Hingham Savings Announces 14% Increase in Diluted

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Posted On: 04/12/2017 11:00:28 AM

Posted By: News Desk 2018

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 assets	7.89		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

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