HINGHAM, Mass., July 13, 2018 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ:HIFS), Hingham, Massachusetts announced second quarter results for 2018.
Net income for the quarter ended June 30, 2018 was $7,975,000 or $3.74 per share basic and $3.64 per share diluted, as compared to $6,470,000 or $3.03 per share basic and $2.97 per share diluted for the same period last year. The Bank’s annualized return on average equity for the second quarter of 2018 was 15.97%, and the annualized return on average assets was 1.40%, as compared to 15.08% and 1.25% for the same period in 2017. Net income per share (diluted) for the second quarter of 2018 increased 23% over the same period of 2017.
Excluding the after-tax gains and losses on securities, both realized and unrealized, core net income for the second quarter of 2018 was $8,147,000 or $3.82 per share basic and $3.73 per share diluted, as compared to $6,421,000 or $3.01 per share basic and $2.95 per share diluted for the same period last year. The Bank’s annualized core return on average equity for the second quarter of 2018 was 16.31%, and the annualized core return on average assets was 1.43%, as compared to 14.97% and 1.24% for the same period in 2017. Core net income per share (diluted) for the second quarter of 2018 increased by 26% over the same period in 2017.
Net income for the six months ended June 30, 2018 was $16,887,000 or $7.92 per share basic and $7.72 per share diluted, as compared to $12,582,000 or $5.90 per share basic and $5.77 per share diluted for the same period last year. The Bank’s annualized return on average equity for the first six months of 2018 was 17.24%, and the annualized return on average assets was 1.48%, as compared to 14.93% and 1.23% for the same period last year. Net income per share (diluted) for the first six months of 2018 increased 34% over the same period in 2017.
Excluding the after-tax gains on securities, both realized and unrealized, core net income for the six months ended June 30, 2018 was $16,305,000 or $7.65 per share basic and $7.46 per share diluted, as compared to $12,533,000 or $5.88 per share basic and $5.75 per share diluted for the same period last year. The Bank’s annualized core return on average equity for the first six months of 2018 was 16.64% and the annualized core return on average assets was 1.43%, as compared to 14.87% and 1.23% for the same period last year. Core net income per share (diluted) for the first six months of 2018 increased by 30% over the same period in 2017.
Growth in the first half of 2018 was strong, as deposits increased to $1.646 billion at June 30, 2018, representing 19% annualized growth year-to-date and 16% growth from June 30, 2017. This growth reflected strong growth in retail and business deposits as well as the use of more attractively priced wholesale deposits in lieu of comparable Federal Home Loan Bank advances. Net loans increased to $1.934 billion, representing 11% annualized growth year-to-date and 16% growth from June 30, 2017. Total assets increased to $2.308 billion, representing 2% annualized growth year-to-date and 9% growth from June 30, 2017. During the first half of 2018, the Bank used a portion of its cash balances to reduce outstanding Federal Home Loan Bank advances and listing services time deposits, in order to minimize the carrying cost of its on-balance sheet liquidity. Book value per share was $94.55 as of June 30, 2018, representing 17% annualized growth year-to-date and 17% growth from June 30, 2017. In addition to the increase in book value per share, the Bank declared $1.71 in dividends per share since June 30, 2017, including a special dividend of $0.34 per share declared during the fourth quarter of 2017.
Key credit and operational metrics remained strong in the second quarter. At June 30, 2018, non-performing assets totaled 0.05% of total assets, compared to 0.07% at December 31, 2017 and 0.18% at June 30, 2017. Non-performing loans as a percentage of the total loan portfolio totaled 0.06% at June 30, 2018, compared to 0.09% at December 31, 2017 and 0.22% at June 30, 2017. The Bank recorded zero net charge-offs for the first six months of 2018, as compared to $1,000 net recoveries for the same period last year. At June 30, 2018, December 31 and June 30, 2017, the Bank did not own any foreclosed property. The efficiency ratio was 29.95% for the second quarter of 2018, as compared to 29.97% for the same period last year. Non-interest expense as a percentage of average assets fell to 0.88% in the second quarter of 2018, as compared to 0.93% for the same period last year.
