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Hingham Savings Announces 17% Increase in Annual Operating Earnings

HINGHAM, Mass., Jan. 19, 2016 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ:HIFS), announced net income for the year ended December 31, 2015 was $19,346,000 or $9.09 per share basic and $9.02 per share diluted as compared to $22,264,000 or $10.46 per share basic and $10.44 per share diluted for 2014. Annual earnings for 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 reported in the Bank’s 2014 Annual Report on Form 10-K. Excluding this event, the Bank’s operating earnings was $16,523,000 or $7.76 per share basic and $7.75 per share fully diluted for 2014. Net income per share (basic) for 2015 increased 17% over 2014, excluding the impact of the life insurance transaction.

The Bank’s return on average equity for the year ended December 31, 2015 was 14.81% and the return on average assets was 1.18%. Excluding the impact of the life insurance transaction, the Bank’s return on average equity for the year ended December 31, 2014 was 14.32% and the return on average assets was 1.13%.

Net income for the fourth quarter of 2015 was $5,234,000 or $2.46 per share basic and $2.44 per share diluted; a 15% increase over $4,535,000 or $2.13 per share basic and $2.12 per share diluted for the fourth quarter of 2014. The Bank’s return on average equity for the quarter ending December 31, 2015 was 15.30% and the return on average assets was 1.21%, an improvement from 15.01% and 1.18% for the same quarter last year.

The Bank produced strong growth in deposits, loans, and book value per share in 2015. Deposits increased by 12% to $1.217 billion. Net loans increased by 13% to $1.406 billion. Total assets increased by 14% to $1.769 billion. Book value per share increased by 14% to $64.83. This increase in book value per share excludes capital returned to the ownership through regular and special dividends; the Bank declared $1.46 in regular and special dividends in 2015.

Key credit and operational metrics continued to improve in 2015. At December 31, 2015, non-performing assets totaled 0.10% of total assets compared to 0.20% of total assets at December 31, 2014. Non-performing loans as a percentage of the total loan portfolio totaled 0.13% at December 31, 2015 as compared to 0.18% at December 31, 2014. At December 31, 2015, the Bank did not own any foreclosed real estate. The efficiency ratio improved to 36.32% in 2015 as compared to 37.12% in 2014. Operating expenses as a percentage of average assets improved to 1.16% in 2015 as compared to 1.37% in 2014. Both the efficiency ratio and operating expenses as a percentage of average assets reached new record lows in 2015 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 a strong return on that capital in 2015. Our emphasis on careful capital allocation, conservative underwriting, disciplined cost control and measured growth continues to serve our shareholders well. More important than performance in any one year, however, is a company’s record of compounding shareholder capital over time and through credit cycles. On this measure, our team strives to set a 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 in Hingham. 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 Twelve Months Ended
December 31, December 31,
2014 2015 2014 2015
(Unaudited)
Key Performance Ratios
Return on average assets (1)1.18% 1.21% 1.52% 1.18%
Return on average equity (1)15.01 15.30 19.30 14.81
Interest rate spread (1) (2)3.12 3.02 3.13 3.06
Net interest margin (1) (3)3.23 3.14 3.23 3.17
Non-interest expense to average assets (1)1.24 1.09 1.37 1.16
Efficiency ratio (4)37.95 34.55 37.12 36.32
Average equity to average assets7.83 7.90 7.87 7.97
Average interest-bearing assets to average interest
bearing liabilities

115.74

115.90

114.92

115.85


December 31,
December 31,
2014 2015
(Unaudited)
Asset Quality Ratios
Allowance for loan losses/total loans 0.73% 0.70%
Allowance for loan losses/non-performing loans 397.04 540.37
Non-performing loans/total loans 0.18 0.13
Non-performing loans/total assets 0.15 0.10
Non-performing assets/total assets 0.20 0.10
Share Related
Book value per share$57.08 $64.83
Market value per share$87.01 $119.80
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, excluding gain on sale of securities.

HINGHAM INSTITUTION FOR SAVINGS
Consolidated Balance Sheets
December 31, December 31,
(Dollars in thousands, except per share data)2014 2015
(Unaudited)
ASSETS
Cash and due from banks $6,917 $6,944
Short-term investments 170,305 254,069
Cash and cash equivalents 177,222 261,013
Certificates of deposit 12,926 6,206
Securities available for sale, at fair value 70,570 40,603
Federal Home Loan Bank stock, at cost 17,855 19,796
Loans, net of allowance for loan losses of $9,108 at
December 31, 2014 and $9,905 at December 31, 2015 1,238,656 1,405,533
Foreclosed real estate 786
Bank-owned life insurance 11,416 11,697
Premises and equipment, net 15,211 15,094
Accrued interest receivable 2,959 3,270
Deferred income tax asset, net 2,642 3,281
Other assets 1,962 2,035
Total assets$1,552,205 $1,768,528
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits $1,089,217 $1,217,027
Federal Home Loan Bank advances 329,602 402,464
Mortgage payable 973 922
Mortgagors’ escrow accounts 4,476 4,850
Accrued interest payable 350 303
Other liabilities 6,072 4,947
Total liabilities 1,430,690 1,630,513
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
Additional paid-in capital 10,942 11,052
Undivided profits 108,243 124,481
Accumulated other comprehensive income 201 353
Total stockholders’ equity 121,515 138,015
Total liabilities and stockholders’ equity$1,552,205 $1,768,528


HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Net Income
Three Months Ended Twelve Months Ended
December 31, December 31,
(In thousands, except per share amounts)2014 2015
2014
2015
(Unaudited)
Interest and dividend income:
Loans$14,392 $15,810 $54,990 $60,260
Debt securities 73 33 336 195
Equity securities 145 250 491 795
Short-term investments and certificates of deposit 130 185 376 609
Total interest and dividend income 14,740 16,278 56,193 61,859
Interest expense:
Deposits 1,760 2,197 6,314 7,945
Federal Home Loan Bank advances 760 746 3,562 2,908
Mortgage payable 15 14 60 57
Total interest expense 2,535 2,957 9,936 10,910
Net interest income 12,205 13,321 46,257 50,949
Provision for loan losses 150 100 625 625
Net interest income, after provision for loan losses12,055 13,221 45,632 50,324
Other income:
Customer service fees on deposits 258 247 1,014 978
Increase in bank-owned life insurance 70 69 308 281
Gain on life insurance distribution 6,302
Gain on sale of securities 29
Miscellaneous 57 53 239 195
Total other income 385 369 7,863 1,483
Operating expenses:
Salaries and employee benefits 2,846 2,931 12,424 11,632
Data processing 304 291 1,197 1,182
Occupancy and equipment 496 471 1,968 2,057
Deposit insurance 211 240 803 902
Foreclosure 29 10 263 72
Marketing 203 105 557 489
Other general and administrative 682 682 2,877 2,697
Total operating expenses 4,771 4,730 20,089 19,031
Income before income taxes 7,669 8,860 33,406 32,776
Income tax provision 3,134 3,626 11,142 13,430
Net income$4,535 $5,234 $22,264 $19,346
Weighted average common shares outstanding:
Basic 2,129 2,129 2,129 2,129
Diluted 2,136 2,149 2,133 2,145
Earnings per common share:
Basic$2.13 $2.46 $10.46 $9.09
Diluted$2.12 $2.44 $10.44 $9.02

HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis
Three Months Ended December 31,
2014 2015
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
(Dollars in thousands)
(Unaudited)
Loans (1) (2)$1,228,130 $14,392 4.69% $1,381,732 $15,810 4.58%
Securities (3) (4) 96,852 218 0.90 64,082 283 1.77
Short-term investments and certificates of deposit 185,211 130 0.28 253,716 185 0.29
Total earning assets 1,510,193 14,740 3.90 1,699,530 16,278 3.83
Other assets 33,565 33,138
Total assets$1,543,758 $1,732,668
Interest-bearing deposits (5)$965,990 1,760 0.73 $1,087,721 2,197 0.81
Borrowed funds 338,841 775 0.91 378,621 760 0.80
Total interest-bearing liabilities 1,304,831 2,535 0.78 1,466,342 2,957 0.81
Demand deposits 111,821 124,994
Other liabilities 6,245 4,499
Total liabilities 1,422,897 1,595,835
Stockholders’ equity 120,861 136,833
Total liabilities and stockholders’ equity$1,543,758 $1,732,668
Net interest income $12,205 $13,321
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% 115.90%


(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 2015
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
(Dollars in thousands)
(Unaudited)
Loans (1) (2)$1,179,865 $54,990 4.66% $1,307,871 $60,260 4.61%
Securities (3) (4) 110,021 827 0.75 76,193 990 1.30
Short-term investments and certificates of deposit 140,393 376 0.27 221,807 609 0.27
Total earning assets 1,430,279 56,193 3.93 1,605,871 61,859 3.85
Other assets 35,824 33,014
Total assets$1,466,103 $1,638,885
Interest-bearing deposits (5)$923,550 6,314 0.68 $1,038,016 7,945 0.77
Borrowed funds 321,068 3,622 1.13 348,094 2,965 0.85
Total interest-bearing liabilities 1,244,618 9,936 0.80 1,386,110 10,910 0.79
Demand deposits 101,974 117,741
Other liabilities 4,130 4,387
Total liabilities 1,350,722 1,508,238
Stockholders’ equity 115,381 130,647
Total liabilities and stockholders’ equity$1,466,103 $1,638,885
Net interest income $46,257 $50,949
Weighted average spread 3.13% 3.06%
Net interest margin (6) 3.23% 3.17%
Average interest-earning assets to average interest-bearing liabilities (7) 114.92% 115.85%


(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