Hingham Announces 21% Increase in Annual Earnings and 15.59% Return on Equity
January 17 2017 - 6:22PM
HINGHAM INSTITUTION FOR SAVINGS (NASDAQ:HIFS), Hingham,
Massachusetts announced earnings for the fourth quarter and the
year ended December 31, 2016.
Net income for the year ended December 31, 2016
was $23,423,000 or $10.99 per share basic and $10.89 per share
diluted as compared to $19,346,000 or $9.09 per share basic and
$9.02 per share diluted for the year ended December 31, 2015.
Net income per share (basic and diluted) for 2016 increased
21% over the same period in 2015. The Bank’s return on
average equity for the year ended December 31, 2016 was 15.59% and
the return on average assets was 1.22%, as compared to 14.81% and
1.18% for the same period in 2015.
Net income for the quarter ended December 31,
2016 was $6,287,000 or $2.95 per share basic and $2.92 per share
diluted as compared to $5,234,000 or $2.46 per share basic and
$2.44 per share diluted for the fourth quarter of 2015. Net
income per share (basic and diluted) for the fourth quarter of 2016
increased 20% over the same period in 2015. The Bank’s
annualized return on average equity for the fourth quarter of 2016
was 15.85%, and the annualized return on average assets was 1.27%
as compared to 15.30% and 1.21% for the same period in 2015.
The Bank continued to produce strong growth in
deposits, loans, and book value per share in 2016. Deposits
increased by 12% to $1.366 billion. Net loans increased by
14% to $1.606 billion. Total assets increased by 14% to
$2.015 billion. Book value per share increased by 16% to
$75.50. This increase in book value per share excludes
capital returned to the ownership through regular and special
dividends; the Bank declared $1.56 in regular and special dividends
in 2016.
Key credit and operational metrics remained
strong in 2016. At December 31, 2016, non-performing assets
totaled 0.09% of total assets as compared with 0.10% at December
31, 2015. Non-performing loans as a percentage of the total
loan portfolio totaled 0.11% at December 31, 2016, as compared to
0.13% at December 31, 2015. At December 31, 2016 and 2015,
the Bank did not own any foreclosed property. The efficiency
ratio improved to 32.15% in 2016 as compared to 36.32% in
2015. Non-interest expense as a percentage of average assets
improved to 1.00% in 2016, as compared to 1.16% in 2015. Both
the efficiency ratio and operating expenses as a percentage of
average assets reached new record lows in 2016 and reflect the
Bank’s particular focus on disciplined expense management.
President Robert H. Gaughen, Jr. stated, “We are
pleased to report a strong return on capital in 2016. At
Hingham, we take our role as stewards of the shareholders’ capital
seriously. Our emphasis on careful capital allocation,
defensive and conservative underwriting, and disciplined cost
control continues to serve our owners well. More important
than performance in any one period, however, is a company’s record
of compounding shareholder capital over time and through credit
cycles. On this measure, our team strives to set a high
bar.”
