22% Increase in Quarterly Earnings Per Share, 15.59% Return on Equity

HINGHAM, Mass., Oct. 12, 2016 (GLOBE NEWSWIRE) — HINGHAM INSTITUTION FOR SAVINGS (NASDAQ:HIFS), Hingham, Massachusetts announced third quarter earnings for 2016. Net income for the quarter ended September 30, 2016 was $5,945,000 or $2.79 per share basic and $2.76 per share diluted as compared to $4,874,000 or $2.29 per share basic and $2.27 per share diluted for the third quarter of 2015.  Net income per share (basic) for the third quarter of 2016 increased 22% over the same period in 2015.  The Bank’s annualized return on average equity for the third quarter of 2016 was 15.59%, and the annualized return on average assets was 1.23% as compared to 14.67% and 1.18% for the same period in 2015.

Net income for the nine months ended September 30, 2016 was $17,136,000 or $8.04 per share basic and $7.97 per share diluted as compared to $14,112,000 or $6.63 per share basic and $6.58 per share diluted for the same period last year. Net income per share (basic) for the first nine months of 2016 increased 21% over the same period in 2015.  The Bank’s annualized return on average equity for the first nine months of 2016 was 15.53% and the annualized return on average assets was 1.21%, as compared to 14.63% and 1.17% for the same period in 2015.

Strong balance sheet growth trends of recent years continued, as deposits were $1.335 billion at September 30, 2016, representing 13% annualized growth year-to-date and 13% growth from September 30, 2015.  Net loans were $1.563 billion at September 30, 2016, representing 15% annualized growth year-to-date and 16% growth from September 30, 2015.  Total assets were $1.960 billion at September 30, 2016, representing 14% annualized growth year-to-date and 16% growth from September 30, 2015.  Book value per share increased to $72.35 per share at September 30, 2016, representing a 15% annualized growth rate year-to-date and a 15% increase from September 30, 2015.  In addition to the increase in book value per share, the Bank has declared $1.52 in dividends per share since September 30, 2015.

Key credit and operational metrics remained steady in the third quarter of 2016.  At September 30, 2016, non-performing assets totaled 0.16% of total assets as compared with 0.10% at December 31, 2015 and 0.17% at September 30, 2015.  Non-performing loans as a percentage of the total loan portfolio totaled 0.20% at September 30, 2016, as compared to 0.13% at December 31, 2015 and 0.21% at September 30, 2015.  At September 30, 2016, the Bank did not own any foreclosed property.  The efficiency ratio improved to 31.57% for the third quarter of 2016, as compared to 36.19% for the same period last year.  Non-interest expense (annualized) as a percentage of average assets fell to 0.99% for the third quarter of 2016, as compared to 1.15% for the same period last year.  These metrics reflect the Bank’s disciplined focus on credit and expense management.

President Robert H. Gaughen, Jr. stated, “We are pleased to report another quarter of strong performance.  At Hingham, we take our role as stewards of the shareholders’ capital seriously.  Our emphasis on careful capital allocation, defensive and conservative underwriting, and disciplined cost control continues to serve our owners well.  More important than performance in any one period, however, is a company’s record of compounding shareholder capital over time and through credit cycles.  On this measure, our team strives to set a high bar.”

Hingham Institution for Savings is a Massachusetts-chartered savings bank located in Hingham, Massachusetts. Incorporated in 1834, it is the oldest financial institution headquartered in Hingham and one of the oldest continuously operating banks in the United States. The Bank’s main offices are located on Main Street in Hingham, MA.  The Bank also maintains branch offices in South Hingham and the neighboring towns of Cohasset, Hull, Scituate, Norwell and Weymouth as well as branches in the South End of Boston, Beacon Hill and on the island of Nantucket.

The Bank’s shares of common stock are listed and traded on The Nasdaq Stock Market under the symbol HIFS.

HINGHAM INSTITUTION FOR SAVINGS
Selected Financial Ratios
 
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2015   2016   2015   2016
(Unaudited)                      
                       
Key Performance Ratios                      
Return on average assets (1) 1.18 %   1.23 %   1.17 %   1.21 %
Return on average equity (1) 14.67     15.59     14.63     15.53  
Interest rate spread (1) (2) 3.04     3.00     3.08     2.97  
Net interest margin (1) (3) 3.16     3.12     3.19     3.09  
Non-interest expense to average assets (1) 1.15     0.99     1.19     1.02  
Efficiency ratio (4) 36.19     31.57     36.94     32.94  
Average equity to average assets 8.01     7.88     8.00     7.78  
Average interest-earning assets to average interest-
  bearing liabilities
115.97    
116.41
     
115.84
     
116.03
 
                       

  September 30,
2015
  December 31,
2015
  September 30,
2016

(Unaudited)                            
           
Asset Quality Ratios          
Allowance for loan losses/total loans   0.71 %   0.70 %   0.68 %
Allowance for loan losses/non-performing loans   345.96     540.37     334.89  
                   
Non-performing loans/total loans   0.21     0.13     0.20  
Non-performing loans/total assets   0.16     0.10     0.16  
Non-performing assets/total assets   0.17     0.10     0.16  
                   
Share Related                  
Book value per share $ 62.94     $ 64.83     $    72.35  
Market value per share $ 116.03     $ 119.80     $    138.50  
Shares outstanding at end of period   2,128,750       2,128,750       2,130,750  

  (1 ) Annualized.
  (2 ) Interest rate spread represents the difference between the yield on interest-earning assets and cost of interest-bearing liabilities.
  (3 ) Net interest margin represents net interest income divided by average earning assets.
  (4 ) The efficiency ratio represents non-interest expense, divided by the sum of net interest income and non-interest income, excluding gain on sale of securities. 

