DEDHAM INSTITUTION FOR SAVINGS,

Transcription

1 2011 Annual Report

2 The home of Jonathan Cobb served as the Bank s first location. It was opened for business on May 11, The Bank was located in Cobb s front parlor and banking hours were 7-9 PM on Wednesday evenings.

3 2011 President s Message This past year, the Dedham Institution For Savings celebrated its 180th anniversary as an independent mutual bank. Incorporated in 1831, the Bank has established a history rich in serving its customers and the community. It is a history of which our staff, our corporators and our trustees are quite proud as it speaks to the Bank s stability and resiliency. In 2011, the environment in which we operated continued to test these attributes. Since the financial meltdown during the fourth quarter of 2008, Dedham Savings, and just about every other community bank, has been fighting an uphill battle to restore capital and to remain profitable. The headwind continues to come from historically low interest rates, increased regulatory pressures and a slow-to-recover economy. The economy continues to be impacted by high unemployment, slow housing sales, depressed housing prices, the partisan political climate, elevated levels of government spending and the uncertainties of Europe. Peter G. Brown, President and Chief Executive Officer When the Bank celebrated its 150th anniversary in 1981, the banking industry was navigating through a different set of challenges. Inflation was rampant, the prime rate was just coming off an all-time high of 21.5%, and threats associated with disintermediation could be felt. Our former President and CEO, John Lund, stated in that year s annual report: we cannot predict what further changes in the future may bring but we can predict that a continuing high standard of excellence will be our plumb line in decisions demanding energy, intellect and innovation. It will be that same high standard of excellence which has made us 150 years STRONG. In fact, this standard of excellence has made us 180 years strong and I believe will continue to do so for many more years to come. Despite all of these challenges, the Bank had a very successful year. As we have done in the past, we measure our success by reviewing our financial results as well as by reviewing our adherence to our Strategic Plan. Later in this report is a more detailed 2011 financial review. However, below is a summary of a few notable financial results: Recorded total net income of $5.8 million. Increased deposits to $935 million, an increase of $34 million, or 3.8%. Increased net loans to $738 million, an increase of $21 million, or 2.9%. Increased commercial loans to $219 million, an increase of $32 million, or 17%. Closed 779 residential, commercial and consumer loans totaling $262 million. Modified 242 loans preserving $93 million in loan balances. Decreased non-performing loans by 47% from $22 million to $11.7 million. Increased capital to $106.4 million providing a capital ratio of 9.8%. During 2011, we were also pleased with the execution of several initiatives identified in our Strategic Plan. One of the most critical initiatives was the complete reorganization and restructuring of the Bank s Finance and Accounting function. This was highlighted by the recruitment of Mark Ingalls as Executive Vice President and Chief Financial Officer and Amanda Paquette as Controller. Both have significant banking and public accounting experience and have already demonstrated a positive impact to this area of the Bank ANNUAL REPORT 1

