remainder of our
deposit growth was in retail deposits which increased by $8,474,872 during 1995.
Money market deposits increased by $21,988,890 or 185.9% to $33,819,928 in 1995
from $11,831,038 in 1994. The increase in wholesale term certificates and money
market deposits was partially offset by the decline in passbook savings deposits
which decreased by $18,637,225 or 28.8%.
The Bank uses borrowed funds, primarily advances from the Federal Home Loan
Bank as an alternative funding source for immediate lending or investment
opportunities or as a means of controlling its cost of funds. The Bank pays
down borrowings in accordance with the respective contracted borrowing
agreements and as cash flow warrants.
RESULTS OF OPERATIONS
COMPARISON OF FISCAL YEAR ENDED DECEMBER 31, 1995 AND 1994
Net interest margins were negatively impacted by the overall increase in
our cost of funds in 1995 which increased by 84 basis points to 4.55% in 1995
compared to 3.71% in 1994. However, net income was positively impacted by the
increase in the Bank's loan portfolio which increased by $44,956,187 or 27.5%
to $208,326,723 at year end 1995 compared to $163,370,536 in 1994. Total
earning assets increased by $59,817,399 or 21.7% to $335,761,878 at December 31,
1995. As a result, net interest income increased by $999,131 or 10.8% to
$10,229,233 for 1995 compared to $9,230,102 for 1994.
Noninterest income was comprised of fees on checking and savings related
services, gains and losses on sales of securities, loans, loan servicing, fixed
assets, other real estate owned, and miscellaneous other items. Noninterest
income totaled $1,288,714 in 1995 compared to $570,926 in 1994. The net
increase in noninterest income came primarily from gains from the sale of loan
servicing which totaled $763,806 in 1995 as compared to no gains in 1994. We
also experienced an increase in customer service fees to $463,518 in 1995 from
$413,058 in 1994.
Noninterest expenses in 1995 increased by $256,427 or 3.9% to $6,852,498
compared to total noninterest expenses of $6,596,071 in 1994. Much of this
increase can be attributed to the costs associated with the opening of two
additional branches in 1995 and the expansion of our lending staff which was
necessary in order to accommodate the growth in loans outstanding achieved. On
July 17, 1995, we opened a branch at 274 Main Street in Hingham. We opened our
seventh branch on December 21, 1995 at 397 Washington Street, Stoughton.
Consequently, salaries and employee benefits increased by $359,379 or 11.8% to
$3,416,508 in 1995 from $3,057,129 in 1994. Occupancy and equipment expenses
increased by $124,895 or 14.1% to $1,008,534 in 1995 from $883,639 in 1994.
This increase was partially offset by a reduction in OREO expenses which
declined by $86,262 or 22.3% from $387,058 in 1994 and a reduction in FDIC
insurance expense which declined by $290,279 or 46.6% from $623,431 in 1994 to
$333,152 in 1995. In total, noninterest expenses as a percentage of average
assets declined to 2.2% in 1995 from 2.5% in 1994.
The Bank's effective tax rate was 37.7% in 1995, which is less than the
combined federal and state statutory rate, due to rehabilitation and low income
housing credits and various other differences in recognition of income as
allowed under the Internal Revenue Code.
The Bank, in 1995, recorded pretax core earnings of $3,904,144 as compared
to core earnings of $3,433,615 in 1994 and $2,186,435 in 1993. For the year
ended December 31, 1995, the Bank's net income was $2,719,235 or $1.76 per
share, based on 1,545,297 weighted average shares and common stock equivalents
outstanding compared to net income of $2,067,626 or $1.41 per share, based on
1,468,758 weighted average shares and common stock equivalents outstanding for
the year ended December 31, 1994. Finally, as a result of 1995 earnings of
$2,719,235 and the issuance of additional capital stock, the Bank experienced an
increase of $3,038,519 in stockholders' equity to $22,824,616 at December 31,
1995 from $19,786,097 at December 31, 1994. Over this period, the Bank's
leverage capital ratio declined to 6.6% from 6.9% as a result of asset growth.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
The following table sets forth the components of the Bank's average
balances, net interest and fee income, interest rate spread and net interest
margin for the years indicated.
1995 1994 1993
------------------------------------------------------------------------------------------------
Interest Average Interest Average Interest Average
------------------------------------------------------------------------------------------------
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
- ----------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
ASSETS
Investment securities:
Bonds and obligations $ 10,158 $ 796 7.84% $ 271 $ 21 7.75% $ 45,770 $ 2,744 6.00%
Mortgage-backed securities 93,438 5,088 5.45% 102,492 5,169 5.04% 35,532 1,957 5.51%
Other securities 3,206 228 7.11% 1,812 150 8.28% 2,099 114 5.43%
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total investment securities 106,802 6,112 5.72% 104,575 5,340 5.11% 83,401 4,815 5.77%
Loans 188,479 17,472 9.27% 148,814 13,296 8.93% 136,227 13,137 9.64%
Other interest-bearing deposits 6,126 354 5.78% 2,117 73 3.45% 5,972 170 2.85%
Federal funds sold 207 11 5.31% 621 19 3.06% 1,177 35 2.97%
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total earning assets 301,614 23,949 7.94% 256,127 18,728 7.31% 226,777 18,157 8.01%
Allowance for possible loan
losses (2,341) (2,357) (2,786)
Cash and due from banks 2,586 2,263 2,318
Other assets 8,898 8,490 12,324
-------- -------- --------
Total assets $310,757 $264,523 $238,633
-------- -------- --------
-------- -------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
NOW accounts $ 10,365 $ 155 1.50% $ 9,664 $ 144 1.49% $ 8,877 $ 161 1.81%
Savings accounts 50,210 1,415 2.82% 86,656 2,507 2.89% 101,934 3,307 3.24%
Money market accounts 27,459 1,136 4.14% 5,498 146 2.66% 4,971 132 2.66%
Term certificates 170,020 9,578 5.63% 126,968 6,090 4.80% 92,602 4,484 4.84%
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total deposits 258,054 12,284 4.76% 228,786 8,887 3.88% 208,384 8,084 3.88%
Borrowed funds 22,395 1,436 6.41% 10,168 611 6.01% 8,836 865 9.79%
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total interest-bearing
liabilities 280,449 13,720 4.89% 238,954 9,498 3.97% 217,220 8,949 4.12%
Demand deposit accounts 7,969 6,076 3,547
Other liabilities 439 660 1,567
Stockholders' equity 21,900 18,833 16,299
Total liabilities and
stockholders' equity $310,757 $264,523 $238,633
-------- -------- --------
-------- -------- --------
Net interest income $ 10,229 $ 9,230 $ 9,208
-------- -------- --------
-------- -------- --------
Interest rate spread 3.05% 3.34% 3.89%
Net interest margin 3.39% 3.60% 4.06%
----- ----- -----
----- ----- -----
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RATE/VOLUME ANALYSIS
The following table shows changes in the Bank's net interest income
attributable to the change in interest rates and the change in the volume of
interest-bearing assets and liabilities. Amounts attributed to the change in
rates are based upon the change in rate multiplied by the prior year's volume.
Amounts attributed to the change in volume are based upon the change in volume
multiplied by the prior year's rate. The combined effect of changes in both
volume and rate, which cannot be separately identified, has been allocated
proportionately.
Year Ended December 31, 1995 vs. 1994 1994 vs. 1993
------------------------------ ------------------------------
Increase (Decrease) Due to Increase (Decrease) Due to
------------------------------ ------------------------------
Volume Rate Total Volume Rate Total
------------------------------ ------------------------------
(Dollars in Thousands)
INTEREST INCOME:
Loans $3,610 $ 566 $4,176 $1,125 $ (966) $ 159
Investments 314 731 1,045 849 (437) 412
------ ------ ------ ------ ------ ------
Total interest income 3,924 1,297 5,221 1,974 (1,403) 571
------ ------ ------ ------ ------ ------
INTEREST EXPENSE:
Deposits 1,265 2,132 3,397 793 15 808
Borrowed funds 759 66 825 79 (338) (259)
------ ------ ------ ------ ------ ------
Total interest expense 2,024 2,198 4,222 872 (323) 549
------ ------ ------ ------ ------ ------
Net interest income $1,900 $ (901) $ 999 $1,102 $(1,080) $ 22
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
The earnings of the Bank depend primarily upon the difference between
interest and dividend income earned on its loan and investment portfolios and
the interest expense paid on its deposits and borrowings. Total interest income
increased by $5,220,904 or 27.9% from $18,728,097 for the year ended December
31, 1994 to $23,949,001 for the year ended December 31, 1995. Total interest
expense increased by $4,221,773 or 44.4% from $9,497,995 for the year ended
December 31, 1994 to $13,719,768 for the year ended December 31, 1995. For the
year ended December 31, 1995, the Bank's net interest income totaled $10,229,233
representing an increase of $999,131 compared to $9,230,102 for the year ended
December 31, 1994.
