HIFS Hingham Institution for Savings

HINGHAM INSTITUTION FOR SAVINGS (NASDAQ:HIFS), Hingham, Massachusetts announced third quarter earnings for 2013. Net income for the quarter ended September 30, 2013 was $3,403,000 or $1.60 per share (basic and diluted) as compared to $3,327,000 or $1.57 per share basic and $1.56 per share diluted for the third quarter of 2012. Net income for the nine months ended September 30, 2013 was $9,883,000 or $4.65 per share basic and $4.64 per share diluted as compared to $9,936,000 or $4.67 per share (basic and diluted) for the same period last year. The Bank’s annualized return on average equity for the first nine months of 2013 was 13.49% and the annualized return on average assets was 1.07%.

Strong growth trends of recent years continued, as deposits increased by $36.9 million from December 31, 2012 and $78.7 million from September 30, 2012, representing a 6% annualized growth year to date and 10% from September 30, 2012. Net loans increased by $64.1 million from December 31, 2012 and $96.3 million from September 30, 2012, representing 9% annualized growth year to date and 10% growth from September 30, 2012. Total assets increased by $98.0 million from December 31, 2012 and $110.5 million from September 30, 2012, representing an 11% annualized growth year to date and 9% from September 30, 2012. Stockholders’ equity increased to $101.0 million as of September 30, 2013, representing a 12% annualized growth year to date and an 11% increase from September 30, 2012. Book value per share increased to $47.42 per share at September 30, 2013 from $43.65 per share at December 31, 2012 and $42.63 per share at September 30, 2012.

At September 30, 2013, non-performing assets totaled 0.33% of total assets, as compared with 0.28% at December 31, 2012 and 0.58% at September 30, 2012. For the quarter ended September 30, 2013, a provision of $90,000 was made to the allowance for loan losses compared to $150,000 for the same period in 2012.

President Robert H. Gaughen, Jr. stated, “While the extended low interest rate environment puts pressure on net interest margin, we continue to see strong earnings performance with our third quarter 2013 results improving over those of the same period in 2012. Solid balance sheet growth, combined with our diligent cost control, continues to produce some of the strongest earnings in the industry.”

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 in the Commonwealth. The Bank’s main office is located on Main Street, Hingham, Massachusetts. The Bank also maintains branch offices in South Hingham and the neighboring towns of Cohasset, Hull, Scituate, Weymouth and Norwell as well as two branches in Boston. In August, the Bank opened its 11th branch located 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

Consolidated Balance Sheets

 

(Dollars in thousands except per share data)

 

September 30,2013

 

December 31,2012

 

September 30,2012

(Unaudited) ASSETS   Cash and due from banks $ 6,896 $ 7,961 $ 6,624 Short-term investments   115,230   79,373   101,524 Cash and cash equivalents 122,126 87,334 108,148   Certificates of deposit 14,397 13,737 13,635 Securities available for sale, at fair value 99,419 102,866 102,167 Federal Home Loan Bank stock, at cost 15,119 14,105 14,105 Loans, net of allowance for loan losses of $8,421 at

September 30, 2013, $7,999 at December 31, 2012

and $7,880 at September 30, 2012

 

1,013,798

 

949,662

 

917,502

Foreclosed assets 471 471 3,465 Bank-owned life insurance 15,268 14,945 14,843 Premises and equipment, net 15,769 14,180 10,379 Accrued interest receivable 2,768 2,667 3,201 Deferred income tax asset, net 2,664 2,556 3,416 Other assets   2,310   3,361   2,573 Total assets $ 1,304,109 $ 1,205,884 $ 1,193,434  

LIABILITIES AND STOCKHOLDERS’ EQUITY

  Deposits $ 906,752 $ 869,886 $ 828,080 Federal Home Loan Bank advances 287,764 234,355 266,385 Mortgage payable 1,032 1,065 1,076 Mortgagors’ escrow accounts 3,538 3,231 2,967 Accrued interest payable 463 478 467 Other liabilities   3,609   4,070   3,845 Total liabilities   1,203,158   1,113,085   1,102,820   Stockholders’ equity:

Preferred stock, $1.00 par value, 2,500,000 shares authorized, none issued

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—

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Common stock, $1.00 par value, 5,000,000 shares authorized; 2,128,750 shares issued and outstanding at September 30, 2013 and 2,125,750 issued and outstanding at December 31, 2012 and September 30, 2012.