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
continuously operating banks in the United States. The Bank’s main
offices are located on Main Street in Hingham, MA. The Bank
also maintains branch offices in South Hingham and the neighboring
towns of Cohasset, Hull, Scituate, Norwell and Weymouth as well as
branches in the South End of Boston, Beacon Hill and 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 |
Selected Financial Ratios |
|
|
Three Months EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
2015 |
|
2016 |
|
2015 |
|
2016 |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Performance
Ratios |
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets (1) |
1.21 |
% |
|
1.27 |
% |
|
1.18 |
% |
|
1.22 |
% |
Return on average
equity (1) |
15.30 |
|
|
15.85 |
|
|
14.81 |
|
|
15.59 |
|
Interest rate spread
(1) (2) |
3.02 |
|
|
3.03 |
|
|
3.06 |
|
|
2.99 |
|
Net interest margin (1)
(3) |
3.14 |
|
|
3.15 |
|
|
3.17 |
|
|
3.10 |
|
Non-interest expense to
average assets (1) |
1.09 |
|
|
0.95 |
|
|
1.16 |
|
|
1.00 |
|
Efficiency ratio
(4) |
34.55 |
|
|
29.93 |
|
|
36.32 |
|
|
32.15 |
|
Average equity to
average assets |
7.90 |
|
|
7.98 |
|
|
7.97 |
|
|
7.85 |
|
Average
interest-earning assets to average interest-bearing
liabilities |
115.90 |
|
|
116.65 |
|
|
115.85 |
|
|
116.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015 |
|
December 31,
2016 |
(Unaudited) |
|
|
|
Asset Quality
Ratios |
|
Allowance for loan
losses/total loans |
0.70 |
% |
|
0.68 |
% |
Allowance for loan
losses/non-performing loans |
540.37 |
|
|
614.43 |
|
|
|
|
|
|
|
Non-performing
loans/total loans |
0.13 |
|
|
0.11 |
|
Non-performing
loans/total assets |
0.10 |
|
|
0.09 |
|
Non-performing
assets/total assets |
0.10 |
|
|
0.09 |
|
|
|
|
|
|
|
Share
Related |
|
|
|
|
|
Book value per
share |
$ |
64.83 |
|
$ |
75.50 |
|
Market value per
share |
$ |
119.80 |
|
$ |
196.78 |
|
Shares outstanding at
end of period |
|
2,128,750 |
|
|
2,132,750 |
|
(1) Annualized for the three months periods.
(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 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 sale of securities.
|
HINGHAM INSTITUTION FOR SAVINGS |
Consolidated Balance Sheets |
|
(Dollars in thousands,
except per share data) |
|
December 31, 2015 |
|
December
31, 2016 |
(Unaudited) |
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and due from
banks |
|
$ |
6,944 |
|
$ |
7,816 |
Federal Reserve and
other short-term investments |
|
|
254,069 |
|
|
315,116 |
Cash and
cash equivalents |
|
|
261,013 |
|
|
322,932 |
|
|
|
|
|
|
|
Certificates of
deposit |
|
|
6,206 |
|
|
— |
|
|
|
|
|
|
|
CRA investment |
|
|
4,971 |
|
|
6,839 |
Other securities
available for sale |
|
|
35,632 |
|
|
20,329 |
Securities available for sale, at fair value |
|
|
40,603 |
|
|
27,168 |
Federal Home Loan Bank
stock, at cost |
|
|
19,796 |
|
|
24,472 |
Loans, net of allowance
for loan losses of $9,905 at December 31, 2015 and $11,030 at
December 31, 2016 |
|
|
1,405,533 |
|
|
1,605,647 |
