Hampden Bancorp posted strong earnings and net income for the three and nine months ended March 31 after staving off a proposal from activist shareholders last fall.
Early in November at the company’s annual meeting, stockholders voted in the company’s director nominees and rejected two candidates nominated by a Texas hedge fund that held approximately 8 percent of Hampden’s stock. The group, Clover Partners, had hoped to force a sale or merger, complaining that the Springfield-headquartered Hampden Bank paid its executives too much while delivering lackluster stock performance.
The holding company for Hampden Bank increased its net income approximately 33 percent to $3.2 million for the nine months ended March 31, compared with $2.4 million in the corresponding period last year. For the three month period ended March 31, Hamden Bancorp increased net income 23.8 percent, or $196,000, to $1 million, compared with $825,000n for the same period in 2013.
Net interest income for that quarter increased 12.3 percent, or $564,000, while interest expenses declined 4 percent, or $54,000. The company’s net interest margin inched up to 3.08 percent, compared with 3.01 percent in the year-ago period. In a statement accompanying the bank’s earnings release, President and CEO Glenn S. Welch attributed the increase largely to a continued emphasis on growing the company’s higher yielding commercial loan portfolio.
Since June 30 of last year – Hampden’s fiscal year-end – the company has increased its commercial loan portfolio 21 percent, or $48.7 million. Commercial real estate loans increased $32.7 million, commercial construction loans increased $6 million and commercial loans increased $9.9 million. The majority of those construction loans were written to become permanent financing, the company said.
For the quarter ended in March, Hampden Bancorp also increased its provision for loan losses to $150,000 from $100,000 in the year-ago period, primarily due to increased loan growth.
During the quarter, non-interest income declined $390,000 from the year-ago period. That included a $191,000 decrease in the gain on sale of loans, a $114,000 decrease in the gain on sale of securities and a $113,000 decrease in other non-interest income due to a decrease in the fair value of mortgage servicing rights. Those declines were partially offset by a 7.5 percent, or $35,000, increase in customer service fees during that quarter.
Non-interest expenses also declined during the quarter by 3.7 percent, or $162,000.
The company’s board of directors declared a quarterly cash dividend of 6 cents per common share to be paid May 30 to shareholders of record at the close of business on May 16.
Email: lalix@thewarrengroup.com