The gross yield on average earning assets was 7.9% for 1995 compared to
7.3% in 1994. Interest expense as a percentage of average interest-bearing
liabilities in 1995 was 4.9% compared to 4.0% in 1994. This resulted in a net
interest spread of 3.0% in 1995 and 3.3% in 1994. Interest expense as a
percentage of average earning assets in 1995 was 4.5% compared to 3.7% in 1994.
This resulted in a net interest margin of 3.4% in 1995 and 3.6% in 1994.
COMPARISON OF FISCAL YEAR ENDED DECEMBER 31, 1994 AND 1993
Net interest margins were negatively impacted by the overall increase in
interest rates in 1994. However, net income was positively impacted by the
increase in the Bank's loan portfolio resulting in increased net interest
income. In addition, pretax core earnings were positively impacted by the
substantial decline in net charge-offs and the resultant reduction in loan loss
provisions.
For 1994, noninterest income was comprised of fees on checking and savings
related services, gains and losses on sales of securities, loans and other real
estate owned, and miscellaneous other items. Noninterest income totaled
$570,926 in 1994 compared to $4,024,540 in 1993. The net decrease in
noninterest income was a result of the combination of a decline in net gains on
the
11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
sale of securities which totaled $193,577 in 1994 as compared to net gains of
$3,952,060 in 1993, losses on sale of loans in the secondary market of $1,395 in
1994 compared to a gain of $20,040 in 1993, and a decrease in customer service
fees to $413,058 in 1994 from $472,441 in 1993.
Noninterest expenses in 1994 decreased by $277,610 or 4.0% to $6,596,071
compared to total noninterest expenses of $6,873,681 in 1993. The decrease was
due primarily to a decline in OREO related expenses as the number of OREO
properties held by the Bank declined. OREO expenses declined by $806,554 or
67.6% from $1,193,612 in 1993 to $387,058 in 1994. This decline was partially
offset by an increase in the number of personnel employed as well as
cost-of-living salary increases which resulted in an increase in salaries and
benefits totaling $397,641. Occupancy expenses increased by $76,808 for 1994,
reflecting the added cost from opening our administrative office at 730 Hancock
Street, Quincy, MA plus the preliminary costs incurred related to the planned
opening of a new branch office at 274 Main Street, Hingham, MA. In total,
noninterest expenses as a percentage of average assets declined to 2.5% in 1994
from 2.9% in 1993.
The Bank's effective tax rate was 32.7 % in 1994, which is less than the
statutory rate, due to a reduction in the Bank's valuation reserve established
for the net deferred tax asset in prior years. Given the strong earnings
performance by the Bank over the past two years, management felt that the net
deferred tax asset would be realizable in the future.
For the year ended December 31, 1994, the Bank's net income was $2,067,626
or $1.41 per share, based on 1,468,758 weighted average shares and common stock
equivalents outstanding compared to net income of $3,080,184 or $2.14 per share,
based on 1,437,092 weighted average shares and common stock equivalents
outstanding for the year ended December 31, 1993. Finally, as a result of 1994
earnings of $2,067,626 and the issuance of additional capital stock, the Bank
experienced an increase of $2,473,961 in stockholders' equity to $19,786,097 at
December 31, 1994 from $17,312,136 at December 31, 1993. The Bank's leverage
capital ratio during this period remained unchanged at 6.9%.
LIQUIDITY AND CAPITAL RESOURCES
The Bank attempts to maximize interest-earning assets while maintaining
sufficient funds on hand to meet loan commitments, cash disbursements and
possible deposit outflows. The Bank obtains funds for investment and other
banking purposes principally from deposits, borrowings, loan repayments and
through sales of loans, loan participations and securities available for sale,
and maturities of investment securities. While loan payments and maturing
investment securities are a relatively stable source of funds, deposit flows are
greatly influenced by general interest rates, economic conditions and
competitive factors. Borrowings may also be used to offset reductions in other
sources of funds such as deposits. The Bank may borrow up to 30% of its total
assets but not more than 20 times its capital stock holdings in the FHLB for any
sound business purpose for which the Bank has legal authority. Borrowings
authorized totaled $43,968,000 at December 31, 1995.
IMPACT OF INFLATION AND CHANGING PRICES
Virtually all of the assets and liabilities of a financial institution,
unlike those of other companies, are monetary in nature. Consequently, changes
in the levels of interest rates have a greater impact on a financial
institution's performance than the effects of general levels of inflation.
Interest rates do not necessarily fluctuate in the same direction or in the same
magnitude as prices of goods and services.
12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The financial statements and related data presented herein have been
prepared in accordance with generally accepted accounting principles requiring
the measurement of financial position and operating results in terms of
historical dollars, without considering changes in the relative purchasing power
of money over time due to inflation.
CAPITAL AND REGULATORY MATTERS
The Bank's regulators have classified and defined bank capital into the
following components: (1) Tier I capital, which includes tangible stockholders'
equity for common stock and certain perpetual preferred stock, and (2) Tier II
capital, which includes a portion of the allowance for possible loan losses,
certain qualifying long-term debt and preferred stock which does not qualify for
Tier I capital. In addition, they have implemented risk-based capital
guidelines that require a bank to maintain certain minimum capital as a percent
of such bank's assets and certain off-balance sheet items adjusted for
predefined credit risk factors (risk-adjusted assets). As of December 31, 1995,
the Bank's Tier I and combined Tier I and Tier II capital ratios were 11.4% and
12.7%, respectively.
In addition to the risk-based guidelines discussed above, the Bank's
regulators require that the Bank maintain a minimum leverage ratio (Tier I
capital as a percent of tangible assets) of 4.0%. As of December 31, 1995, the
Bank had a leverage capital ratio of 6.6%.
13
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF THE HIBERNIA SAVINGS BANK:
We have audited the accompanying consolidated balance sheets of The
Hibernia Savings Bank and subsidiaries (the "Bank") as of December 31, 1995 and
1994, and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Bank's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
The Hibernia Savings Bank and subsidiaries as of December 31, 1995 and 1994, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
Boston, Massachusetts
January 10, 1996
14
CONSOLIDATED BALANCE SHEETS
THE HIBERNIA SAVINGS BANK AND SUBSIDIARIES
December 31, 1995 and 1994 1995 1994
- -------------------------------------------------------------------------------
ASSETS:
Cash and cash equivalents $ 3,213,259 $ 3,780,957
Short-term investments 4,860,000 3,590,000
Securities (Notes 1 and 3):
Held to maturity--market value $76,708,209
and $92,848,514 77,565,687 100,252,866
Available for sale 40,676,183 5,925,359
Federal Home Loan Bank stock 2,198,400 1,813,700
Loans, net of allowance for possible loan
losses of $2,541,997 and $2,241,286 (Note 4) 208,326,723 163,370,536
Banking premises and equipment, net (Note 5) 5,574,956 4,738,238
Accrued interest receivable 2,128,536 1,485,077
Other real estate owned 430,000 133,000
Other assets (Note 8) 1,891,469 1,338,927
------------ ------------
Total assets $346,865,213 $286,428,660
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits (Note 6) $282,787,249 $256,339,791
Federal Home Loan Bank advances (Note 7) 38,968,000 9,000,000
Mortgagors' escrow payments 1,094,397 849,368
Income taxes payable (Note 8) 364,444 156,677
Other liabilities 826,507 296,727
------------ ------------
Total liabilities 324,040,597 266,642,563
------------ ------------
COMMITMENTS AND CONTINGENCIES (NOTES 9 AND 10)
Stockholders' equity (Notes 2, 11, 12 and 13):
Serial preferred stock, $1.00 par value--
Authorized--1,000,000 shares
Issued--None -- --
Common stock, $1.00 par value--
Authorized--5,000,000 shares
Issued and outstanding--1,532,431 shares
and 1,446,737 shares 1,532,431 1,446,737
Additional paid-in capital 8,824,970 8,322,273
Retained earnings 12,406,361 10,022,386
Less: Unrealized gains (losses) on securities
available for sale, net of tax 60,854 (5,299)
------------ ------------
Total stockholders' equity 22,824,616 19,786,097
------------ ------------
Total liabilities and stockholders'
equity $346,865,213 $286,428,660
------------ ------------
------------ ------------
The accompanying notes are an integral part of these consolidated financial
statements.
