Hingham Savings Announces 8% Increase in Annual Diluted Earnings per Share, 14.73% Return on Equity

HINGHAM, Mass., Jan. 18, 2018 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ:HIFS), Hingham, Massachusetts announced earnings for the fourth quarter and the year ended December 31, 2017.

Net income for the year ended December 31, 2017 was $25,757,000 or $12.08 per share basic and $11.81 per share diluted as compared to $23,423,000 or $10.99 per share basic and $10.89 per share diluted for the year ended December 31, 2016.  Net income per share (diluted) for 2017 increased 8% over the same period in 2016.  The Bank’s return on average equity for the year ended December 31, 2017 was 14.73% and the return on average assets was 1.21%, as compared to 15.59% and 1.22% for the same period in 2016.  As a result of the Tax Cut and Jobs Act enacted on December 22, 2017, the Bank was required to remeasure its deferred tax assets and liabilities.  The remeasurement resulted in an additional $218,000 in income tax expense provision for the year ended December 31, 2017.  Excluding the effect of this remeasurement, net income for the year ended December 31, 2017 was $25,975,000 or $12.18 per share basic and $11.91 per share diluted, representing a return on average equity of 14.85% and a return on average assets of 1.22%.

Net income for the quarter ended December 31, 2017 was $6,691,000 or $3.14 per share basic and $3.06 per share diluted as compared to $6,287,000 or $2.95 per share basic and $2.92 per share diluted for the fourth quarter of 2016.  Net income per share (diluted) for the fourth quarter of 2017 increased 5% over the same period of 2016.  The Bank’s annualized return on average equity for the fourth quarter of 2017 was 14.51%, and the annualized return on average assets was 1.18%, as compared to 15.85% and 1.27% for the same period in 2016.  Excluding the effect of the net deferred tax asset remeasurement discussed above, net income for the quarter ended December 31, 2017 was $6,909,000 or $3.24 per share basic and $3.16 per share diluted, representing an annualized return on average equity of 14.98% and an annualized return on average assets of 1.22%.

The Bank continued to produce strong growth in deposits, loans, and book value per share in 2017.  Total deposits increased by 10% to $1.506 billion, with 25% growth in non-interest bearing deposits.  Net loans increased by 14% to $1.834 billion.  Total assets increased by 13% to $2.285 billion.  Book value per share increased by 16% from $75.50 to $87.29.  In addition to the increase in book value per share, the Bank declared $1.66 in dividends per share since December 31, 2016, including a special dividend of $0.34 per share declared during the fourth quarter of 2017.  The trailing five year compound annual growth rate in book value per share, an important measure of value creation, rose to 14.9%.

Key credit and operational metrics improved in 2017.  At December 31, 2017, non-performing assets totaled 0.07% of total assets, as compared to 0.09% at December 31, 2016.  Non-performing loans as a percentage of the total loan portfolio totaled 0.09% at December 31, 2017, as compared to 0.11% at December 31, 2016.  The Bank recorded $2,000 of net recoveries in 2017, as compared to $10,000 of net charge-offs in 2016.  At December 31, 2017 and 2016, the Bank did not own any foreclosed property.  The efficiency ratio improved to 30.06% in 2017, as compared to 32.15% in 2016.  Non-interest expense as a percentage of average assets improved to 0.92% in 2017, as compared to 1.00% in 2016.  Both the efficiency ratio and operating expenses as a percentage of average assets reached new record lows in 2017.  These metrics reflect the Bank’s disciplined focus on credit quality and expense management.

Net income for the years ended December 31, 2017 and 2016 included after-tax realized gains on securities of approximately $49,000 and $221,000 respectively.  For the year ended December 31, 2017, unrealized gains on securities, net of deferred tax liabilities, were recorded in stockholders’ equity through accumulated other comprehensive income.  Effective January 1, 2018, changes in unrealized gains on equity securities, net of deferred tax liabilities, will be recognized through the income statement.

President Robert H. Gaughen, Jr. stated, “We are pleased to report that returns on equity and assets remain satisfactory, despite heightened competition and a flattening yield curve.  At Hingham, we take seriously our role as stewards of the shareholders’ capital.  Our emphasis on careful capital allocation, defensive underwriting, process improvement, and disciplined cost control continues to serve our owners well.  Performance in any one period, especially periods when tailwinds may be with us, should be viewed cautiously.  Such periods are historically fraught with peril in our industry.  The real test of performance in banking is a company’s record of compounding shareholder capital over time and through all stages of the credit cycle.  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 is also an active commercial real estate lender 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.

(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 earning assets.

(4) The efficiency ratio represents non-interest expense, divided by the sum of net interest income and non-interest income, excluding gain on sale of securities, net.