Hingham Institution For Savings Reports 7% Increase In Quarterly Earnings

HINGHAM INSTITUTION FOR SAVINGS (NASDAQ – HIFS), Hingham, Massachusetts announced third quarter earnings for 2012. Net income for the quarter ended September 30, 2012 was $3,327,000 or $1.57 per share basic and $1.56 per share diluted as compared to $3,108,000 or $1.46 per share (basic and diluted) for the same period last year. The Bank’s annualized return on average equity for the third quarter of 2012 was 14.70%, and the annualized return on average assets was 1.15%. Net income for the nine months ended September 30, 2012 was $9,936,000 or $4.67 per share (basic and diluted) as compared to $8,955,000 or $4.22 per share basic and $4.21 per share diluted for the same period last year. The Bank’s annualized return on average equity for the first nine months of 2012 was 15.12% and the annualized return on average assets was 1.16%.

Strong growth trends of recent years continued, as net loans increased by $67.7 million from December 31, 2011 and $80.7 million from September 30, 2011, representing a 11% annualized growth year to date and 10% from September 30, 2011. Deposits increased by $40.5 million from December 31, 2011 and $67.1 million from September 30, 2011, representing 7% annualized growth year to date and 9% growth from September 30, 2011. Total assets increased by $66.2 million from December 31, 2011 and $107.8 million from September 30, 2011, representing a 8% annualized growth year to date and 10% from September 30, 2011. Stockholders’ equity increased to $90.6 million as of September 30, 2012, representing a 14% annualized growth year to date and a 13% increase from September 30, 2011. Book value per share increased to $42.63 per share at September 30, 2012 from $38.70 per share at December 31, 2011 and $37.77 per share at September 30, 2011.

At September 30, 2012, non-performing assets totaled 0.58% of total assets, a decrease from 0.92% at December 31, 2011 and 1.12% at September 30, 2011. For the quarter ended September 30, 2012, a provision of $150,000 was made to the allowance for loan losses compared to $275,000 for the same period in 2011. Foreclosure related expenses totaled $87,000 for the quarter ended September 30, 2012 compared to $256,000 for the quarter ended September 30, 2011.

President Robert H. Gaughen, Jr. stated, “We are pleased to report that our current quarterly earnings represent a 7% increase over the third quarter in 2011 and our year to date earnings were 11% over the same period in 2011. We continue to see ongoing improvement in our non-performing assets as the Bank makes considerable progress in resolving our already modest level of problem credits. As we go through an extended period of low interest rates, we are seeing increased pressure on net interest margins. However, we continue to focus on our 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)
September 30, 2012 December 31, 2011

September 30, 2011
(Unaudited)
ASSETS
 
Cash and due from banks $ 6,624 $ 8,918 $ 6,674
Short-term investments   101,524   107,422   98,908
Cash and cash equivalents 108,148 116,340 105,582
 
Certificates of deposit 13,635 13,405 14,325
Securities available for sale, at fair value 102,167 96,689 78,370
Federal Home Loan Bank stock, at cost 14,105 13,373 13,373

Loans, net of allowance for loan losses of $7,880 at     September 30, 2012, $7,516 at December 31, 2011     and $7,414 at September 30, 2011

 

917,502

 

849,776

 

836,762
Foreclosed assets 3,465 3,629 3,401
Bank-owned life insurance 14,843 14,524 14,416
Premises and equipment, net 10,379 10,597 10,470
Accrued interest receivable 3,201 2,858 1,985
Prepaid FDIC assessment 1,476 1,871 2,977
Deferred income tax asset, net 3,416 3,425 2,764
Other assets   1,097   789   1,256
Total assets $ 1,193,434 $ 1,127,276 $ 1,085,681

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits $ 828,080 $ 787,573 $ 761,030
Federal Home Loan Bank advances 266,385 247,471 237,499
Mortgage payable 1,076 1,107 1,117
Mortgagors’ escrow accounts 2,967 2,517 2,484
Accrued interest payable 467 475 483
Other liabilities   3,845   5,868   2,779
Total liabilities   1,102,820   1,045,011   1,005,392
 
Stockholders’ equity:

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

Common stock, $1.00 par value, 5,000,000 sharesauthorized; 2,125,750 shares issued andoutstanding September 30, 2012, December 31, 2011and September 30, 2011.

 

 

2,126

 

 

2,126

 

 

2,126
Additional paid-in capital 10,519 10,500 10,500
Undivided profits 77,703 69,404 67,382
Accumulated other comprehensive income   266   235   281
Total stockholders’ equity   90,614   82,265   80,289
Total liabilities and stockholders’ equity $ 1,193,434 $ 1,127,276 $ 1,085,681

HINGHAM INSTITUTION FOR SAVINGS

Consolidated Statements of Income
       
Three Months Ended Nine Months Ended
September 30, September 30,
2012   2011 2012   2011
(Unaudited) (In thousands, except per share amounts)
Interest and dividend income:    
Loans $ 11,858 $ 11,937 $ 35,627 $ 35,248
Debt securities 127 149 415 603
Equity securities 42 32 128 101
Short-term investments and certificates of deposit   81   83   262   261
Total interest and dividend income   12,108   12,201   36,432   36,213
Interest expense:
Deposits 1,449 1,682 4,391 5,204
Federal Home Loan Bank advances 1,257 1,472 3,732 4,451
Mortgage payable   16   17   49   51
Total interest expense   2,722   3,171   8,172   9,706
Net interest income 9,386 9,030 28,260 26,507
Provision for loan losses   150   275   575   875
Net interest income, after provision for loan losses   9,236   8,755   27,685   25,632
Other income:
Customer service fees on deposits 249 246 755 728
Increase in bank-owned life insurance 109 112 319 342
Miscellaneous   49   64   164   184
Total other income   407   422   1,238   1,254
Operating expenses:
Salaries and employee benefits 2,434 2,276 7,137 6,631
Data processing 206 221 650 659
Occupancy and equipment 424 411 1,271 1,115
Deposit insurance 158 (40) 447 542
Foreclosure 87 256 331 609
Marketing 148 226 497 479
Other general and administrative   577   586   1,847   1,771
Total operating expenses   4,034   3,936   12,180   11,806
Income before income taxes 5,609 5,241 16,743 15,080
Income tax provision   2,282   2,133   6,807   6,125
Net income $ 3,327 $ 3,108 $ 9,936 $ 8,955
 
