HINGHAM, Mass., Jan. 16, 2020 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ: HIFS), Hingham, Massachusetts announced earnings for the fourth quarter and the year ended December 31, 2019.
Net income for the year ended December 31, 2019 was $38,927,000 or $18.24 per share basic and $17.83 per share diluted, as compared to $30,399,000 or $14.25 per share basic and $13.90 per share diluted for the same period last year. The Bank’s return on average equity for the year ended December 31, 2019 was 16.82%, and the return on average assets was 1.55%, as compared to 14.97% and 1.32% for the same period in 2018. Net income per share (diluted) for 2019 increased 28% over the same period in 2018.
Excluding the after-tax gains and losses on securities, both realized and unrealized, core net income for the year ended December 31, 2019 was $32,996,000 or $15.46 per share basic and $15.12 per share diluted, as compared to $32,776,000 or $15.37 per share basic and $14.99 per share diluted for the same period last year. The Bank’s core return on average equity for the year ended December 31, 2019 was 14.26%, and the core return on average assets was 1.32%, as compared to 16.14% and 1.42% for the same period in 2018. Core net income per share (diluted) for 2019 increased by 1% over the same period in 2018.
Net income for the quarter ended December 31, 2019 was $11,364,000 or $5.32 per share basic and $5.20 per share diluted, as compared to $4,664,000 or $2.18 per share basic and $2.13 per share diluted for the same period last year. The Bank’s annualized return on average equity for the fourth quarter of 2019 was 18.64%, and the annualized return on average assets was 1.81%, as compared to 8.78% and 0.80% for the same period last year. Net income per share (diluted) for the fourth quarter of 2019 increased by 144% compared to the same period in 2018.
Excluding the after-tax gains and losses on securities, both realized and unrealized, core net income for the quarter ended December 31, 2019 was $8,814,000 or $4.13 per share basic and $4.04 per share diluted, as compared to $8,046,000 or $3.77 per share basic and $3.68 per share diluted for the same period last year. The Bank’s annualized core return on average equity for the fourth quarter of 2019 was 14.46% and the annualized core return on average assets was 1.40%, as compared to 15.14% and 1.38% for the same period last year. Core net income per share (diluted) for the fourth quarter of 2019 increased by 10% over the same period in 2018.
Balance sheet growth in 2019 was strong, as deposits increased to $1.821 billion at December 31, 2019, representing 16% growth from 2018. This reflected strong growth in retail and business deposits of $173.3 million, as well $74.4 million growth in wholesale deposits. Net loans increased to $2.227 billion, representing 11% growth from 2018. Total assets increased to $2.590 billion, representing 8% growth from 2018. During 2019, the Bank used a portion of its cash balances to reduce outstanding Federal Home Loan Bank advances, in order to minimize the carrying cost of its on-balance sheet liquidity. Book value per share was $115.75 as of December 31, 2019, representing 16% growth from December 31, 2018. In addition to the increase in book value per share, the Bank declared $2.18 in dividends per share in 2019, including a special dividend of $0.60 per share declared during the fourth quarter of 2019. The Bank announced increases in its regular quarterly dividend in March, June, September and November of 2019. The trailing five year compound annual growth rate in book value per share, an important measure of long-term value creation, was 15.2%.
Key credit and operational metrics remained strong in 2019. At December 31, 2019, non-performing assets totaled 0.22% of total assets, compared to 0.02% at December 31, 2018. Non-performing loans as a percentage of the total loan portfolio totaled 0.25% at December 31, 2019, compared to 0.02% at December 31, 2018. A single non-performing residential loan on Nantucket comprised the substantial majority of non-performing assets at year-end and the Bank is actively exercising its full range of remedies, including foreclosure proceedings against the collateral as well as direct litigation against each of the borrowers individually. The Bank recorded $1,000 in net recoveries in both 2019 and 2018. At December 31, 2019 and 2018, the Bank did not own any foreclosed property. The efficiency ratio increased slightly to 30.26% in 2019, as compared to 29.89% in 2018. Operating expenses as a percentage of average assets improved to 0.82% in 2019, as compared to 0.87% in 2018. These metrics reflect the Bank’s disciplined focus on credit quality and expense management.
Chairman Robert H. Gaughen, Jr. stated, “Returns on equity and assets were adequate in 2019, although competitive pressures remain acute. Performance in any one period, especially a period in which tailwinds are blowing strongly in our favor, should be viewed cautiously. 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 annual and quarterly financial results are summarized in this earnings release, but shareholders are encouraged to read the Bank’s annual report on Form 10-K, which is generally available several weeks after the earnings release. The Bank expects to file Form 10-K for the year ended December 31, 2019 with the FDIC on or about March 4, 2020.
