TOWSON, Md., Nov. 1, 2013 /PRNewswire/ -- Hamilton
Bancorp, Inc. (the "Company") (Nasdaq: HBK), today reported a
net loss of $500,000, or $(0.15) per share (basic and diluted), for the
quarter ended September 30, 2013,
compared to net income of $141,000
for the quarter ended September 30,
2012. Net loss for the six months ended September 30, 2013 was $483,000, or $(0.14) per share (basic and diluted), compared
to net income of $364,000 for the six
months ended September 30, 2012. Per
share amounts for the prior year periods are not applicable as the
net income reported is for Hamilton Bank prior to the completion of
its mutual-to-stock conversion on October
10, 2012.
The Company also announced today the adoption of a stock
repurchase program under which the Company may repurchase up to
185,150 shares of its common stock, or approximately 5% of the
current outstanding shares. See "Adoption of Stock Repurchase
Program" below.
Balance Sheet Review
Total assets at September 30, 2013
decreased 5.5% to $313.7 million from
$332.0 million at March 31, 2013. The decrease in assets is
attributable to a $6.4 million
decrease in cash and cash equivalents, a $5.4 million decrease in investment securities,
and a $7.7 million decrease in loans
during the six months ended September 30,
2013.
Net loans decreased $7.7 million
to $151.6 million at September 30, 2013 from $159.3 million at March
31, 2013, after an increase in net loans of $2.1 million in the first quarter of the fiscal
year. The largest decline in loans occurred in residential one- to
four family loans with a decrease of $5.2
million as such loans were either paid down, repaid or
refinanced and newly originated residential loans were sold in the
secondary market at a premium. The Bank continues to transform the
composition of its loan portfolio by emphasizing commercial and
commercial real estate lending which has resulted in residential
loan balances declining. At September 30,
2013, commercial real estate loans accounted for 25.6% of
gross loans compared to 22.5% at March 31,
2013, or a net increase of $3.3
million. Commercial business loans, however, have
declined in the last six months, representing 14.2% of gross loans
at September 30, 2013, compared to
16.7% at March 31, 2013 or a net
decrease of $5.1 million. The recent
decline in commercial business loans is attributable to several
large commercial business loans paying off.
Total deposits were $246.8 million
at September 30, 2013, compared to
$260.1 million at March 31, 2013, a decline of $13.3 million or 5.1%. The decline in deposits
was due to the continued decrease in time deposits. Time deposits
decreased $19.6 million to
$176.4 million at September 30, 2013 compared to $196.0 million at March
31, 2013. The Company remains focused on changing its
deposit mix to rely less on certificates of deposit as a primary
funding source and attract lower costing core deposits. Checking
accounts increased $5.6 million to
$26.0 million at September 30, 2013 compared to $20.4 million at March 31,
2013, an increase of 27.2%.
Total shareholders' equity at September
30, 2013 was $65.1 million,
compared to total equity of $67.4
million at March 31,
2013. The decrease in shareholders' equity was primarily
attributable to a $1.9 million
decrease in accumulated other comprehensive income and the
$483,000 net loss for the six months
ended September 30, 2013. The
decrease in accumulated other comprehensive income was due to
the negative impact of rising interest rates on the market value of
the investment portfolio during the past six months. The Company's
book value per common share at September 30,
2013 was $17.57 compared to
$18.21 at March 31, 2013. At that same date, tangible
book value per share, which includes the $(0.77) per share effect of the Company's
$2.9 million of goodwill and other
intangibles, equaled $16.80 per
share.
Asset Quality Review
Nonperforming assets increased 12.4% or $728,000 to $6.6
million at September 30, 2013,
from $5.9 million at March 31, 2013. Total nonperforming assets
were 2.1% of total assets at the end of the quarter, compared to
1.77% at March 31, 2013. The
increase in nonperforming assets is attributable to one loan
totaling $675,000. While this loan is
on accrual and paying on the same terms as contractually agreed, it
is 90 days past its contractual maturity date and is therefore
reported as nonperforming.
Non-accrual loans totaled $4.2
million at September 30, 2013
compared to $5.1 million at
March 31, 2013. The $900,000 decrease in non-accrual loans is
primarily due to one non-accrual participation loan that was
transferred to foreclosed real estate upon foreclosure by the lead
bank. In addition, two commercial business loans totaling
$1.3 million, one of which is a
troubled debt restructure, are paying as agreed but have been
placed on non-accrual by management until the borrower can show
improved cash flow.
