Hingham Savings Reports First Quarter 2021 Results
Hingham Institution for Savings (NASDAQ: HIFS) reported significant growth for Q1 2021, posting a net income of $16.35 million, or $7.65 per share, compared to $2.19 million, or $1.02 per share, in Q1 2020. The annualized return on average equity was 21.72%, a rise from 3.46% year-over-year. Core net income also rose by 61% to $13.73 million. Total assets decreased by 2% YTD to $2.84 billion, but net loans grew by 2% and total deposits surged by 25%. The bank continues to manage its funding mix effectively, achieving a net interest margin of 3.54%. Additionally, it declared a 4% increase in its regular quarterly dividend.
- Net income surged 646% year-over-year to $16.35 million.
- Core net income increased 61% to $13.73 million.
- Return on average equity improved to 21.72%.
- Total deposits grew 25% year-to-date.
- Net loans increased by 2% YTD, with a focus on commercial real estate.
- Net interest margin rose to 3.54%.
- Total assets declined by 2% year-to-date.
- The annualized return on average assets decreased to 2.32%.
HINGHAM, Mass., April 14, 2021 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ: HIFS), Hingham, Massachusetts announced results for the quarter ended March 31, 2021.
Earnings
Net income for the quarter ended March 31, 2021 was
Core net income for the quarter ended March 31, 2021, which represents net income excluding the after-tax gains and losses on securities, both realized and unrealized, was
See Page 8 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 and Capital Management
Total assets were
Net loans increased to
Total deposits, including wholesale deposits, increased to
Book value per share was
In March 2021, the Bank declared a regular cash dividend of
The Bank sets the level of the special dividend based on the Bank’s capital requirements and the prospective return on other capital allocation options. This may result in special dividends, if any, significantly above or below the regular quarterly dividend. Future regular and special dividends will be considered by the Board of Directors on a quarterly basis.
The Bank has previously communicated the declaration of the regular dividend via a separate press release. Going forward, the announcement of regular and special dividends, if any, will be communicated along with the quarterly results to simplify our internal process and reduce our costs.
Operational Performance Metrics
The net interest margin for the quarter ended March 31, 2021 increased 72 basis points to
Key credit and operational metrics remained strong in the first quarter. At March 31, 2021, non-performing assets totaled
At March 31, 2021, the Bank did not own any foreclosed property, as compared to
The efficiency ratio fell to
These operational metrics reflect the Bank’s disciplined focus on credit quality and expense management.
Annual Meeting
The Bank will hold its Annual Meeting of Stockholders at 3:00PM EST on Thursday, April 29th, 2021 via Zoom. Although we anticipate that a handful of Bank staff will be present at our Main Office for the business section of the meeting, we do not believe the public health environment will allow the Bank to hold a traditional in-person meeting in 2021. Immediately following the business meeting, the Bank will hold an informal meeting to discuss the results of the prior year and the operations of the Bank, as well as a questions and answers session. We strongly encourage all shareholders to vote by proxy. Electronic voting will not be available. Registration for the meeting is available on the Bank’s Investor Relations website (click here).
Chairman Robert H. Gaughen Jr. stated, “Returns on equity and assets were satisfactory in the first quarter of 2021, 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 quarterly financial results are summarized in this earnings release, but shareholders are encouraged to read the Bank’s quarterly report on Form 10-Q, which is generally available several weeks after the earnings release. The Bank expects to file Form 10-Q for the quarter ended March 31, 2021 with the Federal Deposit Insurance Corporation (FDIC) on or about May 5, 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 March 31, | |||||
2020 | 2021 | ||||
(Unaudited) | |||||
Key Performance Ratios | |||||
Return on average assets (1) | 0.33 | % | 2.32 | % | |
Return on average equity (1) | 3.46 | 21.72 | |||
Core return on average assets (1) (5) | 1.30 | 1.95 | |||
Core return on average equity (1) (5) | 13.44 | 18.23 | |||
Interest rate spread (1) (2) | 2.52 | 3.44 | |||
Net interest margin (1) (3) | 2.82 | 3.54 | |||
Operating expenses to average assets (1) | 0.86 | 0.77 | |||
Efficiency ratio (4) | 30.64 | 22.02 | |||
Average equity to average assets | 9.67 | 10.70 | |||
Average interest-earning assets to average interest bearing liabilities | 121.37 | 126.10 | |||
March 31, 2020 | December 31, 2020 | March 31, 2021 | |||||||||
(Unaudited) | |||||||||||
Asset Quality Ratios | |||||||||||
Allowance for loan losses/total loans | 0.68 | % | 0.69 | % | 0.70 | % | |||||
Allowance for loan losses/non-performing loans | 1,099.51 | 438.28 | 2,870.29 | ||||||||
Non-performing loans/total loans | 0.06 | 0.16 | 0.02 | ||||||||
Non-performing loans/total assets | 0.05 | 0.14 | 0.02 | ||||||||
Non-performing assets/total assets | 0.19 | 0.27 | 0.02 | ||||||||
Share Related | |||||||||||
Book value per share | $ | 116.34 | $ | 137.02 | $ | 144.12 | |||||
Market value per share | $ | 144.99 | $ | 216.00 | $ | 283.76 | |||||
Shares outstanding at end of period | 2,136,750 | 2,137,900 | 2,139,400 | ||||||||
(1) Annualized.
