HINGHAM, Mass., Oct. 12, 2018 (GLOBE NEWSWIRE) -- 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.

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 Ended						Nine Months Ended
	September 30,						September 30,
	2017			2018			2017			2018
(Unaudited)
Key Performance Ratios
Return on average assets (1)	1.21	%		1.52	%		1.22	%		1.49	%
Return on average equity (1)	14.60			17.06			14.81			17.17
Core return on average assets (1) (5)	1.21			1.45			1.22			1.43
Core return on average equity (1) (5)	14.60			16.24			14.77			16.50
Interest rate spread (1) (2)	2.89			2.67			2.93			2.72
Net interest margin (1) (3)	3.04			2.93			3.08			2.93
Non-interest expense to average assets (1)	0.90			0.86			0.94			0.88
Efficiency ratio (4)	29.37			29.17			30.58			29.84
Average equity to average assets	8.26			8.91			8.25			8.69
Average interest-earning assets to average interest-bearing liabilities	117.69			119.39			117.32			118.61

	September 30, 2017				December 31, 2017			September 30, 2018
(Unaudited)
Asset Quality Ratios
Allowance for loan losses/total loans	0.68%			0.68%			0.68%
Allowance for loan losses/non-performing loans	1,078.04			735.74			2,807.44
Non-performing loans/total loans	0.06			0.09			0.02
Non-performing loans/total assets	0.05			0.07			0.02
Non-performing assets/total assets	0.05			0.07			0.02
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 period	2,132,750			2,132,750			2,132,750

(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,  2017			December 31, 2017					September 30,  2018
(Unaudited)
ASSETS
Cash and due from banks	$	9,792		$	10,852				$	10,043
Federal Reserve and other short-term investments		341,294			344,377					286,449
Cash and cash equivalents		351,086			355,229					296,492
CRA investment		7,390			7,341					7,605
Debt securities available for sale		19			17					15
Other marketable equity securities		24,892			26,946					32,099
Securities, at fair value		32,301			34,304					39,719
Federal Home Loan Bank stock, at cost		26,863			27,102					21,682
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 insurance		12,158			12,221					12,414
Premises and equipment, net		14,049			14,068					14,458
Accrued interest receivable		4,079			4,398					5,066
Deferred income tax asset, net		1,601			1,301					1,128
Other assets		2,973			1,989					2,981
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 deposits	171,382			185,375			220,943
Total deposits	1,448,539			1,505,862			1,715,136
Federal Home Loan Bank advances	574,395			579,164			431,242
Mortgage payable	826			812			766
Mortgagors’ escrow accounts	6,228			6,424			6,901
Accrued interest payable	457			575			1,687
Other liabilities	4,777			5,604			4,883
Total liabilities	2,035,222			2,098,441			2,160,615
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 outstanding	2,133			2,133			2,133
Additional paid-in capital	11,706			11,750			11,843
Undivided profits	161,554			165,596			195,771
Accumulated other comprehensive income	4,325			6,679			—
Total stockholders’ equity	179,718			186,158			209,747
Total liabilities and stockholders’ equity	$	2,214,940		$	2,284,599		$	2,370,362

HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(In thousands, except per share amounts)		2017			2018		2017			2018
(Unaudited)
Interest and dividend income:
Loans	$	19,211		$	22,523		$	55,663		$	64,306
Equity securities		396			503			1,116			1,487
Federal Reserve and other short-term investments		1,079			1,317			2,515			3,814
Total interest and dividend income		20,686			24,343			59,294			69,607
Interest expense:
Deposits		2,854			5,291			8,084			13,202
Federal Home Loan Bank advances		1,742			2,294			3,979			6,653
Mortgage payable		12			12			38			36
Total interest expense		4,608			7,597			12,101			19,891
Net interest income		16,078			16,746			47,193			49,716
Provision for loan losses		558			350			1,098			1,050
Net interest income, after provision for loan losses		15,520			16,396			46,095			48,666
Other income:
Customer service fees on deposits		216			216			662			638
Increase in bank-owned life insurance		67			65			196			193
Gain on equity securities, net		—			544			77			1,290
Miscellaneous		44			42			136			129
Total other income		327			867			1,071			2,250
Operating expenses:
Salaries and employee benefits		3,008			3,146			9,245			9,534
Occupancy and equipment		422			421			1,305			1,313
Data processing		321			353			929			1,042
Deposit insurance		279			258			795			757
Foreclosure		11			(33)			14			(41)
Marketing		85			136			325			428
Other general and administrative		692			698			2,121			2,088
Total operating expenses		4,818			4,979			14,734			15,121
Income before income taxes		11,029			12,284			32,432			35,795
Income tax provision		4,545			3,436			13,366			10,060
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:
Basic		2,133			2,133			2,133			2,133
Diluted		2,180			2,188			2,180			2,187
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,
	2017										2018
	AVERAGE BALANCE			INTEREST 			YIELD/ RATE (8)				AVERAGE BALANCE			INTEREST			YIELD/ RATE (8)
(Dollars in thousands)
(Unaudited)
Loans (1) (2)	$	1,733,650		$	19,211		4.43	%			$	1,973,987		$	22,523		4.56	%
Securities (3) (4)	50,696			396			3.12				52,166			503			3.86
Federal Reserve and other short-term investments	332,367			1,079			1.30				262,943			1,317			2.00
Total interest-earning assets	2,116,713			20,686			3.91				2,289,096			24,343			4.25
Other assets	35,471										38,380
Total assets	$	2,152,184									$	2,327,476
Interest-bearing deposits (5)	$	1,265,731		2,854			0.90				$	1,503,771		5,291			1.41
Borrowed funds	532,836			1,754			1.32				413,497			2,306			2.23
Total interest-bearing liabilities	1,798,567			4,608			1.02				1,917,268			7,597			1.58
Demand deposits	171,680										197,838
Other liabilities	4,242										4,927
Total liabilities	1,974,489										2,120,033
Stockholders’ equity	177,695										207,443
Total liabilities and stockholders’ equity	$	2,152,184									$	2,327,476
Net interest income				$	16,078									$	16,746
Weighted average spread							2.89	%									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,
	2017									2018
	AVERAGE BALANCE			INTEREST			YIELD/ RATE (8)			AVERAGE BALANCE			INTEREST			YIELD/ RATE (8)
(Dollars in thousands)
(Unaudited)
Loans (1) (2)	$	1,675,563		$	55,663		4.43	%		$	1,918,239		$	64,306		4.47	%
Securities (3) (4)	49,202			1,116			3.02			52,870			1,487			3.75
Federal Reserve and other short-term investments	321,335			2,515			1.04			289,018			3,814			1.76
Total interest-earning assets	2,046,100			59,294			3.86			2,260,127			69,607			4.11
Other assets	35,261									38,668
Total assets	$	2,081,361								$	2,298,795
Interest-bearing deposits (5)	$	1,252,938		8,084			0.86			$	1,430,524		13,202			1.23
Borrowed funds	491,114			4,017			1.09			475,050			6,689			1.88
Total interest-bearing liabilities	1,744,052			12,101			0.93			1,905,574			19,891			1.39
Demand deposits	161,037									188,441
Other liabilities	4,613									4,954
Total liabilities	1,909,702									2,098,969
Stockholders’ equity	171,659									199,826
Total liabilities and stockholders’ equity	$	2,081,361								$	2,298,795
Net interest income				$	47,193								$	49,716
Weighted average spread							2.93	%								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.