HINGHAM, Mass.--(BUSINESS WIRE)--HINGHAM INSTITUTION FOR SAVINGS (NASDAQ – HIFS), Hingham, Massachusetts announced first quarter earnings for 2014. Net income for the quarter ended March 31, 2014 was $9,375,000 or $4.40 per share (basic and diluted) as compared to $3,205,000 or $1.51 per share (basic and diluted) for the same period last year. Earnings for 2014 included a one-time net gain of approximately $5.7 million related to non-taxable life insurance death benefit income of $6,302,000 less an accrual of $949,000 for a contractual death benefit liability, and $388,000 in related income tax benefit.
Excluding this event, the Bank earned $3,636,000 or $1.71 per share (basic and diluted), representing a 13% increase in net income over last year. The Bank’s return on average equity for the first quarter of 2014 was 18.87%, and the return on average assets was 1.47%. Excluding the $5.7 million event, the Bank’s return on average equity for the first quarter of 2014 was 13.53%, and the return on average assets was 1.05% as compared to return on average equity of 13.42% and a return on average assets of 1.07% for the first quarter of 2013.
Strong growth trends of recent years continued, as deposits increased by $133.5 million representing a 15% increase from March 31, 2013. Net loans increased by 18% and total assets increased by 17% as compared to March 31, 2013. Stockholders’ equity increased $16.7 million from March 31, 2013 to March 31, 2014, representing a 17% increase, with a related increase in book value per share from $44.88 to $52.70.
President Robert H. Gaughen Jr. stated, “We continue to create value for our owners through measured balance sheet growth, cost discipline, and careful capital allocation. Our earnings, among the strongest in our industry, are the product of these practices. We remain committed to the fundamentally conservative strategies that have produced long-term value without undue risk.”
It was with great grief, however, that we learned of the death of Deborah Jackson, our former Senior Vice President and Treasurer, in March 2014. She was a remarkable person and a key element of our success. We took great pleasure in her success as President and Chief Operating Officer of East Boston Savings Bank, where she led that bank in a period of rapid growth. She will be remembered by all of us at Hingham and our deepest condolences go to her family.”
Hingham Institution for Savings is a Massachusetts-chartered savings bank located in Hingham, Massachusetts. Incorporated in 1834, it is the oldest financial institution headquartered in Hingham and one of the oldest in the Commonwealth. The Bank’s main offices are located on Main Street, Hingham, Massachusetts 02043, phone (781) 749-2200. The Bank also maintains branch offices in South Hingham and the neighboring towns of Cohasset, Hull, Norwell, Scituate and Weymouth, as well as branches in the South End of Boston and on Beacon Hill and on the island of Nantucket.
The Bank’s shares of common stock are listed and traded on The NASDAQ Stock Market under the symbol HIFS.
HINGHAM INSTITUTION FOR SAVINGS Consolidated Balance Sheets |
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(Dollars in thousands except per share data) |
March 31, |
December 31, |
March 31, |
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(Unaudited) | ||||||||||
ASSETS | ||||||||||
Cash and due from banks | $ | 17,409 | $ | 11,922 | $ | 6,262 | ||||
Short-term investments | 110,830 | 90,925 | 91,061 | |||||||
Cash and cash equivalents | 128,239 | 102,847 | 97,323 | |||||||
Certificates of deposit | 12,763 | 13,011 | 12,999 | |||||||
Securities available for sale, at fair value | 105,443 | 106,369 | 102,561 | |||||||
Federal Home Loan Bank stock, at cost | 16,007 | 15,978 | 13,824 | |||||||
Loans, net of allowance for loan losses of $8,660
at March 31, 2014, $8,509 at December 31, 2013 and $8,216 at March 31, 2013 |
1,130,902 |
1,078,879 |
961,051 |
