HINGHAM, Mass., Oct. 11, 2019 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ: HIFS), Hingham, Massachusetts announced third quarter results for 2019.
Net income for the quarter ended September 30, 2019 was $9,033,000 or $4.23 per share basic and $4.14 per share diluted, as compared to $8,848,000 or $4.15 per share basic and $4.05 per share diluted for the same period last year. The Bank’s annualized return on average equity for the third quarter of 2019 was 15.33%, and the annualized return on average assets was 1.40%, as compared to 17.06% and 1.52% for the same period in 2018. Net income per share (diluted) for the third quarter of 2019 increased by 2% over the same period of 2018.
Excluding the after-tax gains and losses on securities, both realized and unrealized, core net income for the third quarter of 2019 was $8,801,000 or $4.12 per share basic and $4.03 per share diluted, as compared to $8,424,000 or $3.95 per share basic and $3.85 per share diluted for the same period last year. The Bank’s annualized core return on average equity for the third quarter of 2019 was 14.94%, and the annualized core return on average assets was 1.37%, as compared to 16.24% and 1.45% for the same period in 2018. Core net income per share (diluted) for the third quarter of 2019 increased by 5% over the same period in 2018.
Net income for the nine months ended September 30, 2019 was $27,563,000 or $12.92 per share basic and $12.63 per share diluted, as compared to $25,735,000 or $12.07 per share basic and $11.77 per share diluted for the same period last year. The Bank’s annualized return on average equity for the first nine months of 2019 was 16.17%, and the annualized return on average assets was 1.47%, as compared to 17.17% and 1.49% for the same period last year. Net income per share (diluted) for the first nine months of 2019 increased by 7% over the same period in 2018.
Excluding the after-tax gains and losses on securities, both realized and unrealized, core net income for the nine months ended September 30, 2019 was $24,182,000 or $11.33 per share basic and $11.08 per share diluted, as compared to $24,729,000 or $11.60 per share basic and $11.31 per share diluted for the same period last year. The Bank’s annualized core return on average equity for the first nine months of 2019 was 14.19% and the annualized core return on average assets was 1.29%, as compared to 16.50% and 1.43% for the same period last year. Core net income per share (diluted) for the first nine months of 2019 declined by 2% over the same period in 2018.
Balance sheet growth was mixed, as deposits were $1.706 billion at September 30, 2019, representing 11% annualized growth year-to-date and 1% decline from September 30, 2018. The growth during the first nine months of 2019 reflected strong growth in retail and business deposits. The decline over the trailing year was driven by a substantial decline in wholesale deposits, offset by growth in retail and business deposits. Net loans were $2.141 billion at September 30, 2019, representing 9% annualized growth year-to-date and 8% growth from September 30, 2018. Total assets were $2.480 billion, representing 4% annualized growth year-to-date and 5% growth from September 30, 2018. During the third quarter of 2019, the Bank used a portion of its cash balances to reduce outstanding Federal Home Loan Bank advances and brokered time deposits, in order to minimize the carrying cost of its on-balance sheet liquidity. Book value per share was $111.47 as of September 30, 2019, representing 16% annualized growth year-to-date and 13% growth from September 30, 2018. In addition to the increase in book value per share, the Bank declared $2.04 in dividends per share since September 30, 2018, including a special dividend of $0.50 per share declared during the fourth quarter of 2018.
Key credit and operational metrics remained strong in the third quarter of 2019. At September 30, 2019, non-performing assets totaled 0.05% of total assets, compared to 0.02% at December 31, 2018 and 0.02% at September 30, 2018. Non-performing loans as a percentage of the total loan portfolio totaled 0.06% at September 30, 2019, compared to 0.02% at December 31, 2018 and 0.02% at September 30, 2018. The Bank recorded $1,000 in net recoveries for both the first nine months of 2019 and 2018. At September 30, 2019, December 31 and September 30, 2018, the Bank did not own any foreclosed property. The efficiency ratio was 29.28% for the third quarter of 2019, as compared to 29.17% for the same period last year. Operating expenses as a percentage of average assets fell to 0.81% in the third quarter of 2019, as compared to 0.86% for the same period last year.
