The Hibernia Savings Bank announces 1994 earnings.

QUINCY, Mass.--(BUSINESS WIRE)--Jan. 17, 1995--The Hibernia Savings Bank (NASDAQ: HSBK) today reported net income for the year ended Dec. 31, 1994, of $2.07 million or $2.11 per share. This compares to earnings of $3.08 million, or $3.22 per share in 1993.

The 1993 operating results included $2.95 million in net pretax non-core earnings items, representing $3.95 million in net gains on the sale of securities associated with the restructuring of the investment portfolio, a $666,537 loss on the sale of other real estate owned and market value write downs of $335,600. During 1994 gains on the sale of securities totaled only $193,597 while losses on the sale of other real estate owned totaled $170,177 and market value write downs totaled zero.

Fourth quarter earnings for 1994 equaled $535,385, or $0.55 per share. This represented a 111.5% gain per share over the $252,715, or $0.26 per share, reported for the fourth quarter of 1993. All per share results are fully diluted.

The Bank experienced significant growth during 1994 in total assets, earning assets, loans outstanding, and deposits, reflecting the continued improvement in the local economy, combined with successful loan origination and deposit marketing programs. Nonperforming assets also declined substantially.

Commenting on the results, Mark A. Osborne, Chairman of the Board, President and Chief Executive Officer, stated, "We were pleased with the Bank's overall performance in 1994. Pretax core earnings showed a sharp improvement over the prior year's results. Total assets grew by $36.6 million or 14.7%, earning assets increased by $33.6 million or 14.0%, loans outstanding increased by $27.7 million or 20.6% last year and total deposits grew by $34.4 million or 15.5%, which was an excellent showing in absolute terms, but which is even more notable in light of the typical industry experience of slow growth rates. Finally, asset quality, which improved dramatically in 1993, continued to strengthen in 1994. Nonperforming assets declined 51.9% during 1994 and were equal to only 0.6% of year-end assets. We believe these achievements have established the fundamental groundwork for further improvement of operating results in 1995."

Net interest income for 1994 equaled $9.23 million, up slightly from $9.21 million recorded in 1993. It should also be noted that net interest income was progressively higher during each successive quarter in 1994. Net interest income for the fourth quarter of 1994 totaled $2.42 million as compared to $2.42 million for the comparable 1993 period.

Earning assets increased during 1994 by $33.6 million or 14.0% from $240.1 million at the previous year end to $273.7 million at Dec. 31, 1994. The ratio of average earning assets to total assets improved from 95.0% for 1993 to 96.1% for 1994. The growth in earning assets substantially offset the drop in net interest margin that occurred in 1994 which was primarily as a result of the restructuring of the investment portfolio that occurred in the fourth quarter of 1993. The Bank's net interest margin declined from 4.2% for 1993 to 3.5% for 1994. The net interest margin generated for the fourth quarter of 1994 was 3.5%.

The loan loss provision for 1994 was only $135,000 down substantially from the provision of $2.08 million for 1993. The comparatively low loan loss provision for the year was facilitated by the sharp decline in loan charge offs, net of recoveries. For 1994, net charge-offs equaled $375,000 compared to $2.66 million for 1993. The Bank's loan loss reserve was $2.24 million at Dec. 31, 1994, or 719.9% of nonperforming loans. The reserve at Dec. 31, 1993 totaled $2.48 million and was equal to 114.7% of nonperforming loans.

Noninterest income decreased in 1994 to $570,926 from $4.02 million in 1993. The decrease was due to a decline in gains on the sale of securities from $3.95 million in 1993 to $193,577 for 1994. The decline was partially offset by a decrease in losses on the sale of other real estate owned from $666,537 in 1993 to $170,177 in 1994.

Noninterest operating expenses declined substantively during 1994 from $6.87 million for 1993 to $6.60 million. The decline in noninterest operating expenses was a result of a 67.6% decline in expenses related to the management and disposition of non-performing assets which totaled $387,058 as compared to $1.19 million for the previous year. The decrease was partially offset by an increase in salaries and benefits costs of 15.0% from $2.66 million for 1993 to $3.06 million for 1994 plus an increase in marketing and advertising expenses of 34.0% from $240,920 for the prior year to $322,943 for 1994 and increases in audit fees, EDP and item processing costs and miscellaneous other items. The increase in salaries and benefits costs as well as the increase in marketing and advertising expenses was directly related to the promotion and expansion of the Bank's lending activities during 1994. Noninterest operating expenses totaled $1.75 million for the fourth quarter of 1994 as compared to $1.90 million for the fourth quarter of 1993 a decline of 8.1%.

Total assets increased from $249.8 million as of Dec. 31, 1993 by $36.6 million or 14.7% to $286.4 million at Dec. 31, 1994.

The primary earning asset of the Bank is its loan portfolio. During 1994, reflecting the continuing marketing emphasis on the Bank's lending activities, substantial growth was achieved in all major sectors of the portfolio. Residential mortgage loans outstanding increased by 20.2% or $14.0 million from $69.3 million as of Dec. 31, 1993 to $83.3 million at Dec. 31, 1994. Commercial real estate loans outstanding increased by 25.9% or $14.5 million from $55.7 million at Dec. 31, 1993 to $70.2 million at Dec. 31, 1994. Commercial and industrial loans outstanding increased by 53.4% or $2.9 million from $5.5 million the previous year to $8.4 million at year end. Total loans outstanding, net, increased by $27.7 million or 20.6% from $134.4 million at Dec. 31, 1993 to $162.1 million at Dec. 31, 1994.

