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Hingham Savings Reports 24% Increase in Net Operating Earnings, Excluding Last Year's $5.7 Million of Net Income From One-Time Event

HINGHAM, Mass., April 16, 2015 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (Nasdaq:HIFS), Hingham, Massachusetts announced first quarter earnings for 2015. Net income for the quarter ended March 31, 2015 was $4,515,000 or $2.12 per share basic and $2.11 per share diluted as compared to $9,375,000 or $4.40 per share (basic and diluted) for the same period last year. Earnings for the first quarter of 2014 included a 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 $3,634,000 or $1.71 per share (basic and diluted) for the first quarter of 2014.

The Bank's return on average equity for the first quarter of 2015 was 14.52%, and the return on average assets was 1.15% compared to a return on average equity of 18.87% and the return on assets of 1.47% for the same period in 2014. Excluding the one-time event, the Bank's return on average equity for the first quarter of 2014 was 13.53%, and the return on average assets was 1.05%.

Strong growth trends of recent years continued, as deposits increased by $125.5 million representing a 12% increase from March 31, 2014. Net loans increased by 11% and total assets increased by 9% as compared to March 31, 2014. Stockholders' equity increased $13.3 million from March 31, 2014 to March 31, 2015, representing a 12% increase, with a related increase in book value per share from $52.70 to $58.95.

Key credit and operational metrics continued to improve. At March 31, 2015, non-performing assets totaled 0.17% of total assets, a decrease from 0.20% at December 31, 2014 and 0.51% at March 31, 2014. Non-performing loans as a percentage of the total loan portfolio totaled 0.16% at March 31, 2015 compared to 0.18% at December 31, 2014 and 0.56% at March 31, 2014. The efficiency ratio improved to 38.31% for the first quarter of 2015 as compared to 42.98% for the same period in 2014. Non-interest expense as a percentage of average assets fell to 1.23% for the first quarter of 2015 as compared to 1.45% for the same period in 2014. These reductions reflect the Bank's particular focus on disciplined expense management and effective credit management.

President Robert H. Gaughen Jr. stated, "We continue to emphasize conservative underwriting, cost discipline, careful capital allocation and measured growth. We remain committed to the fundamentally conservative strategies that have produced long-term value for our shareholders."

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 and 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
(In thousands) March 31, 2015 December 31, 2014 March 31, 2014
(Unaudited)
ASSETS
Cash and due from banks $ 5,901 $ 6,917 $ 17,409
Short-term investments 182,399 170,305 110,830
Cash and cash equivalents 188,300 177,222 128,239
Certificates of deposit 10,722 12,926 12,763
Securities available for sale, at fair value 66,853 70,570 105,443
Federal Home Loan Bank stock, at cost 17,855 17,855 16,007
Loans, net of allowance for loan losses of $9,284 at March 31, 2015, $9,108 at December 31, 2014 and $8,660 at March 31, 2014 1,254,913 1,238,656 1,130,902
Foreclosed assets 586 786 983
Bank-owned life insurance 11,486 11,416 11,201
Premises and equipment, net 15,091 15,211 15,686
Accrued interest receivable 3,001 2,959 2,877
Deferred income tax asset, net 2,632 2,642 2,842
Other assets 2,491 1,962 12,630
Total assets $ 1,573,930 $ 1,552,205 $ 1,439,573
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 1,135,850 $ 1,089,217 $ 1,010,347
Federal Home Loan Bank advances 300,568 329,602 303,715
Mortgage payable 960 973 1,008
Mortgagors' escrow accounts 4,411 4,476 3,993
Accrued interest payable 341 350 424
Other liabilities 6,307 6,072 7,905
Total liabilities 1,448,437 1,430,690 1,327,392
Stockholders' equity:
Preferred stock, $1.00 par value, 2,500 shares authorized, none issued
Common stock, $1.00 par value, 5,000 shares authorized; 2,129 shares issued and outstanding 2,129 2,129 2,129
Additional paid-in capital 10,965 10,942 10,659
Undivided profits 112,162 108,243 99,250
Accumulated other comprehensive income 237 201 143
Total stockholders' equity 125,493 121,515 112,181
Total liabilities and stockholders' equity $ 1,573,930 $ 1,552,205 $ 1,439,573
HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income
Three Months Ended
March 31,
(In thousands, except per share amounts) 2015 2014
(Unaudited)
Interest and dividend income:
Loans $ 14,538 $ 12,946
Debt securities 62 91
Equity securities 155 114
Short-term investments and certificates of deposit 136 69
Total interest and dividend income 14,891 13,220
Interest expense:
Deposits 1,827 1,437
Federal Home Loan Bank advances 721 1,055
Mortgage payable 14 15
Total interest expense 2,562 2,507
Net interest income 12,329 10,713
Provision for loan losses 175 150
Net interest income, after provision for loan losses 12,154 10,563
Other income:
Customer service fees on deposits 228 243
Increase in cash surrender value of life insurance 70 93
Life insurance death benefit 6,302
Miscellaneous 59 54
Total other income 357 6,692
Operating expenses:
Salaries and employee benefits 2,904 3,786
Data processing 296 283
Occupancy and equipment 554 496
Deposit insurance 217 190
Foreclosure 77 190
Marketing 121 136
Other general and administrative 691 640
Total operating expenses 4,860 5,721
Income before income taxes 7,651 11,534
Income tax provision 3,136 2,159
Net income $ 4,515 $ 9,375
Cash dividends declared per common share $ 0.28 $ 0.27
Weighted average shares outstanding:
Basic 2,129 2,129
Diluted 2,140 2,131
Earnings per share:
Basic $ 2.12 $ 4.40
Diluted $ 2.11 $ 4.40
HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis
Three Months Ended March 31,
2015 2014
AVERAGE
BALANCE

