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Hingham Savings Reports Second Quarter 2019 Results

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HINGHAM, Mass., July 12, 2019 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (HIFS), Hingham, Massachusetts announced second quarter results for 2019.

Net income for the quarter ended June 30, 2019 was $8,706,000 or $4.08 per share basic and $3.99 per share diluted, as compared to $7,975,000 or $3.74 per share basic and $3.64 per share diluted for the same period last year. The Bank’s annualized return on average equity for the second quarter of 2019 was 15.32%, and the annualized return on average assets was 1.37%, as compared to 15.97% and 1.40% for the same period in 2018. Net income per share (diluted) for the second quarter of 2019 increased 10% over the same period of 2018.

Excluding the after-tax gains and losses on securities, both realized and unrealized, core net income for the second quarter of 2019 was $7,794,000 or $3.65 per share basic and $3.57 per share diluted, as compared to $8,147,000 or $3.82 per share basic and $3.73 per share diluted for the same period last year. The Bank’s annualized core return on average equity for the second quarter of 2019 was 13.71%, and the annualized core return on average assets was 1.23%, as compared to 16.31% and 1.43% for the same period in 2018. Core net income per share (diluted) for the second quarter of 2019 declined by 4% over the same period in 2018.

Net income for the six months ended June 30, 2019 was $18,530,000 or $8.69 per share basic and $8.49 per share diluted, as compared to $16,887,000 or $7.92 per share basic and $7.72 per share diluted for the same period last year. The Bank’s annualized return on average equity for the first six months of 2019 was 16.62%, and the annualized return on average assets was 1.50%, as compared to 17.24% and 1.48% for the same period last year. Net income per share (diluted) for the first six months of 2019 increased 10% over the same period in 2018.

Excluding the after-tax gains on securities, both realized and unrealized, core net income for the six months ended June 30, 2019 was $15,381,000 or $7.21 per share basic and $7.05 per share diluted, as compared to $16,305,000 or $7.65 per share basic and $7.46 per share diluted for the same period last year. The Bank’s annualized core return on average equity for the first six months of 2019 was 13.80% and the annualized core return on average assets was 1.25%, as compared to 16.64% and 1.43% for the same period last year. Core net income per share (diluted) for the first six months of 2019 declined by 5% over the same period in 2018.

Balance sheet growth was mixed, as deposits increased to $1.658 billion at June 30, 2019, representing 11% annualized growth year-to-date and 1% growth from June 30, 2018. The growth during the first half of 2019 reflected moderate growth in retail and business deposits as well as the use of wholesale deposits to fund balance sheet growth. Net loans increased to $2.171 billion, representing 16% annualized growth year-to-date and 12% growth from June 30, 2018. Total assets increased to $2.614 billion, representing 17% annualized growth year-to-date and 13% growth from June 30, 2018. Book value per share was $107.59 as of June 30, 2019, representing 16% annualized growth year-to-date and 14% growth from June 30, 2018. In addition to the increase in book value per share, the Bank declared $2.00 in dividends per share since June 30, 2018, including a special dividend of $0.50 per share declared during the fourth quarter of 2018.

Key credit and operational metrics remained strong in the second quarter. At June 30, 2019, non-performing assets totaled 0.02% of total assets, compared to 0.02% at December 31, 2018 and 0.05% at June 30, 2018. Non-performing loans as a percentage of the total loan portfolio totaled 0.03% at June 30, 2019, compared to 0.02% at December 31, 2018 and 0.06% at June 30, 2018. The Bank recorded $1,000 in net charge-offs for the first six months of 2019, as compared to zero net charge-offs for the same period last year. At June 30, 2019, December 31 and June 30, 2018, the Bank did not own any foreclosed property. The efficiency ratio was 31.10% for the second quarter of 2019, as compared to 29.95% for the same period last year. Operating expenses as a percentage of average assets fell to 0.82% in the second quarter of 2019, as compared to 0.88% for the same period last year.

Chairman Robert H. Gaughen Jr. stated, “Although returns on equity and assets were adequate in the second quarter of 2019, we continue to face significant headwinds from a now-inverted yield curve and an extraordinarily competitive market for both high-quality lending and deposit relationships. Given the unique structure and composition of our balance sheet, this is a particularly challenging environment. As always, we remain focused on careful capital allocation, defensive underwriting, and disciplined cost control - the keys to compounding shareholder capital through all stages of the credit cycle.”

The Bank’s quarterly financial results are summarized in the earnings release, but shareholders are encouraged to read the Bank’s quarterly reports on Form 10-Q, which are generally available several weeks after the earnings release. The Bank expects to file Form 10-Q for the second quarter of 2019 with the FDIC on or about August 7th, 2019.

