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Source: Hingham Institution for Savings

Hingham Savings Reports Second Quarter 2019 Results

HINGHAM, Mass., July 12, 2019 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ: HIFS), Hingham, Massachusetts announced second quarter results for 2019.

Net income for the quarter ended June 30, 2019 was $8,706,000 or $4.08 per share basic and $3.99 per share diluted, as compared to $7,975,000 or $3.74 per share basic and $3.64 per share diluted for the same period last year. The Bank’s annualized return on average equity for the second quarter of 2019 was 15.32%, and the annualized return on average assets was 1.37%, as compared to 15.97% and 1.40% for the same period in 2018. Net income per share (diluted) for the second quarter of 2019 increased 10% over the same period of 2018. 

Excluding the after-tax gains and losses on securities, both realized and unrealized, core net income for the second quarter of 2019 was $7,794,000 or $3.65 per share basic and $3.57 per share diluted, as compared to $8,147,000 or $3.82 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 second quarter of 2019 was 13.71%, and the annualized core return on average assets was 1.23%, as compared to 16.31% and 1.43% for the same period in 2018. Core net income per share (diluted) for the second quarter of 2019 declined by 4% over the same period in 2018.

Net income for the six months ended June 30, 2019 was $18,530,000 or $8.69 per share basic and $8.49 per share diluted, as compared to $16,887,000 or $7.92 per share basic and $7.72 per share diluted for the same period last year. The Bank’s annualized return on average equity for the first six months of 2019 was 16.62%, and the annualized return on average assets was 1.50%, as compared to 17.24% and 1.48% for the same period last year. Net income per share (diluted) for the first six months of 2019 increased 10% over the same period in 2018.

Excluding the after-tax gains on securities, both realized and unrealized, core net income for the six months ended June 30, 2019 was $15,381,000 or $7.21 per share basic and $7.05 per share diluted, as compared to $16,305,000 or $7.65 per share basic and $7.46 per share diluted for the same period last year. The Bank’s annualized core return on average equity for the first six months of 2019 was 13.80% and the annualized core return on average assets was 1.25%, as compared to 16.64% and 1.43% for the same period last year. Core net income per share (diluted) for the first six months of 2019 declined by 5% over the same period in 2018.

Balance sheet growth was mixed, as deposits increased to $1.658 billion at June 30, 2019, representing 11% annualized growth year-to-date and 1% growth from June 30, 2018. The growth during the first half of 2019 reflected moderate growth in retail and business deposits as well as the use of wholesale deposits to fund balance sheet growth. Net loans increased to $2.171 billion, representing 16% annualized growth year-to-date and 12% growth from June 30, 2018. Total assets increased to $2.614 billion, representing 17% annualized growth year-to-date and 13% growth from June 30, 2018. Book value per share was $107.59 as of June 30, 2019, representing 16% annualized growth year-to-date and 14% growth from June 30, 2018. In addition to the increase in book value per share, the Bank declared $2.00 in dividends per share since June 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 second quarter. At June 30, 2019, non-performing assets totaled 0.02% of total assets, compared to 0.02% at December 31, 2018 and 0.05% at June 30, 2018. Non-performing loans as a percentage of the total loan portfolio totaled 0.03% at June 30, 2019, compared to 0.02% at December 31, 2018 and 0.06% at June 30, 2018. The Bank recorded $1,000 in net charge-offs for the first six months of 2019, as compared to zero net charge-offs for the same period last year. At June 30, 2019, December 31 and June 30, 2018, the Bank did not own any foreclosed property. The efficiency ratio was 31.10% for the second quarter of 2019, as compared to 29.95% for the same period last year. Operating expenses as a percentage of average assets fell to 0.82% in the second quarter of 2019, as compared to 0.88% for the same period last year.   

