Hingham Savings Reports Third Quarter 2018 Results

 

HINGHAM, Mass., Oct. 12, 2018 — HINGHAM INSTITUTION FOR SAVINGS (NASDAQ: HIFS), Hingham, Massachusetts announced third quarter results for 2018.

Net income for the quarter ended September 30, 2018 was $8,848,000 or $4.15 per share basic and $4.05 per share diluted, as compared to $6,484,000 or $3.04 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 third quarter of 2018 was 17.06%, and the annualized return on average assets was 1.52%, as compared to 14.60% and 1.21% for the same period in 2017.  Net income per share (diluted) for the third quarter of 2018 increased 36% over the same period of 2017.

Excluding the after-tax gains and losses on securities, both realized and unrealized, core net income for the third quarter of 2018 was $8,424,000 or $3.95 per share basic and $3.85 per share diluted, as compared to $6,484,000 or $3.04 per share basic and $2.97 per share diluted for the same period last year.  The Bank’s annualized core return on average equity for the third quarter of 2018 was 16.24%, and the annualized core return on average assets was 1.45%, as compared to 14.60% and 1.21% for the same period in 2017.  Core net income per share (diluted) for the third quarter of 2018 increased by 30% over the same period in 2017.

 Stay Updated To Save Money & Time. Join Our Free Newsletter 
. Indepth Analysis & Opinion       . Interviews      . Exclusive Reports  
. Free Digital Magazines      News & updates      . Event Invitations 
                     
& Much More Delivered To Your Inbox For Free.
Submit
We Will Not Spam, Rent, or Sell Your Information.
All emails include an unsubscribe link. You may opt-out at any time. See our privacy policy.

 

Net income for the nine months ended September 30, 2018 was $25,735,000 or $12.07 per share basic and $11.77 per share diluted, as compared to $19,066,000 or $8.94 per share basic and $8.75 per share diluted for the same period last year.  The Bank’s annualized return on average equity for the first nine months of 2018 was 17.17%, and the annualized return on average assets was 1.49%, as compared to 14.81% and 1.22% for the same period last year.  Net income per share (diluted) for the first nine months of 2018 increased 35% over the same period in 2017.

Excluding the after-tax gains and losses on securities, both realized and unrealized, core net income for the nine months ended September 30, 2018 was $24,729,000 or $11.60 per share basic and $11.31 per share diluted, as compared to $19,017,000 or $8.92 per share basic and $8.72 per share diluted for the same period last year.  The Bank’s annualized core return on average equity for the first nine months of 2018 was 16.50% and the annualized core return on average assets was 1.43%, as compared to 14.77% and 1.22% for the same period last year.  Core net income per share (diluted) for the first nine months of 2018 increased by 30% over the same period in 2017.

Growth in the first nine months of 2018 was generally satisfactory, as deposits increased to $1.715 billion at September 30, 2018, representing 19% annualized growth year-to-date and 18% growth from September 30, 2017.  This growth reflected modest growth in retail and business deposits as well as the increasing use of more attractively priced wholesale deposits in lieu of comparable Federal Home Loan Bank advances.  Net loans increased to $1.976 billion, representing 10% annualized growth year-to-date and 12% growth from September 30, 2017.  Total assets increased to $2.370 billion, representing 5% annualized growth year-to-date and 7% growth from September 30, 2017.  During the first nine months 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 $98.35 as of September 30, 2018, representing 17% annualized growth year-to-date and 17% growth from September 30, 2017.  In addition to the increase in book value per share, the Bank declared $1.73 in dividends per share since September 30, 2017, including a special dividend of $0.34 per share declared during the fourth quarter of 2017.  The Bank announced increases in its regular quarterly dividend in both June and September 2018.

Key credit and operational metrics remained strong in the third quarter of 2018.  At September 30, 2018, non-performing assets totaled 0.02% of total assets, compared to 0.07% at December 31, 2017 and 0.05% at September 30, 2017.  Non-performing loans as a percentage of the total loan portfolio totaled 0.02% at September 30, 2018, compared to 0.09% at December 31, 2017 and 0.06% at September 30, 2017.  The Bank recorded $1,000 in net recoveries for the first nine months of 2018 and 2017.  At September 30, 2018, December 31 and September 30, 2017, the Bank did not own any foreclosed property.  The efficiency ratio was 29.17% for the third quarter of 2018, as compared to 29.37% for the same period last year.  Non-interest expense as a percentage of average assets fell to 0.86% in the third quarter of 2018, as compared to 0.90% for the same period last year.

