Hingham Institution For Savings Reports 14% Increase In Quarterly Earnings

HINGHAM INSTITUTION FOR SAVINGS (NASDAQ – HIFS), Hingham, Massachusetts announced second quarter earnings for 2012. Net income for the quarter ended June 30, 2012 was $3,368,000 or $1.58 per share (basic and diluted) as compared to $2,967,000 or $1.40 per share (basic and diluted) for the same period last year. The Bank’s annualized return on average equity for the second quarter of 2012 was 15.40%, and the annualized return on average assets was 1.18%. Net income for the six months ended June 30, 2012 was $6,609,000 or $3.11 per share (basic and diluted) as compared to $5,847,000 or $2.75 per share (basic and diluted) for the same period last year. The Bank’s annualized return on average equity for the first six months of 2012 was 15.35% and the annualized return on average assets was 1.16%.

Strong growth trends of recent years continued, as deposits increased by $39.3 million from December 31, 2011 and $71.2 million from June 30, 2011, representing a 10% annualized growth year to date and 9% from June 30, 2011. Net loans increased by $33.4 million from December 31, 2011 and $56.3 million from June 30, 2011, representing 8% annualized growth year to date and 7% growth from June 30, 2011. Total assets increased by $31.7 million from December 31, 2011 and $92.4 million from June 30, 2011, representing a 6% annualized growth year to date and 9% from June 30, 2011. Stockholders’ equity increased to $87.8 million as of June 30, 2012, representing a 13% annualized growth year to date and a 13% increase from June 30, 2011. Book value per share increased to $41.29 per share at June 30, 2012 from $38.70 per share at December 31, 2011 and $36.54 per share at June 30, 2011.

At June 30, 2012, non-performing assets totaled 0.74% of total assets, a decrease from 0.92% at December 31, 2011 and 1.10% at June 30, 2011. For the quarter ended June 30, 2012, a provision of $200,000 was made to the allowance for loan losses compared to $300,000 for the same period in 2011. Foreclosure related expenses totaled $44,000 for the quarter ended June 30, 2012 compared to $185,000 for the quarter ended June 30, 2011.

President Robert H. Gaughen, Jr. stated, “We are pleased to report that our current quarterly earnings represent a 14% increase over the second quarter and our year to date earnings were 13% over the first half of 2011. We are also pleased to report the ongoing improvement in non-performing assets as the Bank makes considerable progress in resolving our already modest level of problem credits. We continue to see strong performance year over year, reflecting our continued commitment to shareholder value through quality growth and effective 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 two branches in 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)

June 30, 2012

December 31, 2011
June 30,

2011
(Unaudited)
ASSETS
 
Cash and due from banks $ 7,833 $ 8,918 $ 5,315
Short-term investments   100,261   107,422   82,873
Cash and cash equivalents 108,094 116,340 88,188
 
Certificates of deposit 13,804 13,405 14,228
Securities available for sale, at fair value 103,068 96,689 87,556
Federal Home Loan Bank stock, at cost 13,406 13,373 13,373
Loans, net of allowance for loan losses of $7,821

at June 30, 2012, $7,516 at December 31, 2011

and $7,222 at June 30, 2011

 

883,221

 

849,776

 

826,877
Foreclosed assets 3,161 3,629 3,277
Bank-owned life insurance 14,734 14,524 14,304
Premises and equipment, net 10,456 10,597 9,977
Accrued interest receivable 2,860 2,858 2,990
Prepaid FDIC assessment 1,616 1,871 1,929
Deferred income tax asset, net 3,458 3,425 2,784
Other assets   1,127   789   1,115
Total assets $ 1,159,005 $ 1,127,276 $ 1,066,598
 

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Deposits $ 826,845 $ 787,573 $ 755,621
Federal Home Loan Bank advances 236,414 247,471 227,019
Mortgage payable 1,086 1,107 1,127
Mortgagors’ escrow accounts 2,700 2,517 2,319
Accrued interest payable 454 475 535
Other liabilities   3,742   5,868   2,356
Total liabilities   1,071,241   1,045,011   988,977
 
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

June 30, 2012 and December 31, 2011; 2,124,250 issued

and outstanding at June 30, 2011.

 

 

2,126

 

 

2,126

 

 

2,124
Additional paid-in capital 10,519 10,500 10,447
Undivided profits 74,929 69,404 64,805
Accumulated other comprehensive income   190   235   245
Total stockholders’ equity   87,764   82,265   77,621
Total liabilities and stockholders’ equity $ 1,159,005 $ 1,127,276 $ 1,066,598
 

HINGHAM INSTITUTION FOR SAVINGS

Consolidated Statements of Income
       
Three Months Ended Six Months Ended
June 30, June 30,
2012   2011 2012   2011
(Unaudited) (In thousands, except per share amounts)
Interest and dividend income:    
Loans $ 11,926 $ 11,743 $ 23,769 $ 23,311
Debt securities 139 215 288 454
Equity securities 44 35 86 69
Short-term investments and certificates of deposit   92   96   181 178
Total interest and dividend income   12,201   12,089   24,324     24,012
Interest expense:
Deposits 1,436 1,764 2,942 3,522
Federal Home Loan Bank advances 1,235 1,487 2,475 2,979
Mortgage payable   17   17   33   34
Total interest expense   2,688   3,268   5,450   6,535
Net interest income 9,513 8,821 18,874 17,477
Provision for loan losses   200   300   425   600
Net interest income, after provision for loan losses   9,313   8,521   18,449   16,877
Other income:
Customer service fees on deposits 253 247 506 482
Increase in bank-owned life insurance 113 114 210 230
Miscellaneous   58   60   115   120
Total other income   424   421   831   832
Operating expenses:
Salaries and employee benefits 2,368 2,205 4,703 4,355
Data processing 213 217 444 438
Occupancy and equipment 428 349 847 704
Deposit insurance 156 263 289 582
Foreclosure 44 185 244 353
Marketing 215 142 349 253
Other general and administrative   645   598   1,270   1,185
Total operating expenses   4,069   3,959   8,146   7,870
Income before income taxes 5,668 4,983 11,134 9,839
Income tax provision   2,300   2,016   4,525   3,992
Net income $ 3,368 $ 2,967 $ 6,609 $ 5,847
 