Weighted average common shares outstanding:
Basic   2,126   2,125   2,126   2,124
Diluted   2,128   2,126   2,127   2,126
 
Earnings per common share:
Basic $ 1.57 $ 1.46 $ 4.67 $ 4.22
Diluted $ 1.56 $ 1.46 $ 4.67 $ 4.21

HINGHAM INSTITUTION FOR SAVINGS

Net Interest Income Analysis
 
Three Months Ended September 30,
2012   2011

AVERAGEBALANCE
 

INTEREST
 

YIELD/RATE

AVERAGEBALANCE
 

INTEREST
 

YIELD/RATE
(Dollars in thousands)
(Unaudited)
 
Loans (1) (2) $ 899,727 $ 11,858 5.27 % $ 837,930 $ 11,937 5.70 %
Securities (3) (4) 114,244 169 0.59 96,576 181 0.75
Short-term investments and certificates of deposit   106,132   81 0.31   89,618   83 0.37
Total earning assets 1,120,103   12,108 4.32 1,024,124   12,201 4.77
Other assets   36,013   35,639
Total assets $ 1,156,116 $ 1,059,763
 
Interest-bearing deposits (5) $ 754,020 1,449 0.77 $ 700,601 1,682 0.96
Borrowed funds   234,214   1,273 2.17   216,010   1,489 2.76
Total interest-bearing liabilities 988,234   2,722 1.10 916,611   3,171 1.38
Demand deposits 73,605 60,512
Other liabilities   3,726   2,558
Total liabilities 1,065,565 979,681
Stockholders’ equity   90,551   80,082
Total liabilities and stockholders’ equity $ 1,156,116 $ 1,059,763
Net interest income $ 9,386 $ 9,030
 
Weighted average spread 3.22 % 3.39 %
 
Net interest margin (6) 3.35 % 3.53 %
 

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

113.34

%

111.73

%
(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,
2012   2011

AVERAGEBALANCE
 

INTEREST
 

YIELD/RATE

AVERAGEBALANCE
 

INTEREST
 

YIELD/RATE
(Dollars in thousands)
(Unaudited)
 
Loans (1) (2) $ 882,245 $ 35,627 5.38 % $ 821,341 $ 35,248 5.72 %
Securities (3) (4) 110,020 543 0.66 102,998 704 0.91
Short-term investments and certificates of deposit   113,133   262 0.31   85,034   261 0.41
Total earning assets 1,105,398   36,432 4.39 1,009,373   36,213 4.78
Other assets   36,769   34,924
Total assets $ 1,142,167 $ 1,044,297
 
Interest-bearing deposits (5) $ 744,209 4,391 0.79 $ 696,196 5,204 1.0
Borrowed funds   237,964   3,781 2.12   210,403   4,502 2.85
Total interest-bearing liabilities 982,173   8,172 1.11 906,599   9,706 1.43
Demand deposits 68,587 57,228
Other liabilities   3,791   2,950
Total liabilities 1,054,551 966,777
Stockholders’ equity   87,616   77,520
Total liabilities and stockholders’ equity $ 1,142,167 $ 1,044,297
Net interest income $ 28,260 $ 26,507
 
Weighted average spread 3.28 % 3.35 %
 
Net interest margin (6) 3.41 % 3.50 %
 

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

112.55

%

111.34

%
(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

Selected Financial Ratios
   
Three Months Ended

September 30,
Nine Months Ended

September 30,
2012   2011 2012   2011
(Unaudited)
 
Key Performance Ratios
Return on average assets (1) 1.15 % 1.17 % 1.16 % 1.14 %
Return on average equity (1) 14.70 15.52 15.12 15.40
Interest rate spread (1) (2) 3.22 3.39 3.28 3.35
Net interest margin (1) (3) 3.35 3.53 3.41 3.50
Non-interest expense to average assets (1) 1.40 1.49 1.42 1.51
Efficiency ratio (4) 41.19 41.64 41.29 42.53
Average equity to average assets 7.83 7.56 7.67 7.42

Average interest-bearing assets to average interest  bearing liabilities

113.34

111.73

112.55

111.34

September 30, 2012
  December 31, 2011  

September 30, 2011
(Unaudited)
 
Asset Quality Ratios
Allowance for loan losses/total loans 0.85 %

 

0.88
% 0.88 %
Allowance for loan losses/non-performing loans 231.22

 

111.30
84.94
 
Non-performing loans/total loans 0.37

 

0.79
1.04
Non-performing loans/total assets 0.29

 

0.60
0.80
Non-performing assets/total assets 0.58

 

0.92
1.12
 
Share Related
Book value per share $ 42.63 $ 38.70

$

37.77
Market value per share $ 64.43 $ 47.80

 

47.68
Shares outstanding at end of period 2,125,750 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.

Copyright Business Wire 2010

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