Hingham Savings Reports 18% Growth in Quarterly Earnings

HINGHAM, Mass.--()--HINGHAM INSTITUTION FOR SAVINGS (NASDAQ – HIFS), announced second quarter earnings for 2014. Net income for the quarter ended June 30, 2014 was $3,873,000 or $1.82 per share (basic and diluted) as compared to $3,275,000 or $1.54 per share (basic and diluted) in earnings for the second quarter of 2013. The Bank’s annualized return on average equity for the second quarter of 2014 was 13.51%, and the annualized return on average assets was 1.08%.

Net income for the six months ended June 30, 2014 was $13,248,000 or $6.22 per share (basic and diluted) as compared to $6,480,000 or $3.05 per share basic and $3.04 per share diluted for the same period last year. Earnings for first six months of 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 $7,507,000 or $3.53 per share basic and $3.52 per share diluted for the first six months of 2014, representing a 16% increase in net income over same period last year.

The Bank’s return on average equity for the first six months of 2014 was 23.86%, and the return on average assets was 1.88%. Excluding the $5.7 million event, the Bank’s return on average equity for the first six months of 2014 was 13.52%, and the return on average assets was 1.06% as compared to return on average equity of 13.44% and a return on average assets of 1.07% for the first six months of 2013.

Strong growth trends of recent years continued, as deposits increased by $83.8 million from December 31, 2013 and $132.9 million from June 30, 2013, representing an 18% annualized growth year to date and 15% from June 30, 2013. Net loans increased by $109.3 million from December 31, 2013 and $197.3 million from June 30, 2013, representing 20% annualized growth year to date and 20% growth from June 30, 2013. Total assets increased by $124.5 million from December 31, 2013 and $225.3 million from June 30, 2013, representing an 18% annualized growth year to date and 18% from June 30, 2013. Stockholders’ equity increased to $115.6 million as of June 30, 2014, representing a 24% annualized growth year to date and an 18% increase from June 30, 2013. Book value per share increased to $54.32 per share at June 30, 2014 from $48.49 per share at December 31, 2013 and $46.08 per share at June 30, 2013.

At June 30, 2014, non-performing assets totaled 0.44% of total assets, compared with 0.46% at December 31, 2013 and 0.38% at June 30, 2013. For the quarter ended June 30, 2014, a provision of $175,000 was made to the allowance for loan losses compared to $100,000 for the same period in 2013.

President Robert H. Gaughen, Jr. stated, “We are pleased to report that our current quarterly earnings represent an 18% increase over the second quarter of 2013. Improvement in our net interest margin, combined with effective cost control and solid growth in our balance sheet continue to produce some of the strongest earnings in the industry. This is a reflection of our continued commitment to shareholder value through quality growth and effective cost control.”

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, 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

 

(Dollars in thousands except per share data)

June 30,
2014

December 31,
2013

June 30,
2013

(Unaudited)
ASSETS
 
Cash and due from banks $ 8,140 $ 11,922 $ 8,570
Short-term investments   120,647   90,925   87,195
Cash and cash equivalents 128,787 102,847 95,765
 
Certificates of deposit 14,209 13,011 13,055
Securities available for sale, at fair value 97,331 106,369 103,580
Federal Home Loan Bank stock, at cost 16,983 15,978 14,043
Loans, net of allowance for loan losses of $8,834

at June 30, 2014, $8,509 at December 31, 2013

and $8,330 at June 30, 2013

 

1,188,157

 

1,078,879

 

990,831

Foreclosed assets 425 271 471
Bank-owned life insurance 11,272 15,375 15,160
Premises and equipment, net 15,537 15,854 15,101
Accrued interest receivable 3,112 2,792 3,119
Deferred income tax asset, net 2,981 2,934 2,676
Other assets   2,166   2,131   1,848
Total assets $ 1,480,960 $ 1,356,441 $ 1,255,649
 
               

LIABILITIES AND STOCKHOLDERS’ EQUITY

 
 