The provision for loan losses totaled $1.0 million for the quarter ended September 30, 2013 compared to no provision for
the same quarter ended 2012. The provision for loan losses totaled
$1.3 million for the six months ended
September 30, 2013 compared to
$58,000 for the same 2012 period. The
increased provision in the second quarter of 2013 was related to
net charge offs totaling $586,000,
largely related to three different commercial business borrowers,
as well as an increase of $429,000
resulting from a reduction in the historical loss period we use in
calculating average loan loss percentages for various classes of
loans. These average loss percentages are applied to the
various classes of loans as one factor in the determination of
our allowance for loan losses. This reduction in the historical
loss period increased the average loss percentages for certain
classes of loans, while reducing others, with the effect of
increasing the overall required allowance for loan losses balance
calculated in accordance with ASC 450.
The allowance for loan losses at September 30, 2013 totaled $2.7 million, or 1.72% of total loans, compared
to $2.1 million at March 31, 2013, or 1.28% of total loans. The
$588,000 increase in the allowance
for loan losses is the result of $1.3
million in provision for loan losses, offset by $731,000 in net charge-offs for the six months
ending September 30,
2013.
Income Statement Review
Net interest income increased $135,000 to $2.1
million for the quarter ended September 30, 2013 from $2.0 million for the quarter ended September 30, 2012. Net interest income increased
$161,000 to $4.3 million for the six months ended
September 30, 2013, compared to
$4.1 million for the same 2012
period. The increases for the three and six month periods in 2013
were primarily attributable to declines in both the cost and
average balance on interest-bearing deposits. The declines in the
cost of interest-bearing deposits were partially offset by declines
in the yield on interest-earning assets as the average balance of
interest-earning assets remained relatively constant. For the
three and six months ended September 30,
2013, the net interest rate spread increased 22 and 6 basis
points to 2.71% and 2.65%, respectively, from the prior year
periods. The net interest margin also increased from 2.73% for the
six month period ended September 30,
2012 to 2.82% for the six month period ended September 30, 2013.
Noninterest income for the second quarter of 2013 totaled
$191,000, a decrease of $40,000, or 17.3%, compared to the second quarter
of 2012. The decrease between the two quarters was primarily
due to the sale of SBA loans in the prior year quarter, partially
offset by increases in gain on sale of loans held for sale, service
charges, and income from bank owned life insurance. For the six
months ended September 30, 2013,
noninterest income totaled $456,000,
an increase of $36,000 compared to
the six months ended September 30,
2012. The increase between the six month periods was
primarily due to increases in service charges, income from bank
owned life insurance and gain on sale of investment securities,
partially offset by a decrease in gain on sale of SBA loans. Income
from service charges increased due to an increase in the number of
core deposits (checking and savings) which offer more fee based
services and products than conventional time deposits.
Noninterest expenses increased $152,000 to $2.2
million for the three months ended September 30, 2013, compared to $2.0 million for the three months ended
September 30, 2012. The higher
expense in the 2013 quarter is due in part to the added costs
associated with operating as a public company, including legal
expenses and professional services. The increase in operating
expenses has been partially offset by decreases in advertising and
foreclosed real estate expense. Noninterest expense increased
$377,000 to $4.3 million for the six months ended
September 30, 2013, compared to
$3.9 million for the six months ended
September 30, 2012. The largest
contributors to the increase between the six month periods were
increases in salaries and employee benefits, legal and professional
services, and occupancy expense, offset by decreases in advertising
and foreclosed real estate expense.
Use of Non-GAAP Financial Measures
This press release contains financial measures that are not
calculated in accordance with U.S. generally accepted accounting
principles ("GAAP"). Tangible book value is a non-GAAP financial
measure. The Company believes that the presentation of
non-GAAP financial measures will permit investors to assess the
Company's core operating results on the same basis as management.
Non-GAAP financial measures should be considered supplemental to,
not a substitute for or superior to, financial measures calculated
in accordance with GAAP. As other companies may use different
calculations for these measures, this presentation may not be
comparable to other similarly titled measures reported by other
companies.
Adoption of Stock Repurchase Program
The Company's Board of Directors has adopted a stock repurchase
program. Under the repurchase program, the Company may
repurchase up to 185,150 shares of its common stock, or
approximately 5.0% of the current outstanding shares. The
repurchase program permits shares to be repurchased in open market
or private transactions, through block trades, and pursuant to any
trading plan that may be adopted in accordance with Rule 10b5-1 of
the Securities and Exchange Commission.
Repurchases will be made at management's discretion at prices
management considers to be attractive and in the best interests of
both the Company and its stockholders, subject to the availability
of stock, general market conditions, the trading price of the
stock, alternative uses for capital, and the Company's financial
performance. Open market purchases will be conducted in
accordance with the limitations set forth in Rule 10b-18 of the
Securities and Exchange Commission and other applicable legal
requirements.
