Hingham Savings Reports 2020 Results
HINGHAM INSTITUTION FOR SAVINGS (NASDAQ: HIFS) reported strong earnings for 2020, with net income of $50.77 million ($23.25 per diluted share), up from $38.93 million ($17.83 per diluted share) in 2019. Core net income also increased to $44.6 million ($20.43 per diluted share), a 35% rise. The bank achieved a return on average equity of 18.96% and a net interest margin of 3.22%. Total assets grew by 10% to $2.86 billion, while total deposits surged 17% to $2.14 billion. The efficiency ratio improved to 25.41%, indicating better cost management.
- Net income for 2020 increased by 30% year-over-year.
- Core net income rose 35% compared to 2019.
- Total assets grew by 10% to $2.857 billion.
- Total deposits increased by 17% to $2.139 billion.
- The efficiency ratio improved to 25.41%.
- Non-performing assets increased to 0.27% of total assets.
- Net charge-offs rose to $260,000 from $1,000 in 2019.
HINGHAM, Mass., Jan. 19, 2021 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ: HIFS), Hingham, Massachusetts announced earnings for the fourth quarter and the year ended December 31, 2020.
Earnings
Net income for the year ended December 31, 2020 was
Core net income for the year ended December 31, 2020, which represents net income excluding the after-tax gains and losses on securities, both realized and unrealized, was
Net income for the quarter ended December 31, 2020 was
Core net income for the quarter ended December 31, 2020, which represents net income excluding the after-tax gains and losses on securities, both realized and unrealized, was
See page 9 for a Non-GAAP reconciliation between net income and core net income. In calculating core net income, the Bank does not make any adjustments other than those relating to after-tax gains and losses on securities, realized and unrealized.
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 December 31, 2020 increased 50 basis points to
Key credit and operational metrics remained strong in the fourth quarter. At December 31, 2020, non-performing assets totaled
At December 31, 2020, the Bank owned
The Bank recorded
The efficiency ratio, as defined on page 4 below, fell to
Chairman and Chief Executive Officer Robert H. Gaughen Jr. stated, “Returns on equity and assets were satisfactory in 2020, although performance in any one period should always be viewed cautiously, especially when tailwinds are blowing strongly in our favor. These tailwinds will not blow forever and we must be prepared for environments in which headwinds prevail. In doing so, we remain focused on careful capital allocation, defensive underwriting and disciplined cost control - the building blocks for compounding shareholder capital through all stages of the economic cycle. These remain constant, regardless of the macroeconomic environment in which we operate.”
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 December 31, 2020 with the Federal Deposit Insurance Corporation (FDIC) on or about March 3, 2021.
Incorporated in 1834, Hingham Institution for Savings is one of America’s oldest banks. The Bank maintains offices in Boston, Nantucket, and Washington, D.C.
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 December 31, | Twelve Months Ended December 31, | ||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||
(Unaudited) | |||||||||||
Key Performance Ratios | |||||||||||
Return on average assets (1) | 1.81 | % | 2.46 | % | 1.55 | % | 1.88 | % | |||
Return on average equity (1) | 18.64 | 23.83 | 16.82 | 18.96 | |||||||
Core return on average assets (1) (5) | 1.40 | 1.85 | 1.32 | 1.65 | |||||||
Core return on average equity (1) (5) | 14.46 | 17.89 | 14.26 | 16.66 | |||||||
Interest rate spread (1) (2) | 2.45 | 3.31 | 2.38 | 3.03 | |||||||
Net interest margin (1) (3) | 2.79 | 3.43 | 2.72 | 3.22 | |||||||
