Eastern Insurance Holdings, Inc.

CIK:0001321268|SEC Filings

Earnings Per Share

9 Months Ended

Sep. 30, 2013

4. Earnings Per Share

Basic earnings per share are computed by dividing net income (loss) by the weighted average number of shares outstanding for the respective period. Diluted earnings per share are computed by dividing net income (loss) by the weighted average number of shares outstanding for the period, including dilutive potential common shares outstanding for the period.

Consolidated net income, basic shares outstanding, diluted shares outstanding, basic earnings per share, diluted earnings per share and cash dividends per share for the three and nine months ended September 30, 2013 and 2012 were as follows (in thousands, except share and per share data):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Net income for basic and diluted earnings per share	$	3,692	$	2,786	$	9,928	$	7,056
Less: Dividends declared – common and unvested restricted share units		(794)		(552)		(2,376)		(1,620)
Undistributed earnings		2,898		2,234		7,552		5,436
Percent allocated to common shareholders		98.5%		98.1%		98.5%		98.1%
		2,855		2,192		7,439		5,333
Add: Dividends declared – common shares		782		543		2,340		1,589
	$	3,637	$	2,735	$	9,779	$	6,922
Denominator for basic earnings per share		7,586,843		7,480,526		7,558,707		7,539,870
Effect of dilutive securities		54,228		146,340		38,907		139,633
Denominator for diluted earnings per common share		7,641,071		7,626,866		7,597,614		7,679,503

Basic earnings per share	$	0.48	$	0.37	$	1.29	$	0.92
Diluted earnings per share	$	0.48	$	0.36	$	1.29	$	0.90
Cash dividends per share	$	0.11	$	0.07	$	0.31	$	0.21

The following table provides a summary of the equity awards that were not included in the Company’s earnings per share calculation because to do so would have been anti-dilutive:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Total outstanding equity awards		1,427,585		1,387,000		1,427,585		1,387,000
Dilutive equity awards		(54,228)		(146,340)		(38,907)		(139,633)
Equity awards excluded from earnings per share calculation		1,373,357		1,240,660		1,388,678		1,247,367

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities:
Net income (loss)	$ 9,928	$ 7,056
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	583	599
Net amortization of bond premium/discount	700	900
Net realized investment gains	(3,162)	(1,511)
Change in equity interest in limited partnerships	(748)	(738)
Deferred tax benefit	140	(1,519)
Stock compensation expense	1,688	1,389
Intangible asset amortization	480	605
Changes in assets and liabilities:
Accrued investment income	(57)	(87)
Premiums receivable	(13,377)	(15,809)
Reinsurance recoverable on paid and unpaid losses and loss adjustment expenses	454	(2,750)
Deferred acquisition costs	(2,074)	(797)
Other assets	(1,985)	(1,896)
Reserves for unpaid losses and loss adjustment expenses	8,738	9,608
Unearned and advance premium	15,999	16,196
Ceded reinsurance balances payable	(160)	(636)
Accounts payable and accrued expenses	93	278
Federal income taxes recoverable/payable	(870)	(165)
Policyholder dividends payable	224	263
Segregated portfolio cell dividend payable	2,411	1,243
Net cash provided by operating activities	19,005	12,229
Cash flows from investing activities:
Purchase of fixed income securities	(53,904)	(37,383)
Purchase of equity securities	(3,258)	(7,246)
Purchase of other long-term investments	(1,000)
Proceeds from sale of fixed income securities	15,672	17,274
Proceeds from maturities/calls of fixed income securities	21,949	9,865
Proceeds from the sale of equity securities	7,570	5,582
Proceeds from sale of other long-term investments		1,248
Purchase of equipment	(557)	(617)
Net cash used in investing activities	(13,528)	(11,277)
Cash flows from financing activities:
Repurchase of common stock		(2,423)
Shareholder dividend	(2,376)	(1,620)
Issuance of shares under stock compensation plan	85
Tax benefit related to stock compensation	84	11
Net cash used in financing activities	(2,207)	(4,032)
Net decrease in cash and cash equivalents	3,270	(3,080)
Cash and cash equivalents, beginning of period	48,075	52,448
Cash and cash equivalents, end of period	$ 51,345	$ 49,368

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
ASSETS
Fixed income securities, at estimated fair value (amortized cost, $153,036; $145,486)	$ 153,259	$ 148,976
Convertible bonds, at estimated fair value (amortized cost, $26,413; $18,207)	29,616	19,747
Equity securities, at estimated fair value (cost, $17,684; $20,462)	23,103	23,200
Other long-term investments, at estimated fair value (cost, $8,000; $7,000)	11,722	9,974
Total investments	217,700	201,897
Cash and cash equivalents	51,345	48,075
Accrued investment income	915	858
Premiums receivable (net of allowance, $225; $225)	80,902	67,525
Reinsurance recoverable on paid and unpaid losses and loss adjustment expenses	19,222	19,676
Deferred acquisition costs	11,571	9,497
Deferred income taxes, net	3,574	3,239
Federal income taxes recoverable	627
Intangible assets	3,850	4,331
Goodwill	10,752	10,752
Other assets	16,861	14,902
Total assets	417,319	380,752
LIABILITIES
Reserves for unpaid losses and loss adjustment expenses	126,466	117,728
Unearned premium reserves	90,191	73,775
Advance premium	255	672
Accounts payable and accrued expenses	23,811	23,540
Ceded reinsurance balances payable	9,113	9,273
Segregated portfolio cell dividend payable	20,805	17,354
Policyholder dividends payable	2,536	2,312
Federal income taxes payable		243
Total liabilities	273,177	244,897
Commitments and contingencies (Note 10)
SHAREHOLDERS' EQUITY
Series A preferred stock, par value $0, auth. shares – 5,000,000; no shares issued and outstanding	0	0
Common capital stock, par value $0, auth. shares—20,000,000; issued—11,930,714 and 11,927,714, respectively; outstanding—7,919,527 and 7,910,609, respectively	0	0
Unearned ESOP compensation	(2,057)	(2,616)
Additional paid in capital	118,627	117,443
Treasury stock, at cost (4,011,187 and 4,017,105 shares, respectively)	(56,446)	(56,532)
Retained earnings	82,749	75,169
Accumulated other comprehensive income, net	1,269	2,391
Total shareholders' equity	144,142	135,855
Total liabilities and shareholders' equity	$ 417,319	$ 380,752