15
CONSOLIDATED STATEMENTS OF OPERATIONS
THE HIBERNIA SAVINGS BANK AND SUBSIDIARIES
For the Years Ended December 31, 1995, 1994 and 1993 1995 1994 1993
- ------------------------------------------------------------------------------------------------
INTEREST AND DIVIDEND INCOME:
Interest on loans $17,471,506 $13,295,968 $13,137,156
Interest and dividends on securities 6,112,429 5,339,665 4,814,714
Interest on short-term investments 365,066 92,464 204,928
----------- ----------- -----------
Total interest and dividend income 23,949,001 18,728,097 18,156,798
----------- ----------- -----------
INTEREST EXPENSE:
Interest on deposits 12,284,438 8,892,241 8,083,920
Interest on borrowed funds (Note 7) 1,435,330 605,754 865,391
----------- ----------- -----------
Total interest expense 13,719,768 9,497,995 8,949,311
----------- ----------- -----------
Net interest income 10,229,233 9,230,102 9,207,487
Provision for possible loan losses (Note 4) 300,000 135,000 2,080,000
----------- ----------- -----------
Net interest income, after provision for
possible loan losses 9,929,233 9,095,102 7,127,487
----------- ----------- -----------
NONINTEREST INCOME:
Gain on sale of securities, net 90,993 193,577 3,952,060
Gain on sale of loan servicing (Note 4) 763,806 -- --
Loss on sale of fixed assets (49,826) -- --
(Loss) gain on sale of loans, net (52,611) (1,395) 20,040
Loss on sale of other real estate owned (42,872) (170,177) (666,537)
Customer service fees 463,518 413,058 472,441
Other income 115,706 135,863 246,536
----------- ----------- -----------
Total noninterest income 1,288,714 570,926 4,024,540
----------- ----------- -----------
NONINTEREST EXPENSE:
Salaries and employee benefits (Note 12) 3,416,508 3,057,129 2,659,488
Occupancy and equipment expenses (Notes 5 and 9) 1,008,534 883,639 806,831
Data processing expenses 230,624 217,367 176,344
Other real estate owned expenses 300,796 387,058 1,193,612
Other general and administrative expenses 1,896,036 2,050,878 2,037,406
----------- ----------- -----------
Total noninterest expense 6,852,498 6,596,071 6,873,681
----------- ----------- -----------
Income before provision for income taxes 4,365,449 3,069,957 4,278,346
Provision for income taxes (Note 8) 1,646,214 1,002,331 1,198,162
----------- ----------- -----------
Net income $ 2,719,235 $ 2,067,626 $ 3,080,184
----------- ----------- -----------
----------- ----------- -----------
Earnings per share (Note 1) $ 1.76 $ 1.41 $ 2.14
----------- ----------- -----------
----------- ----------- -----------
Weighted average number of common shares (Note 1) 1,545,297 1,468,758 1,437,092
----------- ----------- -----------
----------- ----------- -----------
The accompanying notes are an integral part of these consolidated financial
statements.
16
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
THE HIBERNIA SAVINGS BANK AND SUBSIDIARIES
Net Unrealized
Gain (Loss) on
Additional Securities
For the Years Ended Common Paid-in Retained Available
December 31, 1995, 1994 and 1993 Stock Capital Earnings For Sale Total
- ------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1992 $ 1,281,878 $ 7,797,248 $ 4,874,576 $ -- $ 13,953,702
Net income -- -- 3,080,184 -- 3,080,184
Proceeds from issuance of stock
through stock purchase plan (Note 11) 50,475 215,275 -- -- 265,750
Proceeds from exercise of stock
options (Note 13) 7,500 5,000 -- -- 12,500
----------- ---------- ----------- ---------- -----------
BALANCE AT DECEMBER 31, 1993 1,339,853 8,017,523 7,954,760 -- 17,312,136
Cumulative effect of adopting -- -- --
SFAS No. 115, net of tax (Note 1) 35,387 35,387
Net income -- -- 2,067,626 -- 2,067,626
Proceeds from issuance of stock
through stock purchase plan (Note 11) 30,684 253,950 -- -- 284,634
Proceeds from exercise of
stock options (Note 13) 76,200 50,800 -- -- 127,000
Increase in net unrealized loss on
securities available for sale, net of tax -- -- -- (40,686) (40,686)
----------- ---------- ----------- ---------- -----------
BALANCE AT DECEMBER 31, 1994 1,446,737 8,322,273 10,022,386 (5,299) 19,786,097
Net income -- -- 2,719,235 -- 2,719,235
Proceeds from issuance of stock
through stock purchase plan (Note 11) 43,240 446,101 -- -- 489,341
Proceeds from issuance of stock through
the dividend reinvestment and optional
cash payment plan (Note 11) 1,254 20,378 -- -- 21,632
Proceeds from exercise of
stock options (Note 13) 41,200 36,218 -- -- 77,418
Dividends paid -- -- (335,260) -- (335,260)
Increase in net unrealized gain on
securities available for sale, net of tax -- -- -- 66,153 66,153
----------- ---------- ----------- ---------- -----------
BALANCE AT DECEMBER 31, 1995 $1,532,431 $8,824,970 $12,406,361 $ 60,854 $22,824,616
----------- ---------- ----------- ---------- -----------
----------- ---------- ----------- ---------- -----------
The accompanying notes are an integral part of these consolidated financial
statements.
17
CONSOLIDATED STATEMENTS OF CASH FLOWS
THE HIBERNIA SAVINGS BANK AND SUBSIDIARIES
For the Years Ended December 31, 1995, 1994 and 1993 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,719,235 $ 2,067,626 $ 3,080,184
Adjustments to reconcile net income
to net cash provided by operating activities--
Depreciation and amortization 507,489 430,161 402,207
Amortization of premiums 503,928 1,024,484 749,144
Provision for possible loan losses 300,000 135,000 2,080,000
Gain on sale of assets, net (709,490) (22,005) (3,305,563)
Increase (decrease) in deferred loan fees (196,407) 152,718 32,912
Provision (benefit) for deferred taxes (138,293) (52,154) (432,708)
Proceeds from sale of mortgage loans 15,848,472 6,845,787 46,633,895
Loans originated for resale (15,901,083) (6,847,182) (46,613,855)
(Increase) decrease in accrued interest receivable (643,459) (1,762) 677,290
(Increase) decrease in other assets (814,359) 8,380 1,192,106
Increase (decrease) in accrued expenses and other liabilities 982,578 (731,838) 67,961
----------- ----------- -----------
Total adjustments (260,624) 941,589 2,063,389
----------- ----------- -----------
Net cash provided by operating activities 2,458,611 3,009,215 5,143,573
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans purchased (22,604,223) -- (7,112,301)
Net (increase) decrease in loans (22,451,874) (29,728,001) 696,439
Proceeds from sales of other real estate owned 779,791 1,522,320 6,841,201
Sales (purchases) of short-term investments, net (1,270,000) (1,645,000) 6,505,000
Proceeds from the sale of fixed assets 49,193 -- --
Purchases of securities held to maturity -- (35,734,168) (171,470,238)
Proceeds from maturities of securities held to maturity 12,894,834 18,463,098 145,865,570
Purchases of securities available for sale (76,818,369) (15,932,605) (37,476,996)
Proceeds from sale of securities available for sale 51,168,978 28,165,654 34,493,336
Purchases of premises and equipment (1,443,227) (1,189,520) (212,728)
----------- ----------- -----------
Net cash used in investing activities (59,694,897) (36,078,222) (21,870,717)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deposits, net 26,447,457 34,389,711 16,029,130
FHLB advances, net 29,968,000 470,000 (1,000)
Proceeds from issuance of stock 588,391 411,634 278,250
Dividends paid (335,260) -- --
----------- ----------- -----------
Net cash provided by financing activities 56,668,588 35,271,345 16,306,380
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents (567,698) 2,202,338 (420,764)
Cash and cash equivalents, beginning of year 3,780,957 1,578,619 1,999,383
----------- ----------- -----------
Cash and cash equivalents, end of year $ 3,213,259 $ 3,780,957 $ 1,578,619
----------- ----------- -----------
----------- ----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 13,721,425 $ 9,500,101 $ 8,943,435
Income taxes paid 1,581,579 2,475,996 156,923
----------- ----------- -----------
----------- ----------- -----------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Transfer of loans to other real estate owned $ 1,323,945 $ 1,731,400 $ 2,956,666
----------- ----------- -----------
----------- ----------- -----------
Transfer of held to maturity securities to available for sale $ 9,250,187 $ -- $ --
----------- ----------- -----------
----------- ----------- -----------
18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
The Hibernia Savings Bank and its wholly owned subsidiaries, Kildare
Corporation, Limerick Securities Corporation and Meath Corporation (the Bank).