Chairman Robert H. Gaughen, Jr. stated, “Although returns on equity and assets were adequate in the third quarter of 2019, we continue to face significant headwinds from a now-inverted yield curve and an extraordinarily competitive market for both high-quality lending and deposit relationships. Given the unique structure and composition of our balance sheet, this is a particularly challenging environment. As always, we remain focused on careful capital allocation, defensive underwriting, and disciplined cost control - the keys to compounding shareholder capital through all stages of the credit cycle.”
The Bank’s quarterly financial results are summarized in the earnings release, but shareholders are encouraged to read the Bank’s quarterly reports on Form 10-Q, which are generally available several weeks after the earnings release. The Bank expects to file Form 10-Q for the third quarter of 2019 with the FDIC on or about November 5, 2019.
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 maintains offices on the South Shore, in Boston (South End and Beacon Hill), and on the island of Nantucket. The Bank also maintains a commercial lending office in Washington, D.C.
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, | ||||||||||
| 2018 | 2019 | 2018 | 2019 | ||||||||
| (Unaudited) | |||||||||||
| Key Performance Ratios | |||||||||||
| Return on average assets (1) | 1.52 | % | 1.40 | % | 1.49 | % | 1.47 | % | |||
| Return on average equity (1) | 17.06 | 15.33 | 17.17 | 16.17 | |||||||
| Core return on average assets (1) (5) | 1.45 | 1.37 | 1.43 | 1.29 | |||||||
| Core return on average equity (1) (5) | 16.24 | 14.94 | 16.50 | 14.19 | |||||||
| Interest rate spread (1) (2) | 2.67 | 2.42 | 2.72 | 2.36 | |||||||
| Net interest margin (1) (3) | 2.93 | 2.77 | 2.93 | 2.69 | |||||||
| Operating expenses to average assets (1) | 0.86 | 0.81 | 0.88 | 0.83 | |||||||
| Efficiency ratio (4) | 29.17 | 29.28 | 29.84 | 30.70 | |||||||
| Average equity to average assets | 8.91 | 9.16 | 8.69 | 9.08 | |||||||
| Average interest-earning assets to average interest- | |||||||||||
| bearing liabilities | 119.39 | 120.49 | 118.61 | 120.31 | |||||||
| September 30, 2018 | December 31, 2018 | September 30, 2019 | |||||||||||
| (Unaudited) | |||||||||||||
| Asset Quality Ratios | |||||||||||||
| Allowance for loan losses/total loans | 0.68 | % | 0.68 | % | 0.70 | % | |||||||
| Allowance for loan losses/non-performing loans | 2,807.44 | 2,852.89 | 1,138.01 | ||||||||||
| Non-performing loans/total loans | 0.02 | 0.02 | 0.06 | ||||||||||
| Non-performing loans/total assets | 0.02 | 0.02 | 0.05 | ||||||||||
| Non-performing assets/total assets | 0.02 | 0.02 | 0.05 | ||||||||||
| Share Related | |||||||||||||
| Book value per share | $ | 98.35 | $ | 99.67 | $ | 111.47 | |||||||
| Market value per share | $ | 219.81 | $ | 197.74 | $ | 189.00 | |||||||
| Shares outstanding at end of period | 2,132,750 | 2,132,750 | 2,133,750 | ||||||||||
(1) Annualized.
(2) Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.
(4) The efficiency ratio represents total operating expenses, divided by the sum of net interest income and total other income, excluding gain on equity securities, net.
