22% Increase in Quarterly Earnings Per Share, 15.59% Return on Equity

HINGHAM, Mass., Oct. 12, 2016 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ:HIFS), Hingham, Massachusetts announced third quarter earnings for 2016. Net income for the quarter ended September 30, 2016 was $5,945,000 or $2.79 per share basic and $2.76 per share diluted as compared to $4,874,000 or $2.29 per share basic and $2.27 per share diluted for the third quarter of 2015. Net income per share (basic) for the third quarter of 2016 increased 22% over the same period in 2015. The Bank’s annualized return on average equity for the third quarter of 2016 was 15.59%, and the annualized return on average assets was 1.23% as compared to 14.67% and 1.18% for the same period in 2015.

Net income for the nine months ended September 30, 2016 was $17,136,000 or $8.04 per share basic and $7.97 per share diluted as compared to $14,112,000 or $6.63 per share basic and $6.58 per share diluted for the same period last year. Net income per share (basic) for the first nine months of 2016 increased 21% over the same period in 2015. The Bank’s annualized return on average equity for the first nine months of 2016 was 15.53% and the annualized return on average assets was 1.21%, as compared to 14.63% and 1.17% for the same period in 2015.

Strong balance sheet growth trends of recent years continued, as deposits were $1.335 billion at September 30, 2016, representing 13% annualized growth year-to-date and 13% growth from September 30, 2015. Net loans were $1.563 billion at September 30, 2016, representing 15% annualized growth year-to-date and 16% growth from September 30, 2015. Total assets were $1.960 billion at September 30, 2016, representing 14% annualized growth year-to-date and 16% growth from September 30, 2015. Book value per share increased to $72.35 per share at September 30, 2016, representing a 15% annualized growth rate year-to-date and a 15% increase from September 30, 2015. In addition to the increase in book value per share, the Bank has declared $1.52 in dividends per share since September 30, 2015.

Key credit and operational metrics remained steady in the third quarter of 2016. At September 30, 2016, non-performing assets totaled 0.16% of total assets as compared with 0.10% at December 31, 2015 and 0.17% at September 30, 2015. Non-performing loans as a percentage of the total loan portfolio totaled 0.20% at September 30, 2016, as compared to 0.13% at December 31, 2015 and 0.21% at September 30, 2015. At September 30, 2016, the Bank did not own any foreclosed property. The efficiency ratio improved to 31.57% for the third quarter of 2016, as compared to 36.19% for the same period last year. Non-interest expense (annualized) as a percentage of average assets fell to 0.99% for the third quarter of 2016, as compared to 1.15% 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 another quarter of strong performance. 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 offices are located on Main Street in Hingham, MA. The Bank also maintains branch offices in South Hingham and the neighboring towns of Cohasset, Hull, Scituate, Norwell and Weymouth as well as branches in the South End of Boston, 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,
2015 2016 2015 2016
(Unaudited)
Key Performance Ratios
Return on average assets (1)1.18% 1.23% 1.17% 1.21%
Return on average equity (1)14.67 15.59 14.63 15.53
Interest rate spread (1) (2)3.04 3.00 3.08 2.97
Net interest margin (1) (3)3.16 3.12 3.19 3.09
Non-interest expense to average assets (1)1.15 0.99 1.19 1.02
Efficiency ratio (4)36.19 31.57 36.94 32.94
Average equity to average assets8.01 7.88 8.00 7.78
Average interest-earning assets to average interest-
bearing liabilities

115.97

116.41

115.84

116.03


September 30,
2015
December 31,
2015
September 30,
2016

(Unaudited)
Asset Quality Ratios
Allowance for loan losses/total loans 0.71% 0.70% 0.68%
Allowance for loan losses/non-performing loans 345.96 540.37 334.89
Non-performing loans/total loans 0.21 0.13 0.20
Non-performing loans/total assets 0.16 0.10 0.16
Non-performing assets/total assets 0.17 0.10 0.16
Share Related
Book value per share$62.94 $64.83 $ 72.35
Market value per share$116.03 $119.80 $ 138.50
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

(Dollars in thousands, except per share data)
September 30,
2015
December 31,
2015

September 30,
2016
(Unaudited)
ASSETS
Cash and due from banks $6,646 $6,944 $7,849
Short-term investments 231,311 254,069 305,990
Cash and cash equivalents 237,957 261,013 313,839
Certificates of deposit 7,448 6,206 1,142
Securities available for sale, at fair value 48,943 40,603 22,882
Federal Home Loan Bank stock, at cost 18,454 19,796 24,203
Loans, net of allowance for loan losses of $9,635
at September 30, 2015, $9,905 at December 31, 2015
and $10,713 at September 30, 2016


1,342,634


1,405,533


1,562,934
Foreclosed assets 118
Bank-owned life insurance 11,628 11,697 11,900
Premises and equipment, net 15,130 15,094 14,605
Accrued interest receivable 3,156 3,270 3,394
Deferred income tax asset, net 2,627 3,281 2,957
Other assets 2,864 2,035 2,453
Total assets$1,690,959 $1,768,528 $1,960,309


LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits$ 1,057,392 $ 1,088,742 $ 1,183,905
Non-interest-bearing deposits 122,578 128,285 151,284
Deposits 1,179,970 1,217,027 1,335,189
Federal Home Loan Bank advances 367,499 402,464 460,356
Mortgage payable 935 922 882
Mortgagors’ escrow accounts 4,629 4,850 5,389
Accrued interest payable 281 303 360
Other liabilities 3,669 4,947 3,979
Total liabilities 1,556,983 1,630,513 1,806,155
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
September 30, 2015 and December 31, 2015 and
2,130,750 shares issued and outstanding at September
30, 2016