All significant intercompany balances and transactions have been eliminated in
consolidation.
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, cash items in the process of collection and amounts due from
banks.
USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities as of the date of the financial
statements and the reported amounts of income and expenses during the reporting
periods. Operating results in the future could vary from the amounts derived
from management's estimates and assumptions.
SECURITIES
Securities purchased are classified as held to maturity when it is
management's intent and ability to hold them to maturity. Such securities,
including mortgage and asset-backed securities, are carried at cost, adjusted
for amortization of premium and accretion of discount, as computed by the
effective yield method. Securities not classified as held to maturity are
classified as available for sale and are reported at fair value, with unrealized
gains or losses, net of the estimated tax effects, classified as a separate
component of stockholders' equity. The Bank does not have any securities
classified as trading.
When securities are sold, the adjusted cost of the specific security sold
is used to compute gains or losses on the sale.
LOANS, DISCOUNTS AND RESERVES
Loans, as reported, have been reduced by unadvanced loan proceeds, unearned
discounts, deferred fees and the allowance for possible loan losses.
Interest on loans is not accrued when principal or interest is 90 days or
more past due or, in the opinion of management, the collectibility of the
principal or interest becomes doubtful. At December 31, 1995 and 1994,
nonaccrual loans were $500,766 and $1,544,628, respectively. Had the nonaccrual
loans at December 31, 1995 and 1994 been accruing, interest income would have
been higher by $56,634 and $133,477, respectively. There were no restructured
loans at December 31, 1995.
The Bank adopted SFAS No. 114, Accounting by Creditors for Impairment of a
Loan and SFAS No. 118, Accounting by Creditors for Impairment of a Loan, Income
Recognition and Disclosures, as of January 1, 1995. SFAS No. 114 requires that
certain impaired loans be measured based on the present value of expected future
cash flows discounted at the loan's original effective interest rate. The Bank
defines impaired loans as all loans in nonaccrual status and reviews on a
continuous basis all classified loans in order to identify possible impaired
loans. As a practical expedient, impairment may be measured based on the loan's
observable market price or the fair value of the collateral if the loan is
collateral dependent. When the measure of the impaired loan is less than the
recorded investment in the loan, the impairment is recorded through a valuation
allowance. The Bank had previously measured the allowance for credit losses
using methods similar to those prescribed in SFAS No. 114. As a result of
adopting these statements, no additional allowance for loan losses was required
as of January 1, 1995.
The adequacy of the allowance for possible loan losses is evaluated on a
regular basis by management. Factors considered in evaluating the adequacy of
the allowance include previous loss experience, current economic conditions and
their effect on borrowers, and the performance of individual loans in relation
to contract terms. The provision for possible loan losses charged to operations
is based upon management's judgment of the amount necessary to maintain the
allowance at a level adequate to absorb possible future losses. The allowance
is an estimate, and ultimate losses may vary from current estimates. Loan
losses are charged against the allowance when management believes the
collectibility of principal is unlikely.
19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
BANKING PREMISES AND EQUIPMENT
Land is carried at original cost. Buildings, leasehold improvements and
equipment are stated at cost, less accumulated depreciation and amortization,
computed primarily on the straight-line basis over the estimated useful lives of
the assets or terms of leases, if shorter. The cost of maintenance and repairs
is charged to operations as incurred.
OTHER REAL ESTATE OWNED
Real estate acquired by foreclosure is initially recorded at the lower of
cost (principal balance of the former mortgage loan plus costs of obtaining
title and possession), or estimated fair value less estimated costs to sell.
During the holding period, foreclosed real estate is periodically appraised, and
the carrying value is adjusted, if necessary, if the estimated fair value is
less than the carrying value.
Expenses and revenues related to holding foreclosed assets are reported in
the results of operations as incurred.
INCOME TAXES
The Bank records income taxes in accordance with SFAS No. 109, Accounting
for Income Taxes. Under SFAS No. 109, deferred tax assets and liabilities
are computed based on the difference between the financial statement and
income tax bases of assets and liabilities using the enacted marginal tax
rate. Deferred income tax expense or credits are based on the changes in
the asset or liability from period to period.
EARNINGS PER SHARE
Earnings per share are computed based on the weighted average number of
common shares and common stock equivalents outstanding during the year using the
treasury stock method.
On January 18, 1995, the Board of Directors declared a 3 for 2 stock split
with an effective date of February 1, 1995. Prior years' consolidated financial
statements have been adjusted to reflect the split.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATION OF CREDIT
RISK
In the normal course of business, to meet the financing needs of its
customers, the Bank is a party to financial instruments with off-balance sheet
risk. As discussed in Note 9, these financial instruments include firm
commitments to grant loans that involve, to varying degrees, elements of credit
and interest rate risk in excess of the amounts recognized in the consolidated
balance sheets. The Bank's exposure to credit loss in the event of
nonperformance by the other party to the financial instrument for commitments to
grant loans is represented by the contractual amount of these instruments. The
Bank uses the same credit policies in making such commitments as it does for
on-balance sheet instruments.
Commitments to grant loans are binding agreements to lend to a customer as
long as there is no violation of any condition in the contract. The Bank has
established internal lending limits applicable to a single borrower or a related
group of borrowers to minimize risk and control exposure by obligor, industry,
loan type and other credit concentrations. The Bank has not experienced any
significant losses on open commitments.
RECLASSIFICATIONS
Certain amounts in the prior years' consolidated financial statements have
been reclassified to be consistent with the current year's
presentation.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Bank in estimating
fair values of financial instruments as disclosed herein:
CASH AND CASH EQUIVALENTS - The carrying amounts of cash and short-term
instruments approximate their fair value.
HELD TO MATURITY AND AVAILABLE FOR SALE SECURITIES - Fair values for
securities are based on quoted market prices.
FEDERAL HOME LOAN BANK STOCK - Fair value is equal to carrying value since
the stock is redeemable at cost.
LOANS - For variable rate loans that reprice frequently and have no
significant change in credit risk, fair values are based on carrying values.
Fair values for certain mortgage loans (for example, one-to-four family
residential), credit card loans, and other consumer loans are based on quoted
market prices of similar loans sold in conjunction with securitization
transactions, adjusted for differences in loan characteristics.
20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fair values for commercial real estate and commercial loans are estimated using
discounted cash flow analyses, using interest rates currently being offered for
loans with similar terms to borrowers of similar credit quality.
DEPOSIT LIABILITIES - The fair values disclosed for demand deposits and
variable rate savings accounts are, by definition, equal to the amount payable
on demand at the reporting date (that is, their carrying amounts). Fair values
for fixed rate deposits are estimated using a discounted cash flow calculation
that applies interest rates currently being offered on similar deposits to a
schedule of aggregated expected monthly maturities.
SHORT-TERM BORROWINGS - The carrying amounts of federal funds purchased,
borrowings under repurchase agreements, and other short-term borrowings maturing
within 90 days approximate their fair values. Fair values of other short-term
borrowings are estimated using discounted cash flow analyses based on the Bank's
current incremental borrowing rates for similar types of borrowing arrangements.
LONG-TERM BORROWINGS - The fair values of the Bank's long-term debt are
estimated using discounted cash flow analyses based on the Bank's current
incremental borrowing rates for similar types of borrowing arrangements.
ACCRUED INTEREST - The carrying amounts of accrued interest approximate
their fair values.
OFF-BALANCE SHEET INSTRUMENTS - Fair values for off-balance sheet lending
commitments are based on fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements and the
counterparties' credit standing.
RECENT PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board (FASB) issued
SFAS No. 121, Accounting for Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of, which is to become effective for fiscal
years beginning after December 15, 1995. SFAS No. 121 requires that
long-lived assets and certain identifiable intangibles to be held and used by
an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The statement also requires that certain long-lived assets and
identifiable intangibles to be disposed of be reported at the lower of the
carrying amount or fair value less cost to sell. Management anticipates that
the application of the new statement would not have a significant impact on
the results of operations or financial condition in the year it is adopted.