Chairman Robert H. Gaughen Jr. stated, “Although returns on equity and assets were adequate in the second 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 second quarter of 2019 with the FDIC on or about August 7th, 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
June 30,
 Six Months Ended
June 30,
 2018 2019 2018 2019
(Unaudited)           
            
Key Performance Ratios           
Return on average assets (1)1.40% 1.37% 1.48% 1.50%
Return on average equity (1)15.97  15.32  17.24  16.62 
Core return on average assets (1) (5)1.43  1.23  1.43  1.25 
Core return on average equity (1) (5)16.31  13.71  16.64  13.80 
Interest rate spread (1) (2)2.72  2.28  2.74  2.32 
Net interest margin (1) (3)2.94  2.62  2.94  2.65 
Operating expenses to average assets (1)0.88  0.82  0.89  0.84 
Efficiency ratio (4)29.95  31.10  30.18  31.47 
Average equity to average assets8.74  8.97  8.58  9.03 
Average interest-earning assets to average interest-bearing liabilities118.57  119.92  118.20  120.22 
            


 June 30,
2018
 December 31,
2018
 June 30,
2019
      
           
          
(Unaudited)       
  
          
Asset Quality Ratios         
Allowance for loan losses/total loans 0.68% 0.68% 0.68 
Allowance for loan losses/non-performing loans 1,064.92  2,852.89  2,130.47  
          
Non-performing loans/total loans 0.06  0.02  0.03 
Non-performing loans/total assets 0.05  0.02  0.02 
Non-performing assets/total assets 0.05  0.02  0.02 
          
Share Related         
Book value per share$94.55  $99.67 $ 07.59 
Market value per share$219.70  $197.74 $ 198.01 
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 (loss) on equity securities, net.
  
(5)Non-GAAP measurements that represent return on average assets and return on average equity, excluding the after-tax gain (loss) on equity securities, net.


HINGHAM INSTITUTION FOR SAVINGS
Consolidated Balance Sheets

 (In thousands, except share amounts)June 30,
2018
 December 31,
2018
 June 30,
2019
(Unaudited)   
  
ASSETS 
         
Cash and due from banks$9,342 $8,004 $9,951
Federal Reserve and other short-term investments 265,695  287,971  318,356
Cash and cash equivalents 275,037  295,975  328,307
         
CRA investment 7,665  7,680  7,888
Debt securities available for sale 16  14  12
Other marketable equity securities 30,328  30,766  36,960
Securities, at fair value 38,009  38,460  44,860
Federal Home Loan Bank stock, at cost 24,530  28,696  31,231
Loans, net of allowance for loan losses of $13,237 at June 30, 2018, $13,808 at December 31, 2018 and $14,787 at June 30, 2019  1,933,915   2,009,288   2,171,130
Foreclosed assets     
Bank-owned life insurance 12,349  12,476  12,600
Premises and equipment, net 14,479  14,553  14,410
Accrued interest receivable 4,630  4,581  5,691
Deferred income tax asset, net 1,165  2,258  1,368
Other assets 3,505  2,300  4,874
Total assets$2,307,619 $2,408,587 $2,614,471

LIABILITIES AND STOCKHOLDERS’ EQUITY

         
Interest-bearing deposits$1,453,401 $1,359,581 $1,429,998
Non-interest-bearing deposits 192,918  213,573  228,306
Total deposits 1,646,319  1,573,154  1,658,304
Federal Home Loan Bank advances 446,283  606,600  710,300
Mortgage payable 782  751  720
Mortgagors’ escrow accounts 6,659  7,402  7,274
Accrued interest payable 1,233  2,187  1,991
Other liabilities 4,697  5,917  6,302
Total liabilities 2,105,973  2,196,011  2,384,891
         
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 June 30 and December 31, 2018 and 2,133,750 shares issued and outstanding at June 30, 2019  2,133   2,133   2,134
Additional paid-in capital 11,822  11,863  11,980
Undivided profits 187,691  198,580  215,466
Accumulated other comprehensive income     
Total stockholders’ equity 201,646  212,576  229,580
Total liabilities and stockholders’ equity$2,307,619 $2,408,587 $2,614,471


HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income


 Three Months Ended Six Months Ended
 June 30, June 30,
(In thousands, except per share amounts) 2018 2019 2018 2019
(Unaudited)         
Interest and dividend income:           
Loans$21,366  $24,816 $41,783  $47,896
Equity securities 505   496  984   985
Federal Reserve and other short-term investments 1,256   1,629  2,497   3,189
Total interest and dividend income 23,127   26,941  45,264   52,070
Interest expense:           
Deposits 4,344   7,074  7,911   13,220
Federal Home Loan Bank advances 2,266   3,539  4,359   6,667
Mortgage payable 12   11  24   22
Total interest expense 6,622   10,624  12,294   19,909
Net interest income 16,505   16,317  32,970   32,161
Provision for loan losses 415   555  700   980
Net interest income, after provision for loan losses 16,090   15,762  32,270   31,181
Other income:           
Customer service fees on deposits 216   199  422   385
Increase in bank-owned life insurance 60   57  128   124
Gain (loss) on equity securities, net (220)  1,170  746   4,039
Miscellaneous 43   43  87   83
Total other income 99   1,469  1,383   4,631
Operating expenses:           
Salaries and employee benefits 3,176   3,177  6,388   6,324
Occupancy and equipment 426   447  892   901
Data processing 348   301  689   735
Deposit insurance 226   265  499   508
Foreclosure (13)  44  (8)  67
Marketing 182   177  349   309
Other general and administrative 694   756  1,333   1,465
Total operating expenses 5,039   5,167  10,142   10,309
Income before income taxes 11,150   12,064  23,511   25,503
Income tax provision 3,175   3,358  6,624   6,973
Net income$7,975  $8,706 $16,887  $18,530
            