             

HINGHAM INSTITUTION FOR SAVINGS
Consolidated Balance Sheets
 
 
(Dollars in thousands, except per share data)
September 30,
 2015
  December 31,
2015
  September 30,
 2016
(Unaudited)                  
ASSETS  
                 
Cash and due from banks  $ 6,646   $ 6,944   $ 7,849
Short-term investments   231,311     254,069     305,990
  Cash and cash equivalents    237,957     261,013     313,839
                 
Certificates of deposit   7,448     6,206     1,142
Securities available for sale, at fair value   48,943     40,603     22,882
Federal Home Loan Bank stock, at cost   18,454     19,796     24,203
Loans, net of allowance for loan losses of $9,635
  at September 30, 2015, $9,905 at December 31, 2015      
  and $10,713 at September 30, 2016
   

1,342,634

     

1,405,533

      

1,562,934

Foreclosed assets   118        
Bank-owned life insurance    11,628     11,697     11,900
Premises and equipment, net    15,130     15,094     14,605
Accrued interest receivable   3,156     3,270     3,394
Deferred income tax asset, net   2,627     3,281     2,957
Other assets   2,864     2,035     2,453
  Total assets $ 1,690,959   $ 1,768,528   $ 1,960,309

LIABILITIES AND STOCKHOLDERS’ EQUITY                
                 
Interest-bearing deposits $      1,057,392   $      1,088,742   $       1,183,905
Non-interest-bearing deposits   122,578     128,285     151,284
  Deposits   1,179,970     1,217,027     1,335,189
Federal Home Loan Bank advances   367,499     402,464     460,356
Mortgage payable   935     922     882
Mortgagors’ escrow accounts   4,629     4,850     5,389
Accrued interest payable   281     303     360
Other liabilities   3,669     4,947     3,979
  Total liabilities   1,556,983     1,630,513     1,806,155
                 
Stockholders’ equity:                
   Preferred stock, $1.00 par value,
     2,500,000 shares authorized, none issued
       
     
Common stock, $1.00 par value, 5,000,000 shares
   authorized; 2,128,750 shares issued and outstanding at
   September  30, 2015 and December 31, 2015 and
   2,130,750 shares issued and outstanding at September
   30, 2016
 

2,129

     
 

2,129

     
 

2,131

  Additional paid-in capital   11,029     11,052     11,351
  Undivided profits   120,524     124,481     139,656
  Accumulated other comprehensive income   294     353     1,016
 Total stockholders’ equity   133,976     138,015     154,154
  Total liabilities and stockholders’ equity $ 1,690,959   $ 1,768,528   $ 1,960,309

HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income
 
            Three Months Ended   Nine Months Ended
            September 30,   September 30,
(In thousands, except per share amounts)    2015   2016   2015   2016
(Unaudited)                                
Interest and dividend income:                          
  Loans       $ 15,180   $ 17,477   $ 44,450   $ 50,890
  Debt securities     43     6     162     52
  Equity securities         231     352     545     881
  Short-term investments and certificates of deposit   154     382     424     1,126
    Total interest and dividend income     15,608     18,217     45,581     52,949
Interest expense:                            
  Deposits         2,047     2,435     5,748     7,125
  Federal Home Loan Bank advances         728     933     2,162     2,782
  Mortgage payable       14     13     43     40
    Total interest expense       2,789     3,381     7,953     9,947
    Net interest income       12,819     14,836     37,628     43,002
Provision for loan losses       175     300     525     810
  Net interest income, after provision for loan losses   12,644     14,536     37,103     42,192
Other income:                            
  Customer service fees on deposits     250     239     731     691
  Increase in bank-owned life insurance         71     63     212     203
  Gain on sale of securities         29         29     344
  Miscellaneous         46     45     142     143
    Total other income       396     347     1,114     1,381
Operating expenses:                            
  Salaries and employee benefits       2,875     2,927     8,701     8,988
  Occupancy and equipment         513     446     1,586     1,401
  Data processing         291     318     891     926
  Deposit insurance         224     265     662     771
  Foreclosure         30     25     62     107
  Marketing         126     104     384     329
  Other general and administrative         713     708     2,015     1,983
    Total operating expenses       4,772     4,793     14,301     14,505
Income before income taxes       8,268      10,090     23,916     29,068
Income tax provision         3,394      4,145     9,804     11,932
    Net income       $ 4,874   $ 5,945   $ 14,112   $ 17,136
                                 