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Foreclosed assets | 983 | 271 | 471 | |||||||
Bank-owned life insurance | 11,201 | 15,375 | 15,054 | |||||||
Premises and equipment, net | 15,686 | 15,854 | 14,330 | |||||||
Accrued interest receivable | 2,877 | 2,792 | 3,063 | |||||||
Deferred income tax asset, net | 2,842 | 2,934 | 2,580 | |||||||
Other assets | 12,630 | 2,131 | 2,765 | |||||||
Total assets | $ | 1,439,573 | $ | 1,356,441 | $ | 1,226,021 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Deposits | $ | 1,010,347 | $ | 940,906 | $ | 876,876 | ||||
Federal Home Loan Bank advances | 303,715 | 302,732 | 244,325 | |||||||
Mortgage payable | 1,008 | 1,020 | 1,054 | |||||||
Mortgagors’ escrow accounts | 3,993 | 3,709 | 3,136 | |||||||
Accrued interest payable | 424 | 490 | 477 | |||||||
Other liabilities | 7,905 | 4,367 | 4,676 | |||||||
Total liabilities | 1,327,392 | 1,253,224 | 1,130,544 | |||||||
Stockholders’ equity: | ||||||||||
Preferred stock, $1.00 par value,
2,500,000 shares authorized, none issued |
— |
— |
— |
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Common stock, $1.00 par value, 5,000,000 shares
authorized; 2,128,750 shares issued and outstanding as of March 31, 2014 and December 31, 2013 and 2,127,250 shares issued and outstanding as of March 31, 2013 |
2,129 |
2,129 |
2,127 |
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Additional paid-in capital | 10,659 | 10,659 | 10,587 | |||||||
Undivided profits | 99,250 | 90,449 | 82,582 | |||||||
Accumulated other comprehensive income (loss) | 143 | (20 | ) | 181 | ||||||
Total stockholders’ equity | 112,181 | 103,217 | 95,477 | |||||||
Total liabilities and stockholders’ equity | $ | 1,439,573 | $ | 1,356,441 | $ | 1,226,021 | ||||
HINGHAM INSTITUTION FOR SAVINGS Consolidated Statements of Income |
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Three Months Ended
March 31, |
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(Dollars in thousands, except per share amounts) | 2014 | 2013 | ||||
(Unaudited) | ||||||
Interest and dividend income: | ||||||
Loans | $ | 12,946 | $ | 11,788 | ||
Debt securities | 91 | 109 | ||||
Equity securities | 114 | 38 | ||||
Short-term investments and certificates of deposit | 69 | 68 | ||||
Total interest and dividend income | 13,220 | 12,003 | ||||
Interest expense: | ||||||
Deposits | 1,437 | 1,429 | ||||
Federal Home Loan Bank advances | 1,055 | 1,208 | ||||
Mortgage payable | 15 | 16 | ||||
Total interest expense | 2,507 | 2,653 | ||||
Net interest income | 10,713 | 9,350 | ||||
Provision for loan losses | 150 | 100 | ||||
Net interest income, after provision for loan losses | 10,563 | 9,250 | ||||
Other income: | ||||||
Customer service fees on deposits | 243 | 238 | ||||
Increase in cash surrender value of life insurance | 93 | 109 | ||||
Life insurance death benefit | 6,302 | — | ||||
Miscellaneous | 68 | 50 | ||||
Total other income | 6,706 | 397 | ||||
Operating expenses: | ||||||
Salaries and employee benefits | 3,786 | 2,554 | ||||
Data processing | 283 | 239 | ||||
Occupancy and equipment | 510 | 481 | ||||
Deposit insurance | 190 | 167 | ||||
Foreclosure | 190 | 80 | ||||
Marketing | 136 | 78 | ||||
Other general and administrative | 640 | 619 | ||||
Total operating expenses | 5,735 | 4,218 | ||||
Income before income taxes | 11,534 | 5,429 | ||||
Income tax provision | 2,159 | 2,224 | ||||
Net income | $ | 9,375 | $ | 3,205 | ||
Cash dividends declared per common share | $ | 0.27 | $ | 0.26 | ||
Weighted average shares outstanding: | ||||||
Basic | 2,129 | 2,127 | ||||
Diluted | 2,131 | 2,129 | ||||
Earnings per share: | ||||||
Basic | $ | 4.40 | $ | 1.51 | ||
Diluted | $ | 4.40 | $ | 1.51 | ||
HINGHAM INSTITUTION FOR SAVINGS Net Interest Income Analysis |
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Three Months Ending March 31, | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
AVERAGE |
INTEREST |
YIELD/ |
AVERAGE |
INTEREST |
YIELD/ |