(5) Non-GAAP measurements that represent return on average assets and return on average equity, excluding the after-tax gain on equity securities, net.
| HINGHAM INSTITUTION FOR SAVINGS | |||||||||
| Consolidated Balance Sheets | |||||||||
| (In thousands, except share amounts) | September 30, 2018 | December 31, 2018 | September 30, 2019 | ||||||
| (Unaudited) | |||||||||
| ASSETS | |||||||||
| Cash and due from banks | $ | 10,043 | $ | 8,004 | $ | 10,233 | |||
| Federal Reserve and other short-term investments | 286,449 | 287,971 | 221,022 | ||||||
| Cash and cash equivalents | 296,492 | 295,975 | 231,255 | ||||||
| CRA investment | 7,605 | 7,680 | 7,948 | ||||||
| Debt securities available for sale | 15 | 14 | 11 | ||||||
| Other marketable equity securities | 32,099 | 30,766 | 38,981 | ||||||
| Securities, at fair value | 39,719 | 38,460 | 46,940 | ||||||
| Federal Home Loan Bank stock, at cost | 21,682 | 28,696 | 23,615 | ||||||
| Loans, net of allowance for loan losses of $13,588 | |||||||||
| at September 30, 2018, $13,808 at December 31, 2018 | |||||||||
| and $15,090 at September 30, 2019 | 1,976,422 | 2,009,288 | 2,140,514 | ||||||
| Foreclosed assets | — | — | — | ||||||
| Bank-owned life insurance | 12,414 | 12,476 | 12,661 | ||||||
| Premises and equipment, net | 14,458 | 14,553 | 14,339 | ||||||
| Accrued interest receivable | 5,066 | 4,581 | 4,912 | ||||||
| Deferred income tax asset, net | 1,128 | 2,258 | 1,303 | ||||||
| Other assets | 2,981 | 2,300 | 4,833 | ||||||
| Total assets | $ | 2,370,362 | $ | 2,408,587 | $ | 2,480,372 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY
| Interest-bearing deposits | $ | 1,494,193 | $ | 1,359,581 | $ | 1,474,113 | ||
| Non-interest-bearing deposits | 220,943 | 213,573 | 231,616 | |||||
| Total deposits | 1,715,136 | 1,573,154 | 1,705,729 | |||||
| Federal Home Loan Bank advances | 431,242 | 606,600 | 519,900 | |||||
| Mortgage payable | 766 | 751 | 703 | |||||
| Mortgagors’ escrow accounts | 6,901 | 7,402 | 7,544 | |||||
| Accrued interest payable | 1,687 | 2,187 | 2,198 | |||||
| Other liabilities | 4,883 | 5,917 | 6,445 | |||||
| Total liabilities | 2,160,615 | 2,196,011 | 2,242,519 | |||||
| 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; 2,132,750 shares issued and outstanding at | 2,133 | 2,133 | 2,134 | |||||
| September 30 and December 31, 2018 and 2,133,750 shares | ||||||||
| issued and outstanding at September 30, 2019 | ||||||||
| Additional paid-in capital | 11,843 | 11,863 | 12,073 | |||||
| Undivided profits | 195,771 | 198,580 | 223,646 | |||||
| Accumulated other comprehensive income | — | — | — | |||||
| Total stockholders’ equity | 209,747 | 212,576 | 237,853 | |||||
| Total liabilities and stockholders’ equity | $ | 2,370,362 | $ | 2,408,587 | $ | 2,480,372 |
| HINGHAM INSTITUTION FOR SAVINGS | |||||||||||||
| Consolidated Statements of Income | |||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||
| September 30, | September 30, | ||||||||||||
| (In thousands, except per share amounts) | 2018 | 2019 | 2018 | 2019 | |||||||||
