Hingham Savings Announces 18% Increase in Earnings per Share, 15% Return on Equity

HINGHAM, Mass., April 12, 2016 -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ:HIFS), Hingham, Massachusetts announced first quarter earnings for 2016. Net income for the quarter ended March 31, 2016 was $5,324,000 or $2.50 per share basic and $2.48 per share diluted as compared to $4,515,000 or $2.12 per share basic and $2.11 per share diluted for the same period last year. For the first quarter of 2016, the Bank’s return on average equity was 15.03% and the return on average assets was 1.19% as compared to 14.52% and 1.15% for the same period in 2015.

Strong growth trends of recent years continued, as deposits increased to $1.268 billion, representing a 12% increase from March 31, 2015 and a 17% increase on an annualized basis for the first quarter. Net loans increased to $1.454 billion, representing a 16% increase from March 31, 2015 and a 14% increase on an annualized basis for the first quarter. Total assets increased to $1.850 billion, an 18% increase from March 31, 2015, primarily driven by the Bank’s larger loan portfolio and cash holdings at the Federal Reserve. Book value per share was $67.21 as of March 31, 2016, a 14% increase from the same time last year.

Key credit and operational metrics remained steady in the first quarter. At March 31, 2016, non-performing assets totaled 0.19% of total assets, compared to 0.10% at December 31, 2015 and 0.17% at March 31, 2015. Non-performing loans as a percentage of the total loan portfolio totaled 0.22% at March 31, 2016 compared to 0.13% at December 31, 2015 and 0.16% at March 31, 2015. At March 31, 2016, the Bank owned only one piece of foreclosed residential real estate valued at $168,000. The efficiency ratio improved to 34.38% for the first quarter of 2016, as compared to 38.26% for the same period last year. Non-interest expense as a percentage of average assets fell to 1.09% in the first quarter, as compared to 1.23% for the same period last year. These metrics reflect the Bank’s disciplined focus on credit and expense management.

Robert H. Gaughen Jr., President and Chairman of the Board of Directors, in releasing these results, stated, “We are pleased to report that our current quarterly earnings per share represent an 18% increase over the same period in 2015 and a 15% return on average equity. At Hingham, we take our role as stewards of the owners’ capital seriously. We remain focused on careful capital allocation, conservative underwriting, and disciplined cost control – strategies that have served our owners well in fair weather and foul.”

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. The Bank also maintains branch offices in South Hingham and the neighboring towns of Cohasset, Hull, Norwell, Scituate and Weymouth, as well as branches in the South End of Boston, on 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 Ended March 31,
	2015		2016
(Unaudited)

Key Performance Ratios
Return on average assets (1)	1.15	%	1.19	%
Return on average equity (1)	14.52		15.03
Interest rate spread (2)	3.09		3.03
Net interest margin (3)	3.20		3.14
Non-interest expense to average assets (1)	1.23		1.09
Efficiency ratio (4)	38.26		34.38
Average equity to average assets	7.90		7.89
Average interest-earning assets to average interest bearing liabilities	115.87		116.13

	March 31, 2015			December 31, 2015			March 31, 2016
(Unaudited)

Asset Quality Ratios
Allowance for loan losses/total loans		0.74	%	0.70		%		0.70	%
Allowance for loan losses/non-performing loans		447.64		540.37				311.79

Non-performing loans/total loans		0.16		0.13				0.22
Non-performing loans/total assets		0.13		0.10				0.18
Non-performing assets/total assets		0.17		0.10				0.19

Share Related
Book value per share	$	58.95		$	64.83		$	67.21
Market value per share	$	99.00		$	119.80		$	119.11
Shares outstanding at end of period		2,128,750			2,128,750			2,130,750

(1) Annualized.
(2) Annualized. Interest rate spread represents the difference between the yield on earning assets and cost of interest-bearing liabilities.
(3) Annualized. Net interest margin represents net interest income divided by average earning assets.
(4) The efficiency ratio represents operating expenses divided by the sum of net interest income and other income.


