Hingham Announces 21% Increase in Annual Earnings and 15.59% Return on Equity

HINGHAM, Mass., Jan. 17, 2017 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ:HIFS), Hingham, Massachusetts announced earnings for the fourth quarter and the year ended December 31, 2016.

Net income for the year ended December 31, 2016 was $23,423,000 or $10.99 per share basic and $10.89 per share diluted as compared to $19,346,000 or $9.09 per share basic and $9.02 per share diluted for the year ended December 31, 2015. Net income per share (basic and diluted) for 2016 increased 21% over the same period in 2015. The Bank’s return on average equity for the year ended December 31, 2016 was 15.59% and the return on average assets was 1.22%, as compared to 14.81% and 1.18% for the same period in 2015.

Net income for the quarter ended December 31, 2016 was $6,287,000 or $2.95 per share basic and $2.92 per share diluted as compared to $5,234,000 or $2.46 per share basic and $2.44 per share diluted for the fourth quarter of 2015. Net income per share (basic and diluted) for the fourth quarter of 2016 increased 20% over the same period in 2015. The Bank’s annualized return on average equity for the fourth quarter of 2016 was 15.85%, and the annualized return on average assets was 1.27% as compared to 15.30% and 1.21% for the same period in 2015.

The Bank continued to produce strong growth in deposits, loans, and book value per share in 2016. Deposits increased by 12% to $1.366 billion. Net loans increased by 14% to $1.606 billion. Total assets increased by 14% to $2.015 billion. Book value per share increased by 16% to $75.50. This increase in book value per share excludes capital returned to the ownership through regular and special dividends; the Bank declared $1.56 in regular and special dividends in 2016.

Key credit and operational metrics remained strong in 2016. At December 31, 2016, non-performing assets totaled 0.09% of total assets as compared with 0.10% at December 31, 2015. Non-performing loans as a percentage of the total loan portfolio totaled 0.11% at December 31, 2016, as compared to 0.13% at December 31, 2015. At December 31, 2016 and 2015, the Bank did not own any foreclosed property. The efficiency ratio improved to 32.15% in 2016 as compared to 36.32% in 2015. Non-interest expense as a percentage of average assets improved to 1.00% in 2016, as compared to 1.16% in 2015. Both the efficiency ratio and operating expenses as a percentage of average assets reached new record lows in 2016 and reflect the Bank’s particular focus on disciplined expense management.

President Robert H. Gaughen, Jr. stated, “We are pleased to report a strong return on capital in 2016. At Hingham, we take our role as stewards of the shareholders’ capital seriously. Our emphasis on careful capital allocation, defensive and conservative underwriting, and disciplined cost control continues to serve our owners well. More important than performance in any one period, however, is a company’s record of compounding shareholder capital over time and through credit cycles. 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 the oldest financial institution headquartered in Hingham and one of the oldest continuously operating banks in the United States. The Bank’s main offices are located on Main Street in Hingham, MA. The Bank also maintains branch offices in South Hingham and the neighboring towns of Cohasset, Hull, Scituate, Norwell and Weymouth as well as branches in the South End of Boston, 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
Selected Financial Ratios

	Three Months Ended December 31,				Twelve Months Ended December 31,
	2015		2016		2015		2016
(Unaudited)

Key Performance Ratios
Return on average assets (1)	1.21	%	1.27	%	1.18	%	1.22	%
Return on average equity (1)	15.30		15.85		14.81		15.59
Interest rate spread (1) (2)	3.02		3.03		3.06		2.99
Net interest margin (1) (3)	3.14		3.15		3.17		3.10
Non-interest expense to average assets (1)	1.09		0.95		1.16		1.00
Efficiency ratio (4)	34.55		29.93		36.32		32.15
Average equity to average assets	7.90		7.98		7.97		7.85
Average interest-earning assets to average interest-bearing liabilities	115.90		116.65		115.85		116.19

	December 31, 2015			December 31, 2016
(Unaudited)

Asset Quality Ratios
Allowance for loan losses/total loans	0.70		%			0.68	%
Allowance for loan losses/non-performing loans	540.37					614.43

Non-performing loans/total loans	0.13					0.11
Non-performing loans/total assets	0.10					0.09
Non-performing assets/total assets	0.10					0.09

Share Related
Book value per share	$	64.83		$	75.50
Market value per share	$	119.80		$	196.78
Shares outstanding at end of period		2,128,750			2,132,750

(1) Annualized for the three months periods.