| (Unaudited) | |||||||||||||
| Interest and dividend income: | |||||||||||||
| Loans | $ | 22,523 | $ | 26,153 | $ | 64,306 | $ | 74,049 | |||||
| Equity securities | 503 | 518 | 1,487 | 1,503 | |||||||||
| Federal Reserve and other short-term investments | 1,317 | 1,527 | 3,814 | 4,716 | |||||||||
| Total interest and dividend income | 24,343 | 28,198 | 69,607 | 80,268 | |||||||||
| Interest expense: | |||||||||||||
| Deposits | 5,291 | 7,585 | 13,202 | 20,805 | |||||||||
| Federal Home Loan Bank advances | 2,294 | 3,099 | 6,653 | 9,766 | |||||||||
| Mortgage payable | 12 | 11 | 36 | 33 | |||||||||
| Total interest expense | 7,597 | 10,695 | 19,891 | 30,604 | |||||||||
| Net interest income | 16,746 | 17,503 | 49,716 | 49,664 | |||||||||
| Provision for loan losses | 350 | 302 | 1,050 | 1,282 | |||||||||
| Net interest income, after provision for loan losses | 16,396 | 17,201 | 48,666 | 48,382 | |||||||||
| Other income: | |||||||||||||
| Customer service fees on deposits | 216 | 213 | 638 | 598 | |||||||||
| Increase in bank-owned life insurance | 65 | 61 | 193 | 185 | |||||||||
| Gain on equity securities, net | 544 | 298 | 1,290 | 4,337 | |||||||||
| Miscellaneous | 42 | 42 | 129 | 125 | |||||||||
| Total other income | 867 | 614 | 2,250 | 5,245 | |||||||||
| Operating expenses: | |||||||||||||
| Salaries and employee benefits | 3,146 | 3,290 | 9,534 | 9,614 | |||||||||
| Occupancy and equipment | 421 | 453 | 1,313 | 1,354 | |||||||||
| Data processing | 353 | 419 | 1,042 | 1,154 | |||||||||
| Deposit insurance | 258 | 22 | 757 | 530 | |||||||||
| Foreclosure | (33) | 34 | (41) | 101 | |||||||||
| Marketing | 139 | 188 | 488 | 497 | |||||||||
| Other general and administrative | 695 | 811 | 2,028 | 2,276 | |||||||||
| Total operating expenses | 4,979 | 5,217 | 15,121 | 15,526 | |||||||||
| Income before income taxes | 12,284 | 12,598 | 35,795 | 38,101 | |||||||||
| Income tax provision | 3,436 | 3,565 | 10,060 | 10,538 | |||||||||
| Net income | $ | 8,848 | $ | 9,033 | $ | 25,735 | $ | 27,563 | |||||
| Cash dividends declared per share | $ | 0.36 | $ | 0.40 | $ | 1.05 | $ | 1.17 | |||||
| Weighted average shares outstanding: | |||||||||||||
| Basic | 2,133 | 2,134 | 2,133 | 2,133 | |||||||||
| Diluted | 2,188 | 2,183 | 2,187 | 2,182 | |||||||||
| Earnings per share: | |||||||||||||
| Basic | $ | 4.15 | $ | 4.23 | $ | 12.07 | $ | 12.92 | |||||
| Diluted | $ | 4.05 | $ | 4.14 | $ | 11.77 | $ | 12.63 | |||||
| HINGHAM INSTITUTION FOR SAVINGS | |||||||||||||||||
| Net Interest Income Analysis | |||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||
| 2018 | 2019 | ||||||||||||||||
| AVERAGE | YIELD/ | AVERAGE | | YIELD/ | |||||||||||||
| BALANCE | INTEREST | RATE (8) | BALANCE | INTEREST | RATE (8) | ||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Loans (1) (2) | $ | 1,973,987 | $ | 22,523 | 4.56 | % | $ | 2,191,324 | $ | 26,153 | 4.77 | % | |||||
| Securities (3) (4) | 52,166 | 503 | 3.86 | 58,133 | 518 | 3.56 | |||||||||||
| Federal Reserve and other short-term investments | 262,943 | 1,317 | 2.00 | 279,802 | 1,527 | 2.18 | |||||||||||
