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Hingham Savings Announces 14% Increase in Diluted Earnings Per Share and 14.77% Return on Equity

HINGHAM, Mass., April 12, 2017 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ:HIFS), Hingham, Massachusetts announced earnings for the first quarter ended March 31, 2017.

Net income for the quarter ended March 31, 2017 was $6,112,000 or $2.87 per share basic and $2.83 per share diluted, as compared to $5,324,000 or $2.50 per share basic and $2.48 per share diluted for the same period last year. For the first quarter of 2017, the Bank’s annualized return on average equity was 14.77% and the annualized return on average assets was 1.21%, as compared to 15.03% and 1.19%, respectively, for the same period in 2016.

Solid growth trends of recent years continued, as deposits increased to $1.403 billion at March 31, 2017, representing 11% annualized growth year-to-date and 11% growth from March 31, 2016. Net loans increased to $1.634 billion, representing 7% annualized growth year-to-date and 12% growth from March 31, 2016. Total assets increased to $2.039 billion, representing 5% annualized growth year-to-date and 10% growth from March 31, 2016, primarily driven by the Bank’s larger loan portfolio. Book value per share was $78.29 as of March 31, 2017, representing a 16% increase from the same time last year and 15% annualized growth year to date. This increase in book value per share excludes capital returned to the ownership through regular and special dividends; the Bank has declared $1.58 in regular and special dividends since March 31, 2016, including a regular dividend of $0.32 declared during the first quarter of 2017.

Key credit and operational metrics remained strong in the first quarter. At March 31, 2017, non-performing assets totaled 0.09% of total assets, compared to 0.09% at December 31, 2016 and 0.19% at March 31, 2016. Non-performing loans as a percentage of the total loan portfolio totaled 0.08% at March 31, 2017, compared to 0.11% at December 31, 2016 and 0.22% at March 31, 2016. At March 31, 2017, the Bank owned only one piece of foreclosed property valued at $563,000. The efficiency ratio improved to 32.45% for the first quarter of 2017, as compared to 34.38% for the same period last year. Non-interest expense as a percentage of average assets fell to 1.02% in the first quarter, as compared to 1.09% for the same period last year. Both the efficiency ratio and operating expenses as a percentage of average assets reflect the Bank’s particular focus on disciplined expense management.

President Robert H. Gaughen Jr. stated, “We are pleased to report that our first quarter of 2017 diluted earnings per share represent an 14% increase over the same period in 2016 and a 14.77% return on average equity. At Hingham, we take our role as stewards of the owners’ capital seriously. We remain focused on careful capital allocation, conservative underwriting, and disciplined cost control – strategies that have served our owners well over time and through credit cycles.”

Hingham Institution for Savings is a Massachusetts-chartered savings bank located in Hingham, Massachusetts. Incorporated in 1834, it is one of America’s oldest banks. The Bank’s Main Office is located in Hingham and the Bank also maintains offices on the South Shore, in Boston (South End and 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
March 31,
2016 2017
(Unaudited)
Key Performance Ratios
Return on average assets (1)1.19% 1.21%
Return on average equity (1)15.03 14.77
Interest rate spread (1) (2)3.03 3.00
Net interest margin (1) (3)3.14 3.12
Non-interest expense to average assets (1)1.09 1.02
Efficiency ratio (4)34.38 32.45
Average equity to average assets7.89 8.21
Average interest-earning assets to average interest
bearing liabilities
116.13 116.78


March 31,
2016
December 31,
2016
March 31,
2017
(Unaudited)
Asset Quality Ratios
Allowance for loan losses/total loans 0.70% 0.68% 0.69%
Allowance for loan losses/non-performing loans 311.79 614.43 846.59
Non-performing loans/total loans 0.22 0.11 0.08
Non-performing loans/total assets 0.18 0.09 0.07
Non-performing assets/total assets 0.19 0.09 0.09
Share Related
Book value per share$67.21 $75.50 $ 78.29
Market value per share$119.11 $196.78 $ 176.85
Shares outstanding at end of period 2,130,750 2,132,750 2,132,750

