Hingham Savings Reports 2021 Results
Earnings
Net income for the year ended
Core net income for the year ended
Net income for the quarter ended
Core net income for the quarter ended
In calculating core net income, the Bank has not traditionally made any adjustments other than those relating to after-tax gains and losses on securities, both realized and unrealized. However, net income for the year ended
Balance Sheet
Total assets increased to
Net loans totaled
Total deposits, including wholesale deposits, increased to
Book value per share was
Operational Performance Metrics
The net interest margin for the year ended
Key credit and operational metrics remained satisfactory in the fourth quarter. At
At
The Bank recorded
The efficiency ratio, as defined on page 4 below, fell to 21.31% in 2021, as compared to 25.48% in 2020. Operating expenses as a percentage of average assets fell to 0.74% in 2021, as compared to 0.82% in 2020. The Bank remains focused on reducing waste through an ongoing process of continuous improvement.
Chairman and Chief Executive Officer
The Bank’s annual financial results are summarized in the earnings release, but shareholders are encouraged to read the Bank’s annual report on Form 10-K, which is generally available several weeks after the earnings release. The Bank expects to file Form 10-K for the year ended
Incorporated in 1834, Hingham Institution for Savings (HIFS) is one of America’s oldest banks. The Bank maintains offices in
The Bank’s shares of common stock are listed and traded on The NASDAQ Stock Market under the symbol HIFS.
HINGHAM INSTITUTION FOR SAVINGS (HIFS)
Selected Financial Ratios
Three Months Ended | Twelve Months Ended | ||||||||||
2020 | 2021 | 2020 | 2021 | ||||||||
(Unaudited) | |||||||||||
Key Performance Ratios | |||||||||||
Return on average assets (1) | 2.46 | % | 2.05 | % | 1.88 | % | 2.25 | % | |||
Return on average equity (1) | 23.83 | 19.14 | 18.96 | 20.62 | |||||||
Core return on average assets (1) (5) | 1.85 | 1.85 | 1.65 | 1.89 | |||||||
Core return on average equity (1) (5) | 17.89 | 17.26 | 16.60 | 17.29 | |||||||
Interest rate spread (1) (2) | 3.31 | 3.39 | 3.03 | 3.40 | |||||||
Net interest margin (1) (3) | 3.43 | 3.46 | 3.22 | 3.48 | |||||||
Operating expenses to average assets (1) | 0.80 | 0.71 | 0.82 | 0.74 | |||||||
Efficiency ratio (4) | 23.57 | 20.62 | 25.48 | 21.31 | |||||||
Average equity to average assets | 10.34 | 10.73 | 9.93 | 10.93 | |||||||
Average interest-earning assets to average interest-bearing liabilities | 125.62 | 127.01 | 123.64 | 127.22 | |||||||
December 31, 2020 | |||||||||||
(Unaudited) | |||||||||||
Asset Quality Ratios | |||||||||||
Allowance for loan losses/total loans | 0.69 | % | 0.68 | % | |||||||
Allowance for loan losses/non-performing loans | 438.28 | 4,784.78 | |||||||||
Non-performing loans/total loans | 0.16 | 0.01 | |||||||||
Non-performing loans/total assets | 0.14 | 0.01 | |||||||||
Non-performing assets/total assets | 0.27 | 0.01 | |||||||||
Share Related | |||||||||||
Book value per share | $ | 137.02 | $ | 165.52 | |||||||
Market value per share | $ | 216.00 | $ | 419.88 | |||||||
Shares outstanding at end of period | 2,137,900 | 2,142,400 |
(1) Annualized for the three months ended
(2) Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.