Operating expenses to average assets (1) | 0.81 | 0.80 | 0.82 | 0.82 | |||||||
Efficiency ratio (4) | 29.00 | 23.57 | 30.26 | 25.41 | |||||||
Average equity to average assets | 9.70 | 10.34 | 9.24 | 9.93 | |||||||
Average interest-earning assets to average interest- | |||||||||||
bearing liabilities | 122.02 | 125.62 | 120.74 | 123.64 | |||||||
December 31, 2019 | December 31, 2020 | ||||||
(Unaudited) | |||||||
Asset Quality Ratios | |||||||
Allowance for loan losses/total loans | 0.69 | % | 0.69 | % | |||
Allowance for loan losses/non-performing loans | 274.57 | 438.28 | |||||
Non-performing loans/total loans | 0.25 | 0.16 | |||||
Non-performing loans/total assets | 0.22 | 0.14 | |||||
Non-performing assets/total assets | 0.22 | 0.27 | |||||
Share Related | |||||||
Book value per share | $ | 115.75 | $ | 137.02 | |||
Market value per share | $ | 210.20 | $ | 216.00 | |||
Shares outstanding at end of period | 2,135,750 | 2,137,900 |
(1) | Annualized for the three months ended December 31, 2019 and 2020. |
(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. |
(5) | Non-GAAP measurements that represent return on average assets and return on average equity, excluding the after-tax gain on equity securities, net. |
HINGHAM INSTITUTION FOR SAVINGS
Consolidated Balance Sheets
(In thousands, except share amounts) | December 31, 2019 | December 31, 2020 | |||||
(Unaudited) | |||||||
ASSETS | |||||||
Cash and due from banks | $ | 9,057 | $ | 6,798 | |||
Federal Reserve and other short-term investments | 243,090 | 227,188 | |||||
Cash and cash equivalents | 252,147 | 233,986 | |||||
CRA investment | 7,910 | 9,580 | |||||
Debt securities available for sale | 11 | 6 | |||||
Other marketable equity securities | 39,265 | 56,282 | |||||
Securities, at fair value | 47,186 | 65,868 | |||||
Federal Home Loan Bank stock, at cost | 24,890 | 19,345 | |||||
Loans, net of allowance for loan losses of | |||||||
2019 and | 2,227,062 | 2,495,331 | |||||
Foreclosed assets | — | 3,826 | |||||
Bank-owned life insurance | 12,727 | 12,657 | |||||
Premises and equipment, net | 14,548 | 15,248 | |||||
Accrued interest receivable | 4,926 | 5,267 | |||||
Deferred income tax asset, net | 1,213 | 763 | |||||
Other assets | 5,647 | 4,802 | |||||
Total assets | $ | 2,590,346 | $ | 2,857,093 |
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits | $ | 1,583,280 | $ | 1,825,700 | ||
Non-interest-bearing deposits | 237,554 | 313,497 | ||||
Total deposits | 1,820,834 | 2,139,197 | ||||
Federal Home Loan Bank advances | 505,200 | 408,031 | ||||
Mortgage payable | 687 | — | ||||
Mortgagors’ escrow accounts | 7,815 | 8,770 | ||||
Accrued interest payable | 960 | 252 | ||||
Other liabilities | 7,627 | 7,900 | ||||
Total liabilities | 2,343,123 | 2,564,150 | ||||
Stockholders’ equity: | ||||||
Preferred stock, | ||||||
2,500,000 shares authorized, none issued | — | — | ||||
Common stock, | ||||||
2,135,750 shares issued and outstanding at December 31, | ||||||
2019 and 2,137,900 shares issued and outstanding at | ||||||
December 31, 2020 | 2,136 | 2,138 | ||||
Additional paid-in capital | 12,234 | 12,460 | ||||
Undivided profits | 232,853 | 278,345 | ||||
Accumulated other comprehensive income | — | — | ||||
Total stockholders’ equity | 247,223 | 292,943 | ||||
Total liabilities and stockholders’ equity | $ | 2,590,346 | $ | 2,857,093 |
HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income
Three Months Ended | Twelve Months Ended | ||||||||||||
December 31, | December 31, | ||||||||||||
(In thousands, except per share amounts) | 2019 | 2020 | 2019 | 2020 | |||||||||
(Unaudited) | |||||||||||||
Interest and dividend income: | |||||||||||||
Loans | $ | 25,330 | $ | 26,038 | $ | 99,379 | $ | 103,797 | |||||
Debt securities | 1 | — | 1 | — | |||||||||
Equity securities | 493 | 264 | 1,996 | 1,666 | |||||||||
Federal Reserve and other short-term investments | 860 | 55 | 5,576 | 899 | |||||||||