4 1831 Another change to the Bank s organizational chart was the formation of an Enterprise Risk Management Department. This area will have the overall responsibility of overseeing critical functions such as audit, compliance, financial controls and all regulatory exam oversight. Pam Millard, Senior Vice President will serve as the Bank s Chief Risk Officer. Another major initiative completed in 2011 was the Bank s acquisition of a 20% interest in Plimoth Investment Advisors. With this acquisition, Dedham Savings can now offer a comprehensive portfolio of trust and wealth management services to retail, commercial and non-profit customers. Thomas Miller, CFP, has been hired by Plimoth to work out of our main office to service clients in the Norfolk County area. Other major strategic initiatives completed in 2011 were as follows: The expansion and solidification of the Bank s Commercial Credit Department highlighted by the hiring of a new Senior Credit Officer. The leasing of 10,000 square feet of additional first class office space at 888 Washington Street Dedham to accommodate our growing needs. The completion of a $1 million renovation of our Walpole Office where we introduced digital media technology. The engagement of a new advertising firm with significant expertise in social media advertising and online marketing strategies. The funding of over $500,000 to local organizations through combined donations from the Bank and its charitable foundation. The continuance of our internal program to upgrade technology and data security. Looking forward into 2012, I wish I was as cautiously optimistic as I was last year at this time. Unfortunately, many of the concerns that I had then still exist. The Fed has all but announced that rates will remain low for an extended period of time placing added pressure to our margins. Compounding the problem, there are still too many lenders chasing too few quality loan opportunities. Further, we are now just starting to learn of the impact that complying with Dodd-Frank will have not just in cost, but in how we do business. Somewhat related is the questionable future of residential mortgage lending, Fannie Mae and Freddie Mac. The uncertainty in Europe also continues to impact us. Finally, the big question is the economy and all of the factors tied in with it: unemployment, the housing markets, consumer spending, business spending and the rising national debt. Despite these burdens, the Bank will forge ahead in 2012 to meet its stated financial goals and strategic objectives. In closing, I would like to congratulate the Bank s staff and the Bank s Board of Trustees for continuing the standard of excellence at Dedham Savings. I also wish to reaffirm our commitment and express our sincere thanks to our depositors, borrowers, and the residents and business owners in the communities we serve. You have all played a distinct role in the Bank s success over the years which is why our 180th celebration also belongs to you. Corporation Meeting March 29, 2012 Peter G. Brown, President and Chief Executive Officer 2 DEDHAM SAVINGS BANK 180 TH ANNIVERSARY

5 2011 (seated from left): Doug Shaw, Executive Vice President and Chief Lending Officer; Gerard R. Lavoie, Executive Vice President and Chief Operating Officer; (standing from left): Pamela A. Millard, Senior Vice President and Chief Risk Officer; Mark A. McKinnon, Executive Vice President and Chief Information Officer; Peter G. Brown, President and Chief Executive Officer; Mark C. Ingalls, Executive Vice President and Chief Financial Officer; Jean M. Tennihan, Senior Vice President, Human Resources. Senior Management Celebrating 180 years of service to our community Throughout the past 180 years of prosperity and uncertainty, growth and change, and war and peace, Dedham Institution for Savings has been there for the citizens of greater Norfolk County. When our country grew from an agricultural society to a more industrialized nation we were there. When World War II veterans returned home in search of the American Dream we were there. When the building boom of the 1950s and 60s shifted into high gear we were there. And when deregulation and a real estate recession threatened the banking industry across Massachusetts in the late 1980s and early 90s Dedham Savings was there. Perhaps the reason we have always been there for our customers and community is because we have always adhered to a simple yet significant principle exemplified by our founders: to provide a safe place for the hard-working citizens of our community to profitably invest their earnings so they can successfully realize their aspirations whatever they may be. The Paul Revere Bell (1796) hung in the original Norfolk County Court House ANNUAL REPORT 3

6 1831 Everyone in the Bank is very professional. They go out of their way to understand and help you with your financial needs. As the second oldest, continuously chartered mutual savings institution in Massachusetts, the Bank and the Town of Dedham have built a long history together. In fact, as we congratulate the Town on celebrating its 375th anniversary also this year, our commitment to providing the residents of Dedham and surrounding communities with products and services that truly meet their real-world needs is more evident than ever. Francis O Brien, Chairman, Norfolk County Commissioner s Office As we have from the very start, Dedham Savings continues to meet the best interests of our customers, instead of stockholders. And, as it has always been, giving back to the community has been central to what Dedham Savings is all about. For us, community banking has always meant community involvement and it always will. Timeless values: trust loyalty service the beginning Back in the early 1800s, there was a distrust of commercial banks because so many had failed, as well as the perception that such banks were only for the wealthy. But Dedham was growing, and the people needed a secure place to keep and invest their money. A concerned group of Dedham citizens doctors, lawyers, ministers, manufacturers, and other town leaders banded together in 1831 and founded the Dedham Institution for Savings. Mutual savings banks were different from commercial banks because they were owned by and run for the benefit of the depositors. It was simply considered a safer banking institution. 4 DEDHAM SAVINGS BANK 180 TH ANNIVERSARY

