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Hingham Savings Announces 22% Growth in Quarterly Earnings

HINGHAM, Mass., July 16, 2015 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ:HIFS), Hingham, Massachusetts announced second quarter earnings for 2015. Net income for the quarter ended June 30, 2015 was $4,723,000 or $2.22 per share basic and $2.20 per share diluted as compared to $3,873,000 or $1.82 per share (basic and diluted) in earnings for the second quarter of 2014. Net income per share (basic) for the second quarter of 2015 increased 22% over the same period in 2014. The Bank's annualized return on average equity for the second quarter of 2015 was 14.70%, and the annualized return on average assets was 1.19% as compared to 13.51% and 1.08% for the same period in 2014.

Net income for the six months ended June 30, 2015 was $9,238,000 or $4.34 per share basic and $4.31 per share diluted as compared to $13,248,000 or $6.22 per share (basic and diluted) for the same period last year. Earnings for first six 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 $7,507,000 or $3.53 per share basic and $3.52 per share diluted for the first six months of 2014. Net income per share for the first six months of 2015 increased 23% 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 six months of 2015 was 14.61%, 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 six months of 2014 was 13.52%, and the annualized return on average assets was 1.06%.

Strong growth trends of recent years continued, as deposits increased by $39.0 million from December 31, 2014 and $103.5 million from June 30, 2014, representing 7% annualized growth year to date and 10% from June 30, 2014. Net loans increased by $55.5 million from December 31, 2014 and $106.0 million from June 30, 2014, representing 9% annualized growth year to date and 9% growth from June 30, 2014. Total assets increased by $81.8 million from December 31, 2014 and $153.0 million from June 30, 2014, representing 11% annualized growth year to date and 10% from June 30, 2014. Stockholders' equity increased to $129.8 million as of June 30, 2015, representing 14% annualized growth year to date and a 12% increase from June 30, 2014. Book value per share increased to $60.96 per share at June 30, 2015 from $57.08 per share at December 31, 2014 and $54.32 per share at June 30, 2014.

