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 assets | 8.41 | 9.10 | |||
| Average interest-earning assets to average interest bearing liabilities | 117.83 | 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 | |||||||||
- Annualized.
- Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
- Net interest margin represents net interest income divided by average interest-earning assets.
- 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.
- 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. |