Hingham Institution for Savings (NASDAQ – HIFS), Hingham, Massachusetts announced third quarter earnings for 2011. Net income for the quarter ended September 30, 2011 was $3,108,000 or $1.46 per share (basic and diluted) as compared to $2,794,000 or $1.32 per share (basic and diluted) for the same period last year. The Bank’s return on average equity for the third quarter of 2011 was 15.52%, and the return on average assets was 1.17%. Net income for the nine months ended September 30, 2011 was $8,955,000 or $4.22 per share basic and $4.21 per share diluted as compared to $7,530,000 or $3.54 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 2011 was 15.40% and the return on average assets was 1.14%.

Deposits increased by $31 million from December 31, 2010 and $55 million from September 30, 2010, representing a 6% annualized growth year to date and 8% from September 30, 2010. Net loans increased by $44 million from December 31, 2010 and $62 million from September 30, 2010 representing 7% annualized growth year to date and 8% growth from the third quarter 2010. Total assets increased by $68 million from December 31, 2010 and $94 million from September 30, 2010, representing a 9% annualized growth year to date and 10% from the third quarter 2010. Stockholders’ equity increased $8 million as of September 30, 2011, representing a 14% annualized growth year to date and a 13% increase from September 30, 2010. Book value per share increased to $37.77 per share at September 30, 2011 from $34.24 per share at December 31, 2010 and $33.54 per share at September 30, 2010.

At September 30, 2011 non-performing assets totaled 1.12% of total assets, an increase from the 0.91% at December 31, 2010 and the 0.92% at September 30, 2010. For the quarter ended September 30, 2011, a provision of $275,000 was made to the allowance for loan losses compared to $300,000 for the same period in 2010. Foreclosure related expenses totaled $256,000 for the quarter ended September 30, 2011 compared to $193,000 for the quarter ended September 30, 2010.

President Robert H. Gaughen, Jr. stated, “We are pleased to report that our current quarterly earnings represent an 11% increase over the third quarter 2010 and a 19% increase over those of the first nine months of 2010. Continued improvements in our net interest margin, effective cost control and prudent lending standards continue to produce real bottom line improvements. We remain focused on increasing shareholder value through quality growth and rigorous cost control.”

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. In October the Bank opened its 10 th branch in the Beacon Hill/Back Bay area 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)

September 30, 2011

December 31, 2010

September 30, 2010
(Unaudited)
ASSETS
 
Cash and due from banks $ 6,674 $ 6,298 $ 5,651
Short-term investments   98,908   61,566   54,215
Cash and cash equivalents 105,582 67,864 59,866
 
Certificates of deposit 14,325 13,929 14,064
Securities available for sale, at fair value 78,370 95,071 94,606
Federal Home Loan Bank stock, at cost 13,373 13,373 13,373

Loans, net of allowance for loan losses of $7,414 at September 30, 2011,$6,905 at December 31, 2010 and $6,645 at September 30, 2010

 

836,762

 

792,910

 

775,013
Foreclosed assets 3,401 3,559 4,860
Bank-owned life insurance 14,416 14,074 13,957
Premises and equipment, net 10,470 7,985 6,520
Accrued interest receivable 2,977 2,992 3,203
Prepaid FDIC assessment 1,985 2,474 2,683
Deferred income tax asset, net 2,764 2,803 2,038
Other assets   1,256   811   1,137
Total assets $ 1,085,681 $ 1,017,845 $ 991,320
 

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Deposits $ 761,030 $ 729,960 $ 705,786
Federal Home Loan Bank advances 237,499 207,580 208,106
Mortgage payable 1,117 1,147 1,156
Mortgagors’ escrow accounts 2,484 2,344 2,208
Accrued interest payable 483 591 631
Other liabilities   2,779   3,487   2,177
Total liabilities   1,005,392   945,109   920,064
 
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;2,125,750 shares issued and outstanding at September 30, 2011and 2,124,250 shares issued and outstanding at December 31, 2010and September 30, 2010

 

 

2,126

 

 

2,124

 

 

2,124
Additional paid-in capital 10,500 10,417 10,417
Undivided profits 67,382 59,999 58,342
Accumulated other comprehensive income   281   196   373
Total stockholders’ equity   80,289   72,736   71,256
Total liabilities and stockholders’ equity $ 1,085,681 $ 1,017,845 $ 991,320
         

HINGHAM INSTITUTION FOR SAVINGS

Consolidated Statements of Income
 
Three Months Ended Nine Months Ended
September 30, September 30,
2011   2010 2011   2010
(Unaudited) (In thousands, except per share amounts)
Interest and dividend income:
Loans $ 11,937 $ 11,461 $ 35,248 $ 33,295
Debt securities 149 305 603 1,154
Equity securities 32 26 101 81
Short-term investments and certificates of deposit 83 106 261 330
Total interest and dividend income 12,201 11,898 36,213 34,860
Interest expense:
Deposits 1,682 1,997 5,204 6,218
Federal Home Loan Bank advances 1,472 1,709 4,451 5,260
Mortgage payable 17 18 51 53
Total interest expense 3,171 3,724 9,706 11,531
Net interest income 9,030 8,174 26,507 23,329
Provision for loan losses 275 300 875 1,000
Net interest income, after provision for loan losses 8,755 7,874 25,632 22,329
Other income:
Customer service fees on deposits 246 232 728 636
Increase in bank-owned life insurance 112 114 342 342
Miscellaneous 64 61 184 186
Total other income 422 407 1,254 1,164
Operating expenses:
Salaries and employee benefits 2,276 2,098 6,631 6,239
Data processing 221 202 659 627
Occupancy and equipment 411 296 1,115 956
Deposit insurance (40) 262 542 817
Foreclosure 256 193 609 480
Marketing 226 113 479 359
Other general and administrative 586 529 1,771 1,654
Total operating expenses 3,936 3,693 11,806 11,132
Income before income taxes 5,241 4,588 15,080 12,361
Income tax provision 2,133 1,794 6,125 4,831
Net income $ 3,108 $ 2,794 $ 8,955 $ 7,530
 