Foreclosed assets |
|
|
— |
|
|
— |
Bank-owned life
insurance |
|
|
11,697 |
|
|
11,962 |
Premises and equipment,
net |
|
|
15,094 |
|
|
14,462 |
Accrued interest
receivable |
|
|
3,270 |
|
|
3,529 |
Deferred income tax
asset, net |
|
|
3,281 |
|
|
2,489 |
Other assets |
|
|
2,035 |
|
|
1,938 |
Total
assets |
|
$ |
1,768,528 |
|
$ |
2,014,599 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Interest-bearing
deposits |
|
$ |
1,088,742 |
|
$ |
1,218,360 |
Non-interest-bearing
deposits |
|
|
128,285 |
|
|
147,749 |
Total
deposits |
|
|
1,217,027 |
|
|
1,366,109 |
Federal Home Loan Bank
advances |
|
|
402,464 |
|
|
475,318 |
Mortgage payable |
|
|
922 |
|
|
868 |
Mortgagors’ escrow
accounts |
|
|
4,850 |
|
|
5,585 |
Accrued interest
payable |
|
|
303 |
|
|
400 |
Other liabilities |
|
|
4,947 |
|
|
5,295 |
Total
liabilities |
|
|
1,630,513 |
|
|
1,853,575 |
|
|
|
|
|
|
|
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; 2,128,750 and
2,132,750 shares issued and outstanding at December 31, 2015 and
2016, respectively |
|
|
2,129 |
|
|
2,133 |
Additional paid-in capital |
|
|
11,052 |
|
|
11,575 |
Undivided
profits |
|
|
124,481 |
|
|
144,580 |
Accumulated other comprehensive income |
|
|
353 |
|
|
2,736 |
Total
stockholders’ equity |
|
|
138,015 |
|
|
161,024 |
Total
liabilities and stockholders’ equity |
|
$ |
1,768,528 |
|
$ |
2,014,599 |
|
HINGHAM INSTITUTION FOR SAVINGS |
Consolidated Statements of
Income |
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
|
|
|
|
December 31, |
|
December 31, |
(In
thousands, except per share amounts) |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
2016 |
(Unaudited) |
|
|
|
|
Interest
and dividend income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
|
$ |
15,810 |
|
$ |
18,027 |
|
|
$ |
60,260 |
|
$ |
68,917 |
|
Debt
securities |
|
|
33 |
|
|
— |
|
|
|
195 |
|
|
52 |
|
Equity
securities |
|
|
|
|
250 |
|
|
367 |
|
|
|
795 |
|
|
1,248 |
|
Federal
Reserve and other short-term investments |
|
185 |
|
|
426 |
|
|
|
609 |
|
|
1,552 |
|
|
Total
interest and dividend income |
|
|
16,278 |
|
|
18,820 |
|
|
|
61,859 |
|
|
71,769 |
Interest
expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
|
|
2,197 |
|
|
2,474 |
|
|
|
7,945 |
|
|
9,599 |
|
Federal
Home Loan Bank advances |
|
|
|
|
746 |
|
|
950 |
|
|
|
2,908 |
|
|
3,732 |
|
Mortgage
payable |
|
|
|
14 |
|
|
14 |
|
|
|
57 |
|
|
54 |
|
|
Total
interest expense |
|
|
|
2,957 |
|
|
3,438 |
|
|
|
10,910 |
|
|
13,385 |
|
|
Net
interest income |
|
|
|
13,321 |
|
|
15,382 |
|
|
|
50,949 |
|
|
58,384 |
Provision
for loan losses |
|
|
|
100 |
|
|
325 |
|
|
|
625 |
|
|
1,135 |
Net
interest income, after provision for loan losses |
|
13,221 |
|
|
15,057 |
|
|
|
50,324 |
|
|
57,249 |
Other
income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer
service fees on deposits |
|
|
247 |
|
|
237 |
|
|
|
978 |
|
|
928 |
|
Increase in
bank-owned life insurance |
|
|
|
|
69 |
|
|
62 |
|
|
|
281 |
|
|
265 |
|
Gain on
sale of securities |
|
|
|
|
— |
|
|
— |
|
|
|
29 |