2,129



2,129



2,131
Additional paid-in capital 11,029 11,052 11,351
Undivided profits 120,524 124,481 139,656
Accumulated other comprehensive income 294 353 1,016
Total stockholders’ equity 133,976 138,015 154,154
Total liabilities and stockholders’ equity$1,690,959 $1,768,528 $1,960,309


HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income
Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands, except per share amounts) 2015 2016 2015 2016
(Unaudited)
Interest and dividend income:
Loans $15,180 $17,477 $44,450 $50,890
Debt securities 43 6 162 52
Equity securities 231 352 545 881
Short-term investments and certificates of deposit 154 382 424 1,126
Total interest and dividend income 15,608 18,217 45,581 52,949
Interest expense:
Deposits 2,047 2,435 5,748 7,125
Federal Home Loan Bank advances 728 933 2,162 2,782
Mortgage payable 14 13 43 40
Total interest expense 2,789 3,381 7,953 9,947
Net interest income 12,819 14,836 37,628 43,002
Provision for loan losses 175 300 525 810
Net interest income, after provision for loan losses 12,644 14,536 37,103 42,192
Other income:
Customer service fees on deposits 250 239 731 691
Increase in bank-owned life insurance 71 63 212 203
Gain on sale of securities 29 29 344
Miscellaneous 46 45 142 143
Total other income 396 347 1,114 1,381
Operating expenses:
Salaries and employee benefits 2,875 2,927 8,701 8,988
Occupancy and equipment 513 446 1,586 1,401
Data processing 291 318 891 926
Deposit insurance 224 265 662 771
Foreclosure 30 25 62 107
Marketing 126 104 384 329
Other general and administrative 713 708 2,015 1,983
Total operating expenses 4,772 4,793 14,301 14,505
Income before income taxes 8,268 10,090 23,916 29,068
Income tax provision 3,394 4,145 9,804 11,932
Net income $4,874 $5,945 $14,112 $17,136
Cash dividends declared per share $0.30 $0.32 $0.86 $0.92
Weighted average shares outstanding:
Basic 2,129 2,131 2,129 2,130
Diluted 2,146 2,152 2,144 2,150
Earnings per share:
Basic $2.29 $2.79 $6.63 $8.04
Diluted $2.27 $2.76 $6.58 $7.97


HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis
Three Months Ended September 30,
2015 2016
AVERAGE
BALANCE

INTEREST
YIELD/
RATE (8)
AVERAGE
BALANCE

INTEREST
YIELD/
RATE (8)
(Dollars in thousands)
(Unaudited)
Loans (1) (2)$1,320,522 $15,180 4.60% $11,552,866 $17,477 4.50%
Securities (3) (4) 71,903 274 1.52 49,354 358 2.90
Short-term investments and certificates of deposit 232,181 154 0.27 300,435 382 0.51
Total interest-earning assets 1,624,606 15,608 3.84 11,902,655 18,217 3.83
Other assets 33,424 33,109
Total assets$1,658,030 $1,935,764
Interest-bearing deposits (5)$1,043,970 2,047 0.78 $1,194,292 2,435 0.82
Borrowed funds 356,930 742 0.83 440,104 946 0.86
Total interest-bearing liabilities 1,400,900 2,789 0.80 1,634,396 3,381 0.83
Demand deposits 120,303 144,497
Other liabilities 3,952 4,334
Total liabilities 1,525,155 1,783,227
Stockholders’ equity 132,875 152,537
Total liabilities and stockholders’ equity$1,658,030 $1,935,764
Net interest income $12,819 $14,836
Weighted average spread 3.04% 3.00%
Net interest margin (6) 3.16% 3.12%
Average interest-earning assets to average
interest-bearing liabilities (7)

115.97

%

116.41

%


(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
Nine Months Ended September 30,
2015 2016
AVERAGE
BALANCE

INTEREST
YIELD/
RATE (8)
AVERAGE
BALANCE

INTEREST
YIELD/
RATE (8)
(Dollars in thousands)
(Unaudited)
Loans (1) (2)$1,282,979 $44,450 4.62% $1,500,203 $50,890 4.52%
Securities (3) (4) 80,275 707 1.17 57,358 933 2.17
Short-term investments and certificates of deposit 211,054 424 0.27 298,729 1,126 0.50
Total interest-earning assets 1,574,308 45,581 3.86 1,856,290 52,949 3.80
Other assets 32,972 33,265
Total assets$1,607,280 $1,889,555
Interest-bearing deposits (5)$1,021,266 5,748 0.75 $1,164,317 7,125 0.82
Borrowed funds 337,806 2,205 0.87 435,548 2,822 0.86
Total interest-bearing liabilities 1,359,072 7,953 0.78 1,599,865 9,947 0.83
Demand deposits 115,296 137,873
Other liabilities 4,327 4,741
Total liabilities 1,478,695 1,742,479
Stockholders’ equity 128,585 147,076
Total liabilities and stockholders’ equity$1,607,280 $1,889,555
Net interest income $37,628 $43,002
Weighted average spread 3.08% 2.97%
Net interest margin (6) 3.19% 3.09%
Average interest-earning assets to average
interest-bearing liabilities (7)

115.84

%

116.03

%


(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