Hingham Savings Announces 9% Growth in Quarterly Earnings

HINGHAM, Mass., Oct. 14, 2015 (GLOBE NEWSWIRE) — HINGHAM INSTITUTION FOR SAVINGS (NASDAQ:HIFS), Hingham, Massachusetts announced third quarter earnings for 2015. Net income for the quarter ended September 30, 2015 was $4,874,000 or $2.29 per share basic and $2.27 per share fully diluted as compared to $4,481,000 or $2.10 per share (basic and fully diluted) for the third quarter of 2014.  Net income per share (basic) for the third quarter of 2015 increased 9% over the same period in 2014.  The Bank’s annualized return on average equity for the third quarter of 2015 was 14.67%, and the annualized return on average assets was 1.18% as compared to 15.12% and 1.20% for the same period in 2014.

Net income for the nine months ended September 30, 2015 was $14,112,000 or $6.63 per share basic and $6.58 per share fully diluted as compared to $17,729,000 or $8.33 per share basic and $8.32 per share fully diluted for the same period last year. Earnings for first nine months of 2014 included a one-time net gain of approximately $5.7 million related to a non-taxable life insurance transaction, the details of which were fully reported in the Bank’s 2014 Annual Report on Form 10-K. Excluding this event, the Bank earned $11,988,000 or $5.63 per share basic and $5.62 per share fully diluted for the first nine months of 2014.  Net income per share (basic) for the first nine months of 2015 increased 18% over the same period in 2014 excluding the impact of the life insurance transaction. 

The Bank’s annualized return on average equity for the first nine months of 2015 was 14.63% and the annualized return on average assets was 1.17%. Excluding the impact of the life insurance transaction, the Bank’s annualized return on average equity for the first nine months of 2014 was 14.08%, and the annualized return on average assets was 1.11%.

Strong balance sheet growth trends of recent years continued, as deposits were $1.180 billion at September 30, 2015, representing 11% annualized growth year to date and 12% growth from September 30, 2014.  Net loans were $1.343 billion at September 30, 2015, representing 11% annualized growth year to date and 11% growth from September 30, 2014.  Total assets were $1.691 billion at September 30, 2015, representing 12% annualized growth year to date and 12% growth from September 30, 2014.  Book value per share increased to $62.94 per share at September 30, 2015, representing a 14% annualized growth rate year to date and a 12% increase from September 30, 2014.  In addition to the increase in book value per share, the Bank has declared $0.86 in dividends per share in 2015 and $2.14 in dividends per share since September 30, 2014.

Key credit and operational metrics remained steady in the third quarter of 2015.  At September 30, 2015, non-performing assets totaled 0.17% of total assets, compared with 0.20% at December 31, 2014 and 0.43% at September 30, 2014.  Non-performing loans as a percentage of the total loan portfolio totaled 0.21% at September 30, 2015, as compared to 0.18% at December 31, 2014 and 0.46% at September 30, 2014.  The efficiency ratio improved to 36.11% for the third quarter of 2015, as compared to 37.04% for the same period last year.  Non-interest expense (annualized) as a percentage of average assets fell to 1.15% for the third quarter of 2015, as compared to 1.22% for the same period last year.  These reductions reflect the Bank’s continued focus on credit quality and disciplined expense controls.

President Robert H. Gaughen, Jr. stated, “We are pleased to report that our current quarterly earnings represent a 9% increase over the third quarter of 2014 – the product of careful capital allocation, conservative underwriting, disciplined cost control and measured growth.  We continue to offer unique value to our customers, with whom we have deep, long-term relationships.  Our success is a product of these partnerships.”  

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 continually operating banks in the United States.  The Bank’s main offices are located on Main Street, Hingham, Massachusetts 02043, phone (781) 749-2200.  The Bank also maintains branch offices in South Hingham and the neighboring towns of Cohasset, Hull, Norwell, Scituate and Weymouth, as well as branches in the South End of Boston, on 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,
  2014   2015   2014   2015
(Unaudited)                      
                       
Key Performance Ratios                      
Return on average assets (1) 1.20 %   1.18 %   1.64 %   1.17 %
Return on average equity (1) 15.12     14.67     20.82     14.63  
Interest rate spread (1) (2) 3.16     3.04     3.13     3.08  
Net interest margin (1) (3) 3.26     3.16     3.24     3.19  
Non-interest expense to average assets (1) 1.22     1.15     1.42     1.19  
Efficiency ratio (4) 37.04     36.19     36.96     36.94  
Average equity to average assets 7.91     8.01     7.89     8.00  
Average interest-bearing assets to average interest bearing liabilities 115.18     115.97     114.62     115.84  
                       