In May 1995, the FASB issued SFAS No. 122, Accounting for Mortgage
Servicing Rights, which is to become effective for fiscal years beginning after
December 15, 1995. SFAS No. 122 requires that a mortgage banking enterprise
recognize as separate assets, rights to service mortgage loans for others
regardless of the manner in which the servicing rights are acquired. In
addition, capitalized mortgage servicing rights are required to be assessed for
impairment based on the fair value of those rights. Management elected to adopt
the provisions as of October 1, 1995 and retroactively applied the provisions of
this statement to January 1, 1995. The adoption did not have a significant
impact on the Bank's reported results of operations or financial condition.
(2) CAPITAL
Banking regulators have classified and defined bank capital into the
following components: (1) Tier I capital, which includes tangible stockholders'
equity for common stock and certain perpetual preferred stock, and (2) Tier II
capital, which includes a portion of the allowance for possible loan losses,
certain qualifying long-term debt and preferred stock which does not qualify for
Tier I capital. In addition, they have implemented risk-based capital
guidelines that require a bank to maintain certain minimum capital as a percent
of such bank's assets and certain off-balance sheet items adjusted for
predefined credit risk factors (risk-adjusted assets). As of December 31, 1995,
the regulatory minimum Tier I and combined Tier I and II capital ratios are 4.0%
and 8.0%, respectively, of risk-based assets. At December 31, 1995, the Bank's
Tier I and combined Tier I and II risk-based capital ratios were 11.4% and
12.7%, respectively.
In addition to the risk-based guidelines discussed above, the banking
regulators require the Bank maintain a minimum leverage capital ratio (Tier I
capital as a percent of tangible assets) of 4.0%. As of December 31, 1995, the
Bank has a leverage capital ratio of 6.6%.
21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(3) SECURITIES
The amortized cost and estimated market values of securities are as follows:
December 31, 1995
--------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------------------------------------------------------
SECURITIES HELD TO MATURITY:
Mortgage-backed securities $77,565,687 $ -- $ 857,478 $76,708,209
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
SECURITIES AVAILABLE FOR SALE:
US Treasury and Agency bonds and notes $40,574,759 $ 101,424 $ -- $40,676,183
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
December 31, 1994
--------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------------------------------------------------------
SECURITIES HELD TO MATURITY:
Mortgage-backed securities $100,252,866 $ -- $7,404,352 $ 92,848,514
------------ ----------- ---------- ------------
------------ ----------- ---------- ------------
SECURITIES AVAILABLE FOR SALE:
Corporate bonds and notes $ 5,930,658 $ -- $ 5,299 $ 5,925,359
------------ ----------- ---------- -----------
------------ ----------- ---------- -----------
The amortized cost and market value of debt securities at December 31, 1995
and December 31, 1994, by contractual maturity, are shown below. Actual
maturities may differ from contractual maturities because borrowers have the
right to prepay obligations with or without call or prepayment penalties.
Certain securities classified as available for sale have call provisions. The
call dates on all these securities are within one year, as such they are
classified in the one year or less category in 1995 rather than the contractual
maturity date.
SECURITIES HELD TO MATURITY:
Amortized Estimated Percent
Cost Market Value of Total
December 31, 1995-- ------------------------------------------
Due in one year or less $ -- $ -- --
Due after one year through five years 56,206,391 55,815,979 72.46%
Due after five years through ten years 21,359,296 20,892,230 27.54%
Due after ten years -- -- --
----------- ----------- -----------
$77,565,687 $76,708,209 100.00%
----------- ----------- -----------
----------- ----------- -----------
SECURITIES AVAILABLE FOR SALE:
Amortized Estimated Percent
Cost Market Value of Total
December 31, 1995-- ------------------------------------------
Due in one year or less $40,574,759 $40,676,183 100.00%
Due after one year through five years -- -- --
Due after five years through ten years -- -- --
Due after ten years -- -- --
----------- ----------- -----------
$40,574,759 $40,676,183 100.00%
----------- ----------- -----------
----------- ----------- -----------
Proceeds from the maturity and sales of investments during 1995, 1994 and
1993 were $64,063,812, $46,628,752 and $180,358,906, respectively. Gross gains
of $363,017, $215,126 and $3,994,808 and gross losses of $272,024, $21,549 and
$42,748, respectively, were realized on the sales.
At December 31, 1995, the Bank had no investments in obligations of states,
counties or municipalities which exceeded 10% of stockholders' equity.
22
The Bank transferred and sold approximately $9,250,000 of formerly held to
maturity securities which resulted in a corresponding net loss of approximately
$171,000. The transfer was made pursuant to the issuance of "A Guide to
Implementation of Statement 115 on Accounting for Certain Investments in Debt
and Equity Securities" which allowed a one-time reassessment of the
appropriateness of the classification of all securities without calling into
question the Bank's classification of its other securities.
The FASB issued Statement of Financial Accounting Standards No. 119 (SFAS
No. 119), Disclosure about Derivative Financial Instruments and Fair Value of
Financial Instruments, which is effective for fiscal years ending after December
15, 1994. SFAS No. 119 requires certain disclosures about derivative financial
instruments including futures, forward swap and option contracts and other
financial instruments with similar characteristics. As of December 31, 1995,
the Bank had no financial instruments requiring disclosure under SFAS No. 119.
(4) LOANS
A summary of the balances of loans follows:
1995 1994
---------------------------
Mortgage loans on real estate
Residential, owner-occupied, one to four family and condos $101,817,810 $ 72,216,952
Residential, nonowner-occupied, one to four family and condos 10,667,757 11,371,794
Multi-family units five or more 34,632,581 34,956,394
Retail/mixed-use properties 30,311,277 26,025,089
Office/industrial space 10,638,889 6,809,092
Other loans 3,528,515 3,687,546
------------ -------------
191,596,829 155,066,867
Less--Deferred fees and income 93,654 290,061
------------ -------------
Total mortgage loans on real estate 191,503,175 154,776,806
------------ -------------
Commercial loans 16,857,492 8,423,229
------------ -------------
Other loans, personal installment 1,767,627 1,592,808
Lines of credit 746,746 831,054
------------ -------------
2,514,373 2,423,862
Less--Unearned discount 6,320 12,075
------------ -------------
Total other loans 2,508,053 2,411,787
------------ -------------
Total loans 210,868,720 165,611,822
Less--Allowance for possible loan losses 2,541,997 2,241,286
------------ -------------
Loans, net $208,326,723 $163,370,536
------------ -------------
------------ -------------
An analysis of the allowance for possible loan losses follows:
1995 1994 1993
----------------------------------------
Balance at beginning of year $2,241,286 $2,480,881 $3,056,336
Provision for possible loan losses 300,000 135,000 2,080,000
Recoveries 340,390 722,440 774,042
---------- ---------- ----------
2,881,676 3,338,321 5,910,378
Loans charged-off (339,679) (1,097,035) (3,429,497)
---------- ---------- ----------
Balance at end of year $2,541,997 $2,241,286 $2,480,881
---------- ---------- ----------
---------- ---------- ----------
In addition to the loan portfolio noted above, the Bank services
approximately $16,370,067 of loans sold without recourse to investors in the
secondary mortgage market and other financial institutions. During the second
quarter of 1995 the Bank sold its servicing rights on certain residential
mortgage loans with a gross outstanding balance of $69,113,347. From this sale
the Bank received gross proceeds of $898,473. The related pretax gain of
$763,806 is reflected in the current year's consolidated statement of
operations.
The Bank operates primarily in the Greater Boston area, and the performance
of its loan portfolio is dependent, to a large degree, on the condition of the
local real estate market. Uncertainty exists as to the ultimate realization in
full of certain loans, and other real estate owned as a result of current
economic conditions in the New England region. Based on management's assessment
of the condition of the Massachusetts real estate market at year end and
prevailing economic conditions, management believes that the allowance for loan
losses as
23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) LOANS (continued)
of December 31, 1995 is adequate to absorb the current estimate of future losses
in the loan portfolio. However, economic deterioration in future periods could
result in the Bank experiencing increased levels of nonperforming assets and
charge-offs, additional provisions for loan losses and reduction in net interest
income.
At December 31, 1995, real estate mortgage loans were pledged to secure
Federal Home Loan Bank advances, as further discussed in Note 7.
As of December 31, 1995, the Bank's impaired loans and related valuation
allowance (which is included in the allowance for loan losses) calculated under
SFAS No. 114 were as follows:
Impaired Valuation
Loans Allowance
-------------------------
Valuation allowance required $ -- $ --
No valuation allowance required 500,766
--------- ---------
Total impaired loans $ 500,766 $ --
--------- ---------
--------- ---------
The recorded investment in impaired loans for which no allowance is needed
is net of $110,608 of previous direct charge-offs and applications of cash
interest payments against the loan balances as of December 31, 1995. The
average recorded investment in impaired loans for the year ended December 31,
1995 was $760,750. Interest payments received on impaired loans are recorded as
interest income unless collection of the remaining recorded investment is
doubtful at which time payments received are recorded as a reduction in
principal.