7 2011 The purpose of the Bank was to provide a safe and profitable mode of enabling industrious persons of all descriptions to invest such part of their earnings or property as they can conveniently spare in a manner which will afford them both profit and security. This is a purpose that still holds true today. The first meeting of the Institution was held on April 21, 1831 in the law office and home of Jonathan Cobb. This was also where banking began to be conducted on May 11, The Bank was located in Cobb s front parlor and banking hours were 7-9 p.m. on Wednesdays. The first President was Ebenezer Burgess, a minister, who served from 1831 to 1870 without compensation, setting the example of dedicated service for future presidents. The Bank's first depositor was Sophia Foord, who deposited $50. She was the sister of the former Register of Deeds, Enos Foord, and an acquaintance of Henry David Thoreau. The smallest deposit that could be made was $1, and $5 was the smallest amount that could be put into an interest-bearing account. The Metcalf Great Chair (1652), made by Michael Metcalf, a Dedham teacher, is the oldest American-made chair inscribed with a date. After just a year, Dedham Savings had almost $30,000 on deposit. Growth was gradual, reflecting the fact that the average depositor was a thrifty saver rather than a rich investor. But by 1895, there were 6,649 depositors and assets totaled about $2.8 million. In 1834, the Bank moved from Jonathan Cobb s Dedham leather fire buckets, law office/home to the lower lobby of the courthouse, and in 1874 to a building at the corner of High and Pearl Streets. In 1890, the Bank purchased land and built a brick building at High Street, which was also occupied by the Dedham National Bank, a drug store, and the Fisher Ames Club. Early on, it was clear that Dedham Savings had established itself as a pillar of strength and leadership to promote financial stability and success throughout the region ANNUAL REPORT 5

8 1831 The Dedham Savings that we did business with in 1980 is the same Bank that we do business with today, and that is a comfort. Growth, change and perseverance the 1900s (from left): Anthony Musto and Mario Musto, Jr., co-owners of Hyde Park Masonry Supplies, Inc., specialists in a complete range of masonry, landscaping and snow removal products for commercial and residential customers. The 1930s brought the Great Depression, but thanks to the conservative investment and lending strategy of the Bank s leaders, Dedham Savings not only held steady, but was able to help mortgagees who were in danger of foreclosure by allowing them to remain in their homes by paying a weekly rent. By the 1950s and 1960s, economic conditions across the country greatly improved. It was a time of growth and change for Dedham Savings as well. When World War II ended in 1945, many war veterans moved to the suburbs and bought homes. In Dedham and surrounding towns, farmland had given way to subdivisions and those subdivisions began to flourish. Dedham Savings assisted families with mortgages for these homes, and began to open Bank branches outside the town of Dedham. The first Bank branch opened in Westwood in 1951, followed by Dedham Plaza in 1957 and East Dedham in Also in the 1960s, new ways of purchasing products emerged. Installment loans for vehicles became popular, as did using bank credit cards for purchases instead of paying cash. In the mid-70s, savings banks were allowed to offer NOW Accounts (Negotiable Orders of Withdrawal), which were interest-paying checking accounts. Previously, only commercial banks offered checking accounts. By 1977, the Bank moved to its current Elm Street location, but the High Street building that was established in the late 1800s still stands today and continued as an operating branch until November The Bank s second savings passbook issued in 1831 to Jonathan Cobb, the Bank s first Treasurer. 6 DEDHAM SAVINGS BANK 180 TH ANNIVERSARY