(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 (loss), excluding gain (loss) 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 first quarter of 2020 stated above has been recalculated using this method.
(5) Non-GAAP measurements that represent return on average assets and return on average equity, excluding the after-tax gain (loss) on equity securities, net.
HINGHAM INSTITUTION FOR SAVINGS
Consolidated Balance Sheets
(In thousands, except share amounts) | March 31, 2020 | December 31, 2020 | March 31, 2021 | |||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Cash and due from banks | $ | 7,797 | $ | 6,798 | $ | 6,267 | ||
Federal Reserve and other short-term investments | 203,729 | 227,188 | 208,206 | |||||
Cash and cash equivalents | 211,526 | 233,986 | 214,473 | |||||
CRA investment | 8,532 | 9,580 | 9,412 | |||||
Debt securities available for sale | 10 | 6 | 5 | |||||
Other marketable equity securities | 38,407 | 56,282 | 59,448 | |||||
Securities, at fair value | 46,949 | 65,868 | 68,865 | |||||
Federal Home Loan Bank stock, at cost | 29,868 | 19,345 | 14,185 | |||||
Loans, net of allowance for loan losses of | 2,320,369 | 2,495,331 | 2,507,873 | |||||
Foreclosed assets | 3,600 | 3,826 | — | |||||
Bank-owned life insurance | 12,785 | 12,657 | 12,738 | |||||
Premises and equipment, net | 15,418 | 15,248 | 15,247 | |||||
Accrued interest receivable | 5,183 | 5,267 | 5,109 | |||||
Deferred income tax asset, net | 3,153 | 763 | 203 | |||||
Other assets | 5,720 | 4,802 | 5,421 | |||||
Total assets | $ | 2,654,571 | $ | 2,857,093 | $ | 2,844,114 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Interest-bearing deposits | $ | 1,468,349 | $ | 1,825,700 | $ | 1,946,327 | ||
Non-interest-bearing deposits | 244,546 | 313,497 | 327,279 | |||||
Total deposits | 1,712,895 | 2,139,197 | 2,273,606 | |||||
Federal Home Loan Bank advances | 676,231 | 408,031 | 246,200 | |||||
Mortgagors’ escrow accounts | 7,894 | 8,770 | 9,052 | |||||
Accrued interest payable | 359 | 252 | 154 | |||||
Other liabilities | 8,593 | 7,900 | 6,761 | |||||
Total liabilities | 2,405,972 | 2,564,150 | 2,535,773 | |||||
Stockholders’ equity: | ||||||||
Preferred stock, | — | — | — | |||||
Common stock, | 2,137 | 2,138 | 2,139 | |||||
Additional paid-in capital | 12,322 | 12,460 | 12,556 | |||||
Undivided profits | 234,140 | 278,345 | 293,646 | |||||
Accumulated other comprehensive income | — | — | — | |||||
Total stockholders’ equity | 248,599 | 292,943 | 308,341 | |||||
Total liabilities and stockholders’ equity | $ | 2,654,571 | $ | 2,857,093 | $ | 2,844,114 | ||
HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income
Three Months Ended March 31, | |||||||
(In thousands, except per share amounts) | 2020 | 2021 | |||||
(Unaudited) | |||||||
Interest and dividend income: | |||||||
Loans | $ | 25,710 | $ | 26,749 | |||
Equity securities | 498 | 218 | |||||
Federal Reserve and other short-term investments | 741 | 52 | |||||
Total interest and dividend income | 26,949 | 27,019 | |||||
Interest expense: | |||||||
Deposits | 5,941 | 2,107 | |||||
Federal Home Loan Bank advances | 2,947 | 444 | |||||
Mortgage payable | 3 | — | |||||
Total interest expense | 8,891 | 2,551 | |||||
Net interest income | 18,058 | 24,468 | |||||
Provision for loan losses | 1,138 | 278 | |||||
Net interest income, after provision for loan losses | 16,920 | 24,190 | |||||
Other income (loss): | |||||||
Customer service fees on deposits | 172 | 181 | |||||
Increase in cash surrender value of bank-owned life insurance | 58 | 81 | |||||