Chairman Robert H. Gaughen, Jr. stated, “We are pleased to report that returns on equity and assets remained satisfactory in the third quarter of 2018, although balance sheet growth was modest relative to capital generation.  We remain focused on careful capital allocation, defensive underwriting and disciplined cost control – we believe these are the keys to generating sustained value for our ownership.”

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 EndedNine Months Ended
 September 30,  September 30,
2017201820172018
(Unaudited)
Key Performance Ratios
Return on average assets (1)1.21%1.52%1.22%1.49%
Return on average equity (1)14.6017.0614.8117.17
Core return on average assets (1) (5)1.211.451.221.43
Core return on average equity (1) (5)14.6016.2414.7716.50
Interest rate spread (1) (2)2.892.672.932.72
Net interest margin (1) (3)3.042.933.082.93
Non-interest expense to average assets (1)0.900.860.940.88
Efficiency ratio (4)29.3729.1730.5829.84
Average equity to average assets8.268.918.258.69
Average interest-earning assets to average interest-bearing liabilities117.69119.39117.32118.61
September 30, 2017December 31, 2017September 30, 2018
(Unaudited)
Asset Quality Ratios
Allowance for loan losses/total loans0.68%0.68%0.68%
Allowance for loan losses/non-performing loans1,078.04735.742,807.44
Non-performing loans/total loans0.060.090.02
Non-performing loans/total assets0.050.070.02
Non-performing assets/total assets0.050.070.02
Share Related
Book value per share$84.27$87.29$ 98.35 
Market value per share$190.27$207.00$ 219.81
Shares outstanding at end of period2,132,7502,132,7502,132,750

(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 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

  (Dollars in thousands, except per share data)September 30,  2017December 31, 2017September 30,  2018
(Unaudited)
ASSETS
Cash and due from banks$9,792$10,852$10,043
Federal Reserve and other short-term investments341,294344,377286,449
  Cash and cash equivalents351,086355,229296,492
 
CRA investment7,3907,3417,605
Debt securities available for sale191715
Other marketable equity securities24,89226,94632,099
Securities, at fair value32,30134,30439,719
Federal Home Loan Bank stock, at cost26,86327,10221,682
Loans, net of allowance for loan losses of $12,128 at September 30, 2017, $12,537 at December 31, 2017 and $13,588 at September 30, 2018  1,769,830  1,833,987  1,976,422
Foreclosed assets
Bank-owned life insurance12,15812,22112,414
Premises and equipment, net14,04914,06814,458
Accrued interest receivable4,0794,3985,066
Deferred income tax asset, net1,6011,3011,128
Other assets2,9731,9892,981
  Total assets$2,214,940$2,284,599$2,370,362

LIABILITIES AND STOCKHOLDERS’ EQUITY

Interest-bearing deposits$1,277,157$1,320,487$1,494,193
Non-interest-bearing deposits171,382185,375220,943
Total deposits1,448,5391,505,8621,715,136
Federal Home Loan Bank advances574,395579,164431,242
Mortgage payable826812766
Mortgagors’ escrow accounts6,2286,4246,901
Accrued interest payable4575751,687
Other liabilities4,7775,6044,883
Total liabilities2,035,2222,098,4412,160,615
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 outstanding2,1332,1332,133
Additional paid-in capital11,70611,75011,843
Undivided profits161,554165,596195,771
Accumulated other comprehensive income4,3256,679
Total stockholders’ equity179,718186,158209,747
Total liabilities and stockholders’ equity$2,214,940$2,284,599$2,370,362