9 2011 One of the biggest changes for banks was the advent of the ATM (Automated Teller Machine) in the 1970s. At the time, people believed ATMs would lead to a checkless society, where ATM cards would replace both cash and checks. Today, the 24/7 convenience of ATM banking continues to make it one of the most popular methods of banking by our customers. During the 1980s and 1990s, deregulation and a real estate recession caused more banks to fail in Massachusetts than had failed since the Great Depression. As deposit interest rates were deregulated, the cost of funds at banks rose and fell. Savings banks sought new and more profitable ways for customers to invest and borrow money so they could provide better service for their customers while finding new ways to compete with other financial institutions. Fortunately for Dedham Savings and its customers, the lines blurred between what commercial banks could do and what savings banks could do. For example, banks were able to offer high-interest Money Market Deposit Accounts to compete with Money Market Mutual Funds from brokerage houses that paid high interest rates. Through it all, Dedham Savings persevered by demonstrating leadership and integrity through products and services that kept pace with our customers rapidly changing needs. Late 19th century Dedham Pottery rabbit platter with Boyden and Bailey jug. With the advent of the secondary market, mortgage companies that did not hold assets could simply contract for a mortgage and then sell it. Competition for home mortgages intensified with numerous choices for borrowers. Savings banks began to focus on other types of lending such as commercial and consumer products. However, Dedham Savings always remained committed to its residential customers, and home mortgages continue to be a mainstay of our business today. Dedham Savings continued to grow, opening branches in Walpole in 1987, Norwood in 1991, Sharon in 2000, and Needham in New Pond Village and Orchard Cove, both satellite branches located in assisted living communities, were also opened during the 1990s. As Dedham Savings footprint grew, so did the Bank s commitment to providing a superior banking experience that could keep pace with our customers evolving needs ANNUAL REPORT 7

10 1831 Dedham Savings has been a good partner for us as we ve grown. We have confidence and trust in them. (from left): Chris and Alfred Priore Jr., 2nd and 3rd generation owners of Dedham Cabinet Shop, Inc., designers and manufacturers of custom cabinetry in the Greater Boston area. A source of strength and stability 2000 to present The early to mid-2000s were much like the late 1990s with more of an emphasis on commercial lending, while still fulfilling the mission of home ownership through vigorous fixed and adjustable rate mortgage programs. Despite the latter half of the decade, which brought about the sub-prime mortgage collapse and difficult economic conditions, Dedham Savings remained strong by steering clear of the sub-prime mortgage business. While many other community banks went out of business, astute investment and sound lending practices enabled Dedham Savings to continue to be there when our customers needed a source of strength, stability and support. We have been there for our customers in other ways too. As advances in technology over the last decade transformed the way many of us interact and conduct business, Dedham Savings continued to make the latest innovations a priority for its customers. From mobile banking (soon to be introduced) to online banking and bill pay, to internet cafés and the proliferation of ATMs, Dedham Savings ability to stay current with the latest advancements in technology allows our customers the freedom to bank the way they choose. Today, our retail customers enjoy outstanding convenience from innovations, such as: Reward Checking Account, offering customers a rate of interest that often exceeds Certificate of Deposit rates to qualifying customers. Great Rate Account, enabling savers to earn a higher market interest rate while still providing instant access to funds when needed. Debit MasterCard, providing the same benefits as the classic ATM card plus the ability to make purchases at any location where MasterCard is accepted. 8 DEDHAM SAVINGS BANK 180 TH ANNIVERSARY

11 2011 Internet banking, offering 24/7 online access to accounts with online bill pay and monthly statements. Dedham Savings also helps our business customers maintain a competitive edge with helpful tools, including: Business Online Banking, making 24/7 banking more convenient and secure for our business customers. Remote Deposit Capture, allowing businesses to Dedham Savings coin bank engraved with the Bank s High Street Building deposit checks without ever having to leave the office which served as the Bank s main office from using a PC, scanner, and internet connection. Business Debit MasterCard, helping businesses of all types reduce their reliance on paper checks and cash while enhancing accurate record keeping. Deposit Escrow Sub-Accounting, enabling property and real estate managers to easily record, process, and report on multi-level relationships, making it easy to ensure that their tenants deposits are insured to the current limit by the Federal Deposit Insurance Corporation (FDIC). At the Dedham Square, Needham, Walpole and Westwood branches, customers can go online at our comfortable internet café or check the financial news of the day on one of the high-definition televisions. However, it s our personalized service and hometown atmosphere that keep the majority of our customers banking with us in person where they can enjoy easy access to our full range of financial and investment solutions designed to help them manage every aspect of their financial lives, from college to career, from marriage and homeownership, all the way through to retirement. Dedham Savings Christmas and Vacation Club brochures in A tradition of excellence that lives on From its start that began with the first deposit of $50 at the home of a local lawyer, Dedham Savings commitment to the individuals, families, and businesses of greater Norfolk County has always been a constant. By staying true to our values over the years, and always remaining agile enough to meet our customers ever-changing needs, Dedham Savings has become forever interwoven into the fabric of this historic community ANNUAL REPORT 9