(5) BANKING PREMISES AND EQUIPMENT
A summary of the cost and accumulated depreciation and amortization of
banking premises and equipment and their estimated useful lives follows:
Estimnated
1995 1994 Useful Lives
-----------------------------------------
Land and building $1,727,200 $1,817,867 25 years
Leasehold improvements 4,170,918 3,409,831 10-25 years
Furniture and equipment 3,433,923 2,760,136 2-10 years
---------- ---------- -----------
9,332,041 7,987,834
Less--Accumulated depreciation
and amortization 3,757,085 3,249,596
---------- ----------
$5,574,956 $4,738,238
---------- ----------
---------- ----------
Total depreciation and amortization for the years ended December 31, 1995,
1994 and 1993 amounted to $507,489, $430,161 and $402,207, respectively.
(6) DEPOSITS
A summary of deposit balances, by type, is as follows:
1995 1994
----------------------------
NOW and demand deposits $ 22,011,361 $ 18,394,371
Money market deposits 33,819,928 11,831,038
Other savings 46,038,261 64,675,486
------------ ------------
Total non-certificate accounts 101,869,550 94,900,895
Term certificate accounts 180,917,699 161,438,896
------------ ------------
Total deposits $282,787,249 $256,339,791
------------ ------------
------------ ------------
24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The aggregate amounts of term certificates of deposits of $100,000 or more
at December 31, 1995 and 1994 are $63,802,166 and $24,619,451, respectively.
A summary of term certificate accounts by maturity as of December 31, 1995
and 1994 is as follows:
1995 1994
--------------------------------------------------------
Weighted Weighted
Amount Average Rate Amount Average Rate
--------------------------------------------------------
Within one year $111,842,814 5.68% $104,135,730 5.07%
One to three years 51,986,914 5.85% 41,479,505 5.20%
Over three years 17,087,971 6.67% 15,823,661 5.72%
------------ ----- ------------ -----
$180,917,699 5.83% $161,438,896 5.17%
------------ ----- ------------ -----
------------ ----- ------------ -----
(7) FEDERAL HOME LOAN BANK ADVANCES (FHLB)
Federal Home Loan Bank advances consist of the following at December 31,
1995 and 1994:
Maturity Date Interest Rate 1995 1994
- -------------------------------------------------------------------------------
June 12, 1995 6.46% $ -- $1,200,000
June 21, 1995 6.35% -- 1,500,000
October 3, 1995 6.22% -- 2,000,000
January 2, 1996 5.85% 3,000,000 --
January 16, 1996 6.60% 4,300,000 4,300,000
February 16, 1996 5.80% 5,000,000 --
July 12, 1996 5.73% 4,000,000 --
October 13, 1998 5.90% 5,000,000 --
November 23, 1998 5.76% 10,000,000 --
October 10, 2000 6.09% 7,668,000 --
----------- ----------
Total advances $38,968,000 $9,000,000
----------- ----------
----------- ----------
The interest rates charged on advances maturing in 1995 and 1996 are
primarily fixed but also include floating rate advances indexed to prime. The
FHLB advances are collateralized by a pledge of the Bank's portfolio of
unencumbered securities and mortgages and by a lien on the Bank's holdings of
FHLB stock. The Bank may borrow up to 30% of its total assets but not more than
20 times its capital stock holdings in the FHLB for any sound business purpose
for which the Bank has legal authority. Borrowings authorized totaled
$43,968,000 at December 31, 1995.
(8) INCOME TAXES
Allocation of federal and state income taxes between current and deferred
portions is as follows:
1995 1994 1993
---------------------------------------
Current tax provision--
Federal $1,371,186 $ 822,048 $1,576,009
State 413,321 232,437 54,861
---------- ---------- ----------
1,784,507 1,054,485 1,630,870
---------- ---------- ----------
---------- ---------- ----------
Deferred tax provision (benefit)--
Federal (108,533) (38,446) (436,229)
State (29,760) (13,708) 3,521
---------- ---------- ----------
(138,293) (52,154) (432,708)
---------- ---------- ----------
$1,646,214 $1,002,331 $1,198,162
---------- ---------- ----------
---------- ---------- ----------
25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(8) INCOME TAXES (CONTINUED)
The reasons for the differences between the effective tax rate and the
corporate statutory federal income tax rate are summarized as follows:
1995 1994 1993
----------------------------------
Statutory rate 34.0% 34.0% 34.0%
Increase (decrease) resulting from--
State taxes, net of federal tax benefit 6.0 5.9 0.9
Reduction in valuation allowance -- (7.0) (6.2)
Rehabilitation and low income housing
tax credit (0.9) (1.2) (0.8)
Dividend received deduction (0.4) (0.1) (0.2)
Other (1.0) 1.1 0.3
----- ----- -----
Effective tax rate 37.7% 32.7% 28.0%
----- ----- -----
----- ----- -----
As of December 31, 1995 and 1994, the consolidated balance sheets include
net deferred tax assets of $383,653 and $245,360, respectively. The tax-
affected components of the prepaid income taxes at December 31, 1995 and 1994
are as follows:
1995 1994
----------------------
Loan allowances $182,711 $140,340
Loan fees 8,314 11,714
State taxes, net of federal benefit 83,109 62,868
Other, net 109,519 30,438
-------- --------
Net deferred tax assets $383,653 $245,360
-------- --------
-------- --------
(9) COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS
The Bank presently occupies the premises at 731 Hancock Street, Quincy,
Massachusetts, under a lease expiring in 2002, with three, five-year renewal
options, and the premises at 101 Federal Street, Boston, Massachusetts, under a
lease expiring in 1999, with two, five-year renewal options. In 1995 the Bank
executed a lease on the location of its newest branch office at 397 Washington
Street, Stoughton, Massachusetts which expires in 2005 with three, five-year
renewal options. Future minimum rental commitments under these leases are as
follows:
1996 $ 244,385
1997 248,113
1998 257,423
1999 258,660
2000 258,660
Thereafter 3,490,631
----------
$4,757,872
----------
----------
Net rental expenses for the years ended December 31, 1995, 1994 and 1993
were $211,665, $176,549 and $145,245, respectively.
LOAN AND SECURITY COMMITMENTS
In the normal course of business, there are outstanding commitments that
are not reflected in the accompanying consolidated financial statements. Firm
commitments to grant loans amounted to $15,367,512 and $4,868,000 at
December 31, 1995 and 1994, respectively. Also, amounts committed under
existing lines of credit totaled $4,581,535 at December 31, 1995.
EMPLOYMENT AND TERMINATION AGREEMENTS
The Bank has entered into a five year Employment Agreement with its Chief
Executive Officer providing for specified minimum annual compensation and the
continuation of benefits currently received. The contract is automatically
extended for an additional year on the anniversary date of the contract. In
addition, the Bank has entered into a Special Termination Agreement with its
Chief Executive Officer which provides for a lump-sum severance payment within a
three year period following a change in control, as defined in the agreement.
26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(10) LITIGATION
The Bank is a defendant in various legal actions. In the opinion of the
Bank's legal counsel, the resolution of these matters is not expected to have a
material effect on the consolidated financial position or results of operations
of the Bank.
(11) STOCKHOLDERS' EQUITY
The Bank may not declare or pay cash dividends on its shares of common
stock if the effect thereof would cause its stockholders' equity to be reduced
below applicable capital maintenance requirements or if such declaration and
payments would otherwise violate regulatory requirements (see Note 2).
The Bank maintains a Stock Purchase Plan, the purpose of which is to
provide an additional source of capital. Under the terms of the plan, 300,000
shares of authorized common stock are available for purchase of which 93,677
shares remain unissued. The purchase price will be the closing bid price of the
common stock on the business day prior to the purchase. In 1995, 43,240 shares
of common stock were purchased by eligible plan participants under the plan for
total proceeds to the Bank of $489,341.
In 1995, the Bank began an Automatic Dividend Reinvestment and Common Stock
Purchase Plan for the benefit of all eligible stockholders of record on November
1, 1995. The plan permits eligible stockholders to have their dividends
reinvested automatically into additional newly issued shares of common stock of
the Bank as the dividends are paid. In addition, the plan allows optional cash
payments to be made which permits stockholders to purchase additional shares on
a monthly basis. In 1995, 1,254 shares of common stock were purchased by
eligible stockholders under the plan for total proceeds to the Bank of $21,632.
