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Hingham Savings Announces Record Annual Earnings and 30% Increase in Quarterly Earnings

HINGHAM, Mass., Jan. 16, 2015 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (Nasdaq:HIFS) announced record earnings for 2014. Net income for the year ended December 31, 2014 was $22,264,000 or $10.46 per share basic and $10.44 per share diluted as compared to $13,371,000 or $6.28 per share (basic and diluted) for 2013. Net income for the fourth quarter of 2014 was $4,535,000 or $2.13 per share basic and $2.12 per share diluted; a 30% increase over $3,488,000 or $1.64 per share (basic and diluted) for the fourth quarter of 2013. The Bank's return on average equity for the year ended December 31, 2014 was 19.30%, and the return on average assets was 1.52%.

Net income for 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 $16,523,000 or $7.76 per share basic and $7.75 per share diluted for 2014, representing a 24% increase in net income over the previous year. Excluding the income statement impact of this event, the Bank's return on average equity was 14.32% and return on average assets was 1.13% in 2014, as compared to 13.52% and 1.07% in 2013.

The Bank also produced record increases in both deposits and loans. Deposits increased by $148.3 million, or 16%. Net loans increased by $159.8 million, or 15%, and total assets increased by 14% from December 31, 2013 to December 31, 2014. Total assets were $1.552 billion at December 31, 2014 as compared to $1.356 billion at December 31, 2013. Book value per share increased by 17.7% to $57.08 per share at December 31, 2014 from $48.49 per share at December 31, 2013. This increase in book value per share excludes capital returned to the ownership through regular and special dividends; the Bank declared $2.10 per share in regular and special dividends in 2014.

Key credit and operational metrics continued to improve in 2014 as compared to 2013. At December 31, 2014, non-performing assets totaled 0.20% of total assets compared to 0.46% of total assets at December 31, 2013. Non-performing loans as a percentage of the total loan portfolio totaled 0.18% at December 31, 2014 as compared to 0.55% at December 31, 2013. The efficiency ratio improved to 37.19% in 2014 as compared to 43.23% in 2013. Non-interest expense as a percentage of average assets fell to 1.37% in 2014 as compared to 1.40% in 2013. Both the efficiency ratio and non-interest expense as a percentage of average assets reached record lows in 2014 and reflect the Bank's particular focus on disciplined expense management.

