HINGHAM, Mass., April 12, 2019 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ: HIFS), Hingham, Massachusetts announced earnings for the first quarter ended March 31, 2019.

Net income for the quarter ended March 31, 2019 was $9,824,000 or $4.61 per share basic and $4.50 per share diluted, as compared to $8,912,000 or $4.18 per share basic and $4.08 per share diluted for the same period last year.  The Bank’s annualized return on average equity for the first quarter of 2019 was 17.98%, and the annualized return on average assets was 1.64%, as compared to 18.56% and 1.56% for the same period last year.  Net income per share (diluted) for the first quarter of 2019 increased by 10% compared to the same period in 2018.

Excluding the after-tax gains and losses on securities, both realized and unrealized, core net income for the quarter ended March 31, 2019 was $7,587,000 or $3.56 per share basic and $3.48 per share diluted, as compared to $8,159,000 or $3.83 per share basic and $3.73 per share diluted for the same period last year.  The Bank’s annualized core return on average equity for the first quarter of 2019 was 13.89% and the annualized core return on average assets was 1.26%, as compared to 16.99% and 1.43% for the same period last year.  Core net income per share (diluted) for the first quarter of 2019 decreased by 7% over the same period in 2018.

Growth in the first quarter of 2019 was mixed, with a decline in total deposits combined with strong loan growth.  Deposits decreased to $1.555 billion at March 31, 2019, representing a 5% annualized decline year-to-date and 2% growth from March 31, 2018.  This reflected a decline in wholesale deposits and retail interest-bearing deposits, partially offset by growth in non-interest-bearing business deposits.  Net loans increased to $2.092 billion, representing 17% annualized growth year-to-date and 12% growth from March 31, 2018.  Total assets increased to $2.497 billion, representing 15% annualized growth year-to-date and 11% growth from March 31, 2018.  Book value per share was $103.89 as of March 31, 2019, representing 17% annualized growth year-to-date and 14% growth from March 31, 2018.  In addition to the increase in book value per share, the Bank declared $1.96 in dividends per share since March 31, 2018, including a special dividend of $0.50 per share declared during the fourth quarter of 2018.  The Bank announced increases in its regular quarterly dividend in each of the last four quarters.

Key credit and operational metrics remained strong in the first quarter.  At March 31, 2019, non-performing assets totaled 0.02% of total assets, compared to 0.02% at December 31, 2018 and 0.08% at March 31, 2018.  Non-performing loans as a percentage of the total loan portfolio totaled 0.03% at March 31, 2019, compared to 0.02% at December 31, 2018 and 0.10% at March 31, 2018.  The Bank recorded $1,000 of net charge-offs for the first three months of 2019, as compared to $1,000 of net recoveries for the same period last year.  At March 31, 2019, December 31, 2018, and March 31, 2018 the Bank did not own any foreclosed property.  The efficiency ratio increased to 31.86% for the first quarter of 2019, as compared to 30.41% for the same period last year.  Operating expenses as a percentage of average assets fell to 0.86% in the first quarter of 2019, as compared to 0.89% for the same period last year.  These metrics reflect the Bank’s disciplined focus on credit quality and expense management.

Chairman Robert H. Gaughen Jr. stated, “Although returns on equity and assets were adequate in the first quarter of 2019, we continue to face significant headwinds from a flattening yield curve and an extraordinarily competitive market for both high-quality lending and deposit relationships.  There is a natural temptation in our industry to compromise on credit quality to obtain higher yields and achieve growth.  We must continue to resist this temptation.  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.

We also are devoting increased focus to our commercial deposit business through our Specialized Deposit Group, which provides our commercial, institutional, and nonprofit customers with dedicated single point-of-contact relationship managers to handle all of their deposit needs.  This relationship business offsets our traditional reliance on Federal Home Loan Bank and wholesale funding.”

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 provides commercial mortgage lending and private banking services in the Greater Washington D.C. metropolitan area.

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,
 2018 2019
(Unaudited)     
      
Key Performance Ratios     
Return on average assets (1)1.56% 1.64%
Return on average equity (1)18.56  17.98 
Core return on average assets (1) (5)1.43  1.26 
Core return on average equity (1) (5)16.99  13.89 
Interest rate spread (1) (2)2.75  2.36 
Net interest margin (1) (3)2.93  2.68 
Operating expenses to average assets (1)0.89  0.86 
Efficiency ratio (4)30.41  31.86 
Average equity to average assets8.41  9.10 
Average interest-earning assets to average interest bearing liabilities117.83  120.54 
      


 March 31,
2018
 December 31,
2018
 March 31,
2019
(Unaudited)           
      
Asset Quality Ratios     
Allowance for loan losses/total loans 0.68% 0.68% 0.68%
Allowance for loan losses/non-performing loans 691.27  2,852.89  2,280.77 
          
Non-performing loans/total loans 0.10  0.02  0.03 
Non-performing loans/total assets 0.08  0.02  0.02 
Non-performing assets/total assets 0.08  0.02  0.02 
          
Share Related         
Book value per share$  91.14  $99.67 $  103.89 
Market value per share$206.00  $197.74 $  172.01 
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)
March 31,
2018
 December 31,
2018
 March 31,
2019
(Unaudited)         
ASSETS 
         
