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Hingham Savings Announces 24% Increase In Quarterly Earnings Per Share, 15.96% Return On Equity

HINGHAM, Mass., July 13, 2016 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ:HIFS), announced second quarter earnings for 2016. Net income for the quarter ended June 30, 2016 was $5,867,000 or $2.75 per share basic and $2.73 per share diluted as compared to $4,723,000 or $2.22 per share basic and $2.20 per share diluted for the second quarter of 2015. Net income per share (basic) for the second quarter of 2016 increased 24% over the same period in 2015. The Bank’s annualized return on average equity for the second quarter of 2016 was 15.96%, and the annualized return on average assets was 1.21% as compared to 14.70% and 1.19% for the same period in 2015. Net income for the 2016 period included an after-tax realized gain on investments of approximately $221,000, which was unrelated to the Bank’s core business operations.

Net income for the six months ended June 30, 2016 was $11,191,000 or $5.25 per share basic and $5.21 per share diluted as compared to $9,238,000 or $4.34 per share basic and $4.31 per share diluted for the same period last year. Net income per share (basic) for the first six months of 2016 increased 21% over the same period in 2015. The Bank’s annualized return on average equity for the first six months of 2016 was 15.51% and the annualized return on average assets was 1.20%. 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%.

Strong balance sheet growth trends of recent years continued, as deposits were $1.320 billion at June 30, 2016, representing 17% annualized growth year-to-date and 17% growth from June 30, 2015. Net loans were $1.525 billion at June 30, 2016, representing 17% annualized growth year-to-date and 18% growth from June 30, 2015. Total assets were $1.919 billion at June 30, 2016, representing 17% annualized growth year-to-date and 17% growth from June 30, 2015. Book value per share increased to $69.69 per share at June 30, 2016, representing a 15% annualized growth rate year-to-date and a 14% increase from June 30, 2015. In addition to the increase in book value per share, the Bank has declared $1.50 in dividends per share since June 30, 2015.

Key credit and operational metrics remained steady in the second quarter of 2016. At June 30, 2016, non-performing assets totaled 0.18% of total assets, compared with 0.10% at December 31, 2015 and 0.11% at June 30, 2015. Non-performing loans as a percentage of the total loan portfolio totaled 0.22% at June 30, 2016, as compared to 0.13% at December 31, 2015 and 0.13% at June 30, 2015. At June 30, 2016, the Bank did not own any foreclosed property. The efficiency ratio improved to 32.96% for the second quarter of 2016, as compared to 36.36% for the same period last year. Non-interest expense (annualized) as a percentage of average assets fell to 1.00% for the second quarter of 2016, as compared to 1.18% for the same period last year. These metrics reflect the Bank’s disciplined focus on credit and expense management.

President Robert H. Gaughen, Jr. stated, “We are pleased to report that our current quarterly earnings per share represent a 24% increase over the second quarter of 2015. At Hingham, we take our role as stewards of the shareholders’ capital seriously. Our emphasis on careful capital allocation, defensive and conservative underwriting, and disciplined cost control continues to serve our owners well. More important than performance in any one period, 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 Office is 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
June 30,
Six Months Ended
June 30,
2015 2016 2015 2016
(Unaudited)
Key Performance Ratios
Return on average assets (1)1.19% 1.21% 1.17% 1.20%
Return on average equity (1)14.70 15.96 14.61 15.51
Interest rate spread (1) (2)3.11 2.90 3.10 2.96
Net interest margin (1) (3)3.21 3.01 3.20 3.07
Non-interest expense to average assets (1)1.18 1.00 1.21 1.04
Efficiency ratio (4)36.36 32.96 37.33 33.66
Average equity to average assets8.09 7.59 8.00 7.73
Average interest-earning assets to average interest-
bearing liabilities
115.67 115.55 115.77 115.83


June 30,
December 31, June 30,
2015 2015 2016
(Unaudited)
Asset Quality Ratios
Allowance for loan losses/total loans 0.73% 0.70% 0.68%
Allowance for loan losses/non-performing loans 569.13 540.37 302.09
Non-performing loans/total loans 0.13 0.13 0.22
Non-performing loans/total assets 0.10 0.10 0.18
Non-performing assets/total assets 0.11 0.10 0.18
Share Related
Book value per share$60.96 $64.83 $ 69.69
Market value per share$115.11 $119.80 $122.92
Shares outstanding at end of period 2,128,750 2,128,750 2,130,750

(1) Annualized.

(2) Interest rate spread represents the difference between the yield on interest-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
June 30, December 31, June 30,
(Dollars in thousands, except per share data)2015 2015 2016
(Unaudited)
ASSETS
Cash and due from banks $10,115 $6,944 $10,788
Short-term investments 207,143 254,069 287,009
Cash and cash equivalents 217,258 261,013 297,797
Certificates of deposit 9,281 6,206 2,630
Securities available for sale, at fair value 59,831 40,603 32,949
Federal Home Loan Bank stock, at cost 18,454 19,796 24,203
Loans, net of allowance for loan losses of $9,459
at June 30, 2015, $9,905 at December 31, 2015
and $10,413 at June 30, 2016 1,294,141 1,405,533 1,525,407
Foreclosed assets 175
Bank-owned life insurance 11,557 11,697 11,838
Premises and equipment, net 15,085 15,094 14,774
Accrued interest receivable 3,075 3,270 3,498
Deferred income tax asset, net 2,589 3,281 3,146
Other assets 2,550 2,035 2,423
Total assets$1,633,996 $1,768,528 $1,918,665
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits$1,011,365 $1,088,742 $1,183,353
Non-interest-bearing deposits 116,813 128,285 136,272
Deposits 1,128,178 1,217,027 1,319,625
Federal Home Loan Bank advances 366,534 402,464 440,392
Mortgage payable 948 922 896
Mortgagors’ escrow accounts 4,223 4,850 4,970
Accrued interest payable 302 303 388
Other liabilities 4,044 4,947 3,897
Total liabilities 1,504,229 1,630,513 1,770,168
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
June 30, 2015 and December 31, 2015 and 2,130,750
shares issued and outstanding at June 30, 2016
2,129 2,129 2,131
Additional paid-in capital 11,006 11,052 11,319
Undivided profits 116,289 124,481 134,394
Accumulated other comprehensive income 343 353 653
Total stockholders’ equity 129,767 138,015 148,497
Total liabilities and stockholders’ equity$1,633,996 $1,768,528 $1,918,665


HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income
Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except per share amounts) 2015 2016 2015 2016
(Unaudited)
Interest and dividend income:
Loans $14,732 $16,983 $29,270 $33,413
Debt securities 57 18 119 46
Equity securities 159 285 314 529
Short-term investments and certificates of deposit 134 418 270 744
Total interest and dividend income 15,082 17,704 29,973 34,732
Interest expense:
Deposits 1,874 2,400 3,701 4,690
Federal Home Loan Bank advances 713 959 1,434 1,849
Mortgage payable 15 13 29 27
Total interest expense 2,602 3,372 5,164 6,566
Net interest income 12,480 14,332 24,809 28,166
Provision for loan losses 175 255 350 510
Net interest income, after provision for loan losses 12,305 14,077 24,459 27,656
Other income:
Customer service fees on deposits 253 236 481 452
Increase in bank-owned life insurance 71 74 141 141
Gain on sale of securities 344 344
Miscellaneous 37 48 96 97
Total other income 361 702 718 1,034
Operating expenses:
Salaries and employee benefits 2,922 2,991 5,826 6,061
Occupancy and equipment 519 484 1,073 955
Data processing 304 303 600 608
Deposit insurance 221 264 438 506
Foreclosure (45) 26 32 82
Marketing 137 109 258 225
Other general and administrative 611 665 1,302 1,275
Total operating expenses 4,669 4,842 9,529 9,712
Income before income taxes 7,997 9,937 15,648 18,978
Income tax provision 3,274 4,070 6,410 7,787
Net income $4,723 $5,867 $9,238 $11,191
Cash dividends declared per share $0.28 $0.30 $0.56 $0.60
Weighted average shares outstanding:
Basic 2,129 2,131 2,129 2,130
Diluted 2,145 2,149 2,142 2,148
Earnings per share:
Basic $2.22 $2.75 $4.34 $5.25
Diluted $2.20 $2.73 $4.31 $5.21


HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis
Three Months Ended June 30,
2015 2016
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE (8) BALANCE INTEREST RATE (8)
(Dollars in thousands)
(Unaudited)
Loans (1) (2)$1,277,323 $14,732 4.61% $1,507,171 $16,983 4.51%
Securities (3) (4) 82,026 216 1.05 61,766 303 1.96
Short-term investments and certificates of deposit 196,092 134 0.27 335,064 418 0.50
Total interest-earning assets 1,555,441 15,082 3.88 1,904,001 17,704 3.72
Other assets 32,792 33,532
Total assets$1,588,233 $1,937,533
Interest-bearing deposits (5)$1,013,585 1,874 0.74 $1,177,674 2,400 0.82
Borrowed funds 331,158 728 0.88 470,110 972 0.83
Total interest-bearing liabilities 1,344,743 2,602 0.77 1,647,784 3,372 0.82
Demand deposits 110,770 137,837
Other liabilities 4,194 4,889
Total liabilities 1,459,707 1,790,510
Stockholders’ equity 128,526 147,023
Total liabilities and stockholders’ equity$1,588,233 $1,937,533
Net interest income $12,480 $14,332
Weighted average spread 3.11% 2.90%
Net interest margin (6) 3.21% 3.01%
Average interest-earning assets to average
interest-bearing liabilities (7)
115.67% 115.55%


(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 interest-earning assets.
(7) Total interest-earning assets divided by total interest-bearing liabilities.
(8) Annualized


HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis
Six Months Ended June 30,
2015 2016
AVERAGE
YIELD/ AVERAGE YIELD/
BALANCE
INTEREST RATE (8) BALANCE
INTEREST
RATE (8)
(Dollars in thousands)
(Unaudited)
Loans (1) (2)$1,263,897 $29,270 4.63% $1,473,583 $33,413 4.53%
Securities (3) (4) 84,530 433 1.02 61,404 575 1.87
Short-term investments and certificates of deposit 200,316 270 0.27 297,866 744 0.50
Total interest-earning assets 1,548,743 29,973 3.87 1,832,853 34,732 3.79
Other assets 32,742 33,344
Total assets$1,581,485 $1,866,197
Interest-bearing deposits (5)$1,009,726 3,701 0.73 $1,149,165 4,690 0.82
Borrowed funds 328,085 1,463 0.89 433,244 1,876 0.87
Total interest-bearing liabilities 1,337,811 5,164 0.77 1,582,409 6,566 0.83
Demand deposits 112,751 134,524
Other liabilities 4,483 4,918
Total liabilities 1,455,045 1,721,851
Stockholders’ equity 126,440 144,346
Total liabilities and stockholders’ equity$1,581,485 $1,866,197
Net interest income $24,809 $28,166
Weighted average spread 3.10% 2.96%
Net interest margin (6) 3.20% 3.07%
Average interest-earning assets to average
interest-bearing liabilities (7)
115.77% 115.83%


(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 interest-earning assets.
(7) Total interest-earning assets divided by total interest-bearing liabilities.
(8) Annualized

CONTACT: Patrick R. Gaughen, Executive Vice President (781) 783-1761

Source:Hingham Institution for Savings