Hingham Institution For Savings Reports 24% Increase In Quarterly Earnings

Hingham Institution for Savings (NASDAQ – HIFS), Hingham, Massachusetts announced first quarter earnings for 2011. Net income for the quarter ended March 31, 2011 was $2,880,000 or $1.36 per share (basic and diluted) as compared to $2,315,000 or $1.09 per share (basic and diluted) for the same period last year. The Bank’s return on average equity for the first quarter of 2011 was 15.37%, and the return on average assets was 1.13%.

Strong growth trends of recent years continued, as deposits increased by $62.9 million representing a 9% increase from March 31, 2010. Net loans increased by 10% and total assets increased by 7% over those for the first quarter of 2010. Stockholders’ equity increased to $75.0 million as of March 31, 2011 representing a 12% increase from March 31, 2010 with a related increase in book value per share from $31.56 to $35.31.

At March 31, 2011 non-performing assets totaled 0.92% of total assets, relatively flat with the 0.91% at December 31, 2010 and down from the 1.34% at March 31, 2010. For the quarter ended March 31, 2011, a provision of $300,000 was made to the allowance for loan losses compared to $400,000 for the same period in 2010. Foreclosure related expenses totaled $168,000 for the quarter ended March 31, 2011 compared to $126,000 for the quarter ended March 31, 2010.

President Robert H. Gaughen, Jr. stated, “Our quarterly earnings represent a 24% increase over the same period last year. The growth in our balance sheet combined with a favorable interest rate environment and stringent expense control allowed us to achieve these strong results.”

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 the South End of Boston.

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)		March 31, 2011			December 31,2010			March 31, 2010
(Unaudited)
ASSETS
Cash and due from banks		$	7,037		$	6,298		$	10,170
Short-term investments			65,420			61,566			77,861
Cash and cash equivalents			72,457			67,864			88,031
Certificates of deposit			13,980			13,929			13,610
Securities available for sale, at fair value			94,053			95,071			92,009
Federal Home Loan Bank stock, at cost			13,373			13,373			13,373
Loans, net of allowance for loan losses of $7,205 at March 31, 2011, $6,905 at December 31, 2010 and $6,127 at March 31, 2010			803,653			792,910			727,698
Foreclosed assets			3,044			3,559			2,685
Bank-owned life insurance			14,190			14,074			13,729
Premises and equipment, net			9,106			7,985			5,448
Accrued interest receivable			3,208			2,992			3,246
Prepaid FDIC assessment			2,173			2,474			3,185
Deferred income tax asset, net			2,852			2,803			2,033
Other assets			923			811			1,340
Total assets		$	1,033,012		$	1,017,845		$	966,387
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits		$	738,204		$	729,960		$	675,347
Federal Home Loan Bank advances			211,553			207,580			216,417
Mortgage payable			1,137			1,147			1,175
Mortgagors’ escrow accounts			2,443			2,344			2,078
Accrued interest payable			571			591			697
Other liabilities			4,093			3,487			3,635
Total liabilities			958,001			945,109			899,349
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; 2,124,250 shares issued and outstanding			2,124			2,124			2,124
Additional paid-in capital			10,417			10,417			10,412
Undivided profits			62,369			59,999			54,125
Accumulated other comprehensive income			101			196			377
Total stockholders’ equity			75,011			72,736			67,038
Total liabilities and stockholders’ equity		$	1,033,012		$	1,017,845		$	966,387

HINGHAM INSTITUTION FOR SAVINGS Consolidated Statements of Income
		Three Months Ended March 31,
(Dollars in thousands, except per share amounts)		2011			2010
(Unaudited)
Interest and dividend income:
Loans		$	11,568		$	10,873
Debt securities			239			449
Equity securities			34			28
Short-term investments and certificates of deposit			82			110
Total interest and dividend income			11,923			11,460
Interest expense:
Deposits			1,758			2,168
Federal Home Loan Bank advances			1,492			1,809
Mortgage payable			17			18
Total interest expense			3,267			3,995
Net interest income			8,656			7,465
Provision for loan losses			300			400
Net interest income, after provision for loan losses			8,356			7,065
Other income:
Customer service fees on deposits			235			200
Increase in Bank-owned life insurance			116			114
Miscellaneous			60			63
Total other income			411			377
Operating expenses:
Salaries and employee benefits			2,150			2,044
Data processing			221			215
Occupancy and equipment			355			344
Deposit insurance			319			280
Foreclosure			168			126
Marketing			111			108
Other general and administrative			587			530
Total operating expenses			3,911			3,647
Income before income taxes			4,856			3,795
Income tax provision			1,976			1,480
Net income		$	2,880		$	2,315
Cash dividends declared per common share		$	0.24		$	0.23
Weighted average shares outstanding:
Basic			2,124			2,124
Diluted			2,125			2,124
Earnings per share:
Basic		$	1.36		$	1.09
Diluted		$	1.36		$	1.09

HINGHAM INSTITUTION FOR SAVINGS Net Interest Income Analysis
		Three Months Ending March 31,
		2011									2010
		AVERAGEBALANCE			INTEREST			YIELD/RATE			AVERAGEBALANCE			INTEREST			YIELD/RATE
(Dollars in thousands)
(Unaudited)
Loans (1) (2)		$	806,714		$	11,568		5.74	%		$	729,559		$	10,873		5.96	%
Securities (3) (4)			107,945			273		1.01				104,347			477		1.83
Short-term investments and certificates ofdeposit			72,365			82		0.45				81,355			110		0.54
Total earning assets			987,024			11,923		4.83				915,261			11,460		5.01
Other assets			34,203									32,933
Total assets		$	1,021,227								$	948,194
Interest-bearing deposits (5)		$	682,247			1,758		1.03			$	610,151			2,168		1.42
Borrowed funds			206,527			1,509		2.92				220,584			1,827		3.31
Total interest-bearing liabilities			888,774			3,267		1.47				830,735			3,995		1.92
Demand deposits			54,222									47,056
Other liabilities			3,266									3,677
Total liabilities			946,262									881,468
Stockholders’ equity			74,965									66,726
Total liabilities and stockholders’ equity		$	1,021,227								$	948,194
Net interest income					$	8,656								$	7,465
Weighted average spread								3.36	%								3.09	%
Net interest margin (6)								3.51	%								3.26	%
Average interest-earning assets to averageinterest-bearing liabilities (7)								111.05	%								110.17	%
(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 Ended March 31,
						2011								2010
(Unaudited)
Key Performance Ratios
Return on average assets (1)						1.13				%				0.98		%
Return on average equity (1)						15.37								13.88
Interest rate spread (1) (2)						3.36								3.09
Net interest margin (1) (3)						3.51								3.26
Non-interest expense to average assets (1)						1.53								1.54
Efficiency ratio (4)						43.13								46.51
Average equity to average assets						7.34								7.04
Average interest-bearing assets to average interest bearing liabilities						111.05								110.17
		March 31, 2011						December 31, 2010					March 31, 2010
(Unaudited)
Asset Quality Ratios
Allowance for loan losses/total loans			0.89	%				0.86			%				0.84	%
Allowance for loan losses/non-performing loans			110.80					120.25							59.42
Non-performing loans/total loans			0.81					0.72							1.41
Non-performing loans/total assets			0.63					0.56							1.07
Non-performing assets/total assets			0.92					0.91							1.34
Share Related
Book value per share		$	35.31					$	34.24				$ 31.56
Market value per share		$	51.51					$	44.50				$ 34.67
Shares outstanding at end of period			2,124,250						2,124,250				2,124,250
(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.