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 banking 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 SAVINGSSelected Financial Ratios
| Three Months EndedDecember 31, | Twelve Months EndedDecember 31, | ||||||||||
| 2018 | 2019 | 2018 | 2019 | ||||||||
| (Unaudited) | |||||||||||
| Key Performance Ratios | |||||||||||
| Return on average assets (1) | 0.80 | % | 1.81 | % | 1.32 | % | 1.55 | % | |||
| Return on average equity (1) | 8.78 | 18.64 | 14.97 | 16.82 | |||||||
| Core return on average assets (1) (5) | 1.38 | 1.40 | 1.42 | 1.32 | |||||||
| Core return on average equity (1) (5) | 15.14 | 14.46 | 16.14 | 14.26 | |||||||
| Interest rate spread (1) (2) | 2.48 | 2.45 | 2.66 | 2.38 | |||||||
| Net interest margin (1) (3) | 2.79 | 2.79 | 2.90 | 2.72 | |||||||
| Operating expenses to average assets (1) | 0.84 | 0.81 | 0.87 | 0.82 | |||||||
| Efficiency ratio (4) | 30.07 | 29.00 | 29.89 | 30.26 | |||||||
| Average equity to average assets | 9.09 | 9.70 | 8.80 | 9.24 | |||||||
| Average interest-earning assets to average interest- bearing liabilities | 121.08 | 122.02 | 119.23 | 120.74 | |||||||
| December 31, 2018 | December 31, 2019 | |||||||
| (Unaudited) | ||||||||
| Asset Quality Ratios | ||||||||
| Allowance for loan losses/total loans | 0.68 | % | 0.69 | % | ||||
| Allowance for loan losses/non-performing loans | 2,852.89 | 274.57 | ||||||
| Non-performing loans/total loans | 0.02 | 0.25 | ||||||
| Non-performing loans/total assets | 0.02 | 0.22 | ||||||
| Non-performing assets/total assets | 0.02 | 0.22 | ||||||
| Share Related | ||||||||
| Book value per share | $ | 99.67 | $ | 115.75 | ||||
| Market value per share | $ | 197.74 | $ | 210.20 | ||||
| Shares outstanding at end of period | 2,132,750 | 2,135,750 | ||||||
- Annualized for the three months ended December 31, 2018 and 2019.
- Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
- Net interest margin represents net interest income divided by average interest-earning assets.
- The efficiency ratio represents total operating expenses, divided by the sum of net interest income and total other income (loss), excluding gain (loss) on equity securities, net.
- 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 SAVINGSConsolidated Balance Sheets
| (Dollars in thousands, except share amounts) | December 31, 2018 | December 31, 2019 | |||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Cash and due from banks | $ | 8,004 | $ | 9,057 | |||
| Federal Reserve and other short-term investments | 287,971 | 243,090 | |||||
| Cash and cash equivalents | 295,975 | 252,147 | |||||
| CRA investment | 7,680 | 7,910 | |||||
| Debt securities available for sale | 14 | 11 | |||||
| Other marketable equity securities | 30,766 | 39,265 | |||||
| Securities, at fair value | 38,460 | 47,186 | |||||
| Federal Home Loan Bank stock, at cost | 28,696 | 24,890 | |||||
| Loans, net of allowance for loan losses of $13,808 at December 31, 2018 and $15,376 at December 31, 2019 | 2,009,288 | 2,227,062 | |||||
| Foreclosed assets | — | — | |||||
| Bank-owned life insurance | 12,476 | 12,727 | |||||
| Premises and equipment, net | 14,553 | 14,548 | |||||
| Accrued interest receivable | 4,581 | 4,926 | |||||
| Deferred income tax asset, net | 2,258 | 1,213 | |||||
| Other assets | 2,300 | 5,647 | |||||
| Total assets | $ | 2,408,587 | $ | 2,590,346 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY
| Interest-bearing deposits | $ | 1,359,581 | $ | 1,583,280 | ||
| Non-interest-bearing deposits | 213,573 | 237,554 | ||||
| Total deposits | 1,573,154 | 1,820,834 | ||||
| Federal Home Loan Bank advances | 606,600 | 505,200 | ||||