| Total interest-earning assets | 2,289,096 | 24,343 | 4.25 | 2,529,259 | 28,198 | 4.46 | |||||||||||
| Other assets | 38,380 | 43,578 | |||||||||||||||
| Total assets | $ | 2,327,476 | $ | 2,572,837 | |||||||||||||
| Interest-bearing deposits (5) | $ | 1,503,771 | 5,291 | 1.41 | $ | 1,616,151 | 7,585 | 1.88 | |||||||||
| Borrowed funds | 413,497 | 2,306 | 2.23 | 482,975 | 3,110 | 2.58 | |||||||||||
| Total interest-bearing liabilities | 1,917,268 | 7,597 | 1.58 | 2,099,126 | 10,695 | 2.04 | |||||||||||
| Demand deposits | 197,838 | 230,505 | |||||||||||||||
| Other liabilities | 4,927 | 7,514 | |||||||||||||||
| Total liabilities | 2,120,033 | 2,337,145 | |||||||||||||||
| Stockholders’ equity | 207,443 | 235,692 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 2,327,476 | $ | 2,572,837 | |||||||||||||
| Net interest income | $ | 16,746 | $ | 17,503 | |||||||||||||
| Weighted average spread | 2.67 | % | 2.42 | % | |||||||||||||
| Net interest margin (6) | 2.93 | % | 2.77 | % | |||||||||||||
| Average interest-earning assets to average | |||||||||||||||||
| interest-bearing liabilities (7) | 119.39 | % | 120.49 | % | |||||||||||||
| (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. |
| (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, | |||||||||||||||||
| 2018 | 2019 | ||||||||||||||||
| AVERAGE BALANCE | INTEREST | YIELD/ RATE (8) | AVERAGE BALANCE | INTEREST | YIELD/ RATE (8) | ||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Loans (1) (2) | $ | 1,918,239 | $ | 64,306 | 4.47 | % | $ | 2,134,186 | $ | 74,049 | 4.63 | % | |||||
| Securities (3) (4) | 52,870 | 1,487 | 3.75 | 57,118 | 1,503 | 3.51 | |||||||||||
| Federal Reserve and other short-term investments | 289,018 | 3,814 | 1.76 | 270,882 | 4,716 | 2.32 | |||||||||||
| Total interest-earning assets | 2,260,127 | 69,607 | 4.11 | 2,462,186 | 80,268 | 4.35 | |||||||||||
| Other assets | 38,668 | 41,483 | |||||||||||||||
| Total assets | $ | 2,298,795 | $ | 2,503,669 | |||||||||||||
| Interest-bearing deposits (5) | $ | 1,430,524 | 13,202 | 1.23 | $ | 1,548,791 | 20,805 | 1.79 | |||||||||
| Borrowed funds | 475,050 | 6,689 | 1.88 | 497,694 | 9,799 | 2.63 | |||||||||||
| Total interest-bearing liabilities | 1,905,574 | 19,891 | 1.39 | 2,046,485 | 30,604 | 1.99 | |||||||||||
| Demand deposits | 188,441 | 222,280 | |||||||||||||||
| Other liabilities | 4,954 | 7,635 | |||||||||||||||
| Total liabilities | 2,098,969 | 2,276,400 | |||||||||||||||
| Stockholders’ equity | 199,826 | 227,269 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 2,298,795 | $ | 2,503,669 | |||||||||||||
| Net interest income | $ | 49,716 | $ | 49,664 | |||||||||||||
| Weighted average spread | 2.72 | % | 2.36 | % | |||||||||||||
| Net interest margin (6) | 2.93 | % | 2.69 | % | |||||||||||||
| Average interest-earning assets to average | |||||||||||||||||
| interest-bearing liabilities (7) | 118.61 | % | 120.31 | % | |||||||||||||
| (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. |
| (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. |