(12) EMPLOYEE BENEFIT PLANS
During 1989, the Board of Directors voted to establish an Employee Stock
Ownership Plan (ESOP), which is a qualified stock bonus plan under Internal
Revenue Code Section 401(a). Employees reaching the age of 21 and having
completed 1,000 hours of service in one consecutive twelve-month period
automatically become participants in the ESOP. Participants become fully vested
upon completion of three years of service. During 1995, 1994 and 1993, the ESOP
purchased 20,948, 20,961 and 39,390 shares, respectively, of the Bank's common
stock at an aggregate purchase price of $241,480, $195,636 and $198,335
respectively, in the open market.
In 1995, 1994 and 1993, the Bank made contributions to the ESOP totaling
$183,800, $200,914 and $195,875, respectively, which are included in salaries
and employee benefits expense. Dividends on unallocated shares of the Bank's
stock held by the ESOP are accumulated within the plan.
The Bank also maintains a Non-Qualified Executive Retirement Plan which is
an unfunded non-qualified plan which provides deferred compensation to a select
group of management whose retirement benefits in the Employer's tax qualified
retirement plans are restricted by statute. During 1995 and 1994 the Bank
expensed $30,944 and $41,748, respectively, related to this plan.
In 1992, the Bank adopted a Profit Sharing Plan as defined in the Internal
Revenue Code Section 401(k). All employees who complete twelve consecutive
months of employment with the Bank are eligible to participate in the plan. In
1995, 1994 and 1993, the Bank matched employees' voluntary contributions on a
dollar-for-dollar basis up to an additional 3% of total compensation. The plan
is administered by the Savings Bank Employees Retirement Association. For the
plan years ended December 31, 1995, 1994 and 1993 the Bank made contributions of
$49,444, $43,394 and $44,624, respectively, to the plan.
The Bank maintains a Short-term Incentive Bonus Plan (the Plan) whereby
certain employees are eligible to receive a bonus if the Bank meets or exceeds
certain base standards of profitability, and certain strategic goals are
achieved. The structure of the Plan is reviewed on an annual basis by the Board
of Directors of the Bank. The Bank expensed $185,504 in 1995, $124,125 in 1994
and $136,900 in 1993 related to this plan.
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(13) STOCK OPTION PLAN
In 1986, 1989 and 1995, the Board of Directors adopted, and the
stockholders subsequently approved, stock option plans for the benefit of the
Bank's key employees. Under the 1986 Stock Option Plan, 120,000 shares of common
stock have been reserved for issuance pursuant to options granted under the
plan. Under the 1989 Stock Option Plan, 52,500 shares of common stock have been
reserved for issuance pursuant to options granted under the plan. Under the 1995
Premium Incentive Stock Option Plan, 70,000 shares of common stock have been
reserved for issuance pursuant to options granted under the plan. Stock options
may be granted by the Board of Directors under the plan at an exercise price
equal to, or in excess of, the fair market value of a share of common stock of
the Bank on the date the option is granted.
The following is a summary of the 1986 Stock Option Plan, the 1989 Stock
Option Plan and the 1995 Premium Incentive Stock Option Plan activity:
Number
Price Range of Shares
----------------------------
Outstanding at December 31, 1993 $1.67 - $8.83 142,800
Granted 11.00 22,200
Exercised 1.67 (76,200)
Expired 4.00 (1,500)
-------------- -------
Outstanding at December 31, 1994 1.67 - 11.00 87,300
Granted 11.75 - 16.50 42,000
Exercised 1.67 - 4.00 (41,200)
Expired 11.75 (3,750)
-------------- -------
Outstanding at December 31, 1995 $1.67 - $16.50 84,350
-------------- -------
At December 31, 1995, 33,250 shares were available for future grant under
the 1995 Premium Incentive Stock Option Plan. The options granted are
exercisable on the following dates:
Option Options Exercisable
Price Granted Beginning Expiration Date
----------------------------------------------------------
1986 Plan $ 1.67 4,400 January 1994 January 14, 2002
8.83 1,200 September 1995 September 14, 2003
11.75 1,500 March 1997 March 14, 2003
1989 Plan 8.83 16,800 January 1995 January 14, 2003
11.00 19,950 October 1996 October 11, 2004
11.75 3,750 March 1997 March 14, 2005
1995 Plan 13.00 14,750 May 1998 May 10, 2005
16.50 22,000 December 1997 December 12, 2005
(14) RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Bank has granted loans to
officers and directors and their affiliates amounting to $1,088,274 at
December 31, 1995. All such transactions are on substantially the same terms
as those prevailing at the same time for individuals not affiliated with the
Bank and such loans do not involve more than the normal risk of
collectibility. During the year ended December 31, 1995, total principal
additions were $192,900, and total principal payments were $1,195,276. At
December 31, 1994, outstanding loans to officers and directors and their
affiliates amounted to $2,090,650. For 1994, total principal additions were
$594,200, and total principal payments were $178,700.
28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(15) FAIR VALUES OF FINANCIAL INSTRUMENTS
The estimated fair values of the Bank's financial instruments were as
follows:
December 31, 1995 December 31, 1994
--------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
--------------------------------------------------------
FINANCIAL ASSETS:
Cash and due from banks, interest-bearing
deposits with banks, and federal funds sold $ 3,213,259 $ 3,213,259 $ 3,780,957 $ 3,780,957
Short-term investments 4,860,000 4,860,000 3,590,000 3,590,000
Securities held to maturity 77,565,687 76,708,209 100,252,866 92,848,514
Securities available for sale 40,676,183 40,676,183 5,925,359 5,925,359
Federal Home Loan Bank stock 2,198,400 2,198,400 1,813,700 1,813,700
Loans receivable 208,326,723 207,283,591 163,370,536 163,916,672
Accrued interest receivable 2,128,536 2,128,536 1,485,077 1,485,077
FINANCIAL LIABILITIES:
Deposit liabilities $282,787,249 $283,363,249 $256,339,791 $255,218,324
Federal Home Loan Bank advances 38,968,000 39,327,596 9,000,000 9,000,000
OFF-BALANCE SHEET ASSETS:
A summary of the notional amounts of the Bank's financial instruments with
off-balance sheet risk at December 31, 1995 and 1994 follows:
1995 1994
--------------------------------------------------------
Notional Fair Notional Fair
Amount Value Amount Value
--------------------------------------------------------
Commitments to grant loans $ 15,367,512 $ 15,367,512 $ 4,868,000 $ 4,868,000
Existing lines of credit 4,581,535 4,581,535 4,279,000 4,279,000
(16) QUARTERLY DATA (UNAUDITED)
Summaries of consolidated operating results on a quarterly basis for the
years ended December 31, 1995 and 1994 are as follows:
Fourth Third Second First
1995 Quarter Quarter Quarter Quarter
- ---------------------------------------------------------------------------------------------------------
Interest and dividend income $6,683,659 $6,073,597 $5,780,344 $5,411,401
Interest expense 3,892,744 3,569,358 3,368,318 2,889,348
---------- ---------- ---------- ----------
Net interest income 2,790,915 2,504,239 2,412,026 2,522,053
Provision for possible loan losses -- 48,334 100,000 151,666
---------- ---------- ---------- ----------
Net interest income after
provision for possible loan losses 2,790,915 2,455,905 2,312,026 2,370,387
Gain (loss) on sale of loans 2,760 (179) (55,192) --
Noninterest income 144,153 122,497 159,270 153,304
Noninterest expense 1,694,394 1,585,292 1,680,390 1,591,626
---------- ---------- ---------- ----------
Core earnings 1,243,434 992,931 735,714 932,065
Net gain (loss) on sale of securities (219,664) 191,395 (13,750) 133,012
Gain on sale of loan servicing -- -- 763,806 --
Net gain (loss) on sale of OREO 87,198 -- (119,965) (10,105)
Gain (loss) on sale of fixed assets (54,574) -- -- 4,748
OREO write-downs and expense 105,325 48,367 66,920 80,184
Provision for income taxes 390,998 427,181 486,221 341,814
---------- ---------- ---------- ----------
Net income $ 560,071 $ 708,778 $ 812,664 $ 637,722
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Earnings per common share $ 0.35 $ 0.46 $ 0.53 $ 0.42
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(16) QUARTERLY DATA (CONTINUED)
Fourth Third Second First
1994 Quarter Quarter Quarter Quarter
- ---------------------------------------------------------------------------------------------------------
Interest and dividend income $5,084,751 $4,810,976 $4,513,688 $4,318,682
Interest expense 2,669,661 2,451,230 2,207,674 2,169,430
---------- ---------- ---------- ----------
Net interest income 2,415,090 2,359,746 2,306,014 2,149,252
Provision for possible loan losses -- -- -- 135,000
---------- ---------- ---------- ----------
Net interest income after
provision for possible loan losses 2,415,090 2,359,746 2,306,014 2,014,252
Gain (loss) on sale of loans 47 (4,684) (6,244) 9,486
Noninterest income 134,816 124,317 148,264 141,524
Noninterest expense 1,668,651 1,529,366 1,528,572 1,482,424
---------- ---------- ---------- ----------
Core earnings 881,302 950,013 919,462 682,838
Net gain (loss) on sale of securities (18,260) -- 16,605 195,232
Net gain (loss) on sale of OREO 23,635 1,595 (80,998) (114,409)
OREO write-downs and expense 76,529 78,819 75,828 155,882
Provision for income taxes 274,763 256,748 264,942 205,878
---------- ---------- ---------- ----------
Net income $ 535,385 $ 616,041 $ 514,299 $ 401,901
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Earnings per common share $ 0.36 $ 0.43 $ 0.35 $ 0.27
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
MARKET PRICES AND STOCK DIVIDENDS
The Hibernia Savings Bank common stock was initially issued and sold in
September 1986 as part of its stock conversion at a split adjusted price of
$7.67 per share. The common stock of the Bank is quoted on the National
Association of Securities Dealers Automated Quotation (NASDAQ) National Market
System under the symbol "HSBK".
