Hamlin Bank & Trust Company: A Victim Of Demographics

About: Hamlin Bank & Trust Co. (Smethport, PA) (HMLN)
by: Carlton Getz, CFA
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Carlton Getz, CFA
Deep Value, growth at reasonable price, contrarian, long-term horizon

Hamlin Bank & Trust is a small community bank serving northwestern Pennsylvania.

The company's core market region is in demographic decline with an aging and falling population.

The company's deposits and market share (as well as assets) have declined over the last five years and are now roughly equivalent to the company's position a decade ago.

The result is a decline in net income adjusted for mark-to-market gains and losses which has pushed up the dividend payout ratio.

In the long term, demographic declines may place the dividend at risk despite the company's rather overcapitalized position, especially given persistently high past due loans.

Hamlin Bank & Trust Company (OTCPK:HMLN) is a six branch community bank primarily serving McKean County in northwestern Pennsylvania. The company is the oldest financial institution in the region, dating to 1863, and