Total interest and dividend income | 26,684 | 26,357 | 106,952 | 106,362 | |||||||||
Interest expense: | |||||||||||||
Deposits | 6,014 | 2,568 | 26,819 | 16,186 | |||||||||
Federal Home Loan Bank and Federal Reserve Bank advances | 3,422 | 513 | 13,188 | 4,969 | |||||||||
Mortgage payable | 10 | — | 43 | 3 | |||||||||
Total interest expense | 9,446 | 3,081 | 40,050 | 21,158 | |||||||||
Net interest income | 17,238 | 23,276 | 66,902 | 85,204 | |||||||||
Provision for loan losses | 285 | 175 | 1,567 | 2,288 | |||||||||
Net interest income, after provision for loan losses | 16,953 | 23,101 | 65,335 | 82,916 | |||||||||
Other income: | |||||||||||||
Customer service fees on deposits | 205 | 177 | 803 | 678 | |||||||||
Increase in cash surrender value of bank-owned life insurance | 66 | 51 | 251 | 219 | |||||||||
Gain on equity securities, net | 3,271 | 5,453 | 7,608 | 7,916 | |||||||||
Gain on disposal of fixed assets | — | — | — | 218 | |||||||||
Miscellaneous | 41 | 47 | 166 | 161 | |||||||||
Total other income | 3,583 | 5,728 | 8,828 | 9,192 | |||||||||
Operating expenses: | |||||||||||||
Salaries and employee benefits | 3,212 | 3,278 | 12,826 | 13,155 | |||||||||
Occupancy and equipment | 459 | 422 | 1,813 | 1,854 | |||||||||
Data processing | 432 | 443 | 1,586 | 1,909 | |||||||||
Deposit insurance | 4 | 211 | 534 | 860 | |||||||||
Foreclosure and related | 16 | 207 | 117 | 528 | |||||||||
Marketing | 198 | 145 | 695 | 545 | |||||||||
Other general and administrative | 768 | 846 | 3,044 | 3,127 | |||||||||
Total operating expenses | 5,089 | 5,552 | 20,615 | 21,978 | |||||||||
Income before income taxes | 15,447 | 23,277 | 53,548 | 70,130 | |||||||||
Income tax provision | 4,083 | 6,235 | 14,621 | 19,359 | |||||||||
Net income | $ | 11,364 | $ | 17,042 | $ | 38,927 | $ | 50,771 | |||||
Cash dividends declared per share | $ | 1.01 | $ | 1.17 | $ | 2.18 | $ | 2.47 | |||||
Weighted average shares outstanding: | |||||||||||||
Basic | 2,134 | 2,137 | 2,134 | 2,137 | |||||||||
Diluted | 2,183 | 2,189 | 2,183 | 2,183 | |||||||||
Earnings per share: | |||||||||||||
Basic | $ | 5.32 | $ | 7.97 | $ | 18.24 | $ | 23.76 | |||||
Diluted | $ | 5.20 | $ | 7.78 | $ | 17.83 | $ | 23.25 |
HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis
Three Months Ended December 31, | |||||||||||||||||
2019 | 2020 | ||||||||||||||||
AVERAGE BALANCE | INTEREST | YIELD/ RATE (8) | AVERAGE BALANCE | INTEREST | YIELD/ RATE (8) | ||||||||||||
(Dollars in thousands) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Loans (1) (2) | $ | 2,198,689 | $ | 25,330 | 4.61 | % | $ | 2,440,571 | $ | 26,038 | 4.27 | % | |||||
Securities (3) (4) | 62,938 | 494 | 3.14 | 62,966 | 264 | 1.68 | |||||||||||
Federal Reserve and other short-term investments | 208,197 | 860 | 1.65 | 214,403 | 55 | 0.10 | |||||||||||
Total interest-earning assets | 2,469,824 | 26,684 | 4.32 | 2,717,940 | 26,357 | 3.88 | |||||||||||
Other assets | 42,766 | 48,848 | |||||||||||||||
Total assets | $ | 2,512,590 | $ | 2,766,788 | |||||||||||||
Interest-bearing deposits (5) | $ | 1,425,114 | 6,014 | 1.69 | $ | 1,843,689 | 2,568 | 0.56 | |||||||||
Borrowed funds | 599,025 | 3,432 | 2.29 | 319,931 | 513 | 0.64 | |||||||||||
Total interest-bearing liabilities | 2,024,139 | 9,446 | 1.87 | 2,163,620 | 3,081 | 0.57 | |||||||||||
Non-interest-bearing deposits | 237,039 | 309,975 | |||||||||||||||
Other liabilities | 7,594 | 7,153 | |||||||||||||||
Total liabilities | 2,268,772 | 2,480,748 | |||||||||||||||
Stockholders’ equity | 243,818 | 286,040 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,512,590 | $ | 2,766,788 | |||||||||||||
Net interest income | $ | 17,238 | $ | 23,276 | |||||||||||||
Weighted average spread | 2.45 | % | 3.31 | % | |||||||||||||
Net interest margin (6) | 2.79 | % | 3.43 | % | |||||||||||||
Average interest-earning assets to average | |||||||||||||||||