Deposits $ 1,024,673 $ 940,906 $ 891,772
Federal Home Loan Bank advances 331,668 302,732 257,795
Mortgage payable 997 1,020 1,043
Mortgagors’ escrow accounts 3,956 3,709 3,092
Accrued interest payable 379 490 448
Other liabilities   3,645   4,367   3,473
Total liabilities   1,365,318   1,253,224   1,157,623
 
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;
2,128,750 shares issued and outstanding at June 30,
2014 and December 31, 2013 and 2,127,250 shares
issued and outstanding at June 30, 2013

 

 

2,129

 

 

2,129

 

 

2,127

Additional paid-in capital 10,896 10,659 10,587
Undivided profits 102,548 90,449 85,303
Accumulated other comprehensive income   69   (20)   9
Total stockholders’ equity   115,642   103,217   98,026
Total liabilities and stockholders’ equity $ 1,480,960 $ 1,356,441 $ 1,255,649
 
       

HINGHAM INSTITUTION FOR SAVINGS

Consolidated Statements of Income

 
Three Months Ended Six Months Ended
June 30, June 30,
2014   2013 2014   2013
(Unaudited) (In thousands, except per share amounts)
Interest and dividend income:
Loans $ 13,543 $ 11,991 $ 26,489 $ 23,779
Debt securities 92 104 183 213
Equity securities 116 38 230 76
Short-term investments and certificates of deposit   82   66   151   134
Total interest and dividend income   13,833   12,199   27,053   24,202
Interest expense:
Deposits 1,519 1,405 2,956 2,834
Federal Home Loan Bank advances 901 1,209 1,956 2,417
Mortgage payable   15   15   30   31
Total interest expense   2,435   2,629   4,942   5,282
Net interest income 11,398 9,570 22,111 18,920
Provision for loan losses   175   100   325   200
Net interest income, after provision for loan losses   11,223   9,470   21,786   18,270
Other income:
Customer service fees on deposits 256 256 499 494
Increase in bank-owned life insurance 72 106 165 215
Life insurance death benefit 6,302
Miscellaneous   125   57   193   107
Total other income   453   419   7,159   816
Operating expenses:
Salaries and employee benefits 2,904 2,604 6,691 5,158
Data processing 302 240 585 479
Occupancy and equipment 526 459 1,036 940
Deposit insurance 197 168 387 335
Foreclosure 106 119 296 199
Marketing 119 130 255 208
Other general and administrative   938   637   1,577   1,256
Total operating expenses   5,092   4,357   10,827   8,575
Income before income taxes 6,584 5,532 18,118 10,961
Income tax provision   2,711   2,257   4,870   4,481
Net income $ 3,873 $ 3,275 $ 13,248 $ 6,480
 
Weighted average common shares outstanding:
Basic   2,129   2,127   2,129   2,127
Diluted   2,130   2,129   2,130   2,129
 
Earnings per common share:
Basic $ 1.82 $ 1.54 $ 6.22 $ 3.05
Diluted $ 1.82 $ 1.54 $ 6.22 $ 3.04
 
     

HINGHAM INSTITUTION FOR SAVINGS

Net Interest Income Analysis

 
Three Months Ended June 30,
2014   2013

AVERAGE
BALANCE

 

INTEREST

 

YIELD/
RATE

AVERAGE
BALANCE

 

INTEREST

 

YIELD/
RATE

(Dollars in thousands)
(Unaudited)
 
Loans (1) (2) $ 1,168,189 $ 13,543 4.64 % $ 984,444 $ 11,991 4.87 %
Securities (3) (4) 117,791 208 0.71 113,924 142 0.50
Short-term investments and certificates of deposit   116,911   82 0.28   85,227   66 0.31
Total earning assets 1,402,891   13,833 3.94 1,183,595   12,199 4.12
Other assets   37,923   36,535
Total assets $ 1,440,814 $ 1,220,130
 
