Hingham Reports 32% Growth in Quarterly Earnings

HINGHAM, Mass., Oct. 15, 2014 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (Nasdaq:HIFS), Hingham, Massachusetts announced third quarter earnings for 2014. Net income for the quarter ended September 30, 2014 was $4,481,000 or $2.10 per share (basic and diluted) as compared to $3,403,000 or $1.60 per share (basic and diluted) for the third quarter of 2013.

Net income for the nine months ended September 30, 2014 was $17,729,000 or $8.33 per share basic and $8.32 per share diluted as compared to $9,883,000 or $4.65 per share basic and $4.64 per share diluted for the same period last year. Earnings for the first nine months of 2014 included a one-time net gain of approximately $5.7 million related to non-taxable life insurance death benefit income of $6,302,000 less an accrual of $949,000 for a contractual death benefit liability, and $388,000 in related income tax benefit. Excluding this event, the Bank earned $11,988,000 or $5.63 per share basic and $5.62 per share diluted for the first nine months of 2014, representing a 21% increase in net income over same period last year.

Strong growth trends of recent years continued, as deposits increased by $114.8 million from December 31, 2013 and $148.9 million from September 30, 2013, representing a 16% annualized growth year to date and 16% from September 30, 2013. Net loans increased by $128.6 million from December 31, 2013 and $193.7 million from September 30, 2013, representing 16% annualized growth year to date and 19% growth from September 30, 2013. Total assets increased by $149.5 million from December 31, 2013 and $201.8 million from September 30, 2013, representing a 15% annualized growth year to date and 15% from September 30, 2013. Stockholders' equity increased to $119.6 million as of September 30, 2014, representing a 21% annualized growth year to date and a 19% increase from September 30, 2013. Book value per share increased to $56.20 per share at September 30, 2014 from $48.49 per share at December 31, 2013 and $47.42 per share at September 30, 2013.

President Robert H. Gaughen, Jr. stated, "We are pleased to report that our current quarterly earnings represent a 32% increase over the third quarter of 2013 – the product of 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, and success is a product of this partnership."