  September 30,
2014
    December 31,
2014
  September 30,
2015
(Unaudited)                      
                           
Asset Quality Ratios                          
Allowance for loan losses/total loans   0.74 %   0.73 %     0.71 %
Allowance for loan losses/non-performing loans   159.19     397.04     345.96  
                   
Non-performing loans/total loans   0.46     0.18     0.21  
Non-performing loans/total assets   0.37     0.15     0.16  
Non-performing assets/total assets   0.43     0.20     0.17  
                   
Share Related                  
Book value per share $ 56.20     $ 57.08   $  62.94  
Market value per share $ 81.55     $ 87.01   $  116.03  
Shares outstanding at end of period   2,128,750     2,128,750     2,128,750  
  1. Annualized.
     
  2. Interest rate spread represents the difference between the yield on 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, 2014   December 31, 2014   September 30,
 2015
(Unaudited)                        
ASSETS  
                 
Cash and due from banks  $ 6,012   $ 6,917   $ 6,646
Short-term investments   142,414     170,305     231,311
Cash and cash equivalents    148,426     177,222     237,957
                 
Certificates of deposit   14,460     12,926     7,448
Securities available for sale, at fair value   81,806     70,570     48,943
Federal Home Loan Bank stock, at cost   17,855     17,855     18,454
Loans, net of allowance for loan losses of $8,953 at September 30, 2014, $9,108 at December 31,  2014 and $9,635 at September 30, 2015   1,207,481     1,238,656     1,342,634
Foreclosed assets   821     786     118
Bank-owned life insurance    11,345     11,416     11,628
Premises and equipment, net    15,381     15,211     15,130
Accrued interest receivable   2,989     2,959     3,156
Deferred income tax asset, net   2,940     2,642     2,627
Other assets   2,418     1,962     2,864
Total assets $ 1,505,922   $ 1,552,205   $ 1,690,959
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
                 
Deposits $ 1,055,701   $ 1,089,217   $ 1,179,970
Federal Home Loan Bank advances   320,635     329,602     367,499
Mortgage payable   985     973     935
Mortgagors’ escrow accounts   4,239     4,476     4,629
Accrued interest payable   346     350     281
Other liabilities   4,375     6,072     3,669
Total liabilities   1,386,281     1,430,690     1,556,983
                 
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   2,129     2,129     2,129
Additional paid-in capital   10,919     10,942     11,029
Undivided profits   106,432     108,243     120,524
Accumulated other comprehensive income   161     201     294
Total stockholders’ equity   119,641     121,515     133,976
Total liabilities and stockholders’ equity $ 1,505,922   $ 1,552,205   $ 1,690,959

 

   
HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income
 
   
            Three Months Ended   Nine Months Ended  
            September 30,   September 30,  
(In thousands, except per share amounts)       2014       2015   2014   2015
(Unaudited)                                        
Interest and dividend income:                            
  Loans       $   14,109     $ 15,180   $ 40,598   $ 44,450  
  Debt securities       80       43     263     162  
  Equity securities           116       231     346     545  
  Short-term investments and certificates of deposit     95       154     246     424  
    Total interest and dividend income       14,400       15,608     41,453     45,581  
Interest expense:                              
  Deposits           1,598       2,047     4,554     5,748  
  Federal Home Loan Bank advances           846       728     2,802     2,162  
  Mortgage payable         15       14     45     43  
    Total interest expense         2,459       2,789     7,401     7,953  
    Net interest income         11,941       12,819     34,052     37,628  
Provision for loan losses         150       175     475     525  
Net interest income, after provision for loan losses     11,791       12,644     33,577     37,103  
Other income:                              
  Customer service fees on deposits       257       250     756     731  
  Increase in bank-owned life insurance           73       71     238     212  
  Gain on life insurance distribution                     6,302      
  Gain on sale of securities                 29         29  
  Miscellaneous           69       46     232     142  
    Total other income         399       396     7,528     1,114  
Operating expenses:                              
  Salaries and employee benefits         2,887       2,875     9,578     8,701  
  Occupancy and equipment           486       513     1,522     1,586  
  Data processing           308       291     893     891  
  Deposit insurance           205       224     592     662  
  Foreclosure           (62 )     30     234     62  
  Marketing           99       126     354     384  
  Other general and administrative           648       713     2,195     2,015  
    Total operating expenses         4,571       4,772     15,368     14,301  
Income before income taxes         7,619       8,268     25,737     23,916  
Income tax provision           3,138       3,394     8,008     9,804  
    Net income       $   4,481     $ 4,874   $ 17,729   $ 14,112  
                                   