HINGHAM INSTITUTION FOR SAVINGS Consolidated Statements of Income

Three Months EndedNine Months Ended
September 30,September 30,
(In thousands, except per share amounts)2017201820172018
(Unaudited)
Interest and dividend income:
Loans$19,211$22,523$55,663$64,306
Equity securities3965031,1161,487
Federal Reserve and other short-term investments1,0791,3172,5153,814
Total interest and dividend income20,68624,34359,29469,607
Interest expense:  
Deposits2,8545,2918,08413,202
Federal Home Loan Bank advances1,7422,2943,9796,653
Mortgage payable12123836
Total interest expense4,6087,59712,10119,891
Net interest income16,07816,74647,19349,716
Provision for loan losses5583501,0981,050
  Net interest income, after provision for loan losses15,52016,39646,09548,666
Other income:
Customer service fees on deposits216216662638
Increase in bank-owned life insurance6765196193
Gain on equity securities, net544771,290
Miscellaneous4442136129
Total other income3278671,0712,250
Operating expenses:
Salaries and employee benefits3,0083,1469,2459,534
Occupancy and equipment4224211,3051,313
Data processing3213539291,042
Deposit insurance279258795757
Foreclosure11(33)14(41)
Marketing85136325428
Other general and administrative6926982,1212,088
Total operating expenses4,8184,97914,73415,121
Income before income taxes11,02912,28432,43235,795
Income tax provision4,5453,43613,36610,060
Net income$6,484$8,848$19,066$25,735
Cash dividends declared per share$0.34$0.36$0.98$1.05
Weighted average shares outstanding:
Basic2,1332,1332,1332,133
Diluted2,1802,1882,1802,187
Earnings per share:
Basic$3.04$4.15$8.94$12.07
Diluted$2.97$4.05$8.75$11.77

HINGHAM INSTITUTION FOR SAVINGS Net Interest Income Analysis

Three Months Ended September 30,
20172018
AVERAGE BALANCEINTERESTYIELD/ RATE (8)AVERAGE BALANCEINTERESTYIELD/ RATE (8)
(Dollars in thousands)
(Unaudited)
Loans (1) (2)$1,733,650$19,2114.43%$1,973,987$22,5234.56%
Securities (3) (4)50,6963963.1252,1665033.86
Federal Reserve and other short-term investments332,3671,0791.30262,9431,3172.00
Total interest-earning assets2,116,71320,6863.912,289,09624,3434.25
Other assets35,47138,380
Total assets$2,152,184$2,327,476
Interest-bearing deposits (5)$1,265,7312,8540.90$1,503,7715,2911.41
Borrowed funds532,8361,7541.32413,4972,3062.23
Total interest-bearing liabilities1,798,5674,6081.021,917,2687,5971.58
Demand deposits171,680197,838
Other liabilities4,2424,927
Total liabilities1,974,4892,120,033
Stockholders’ equity177,695207,443
Total liabilities and stockholders’ equity$2,152,184$2,327,476
Net interest income$16,078$16,746
Weighted average spread2.89%2.67%
Net interest margin (6)3.04%2.93%
Average interest-earning assets to average interest-bearing liabilities (7)117.69%119.39%

(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

Nine Months Ended September 30,
20172018
AVERAGE BALANCEINTERESTYIELD/ RATE (8)AVERAGE BALANCEINTERESTYIELD/ RATE (8)
(Dollars in thousands)
(Unaudited)
Loans (1) (2)$1,675,563$55,6634.43%$1,918,239$64,3064.47%
Securities (3) (4)49,2021,1163.0252,8701,4873.75
Federal Reserve and other short-term investments321,3352,5151.04289,0183,8141.76
Total interest-earning assets2,046,10059,2943.862,260,12769,6074.11
Other assets35,26138,668
Total assets$2,081,361$2,298,795
Interest-bearing deposits (5)$1,252,9388,0840.86$1,430,52413,2021.23
Borrowed funds491,1144,0171.09475,0506,6891.88
Total interest-bearing liabilities1,744,05212,1010.931,905,57419,8911.39
Demand deposits161,037188,441
Other liabilities4,6134,954
Total liabilities1,909,7022,098,969
Stockholders’ equity171,659199,826
Total liabilities and stockholders’ equity$2,081,361$2,298,795
Net interest income$47,193$49,716
Weighted average spread2.93%2.72%
Net interest margin (6)3.08%2.93%
Average interest-earning assets to average  interest-bearing liabilities (7)117.32%118.61%

(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.

Primary Logo

 Stay Updated To Save Money & Time. Join Our Free Newsletter 
. Indepth Analysis & Opinion       . Interviews      . Exclusive Reports  
. Free Digital Magazines      News & updates      . Event Invitations 
                     
& Much More Delivered To Your Inbox For Free.
Submit
We Will Not Spam, Rent, or Sell Your Information.
All emails include an unsubscribe link. You may opt-out at any time. See our privacy policy.

 
Close
Stay Updated To Save Money & Time. Join Our Free Newsletter. 
. Indepth Analysis & Opinion       Interviews          . Exclusive Reports 
. Free Digital Magazines        . News & updates        . Event Invitations
& Much More Delivered To Your Inbox For Free. 
Submit
We Will Not Spam, Rent, or Sell Your Information.
All emails include an unsubscribe link. You may opt-out at any time. See our privacy policy.
 
Close