Cash dividends declared per share$0.35  $0.39 $0.69  $0.77
            
Weighted average shares outstanding:           
Basic 2,133   2,134  2,133   2,133
Diluted 2,187   2,182  2,186   2,182
            
Earnings per share:           
Basic$3.74  $4.08 $7.92  $8.69
Diluted$3.64  $3.99 $7.72  $8.49


HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis


 Three Months Ended June 30,  
 2018  2019 
 AVERAGE
BALANCE
  INTEREST YIELD/
RATE (8)
  AVERAGE
BALANCE
  INTEREST YIELD/
RATE (8)
 
(Dollars in thousands)                 
(Unaudited)                 
                  
Loans (1) (2)$1,913,404 $21,366 4.47% $2,161,278 $24,816 4.59%
Securities (3) (4) 52,941  505 3.82   58,311  496 3.40 
Federal Reserve and other short-term investments 278,434  1,256 1.80   272,453  1,629 2.39 
Total interest-earning assets 2,244,779  23,127 4.12   2,492,042  26,941 4.32 
Other assets 39,619        41,700      
Total assets$2,284,398       $2,533,742      
                  
Interest-bearing deposits (5)$1,423,682  4,344 1.22  $1,543,247  7,074 1.83 
Borrowed funds 469,476  2,278 1.94   534,809  3,550 2.66 
Total interest-bearing liabilities 1,893,158  6,622 1.40   2,078,056  10,624 2.04 
Demand deposits 186,919        221,051      
Other liabilities 4,555        7,271      
Total liabilities 2,084,632        2,306,378      
Stockholders’ equity 199,766        227,364      
Total liabilities and stockholders’ equity$2,284,398       $2,533,742      
Net interest income   $16,505       $16,317   
                  
Weighted average spread      2.72%       2.28%
                  
Net interest margin (6)      2.94%       2.62%
                  
Average interest-earning assets to average interest-bearing liabilities (7) 118.57%       119.92%     


(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


 Six Months Ended June 30,  
 2018  2019 
 AVERAGE
BALANCE
  INTEREST YIELD/
RATE (8)
  AVERAGE
BALANCE
 INTEREST YIELD/
RATE (8)
 
(Dollars in thousands)                 
(Unaudited)                 
                  
Loans (1) (2)$1,889,901 $41,783 4.42% $2,105,144 $47,896 4.55%
Securities (3) (4) 53,228  984 3.70   56,602  985 3.48 
Federal Reserve and other short-term investments 302,272  2,497 1.65   266,348  3,189 2.39 
Total interest-earning assets 2,245,401  45,264 4.03   2,428,094  52,070 4.29 
Other assets 38,815        40,418      
Total assets$2,284,216       $2,468,512      
                  
Interest-bearing deposits (5)$1,393,294  7,911 1.14  $1,514,553  13,220 1.75 
Borrowed funds 506,337  4,383 1.73   505,176  6,689 2.65 
Total interest-bearing liabilities 1,899,631  12,294 1.29   2,019,729  19,909 1.97 
Demand deposits 183,665        218,099      
Other liabilities 4,965        7,697      
Total liabilities 2,088,261        2,245,525      
Stockholders’ equity 195,955        222,987      
Total liabilities and stockholders’ equity$2,284,216       $2,468,512      
Net interest income   $32,970       $32,161   
                  
Weighted average spread      2.74%       2.32%
                  
Net interest margin (6)      2.94%       2.65%
                  
Average interest-earning assets to average interest-bearing liabilities (7) 118.20%       120.22%     


(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