Robert H. Gaughen Jr., President and Chairman of the Board of Directors, stated "At Hingham, we take our role as stewards of the shareholders' capital seriously. We are pleased to report an outstanding return on that capital in 2014. Our emphasis on conservative underwriting, careful capital allocation, and measured growth continues to serve our shareholders well. More important than performance in any one year, however, is our record of compounding shareholder capital over time. On this measure, our team continues to set a very 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, Hingham, Massachusetts 02043, phone (781) 749-2200. The Bank also maintains branch offices in South Hingham and the neighboring towns of Cohasset, Hull, Scituate, Norwell, Weymouth as well as branches in the South End of Boston, Beacon Hill and 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 Twelve Months Ended
December 31, December 31,
2014 2013 2014 2013
(Unaudited)
Key Performance Ratios
Return on average assets (1) 1.18% 1.06% 1.52% 1.07%
Return on average equity (1) 15.01 13.62 19.30 13.52
Interest rate spread (1) (2) 3.12 3.02 3.13 3.08
Net interest margin (1) (3) 3.23 3.14 3.23 3.19
Non-interest expense to average assets (1) 1.24 1.37 1.37 1.40
Efficiency ratio (4) 37.95 43.03 37.19 43.23
Average equity to average assets 7.83 7.75 7.87 7.89
Average interest-bearing assets to average interest
bearing liabilities 115.74 114.01 114.92 113.95
December 31, December 31,
2014 2013
(Unaudited)
Asset Quality Ratios
Allowance for loan losses/total loans 0.73% 0.78%
Allowance for loan losses/non-performing loans 397.04 143.37
Non-performing loans/total loans 0.18 0.55
Non-performing loans/total assets 0.15 0.44
Non-performing assets/total assets 0.20 0.46
Share Related
Book value per share $ 57.08 $ 48.49
Market value per share $ 87.01 $ 78.49
Shares outstanding at end of period 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.
HINGHAM INSTITUTION FOR SAVINGS
Consolidated Balance Sheets
December 31,
2014
December 31,
2013
(Dollars in thousands except per share data)
(Unaudited)
ASSETS
Cash and due from banks $ 6,917 $ 11,922
Short-term investments 170,305 90,925
Cash and cash equivalents 177,222 102,847
Certificates of deposit 12,926 13,011
Securities available for sale, at fair value 70,570 106,369
Federal Home Loan Bank stock, at cost 17,855 15,978
Loans, net of allowance for loan losses of $9,108 at
December 31, 2014 and $8,509 at December 31, 2013 1,238,656 1,078,879
Foreclosed assets 786 271
Bank-owned life insurance 11,416 15,375
Premises and equipment, net 15,211 15,854
Accrued interest receivable 2,959 2,792
Deferred income tax asset, net 2,642 2,934
Other assets 1,962 2,131
Total assets $ 1,552,205 $ 1,356,441
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 1,089,217 $ 940,906
Federal Home Loan Bank advances 329,602 302,732
Mortgage payable 973 1,020
Mortgagors' escrow accounts 4,476 3,709
Accrued interest payable 350 490
Other liabilities 6,072 4,367
Total liabilities 1,430,690 1,253,224
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 December 31, 2014 and December 31, 2013
2,129 2,129
Additional paid-in capital 10,942 10,659
Undivided profits 108,243 90,449
Accumulated other comprehensive income 201 (20)
Total stockholders' equity 121,515 103,217
Total liabilities and stockholders' equity $ 1,552,205 $ 1,356,441
HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Net Income
Three Months Ended Twelve Months Ended
December 31, December 31,
2014 2013 2014 2013
(Unaudited) (In thousands, except per share amounts)
Interest and dividend income:
Loans $ 14,392 $ 12,455 $ 54,990 $ 48,455
Debt securities 73 92 336 407
Equity securities 145 65 491 181
Short-term investments and certificates of deposit 130 86 376 299
Total interest and dividend income 14,740 12,698 56,193 49,342
Interest expense:
Deposits 1,760 1,430 6,314 5,660
Federal Home Loan Bank advances 760 1,177 3,562 4,779
Mortgage payable 15 16 60 63
Total interest expense 2,535 2,623 9,936 10,502
Net interest income 12,205 10,075 46,257 38,840
Provision for loan losses 150 90 625 380
Net interest income, after provision for loan losses 12,055 9,985 45,632 38,460
Other income:
Customer service fees on deposits 258 261 1,014 1,019
Increase in bank-owned life insurance 70 107 308 430
Life insurance death benefit 6,302
Miscellaneous 69 65 296 214
Total other income 397 433 7,920 1,663
Operating expenses:
Salaries and employee benefits 2,846 2,773 12,424 10,602
Data processing 304 261 1,197 1,015
Occupancy and equipment 496 480 1,968 1,853
Deposit insurance 211 175 803 684
Foreclosure 29 (32) 263 186
Marketing 203 167 557 557
Other general and administrative 694 700 2,934 2,615
Total operating expenses 4,783 4,524 20,146 17,512
Income before income taxes 7,669 5,894 33,406 22,611
Income tax provision 3,134 2,406 11,142 9,240
Net income $ 4,535 $ 3,488 $ 22,264 $ 13,371
Weighted average common shares outstanding:
Basic 2,129 2,129 2,129 2,128
Diluted 2,136 2,131 2,133 2,130
Earnings per common share:
Basic $ 2.13 $ 1.64 $ 10.46 $ 6.28
Diluted $ 2.12 $ 1.64 $ 10.44 $ 6.28
HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis
Three Months Ended December 31,
2014 2013
AVERAGE
BALANCE
INTEREST YIELD/
RATE
AVERAGE
BALANCE
INTEREST YIELD/
RATE
(Dollars in thousands)
(Unaudited)
Loans (1) (2) $ 1,228,130 $ 14,392 4.69% $ 1,053,754 $ 12,455 4.73%
Securities (3) (4) 96,852 218 0.90 116,233 157 0.54
Short-term investments and certificates of deposit 185,211 130 0.28 114,398 86 0.30
Total earning assets 1,510,193 14,740 3.90 1,284,385 12,698 3.95
Other assets 33,565 37,525
Total assets $ 1,543,758 $ 1,321,910
Interest-bearing deposits (5) $ 965,990 1,760 0.73 $ 833,128 1,430 0.69
Borrowed funds 338,841 775 0.91 293,442 1,193 1.63
Total interest-bearing liabilities 1,304,831 2,535 0.78 1,126,570 2,623 0.93
Demand deposits 111,821 88,294
Other liabilities 6,245 4,571
Total liabilities 1,422,897 1,219,435
Stockholders' equity 120,861 102,475
Total liabilities and stockholders' equity $ 1,543,758 $ 1,321,910
Net interest income $ 12,205 $ 10,075
Weighted average spread 3.12% 3.02%
Net interest margin (6) 3.23% 3.14%
Average interest-earning assets to average
interest-bearing liabilities (7) 115.74% 114.01%
(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
Twelve Months Ended December 31,
2014 2013
AVERAGE
BALANCE
INTEREST YIELD/
RATE
AVERAGE
BALANCE
INTEREST YIELD/
RATE
(Dollars in thousands)
(Unaudited)
Loans (1) (2) $ 1,179,865 $ 54,990 4.66% $ 1,000,412 $ 48,455 4.84%
Securities (3) (4) 110,021 827 0.75 115,476 588 0.51
Short-term investments and certificates of deposit 140,393 376 0.27 100,527 299 0.30
Total earning assets 1,430,279 56,193 3.93 1,216,415 49,342 4.06
Other assets 35,824 36,866
Total assets $ 1,466,103 $ 1,253,281
Interest-bearing deposits (5) $ 923,550 6,314 0.68 $ 806,728 5,660 0.70
Borrowed funds 321,068 3,622 1.13 260,817 4,842 1.86
Total interest-bearing liabilities 1,244,618 9,936 0.80 1,067,545 10,502 0.98
Demand deposits 101,974 83,222
Other liabilities 4,130 3,626
Total liabilities 1,350,722 1,154,393
Stockholders' equity 115,381 98,888
Total liabilities and stockholders' equity $ 1,466,103 $ 1,253,281
Net interest income $ 46,257 $ 38,840
Weighted average spread 3.13% 3.08%
Net interest margin (6) 3.23% 3.19%
Average interest-earning assets to average
interest-bearing liabilities (7) 114.92% 113.95%
(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: Robert A. Bogart, Vice President-Treasurer (781) 749-2200

Source:Hingham Institution for Savings