Chairman Robert H. Gaughen, Jr. stated, “During the second quarter, we announced our intention to close our North Scituate branch in September 2018 and consolidate our client service for this market in our branch in historic Cohasset Village. We also completed the acquisition of 85A Main Street in Hingham Square - a parcel of land that will facilitate growth in our Main Office well into the future. We continue to balance our emphasis on thrift with a willingness to invest aggressively if long-term returns on capital are likely to be satisfactory. The most important test of performance in banking is whether a firm can generate sustained high returns on equity capital through all stages of the credit cycle. This is the standard against which we measure all of our capital allocation, lending, and operational decisions. 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 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 June 30, | Six Months Ended June 30, | ||||||||||
| 2017 | 2018 | 2017 | 2018 | ||||||||
| (Unaudited) | |||||||||||
| Key Performance Ratios | |||||||||||
| Return on average assets (1) | 1.25 | % | 1.40 | % | 1.23 | % | 1.48 | % | |||
| Return on average equity (1) | 15.08 | 15.97 | 14.93 | 17.24 | |||||||
| Core return on average assets (1) (5) | 1.24 | 1.43 | 1.23 | 1.43 | |||||||
| Core return on average equity (1) (5) | 14.97 | 16.31 | 14.87 | 16.64 | |||||||
| Interest rate spread (1) (2) | 2.94 | 2.72 | 2.97 | 2.74 | |||||||
| Net interest margin (1) (3) | 3.08 | 2.94 | 3.10 | 2.94 | |||||||
| Non-interest expense to average assets (1) | 0.93 | 0.88 | 0.97 | 0.89 | |||||||
| Efficiency ratio (4) | 29.97 | 29.95 | 31.20 | 30.18 | |||||||
| Average equity to average assets | 8.27 | 8.74 | 8.24 | 8.58 | |||||||
| Average interest-earning assets to average interest- | |||||||||||
| bearing liabilities | 117.45 | 118.57 | 117.12 | 118.20 | |||||||
| June 30, 2017 | December 31, 2017 | June 30, 2018 | |||||||||
| (Unaudited) | |||||||||||
| Asset Quality Ratios | |||||||||||
| Allowance for loan losses/total loans | 0.69 | % | 0.68 | % | 0.68 | % | |||||
| Allowance for loan losses/non-performing loans | 310.63 | 735.74 | 1,064.92 | ||||||||
| Non-performing loans/total loans | 0.22 | 0.09 | 0.06 | ||||||||
| Non-performing loans/total assets | 0.18 | 0.07 | 0.05 | ||||||||
| Non-performing assets/total assets | 0.18 | 0.07 | 0.05 | ||||||||
| Share Related | |||||||||||
| Book value per share | $ | 81.05 | $ | 87.29 | $ | 94.55 | |||||
| Market value per share | $ | 181.93 | $ | 207.00 | $ | 219.70 | |||||
| Shares outstanding at end of period | 2,132,750 | 2,132,750 | 2,132,750 | ||||||||
| (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 interest-earning assets. | |||||||||||||||
| (4 | ) | The efficiency ratio represents non-interest expense, divided by the sum of net interest income and non-interest income, excluding gain (loss) on equity securities. | |||||||||||||||
| (5 | ) | Non-GAAP measurements that represent return on average assets and return on average equity, excluding the after-tax gain (loss) on equity securities. | |||||||||||||||
HINGHAM INSTITUTION FOR SAVINGS
Consolidated Balance Sheets
| (Dollars in thousands, except per share data) | June 30, 2017 | December 31, 2017 | June 30, 2018 | |||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 8,312 | $ | 10,852 | $ | 9,342 | ||
| Federal Reserve and other short-term investments | 346,999 | 344,377 | 265,695 | |||||
| Cash and cash equivalents | 355,311 | 355,229 | 275,037 | |||||
| CRA investment | 7,383 | 7,341 | 7,665 | |||||
| Debt securities available for sale | 23 | 17 | 16 | |||||
| Other marketable equity securities | 21,951 | 26,946 | 30,328 | |||||
| Securities, at fair value | 29,357 | 34,304 | 38,009 | |||||
| Federal Home Loan Bank stock, at cost | 25,297 | 27,102 | 24,530 | |||||
| Loans, net of allowance for loan losses of $11,571 | ||||||||
| at June 30, 2017, $12,537 at December 31, 2017 | ||||||||
