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

             


            

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