12 1831 Our family s relationship with Dedham Savings dates back to the early 1900s. Whenever we ve needed anything, they ve been willing to help. As a result, Dedham Savings has successfully grown to eight locations with assets totaling over $1 billion. This year alone, we helped customers purchase homes locally by funding more than 400 mortgage loans, totaling $136 million. We helped businesses grow too by funding more than 140 commercial loans totaling $117 million. Our customers conducted more banking electronically in 2011 with activity surpassing 4.4 million transactions, bill pay transactions totaling 132,000, and debit card transactions equaling 2.6 million. And, as always, our capital reserves exceeded the level at which a bank is considered by bank regulators to be well capitalized. Dedham Savings is so much more than numbers and checkbooks. In honor of the (seated): Peggy Barrett with daughter-in-law Nancy and 375th anniversary, Dedham Savings grandchildren Madison and Jack. The family are long time sponsored the Town s year-long anniversary Dedham residents and Bank customers for over four generations. festivities. Dedham Savings employees from the Dedham, Needham, Sharon and Westwood branches continue the Bank s 22-year plus commitment to delivering meals to seniors through the local Meals on Wheels Programs. Employees help in hospitals, schools, and community organizations and also in fundraising for walks and literacy programs. The Dedham Institution for Savings Foundation, our charitable giving foundation, continues to provide grants ranging from $2,500 to $75,000 for a broad range of activities. This year, the Foundation funded a Dedham Historical Society project to upgrade the electronic management and archival materials of the library. The Foundation also sponsored the lighting project at the new Dedham High School sports field. Dondervelt child s toy horse (1925). 10 DEDHAM SAVINGS BANK 180 TH ANNIVERSARY

13 2011 And Dedham Savings continues to evolve to meet the ever-changing needs of our customers, too. Significant accomplishments over this past year include: Expansion into 10,000 square feet of leased space on Washington Street in Dedham to house the Finance, Marketing, Training, and Loan Origination Departments. Total renovation of the Walpole branch office into a modern and technologically advanced banking environment with LED screens, an internet café, and a convenient drive-up teller and drive-up ATM. The purchase of a joint ownership in Plimoth Investment Advisors, an investment management firm providing investment, trust, retirement planning, and estate administration services. From our three offices in Dedham to our other branches in Westwood, Walpole, Norwood, Sharon and Needham, Dedham Savings remains committed to providing convenient personal service, the most advanced banking technology, as well as a full range of retail and commercial deposit and loan products to best serve the interests of our customers. At Dedham Savings, we are not only extremely proud of our longstanding history, but are also especially honored to have served the financial and banking needs of our friends, families and co-workers since We are grateful for the role that our institution has played in helping to establish this vibrant community, and we truly take great pride in calling this place our home. We would like to thank you for the trust you have placed in us over the years. And, as always, we promise to continue to provide you with the same kind of personal service and financial management expertise that you have come to expect from us each and every day and for the next 180 years and beyond. We ve been with the Bank since the late 1950s. They ve been an invaluable resource in helping us with many of our construction projects. (from left): Mark and Erik Iverson, father and son owners of Jolin Corporation, residential builders in Norfolk County ANNUAL REPORT 11