Cash and due from banks $8,901 $8,004 $7,433
Federal Reserve and other short-term investments 262,367  287,971  286,333
  Cash and cash equivalents  271,268  295,975  293,766
         
CRA investment 7,724  7,680  7,776
Debt securities available for sale 17  14  13
Other marketable equity securities 30,089  30,766  34,935
  Securities, at fair value 37,830  38,460  42,724
Federal Home Loan Bank stock, at cost 24,530  28,696  30,617
Loans, net of allowance for loan losses of $12,823 at March 31, 2018, $13,808 at December 31, 2018 and $14,232 at March 31, 2019 1,872,114
  2,009,288
  2,092,313
Foreclosed assets     
Bank-owned life insurance  12,289  12,476  12,542
Premises and equipment, net  13,947  14,553  14,388
Accrued interest receivable 4,240  4,581  5,180
Deferred income tax asset, net 1,103  2,258  1,626
Other assets 2,816  2,300  4,233
  Total assets$2,240,137 $2,408,587 $2,497,389

LIABILITIES AND STOCKHOLDERS’ EQUITY

         
Interest-bearing deposits$1,345,639 $1,359,581 $1,327,451
Non-interest-bearing deposits 186,169  213,573  227,872
  Total deposits 1,531,808  1,573,154  1,555,323
Federal Home Loan Bank advances 499,124  606,600  702,100
Mortgage payable 797  751  735
Mortgagors’ escrow accounts 6,551  7,402  7,201
Accrued interest payable 774  2,187  2,086
Other liabilities 6,695  5,917  8,263
  Total liabilities 2,045,749  2,196,011  2,275,708
         
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 March 31 and December 31, 2018 and 2,133,750 shares issued and outstanding at March 31, 2019  
2,133
   
2,133
  
2,134
  Additional paid-in capital 11,794  11,863  11,954
  Undivided profits 180,461  198,580  207,593
  Accumulated other comprehensive income     
  Total stockholders’ equity 194,388  212,576  221,681
  Total liabilities and stockholders’ equity$2,240,137 $2,408,587 $2,497,389


 
HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income
 
 Three Months Ended
March 31,
(In thousands, except per share amounts)2018 2019
(Unaudited)     
      
Interest and dividend income:     
   Loans$20,417 $23,080
  Equity securities 479  489
  Federal Reserve and other short-term investments 1,241  1,560
  Total interest and dividend income 22,137  25,129
      
Interest expense:     
  Deposits 3,567  6,146
  Federal Home Loan Bank advances 2,093  3,128
  Mortgage payable 12  11
  Total interest expense 5,672  9,285
  Net interest income 16,465  15,844
Provision for loan losses 285  425
  Net interest income, after provision for loan losses 16,180  15,419
Other income:     
  Customer service fees on deposits 206  186
  Increase in cash surrender value of bank-owned life insurance 68  67
  Gain on equity securities, net 966  2,869
  Miscellaneous 44  40
  Total other income 1,284  3,162
Operating expenses:     
  Salaries and employee benefits 3,212  3,147
  Occupancy and equipment 466  454
  Data processing 341  434
  Deposit insurance 273  243
  Foreclosure 5  23
  Marketing 167  132
  Other general and administrative 639  709
  Total operating expenses 5,103  5,142
Income before income taxes 12,361  13,439
Income tax provision 3,449  3,615
  Net income$8,912 $9,824
      
Cash dividends declared per common share$0.34 $0.38
      
Weighted average shares outstanding:     
  Basic 2,133  2,133
  Diluted 2,186  2,182
      
Earnings per share:     
  Basic$4.18 $4.61
  Diluted$4.08 $4.50
      


  
HINGHAM INSTITUTION FOR SAVINGS 
Net Interest Income Analysis 
  
 Three Months Ended March 31,  
 2018  2019 
 AVERAGE
BALANCE
  INTEREST YIELD/
RATE (8)
  AVERAGE
BALANCE
  INTEREST YIELD/
RATE (8)
 
(Dollars in thousands)                 
(Unaudited)                 
                  
Loans (1) (2)$1,866,138 $20,417 4.38% $2,048,387 $23,080 4.51%
Securities (3) (4) 53,517  479 3.58   54,873  489 3.56 
Federal Reserve and other short-term investments 326,375  1,241 1.52   260,176  1,560 2.40 
  Total interest-earning assets 2,246,030  22,137 3.94   2,363,436  25,129 4.25 
Other assets 38,003        39,122      
  Total assets$2,284,033       $2,402,558      
                  
Interest-bearing deposits (5)$1,362,569  3,567 1.05  $1,485,540  6,146 1.65 
Borrowed funds 543,607  2,105 1.55   475,213  3,139 2.64 
  Total interest-bearing liabilities 1,906,176  5,672 1.19   1,960,753  9,285 1.89 
Demand deposits 180,375        215,115      
Other liabilities 5,381        8,128      
  Total liabilities 2,091,932        2,183,996      
Stockholders’ equity 192,101        218,562      
  Total liabilities and stockholders’ equity$2,284,033       $2,402,558      
Net interest income   $16,465       $15,844   
                  
Weighted average spread      2.75%       2.36%
                  
Net interest margin (6)      2.93%       2.68%
                  
Average interest-earning assets to average interest-bearing liabilities (7) 117.83%       120.54%     


(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.
   

Patrick R. Gaughen, President and Chief Operating Officer (781) 783-1761