Interest-bearing deposits (5) $ 917,070 1,519 0.66 $ 793,668 1,405 0.71
Borrowed funds   306,186   916 1.20   243,374   1,224 2.01
Total interest-bearing liabilities 1,223,256   2,435 0.80 1,037,042   2,629 1.01
Demand deposits 99,194 82,166
Other liabilities   3,725   3,559
Total liabilities 1,326,175 1,122,767
Stockholders’ equity   114,639   97,363
Total liabilities and stockholders’ equity $ 1,440,814 $ 1,220,130
Net interest income $ 11,398 $ 9,570
 
Weighted average spread 3.14 % 3.11 %
 
Net interest margin (6) 3.25 % 3.23 %
 

Average interest-earning assets to average
interest-bearing liabilities (7)

 

114.68

%

114.13

%

 

(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

Net Interest Income Analysis

 
Six Months Ended June 30,
2014   2013

AVERAGE
BALANCE

 

INTEREST

 

YIELD/
RATE

AVERAGE
BALANCE

 

INTEREST

 

YIELD/
RATE

(Dollars in thousands)
(Unaudited)
 
Loans (1) (2) $ 1,141,363 $ 26,489 4.64 % $ 971,146 $ 23,779 4.90 %
Securities (3) (4) 118,485 413 0.70 114,812 289 0.50
Short-term investments and certificates of deposit   111,985   151 0.27   89,444   134 0.30
Total earning assets 1,371,833   27,053 3.94 1,175,402   24,202 4.12
Other assets   38,070   36,234
Total assets $ 1,409,903 $ 1,211,636
 
Interest-bearing deposits (5) $ 893,272 2,956 0.66 $ 793,801 2,834 0.71
Borrowed funds   306,752   1,986 1.29   239,102   2,448 2.05
Total interest-bearing liabilities 1,200,024   4,942 0.82 1,032,903   5,282 1.02
Demand deposits 95,719 79,188
Other liabilities   3,105   3,102
Total liabilities 1,298,848 1,115,193
Stockholders’ equity   111,055   96,443
Total liabilities and stockholders’ equity $ 1,409,903 $ 1,211,636
Net interest income $ 22,111 $ 18,920
 
Weighted average spread 3.12 % 3.10 %
 
Net interest margin (6) 3.22 % 3.22 %
 

Average interest-earning assets to average
interest-bearing liabilities (7)

 

114.32

%

113.80

%

 

(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

 
Three Months Ended

June 30,

Six Months Ended

June 30,

2014     2013 2014     2013
(Unaudited)
 
Key Performance Ratios
Return on average assets (1) 1.08 % 1.07 % 1.88 % 1.07 %
Return on average equity (1) 13.51 13.45 23.86 13.44
Interest rate spread (1) (2) 3.14 3.11 3.12 3.10
Net interest margin (1) (3) 3.25 3.23 3.22 3.22
Non-interest expense to average assets (1) 1.41 1.43 1.54 1.42
Efficiency ratio (4) 42.97 43.62 36.99 43.45
Average equity to average assets 7.96 7.98 7.88 7.96

Average interest-bearing assets to average interest
bearing liabilities

 

114.68

114.13

114.32

113.80

 
   
June 30,

2014

December 31,
2013

June 30,

2013

(Unaudited)  
 
Asset Quality Ratios
Allowance for loan losses/total loans 0.74 % 0.78 %   0.83 %
Allowance for loan losses/non-performing loans 144.14 143.37 191.32
 
Non-performing loans/total loans 0.51 0.55 0.44
Non-performing loans/total assets 0.41 0.44 0.35
Non-performing assets/total assets 0.44 0.46 0.38
 
Share Related
Book value per share $ 54.32 $ 48.49 $ 46.08
Market value per share $ 79.40 $ 78.49 67.88
Shares outstanding at end of period 2,128,750 2,128,750 $ 2,127,250
 

(1) Annualized

(2) Interest rate spread represents the difference between the yield on 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.

Contacts

Hingham Institution for Savings
Robert A. Bogart, 781-749-2200
Vice President & Treasurer

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Contacts

Hingham Institution for Savings
Robert A. Bogart, 781-749-2200
Vice President & Treasurer