The stock price and other trade information appear in the Wall Street
Journal under NASDAQ over-the-counter markets for National Market Issues under
"HiberniaSvg". The following table sets forth high and low daily closing prices
for the common stock of the Bank for the periods indicated.
Sales Price Cash
---------------------- Dividends
Quarter Ended High Low Paid
- -------------------------------------------------------------------------------
December 31, 1995 $18 1/4 $15 3/4 $0.06
September 30, 1995 17 1/8 14 1/2 0.06
June 30, 1995 14 3/4 12 1/2 0.05
March 31, 1995 13 1/2 10 1/8 0.05
- -------------------------------------------------------------------------------
December 31, 1994 $11 5/8 $10 $ --
September 30, 1994 12 5/8 11 1/2 --
June 30, 1994 13 1/8 10 3/8 --
March 31, 1994 11 5/8 9 --
30
OFFICERS AND DIRECTORS
OFFICERS OF THE BANK
MARK A. OSBORNE DENNIS P. MYERS THOMASINE F. KENNEDY PATRICIA HANLON
CHAIRMAN OF THE BOARD AND SENIOR VICE PRESIDENT AND COMPTROLLER ASSISTANT VICE PRESIDENT
CHIEF EXECUTIVE OFFICER SENIOR LOAN OFFICER
EDWIN J. BECK, JR. DONALD J. MCLAUGHLIN
RICHARD S. STRACZYNSKI ROBERT D. MCCARTHY ASSISTANT VICE PRESIDENT ASSISTANT VICE PRESIDENT
PRESIDENT AND VICE PRESIDENT
CHIEF OPERATING OFFICER BARRY E. BURDEN ROBERT S. PYER, JR.
ROGER L. MEADE ASSISTANT VICE PRESIDENT ASSISTANT VICE PRESIDENT
WAYNE F. BLAISDELL VICE PRESIDENT
SENIOR VICE PRESIDENT ELIZABETH M. CASEY JANE M. HANLON-COOK
BRANCH ADMINISTRATION & JOSEPH F. RICHARDI ASSISTANT VICE PRESIDENT LOAN OFFICER
OPERATIONS OFFICER VICE PRESIDENT
ARMAND A. FERNANDEZ DOUGLAS C. PURDY
GERARD F. LINSKEY MICHAEL P. DONOHOE ASSISTANT VICE PRESIDENT CLERK OF THE CORPORATION
SENIOR VICE PRESIDENT AND TREASURER
CHIEF FINANCIAL OFFICER
BOARD OF DIRECTORS
MARTHA M. CAMPBELL THOMAS P. MOORE, JR. MARK A. OSBORNE MICHAEL T. PUTZIGER
ATTORNEY-AT-LAW SENIOR VICE PRESIDENT CHAIRMAN OF THE BOARD AND ATTORNEY-AT-LAW
STATE STREET RESEARCH AND CHIEF EXECUTIVE OFFICER ROCHE, CARENS & DEGIACOMO
THOMAS J. CARENS MANAGEMENT COMPANY THE HIBERNIA SAVINGS BANK
OF COUNSEL RICHARD P. QUINCY
ROCHE, CARENS & DEGIACOMO RICHARD J. MURNEY PAUL D. OSBORNE PRESIDENT
CERTIFIED PUBLIC ACCOUNTANT TREASURER QUINCY & CO.
BERNARD J. DWYER OSBORNE OFFICE FURNITURE
ATTORNEY-AT-LAW JOHN V. MURPHY CHARLES R. SIMPSON, JR.
EXECUTIVE VICE PRESIDENT & DOUGLAS C. PURDY FORMER CHAIRMAN AND CEO
PETER L. MAGUIRE CHIEF OPERATING OFFICER ATTORNEY-AT-LAW QUINCY SAVINGS BANK
PRESIDENT DAVID L. BABSON & CO., INC. SERAFINI, PURDY, DINARDO &
MANAGEMENT INFORMATION WELLS
SERVICES WILLIAM T. NOVELLINE
PRESIDENT
ABBOT FINANCIAL MANAGEMENT
STOCKHOLDER INFORMATION
ADMINISTRATIVE OFFICES LOAN CENTERS FORM F-2 REGISTRATION STOCKHOLDER RELATIONS
The Hibernia Savings Bank 730 Hancock Street AND OTHER REPORTS To receive further informa-
730 Hancock Street Quincy, MA 02170 The Bank has filed an tion about The Hibernia
Quincy, MA 02170 617-479-5001 Annual Report Form F-2 Savings Bank please contact
617-479-5001 with the Federal Deposit
731 Hancock Street Insurance Corporation Gerard F. Linskey
MAIN OFFICE Quincy, MA 02170 (FDIC). Copies of the Form Senior Vice President and
731 Hancock Street 617-479-2265 F-2 without exhibits, our Chief Financial Officer
Quincy, MA 02170 Annual Report and Quarterly The Hibernia Savings Bank
617-479-2265 51 Commercial Street Reports may be obtained 730 Hancock Street
Braintree, MA 02184 without charge upon written Quincy, MA 02170
BRANCH OFFICES 617-356-8246 request to: 617-479-5001
101 Federal Street
Boston, MA 02110 TRANSFER AGENT & REGISTRAR Attention: Gerard F. Linskey ANNUAL MEETING
617-345-0441 Chemical Mellon Senior Vice President and The annual meeting of the
Shareholder Services LLC Chief Financial Officer stockholders of the Bank
51 Commercial Street 85 Challenger Road The Hibernia Savings Bank will be held at 10:00 a.m.
Braintree, MA 02184 Overpeck Centre 730 Hancock Street Monday, April 29, 1996, at
617-848-5560 Ridgefield Park, NJ 07660 Quincy, MA 02170 the Sheraton Tara Hotel,
1-800-288-9541 37 Forbes Road, Braintree,
1150 Washington Street TRADING OF COMMON STOCK Massachusetts.
Weymouth, MA 02189 INDEPENDENT PUBLIC The Hibernia Savings Bank
617-331-0893 ACCOUNTANTS Common Stock is traded
Arthur Andersen LLP over-the-counter on the
274 Main Street One International Place NASDAQ National Market
Hingham, MA 02043 100 Oliver Street System under the symbol
617-740-4830 Boston, MA 02110 HSBK
617-330-4000
397 Washington Street
Stoughton, MA 02072 LEGAL COUNSEL
617-297-3550 Roche, Carens & DeGiacomo
One Post Office Square
Quincy High School Boston, MA 02109
52 Coddington Street 617-451-9300
Quincy, MA 02169
617-472-2404
THE HIBERNIA SAVINGS BANK
- ----------------------------------Cead Mile Failte------------------------------
731 Hancock St., Quincy * 101 Federal St., Boston * 51 Commercial St., Braintree
* 274 Main St., Hingham * 1150 Washington St., Weymouth * 397 Washington St.,
Stoughton
Educational Training Facility: Quincy High School, 52 Coddington St., Quincy
Member FDIC/DIF * Equal Housing Lender