14 1831 Financial Review 2011 Expectations heading into 2011 were for rates to rise or perhaps plateau after the prior 3+ year period which saw rates fall to record lows. The slight rebound in real estate prices, a declining national unemployment rate and the slow but meaningful increase in GDP would, in normal times, signal higher interest rates. Instead, we experienced yet further decline in treasury rates to yet new record lows as global concerns about Europe, weak demand for consumer goods worldwide and the ongoing deleverage of corporate, municipal and personal balance sheets pushed rates lower than most market participants expected. Nearly all rates fell, not just U.S. Treasuries, which performed exceptionally well in 2011 as there remained a continued flight-to-safety despite near zero yields on short-term paper. Equities significantly underperformed fixed-income in 2011 and this had an impact on the Bank s overall investment portfolio performance and its 2011 capital formation. Record low interest rates continue to influence balance sheet structure and net interest margin. The Bank experienced a steady inflow of deposits during the year, in particular lower-cost core checking and savings accounts as customers fled ultra-low yield money-market mutual fund and low-rate/ high-fee mega bank alternatives. In normal times this would be viewed as a bonanza for the Bank but in the current environment, we are challenged to find earning assets with adequate yields to cover transaction costs and risks. While core balances rose, time deposit balances fell modestly during This was to be expected given the increased reluctance of depositors to tie up their funds at record low rates for extended terms. In response, the Bank shifted its marketing efforts during the latter half of 2011 to emphasize short-term CD specials. The primary benefit to Bank earnings in this extraordinary rate environment was the steady decline in Bank funding costs as matured CDs and borrowings were replaced with much lower cost funds. Asset yields were certainly hurt by low rates. Loans comprise the Bank s largest earning asset class with residential mortgages the largest segment. In recent years, including 2011, many residential loan customers have refinanced or modified their loans to lower rates, and in some cases, shorter terms both of which reduce the Bank s ability to generate net interest income. Lower rates also triggered a modest decline in residential loan outstandings as many adjustable-rate loan customers refinanced into fixed-rate mortgages, which the Bank often sells through the secondary market for interest-rate risk management purposes and to generate fee income. Fortunately, the Bank experienced strong growth in commercial loan outstandings during This more than offset the modest runoff of residential loan balances and also helped mitigate some of the margin compression caused by falling rates. During a time when many banks are seeing net declines overall in loans, Dedham Savings continues to see increases in high credit quality and strong yielding commercial loans. Another positive trend was the rebound in the Bank s overall loan credit quality. By all measures loan delinquency, impaired loans or real estate owned troubled asset levels fell significantly in The Bank has a rigorous process to identify problem assets in their early stages, develop remediation plans and then monitor the progress of such plans over time. While no one can predict future credit quality trends, we are optimistic that the favorable 2011 trend will continue into For the year, net income amounted to $5.8MM, a decrease of $0.8 million from 2010 results. The decline is largely attributed to accelerated premium amortization on loans, investments, and mortgage servicing rights triggered by the sustained record-low interest-rate environment in recent years. Heading into 2011 the Bank had substantial gains in its equity portfolio, some of which were realized during 2011 and helped offset much of the decline. Net earnings helped the Bank achieve a $2.3MM increase in capital during 2011, which kept the Bank s Tier I and risk-based capital ratios well above regulatory minimums. 1 B 900m 800m 700m 600m 500m 400m 300m 200m 100m 90m $ Loans $663.1 $564.3 $98.8 $692.4 $694.1 $577.2 $115.2 $560.9 $133.2 Total Retail Loans (Includes Residential, Home Equity and Consumer) $723.3 $536.2 $187.1 $743.6 $524.5 $ Total Commercial Loans (Includes Real Estate, Construction and C&I) % Net Interest Margin 4% 3% 2% 1% 0% 2.48% 2.60% 2.85% 3.11% 3.00% $ Total Surplus 110m 100m 90m 80m 70m $104.1 $80.2 $95.4 $104.1 $ DEDHAM SAVINGS BANK 180 TH ANNIVERSARY