| and $13,237 at June 30, 2018 | 1,666,172 | 1,833,987 | 1,933,915 | |||||
| Foreclosed assets | — | — | — | |||||
| Bank-owned life insurance | 12,091 | 12,221 | 12,349 | |||||
| Premises and equipment, net | 14,169 | 14,068 | 14,479 | |||||
| Accrued interest receivable | 3,645 | 4,398 | 4,630 | |||||
| Deferred income tax asset, net | 2,190 | 1,301 | 1,165 | |||||
| Other assets | 2,784 | 1,989 | 3,505 | |||||
| Total assets | $ | 2,111,016 | $ | 2,284,599 | $ | 2,307,619 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Interest-bearing deposits | $ | 1,263,923 | $ | 1,320,487 | $ | 1,453,401 | ||
| Non-interest-bearing deposits | 159,702 | 185,375 | 192,918 | |||||
| Total deposits | 1,423,625 | 1,505,862 | 1,646,319 | |||||
| Federal Home Loan Bank advances | 503,242 | 579,164 | 446,283 | |||||
| Mortgage payable | 840 | 812 | 782 | |||||
| Mortgagors’ escrow accounts | 5,735 | 6,424 | 6,659 | |||||
| Accrued interest payable | 531 | 575 | 1,233 | |||||
| Other liabilities | 4,182 | 5,604 | 4,697 | |||||
| Total liabilities | 1,938,155 | 2,098,441 | 2,105,973 | |||||
| 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 | 2,133 | 2,133 | 2,133 | |||||
| Additional paid-in capital | 11,662 | 11,750 | 11,822 | |||||
| Undivided profits | 155,796 | 165,596 | 187,691 | |||||
| Accumulated other comprehensive income | 3,270 | 6,679 | — | |||||
| Total stockholders’ equity | 172,861 | 186,158 | 201,646 | |||||
| Total liabilities and stockholders’ equity | $ | 2,111,016 | $ | 2,284,599 | $ | 2,307,619 | ||
HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income
| Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| (In thousands, except per share amounts) | 2017 | 2018 | 2017 | 2018 | |||||||||||||
| (Unaudited) | |||||||||||||||||
| Interest and dividend income: | |||||||||||||||||
| Loans | $ | 18,484 | $ | 21,366 | $ | 36,452 | $ | 41,783 | |||||||||
| Equity securities | 367 | 505 | 720 | 984 | |||||||||||||
| Federal Reserve and other short-term investments | 827 | 1,256 | 1,436 | 2,497 | |||||||||||||
| Total interest and dividend income | 19,678 | 23,127 | 38,608 | 45,264 | |||||||||||||
| Interest expense: | |||||||||||||||||
| Deposits | 2,712 | 4,344 | 5,230 | 7,911 | |||||||||||||
| Federal Home Loan Bank advances | 1,277 | 2,266 | 2,237 | 4,359 | |||||||||||||
| Mortgage payable | 13 | 12 | 26 | 24 | |||||||||||||
| Total interest expense | 4,002 | 6,622 | 7,493 | 12,294 | |||||||||||||
| Net interest income | 15,676 | 16,505 | 31,115 | 32,970 | |||||||||||||
| Provision for loan losses | 285 | 415 | 540 | 700 | |||||||||||||
| Net interest income, after provision for loan losses | 15,391 | 16,090 | 30,575 | 32,270 | |||||||||||||
| Other income: | |||||||||||||||||
| Customer service fees on deposits | 227 | 216 | 446 | 422 | |||||||||||||
| Increase in bank-owned life insurance | 62 | 60 | 129 | 128 | |||||||||||||
| Gain (loss) on equity securities | 77 | (220 | ) | 77 | 746 | ||||||||||||
| Miscellaneous | 47 | 43 | 92 | 87 | |||||||||||||
| Total other income | 413 | 99 | 744 | 1,383 | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Salaries and employee benefits | 3,091 | 3,176 | 6,237 | 6,388 | |||||||||||||
| Occupancy and equipment | 419 | 426 | 883 | 892 | |||||||||||||
| Data processing | 311 | 348 | 608 | 689 | |||||||||||||
| Deposit insurance | 258 | 226 | 516 | 499 | |||||||||||||
| Foreclosure | (40 | ) | (13 | ) | 3 | (8 | ) | ||||||||||
| Marketing | 116 | 154 | 240 | 292 | |||||||||||||
| Other general and administrative | 643 | 722 | 1,429 | 1,390 | |||||||||||||
| Total operating expenses | 4,798 | 5,039 | 9,916 | 10,142 | |||||||||||||
| Income before income taxes | 11,006 | 11,150 | 21,403 | 23,511 | |||||||||||||
| Income tax provision | 4,536 | 3,175 | 8,821 | 6,624 | |||||||||||||
| Net income | $ | 6,470 | $ | 7,975 | $ | 12,582 | $ | 16,887 | |||||||||
| Cash dividends declared per share | $ | 0.32 | $ | 0.35 | $ | 0.64 | $ | 0.69 | |||||||||