The repurchase program may be suspended, terminated or modified
at any time for any reason, including market conditions, the cost
of repurchasing shares, the availability of alternative investment
opportunities, liquidity, and other factors deemed appropriate.
These factors may also affect the timing and amount of share
repurchases. The repurchase program does not obligate the
Company to purchase any particular number of shares.
About Hamilton Bank
Hamilton Bank is a federally-chartered savings bank that has
served the banking needs of its customers since 1915. Hamilton Bank
conducts business primarily from its four full service banking
offices located in Baltimore City,
Maryland and the Maryland
counties of Baltimore and
Anne Arundel.
This press release may contain statements relating to the
future results of the Company (including certain projections and
business trends) that are considered "forward-looking statements"
as defined in the Private Securities Litigation Reform Act of
1995). Forward-looking statements include statements regarding
anticipated future events and can be identified by the fact that
they do not relate strictly to historical or current facts. They
often include words such as "believe," "expect," "anticipate,"
"estimate," and "intend" or future or conditional verbs such as
"will," "would," "should," "could," or "may." Forward-looking
statements, by their nature, are subject to risks and
uncertainties. Certain factors that could cause actual results to
differ materially from expected results include increased
competitive pressures, changes in the interest rate environment,
general economic conditions or conditions within the securities
markets, legislative and regulatory changes that could adversely
affect the business in which Hamilton Bancorp, Inc. and Hamilton
Bank are engaged, and other factors that may be described in the
Company's annual report on Form 10-K and quarterly reports on Form
10-Q as filed with the Securities and Exchange Commission. The
forward-looking statements are made as of the date of this release,
and, except as may be required by applicable law or regulation, the
Company assumes no obligation to update the forward-looking
statements or to update the reasons why actual results could differ
from those projected in the forward-looking statements.
Hamilton Bancorp,
Inc. and Subsidiary
|
Consolidated
Statements of Financial Condition
|
(dollars in
thousands)
|
|
|
|
|
|
September
30,
|
|
March 31,
|
|
2013
|
|
2013
|
|
(unaudited)
|
|
(audited)
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
27,557
|
|
$
33,969
|
Investment securities
available for sale
|
110,855
|
|
116,234
|
Loans receivable,
net
|
151,593
|
|
159,317
|
Foreclosed real
estate
|
1,759
|
|
756
|
Premises and
equipment, net
|
2,321
|
|
2,461
|
Bank-owned life
insurance
|
11,817
|
|
11,623
|
Goodwill and other
intangible assets
|
2,855
|
|
2,877
|
Other
assets
|
4,982
|
|
4,725
|
Total
Assets
|
$
313,739
|
|
$
331,962
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
Deposits
|
$
246,759
|
|
$
260,117
|
Other
liabilities
|
1,922
|
|
4,409
|
Total
Liabilities
|
248,681
|
|
264,526
|
Total Shareholders'
Equity
|
65,058
|
|
67,436
|
Total Liabilities and
Shareholders' Equity
|
$
313,739
|
|
$
331,962
|
Hamilton Bancorp,
Inc. and Subsidiary
|
Consolidated
Statements of Operations
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Six Months Ended
September 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
(Dollars in thousands
except per share data)
|
Interest
Income
|
$
2,609
|
|
$
2,719
|
|
$
5,284
|
|
$
5,606
|
Interest
Expense
|
485
|
|
730
|
|
1,033
|
|
1,516
|
Net Interest
Income
|
2,124
|
|
1,989
|
|
4,251
|
|
4,090
|
Provision for Loan
Losses
|
1,015
|
|
-
|
|
1,319
|
|
58
|
Net Interest Income