Weighted average common shares outstanding:
Basic 2,125 2,124 2,124 2,124
Diluted 2,126 2,125 2,126 2,125
 
Earnings per common share:
Basic $ 1.46 $ 1.32 $ 4.22 $ 3.54
Diluted $ 1.46 $ 1.32 $ 4.21 $ 3.54
           

HINGHAM INSTITUTION FOR SAVINGS

Net Interest Income Analysis
 
Three Months Ended September 30,
2011 2010

AVERAGE BALANCE

INTEREST

YIELD/ RATE

AVERAGE BALANCE

INTEREST

YIELD/ RATE
(Dollars in thousands)
(Unaudited)
 
Loans (1) (2) $ 837,930 $ 11,937 5.70 % $ 764,759 $ 11,461 5.99 %
Securities (3) (4) 96,576 181 0.75 103,424 331 1.28
Short-term investments and certificates of deposit   89,618   83 0.37   75,970   106 0.56
Total earning assets 1,024,124   12,201 4.77 944,153   11,898 5.04
Other assets   35,639   36,079
Total assets $ 1,059,763 $ 980,232
 
Interest-bearing deposits (5) $ 700,601 1,682 0.96 $ 643,618 1,997 1.24
Borrowed funds   216,010   1,489 2.76   211,098   1,727 3.27
Total interest-bearing liabilities 916,611   3,171 1.38 854,716   3,724 1.74
Demand deposits 60,512 52,183
Other liabilities   2,558   2,706
Total liabilities 979,681 909,605
Stockholders’ equity   80,082   70,627
Total liabilities and stockholders’ equity $ 1,059,763 $ 980,232
Net interest income $ 9,030 $ 8,174
 
Weighted average spread 3.39 % 3.30 %
 
Net interest margin (6) 3.53 % 3.46 %
 
Average interest-earning assets to average

interest-bearing liabilities (7)

111.73

%

110.46

%
(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,
2011 2010

AVERAGE BALANCE

INTEREST

YIELD/ RATE

AVERAGE BALANCE

INTEREST

YIELD/ RATE
(Dollars in thousands)
(Unaudited)
 
Loans (1) (2) $ 821,341 $ 35,248 5.72 % $ 764,759 $ 33,295 5.95 %
Securities (3) (4) 102,998 704 0.91 103,424 1,235 1.58
Short-term investments and certificates of deposit   85,034   261 0.41   75,970   330 0.54
Total earning assets 1,009,373   36,213 4.78 944,153   34,860 4.99
Other assets   34,924   36,079
Total assets $ 1,044,297 $ 980,232
 
Interest-bearing deposits (5) $ 696,196 5,204 1.00 $ 643,618 6,218 1.32
Borrowed funds   210,403   4,502 2.85   211,098   5,313 3.29
Total interest-bearing liabilities 906,599   9,706 1.43 854,716   11,532 1.82
Demand deposits 57,288 52,183
Other liabilities   2,950   2,706
Total liabilities 966,777 909,605
Stockholders’ equity   77,520   70,627
Total liabilities and stockholders’ equity $ 1,044,297 $ 980,232
Net interest income $ 26,507 $ 23,329
 
Weighted average spread 3.35 % 3.17 %
 
Net interest margin (6) 3.50 % 3.34 %
 
Average interest-earning assets to average

interest-bearing liabilities (7)

111.34

%

110.36

%
(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

September 30,
Nine Months Ended

September 30,
2011 2010 2011 2010
(Unaudited)
 
Key Performance Ratios
Return on average assets (1) 1.17 % 1.14 % 1.14 % 1.04 %
Return on average equity (1) 15.52 15.82 15.40 14.61
Interest rate spread (1) (2) 3.39 3.30 3.35 3.17
Net interest margin (1) (3) 3.53 3.46 3.50 3.34
Non-interest expense to average assets (1) 1.49 1.51 1.51 1.54
Efficiency ratio (4) 41.64 43.04 42.53 45.45
Average equity to average assets 7.56 7.21 7.42 7.12
Average interest-bearing assets to average interest

bearing liabilities

111.73

110.46

111.34

110.36
     
September 30,

2011

December 31, 2010
September 30,

2010
(Unaudited)
 
Asset Quality Ratios
Allowance for loan losses/total loans 0.88 %

 

0.86
% 0.85 %
Allowance for loan losses/non-performing loans 84.94

 

120.25
155.62
 
Non-performing loans/total loans 1.04

 

0.72
0.55
Non-performing loans/total assets 0.80

 

0.56
0.43
Non-performing assets/total assets 1.12

 

0.91
0.92
 
Share Related
Book value per share $ 37.77 $ 34.24

$

33.54
Market value per share $ 47.68 $ 44.50

$

37.62
Shares outstanding at end of period 2,125,750 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.

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