Weighted average shares outstanding:                          
  Basic           2,129       2,129     2,129     2,129  
  Diluted           2,135       2,146     2,132     2,144  
                                   
Earnings per share:                            
  Basic       $   2.10     $ 2.29   $ 8.33   $ 6.63  
  Diluted       $   2.10     $ 2.27   $ 8.32   $ 6.58  

 
HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis
 
  Three Months Ended September 30,  
  2014     2015  
  AVERAGE BALANCE   INTEREST   YIELD/
RATE
    AVERAGE BALANCE   INTEREST   YIELD/
RATE
 
(Dollars in thousands)                                  
(Unaudited)                                  
                                   
Loans (1) (2) $ 1,207,348   $ 14,109   4.67 %   $ 1,320,522   $ 15,180   4.60 %
Securities (3) (4)   106,538     196   0.74       71,903     274   1.52  
Short-term investments and certificates of deposit   151,394     95   0.25       232,181     154   0.27  
Total earning assets   1,465,280     14,400   3.93       1,624,606     15,608   3.84  
Other assets   33,737                 33,424            
Total assets $ 1,499,017               $ 1,658,030            
                                   
Interest-bearing deposits (5) $ 940,681     1,598   0.68     $ 1,043,970     2,047   0.78  
Borrowed funds   331,458     861   1.04       356,930     742   0.83  
Total interest-bearing liabilities   1,272,139     2,459   0.77       1,400,900     2,789   0.80  
Demand deposits   104,433                 120,303            
Other liabilities   3,894                 3,952            
Total liabilities   1,380,466                 1,525,155            
Stockholders’ equity   118,551                 132,875            
Total liabilities and stockholders’ equity $ 1,499,017               $ 1,658,030            
Net interest income       $ 11,941               $ 12,819      
                                   
Weighted average spread             3.16 %               3.04 %
                                   
Net interest margin (6)             3.26 %               3.16 %
                                   
Average interest-earning assets to average interest-bearing liabilities (7)             115.18 %               115.97 %

  (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 earning assets.
  (7 ) Total earning assets divided by total interest-bearing liabilities.


 
HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis
 
  Nine Months Ended September 30,  
  2014     2015  
  AVERAGE BALANCE    INTEREST   YIELD/
RATE
    AVERAGE BALANCE   INTEREST   YIELD/
RATE
 
(Dollars in thousands)                                  
(Unaudited)                                  
                                   
Loans (1) (2) $ 1,163,600   $ 40,598   4.65 %   $ 1,282,979   $ 44,450   4.62 %
Securities (3) (4)   114,459     609   0.71       80,275     707   1.17  
Short-term investments and certificates of deposit   125,289     246   0.26       211,054     424   0.27  
Total earning assets   1,403,348     41,453   3.94       1,574,308     45,581   3.86  
Other assets   36,586                 32,972            
Total assets $ 1,439,934               $ 1,607,280            
                                   
Interest-bearing deposits (5) $ 909,248     4,554   0.67     $ 1,021,266     5,748   0.75  
Borrowed funds   315,078     2,847   1.20       337,806     2,205   0.87  
Total interest-bearing liabilities   1,224,326     7,401   0.81       1,359,072     7,953   0.78  
Demand deposits   98,656                 115,296            
Other liabilities   3,398                 4,327            
Total liabilities   1,326,380                 1,478,695            
Stockholders’ equity   113,554                 128,585            
Total liabilities and stockholders’ equity $ 1,439,934               $ 1,607,280            
Net interest income       $ 34,052               $ 37,628      
                                   
Weighted average spread             3.13 %               3.08 %
                                   
Net interest margin (6)             3.24 %               3.19 %
                                   
Average interest-earning assets to average interest-bearing liabilities (7)             114.62 %               115.84 %

  (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 earning assets.
  (7 ) Total earning assets divided by total interest-bearing liabilities.
CONTACT: CONTACT: Robert A. Bogart, Vice President & Treasurer (781) 749-2200