After
|
|
|
|
|
|
|
|
Provision for Loan Losses
|
1,109
|
|
1,989
|
|
2,932
|
|
4,032
|
Total Noninterest
Income
|
191
|
|
231
|
|
456
|
|
420
|
Total
Noninterest Expenses
|
2,189
|
|
2,037
|
|
4,326
|
|
3,949
|
Income Before Income
Taxes
|
(889)
|
|
183
|
|
(938)
|
|
503
|
Income Tax Expense
(Benefit)
|
(389)
|
|
42
|
|
(455)
|
|
139
|
Net Income Available
to
|
|
|
|
|
|
|
|
Common
Shareholders
|
$
(500)
|
|
$
141
|
|
$
(483)
|
|
$
364
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Common Share
|
$
(0.15)
|
|
N/A
|
|
$
(0.14)
|
|
N/A
|
Diluted Earnings Per
Common Share
|
$
(0.15)
|
|
N/A
|
|
$
(0.14)
|
|
N/A
|
Hamilton Bancorp,
Inc. and Subsidiary
|
Tangible Book
Value
|
(Unaudited)
|
|
|
|
|
|
September
30,
|
|
March 31,
|
|
2013
|
|
2013
|
|
(dollars in thousands
except per share data)
|
|
|
|
|
Tangible book value
per common share:
|
|
|
|
Total
shareholders' equity
|
$
65,058
|
|
$
67,436
|
Less:
Goodwill and other intangible assets
|
(2,855)
|
|
(2,877)
|
Tangible
common equity
|
$
62,203
|
|
$
64,559
|
|
|
|
|
Outstanding common
shares
|
3,703,000
|
|
3,703,000
|
|
|
|
|
Book value per common
share
|
$
17.57
|
|
$
18.21
|
|
|
|
|
Tangible book value
per common share
|
$
16.80
|
|
$
17.43
|
Tangible common
equity to tangible assets
|
20.01%
|
|
19.62%
|
Hamilton Bancorp,
Inc. and Subsidiary
|
Allowance for Loan
Losses
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
For the
|
|
For the
|
|
Three Months Ended
September 30,
|
|
Six Months Ended
September 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
(Dollars in
thousands)
|
|
|
|
|
|
|
|
|
Balance,
beginning
|
$
2,230
|
|
$
2,107
|
|
$
2,071
|
|
$
3,552
|
Provision charged to income
|
1,015
|
|
-
|
|
1,319
|
|
58
|
Charge-offs
|
(603)
|
|
(285)
|
|
(772)
|
|
(1,788)
|
Recoveries
|
17
|
|
-
|
|
41
|
|
-
|
Balance,
ending
|
$
2,659
|
|
$
1,822
|
|
$
2,659
|
|
$
1,822
|
|
|
|
|
|
|
|
|
Allowance for Loan
Losses as a
|
|
|
|
|
|
|
|
percentage of gross loans
|
1.72%
|
|
1.13%
|
|
1.72%
|
|
1.13%
|
Hamilton Bancorp,
Inc. and Subsidiary
|
|
Non-Performing
Assets
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
|
|
For the
|
|
For the
Fiscal
|
|
|
|
|
Six Months
Ended
|
|
Three Months
Ended
|
|
Year Ended
|
|
|
|
|
September 30,
2013
|
|
June 30,
2013
|
|
March 31,
2013
|
|
|
|
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
Nonaccruing
loans
|
|
|
$
4,182
|
|
$
4,165
|
|
$
5,132
|
|
Accruing loans
delinquent more than 90 days
|
|
675
|
|
-
|
|
-
|
|
Foreclosed
assets
|
|
|
1,759
|
|
756
|
|
756
|
|
Total
nonperforming assets
|
|
|
$
6,616
|
|
$
4,921
|
|
$
5,888
|
|
|
|
|
|
|
|
|
|
|
ASC 450 - Allowance
for loan losses
|
|
|
$
2,346
|
|
$
1,639
|
|
$
1,562
|
|
ASC 310 - Impaired
loan valuation allowance
|
|
313
|
|
591
|
|
509
|
|
Total
allowance for loan losses
|
|
|
$
2,659
|
|
$
2,230
|
|
$
2,071
|
|
|
|
|
|
|
|
|
|
|
Ratio of
nonperforming assets to total assets at end of period
(1)
|
|
2.11
|
%
|
1.51
|
%
|
1.77
|
%
|
Ratio of
nonperforming loans to total loans at end of period (2)
|
|
3.15
|
%
|
2.55
|
%
|
3.18
|
%
|
Ratio of net charge
offs to average loans for the period ended (3)
|
0.91
|
%
|
0.36
|
%
|
1.96
|
%
|
Ratio of allowance
for loan losses to total loans at end of period
|
|
1.72
|
%
|
1.37
|
%
|
1.28
|
%
|
Ratio of allowance
for loan losses to nonperforming
|
|
|
|
|
|
|
|
loans at end
of period (2)
|
|
|
54.75
|
%
|
53.54
|
%
|
40.35
|
%
|
(1)
|
Nonperforming assets
include nonaccruing loans, accruing loans delinquent more than 90
days and foreclosed assets.
|
(2)
|
Nonperforming loans
include both nonaccruing loans and accruing loans delinquent more
than 90 days.
|
(3)
|
Percentages for the
three and six months ended June 30, 2013 and September 30, 2013
have been annualized.
|
SOURCE Hamilton Bancorp, Inc.