HIFS - Hingham Savings Reports Third Quarter 2018 Results
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.