(4) The efficiency ratio represents total operating expenses, divided by the sum of net interest income and total other income, excluding gain on equity securities, net and gain on disposal of fixed assets. Prior to the first quarter of 2021, the Bank’s calculation of the efficiency ratio included gains on disposal of fixed assets. This had the impact of slightly improving the efficiency ratio in periods in which the Bank recognized gains on the sale of former branch locations. The Bank believes it is more conservative to exclude such transactions. The efficiency ratio for the twelve months ended
(5) Non-GAAP measurements that represent return on average assets and return on average equity, excluding the after-tax gain on equity securities, net, and the after-tax gain on disposal of fixed assets. Core return on average assets and core return on average equity for twelve months ended
HINGHAM INSTITUTION FOR SAVINGS
Consolidated Balance Sheets
(In thousands, except share amounts) | 2020 | 2021 | ||||
(Unaudited) | ||||||
ASSETS | ||||||
Cash and due from banks | $ | 6,798 | $ | 5,428 | ||
Federal Reserve and other short-term investments | 227,188 | 265,733 | ||||
Cash and cash equivalents | 233,986 | 271,161 | ||||
CRA investment | 9,580 | 9,306 | ||||
Other marketable equity securities | 56,282 | 79,167 | ||||
Securities, at fair value | 65,862 | 88,473 | ||||
Securities available for sale, at fair value | 6 | — | ||||
Securities held to maturity, at amortized cost | — | 3,500 | ||||
Federal Home Loan Bank stock, at cost | 19,345 | 29,908 | ||||
Loans, net of allowance for loan losses of | 2,495,331 | 2,999,096 | ||||
Foreclosed assets | 3,826 | — | ||||
Bank-owned life insurance | 12,657 | 12,980 | ||||
Premises and equipment, net | 15,248 | 15,825 | ||||
Accrued interest receivable | 5,267 | 5,467 | ||||
Deferred income tax asset, net | 763 | — | ||||
Other assets | 4,802 | 4,755 | ||||
Total assets | $ | 2,857,093 | $ | 3,431,165 |
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits | $ | 1,825,700 | $ | 2,003,717 | ||
Non-interest-bearing deposits | 313,497 | 389,148 | ||||
Total deposits | 2,139,197 | 2,392,865 | ||||
Federal Home Loan Bank advances | 408,031 | 665,000 | ||||
Mortgagors’ escrow accounts | 8,770 | 9,183 | ||||
Accrued interest payable | 252 | 198 | ||||
Deferred income tax liability, net | — | 536 | ||||
Other liabilities | 7,900 | 8,771 | ||||
Total liabilities | 2,564,150 | 3,076,553 | ||||
Stockholders’ equity: | ||||||
Preferred stock, | — | — | ||||
Common stock, | 2,138 | 2,142 | ||||
Additional paid-in capital | 12,460 | 12,728 | ||||
Undivided profits | 278,345 | 339,742 | ||||
Total stockholders’ equity | 292,943 | 354,612 | ||||
Total liabilities and stockholders’ equity | $ | 2,857,093 | $ | 3,431,165 |
HINGHAM INSTITUTION FOR SAVINGS (HIFS)
Consolidated Statements of Net Income
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
(In thousands, except per share amounts) | 2020 | 2021 | 2020 | 2021 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Interest and dividend income: | ||||||||||||||||||||
Loans | $ | 26,038 | $ | 29,182 | $ | 103,797 | $ | 109,449 | ||||||||||||
Debt securities | — | 33 | — | 84 | ||||||||||||||||
Equity securities | 264 | 134 | 1,666 | 696 | ||||||||||||||||
Federal Reserve and other short-term investments | 55 | 78 | 899 | 262 | ||||||||||||||||
Total interest and dividend income | 26,357 | 29,427 | 106,362 | 110,491 | ||||||||||||||||
Interest expense: | ||||||||||||||||||||