|
|
344 |
|
Miscellaneous |
|
|
|
|
53 |
|
|
55 |
|
|
|
195 |
|
|
198 |
|
|
Total other
income |
|
|
|
369 |
|
|
354 |
|
|
|
1,483 |
|
|
1,735 |
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and employee benefits |
|
|
|
2,931 |
|
|
3,036 |
|
|
|
11,632 |
|
|
12,024 |
|
Occupancy
and equipment |
|
|
|
|
471 |
|
|
455 |
|
|
|
2,057 |
|
|
1,856 |
|
Data
processing |
|
|
|
|
291 |
|
|
304 |
|
|
|
1,182 |
|
|
1,230 |
|
Deposit
insurance |
|
|
|
|
240 |
|
|
252 |
|
|
|
902 |
|
|
1,023 |
|
Foreclosure |
|
|
|
|
10 |
|
|
(73 |
) |
|
|
72 |
|
|
34 |
|
Marketing |
|
|
|
|
105 |
|
|
74 |
|
|
|
489 |
|
|
403 |
|
Other
general and administrative |
|
|
|
|
682 |
|
|
662 |
|
|
|
2,697 |
|
|
2,645 |
|
|
Total
operating expenses |
|
|
|
4,730 |
|
|
4,710 |
|
|
|
19,031 |
|
|
19,215 |
Income
before income taxes |
|
|
|
8,860 |
|
|
10,701 |
|
|
|
32,776 |
|
|
39,769 |
Income tax
provision |
|
|
|
|
3,626 |
|
|
4,414 |
|
|
|
13,430 |
|
|
16,346 |
|
|
Net income |
|
|
|
$ |
5,234 |
|
$ |
6,287 |
|
|
$ |
19,346 |
|
$ |
23,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends declared per share |
|
$ |
0.60 |
|
$ |
0.64 |
|
|
$ |
1.46 |
|
$ |
1.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
2,129 |
|
|
2,131 |
|
|
|
2,129 |
|
|
2,131 |
|
Diluted |
|
|
|
|
2,149 |
|
|
2,158 |
|
|
|
2,145 |
|
|
2,152 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
$ |
2.46 |
|
$ |
2.95 |
|
|
$ |
9.09 |
|
$ |
10.99 |
|
Diluted |
|
|
|
$ |
2.44 |
|
$ |
2.92 |
|
|
$ |
9.02 |
|
$ |
10.89 |
|
|
HINGHAM INSTITUTION FOR SAVINGS |
|
Net Interest Income Analysis |
|
|
|
|
Three Months Ended December 31, |
|
|
2015 |
|
|
2016 |
|
|
AVERAGE BALANCE |
|
INTEREST |
|
YIELD/ RATE (8) |
|
|
AVERAGE BALANCE |
|
INTEREST |
|
YIELD/ RATE (8) |
|
(Dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans (1) (2) |
$ |
1,381,732 |
|
$ |
15,810 |
|
4.58 |
% |
|
$ |
1,598,286 |
|
$ |
18,027 |
|
4.51 |
% |
Securities (3) (4) |
|
64,082 |
|
|
283 |
|
1.77 |
|
|
|
45,965 |
|
|
367 |
|
3.19 |
|
Federal Reserve and
other short-term investments |
|
253,716 |
|
|
185 |
|
0.29 |
|
|
|
309,043 |
|
|
426 |
|
0.55 |
|
Total
interest-earning assets |
|
1,699,530 |
|
|
16,278 |
|
3.83 |
|
|
|
1,953,294 |
|
|
18,820 |
|
3.85 |
|
Other assets |
|
33,138 |
|
|
|
|
|
|
|
|
33,715 |
|
|
|
|
|
|
Total
assets |
$ |
1,732,668 |
|
|
|
|
|
|
|
$ |
1,987,009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
deposits (5) |
$ |
1,087,721 |
|
|
2,197 |
|
0.81 |
|
|
$ |
1,212,674 |
|
|
2,474 |
|
0.82 |
|
Borrowed funds |
|
378,621 |
|
|
760 |
|
0.80 |
|
|
|
461,749 |
|
|
964 |
|
0.84 |
|
Total
interest-bearing liabilities |
|
1,466,342 |
|
|
2,957 |
|
0.81 |
|
|
|
1,674,423 |
|
|
3,438 |
|
0.82 |
|
Demand deposits |
|
124,994 |
|
|
|
|
|
|
|
|
149,352 |
|
|
|
|
|
|
Other liabilities |
|
4,499 |
|
|
|
|
|
|
|
|
4,579 |
|
|
|
|
|
|
Total
liabilities |
|
1,595,835 |
|
|
|
|
|
|
|
|
1,828,354 |
|
|
|
|
|
|
Stockholders’
equity |
|
136,833 |
|
|
|
|
|
|
|
|
158,655 |
|
|
|
|
|
|
Total
liabilities and stockholders’ equity |