Cash dividends declared per share   $ 0.30   $ 0.32   $ 0.86   $ 0.92
                         
Weighted average shares outstanding:                        
  Basic         2,129     2,131     2,129     2,130
  Diluted         2,146     2,152     2,144     2,150
                                 
Earnings per share:                          
  Basic       $ 2.29   $ 2.79   $ 6.63   $ 8.04
  Diluted       $ 2.27   $ 2.76   $ 6.58   $ 7.97

HINGHAM INSTITUTION FOR SAVINGS  
Net Interest Income Analysis  
   
  Three Months Ended September 30,  
  2015     2016  
  AVERAGE
BALANCE
   
INTEREST
  YIELD/
RATE (8)
    AVERAGE
BALANCE
   
INTEREST
  YIELD/
RATE (8)
 
(Dollars in thousands)                                  
(Unaudited)                                  
                                   
Loans (1) (2) $ 1,320,522   $ 15,180   4.60 %   $ 11,552,866   $ 17,477   4.50 %
Securities (3) (4)   71,903     274   1.52       49,354     358   2.90  
Short-term investments and certificates of deposit   232,181     154   0.27       300,435     382   0.51  
  Total interest-earning assets   1,624,606     15,608   3.84       11,902,655     18,217   3.83  
Other assets   33,424                 33,109            
  Total assets $ 1,658,030               $ 1,935,764            
                                   
Interest-bearing deposits (5) $ 1,043,970     2,047   0.78     $ 1,194,292     2,435   0.82  
Borrowed funds   356,930     742   0.83       440,104     946   0.86  
  Total interest-bearing liabilities   1,400,900     2,789   0.80       1,634,396     3,381   0.83  
Demand deposits   120,303                 144,497            
Other liabilities   3,952                 4,334            
  Total liabilities   1,525,155                 1,783,227            
Stockholders’ equity   132,875                 152,537            
  Total liabilities and stockholders’ equity $ 1,658,030               $ 1,935,764            
Net interest income       $ 12,819               $ 14,836      
                                   
Weighted average spread             3.04 %               3.00 %
                                   
Net interest margin (6)             3.16 %               3.12 %
                                   
Average interest-earning assets to average
  interest-bearing liabilities (7)
             
115.97
 
%
               
116.41
 
%

  (1 ) Before allowance for loan losses.
  (2 ) Includes non-accrual loans.
  (3 ) Excludes the impact of the average net unrealized gain or loss on securities available for sale.
  (4 ) Includes Federal Home Loan Bank stock.
  (5 ) Includes mortgagors’ escrow accounts.
  (6 ) Net interest income divided by average total interest-earning assets.
  (7 ) Total interest-earning assets divided by total interest-bearing liabilities.
  (8 ) Annualized

HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis
 
  Nine Months Ended September 30,  
  2015     2016  
  AVERAGE
BALANCE
   
INTEREST
  YIELD/
RATE (8)
    AVERAGE
BALANCE
   
INTEREST
  YIELD/
RATE (8)
 
(Dollars in thousands)                                    
(Unaudited)                                  
                                   
Loans (1) (2) $ 1,282,979   $ 44,450   4.62 %   $ 1,500,203   $ 50,890   4.52 %
Securities (3) (4)   80,275     707   1.17       57,358     933   2.17  
Short-term investments and certificates of deposit   211,054     424   0.27       298,729     1,126   0.50  
  Total interest-earning assets   1,574,308     45,581   3.86       1,856,290     52,949   3.80  
Other assets   32,972                 33,265            
  Total assets $ 1,607,280               $ 1,889,555            
                                   
Interest-bearing deposits (5) $ 1,021,266     5,748   0.75     $ 1,164,317     7,125   0.82  
Borrowed funds   337,806     2,205   0.87       435,548     2,822   0.86  
  Total interest-bearing liabilities   1,359,072     7,953   0.78       1,599,865     9,947   0.83  
Demand deposits   115,296                 137,873            
Other liabilities   4,327                 4,741            
  Total liabilities   1,478,695                 1,742,479            
Stockholders’ equity   128,585                 147,076            
  Total liabilities and stockholders’ equity $ 1,607,280               $ 1,889,555            
Net interest income       $ 37,628               $ 43,002      
                                   
Weighted average spread             3.08 %               2.97 %
                                   
Net interest margin (6)             3.19 %               3.09 %
                                   
Average interest-earning assets to average
  interest-bearing liabilities (7)
             
115.84
 
%
               
116.03
 
%

  (1 ) Before allowance for loan losses.
  (2 ) Includes non-accrual loans.
  (3 ) Excludes the impact of the average net unrealized gain or loss on securities available for sale.
  (4 ) Includes Federal Home Loan Bank stock.
  (5 ) Includes mortgagors’ escrow accounts.
  (6 ) Net interest income divided by average total interest-earning assets.
  (7 ) Total interest-earning assets divided by total interest-bearing liabilities.
  (8 ) Annualized

          

CONTACT: CONTACT: Patrick R. Gaughen, Executive Vice President (781) 783-1761

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