| Mortgage payable | 751 | 687 | ||||
| Mortgagors’ escrow accounts | 7,402 | 7,815 | ||||
| Accrued interest payable | 2,187 | 960 | ||||
| Other liabilities | 5,917 | 7,627 | ||||
| Total liabilities | 2,196,011 | 2,343,123 | ||||
| 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 December 31, 2018 and 2,135,750 shares issued and outstanding at December 31, 2019 | 2,133 | 2,136 | ||||
| Additional paid-in capital | 11,863 | 12,234 | ||||
| Undivided profits | 198,580 | 232,853 | ||||
| Accumulated other comprehensive income | — | — | ||||
| Total stockholders’ equity | 212,576 | 247,223 | ||||
| Total liabilities and stockholders’ equity | $ | 2,408,587 | $ | 2,590,346 |
HINGHAM INSTITUTION FOR SAVINGSConsolidated Statements of Income
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||
| (In thousands, except per share amounts) | 2018 | 2019 | 2018 | 2019 | ||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Interest and dividend income: | ||||||||||||||||||||
| Loans | $ | 22,716 | $ | 25,330 | $ | 87,022 | $ | 99,379 | ||||||||||||
| Debt securities | 1 | 1 | 1 | 1 | ||||||||||||||||
| Equity securities | 498 | 493 | 1,985 | 1,996 | ||||||||||||||||
| Federal Reserve and other short-term investments | 1,347 | 860 | 5,161 | 5,576 | ||||||||||||||||
| Total interest and dividend income | 24,562 | 26,684 | 94,169 | 106,952 | ||||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Deposits | 5,777 | 6,014 | 18,979 | 26,819 | ||||||||||||||||
| Federal Home Loan Bank advances | 2,705 | 3,422 | 9,358 | 13,188 | ||||||||||||||||
| Mortgage payable | 11 | 10 | 47 | 43 | ||||||||||||||||
| Total interest expense | 8,493 | 9,446 | 28,384 | 40,050 | ||||||||||||||||
| Net interest income | 16,069 | 17,238 | 65,785 | 66,902 | ||||||||||||||||
| Provision for loan losses | 220 | 285 | 1,270 | 1,567 | ||||||||||||||||
| Net interest income, after provision for loan losses | 15,849 | 16,953 | 64,515 | 65,335 | ||||||||||||||||
| Other income (loss): | ||||||||||||||||||||
| Customer service fees on deposits | 222 | 205 | 860 | 803 | ||||||||||||||||
| Increase in bank-owned life insurance | 62 | 66 | 255 | 251 | ||||||||||||||||
| Gain (loss) on equity securities, net | (4,313 | ) | 3,271 | (3,023 | ) | 7,608 | ||||||||||||||
| Miscellaneous | 44 | 41 | 173 | 166 | ||||||||||||||||
| Total other income (loss) | (3,985 | ) | 3,583 | (1,735 | ) | 8,828 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Salaries and employee benefits | 3,124 | 3,212 | 12,658 | 12,826 | ||||||||||||||||
| Occupancy and equipment | 461 | 459 | 1,774 | 1,813 | ||||||||||||||||
| Data processing | 360 | 432 | 1,402 | 1,586 | ||||||||||||||||
| Deposit insurance | 220 | 4 | 977 | 534 | ||||||||||||||||
| Foreclosure | 9 | 16 | (32 | ) | 117 | |||||||||||||||
| Marketing | 137 | 198 | 625 | 695 | ||||||||||||||||
| Other general and administrative | 619 | 768 | 2,647 | 3,044 | ||||||||||||||||
| Total operating expenses | 4,930 | 5,089 | 20,051 | 20,615 | ||||||||||||||||
| Income before income taxes | 6,934 | 15,447 | 42,729 | 53,548 | ||||||||||||||||
| Income tax provision | 2,270 | 4,083 | 12,330 | 14,621 | ||||||||||||||||
| Net income | $ | 4,664 | $ | 11,364 | $ | 30,399 | $ | 38,927 | ||||||||||||
| Cash dividends declared per share | $ | 0.87 | $ | 1.01 | $ | 1.92 | $ | 2.18 | ||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||
| Basic | 2,133 | 2,134 | 2,133 | 2,134 | ||||||||||||||||
| Diluted | 2,186 | 2,183 | 2,187 | 2,183 | ||||||||||||||||
| Earnings per share: | ||||||||||||||||||||
| Basic | $ | 2.18 | $ | 5.32 | $ | 14.25 | $ | 18.24 | ||||||||||||
| Diluted | $ | 2.13 | $ | 5.20 | $ | 13.90 | $ | 17.83 | ||||||||||||
