Moody's Investor Service has assigned Hamilton College an initial rating of Aa2 and said the college's financial outlook is stable.
According to Moody's, "obligations rated Aa are judged to be of high quality and are subject to very low credit risk." The addition of the numerical modifier "2" in the initial rating indicates a mid-range ranking in the Aa category.
"This independent analysis of Hamilton's fiscal position reflects the college's careful stewardship of resources, solid fiscal practices and successful investment strategies," said Karen Leach, vice president for administration and finance. "The financial and moral support of a passionate alumni body also enabled the college to achieve this favorable rating."
In assessing Hamilton's fiscal position, Moody's concluded that "Hamilton's history of consistently positive operating performance bolsters [its] financial position and indicates conservative management tendencies." The ratings agency said "the College maintains an excellent balance sheet position with financial reserves providing solid coverage of debt and operations. Hamilton's total financial resources of $796 million at June 30, 2007, represent $436,132 per student, significantly above the preliminary FY 2007 Aa-rated private median of $295,915."
Moody's cited the college's investment returns, fund-raising success and operating surpluses to support its upbeat assessment of Hamilton's financial position. In particular, Moody's pointed to annual investment returns of 15 percent annually since 2003, including a 21.2 percent return in FY 2007; gift revenue that has averaged $24 million over the past three years; and "[t]he participation rate of Hamilton alumni in annual giving [being] among the highest in the nation, at over 50 percent annually."
Moody's also noted that "[t]the college enjoys strong demand, accepting just 28 percent of applicants for the class that entered in the fall of 2007," and a "rigorous budget process" that has resulted in "strong operating margins in recent years."
Among the challenges faced by Hamilton in the future, according to the report, is "dependence on demographically weak Mid-Atlantic and New England regions for students [that] will require greater outreach efforts to maintain market position…
Both regions are projected to experience declines in the number of high school graduates over the next decade, which will necessitate revised recruiting strategies by the college. Moody's believes Hamilton is aggressively addressing this issue and reviewing alternative actions, including greater focus on financial aid and growing its financial aid resources."
A second challenge, according to the report, is ongoing plant renewal, which the college estimates to be about $7 million annually. Moody's observed, however, that "in the past five years, the college has spent an average of $28 million annually on its physical plant and equipment and has thereby eliminated much potential deferred maintenance. As result, the age of plant as calculated by Moody's has declined to 8.7 years from 13.2 years in 2003. The current age of plant compares favorably to the preliminary Aa-rated private median of 11.9 years."
Leach said the college's rating reflects Hamilton's financial well-being and a tribute to its fiscal practices. "It is important that families paying tuition and donors supporting the college know that their investments in Hamilton are being well-managed."
Moody's describes itself as being among the "world's most respected and widely utilized sources for credit ratings, research and risk analysis." Its Aa2 rating for Hamilton applies to $143 million in outstanding debt.
According to Moody's, "obligations rated Aa are judged to be of high quality and are subject to very low credit risk." The addition of the numerical modifier "2" in the initial rating indicates a mid-range ranking in the Aa category.
"This independent analysis of Hamilton's fiscal position reflects the college's careful stewardship of resources, solid fiscal practices and successful investment strategies," said Karen Leach, vice president for administration and finance. "The financial and moral support of a passionate alumni body also enabled the college to achieve this favorable rating."
In assessing Hamilton's fiscal position, Moody's concluded that "Hamilton's history of consistently positive operating performance bolsters [its] financial position and indicates conservative management tendencies." The ratings agency said "the College maintains an excellent balance sheet position with financial reserves providing solid coverage of debt and operations. Hamilton's total financial resources of $796 million at June 30, 2007, represent $436,132 per student, significantly above the preliminary FY 2007 Aa-rated private median of $295,915."
Moody's cited the college's investment returns, fund-raising success and operating surpluses to support its upbeat assessment of Hamilton's financial position. In particular, Moody's pointed to annual investment returns of 15 percent annually since 2003, including a 21.2 percent return in FY 2007; gift revenue that has averaged $24 million over the past three years; and "[t]he participation rate of Hamilton alumni in annual giving [being] among the highest in the nation, at over 50 percent annually."
Moody's also noted that "[t]the college enjoys strong demand, accepting just 28 percent of applicants for the class that entered in the fall of 2007," and a "rigorous budget process" that has resulted in "strong operating margins in recent years."
Among the challenges faced by Hamilton in the future, according to the report, is "dependence on demographically weak Mid-Atlantic and New England regions for students [that] will require greater outreach efforts to maintain market position…
Both regions are projected to experience declines in the number of high school graduates over the next decade, which will necessitate revised recruiting strategies by the college. Moody's believes Hamilton is aggressively addressing this issue and reviewing alternative actions, including greater focus on financial aid and growing its financial aid resources."
A second challenge, according to the report, is ongoing plant renewal, which the college estimates to be about $7 million annually. Moody's observed, however, that "in the past five years, the college has spent an average of $28 million annually on its physical plant and equipment and has thereby eliminated much potential deferred maintenance. As result, the age of plant as calculated by Moody's has declined to 8.7 years from 13.2 years in 2003. The current age of plant compares favorably to the preliminary Aa-rated private median of 11.9 years."
Leach said the college's rating reflects Hamilton's financial well-being and a tribute to its fiscal practices. "It is important that families paying tuition and donors supporting the college know that their investments in Hamilton are being well-managed."
Moody's describes itself as being among the "world's most respected and widely utilized sources for credit ratings, research and risk analysis." Its Aa2 rating for Hamilton applies to $143 million in outstanding debt.