(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.


HINGHAM INSTITUTION FOR SAVINGS
Consolidated Balance Sheets

(Dollars in thousands, except per share data)	December 31, 2015		December 31, 2016
(Unaudited)
ASSETS

Cash and due from banks	$	6,944	$	7,816
Federal Reserve and other short-term investments		254,069		315,116
Cash and cash equivalents		261,013		322,932

Certificates of deposit		6,206		—

CRA investment		4,971		6,839
Other securities available for sale		35,632		20,329
Securities available for sale, at fair value		40,603		27,168
Federal Home Loan Bank stock, at cost		19,796		24,472
Loans, net of allowance for loan losses of $9,905 at December 31, 2015 and $11,030 at December 31, 2016		1,405,533		1,605,647
Foreclosed assets		—		—
Bank-owned life insurance		11,697		11,962
Premises and equipment, net		15,094		14,462
Accrued interest receivable		3,270		3,529
Deferred income tax asset, net		3,281		2,489
Other assets		2,035		1,938
Total assets	$	1,768,528	$	2,014,599
LIABILITIES AND STOCKHOLDERS’ EQUITY

Interest-bearing deposits	$	1,088,742	$	1,218,360
Non-interest-bearing deposits		128,285		147,749
Total deposits		1,217,027		1,366,109
Federal Home Loan Bank advances		402,464		475,318
Mortgage payable		922		868
Mortgagors’ escrow accounts		4,850		5,585
Accrued interest payable		303		400
Other liabilities		4,947		5,295
Total liabilities		1,630,513		1,853,575

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 and 2,132,750 shares issued and outstanding at December 31, 2015 and 2016, respectively		2,129		2,133
Additional paid-in capital		11,052		11,575
Undivided profits		124,481		144,580
Accumulated other comprehensive income		353		2,736
Total stockholders’ equity		138,015		161,024
Total liabilities and stockholders’ equity	$	1,768,528	$	2,014,599


HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income

				Three Months Ended						Twelve Months Ended
				December 31,						December 31,
(In thousands, except per share amounts)						2015		2016		2015		2016
(Unaudited)
Interest and dividend income:
		Loans		$		15,810	$	18,027		$	60,260	$	68,917
		Debt securities				33		—			195		52
		Equity securities				250		367			795		1,248
		Federal Reserve and other short-term investments				185		426			609		1,552
			Total interest and dividend income			16,278		18,820			61,859		71,769
Interest expense:
		Deposits				2,197		2,474			7,945		9,599
		Federal Home Loan Bank advances				746		950			2,908		3,732
		Mortgage payable				14		14			57		54
			Total interest expense			2,957		3,438			10,910		13,385
			Net interest income			13,321		15,382			50,949		58,384
Provision for loan losses						100		325			625		1,135
Net interest income, after provision for loan losses					13,221			15,057			50,324		57,249
Other income:
	Customer service fees on deposits					247		237			978		928
	Increase in bank-owned life insurance					69		62			281		265
	Gain on sale of securities					—		—			29		344
	Miscellaneous					53		55			195		198
			Total other income			369		354			1,483		1,735
Operating expenses:
		Salaries and employee benefits				2,931		3,036			11,632		12,024
		Occupancy and equipment				471		455			2,057		1,856
		Data processing				291		304			1,182		1,230
		Deposit insurance				240		252			902		1,023
		Foreclosure				10		(73	)		72		34
		Marketing				105		74			489		403
		Other general and administrative				682		662			2,697		2,645
			Total operating expenses			4,730		4,710			19,031		19,215
Income before income taxes						8,860		10,701			32,776		39,769
Income tax provision						3,626		4,414			13,430		16,346
			Net income	$		5,234	$	6,287		$	19,346	$	23,423

Cash dividends declared per share				$		0.60	$	0.64		$	1.46	$	1.56

Weighted average shares outstanding:
		Basic				2,129		2,131			2,129		2,131
		Diluted				2,149		2,158			2,145		2,152