The Bank's investment in securities increased by 5.5% during 1994 from $105.7 million at Dec. 31, 1993 to $111.6 million at year end. At the conclusion of 1993, after evaluating both the potential impact of FASB 115 and expected changes in monetary policy on the fixed income markets a defensive investment strategy for 1994 was adopted and all securities owned at that time were classified as investments held to maturity. The Bank's investment portfolio was constructed to maximize cash flow, both principal and interest, in order to fund the Bank's lending activities. Late in the fourth quarter of 1994 the Bank began to invest in short term bonds to enhance liquidity. Those investments are classified as held for sale in accordance with FASB 115. The Bank's investment portfolio does not include derivative investments.

Nonperforming assets totaled $1.7 million at Dec. 31, 1994, down 51.9% from $3.5 million at Dec. 31, 1993. Nonperforming assets were equal to 0.6% of 1994 year end assets compared to 1.4% at Dec. 31, 1993. Nonperforming assets at Dec. 31, 1994 were comprised, of $311,000 in nonperforming loans and $1.4 million in insubstance foreclosures and other real estate owned. At Dec. 31, 1993 nonperforming assets were comprised of $2.2 million in nonperforming loans and $1.3 million in insubstance foreclosures and other real estate owned. Also at Dec. 31, 1994, within the Bank's performing loan portfolio there were only two delinquent loans totaling $185,000.

Total deposits increased from $222.0 million at Dec. 31, 1993 by 15.5% to $256.3 million as of Dec. 31, 1994. The growth in deposits achieved during the year was primarily in certificates of deposit. Management's prevailing funding strategy employed during the year was to lock in whenever possible what represented, in its view, a cyclically low cost of deposits by emphasizing certificates of deposit effectively extending the maturity of the Bank's liabilities. Certificates of deposit, of all types, increased by 61.0% from $100.0 million at Dec. 31, 1993 to $161.4 million at Dec. 31, 1994.

During 1994 shareholders equity increased from $17.3 million by 14.3% to $19.8 million at year end. Also, as of Dec. 31, 1994 the Bank's leverage capital ratio was 6.9% as compared to 6.9% at the previous year end. The Bank's risk based capital ratio was 13.4% at Dec. 31, 1994 compared to 14.6% as of the same comparable date for the prior year. Based upon 964,491 shares outstanding at Dec. 31, 1994 and 893,235 shares outstanding at Dec. 31, 1993 tangible book value per share was $20.51 and $19.38 respectively. For 1994 the Bank generated a return on average assets of 0.77% and a return on average shareholders' equity of 11.1%.

The Hibernia Savings Bank, founded in 1912, is a full-service, state-chartered, stock savings bank. The main office of the Bank is located at 731 Hancock Street in Quincy, Massachusetts. The Bank's administrative offices are located at 730 Hancock Street, also in Quincy. Retail branch banking offices are located in Boston, Quincy Braintree and Weymouth, and Loan Centers in Quincy and Braintree. All deposits of the Bank are insured in full by the Federal Deposit Insurance Corp. (FDIC)/Depositors Insurance Fund (DIF).

                     The Hibernia Savings Bank
                       Financial Highlights

BALANCE SHEET DATA

                     Dec. 31, 1994    Dec. 31, 1993
                               (unaudited)

Total assets          $286,705,806    $249,826,826
Loans, net             162,137,233     134,428,350
Investments            111,587,224     105,735,110
Deposits               256,339,791     221,950,080
Borrowed funds           9,000,000       8,530,000
Stockholders' equity    19,786,097      17,312,136

                        Three Months Ended       Twelve Months Ended
                             Dec. 31,                  Dec. 31,
                         1994        1993         1994          1993

Interest and dividend
 income              $5,084,752  $4,660,231   $18,728,097  $18,156,798
Interest expense      2,669,660   2,238,829     9,497,995    8,949,311
Net interest income   2,415,092   2,421,402     9,230,102    9,207,487

and

Other noninterest
 income                 134,817     107,913       548,921      718,978
Gain (loss) on sale
 of loans                    46    (144,336)       (1,395)     (20,040)

less

Provision for loan
 losses                      --    (120,000)     (135,000)  (2,080,000)
Noninterest expense   1,668,652   1,526,233     6,209,013    5,680,070
Pretax core earnings    881,303     738,746     3,433,615    2,186,435
Net gain (loss) on
 sale of securities     (18,261)    239,313       193,577    3,952,060
Net gain (loss) on
 sale of real estate     23,635    (111,859)     (170,177)    (666,537)
Real estate owned
 expense                 76,529     372,892       387,058    1,193,612
Income before income
 taxes                  810,148     493,308     3,069,957    4,278,346
Income taxes (benefit)  274,763     240,593     1,002,331    1,198,163
Net income (loss)      $535,385    $252,715    $2,067,626   $3,080,183

Per common share
Net
income:
  Primary                 $0.55       $0.26         $2.11        $3.22
  Fully diluted           $0.55       $0.26         $2.11        $3.22

Average number of
 common shares:
  Primary               966,240     965,151       979,025      958,061
  Fully diluted         966,240     965,151       979,172      958,061

Book value per share                               $20.51       $19.38
Actual number of
 outstanding shares                               964,491      893,235

CONTACT: Hibernia Savings Bank

Gerard F. Linskey, 617/479-5001