Deposits | 2,568 | 1,518 | 16,186 | 6,868 | ||||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank advances | 513 | 300 | 4,969 | 1,158 | ||||||||||||||||
Mortgage payable | — | — | 3 | — | ||||||||||||||||
Total interest expense | 3,081 | 1,818 | 21,158 | 8,026 | ||||||||||||||||
Net interest income | 23,276 | 27,609 | 85,204 | 102,465 | ||||||||||||||||
Provision for loan losses | 175 | 1,200 | 2,288 | 3,028 | ||||||||||||||||
Net interest income, after provision for loan losses | 23,101 | 26,409 | 82,916 | 99,437 | ||||||||||||||||
Other income: | ||||||||||||||||||||
Customer service fees on deposits | 177 | 192 | 678 | 746 | ||||||||||||||||
Increase in cash surrender value of bank-owned life insurance | 51 | 79 | 219 | 323 | ||||||||||||||||
Gain on equity securities, net | 5,453 | 2,105 | 7,916 | 11,820 | ||||||||||||||||
Gain on disposal of fixed assets | — | — | 218 | 2,337 | ||||||||||||||||
Miscellaneous | 47 | 22 | 161 | 82 | ||||||||||||||||
Total other income | 5,728 | 2,398 | 9,192 | 15,308 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Salaries and employee benefits | 3,278 | 3,566 | 13,155 | 13,988 | ||||||||||||||||
Occupancy and equipment | 422 | 368 | 1,854 | 1,450 | ||||||||||||||||
Data processing | 443 | 571 | 1,909 | 2,003 | ||||||||||||||||
Deposit insurance | 211 | 252 | 860 | 933 | ||||||||||||||||
Foreclosure and related | 207 | 2 | 528 | (49 | ) | |||||||||||||||
Marketing | 145 | 140 | 545 | 563 | ||||||||||||||||
Other general and administrative | 846 | 855 | 3,127 | 3,188 | ||||||||||||||||
Total operating expenses | 5,552 | 5,754 | 21,978 | 22,076 | ||||||||||||||||
Income before income taxes | 23,277 | 23,053 | 70,130 | 92,669 | ||||||||||||||||
Income tax provision | 6,235 | 6,379 | 19,359 | 25,211 | ||||||||||||||||
Net income | $ | 17,042 | $ | 16,674 | $ | 50,771 | $ | 67,458 | ||||||||||||
Cash dividends declared per share | $ | 1.17 | $ | 1.30 | $ | 2.47 | $ | 2.83 | ||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||
Basic | 2,137 | 2,142 | 2,137 | 2,141 | ||||||||||||||||
Diluted | 2,189 | 2,206 | 2,183 | 2,201 | ||||||||||||||||
Earnings per share: | ||||||||||||||||||||
Basic | $ | 7.97 | $ | 7.78 | $ | 23.76 | $ | 31.50 | ||||||||||||
Diluted | $ | 7.78 | $ | 7.56 | $ | 23.25 | $ | 30.65 |
HINGHAM INSTITUTION FOR SAVINGS (HIFS)
Net Interest Income Analysis
Three Months Ended | |||||||||||||||||
2020 | 2021 | ||||||||||||||||
AVERAGE BALANCE | INTEREST | YIELD/ RATE (8) | AVERAGE BALANCE | INTEREST | YIELD/ RATE (8) | ||||||||||||
(Dollars in thousands) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Loans (1) (2) | $ | 2,440,571 | $ | 26,038 | 4.27 | % | $ | 2,908,433 | $ | 29,182 | 4.01 | % | |||||
Securities (3) (4) | 62,966 | 264 | 1.68 | 82,113 | 167 | 0.81 | |||||||||||
Federal Reserve and other short-term investments | 214,403 | 55 | 0.10 | 204,815 | 78 | 0.15 | |||||||||||
Total interest-earning assets | 2,717,940 | 26,357 | 3.88 | 3,195,361 | 29,427 | 3.68 | |||||||||||
Other assets | 48,848 | 52,128 | |||||||||||||||
Total assets | $ | 2,766,788 | $ | 3,247,489 | |||||||||||||
Interest-bearing deposits (5) | $ | 1,843,689 | 2,568 | 0.56 | $ | 2,087,523 | 1,518 | 0.29 | |||||||||
Borrowed funds | 319,931 | 513 | 0.64 | 428,315 | 300 | 0.28 | |||||||||||
Total interest-bearing liabilities | 2,163,620 | 3,081 | 0.57 | 2,515,838 | 1,818 | 0.29 | |||||||||||
Non-interest-bearing deposits | 309,975 | 375,139 | |||||||||||||||
Other liabilities | 7,153 | 8,022 | |||||||||||||||
Total liabilities | 2,480,748 | 2,898,999 | |||||||||||||||
