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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 assets7.91 8.01 7.89 8.00
Average interest-bearing assets to average interest bearing liabilities115.18 115.97 114.62 115.84


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

Source:Hingham Institution for Savings