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 in the Commonwealth. 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
Consolidated Balance Sheets
September 30, December 31, September 30,
(Dollars in thousands except per share data) 2014 2013 2013
(Unaudited)
ASSETS
Cash and due from banks $ 6,012 $ 11,922 $ 6,896
Short-term investments 142,414 90,925 115,230
Cash and cash equivalents 148,426 102,847 122,126
Certificates of deposit 14,460 13,011 14,397
Securities available for sale, at fair value 81,806 106,369 99,419
Federal Home Loan Bank stock, at cost 17,855 15,978 15,119
Loans, net of allowance for loan losses of $8,953 at September 30, 2014, $8,509 at December 31, 2013 and $8,241 at September 30, 2013 1,207,481 1,078,879 1,013,798
Foreclosed assets 821 271 471
Bank-owned life insurance 11,345 15,375 15,268
Premises and equipment, net 15,381 15,854 15,769
Accrued interest receivable 2,989 2,792 2,768
Deferred income tax asset, net 2,940 2,934 2,664
Other assets 2,418 2,131 2,310
Total assets $ 1,505,922 $ 1,356,441 $ 1,304,109
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 1,055,701 $ 940,906 $ 906,752
Federal Home Loan Bank advances 320,635 302,732 287,764
Mortgage payable 985 1,020 1,032
Mortgagors' escrow accounts 4,239 3,709 3,538
Accrued interest payable 346 490 463
Other liabilities 4,375 4,367 3,609
Total liabilities 1,386,281 1,253,224 1,203,158
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, 2013, December 31, 2013 and September 30, 2013. 2,129 2,129 2,129
Additional paid-in capital 10,919 10,659 10,659
Undivided profits 106,432 90,449 88,132
Accumulated other comprehensive income (loss) 161 (20) 31
Total stockholders' equity 119,641 103,217 100,951
Total liabilities and stockholders' equity $ 1,505,922 $ 1,356,441 $ 1,304,109
HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income
Three Months Ended Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
(Unaudited) (In thousands, except per share amounts)
Interest and dividend income:
Loans $ 14,109 $ 12,221 $ 40,598 $ 36,000
Debt securities 80 102 263 315
Equity securities 116 40 346 116
Short-term investments and certificates of deposit 95 79 246 213
Total interest and dividend income 14,400 12,442 41,453 36,644
Interest expense:
Deposits 1,598 1,396 4,554 4,230
Federal Home Loan Bank advances 846 1,185 2,802 3,602
Mortgage payable 15 16 45 47
Total interest expense 2,459 2,597 7,401 7,879
Net interest income 11,941 9,845 34,052 28,765
Provision for loan losses 150 90 475 290
Net interest income, after provision for loan losses 11,791 9,755 33,577 28,475
Other income:
Customer service fees on deposits 257 264 756 758
Increase in bank-owned life insurance 73 108 238 323
Life insurance death benefit 6,302
Miscellaneous 84 56 277 163
Total other income 414 428 7,573 1,244
Operating expenses:
Salaries and employee benefits 2,887 2,671 9,578 7,829
Data processing 308 275 893 754
Occupancy and equipment 486 447 1,522 1,387
Deposit insurance 205 174 592 509
Foreclosure (62) 19 234 218
Marketing 99 182 354 390
Other general and administrative 663 659 2,240 1,915
Total operating expenses 4,586 4,427 15,413 13,002
Income before income taxes 7,619 5,756 25,737 16,717
Income tax provision 3,138 2,353 8,008 6,834
Net income $ 4,481 $ 3,403 $ 17,729 $ 9,883
Weighted average common shares outstanding:
Basic 2,129 2,129 2,129 2,128
Diluted 2,135 2,130 2,132 2,129
Earnings per common share:
Basic $ 2.10 $ 1.60 $ 8.33 $ 4.65
Diluted $ 2.10 $ 1.60 $ 8.32 $ 4.64
HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis
Three Months Ended September 30,
2014 2013
AVERAGE
BALANCE
INTEREST YIELD/
RATE
AVERAGE
BALANCE
INTEREST YIELD/
RATE
(Dollars in thousands)
(Unaudited)
Loans (1) (2) $ 1,207,348 $ 14,109 4.67% $ 1,004,649 $ 12,221 4.87%
Securities (3) (4) 106,538 196 0.74 116,002 142 0.49
Short-term investments and certificates of deposit 151,308 95 0.25 108,461 79 0.29
Total earning assets 1,465,194 14,400 3.93 1,229,112 12,442 4.05
Other assets 33,823 37,471
Total assets $ 1,499,017 $ 1,266,583
Interest-bearing deposits (5) $ 940,681 1,598 0.68 $ 805,761 1,396 0.69
Borrowed funds 331,458 861 1.04 270,913 1,201 1.77
Total interest-bearing liabilities 1,272,139 2,459 0.77 1,076,674 2,597 0.96
Demand deposits 104,433 86,086
Other liabilities 3,894 3,633
Total liabilities 1,380,466 1,166,393
Stockholders' equity 118,551 100,190
Total liabilities and stockholders' equity $ 1,499,017 $ 1,266,583
Net interest income $ 11,941 $ 9,845
Weighted average spread 3.16% 3.09%
Net interest margin (6) 3.26% 3.20%
Average interest-earning assets to average interest-bearing liabilities (7) 115.18% 114.16%
(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 2013
AVERAGE
BALANCE
INTEREST YIELD/
RATE
AVERAGE
BALANCE
INTEREST YIELD/
RATE
(Dollars in thousands)
(Unaudited)
Loans (1) (2) $ 1,163,600 $ 40,598 4.65% $ 982,436 $ 36,000 4.89%
Securities (3) (4) 114,459 609 0.71 115,213 431 0.50
Short-term investments and certificates of deposit 125,237 246 0.26 95,853 213 0.30
Total earning assets 1,403,296 41,453 3.94 1,193,502 36,644 4.09
Other assets 36,638 36,651
Total assets $ 1,439,934 $ 1,230,153
Interest-bearing deposits (5) $ 909,248 4,554 0.67 $ 797,832 4,230 0.71
Borrowed funds 315,078 2,847 1.20 249,822 3,649 1.95
Total interest-bearing liabilities 1,224,326 7,401 0.81 1,047,654 7,879 1.00
Demand deposits 98,656 81,512
Other liabilities 3,398 3,295
Total liabilities 1,326,380 1,132,461
Stockholders' equity 113,554 97,692
Total liabilities and stockholders' equity $ 1,439,934 $ 1,230,153
Net interest income $ 34,052 $ 28,765
Weighted average spread 3.13% 3.09%
Net interest margin (6) 3.24% 3.21%
Average interest-earning assets to average interest-bearing liabilities (7) 114.62% 113.92%
(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
Selected Financial Ratios
Three Months Ended Nine Months Ended
September 30, September 30,
2014 2013 2014 2013
(Unaudited)
Key Performance Ratios
Return on average assets (1) 1.20% 1.07% 1.64% 1.07%
Return on average equity (1) 15.12 13.59 20.82 13.49
Interest rate spread (1) (2) 3.16 3.09 3.13 3.09
Net interest margin (1) (3) 3.26 3.20 3.24 3.21
Non-interest expense to average assets (1) 1.22 1.40 1.43 1.41
Efficiency ratio (4) 37.12 43.09 37.03 43.33
Average equity to average assets 7.91 7.91 7.89 7.94
Average interest-bearing assets to average interest bearing liabilities 115.18 114.16 114.62 113.92
September 30, December 31, September 30,
2014 2013 2013
(Unaudited)
Asset Quality Ratios
Allowance for loan losses/total loans 0.74% 0.78% 0.82%
Allowance for loan losses/non-performing loans 159.19 143.37 195.88
Non-performing loans/total loans 0.46 0.55 0.42
Non-performing loans/total assets 0.37 0.44 0.33
Non-performing assets/total assets 0.43 0.46 0.37
Share Related
Book value per share $ 56.20 $ 48.49 $ 47.42
Market value per share $ 81.55 $ 78.49 $ 69.91
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.

CONTACT: Robert A. Bogart, Vice President & Treasurer (781) 749-2200Source:Hingham Institution for Savings