2,129

2,126

2,126

Additional paid-in capital 10,659 10,519 10,519 Undivided profits 88,132 79,930 77,703 Accumulated other comprehensive income   31   224   266 Total stockholders’ equity   100,951   92,799   90,614 Total liabilities and stockholders’ equity $ 1,304,109 $ 1,205,884 $ 1,193,434    

HINGHAM INSTITUTION FOR SAVINGS

Consolidated Statements of Income

    Three Months Ended   Nine Months Ended September 30, September 30,   2013     2012 2013   2012 (Unaudited) (In thousands, except per share amounts) Interest and dividend income:     Loans $ 12,221 $ 11,858 $ 36,000 $ 35,627 Debt securities 102 127 315 415 Equity securities 40 42 116 128 Short-term investments and certificates of deposit   79   81   213   262 Total interest and dividend income   12,442   12,108   36,644   36,432 Interest expense: Deposits 1,396 1,449 4,230 4,391 Federal Home Loan Bank advances 1,185 1,257 3,602 3,732 Mortgage payable   16   16   47   49 Total interest expense   2,597   2,722   7,879   8,172 Net interest income 9,845 9,386 28,765 28,260 Provision for loan losses   90   150   290   575 Net interest income, after provision for loan losses   9,755   9,236   28,475   27,685 Other income: Customer service fees on deposits 264 249 758 755 Increase in bank-owned life insurance 108 109 323 319 Miscellaneous   56   49   163   164 Total other income   428   407   1,244   1,238 Operating expenses: Salaries and employee benefits 2,671 2,434 7,829 7,137 Data processing 275 206 754 650 Occupancy and equipment 447 424 1,387 1,271 Deposit insurance 174 158 509 447 Foreclosure 19 87 218 331 Marketing 182 148 390 497 Other general and administrative   659   577   1,915   1,847 Total operating expenses   4,427   4,034   13,002   12,180 Income before income taxes 5,756 5,609 16,717 16,743 Income tax provision   2,353   2,282   6,834   6,807 Net income $ 3,403 $ 3,327 $ 9,883 $ 9,936   Weighted average common shares outstanding: Basic   2,129   2,126   2,128   2,126 Diluted   2,130   2,128   2,129   2,127   Earnings per common share: Basic $ 1.60 $ 1.57 $ 4.65 $ 4.67 Diluted $ 1.60 $ 1.56 $ 4.64 $ 4.67    

HINGHAM INSTITUTION FOR SAVINGS

Net Interest Income Analysis

    Three Months Ended September 30, 2013   2012

AVERAGEBALANCE

 

INTEREST

 

YIELD/RATE

AVERAGEBALANCE

 

INTEREST

 

YIELD/RATE

(Dollars in thousands) (Unaudited)   Loans (1) (2) $ 1,004,649 $ 12,221 4.87 % $ 899,727 $ 11,858 5.27 % Securities (3) (4) 116,002 142 0.49 114,244 169 0.59

Short-term investments and certificates of deposit

  108,461   79 0.29   106,132   81 0.31 Total earning assets 1,229,112   12,442 4.05 1,120,103   12,108 4.32 Other assets   37,471   36,013 Total assets $ 1,266,583 $ 1,156,116   Interest-bearing deposits (5) $ 805,761 1,396 0.69 $ 754,020 1,449 0.77 Borrowed funds   270,913   1,201 1.77   234,214   1,273 2.17 Total interest-bearing liabilities 1,076,674   2,597 0.96 988,234   2,722 1.10 Demand deposits 86,086 73,605 Other liabilities   3,633   4,420 Total liabilities 1,166,393 1,066,259 Stockholders’ equity   100,190   89,857 Total liabilities and stockholders’ equity $ 1,266,583 $ 1,153,116 Net interest income $ 9,845 $ 9,386   Weighted average spread 3.09 % 3.22 %   Net interest margin (6) 3.20 % 3.35 %  

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

114.16

%

113.34

%

 

(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 earning assets.