HINGHAM INSTITUTION FOR SAVINGS
Consolidated Balance Sheets

	March 31,		December 31,		March 31,
(In thousands, except per share amounts)	2015		2015		2016
(Unaudited)
ASSETS

Cash and due from banks	$	5,901	$	6,944	$	7,643
Short-term investments		182,399		254,069		290,414
Cash and cash equivalents		188,300		261,013		298,057

Certificates of deposit		10,722		6,206		4,469
Securities available for sale, at fair value		66,853		40,603		37,400
Federal Home Loan Bank stock, at cost		17,855		19,796		20,679
Loans, net of allowance for loan losses of $9,284
at March 31, 2015, $9,905 at December 31, 2015
and $10,158 at March 31, 2016		1,254,913		1,405,533		1,453,722
Foreclosed assets		586		—		168
Bank-owned life insurance		11,486		11,697		11,764
Premises and equipment, net		15,091		15,094		14,921
Accrued interest receivable		3,001		3,270		3,435
Deferred income tax asset, net		2,632		3,281		3,127
Other assets		2,491		2,035		2,188
Total assets	$	1,573,930	$	1,768,528	$	1,849,930


LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits	$	1,135,850	$	1,217,027	$	1,268,301
Federal Home Loan Bank advances		300,568		402,464		425,429
Mortgage payable		960		922		909
Mortgagors’ escrow accounts		4,411		4,850		4,995
Accrued interest payable		341		303		324
Other liabilities		6,307		4,947		6,770
Total liabilities		1,448,437		1,630,513		1,706,728

Stockholders’ equity:
Preferred stock, $1.00 par value,
2,500 shares authorized, none issued		—		—		—
Common stock, $1.00 par value, 5,000 shares
authorized; 2,129 shares issued and outstanding at March
31, 2015 and December 31, 2015 and 2,131 shares issued
and outstanding at March 31, 2016		2,129		2,129		2,131
Additional paid-in capital		10,965		11,052		11,260
Undivided profits		112,162		124,481		129,166
Accumulated other comprehensive income		237		353		645
Total stockholders’ equity		125,493		138,015		143,202
Total liabilities and stockholders’ equity	$	1,573,930	$	1,768,528	$	1,849,930

HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income

	Three Months Ended March 31,
(In thousands, except per share amounts)	2015		2016
(Unaudited)

Interest and dividend income:
Loans	$	14,538	$	16,430
Debt securities		62		28
Equity securities		155		244
Short-term investments and certificates of deposit		136		326
Total interest and dividend income		14,891		17,028

Interest expense:
Deposits		1,827		2,290
Federal Home Loan Bank advances		721		890
Mortgage payable		14		14
Total interest expense		2,562		3,194
Net interest income		12,329		13,834
Provision for loan losses		175		255
Net interest income, after provision for loan losses		12,154		13,579
Other income:
Customer service fees on deposits		228		216
Increase in cash surrender value of life insurance		70		67
Miscellaneous		48		49
Total other income		346		332
Operating expenses:
Salaries and employee benefits		2,904		3,070
Data processing		296		305
Occupancy and equipment		554		471
Deposit insurance		217		242
Foreclosure		77		56
Marketing		121		116
Other general and administrative		680		610
Total operating expenses		4,849		4,870
Income before income taxes		7,651		9,041
Income tax provision		3,136		3,717
Net income	$	4,515	$	5,324

Cash dividends declared per common share	$	0.28	$	0.30

Weighted average shares outstanding:
Basic		2,129		2,130
Diluted		2,140		2,149

Earnings per share:
Basic	$	2.12	$	2.50
Diluted	$	2.11	$	2.48

HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis

	Three Months Ended March 31,
	2015						2016
	AVERAGE BALANCE		INTEREST		YIELD/ RATE*		AVERAGE BALANCE		INTEREST		YIELD/ RATE*
(Dollars in thousands)
(Unaudited)

Loans (1) (2)	$	1,250,321	$	14,538	4.65	%	$	1,439,994	$	16,430	4.56	%
Securities (3) (4)		87,063		217	1.00			61,042		272	1.78
Short-term investments and certificates of deposit		204,586		136	0.27			260,669		326	0.50
Total interest-earning assets		1,541,970		14,891	3.86			1,761,705		17,028	3.87
Other assets		32,692						33,156
Total assets	$	1,574,662					$	1,794,861

Interest-bearing deposits (5)	$	1,005,824		1,827	0.73		$	1,120,656		2,290	0.82
Borrowed funds		324,979		735	0.90			396,378		904	0.91
Total interest-bearing liabilities		1,330,803		2,562	0.77			1,517,034		3,194	0.84
Demand deposits		114,755						131,212
Other liabilities		4,750						4,947
Total liabilities		1,450,308						1,653,193
Stockholders’ equity		124,354						141,668
Total liabilities and stockholders’ equity	$	1,574,662					$	1,794,861
Net interest income			$	12,329					$	13,834

Weighted average spread					3.09	%					3.03	%

Net interest margin (6)					3.20	%					3.14	%

Average interest-earning assets to average interest-bearing liabilities (7)					115.87	%					116.13	%

* Annualized

(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:
Robert A. Bogart, 
Vice President & Treasurer 
(781) 783-1744

Hingham Savings Announces 18% Increase in Earnings per Share, 15% Return on Equity

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