(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 interest-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
(In thousands, except share amounts)March 31,
2016
December 31,
2016
March 31,
2017
(Unaudited)
ASSETS
Cash and due from banks$7,643 $7,816 $6,548
Federal Reserve and other short-term investments 290,414 315,116 310,130
Cash and cash equivalents 298,057 322,932 316,678
Certificates of deposit 4,469
CRA investment 5,041 6,839 7,341
Other securities available for sale 32,359 20,329 21,369
Securities available for sale, at fair value 37,400 27,168 28,710
Federal Home Loan Bank stock, at cost 20,679 24,472 24,920
Loans, net of allowance for loan losses of $10,158
at March 31, 2016, $11,030 at December 31, 2016
and $11,285 at March 31, 2017
1,453,722 1,605,647 1,634,263
Foreclosed assets 168 563
Bank-owned life insurance 11,764 11,962 12,029
Premises and equipment, net 14,921 14,462 14,314
Accrued interest receivable 3,435 3,529 3,576
Deferred income tax asset, net 3,127 2,489 2,226
Other assets 2,188 1,938 2,217
Total assets$1,849,930 $2,014,599 $2,039,496
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits$1,135,004 $1,218,360 $1,248,381
Non-interest-bearing deposits 133,297 147,749 154,622
Total deposits 1,268,301 1,366,109 1,403,003
Federal Home Loan Bank advances 425,429 475,318 455,281
Mortgage payable 909 868 855
Mortgagors’ escrow accounts 4,995 5,585 5,787
Accrued interest payable 324 400 396
Other liabilities 6,770 5,295 7,207
Total liabilities 1,706,728 1,853,575 1,872,529
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; 2,130,750 shares issued and outstanding at
March 31, 2016 and 2,132,750 shares issued and
outstanding at December 31, 2016 and March 31, 2017
2,131 2,133
2,133
Additional paid-in capital 11,260 11,575 11,619
Undivided profits 129,166 144,580 150,008
Accumulated other comprehensive income 645 2,736 3,207
Total stockholders’ equity 143,202 161,024 166,967
Total liabilities and stockholders’ equity$1,849,930 $2,014,599 $2,039,496

HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income
Three Months Ended
March 31,
(In thousands, except per share amounts)2016 2017
(Unaudited)
Interest and dividend income:
Loans$16,430 $17,968
Debt securities 28
Equity securities 244 353
Federal Reserve and other short-term investments 326 609
Total interest and dividend income 17,028 18,930
Interest expense:
Deposits 2,290 2,518
Federal Home Loan Bank advances 890 960
Mortgage payable 14 13
Total interest expense 3,194 3,491
Net interest income 13,834 15,439
Provision for loan losses 255 255
Net interest income, after provision for loan losses 13,579 15,184
Other income:
Customer service fees on deposits 216 219
Increase in cash surrender value of bank-owned life insurance 67 67
Miscellaneous 49 45
Total other income 332 331
Operating expenses:
Salaries and employee benefits 3,070 3,146
Occupancy and equipment 471 464
Data processing 305 297
Deposit insurance 242 258
Foreclosure 56 43
Marketing 116 124
Other general and administrative 610 786
Total operating expenses 4,870 5,118
Income before income taxes 9,041 10,397
Income tax provision 3,717 4,285
Net income$5,324 $6,112
Cash dividends declared per common share$0.30 $0.32
Weighted average shares outstanding:
Basic 2,130 2,133
Diluted 2,149 2,162
Earnings per share:
Basic$2.50 $2.87
Diluted$2.48 $2.83

HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis
Three Months Ended March 31,
2016 2017
AVERAGE
BALANCE
INTEREST YIELD/
RATE (8)
AVERAGE
BALANCE
INTEREST YIELD/
RATE (8)
(Dollars in thousands)
(Unaudited)
Loans (1) (2)$1,439,994 $16,430 4.56% $1,625,525 $17,968 4.42%
Securities (3) (4) 61,042 272 1.78 47,643 353 2.96
Federal Reserve and other short-term investments 260,669 326 0.50 309,143 609 0.79
Total interest-earning assets 1,761,705 17,028 3.87 1,982,311 18,930 3.82
Other assets 33,156 34,405
Total assets$1,794,861 $2,016,716
Interest-bearing deposits (5)$1,120,656 2,290 0.82 $1,229,476 2,518 0.82
Borrowed funds 396,378 904 0.91 467,988 973 0.83
Total interest-bearing liabilities 1,517,034 3,194 0.84 1,697,464 3,491 0.82
Demand deposits 131,212 148,841
Other liabilities 4,947 4,849
Total liabilities 1,653,193 1,851,154
Stockholders’ equity 141,668 165,562
Total liabilities and stockholders’ equity$1,794,861 $2,016,716
Net interest income $13,834 $15,439
Weighted average spread 3.03% 3.00%
Net interest margin (6) 3.14% 3.12%
Average interest-earning assets to average
interest-bearing liabilities (7)


116.13


%


116.78


%


(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