Hampden Bancorp, Inc. (the “Company”) (NASDAQ - HBNK), which is the holding company for Hampden Bank (the “Bank”), announced the results of operations for the three and nine months ended March 31, 2011.
The Company had net income for the three months ended March 31, 2011 of $253,000, or $0.04 per basic and fully diluted share, as compared to a net loss of $143,000, or $(0.02) per basic and fully diluted share, for the same period in 2010. The increase in net income was due principally to a decrease in the provision for loan losses of $795,000, or 57.0%. The Company had a decrease in net interest income of $112,000 for the three months ended March 31, 2011 compared to the three months ended March 31, 2010. There was a decrease in interest and dividend income, including fees, of $662,000, or 9.7%, for the three months ended March 31, 2011 compared to the three months ended March 31, 2010. This decrease in interest income was mainly due to a decrease in loan income of $466,000 and a decrease in debt securities income of $207,000. Due to interest rate risk, the Company has decided to sell some of its current originations of fixed rate mortgages, which is contributing to the decrease in average outstanding loans as well as the decrease in interest income. For the three month period ended March 31, 2011, interest expense decreased by $550,000, or 23.7%, compared to the three month period ended March 31, 2010. This decrease in interest expense was due to a decrease in deposit interest expense of $410,000 and a decrease in borrowing interest expense of $140,000. There was a decrease in the rates of deposits and a decrease in the average balance of borrowed funds due to the Company paying off some higher rate borrowings. For the three month period ended March 31, 2011, the Company had a loss on the sales/write-downs of securities and loans, net, of $64,000 compared to a gain on the sales/write-downs of securities and loans, net, of $22,000 for the three months ended March 31, 2010. The $64,000 loss for the three month period ended March 31, 2011 consisted of a $49,000 gain on the sale of loans, a $58,000 other-than-temporary-impairment charge on equity securities and a $55,000 loss on the sales of securities. Our combined federal and state effective tax rate was a 9.1% benefit for the three months ended March 31, 2011. This was due to a $100,000 reversal of the company’s valuation reserve against the deferred tax asset established in connection with the charitable contribution carryforward, as the Company believes it will have enough income to receive a larger tax benefit from the contribution.
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