Stockholders’ equity | 286,040 | 348,490 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,766,788 | $ | 3,247,489 | |||||||||||||
Net interest income | $ | 23,276 | $ | 27,609 | |||||||||||||
Weighted average spread | 3.31 | % | 3.39 | % | |||||||||||||
Net interest margin (6) | 3.43 | % | 3.46 | % | |||||||||||||
Average interest-earning assets to average interest-bearing liabilities (7) | 125.62 | % | 127.01 | % |
(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. |
(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. |
(8 | ) | Annualized. |
HINGHAM INSTITUTION FOR SAVINGS (HIFS)
Net Interest Income Analysis
Twelve Months Ended | |||||||||||||||||
2020 | 2021 | ||||||||||||||||
AVERAGE BALANCE | INTEREST | YIELD/ RATE | AVERAGE BALANCE | INTEREST | YIELD/ RATE | ||||||||||||
(Dollars in thousands) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Loans (1) (2) | $ | 2,370,869 | $ | 103,797 | 4.38 | % | $ | 2,667,812 | $ | 109,449 | 4.10 | % | |||||
Securities (3) (4) | 65,318 | 1,666 | 2.55 | 70,419 | 780 | 1.11 | |||||||||||
Federal Reserve and other short-term investments | 212,490 | 899 | 0.42 | 204,500 | 262 | 0.13 | |||||||||||
Total interest-earning assets | 2,648,677 | 106,362 | 4.02 | 2,942,731 | 110,491 | 3.75 | |||||||||||
Other assets | 46,986 | 51,635 | |||||||||||||||
Total assets | $ | 2,695,663 | $ | 2,994,366 | |||||||||||||
Interest-bearing deposits (5) | $ | 1,677,107 | 16,186 | 0.97 | $ | 1,993,863 | 6,868 | 0.34 | |||||||||
Borrowed funds | 465,161 | 4,972 | 1.07 | 319,193 | 1,158 | 0.36 | |||||||||||
Total interest-bearing liabilities | 2,142,268 | 21,158 | 0.99 | 2,313,056 | 8,026 | 0.35 | |||||||||||
Non-interest-bearing deposits | 277,924 | 346,992 | |||||||||||||||
Other liabilities | 7,748 | 7,147 | |||||||||||||||
Total liabilities | 2,427,940 | 2,667,195 | |||||||||||||||
Stockholders’ equity | 267,723 | 327,171 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,695,663 | $ | 2,994,366 | |||||||||||||
Net interest income | $ | 85,204 | $ | 102,465 | |||||||||||||
Weighted average spread | 3.03 | % | 3.40 | % | |||||||||||||
Net interest margin (6) | 3.22 | % | 3.48 | % | |||||||||||||
Average interest-earning assets to average interest-bearing liabilities (7) | 123.64 | % | 127.22 | % |
(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. |
(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. |
Non-GAAP Reconciliation
The table below presents the reconciliation between net income and core net income, a non-GAAP measurement that represents net income excluding the after-tax gain on equity securities, net, and after-tax gain on disposal of fixed assets.
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
(In thousands, unaudited) | 2020 | 2021 | 2020 | 2021 | ||||||||||||||||||
Non-GAAP reconciliation: | ||||||||||||||||||||||
Net income | $ | 17,042 | $ | 16,674 | $ | 50,771 | $ | 67,458 | ||||||||||||||
Gain on equity securities, net | (5,453 | ) | (2,105 | ) | (7,916 | ) | (11,820 | ) | ||||||||||||||
Income tax expense (1) | 1,202 | 464 | 1,745 | 2,605 | ||||||||||||||||||
Gain on disposal of fixed assets | — | — | (218 | ) | (2,337 | ) | ||||||||||||||||
Income tax expense | — | — | 61 | 657 | ||||||||||||||||||
Core net income | $ | 12,791 | $ | 15,033 | $ | 44,443 | $ | 56,563 |
(1) The equity securities are held in a tax-advantaged subsidiary corporation. The income tax effect of the gain on equity securities, net, was calculated using the effective tax rate applicable to the subsidiary.
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Source: Hingham Institution for Savings (HIFS)