$ |
1,732,668 |
|
|
|
|
|
|
|
$ |
1,987,009 |
|
|
|
|
|
|
Net interest
income |
|
|
|
$ |
13,321 |
|
|
|
|
|
|
|
$ |
15,382 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
spread |
|
|
|
|
|
|
3.02 |
% |
|
|
|
|
|
|
|
3.03 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(6) |
|
|
|
|
|
|
3.14 |
% |
|
|
|
|
|
|
|
3.15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
interest-earning assets to average interest-bearing
liabilities (7) |
|
|
|
|
|
|
115.90 |
% |
|
|
|
|
|
|
|
116.65 |
% |
(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 interest-earning assets. |
(7 |
) |
Total interest-earning
assets divided by total interest-bearing liabilities. |
(8 |
) |
Annualized. |
|
|
HINGHAM INSTITUTION FOR
SAVINGS |
|
Net Interest Income Analysis |
|
|
|
|
Twelve Months Ended December 31, |
|
|
2015 |
|
|
2016 |
|
|
AVERAGE BALANCE |
|
INTEREST |
|
YIELD/ RATE |
|
|
AVERAGE BALANCE |
|
INTEREST |
|
YIELD/ RATE |
|
(Dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans (1) (2) |
$ |
1,307,871 |
|
$ |
60,260 |
|
4.61 |
% |
|
$ |
1,524,858 |
|
$ |
68,917 |
|
4.52 |
% |
Securities (3) (4) |
|
76,193 |
|
|
990 |
|
1.30 |
|
|
|
54,494 |
|
|
1,300 |
|
2.39 |
|
Federal Reserve and
other short-term investments |
|
221,807 |
|
|
609 |
|
0.27 |
|
|
|
301,322 |
|
|
1,552 |
|
0.52 |
|
Total
interest-earning assets |
|
1,605,871 |
|
|
61,859 |
|
3.85 |
|
|
|
1,880,674 |
|
|
71,769 |
|
3.82 |
|
Other assets |
|
33,014 |
|
|
|
|
|
|
|
|
33,378 |
|
|
|
|
|
|
Total
assets |
$ |
1,638,885 |
|
|
|
|
|
|
|
$ |
1,914,052 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
deposits (5) |
$ |
1,038,016 |
|
|
7,945 |
|
0.77 |
|
|
$ |
1,176,472 |
|
|
9,599 |
|
0.82 |
|
Borrowed funds |
|
348,094 |
|
|
2,965 |
|
0.85 |
|
|
|
442,134 |
|
|
3,786 |
|
0.86 |
|
Total
interest-bearing liabilities |
|
1,386,110 |
|
|
10,910 |
|
0.79 |
|
|
|
1,618,606 |
|
|
13,385 |
|
0.83 |
|
Demand deposits |
|
117,741 |
|
|
|
|
|
|
|
|
140,758 |
|
|
|
|
|
|
Other liabilities |
|
4,387 |
|
|
|
|
|
|
|
|
4,456 |
|
|
|
|
|
|
Total
liabilities |
|
1,508,238 |
|
|
|
|
|
|
|
|
1,763,820 |
|
|
|
|
|
|
Stockholders’
equity |
|
130,647 |
|
|
|
|
|
|
|
|
150,232 |
|
|
|
|
|
|
Total
liabilities and stockholders’ equity |
$ |
1,638,885 |
|
|
|
|
|
|
|
$ |
1,914,052 |
|
|
|
|
|
|
Net interest
income |
|
|
|
$ |
50,949 |
|
|
|
|
|
|
|
$ |
58,384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
spread |
|
|
|
|
|
|
3.06 |
% |
|
|
|
|
|
|
|
2.99 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(6) |
|
|
|
|
|
|
3.17 |
% |
|
|
|
|
|
|
|
3.10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
interest-earning assets to average interest-bearing liabilities
(7) |
|
|
|
|
|
|
115.85 |
% |
|
|
|
|
|
|
|
116.19 |
% |
(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 interest-earning assets. |
(7 |
) |
Total interest-earning
assets divided by total interest-bearing liabilities. |
CONTACT: Patrick R. Gaughen, Executive Vice President (781) 783-1761
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