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Hingham Savings Announces 9% Increase in Diluted Quarterly Earnings per Share and 15.08% Return on Equity

HINGHAM, Mass., July 13, 2017 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ:HIFS), Hingham, Massachusetts announced second quarter earnings for 2017.

Net income for the quarter ended June 30, 2017 was $6,470,000 or $3.03 per share basic and $2.97 per share diluted as compared to $5,867,000 or $2.75 per share basic and $2.73 per share diluted for the same period last year. Net income per share (diluted) for the second quarter of 2017 increased 9% over the same period of 2016. The Bank’s annualized return on average equity for the second quarter of 2017 was 15.08%, and the annualized return on average assets was 1.25% as compared to 15.96% and 1.21% for the same period in 2016. Net income for the 2017 and 2016 periods included after-tax realized gains on investments of approximately $49,000 and $221,000 respectively, which were unrelated to the Bank’s core business operations.

Net income for the six months ended June 30, 2017 was $12,582,000 or $5.90 per share basic and $5.77 per share diluted as compared to $11,191,000 or $5.25 per share basic and $5.21 per share diluted for the same period last year. Net income per share (diluted) for the first six months of 2017 increased 11% over the same period in 2016. The Bank’s annualized return on average equity for the first six months of 2017 was 14.93% and the annualized return on average assets was 1.23%. 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%.

Balance sheet growth trends of recent years continued, as deposits were $1.424 billion at June 30, 2017, representing 8% annualized growth year-to-date and 8% growth from June 30, 2016. Net loans were $1.666 billion at June 30, 2017, representing 8% annualized growth year-to-date and 9% growth from June 30, 2016. Total assets were $2.111 billion at June 30, 2017, representing 10% annualized growth year-to-date and 10% growth from June 30, 2016. Book value per share increased to $81.05 per share at June 30, 2017, representing a 15% annualized growth rate year-to-date and a 16% increase from June 30, 2016. In addition to the increase in book value per share, the Bank has declared $1.60 in dividends per share since June 30, 2016.

Key credit and operational metrics remained steady in the second quarter of 2017. At June 30, 2017, non-performing assets totaled 0.18% of total assets, compared with 0.09% at December 31, 2016 and 0.18% at June 30, 2016. Non-performing loans as a percentage of the total loan portfolio totaled 0.22% at June 30, 2017, as compared to 0.11% at December 31, 2016 and 0.22% at June 30, 2016. At June 30, 2017 and 2016, the Bank did not own any foreclosed property. The efficiency ratio improved to 29.97% for the second quarter of 2017, as compared to 32.96% for the same period last year. Non-interest expense (annualized) as a percentage of average assets fell to 0.93% for the second quarter of 2017, as compared to 1.00% 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 diluted earnings per share represent a 9% increase over the second quarter of 2016 and that returns on equity and assets remain satisfactory. 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 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
June 30,
Six Months Ended
June 30,
2016 2017 2016 2017
(Unaudited)
Key Performance Ratios
Return on average assets (1)1.21% 1.25% 1.20% 1.23%
Return on average equity (1)15.96 15.08 15.51 14.93
Interest rate spread (1) (2)2.90 2.94 2.96 2.97
Net interest margin (1) (3)3.01 3.08 3.07 3.10
Non-interest expense to average assets (1)1.00 0.93 1.04 0.97
Efficiency ratio (4)32.96 29.97 33.66 31.20
Average equity to average assets7.59 8.27 7.73 8.24
Average interest-earning assets to average interest-
bearing liabilities
115.55 117.45 115.83 117.12


June 30,
2016
December 31,
2016
June 30,
2017
(Unaudited)
Asset Quality Ratios
Allowance for loan losses/total loans 0.68% 0.68% 0.69%
Allowance for loan losses/non-performing loans 302.09 614.43 310.63
Non-performing loans/total loans 0.22 0.11 0.22
Non-performing loans/total assets 0.18 0.09 0.18
Non-performing assets/total assets 0.18 0.09 0.18
Share Related
Book value per share$69.69 $75.50 $81.05
Market value per share$122.92 $196.78 $181.93
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 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)2016 2016 2017
(Unaudited)
ASSETS
Cash and due from banks$10,788 $7,816 $8,312
Federal Reserve and other short-term investments 287,009 315,116 346,999
Cash and cash equivalents 297,797 322,932 355,311
Certificates of deposit 2,630
CRA investment 7,092 6,839 7,383
Other securities available for sale 25,857 20,329 21,974
Securities available for sale, at fair value 32,949 27,168 29,357
Federal Home Loan Bank stock, at cost 24,203 24,472 25,297
Loans, net of allowance for loan losses of $10,413
at June 30, 2016, $11,030 at December 31, 2016
and $11,571 at June 30, 2017 1,525,407 1,605,647 1,666,172
Foreclosed assets
Bank-owned life insurance 11,838 11,962 12,091
Premises and equipment, net 14,774 14,462 14,169
Accrued interest receivable 3,498 3,529 3,645
Deferred income tax asset, net 3,146 2,489 2,190
Other assets 2,423 1,938 2,784
Total assets$1,918,665 $2,014,599 $2,111,016
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits$1,183,353 $1,218,360 $1,263,923
Non-interest-bearing deposits 136,272 147,749 159,702
Total Deposits 1,319,625 1,366,109 1,423,625
Federal Home Loan Bank advances 440,392 475,318 503,242
Mortgage payable 896 868 840
Mortgagors’ escrow accounts 4,970 5,585 5,735
Accrued interest payable 388 400 531
Other liabilities 3,897 5,295 4,181
Total liabilities 1,770,168 1,853,575 1,938,154
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
June 30, 2016 and 2,132,750 shares issued and
outstanding at December 31, 2016 and June 30, 2017 2,131 2,133 2,133
Additional paid-in capital 11,319 11,575 11,662
Undivided profits 134,394 144,580 155,796
Accumulated other comprehensive income 653 2,736 3,271
Total stockholders’ equity 148,497 161,024 172,862
Total liabilities and stockholders’ equity$1,918,665 $2,014,599 $2,111,016


HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income
Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except per share amounts) 2016 2017 2016 2017
(Unaudited)
Interest and dividend income:
Loans $16,983 $18,484 $33,413 $36,452
Debt securities 18 46
Equity securities 285 367 529 720
Federal Reserve and other short-term investments 418 827 744 1,436
Total interest and dividend income 17,704 19,678 34,732 38,608
Interest expense:
Deposits 2,400 2,712 4,690 5,230
Federal Home Loan Bank advances 959 1,277 1,849 2,237
Mortgage payable 13 13 27 26
Total interest expense 3,372 4,002 6,566 7,493
Net interest income 14,332 15,676 28,166 31,115
Provision for loan losses 255 285 510 540
Net interest income, after provision for loan losses 14,077 15,391 27,656 30,575
Other income:
Customer service fees on deposits 236 227 452 446
Increase in bank-owned life insurance 74 62 141 129
Gain on sale of securities 344 77 344 77
Miscellaneous 48 47 97 92
Total other income 702 413 1,034 744
Operating expenses:
Salaries and employee benefits 2,991 3,091 6,061 6,237
Occupancy and equipment 484 419 955 883
Data processing 303 311 608 608
Deposit insurance 264 258 506 516
Foreclosure 26 (40) 82 3
Marketing 109 116 225 240
Other general and administrative 665 643 1,275 1,429
Total operating expenses 4,842 4,798 9,712 9,916
Income before income taxes 9,937 11,006 18,978 21,403
Income tax provision 4,070 4,536 7,787 8,821
Net income $5,867 $6,470 $11,191 $12,582
Cash dividends declared per share $0.30 $0.32 $0.60 $0.64
Weighted average shares outstanding:
Basic 2,131 2,133 2,130 2,133
Diluted 2,149 2,179 2,148 2,180
Earnings per share:
Basic $2.75 $3.03 $5.25 $5.90
Diluted $2.73 $2.97 $5.21 $5.77


HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis
Three Months Ended June 30,
2016 2017
AVERAGE
BALANCE
INTEREST YIELD/
RATE (8)
AVERAGE
BALANCE
INTEREST YIELD/
RATE (8)
(Dollars in thousands)
(Unaudited)
Loans (1) (2)$1,507,171 $16,983 4.51% $1,666,327 $18,484 4.44%
Securities (3) (4) 61,766 303 1.96 49,233 367 2.98
Federal Reserve and other short-term investments 335,064 418 0.50 322,239 827 1.03
Total interest-earning assets 1,904,001 17,704 3.72 2,037,799 19,678 3.86
Other assets 33,532 35,894
Total assets$1,937,533 $2,073,693
Interest-bearing deposits (5)$1,177,674 2,400 0.82 $1,263,209 2,712 0.86
Borrowed funds 470,110 972 0.83 471,805 1,290 1.09
Total interest-bearing liabilities 1,647,784 3,372 0.82 1,735,014 4,002 0.92
Demand deposits 137,837 162,339
Other liabilities 4,889 4,755
Total liabilities 1,790,510 1,902,108
Stockholders’ equity 147,023 171,585
Total liabilities and stockholders’ equity$1,937,533 $2,073,693
Net interest income $14,332 $15,676
Weighted average spread 2.90% 2.94%
Net interest margin (6) 3.01% 3.08%
Average interest-earning assets to average
interest-bearing liabilities (7)
115.55% 117.45%


(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,
2016 2017
AVERAGE
BALANCE
INTEREST YIELD/
RATE (8)
AVERAGE
BALANCE
INTEREST YIELD/
RATE (8)
(Dollars in thousands)
(Unaudited)
Loans (1) (2)$1,473,583 $33,413 4.53% $1,646,040 $36,452 4.43%
Securities (3) (4) 61,404 575 1.87 48,442 720 2.97
Federal Reserve and other short-term investments 297,866 744 0.50 315,727 1,436 0.91
Total interest-earning assets 1,832,853 34,732 3.79 2,010,209 38,608 3.84
Other assets 33,344 35,153
Total assets$1,866,197 $2,045,362
Interest-bearing deposits (5)$1,149,165 4,690 0.82 $1,246,436 5,230 0.84
Borrowed funds 433,244 1,876 0.87 469,907 2,263 0.96
Total interest-bearing liabilities 1,582,409 6,566 0.83 1,716,343 7,493 0.87
Demand deposits 134,524 155,627
Other liabilities 4,918 4,802
Total liabilities 1,721,851 1,876,772
Stockholders’ equity 144,346 168,590
Total liabilities and stockholders’ equity$1,866,197 $2,045,362
Net interest income $28,166 $31,115
Weighted average spread 2.96% 2.97%
Net interest margin (6) 3.07% 3.10%
Average interest-earning assets to average
interest-bearing liabilities (7)
115.83% 117.12%


(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