Gain (loss) on equity securities, net | (8,074 | ) | 3,367 | ||||
Gain on disposal of fixed assets | 218 | — | |||||
Miscellaneous | 53 | 15 | |||||
Total other income (loss) | (7,573 | ) | 3,644 | ||||
Operating expenses: | |||||||
Salaries and employee benefits | 3,380 | 3,526 | |||||
Occupancy and equipment | 455 | 406 | |||||
Data processing | 489 | 461 | |||||
Deposit insurance | 183 | 223 | |||||
Foreclosure and related | 126 | (82 | ) | ||||
Marketing | 180 | 124 | |||||
Other general and administrative | 807 | 792 | |||||
Total operating expenses | 5,620 | 5,450 | |||||
Income before income taxes | 3,727 | 22,384 | |||||
Income tax provision | 1,542 | 6,034 | |||||
Net income | $ | 2,185 | $ | 16,350 | |||
Cash dividends declared per common share | $ | 0.42 | $ | 0.49 | |||
Weighted average shares outstanding: | |||||||
Basic | 2,136 | 2,138 | |||||
Diluted | 2,184 | 2,195 | |||||
Earnings per share: | |||||||
Basic | $ | 1.02 | $ | 7.65 | |||
Diluted | $ | 1.00 | $ | 7.45 | |||
HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis
Three Months Ended March 31, | |||||||||||||||||
2020 | 2021 | ||||||||||||||||
AVERAGE BALANCE | INTEREST | YIELD/ RATE (8) | AVERAGE BALANCE | INTEREST | YIELD/ RATE (8) | ||||||||||||
(Dollars in thousands) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Loans (1) (2) | $ | 2,271,019 | $ | 25,710 | 4.53 | % | $ | 2,497,119 | $ | 26,749 | 4.28 | % | |||||
Securities (3) (4) | 65,302 | 498 | 3.05 | 63,927 | 218 | 1.36 | |||||||||||
Federal Reserve and other short-term investments | 228,170 | 741 | 1.30 | 204,887 | 52 | 0.10 | |||||||||||
Total interest-earning assets | 2,564,491 | 26,949 | 4.20 | 2,765,933 | 27,019 | 3.91 | |||||||||||
Other assets | 46,536 | 47,705 | |||||||||||||||
Total assets | $ | 2,611,027 | $ | 2,813,638 | |||||||||||||
Interest-bearing deposits (5) | $ | 1,513,343 | 5,941 | 1.57 | $ | 1,882,830 | 2,107 | 0.45 | |||||||||
Borrowed funds | 599,659 | 2,950 | 1.97 | 310,683 | 444 | 0.57 | |||||||||||
Total interest-bearing liabilities | 2,113,002 | 8,891 | 1.68 | 2,193,513 | 2,551 | 0.47 | |||||||||||
Non-interest-bearing deposits | 238,005 | 311,800 | |||||||||||||||
Other liabilities | 7,589 | 7,246 | |||||||||||||||
Total liabilities | 2,358,596 | 2,512,559 | |||||||||||||||
Stockholders’ equity | 252,431 | 301,079 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,611,027 | $ | 2,813,638 | |||||||||||||
Net interest income | $ | 18,058 | $ | 24,468 | |||||||||||||
Weighted average spread | 2.52 | % | 3.44 | % | |||||||||||||
Net interest margin (6) | 2.82 | % | 3.54 | % | |||||||||||||
Average interest-earning assets to average interest-bearing liabilities (7) | 121.37 | % | 126.10 | % | |||||||||||||
(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
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 (loss) on equity securities, net.
Three Months Ended March 31, | |||||||
(In thousands, unaudited) | 2020 | 2021 | |||||
Non-GAAP reconciliation: | |||||||
Net Income | $ | 2,185 | $ | 16,350 | |||
(Gain) loss on equity securities, net | 8,074 | (3,367 | ) | ||||
Income tax expense (benefit) (1) | (1,780 | ) | 742 | ||||
Core Net Income | $ | 8,479 | $ | 13,725 | |||
(1) The equity securities are held in a tax-advantaged subsidiary corporation. The income tax effect of the (gain) loss on equity securities, net, was calculated using the effective tax rate applicable to the subsidiary.
CONTACT: | Patrick R. Gaughen, President and Chief Operating Officer (781) 783-1761 | |
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