interest-bearing liabilities (7) | 122.02 | % | 125.62 | % |
(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
Net Interest Income Analysis
Twelve Months Ended December 31, | |||||||||||||||||
2019 | 2020 | ||||||||||||||||
AVERAGE BALANCE | INTEREST | YIELD/ RATE | AVERAGE BALANCE | INTEREST | YIELD/ RATE | ||||||||||||
(Dollars in thousands) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Loans (1) (2) | $ | 2,150,445 | $ | 99,379 | 4.62 | % | $ | 2,370,869 | $ | 103,797 | 4.38 | % | |||||
Securities (3) (4) | 58,585 | 1,997 | 3.41 | 65,318 | 1,666 | 2.55 | |||||||||||
Federal Reserve and other short-term investments | 255,082 | 5,576 | 2.19 | 212,490 | 899 | 0.42 | |||||||||||
Total interest-earning assets | 2,464,112 | 106,952 | 4.34 | 2,648,677 | 106,362 | 4.02 | |||||||||||
Other assets | 41,806 | 46,986 | |||||||||||||||
Total assets | $ | 2,505,918 | $ | 2,695,663 | |||||||||||||
Interest-bearing deposits (5) | $ | 1,517,625 | 26,819 | 1.77 | $ | 1,677,107 | 16,186 | 0.97 | |||||||||
Borrowed funds | 523,235 | 13,231 | 2.53 | 465,161 | 4,972 | 1.07 | |||||||||||
Total interest-bearing liabilities | 2,040,860 | 40,050 | 1.96 | 2,142,268 | 21,158 | 0.99 | |||||||||||
Non-interest-bearing deposits | 225,999 | 277,924 | |||||||||||||||
Other liabilities | 7,619 | 7,748 | |||||||||||||||
Total liabilities | 2,274,478 | 2,427,940 | |||||||||||||||
Stockholders’ equity | 231,440 | 267,723 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,505,918 | $ | 2,695,663 | |||||||||||||
Net interest income | $ | 66,902 | $ | 85,204 | |||||||||||||
Weighted average spread | 2.38 | % | 3.03 | % | |||||||||||||
Net interest margin (6) | 2.72 | % | 3.22 | % | |||||||||||||
Average interest-earning assets to average | |||||||||||||||||
interest-bearing liabilities (7) | 120.74 | % | 123.64 | % |
(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. |
HINGHAM INSTITUTION FOR SAVINGS
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.
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
(In thousands, unaudited) | 2019 | 2020 | 2019 | 2020 | ||||||||||||||||
Non-GAAP reconciliation: | ||||||||||||||||||||
Net income | $ | 11,364 | $ | 17,042 | $ | 38,927 | $ | 50,771 | ||||||||||||
Gain on equity securities, net | (3,271 | ) | (5,453 | ) | (7,608 | ) | (7,916 | ) | ||||||||||||
Income tax expense (1) | 721 | 1,202 | 1,677 | 1,745 | ||||||||||||||||
Core net income | $ | 8,814 | $ | 12,791 | $ | 32,996 | $ | 44,600 |
(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. |
COVID-19 Modifications Table
The table below presents the number and outstanding balances of loans that the Bank has modified as a result of COVID-19 compared as a percentage of the total number and outstanding balances of the Bank's loan portfolio as of December 31, 2020, by loan category. This table reflects all modifications in effect as of December 31, 2020 and as loans return to the original contractual terms, they are no longer reflected on this table.
Outstanding | Modified | % Modified | ||||||||||||||||
# of Loans | Balance (2) | # of Loans | Balance | # of Loans | Balance | |||||||||||||
(Balances in thousands, unaudited) | ||||||||||||||||||
Residential Real Estate (1) | 2,392 | $ | 656,220 | 5 | $ | 1,394 | 0.21 | % | 0.21 | % | ||||||||
Commercial Real Estate | 1,380 | 1,693,215 | 7 | 21,236 | 0.51 | 1.25 | ||||||||||||
Construction | 65 | 153,020 | — | — | — | — | ||||||||||||
Commercial and Consumer | 529 | 7,438 | — | — | — | — | ||||||||||||
Total Loans | 4,366 | $ | 2,509,893 | 12 | $ | 22,630 | 0.27 | % | 0.90 | % |
(1) | Includes Home Equity lines of credit. | |
(2) | Gross loans, before net deferred loan origination costs and the allowance for loan losses. |
CONTACT: Patrick R. Gaughen, President and Chief Operating Officer (781) 783-1761
FAQ
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