| Weighted average shares outstanding: | |||||||||||||||||
| Basic | 2,133 | 2,133 | 2,133 | 2,133 | |||||||||||||
| Diluted | 2,179 | 2,187 | 2,180 | 2,186 | |||||||||||||
| Earnings per share: | |||||||||||||||||
| Basic | $ | 3.03 | $ | 3.74 | $ | 5.90 | $ | 7.92 | |||||||||
| Diluted | $ | 2.97 | $ | 3.64 | $ | 5.77 | $ | 7.72 | |||||||||
HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis
| Three Months Ended June 30, | |||||||||||||||||
| 2017 | 2018 | ||||||||||||||||
| AVERAGE BALANCE | INTEREST | YIELD/ RATE (8) | AVERAGE BALANCE | INTEREST | YIELD/ RATE (8) | ||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Loans (1) (2) | $ | 1,666,327 | $ | 18,484 | 4.44 | % | $ | 1,913,404 | $ | 21,366 | 4.47 | % | |||||
| Securities (3) (4) | 49,233 | 367 | 2.98 | 52,941 | 505 | 3.82 | |||||||||||
| Federal Reserve and other short-term investments | 322,239 | 827 | 1.03 | 278,434 | 1,256 | 1.80 | |||||||||||
| Total interest-earning assets | 2,037,799 | 19,678 | 3.86 | 2,244,779 | 23,127 | 4.12 | |||||||||||
| Other assets | 35,894 | 39,619 | |||||||||||||||
| Total assets | $ | 2,073,693 | $ | 2,284,398 | |||||||||||||
| Interest-bearing deposits (5) | $ | 1,263,209 | 2,712 | 0.86 | $ | 1,423,682 | 4,344 | 1.22 | |||||||||
| Borrowed funds | 471,805 | 1,290 | 1.09 | 469,476 | 2,278 | 1.94 | |||||||||||
| Total interest-bearing liabilities | 1,735,014 | 4,002 | 0.92 | 1,893,158 | 6,622 | 1.40 | |||||||||||
| Demand deposits | 162,339 | 186,919 | |||||||||||||||
| Other liabilities | 4,755 | 4,555 | |||||||||||||||
| Total liabilities | 1,902,108 | 2,084,632 | |||||||||||||||
| Stockholders’ equity | 171,585 | 199,766 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 2,073,693 | $ | 2,284,398 | |||||||||||||
| Net interest income | $ | 15,676 | $ | 16,505 | |||||||||||||
| Weighted average spread | 2.94 | % | 2.72 | % | |||||||||||||
| Net interest margin (6) | 3.08 | % | 2.94 | % | |||||||||||||
| Average interest-earning assets to average | |||||||||||||||||
| interest-bearing liabilities (7) | 117.45 | % | 118.57 | % | |||||||||||||
| (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, | |||||||||||||||||
| 2017 | 2018 | ||||||||||||||||
| AVERAGE BALANCE | INTEREST | YIELD/ RATE (8) | AVERAGE BALANCE | INTEREST | YIELD/ RATE (8) | ||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Loans (1) (2) | $ | 1,646,040 | $ | 36,452 | 4.43 | % | $ | 1,889,901 | $ | 41,783 | 4.42 | % | |||||
| Securities (3) (4) | 48,442 | 720 | 2.97 | 53,228 | 984 | 3.70 | |||||||||||
| Federal Reserve and other short-term investments | 315,727 | 1,436 | 0.91 | 302,272 | 2,497 | 1.65 | |||||||||||
| Total interest-earning assets | 2,010,209 | 38,608 | 3.84 | 2,245,401 | 45,264 | 4.03 | |||||||||||
| Other assets | 35,153 | 38,815 | |||||||||||||||
| Total assets | $ | 2,045,362 | $ | 2,284,216 | |||||||||||||
| Interest-bearing deposits (5) | $ | 1,246,436 | 5,230 | 0.84 | $ | 1,393,294 | 7,911 | 1.14 | |||||||||
| Borrowed funds | 469,907 | 2,263 | 0.96 | 506,337 | 4,383 | 1.73 | |||||||||||
| Total interest-bearing liabilities | 1,716,343 | 7,493 | 0.87 | 1,899,631 | 12,294 | 1.29 | |||||||||||
| Demand deposits | 155,627 | 183,665 | |||||||||||||||
| Other liabilities | 4,802 | 4,965 | |||||||||||||||
| Total liabilities | 1,876,772 | 2,088,261 | |||||||||||||||
| Stockholders’ equity | 168,590 | 195,955 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 2,045,362 | $ | 2,284,216 | |||||||||||||
| Net interest income | $ | 31,115 | $ | 32,970 | |||||||||||||
| Weighted average spread | 2.97 | % | 2.74 | % | |||||||||||||
| Net interest margin (6) | 3.10 | % | 2.94 | % | |||||||||||||
| Average interest-earning assets to average | |||||||||||||||||
| interest-bearing liabilities (7) | 117.12 | % | 118.20 | % | |||||||||||||
| (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. |
CONTACT: Patrick R. Gaughen, President and Chief Operating Officer (781) 783-1761