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

   

HINGHAM INSTITUTION FOR SAVINGS

Net Interest Income Analysis

    Nine Months Ended September 30, 2013   2012

AVERAGEBALANCE

 

INTEREST

 

YIELD/RATE

AVERAGEBALANCE

 

INTEREST

 

YIELD/RATE

(Dollars in thousands) (Unaudited)   Loans (1) (2) $ 982,436 $ 36,000 4.89 % $ 882,245 $ 35,627 5.38 % Securities (3) (4) 115,213 431 0.50 110,020 543 0.66 Short-term investments and certificates of deposit   95,853   213 0.30   113,133   262 0.31 Total earning assets 1,193,502   36,644 4.09 1,105,398   36,432 4.39 Other assets   36,651   36,769 Total assets $ 1,230,153 $ 1,142,167   Interest-bearing deposits (5) $ 797,832 4,230 0.71 $ 744,209 4,391 0.79 Borrowed funds   249,822   3,649 1.95   237,964   3,781 2.12 Total interest-bearing liabilities 1,047,654   7,879 1.00 982,173   8,172 1.11 Demand deposits 81,512 68,587 Other liabilities   3,295   4,367 Total liabilities 1,132,461 1,055,127 Stockholders’ equity   97,692   87,040 Total liabilities and stockholders’ equity $ 1,230,153 $ 1,142,167 Net interest income $ 28,765 $ 28,260   Weighted average spread 3.09 % 3.28 %   Net interest margin (6) 3.21 % 3.41 %  

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

113.92

%

112.55

%

 

(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 earning assets.

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

   

HINGHAM INSTITUTION FOR SAVINGS

Selected Financial Ratios

   

Three Months EndedSeptember 30,

 

Nine Months EndedSeptember 30,

2013   2012 2013   2012 (Unaudited)   Key Performance Ratios Return on average assets (1) 1.07 % 1.15 % 1.07 % 1.16 % Return on average equity (1) 13.59 14.81 13.49 15.22 Interest rate spread (1) (2) 3.09 3.22 3.09 3.28 Net interest margin (1) (3) 3.20 3.35 3.21 3.41 Non-interest expense to average assets (1) 1.40 1.40 1.41 1.42 Efficiency ratio (4) 43.09 41.19 43.33 41.29 Average equity to average assets 7.91 7.77 7.94 7.62

Average interest-bearing assets to average interest bearing liabilities

114.16

113.34

113.92

112.55

       

September 30,2013

 

December 31,2012

 

September 30,2012

  (Unaudited)   Asset Quality Ratios Allowance for loan losses/total loans 0.82 % 0.84 % 0.85 % Allowance for loan losses/non-performing loans 195.88 273.66 231.22   Non-performing loans/total loans 0.42 0.31 0.37 Non-performing loans/total assets 0.33 0.24 0.29 Non-performing assets/total assets 0.37 0.28 0.58   Share Related Book value per share $ 47.42 $ 43.65 $ 42.63 Market value per share $ 69.91 $ 62.60 $ 64.43 Shares outstanding at end of period 2,128,750 2,125,750 2,125,750  

(1) Annualized

(2) Interest rate spread represents the difference between the yield on 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.

Hingham Institution for SavingsRobert H. Gaughen, Jr., 781-749-2200PresidentorWilliam M. Donovan, Jr., 781-749-2200Vice President-Administration