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 maintains a commercial lending office in Washington, D.C.

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
June 30,

Six Months Ended
June 30,

2018

2019

2018

2019

(Unaudited)

Key Performance Ratios

Return on average assets (1)

1.40

%

1.37

%

1.48

%

1.50

%

Return on average equity (1)

15.97

15.32

17.24

16.62

Core return on average assets (1) (5)

1.43

1.23

1.43

1.25

Core return on average equity (1) (5)

16.31

13.71

16.64

13.80

Interest rate spread (1) (2)

2.72

2.28

2.74

2.32

Net interest margin (1) (3)

2.94

2.62

2.94

2.65

Operating expenses to average assets (1)

0.88

0.82

0.89

0.84

Efficiency ratio (4)

29.95

31.10

30.18

31.47

Average equity to average assets

8.74

8.97

8.58

9.03

Average interest-earning assets to average interest-bearing liabilities

118.57

119.92

118.20

120.22


June 30,
2018

December 31,
2018

June 30,
2019

(Unaudited)


Asset Quality Ratios

Allowance for loan losses/total loans

0.68

%

0.68

%

0.68

Allowance for loan losses/non-performing loans

1,064.92

2,852.89

2,130.47

Non-performing loans/total loans

0.06

0.02

0.03

Non-performing loans/total assets

0.05

0.02

0.02

Non-performing assets/total assets

0.05

0.02

0.02

Share Related

Book value per share

$

94.55

$

99.67

$

07.59

Market value per share

$

219.70

$

197.74

$

198.01

Shares outstanding at end of period

2,132,750

2,132,750

2,133,750


(1)

Annualized.

(2)

Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.

(3)

Net interest margin represents net interest income divided by average interest-earning assets.

(4)

The efficiency ratio represents total operating expenses, divided by the sum of net interest income and total other income, excluding gain (loss) on equity securities, net.

(5)

Non-GAAP measurements that represent return on average assets and return on average equity, excluding the after-tax gain (loss) on equity securities, net.


HINGHAM INSTITUTION FOR SAVINGS
Consolidated Balance Sheets

(In thousands, except share amounts)

June 30,
2018

December 31,
2018

June 30,
2019

(Unaudited)


ASSETS

Cash and due from banks

$

9,342

$

8,004

$

9,951

Federal Reserve and other short-term investments

265,695

287,971

318,356

Cash and cash equivalents

275,037

295,975

328,307

CRA investment

7,665

7,680

7,888

Debt securities available for sale

16

14

12

Other marketable equity securities

30,328

30,766

36,960

Securities, at fair value

38,009

38,460

44,860

Federal Home Loan Bank stock, at cost

24,530

28,696

31,231

Loans, net of allowance for loan losses of $13,237 at June 30, 2018, $13,808 at December 31, 2018 and $14,787 at June 30, 2019

1,933,915

2,009,288

2,171,130

Foreclosed assets

Bank-owned life insurance

12,349

12,476

12,600

Premises and equipment, net

14,479

14,553

14,410

Accrued interest receivable

4,630

4,581

5,691

Deferred income tax asset, net

1,165

2,258

1,368

Other assets

3,505

2,300

4,874

Total assets

$

2,307,619

$

2,408,587

$

2,614,471

LIABILITIES AND STOCKHOLDERS’ EQUITY

Interest-bearing deposits

$

1,453,401

$

1,359,581

$

1,429,998

Non-interest-bearing deposits

192,918

213,573

228,306

Total deposits

1,646,319

1,573,154

1,658,304

Federal Home Loan Bank advances

446,283

606,600

710,300

Mortgage payable

782

751

720

Mortgagors’ escrow accounts

6,659

7,402

7,274

Accrued interest payable

1,233

2,187

1,991

Other liabilities

4,697

5,917

6,302

Total liabilities

2,105,973

2,196,011

2,384,891

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 at June 30 and December 31, 2018 and 2,133,750 shares issued and outstanding at June 30, 2019

2,133

2,133

2,134

Additional paid-in capital

11,822

11,863

11,980

Undivided profits

187,691

198,580

215,466

Accumulated other comprehensive income

Total stockholders’ equity

201,646

212,576

229,580

Total liabilities and stockholders’ equity

$

2,307,619

$

2,408,587

$

2,614,471


HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income


Three Months Ended

Six Months Ended

June 30,

June 30,

(In thousands, except per share amounts)

2018

2019

2018

2019

(Unaudited)

Interest and dividend income:

Loans

$

21,366

$

24,816

$

41,783

$

47,896

Equity securities

505

496

984

985

Federal Reserve and other short-term investments

1,256

1,629

2,497

3,189

Total interest and dividend income

23,127

26,941

45,264

52,070

Interest expense:

Deposits

4,344

7,074

7,911

13,220

Federal Home Loan Bank advances

2,266

3,539

4,359

6,667

Mortgage payable

12

11

24

22

Total interest expense

6,622

10,624

12,294

19,909

Net interest income

16,505

16,317

32,970

32,161

Provision for loan losses

415

555

700

980

Net interest income, after provision for loan losses

16,090

15,762

32,270

31,181

Other income:

Customer service fees on deposits

216

199

422

385

Increase in bank-owned life insurance

60

57

128

124

Gain (loss) on equity securities, net

(220

)

1,170

746

4,039

Miscellaneous

43

43

87

83

Total other income

99

1,469

1,383

4,631

Operating expenses:

Salaries and employee benefits

3,176

3,177

6,388

6,324

Occupancy and equipment

426

447

892

901

Data processing

348

301

689

735

Deposit insurance

226

265

499

508

Foreclosure

(13

)

44

(8

)

67

Marketing

182

177

349

309

Other general and administrative

694

756

1,333

1,465

Total operating expenses

5,039

5,167

10,142

10,309

Income before income taxes

11,150

12,064

23,511

25,503

Income tax provision

3,175

3,358

6,624

6,973

Net income

$

7,975

$

8,706

$

16,887

$

18,530

Cash dividends declared per share

$

0.35

$

0.39

$

0.69

$

0.77

Weighted average shares outstanding:

Basic

2,133

2,134

2,133

2,133

Diluted

2,187

2,182

2,186

2,182

Earnings per share:

Basic

$

3.74

$

4.08

$

7.92

$

8.69

Diluted

$

3.64

$

3.99

$

7.72

$

8.49


HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis


Three Months Ended June 30,

2018

2019

AVERAGE
BALANCE

INTEREST

YIELD/
RATE (8)

AVERAGE
BALANCE

INTEREST

YIELD/
RATE (8)

(Dollars in thousands)

(Unaudited)

Loans (1) (2)

$

1,913,404

$

21,366

4.47

%

$

2,161,278

$

24,816

4.59

%

Securities (3) (4)

52,941

505

3.82

58,311

496

3.40

Federal Reserve and other short-term investments

278,434

1,256

1.80

272,453

1,629

2.39

Total interest-earning assets

2,244,779

23,127

4.12

2,492,042

26,941

4.32

Other assets

39,619

41,700

Total assets

$

2,284,398

$

2,533,742

Interest-bearing deposits (5)

$

1,423,682

4,344

1.22

$

1,543,247

7,074

1.83

Borrowed funds

469,476

2,278

1.94

534,809

3,550

2.66

Total interest-bearing liabilities

1,893,158

6,622

1.40

2,078,056

10,624

2.04

Demand deposits

186,919

221,051

Other liabilities

4,555

7,271

Total liabilities

2,084,632

2,306,378

Stockholders’ equity

199,766

227,364

Total liabilities and stockholders’ equity

$

2,284,398

$

2,533,742

Net interest income

$

16,505

$

16,317

Weighted average spread

2.72

%

2.28

%

Net interest margin (6)

2.94

%

2.62

%

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

118.57

%

119.92

%


(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


Six Months Ended June 30,

2018

2019

AVERAGE
BALANCE

INTEREST

YIELD/
RATE (8)

AVERAGE
BALANCE

INTEREST

YIELD/
RATE (8)

(Dollars in thousands)

(Unaudited)

Loans (1) (2)

$

1,889,901

$

41,783

4.42

%

$

2,105,144

$

47,896

4.55

%

Securities (3) (4)

53,228

984

3.70

56,602

985

3.48

Federal Reserve and other short-term investments

302,272

2,497

1.65

266,348

3,189

2.39

Total interest-earning assets

2,245,401

45,264

4.03

2,428,094

52,070

4.29

Other assets

38,815

40,418

Total assets

$

2,284,216

$

2,468,512

Interest-bearing deposits (5)

$

1,393,294

7,911

1.14

$

1,514,553

13,220

1.75

Borrowed funds

506,337

4,383

1.73

505,176

6,689

2.65

Total interest-bearing liabilities

1,899,631

12,294

1.29

2,019,729

19,909

1.97

Demand deposits

183,665

218,099

Other liabilities

4,965

7,697

Total liabilities

2,088,261

2,245,525

Stockholders’ equity

195,955

222,987

Total liabilities and stockholders’ equity

$

2,284,216

$

2,468,512

Net interest income

$

32,970

$

32,161

Weighted average spread

2.74

%

2.32

%

Net interest margin (6)

2.94

%

2.65

%

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

118.20

%

120.22

%


(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.

CONTACT: Patrick R. Gaughen, President and Chief Operating Officer (781) 783-1761