Earnings per share:
		Basic		$		2.46	$	2.95		$	9.09	$	10.99
		Diluted		$		2.44	$	2.92		$	9.02	$	10.89


HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis

	Three Months Ended December 31,
	2015						2016
	AVERAGE BALANCE		INTEREST		YIELD/ RATE (8)		AVERAGE BALANCE		INTEREST		YIELD/ RATE (8)
(Dollars in thousands)
(Unaudited)

Loans (1) (2)	$	1,381,732	$	15,810	4.58	%	$	1,598,286	$	18,027	4.51	%
Securities (3) (4)		64,082		283	1.77			45,965		367	3.19
Federal Reserve and other short-term investments		253,716		185	0.29			309,043		426	0.55
Total interest-earning assets		1,699,530		16,278	3.83			1,953,294		18,820	3.85
Other assets		33,138						33,715
Total assets	$	1,732,668					$	1,987,009

Interest-bearing deposits (5)	$	1,087,721		2,197	0.81		$	1,212,674		2,474	0.82
Borrowed funds		378,621		760	0.80			461,749		964	0.84
Total interest-bearing liabilities		1,466,342		2,957	0.81			1,674,423		3,438	0.82
Demand deposits		124,994						149,352
Other liabilities		4,499						4,579
Total liabilities		1,595,835						1,828,354
Stockholders’ equity		136,833						158,655
Total liabilities and stockholders’ equity	$	1,732,668					$	1,987,009
Net interest income			$	13,321					$	15,382

Weighted average spread					3.02	%					3.03	%

Net interest margin (6)					3.14	%					3.15	%

Average interest-earning assets to average interest-bearing liabilities (7)					115.90	%					116.65	%

(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 interest-earning assets.
(7	)	Total interest-earning assets divided by total interest-bearing liabilities.
(8	)	Annualized.


HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis

	Twelve Months Ended December 31,
	2015							2016
	AVERAGE BALANCE		INTEREST		YIELD/ RATE			AVERAGE BALANCE		INTEREST		YIELD/ RATE
(Dollars in thousands)
(Unaudited)

Loans (1) (2)	$	1,307,871	$	60,260		4.61	%	$	1,524,858	$	68,917	4.52	%
Securities (3) (4)		76,193		990		1.30			54,494		1,300	2.39
Federal Reserve and other short-term investments		221,807		609		0.27			301,322		1,552	0.52
Total interest-earning assets		1,605,871		61,859		3.85			1,880,674		71,769	3.82
Other assets		33,014							33,378
Total assets	$	1,638,885						$	1,914,052

Interest-bearing deposits (5)	$	1,038,016		7,945		0.77		$	1,176,472		9,599	0.82
Borrowed funds		348,094		2,965		0.85			442,134		3,786	0.86
Total interest-bearing liabilities		1,386,110		10,910		0.79			1,618,606		13,385	0.83
Demand deposits		117,741							140,758
Other liabilities		4,387							4,456
Total liabilities		1,508,238							1,763,820
Stockholders’ equity		130,647							150,232
Total liabilities and stockholders’ equity	$	1,638,885						$	1,914,052
Net interest income			$	50,949						$	58,384

Weighted average spread						3.06	%					2.99	%

Net interest margin (6)						3.17	%					3.10	%

Average interest-earning assets to average interest-bearing liabilities (7)						115.85	%					116.19	%

(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 interest-earning assets.
(7	)	Total interest-earning assets divided by total interest-bearing liabilities.

CONTACT: Patrick R. Gaughen, Executive Vice President (781) 783-1761

You just read:

Hingham Announces 21% Increase in Annual Earnings and 15.59% Return on Equity

Distribution channels: Banking, Finance & Investment Industry

EIN Presswire's priority is source transparency. We do not allow opaque clients, and our editors try to be careful about weeding out false and misleading content. As a user, if you see something we have missed, please do bring it to our attention. Your help is welcome. EIN Presswire, Everyone's Internet News Presswire™, tries to define some of the boundaries that are reasonable in today's world. Please see our Editorial Guidelines for more information.