Key credit and operational metrics continued to improve in the second quarter of 2015. At June 30, 2015, non-performing assets totaled 0.11% of total assets, compared with 0.20% at December 31, 2014 and 0.44% at June 30, 2014. Non-performing loans as a percentage of the total loan portfolio totaled 0.13% at June 30, 2015, as compared to 0.18% at December 31, 2014 and 0.51% at June 30, 2014. The efficiency ratio improved to 36.36% for the second quarter of 2015, as compared to 42.73% in the same period last year. Non-interest expense (annualized) as a percentage of average assets fell to 1.18% for the second quarter of 2015, as compared to 1.40% 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 continue to emphasize careful capital allocation, conservative underwriting, and cost discipline. 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, 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 Six Months Ended
June 30, June 30,
2014 2015 2014 2015
(Unaudited)
Key Performance Ratios
Return on average assets (1) 1.08% 1.19% 1.88% 1.17%
Return on average equity (1) 13.51 14.70 23.86 14.61
Interest rate spread (1) (2) 3.14 3.11 3.12 3.10
Net interest margin (1) (3) 3.25 3.21 3.22 3.20
Non-interest expense to average assets (1) 1.40 1.18 1.53 1.21
Efficiency ratio (4) 42.73 36.36 36.85 37.33
Average equity to average assets 7.96 8.09 7.88 8.00
Average interest-bearing assets to average interest
bearing liabilities 114.68 115.67 114.32 115.77
June 30, December 31, June 30,
2014 2014 2015
(Unaudited)
Asset Quality Ratios
Allowance for loan losses/total loans 0.74% 0.73% 0.73%
Allowance for loan losses/non-performing loans 144.14 397.04 569.13
Non-performing loans/total loans 0.51 0.18 0.13
Non-performing loans/total assets 0.41 0.15 0.10
Non-performing assets/total assets 0.44 0.20 0.11
Share Related
Book value per share $ 54.32 $ 57.08 $60.96
Market value per share $ 79.40 $ 87.01 $115.11
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.
HINGHAM INSTITUTION FOR SAVINGS
Consolidated Balance Sheets
June 30, December 31, June 30,
(Dollars in thousands, except per share data) 2014 2014 2015
(Unaudited)
ASSETS
Cash and due from banks $ 8,140 $ 6,917 $ 10,115
Short-term investments 120,647 170,305 207,143
Cash and cash equivalents 128,787 177,222 217,258
Certificates of deposit 14,209 12,926 9,281
Securities available for sale, at fair value 97,331 70,570 59,831
Federal Home Loan Bank stock, at cost 16,983 17,855 18,454
Loans, net of allowance for loan losses of $8,834
at June 30, 2014, $9,108 at December 31, 2014
and $9,459 at June 30, 2015 1,188,157 1,238,656 1,294,141
Foreclosed assets 425 786 175
Bank-owned life insurance 11,272 11,416 11,557
Premises and equipment, net 15,537 15,211 15,085
Accrued interest receivable 3,112 2,959 3,075
Deferred income tax asset, net 2,981 2,642 2,589
Other assets 2,166 1,962 2,550
Total assets $ 1,480,960 $ 1,552,205 $ 1,633,996
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 1,024,673 $ 1,089,217 $ 1,128,178
Federal Home Loan Bank advances 331,668 329,602 366,534
Mortgage payable 997 973 948
Mortgagors' escrow accounts 3,956 4,476 4,223
Accrued interest payable 379 350 302
Other liabilities 3,645 6,072 4,044
Total liabilities 1,365,318 1,430,690 1,504,229
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 10,896 10,942 11,006
Undivided profits 102,548 108,243 116,289
Accumulated other comprehensive income 69 201 343
Total stockholders' equity 115,642 121,515 129,767
Total liabilities and stockholders' equity $ 1,480,960 $ 1,552,205 $ 1,633,996
HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income
Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except per share amounts) 2014 2015 2014 2015
(Unaudited)
Interest and dividend income:
Loans $ 13,543 $ 14,732 $ 26,489 $ 29,270
Debt securities 92 57 183 119
Equity securities 116 159 230 314
Short-term investments and certificates of deposit 82 134 151 270
Total interest and dividend income 13,833 15,082 27,053 29,973
Interest expense:
Deposits 1,519 1,874 2,956 3,701
Federal Home Loan Bank advances 901 713 1,956 1,434
Mortgage payable 15 15 30 29
Total interest expense 2,435 2,602 4,942 5,164
Net interest income 11,398 12,480 22,111 24,809
Provision for loan losses 175 175 325 350
Net interest income, after provision for loan losses 11,223 12,305 21,786 24,459
Other income:
Customer service fees on deposits 256 253 499 481
Increase in bank-owned life insurance 72 71 165 141
Life insurance death benefit 6,302
Miscellaneous 75 37 129 96
Total other income 403 361 7,095 718
Operating expenses:
Salaries and employee benefits 2,904 2,922 6,691 5,826
Data processing 302 304 585 600
Occupancy and equipment 506 519 1,001 1,073
Deposit insurance 197 221 387 438
Foreclosure 106 (45) 296 32
Marketing 119 137 255 258
Other general and administrative 908 611 1,548 1,302
Total operating expenses 5,042 4,669 10,763 9,529
Income before income taxes 6,584 7,997 18,118 15,648
Income tax provision 2,711 3,274 4,870 6,410
Net income $ 3,873 $ 4,723 $ 13,248 $ 9,238
Weighted average shares outstanding:
Basic 2,129 2,129 2,129 2,129
Diluted 2,130 2,145 2,130 2,142
Earnings per share:
Basic $ 1.82 $ 2.22 $ 6.22 $ 4.34
Diluted $ 1.82 $ 2.20 $ 6.22 $ 4.31
HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis
Three Months Ended June 30,
2014 2015
AVERAGE
BALANCE
INTEREST YIELD/
RATE
AVERAGE
BALANCE
INTEREST YIELD/
RATE
(Dollars in thousands)
(Unaudited)
Loans (1) (2) $ 1,168,189 13,543 4.64% $ 1,277,323 $ 14,732 4.61%
Securities (3) (4) 117,791 208 0.71 82,026 216 1.05
Short-term investments and certificates of deposit 116,956 82 0.28 196,092 134 0.27
Total earning assets 1,402,936 13,833 3.94 1,555,441 15,082 3.88
Other assets 37,878 32,792
Total assets $ 1,440,814 $ 1,588,233
Interest-bearing deposits (5) $ 917,070 1,519 0.66 $ 1,013,585 1,874 0.74
Borrowed funds 306,186 916 1.20 331,158 728 0.88
Total interest-bearing liabilities 1,223,256 2,435 0.80 1,344,743 2,602 0.77
Demand deposits 99,194 110,770
Other liabilities 3,725 4,194
Total liabilities 1,326,175 1,459,707
Stockholders' equity 114,639 128,526
Total liabilities and stockholders' equity $ 1,440,814 $ 1,588,233
Net interest income $ 11,398 $ 12,480
Weighted average spread 3.14% 3.11%
Net interest margin (6) 3.25% 3.21%
Average interest-earning assets to average
interest-bearing liabilities (7) 114.68% 115.67%
(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
Six Months Ended June 30,
2014 2015
AVERAGE
BALANCE
INTEREST YIELD/
RATE
AVERAGE
BALANCE
INTEREST YIELD/
RATE
(Dollars in thousands)
(Unaudited)
Loans (1) (2) $ 1,141,363 $ 26,489 4.64% $ 1,263,897 $ 29,270 4.63%
Securities (3) (4) 118,486 413 0.70 84,530 433 1.02
Short-term investments and certificates of deposit 112,020 151 0.27 200,316 270 0.27
Total earning assets 1,371,869 27,053 3.94 1,548,743 29,973 3.87
Other assets 38,034 32,742
Total assets $ 1,409,903 $ 1,581,485
Interest-bearing deposits (5) $ 893,272 2,956 0.66 $ 1,009,726 3,701 0.73
Borrowed funds 306,752 1,986 1.29 328,085 1,463 0.89
Total interest-bearing liabilities 1,200,024 4,942 0.82 1,337,811 5,164 0.77
Demand deposits 95,719 112,751
Other liabilities 3,105 4,483
Total liabilities 1,298,848 1,455,045
Stockholders' equity 111,055 126,440
Total liabilities and stockholders' equity $ 1,409,903 $ 1,581,485
Net interest income $ 22,111 $ 24,809
Weighted average spread 3.12% 3.10%
Net interest margin (6) 3.22% 3.20%
Average interest-earning assets to average
interest-bearing liabilities (7) 114.32% 115.77%
(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