2009 Annual Report

[2010 Six Month Statement] [2009 Executive Summary] [2009 Statement of Income] [2009 Statement of Condition]

To Our Corporators, Customers, Staff and Other Friends,

At Bath Savings Institution, we use our financial strength to help our communities stay strong. The strength of a local economy is its consumers and businesses. As a local community bank, we lend our depositors’ funds to finance homes, automobiles and other personal items, to provide goods and services and create jobs. This access to credit is the lifeblood of our local economy.

While banks across the country struggled with huge losses, Bath Savings Institution grew stronger, posting record net income of $4,467,058. This was 13.9% more than our previous best, recorded last year.

Since we are a mutual organization, these record earnings are all retained as capital to further protect our customers’ deposits and to fund future growth. Capital is the measure of safety at a bank, and at the end of 2009, our total capital, or reserves and undivided profits, grew to $54.8 million or 10.3% of total assets. This capital position is approximately twice what the federal regulators would require to be considered well capitalized.

Customers continue to turn to Bath Savings Institution for the service we offer, the stability we provide, the safety they need. Our deposits grew to $393 million, increasing by 8.8% over last year and ending 2009 at a record level. Our total assets also reached a new record, ending 2009 at $532 million.

It has been widely reported that last year “banks were not lending,” but apparently no one checked with us. In 2009 we provided $176 million to individuals to finance homes, automobiles and their children’s education, $96 million to businesses and municipalities, totaling over $272 million — the most in our 157 year history.

It was impossible not to be affected by the economy which was mired in a great recession for most of 2009. Bank failures across the country caused the FDIC to increase the fees paid by banks for deposit insurance. Our FDIC premium cost increased by 240% totaling $641,622 for the year. Our customers also struggled with falling real-estate values, job losses, and other economic hardships. Given the continuing economic uncertainty and our conservative nature, we added over $2 million to our loan reserve. I am pleased to report that at the end of December only 33 of the 5,097 loans we service were past due, meaning that 99.4% of our customers continue to pay on time. The bank is very conservatively reserved with an Allowance for Loan Losses of $5.4 million which is 163% greater than our total balance of past due loans. In spite of theses extraordinary operating costs, net income still was a record $4.5 million!

Bath Savings Trust Company’s steady commitment to delivering high quality personal service coupled with high quality investment strategies led to record breaking results. Clients enjoyed improved investment results while new clients seeking the personal care and service we deliver came on board at unprecedented rates. By the end of 2009 these investments we manage totaled a record $304 million, increasing by nearly $50 million during the year.

In January of 2010 Oliver (Andy) Andrews was elected to our Board of Trustees. Andy lives in Phippsburg, Maine and is a former public accountant and retired banker. We are proud to have him on our Board of Trustees.

I would like to thank our employees for their dedication to delivering the exceptional service that is the foundation of our success. Bath Savings Institution will continue to deliver the service you deserve by making a positive difference in the lives of our customers and our communities and we will continue to help keep our communities strong.

Sincerely,

Glenn L. Hutchinson, President & CEO