Weighted average common shares outstanding:
Basic   2,126   2,124   2,126   2,124
Diluted   2,127   2,126   2,127   2,125
 
Earnings per common share:
Basic $ 1.58 $ 1.40 $ 3.11 $ 2.75
Diluted $ 1.58 $ 1.40 $ 3.11 $ 2.75
 

HINGHAM INSTITUTION FOR SAVINGS Net Interest Income Analysis

 
       
Three Months Ended June 30,
2012 2011

AVERAGE BALANCE

INTEREST

YIELD/ RATE

AVERAGE BALANCE
 

INTEREST

YIELD/ RATE
(Dollars in thousands)
(Unaudited)
 
Loans (1) (2) $ 882,684 $ 11,926 5.40 % $ 819,037 $ 11,743 5.74 %
Securities (3) (4) 108,318 183 0.68 104,597 250 0.96
Short-term investments and certificates of deposit   117,639   92 0.31   92,929   96 0.41
Total earning assets 1,108,641   12,201 4.40 1,016,563   12,089 4.76
Other assets   37,467   34,913
Total assets $ 1,146,108 $ 1,051,476
 
Interest-bearing deposits (5) $ 742,847 1,436 0.77 $ 705,540 1,764 1.00
Borrowed funds   242,903   1,252 2.06   208,568   1,504 2.88
Total interest-bearing liabilities 985,750   2,688 1.09 914,108   3,268 1.43
Demand deposits 68,750 56,883
Other liabilities   4,100   3,028
Total liabilities 1,058,600 974,019
Stockholders’ equity   87,508   77,457
Total liabilities and stockholders’ equity $ 1,146,108 $ 1,051,476
Net interest income $ 9,513 $ 8,821
 
Weighted average spread 3.31 % 3.33 %
 
Net interest margin (6) 3.43 % 3.47 %
 
Average interest-earning assets to average

interest-bearing liabilities (7)

112.47

%

111.21

%
(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

 
       
Six Months Ended June 30,
2012 2011

AVERAGE BALANCE

INTEREST

YIELD/ RATE

AVERAGE BALANCE

INTEREST
 

YIELD/ RATE
(Dollars in thousands)
(Unaudited)
 
Loans (1) (2) $ 873,408 $ 23,769 5.44 % $ 812,909 $ 23,311 5.74 %
Securities (3) (4) 107,884 374 0.69 106,262 523 0.98
Short-term investments and certificates of deposit   116,672   181 0.31   82,704   178 0.43
Total earning assets 1,097,964   24,324 4.43 1,001,875   24,012 4.79
Other assets   37,152   34,560
Total assets $ 1,135,116 $ 1,036,435
 
Interest-bearing deposits (5) $ 739,249 2,942 0.80 $ 693,958 3,522 1.02
Borrowed funds   239,860   2,508 2.09   207,553   3,013 2.90
Total interest-bearing liabilities 979,109   5,450 1.11 901,511   6,535 1.45
Demand deposits 66,051 55,560
Other liabilities   3,824   3,146
Total liabilities 1,048,984 960,217
Stockholders’ equity   86,132   76,218
Total liabilities and stockholders’ equity $ 1,135,116 $ 1,036,435
Net interest income $ 18,874 $ 17,477
 
Weighted average spread 3.32 % 3.34 %
 
Net interest margin (6) 3.44 % 3.49 %
 
Average interest-earning assets to average

interest-bearing liabilities (7)

112.14

%

111.13

%
(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

June 30,
Six Months Ended

June 30,
2012   2011 2012   2011
(Unaudited)
 
Key Performance Ratios
Return on average assets (1) 1.18 % 1.13 % 1.16 % 1.13 %
Return on average equity (1) 15.40 15.32 15.35 15.34
Interest rate spread (1) (2) 3.31 3.33 3.32 3.34
Net interest margin (1) (3) 3.43 3.47 3.44 3.49
Non-interest expense to average assets (1) 1.42 1.51 1.44 1.52
Efficiency ratio (4) 40.95 42.84 41.34 42.98
Average equity to average assets 7.64 7.37 7.59 7.35

Average interest-bearing assets to average interest

    bearing liabilities

112.47

111.21

112.14

111.13
 
June 30,

2012
 

December 31, 2011
June 30,

2011
(Unaudited)
 
Asset Quality Ratios
Allowance for loan losses/total loans 0.88 % 0.88 %   0.87 %
Allowance for loan losses/non-performing loans 144.94 111.30 85.77
 
Non-performing loans/total loans 0.61 0.79 1.01
Non-performing loans/total assets 0.47 0.60 0.79
Non-performing assets/total assets 0.74 0.92 1.10
 
Share Related
Book value per share $ 41.29 $ 38.70 $ 36.54
Market value per share $ 60.47 $ 47.80 52.93
Shares outstanding at end of period 2,125,750 2,125,750 $ 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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