HINGHAM INSTITUTION FOR SAVINGSNet Interest Income Analysis
| Three Months Ended December 31, | |||||||||||||||||
| 2018 | 2019 | ||||||||||||||||
| AVERAGE BALANCE | INTEREST | YIELD/ RATE (8) | AVERAGE BALANCE | INTEREST | YIELD/ RATE (8) | ||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Loans (1) (2) | $ | 2,009,174 | $ | 22,716 | 4.52 | % | $ | 2,198,689 | $ | 25,330 | 4.61 | % | |||||
| Securities (3) (4) | 53,603 | 499 | 3.72 | 62,938 | 494 | 3.14 | |||||||||||
| Federal Reserve and other short-term investments | 237,371 | 1,347 | 2.27 | 208,197 | 860 | 1.65 | |||||||||||
| Total interest-earning assets | 2,300,148 | 24,562 | 4.27 | 2,469,824 | 26,684 | 4.32 | |||||||||||
| Other assets | 37,433 | 42,766 | |||||||||||||||
| Total assets | $ | 2,337,581 | $ | 2,512,590 | |||||||||||||
| Interest-bearing deposits (5) | $ | 1,469,637 | 5,777 | 1.57 | $ | 1,425,114 | 6,014 | 1.69 | |||||||||
| Borrowed funds | 430,121 | 2,716 | 2.53 | 599,025 | 3,432 | 2.29 | |||||||||||
| Total interest-bearing liabilities | 1,899,758 | 8,493 | 1.79 | 2,024,139 | 9,446 | 1.87 | |||||||||||
| Non-interest-bearing deposits | 218,621 | 237,039 | |||||||||||||||
| Other liabilities | 6,606 | 7,594 | |||||||||||||||
| Total liabilities | 2,124,985 | 2,268,772 | |||||||||||||||
| Stockholders’ equity | 212,596 | 243,818 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 2,337,581 | $ | 2,512,590 | |||||||||||||
| Net interest income | $ | 16,069 | $ | 17,238 | |||||||||||||
| Weighted average spread | 2.48 | % | 2.45 | % | |||||||||||||
| Net interest margin (6) | 2.79 | % | 2.79 | % | |||||||||||||
| Average interest-earning assets to average interest-bearing liabilities (7) | 121.08 | % | 122.02 | % | |||||||||||||
| (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 SAVINGSNet Interest Income Analysis
| Twelve Months Ended December 31, | |||||||||||||||||
| 2018 | 2019 | ||||||||||||||||
| AVERAGE BALANCE | INTEREST | YIELD/ RATE | AVERAGE BALANCE | INTEREST | YIELD/ RATE | ||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Loans (1) (2) | $ | 1,941,159 | $ | 87,022 | 4.48 | % | $ | 2,150,445 | $ | 99,379 | 4.62 | % | |||||
| Securities (3) (4) | 53,055 | 1,986 | 3.74 | 58,585 | 1,997 | 3.41 | |||||||||||
| Federal Reserve and other short-term investments | 276,000 | 5,161 | 1.87 | 255,082 | 5,576 | 2.19 | |||||||||||
| Total interest-earning assets | 2,270,214 | 94,169 | 4.15 | 2,464,112 | 106,952 | 4.34 | |||||||||||
| Other assets | 38,357 | 41,806 | |||||||||||||||
| Total assets | $ | 2,308,571 | $ | 2,505,918 | |||||||||||||
| Interest-bearing deposits (5) | $ | 1,440,383 | 18,979 | 1.32 | $ | 1,517,625 | 26,819 | 1.77 | |||||||||
| Borrowed funds | 463,726 | 9,405 | 2.03 | 523,235 | 13,231 | 2.53 | |||||||||||
| Total interest-bearing liabilities | 1,904,109 | 28,384 | 1.49 | 2,040,860 | 40,050 | 1.96 | |||||||||||
| Non-interest-bearing deposits | 196,048 | 225,999 | |||||||||||||||
| Other liabilities | 5,369 | 7,619 | |||||||||||||||
| Total liabilities | 2,105,526 | 2,274,478 | |||||||||||||||
| Stockholders’ equity | 203,045 | 231,440 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 2,308,571 | $ | 2,505,918 | |||||||||||||
| Net interest income | $ | 65,785 | $ | 66,902 | |||||||||||||
| Weighted average spread | 2.66 | % | 2.38 | % | |||||||||||||
| Net interest margin (6) | 2.90 | % | 2.72 | % | |||||||||||||
| Average interest-earning assets to average interest-bearing liabilities (7) | 119.23 | % | 120.74 | % | |||||||||||||
| (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. |
CONTACT: Patrick R. Gaughen, President and Chief Operating Officer (781) 783-1761