INTEREST
YIELD/
RATE*
AVERAGE
BALANCE

INTEREST
YIELD/
RATE*
(Dollars in thousands)
(Unaudited)
Loans (1) (2) $ 1,250,321 $ 14,538 4.65% $ 1,114,240 $ 12,946 4.65%
Securities (3) (4) 87,063 217 1.00 119,187 205 0.69
Short-term investments and certificates of deposit 204,586 136 0.27 107,030 69 0.26
Total earning assets 1,541,970 14,891 3.86 1,340,457 13,220 3.94
Other assets 32,692 38,193
Total assets $ 1,574,662 $ 1,378,650
Interest-bearing deposits (5) $ 1,005,824 1,827 0.73 $ 869,209 1,437 0.66
Borrowed funds 324,979 735 0.90 307,325 1,070 1.39
Total interest-bearing liabilities 1,330,803 2,562 0.77 1,176,534 2,507 0.85
Demand deposits 114,755 92,206
Other liabilities 4,750 2,438
Total liabilities 1,450,308 1,271,178
Stockholders' equity 124,354 107,472
Total liabilities and stockholders' equity $ 1,574,662 $ 1,378,650
Net interest income $ 12,329 $ 10,713
Weighted average spread 3.09% 3.09%
Net interest margin (6) 3.20% 3.20%
Average interest-earning assets to average interest-bearing liabilities (7) 115.87% 113.93%
* Annualized
(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
March 31,
2015 2014
(Unaudited)
Key Performance Ratios
Return on average assets (1) 1.15% 1.47%
Return on average equity (1) 14.52 18.87
Interest rate spread (2) 3.09 3.09
Net interest margin (3) 3.20 3.20
Non-interest expense to average assets (1) 1.23 1.45
Efficiency ratio (4) 38.31 42.98
Average equity to average assets 7.90 7.80
Average interest-bearing assets to average interest bearing liabilities 115.87 113.93
March 31, December 31, March 31,
2015 2014 2014
(Unaudited)
Asset Quality Ratios
Allowance for loan losses/total loans 0.74% 0.73% 0.76%
Allowance for loan losses/non-performing loans 447.64 397.04 135.12
Non-performing loans/total loans 0.16 0.18 0.56
Non-performing loans/total assets 0.13 0.15 0.45
Non-performing assets/total assets 0.17 0.20 0.51
Share Related
Book value per share $ 58.95 $ 57.08 $ 52.70
Market value per share $ 99.00 $ 87.01 $ 78.50
Shares outstanding at end of period 2,128,750 2,128,750 2,128,750
(1) Annualized, except for the applicable elements of the $5.7 million event in 2014 which were included but not annualized.
(2) Annualized. Interest rate spread represents the difference between the yield on earning assets and cost of interest-bearing liabilities.
(3) Annualized. Net interest margin represents net interest income divided by average earning assets.
(4) The efficiency ratio represents operating expenses divided by the sum of net interest income and other income. The ratio for 2014 excludes the $6.3 million life insurance death benefit from other income and $949,000 in salaries and benefits expense for the related accrual of a contractual death benefit liability.

CONTACT: Robert A. Bogart, Vice President & Treasurer (781) 749-2200

Source:Hingham Institution for Savings