15 2011 Consolidated Balance Sheets December 31, 2011 and (Dollars in thousands) Assets: Cash and due from banks $ 15,607 $ 22,937 Short-term investments ,532 55,498 Total cash and cash equivalents ,139 78,435 Securities available for sale, at fair value , ,339 Federal Home Loan Bank stock, at cost ,807 5,807 Other investments ,793 3,788 Loans, net , ,059 Premises and equipment, net ,736 5,062 Accrued interest receivable ,596 3,611 Bank-owned life insurance ,204 19,555 Foreclosed real estate ,904 Net deferred tax asset ,667 2,053 Prepaid FDIC insurance assessment ,399 3,208 Other assets ,343 3,201 Total Assets $ 1,087,680 $ 1,052,022 Liabilities: Deposits $ 935,141 $ 900,750 Federal Home Loan Bank advances ,778 37,418 Mortgagors escrow accounts ,703 2,596 Due to broker ,331 Accrued expenses and other liabilities ,286 7,150 Total liabilities , ,914 Surplus: Undivided profits , ,542 Accumulated other comprehensive income (loss) (2,874) 566 Total surplus , ,108 Total Liabilities and Surplus $ 1,087,680 $ 1,052, ANNUAL REPORT 13

16 1831 Consolidated Statements of Income Years ended December 31, 2011 and (Dollars in thousands) Interest and Dividend Income: Interest and fees on loans $ 34,439 $ 36,040 Interest and dividends on securities ,344 7,606 Interest on interest-earning deposits Total interest and dividend income ,890 43,756 Interest Expense: Interest on deposits ,761 12,281 Interest on Federal Home Loan Bank advances ,475 2,097 Total interest expense ,236 14,378 Net interest income ,654 29,378 Provision for loan losses ,201 Net interest income, after provision for loan losses ,859 27,177 Other Income (Loss): Customer service fees ,366 2,544 Income from mortgage banking activities, net ,257 Gain on securities available for sale, net ,736 1,942 Other-than-temporary impairment losses on debt securities (1,391) Income from bank-owned life insurance Miscellaneous, net (5) 179 Total other income ,952 5,480 Operating Expenses: Salaries and employee benefits ,152 14,299 Occupancy and equipment ,795 2,955 Data processing ,444 2,103 FDIC insurance assessment ,337 Professional services ,150 1,184 Marketing and advertising Charitable foundation contribution Other operating ,692 2,154 Total operating expenses ,930 25,011 Income before income taxes ,881 7,646 Provision for income taxes ,108 1,067 Net Income $ 5,773 $ 6, DEDHAM SAVINGS BANK 180 TH ANNIVERSARY

17 2011 Gerard R. Lavoie Executive Vice President Chief Operating Officer Douglas R. Shaw Executive Vice President Senior Lending Officer ADMINISTRATION John H. Emmons, Jr. Vice President Beverly Somerville Assistant Vice President CRA Officer COMMERCIAL LENDING Joseph Cavallini Senior Vice President William F. Lindquist, III Senior Vice President Douglas W. Stevens Senior Vice President Donald G. Isles Vice President Michael J. Moran Assistant Vice President CREDIT Anne V. McBride Vice President Senior Credit Officer Abigail King Credit Officer DEPOSIT OPERATIONS Sue Ellen McKinnon Senior Vice President Kerry Riggins Assistant Vice President Tonia Reilly Deposit Operations Officer Maureen Nedder BSA & Security Officer Bank Management Peter G. Brown President Chief Executive Officer EXECUTIVE TEAM Mark C. Ingalls Executive Vice President Chief Financial Officer and Treasurer Pamela A. Millard Senior Vice President Chief Risk Officer FACILITIES Ralph D. Pina, Jr. Assistant Vice President FINANCE Amanda Paquette, CPA Assistant Vice President HUMAN RESOURCES Robin McLeod Human Resources Operations Officer INFORMATION TECHNOLOGY James P. Hanlon Vice President LOAN ORIGINATION Tracy E. Harvard Senior Vice President Lisa M. Forkey Assistant Vice President Patricia Harbour Lending Operations Officer LOAN SERVICING Maria G. Ingegneri Senior Vice President Cathy J. Hamilton Assistant Vice President Holly Lite Secondary Market Officer RETAIL LENDING James W. Dunn Assistant Vice President Loan Officer Pauline M. Dzengelewski Loan Officer Cynthia J. Sullivan Loan Officer Mark A. McKinnon Executive Vice President Chief Information Officer Jean M. Tennihan Senior Vice President Human Resources Officer RETAIL BANKING BRANCH ADMINISTRATION Robert M. Erasmi Senior Vice President BRANCH MANAGERS Laura A. Macs Assistant Vice President Westwood David A. Whitney Assistant Vice President Walpole Lorraine A. McPhillips Retail Banking Officer Elm Street Branch Mobashir Ali Dedham Square Heidi A. Browne Norwood Anna Conte East Dedham Paul J. Pelletier Sharon Stephanie Perkins Needham MARKETING Lois A. Lovely Vice President TRAINING Judy DeLisle Training Officer 2011 ANNUAL REPORT 15