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(Dollars in thousands) | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Loans (1) (2) | $ | 1,114,240 | $ | 12,946 | 4.65 | % | $ | 957,700 | $ | 11,788 | 4.92 | % | ||||||
Securities (3) (4) | 119,187 | 205 | 0.69 | 115,709 | 147 | 0.51 | ||||||||||||
Short-term investments and certificates of deposit | 107,004 | 69 | 0.26 | 93,708 | 68 | 0.29 | ||||||||||||
Total earning assets | 1,340,431 | 13,220 | 3.94 | 1,167,117 | 12,003 | 4.11 | ||||||||||||
Other assets | 38,219 | 35,930 | ||||||||||||||||
Total assets | $ | 1,378,650 | $ | 1,203,047 | ||||||||||||||
Interest-bearing deposits (5) | $ | 869,209 | 1,437 | 0.66 | $ | 793,936 | 1,429 | 0.72 | ||||||||||
Borrowed funds | 307,325 | 1,070 | 1.39 | 234,782 | 1,224 | 2.09 | ||||||||||||
Total interest-bearing liabilities | 1,176,534 | 2,507 | 0.85 | 1,028,718 | 2,653 | 1.03 | ||||||||||||
Demand deposits | 92,206 | 76,176 | ||||||||||||||||
Other liabilities | 2,438 | 2,629 | ||||||||||||||||
Total liabilities | 1,271,178 | 1,107,523 | ||||||||||||||||
Stockholders’ equity | 107,472 | 95,524 | ||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,378,650 | $ | 1,203,047 | ||||||||||||||
Net interest income | $ | 10,713 | $ | 9,350 | ||||||||||||||
Weighted average spread | 3.09 | % | 3.08 | % | ||||||||||||||
Net interest margin (6) | 3.20 | % | 3.20 | % | ||||||||||||||
Average interest-earning assets to average
interest-bearing liabilities (7) |
113.93 |
% |
113.45 |
% |
* Annualized
(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 available for sale. | |
(4) | Includes Federal Home Loan Bank stock. | |
(5) | Includes mortgagors' escrow accounts. | |
(6) | Net interest income divided by average total earning assets. | |
(7) | Total earning assets divided by total interest-bearing liabilities. | |
HINGHAM INSTITUTION FOR SAVINGS Selected Financial Ratios |
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Three Months Ended
March 31, |
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2014 | 2013 | |||||
(Unaudited) | ||||||
Key Performance Ratios | ||||||
Return on average assets (1) | 1.47 | % | 1.07 | % | ||
Return on average equity (1) | 18.87 | 13.42 | ||||
Interest rate spread (2) | 3.09 | 3.08 | ||||
Net interest margin (3) | 3.20 | 3.20 | ||||
Non-interest expense to average assets (1) | 1.46 | 1.40 | ||||
Efficiency ratio (4) | 43.05 | 43.27 | ||||
Average equity to average assets | 7.80 | 7.94 | ||||
Average interest-bearing assets to average interest
bearing liabilities |
113.93 |
113.45 |
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March 31, |
December 31, |
March 31, |
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(Unaudited) | ||||||||||||
Asset Quality Ratios | ||||||||||||
Allowance for loan losses/total loans | 0.76 | % | 0.78 | % | 0.85 | % | ||||||
Allowance for loan losses/non-performing loans | 135.12 | 143.37 | 209.38 | |||||||||
Non-performing loans/total loans | 0.56 | 0.55 | 0.41 | |||||||||
Non-performing loans/total assets | 0.45 | 0.44 | 0.32 | |||||||||
Non-performing assets/total assets | 0.51 | 0.46 | 0.36 | |||||||||
Share Related | ||||||||||||
Book value per share | $ | 52.70 | $ | 48.49 | $ 44.88 | |||||||
Market value per share | $ | 78.50 | $ | 78.49 | $ 69.70 | |||||||
Shares outstanding at end of period | 2,128,750 | 2,128,750 | 2,127,250 | |||||||||
(1) Annualized, except for the applicable elements of the one-time $5.7 million insurance event in 2014 which were included but not annualized.
(2) Annualized. Interest rate spread represents the difference between the yield on earning assets and cost of interest-bearing liabilities.
(3) Annualized. Net interest margin represents net interest income divided by average earning assets.
(4) The efficiency ratio represents operating expenses divided by the sum of net interest income and other income. The ratio for 2014 excludes the $6.3 million life insurance death benefit from other income and $949,000 in salaries and benefits expense for the related one-time accrual of a contractual death benefit liability.