18 1831 Trustees and Members of the Corporation Kevin F. Hampe Charles T. Spiegel John H. Emmons, Jr. William G. Gothorpe Michael C. Lazdowsky, Jr. Mary F. Doherty Natalie F. Colmore John H. Emmons, Jr. Kevin F. Hampe Joan K. Coughlin Cory Alexandre Juanita Allen Kingsley Michael A. Beaumont Richard F. Becker, Jr. David S. Beckwith Milton J. Benjamin, Jr. Roy M. Bourell James M. Brady Richard C. Bremer Peter G. Brown Judith G. Carver J. Stephen Cohen Natalie F. Colmore Joanna Cook Joan K. Coughlin George Doherty, III Mary F. Doherty Daniel J. Driscoll James L. Elcock John H. Emmons, Jr. Mark R. Epker James W. Evans, Jr. TRUSTEES David S. Beckwith Alexander K. Leith Peter S. Gregory William B. Gutfarb Juanita Allen Kingsley Philip R. Weber Juliet W. Onderdonk Honorary Trustee John D. Lund Clerk of the Corporation and Board of Trustees William B. Gutfarb Board of Investment Alexander K. Leith Peter S. Gregory Audit Committee Michael C. Lazdowsky, Jr. Philip R. Weber MEMBERS OF THE CORPORATION William J. Farrell Thomas J. Filbin Dale N. Garth Stephen N. Gifford Lewis E. Gilman, III William G. Gothorpe Peter S. Gregory Michael B. Grogan William B. Gutfarb Kevin F. Hampe Robert B. Hanson Sabina Herlihy Bret D. Jordan Joseph R. Kelliher George Kouri Gerard R. Lavoie Robert A. Lawrence, Jr. Michael C. Lazdowsky, Jr. Alexander K. Leith Peter F. Levangie Ralph Lowell, III Christopher C. Mansfield Judith A. Massey Dean H. Steeger Christine L. Todd Milton J. Benjamin, Jr. Joan K. Coughlin Louis A. Rizoli Peter G. Brown James L. Elcock Peter G. Brown and alternate Trustees each month Louis A. Rizoli Mark A. McKinnon Nancy R. Mobley Stephen G. Moorhead James E. Noris Juliet W. Onderdonk Allan D. Parker, III Helen A. Phinney Dean P. Plakias Louis A. Rizoli Douglas R. Shaw Barbara Shea Charles T. Spiegel Dean H. Steeger Dr. Laurie Tarnell Thomas C. Taylor Christine L. Todd Stephen Tunney Francis M. Walley, III Philip R. Weber Harry E. Wells, III Albert F. Wisialko Gary T. Woods 16 DEDHAM SAVINGS BANK 180 TH ANNIVERSARY

19 Branch Offices Main Office 55 Elm Street Dedham, MA Needham 1077 Great Plain Avenue Needham, MA Dedham Square 420 Washington Street Dedham, MA Walpole 1428 Main Street Walpole, MA East Dedham 260 Bussey Street Dedham, MA Norwood 185 Central Street Norwood, MA Westwood 673 High Street Westwood, MA Sharon 45 South Main Street Sharon, MA Senior Community Branches Dedham NewBridge on the Charles Walpole New Pond Village Canton Orchard Cove Asset Management and Trust Services Plimoth Investment Advisors 55 Elm Street Dedham, MA We wish to thank our friends at the Dedham Historical Society for providing many of the items photographed for this year s annual report.

20 DEDHAM INSTITUTION FOR SAVINGS, Since 1831 Dedham, Massachusetts Member FDIC/Member DIF Equal Housing Lender