Hingham Savings Reports Third Quarter 2020 Results

Nachrichtenquelle: globenewswire
13.10.2020, 22:01  |  117   |   |   

HINGHAM, Mass., Oct. 13, 2020 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ: HIFS), Hingham, Massachusetts announced third quarter results for 2020.

Earnings

Net income for the quarter ended September 30, 2020 was $15,206,000 or $7.12 per share basic and $6.96 per share diluted, as compared to $9,033,000 or $4.23 per share basic and $4.14 per share diluted for the same period last year.  The Bank’s annualized return on average equity for the third quarter of 2020 was 22.23%, and the annualized return on average assets was 2.26%, as compared to 15.33% and 1.40% for the same period in 2019.  Net income per share (diluted) for the third quarter of 2020 increased by 68% over the same period in 2019. 

Core net income for the third quarter of 2020, which represents net income excluding the after-tax gains and losses on securities, both realized and unrealized, was $12,394,000 or $5.80 per share basic and $5.68 per share diluted, as compared to $8,801,000 or $4.12 per share basic and $4.03 per share diluted for the same period last year.  The Bank’s annualized core return on average equity for the third quarter of 2020 was 18.12%, and the annualized core return on average assets was 1.84%, as compared to 14.94% and 1.37% for the same period in 2019.  Core net income per share (diluted) for the third quarter of 2020 increased by 41% over the same period in 2019.

Net income for the nine months ended September 30, 2020 was $33,729,000 or $15.79 per share basic and $15.46 per share diluted, as compared to $27,563,000 or $12.92 per share basic and $12.63 per share diluted for the same period last year.  The Bank’s annualized return on average equity for the first nine months of 2020 was 17.19%, and the annualized return on average assets was 1.68%, as compared to 16.17% and 1.47% for the same period in 2019.  Net income per share (diluted) for the first nine months of 2020 increased by 22% over the same period in 2019.

Core net income for the nine months ended September 30, 2020 was $31,809,000 or $14.89 per share basic and $14.58 per share diluted, as compared to $24,182,000 or $11.33 per share basic and $11.08 per share diluted for the same period last year.  The Bank’s annualized core return on average equity for the first nine months of 2020 was 16.21%, and the annualized core return on average assets was 1.59%, as compared to 14.19% and 1.29% for the same period in 2019.  Core net income per share (diluted) for the first nine months of 2020 increased by 32% over the same period in 2019.

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 $2.719 billion at September 30, 2020, representing 7% annualized growth year-to-date and 10% growth from September 30, 2019.

Net loans totaled $2.359 billion at September 30, 2020, representing 8% annualized growth year-to-date and 10% growth from September 30, 2019.  Growth was concentrated in the Bank’s commercial real estate portfolio. 

Total deposits, including wholesale deposits, increased to $2.027 billion at September 30, 2020, representing 15% annualized growth year-to-date and 19% growth from September 30, 2019.  Total retail and business deposits increased to $1.532 billion at September 30, 2020, representing 10% annualized growth year-date and 8% growth from September 30, 2019.  Non-interest bearing deposits, included in retail and business deposits, increased to $303.8 million at September 30, 2020, representing 37% annualized growth year-to-date and 31% growth from September 30, 2019.  During the first nine months of 2020, the Bank continued to reduce the balance of excess reserves held at the Federal Reserve Bank and reallocated its wholesale funding mix between wholesale time deposits and Federal Home Loan Bank advances in order to reduce the cost of funds.

Book value per share was $130.24 as of September 30, 2020, representing 17% annualized growth year-to-date and 17% growth from September 30, 2019.  In addition to the increase in book value per share, the Bank has declared $2.31 in dividends per share since September 30, 2019, including a special dividend of $0.60 per share declared during the fourth quarter of 2019.  The Bank increased its regular dividend per share in each of the last four quarters.

Operational Performance Metrics

The net interest margin for the quarter ended September 30, 2020 increased 69 basis points to 3.46%, as compared to 2.77% for the same period last year.  The Bank has benefited from a sharp decline in the cost of interest-bearing liabilities, including both interest-bearing retail and commercial deposits, as well as wholesale funding from the Federal Home Loan Bank, brokered time deposits and listing services time deposits.  This benefit was partially offset by a decline in the yield on interest-earning assets, driven primarily by the decline in the interest on excess reserves held at the Federal Reserve Bank of Boston and a lower yield on loans during the same period.

Key credit and operational metrics remained strong in the third quarter. At September 30, 2020, non-performing assets totaled 0.23% of total assets, compared to 0.22% at December 31, 2019 and 0.05% at September 30, 2019.  Non-performing loans as a percentage of the total loan portfolio totaled 0.10% at September 30, 2020, compared to 0.25% at December 31, 2019 and 0.06% at September 30, 2019. 

At September 30, 2020, the Bank owned $3.9 million in foreclosed property, consisting exclusively of a residential property on Nantucket that was purchased at auction in January 2020 for $3.6 million.  This balance includes the capitalization of repairs and improvements completed by the Bank following acquisition.  This collateral secured a non-performing loan which comprised the substantial majority of non-performing assets at December 31, 2019.  The Bank listed the property located at 14 Orange Street for sale in July 2020.  Potential buyers are encouraged to contact our broker, Ms. Gloria Grimshaw of Jordan Real Estate, at 508-228-4449 (extension 109) or at gloria@jordanre.com directly.  At December 31, 2019 and September 30, 2019, the Bank did not own any foreclosed property. 

The Bank recorded $709,000 of net charge-offs for the first nine months of 2020, composed of four charge-offs offset by minor recoveries, as compared to $1,000 in net recoveries for the same period last year.  These charge-offs were primarily associated with residential mortgage loans subject to foreclosure.  The Bank continues to pursue recovery of these deficiencies via litigation.

At September 30, 2020, the Bank had modified less than 1% of the Bank’s total loan portfolio by number and less than 3% by dollar in response to COVID-19.  The nature of these modifications was described in the Bank’s Form 10-Q for the second quarter of 2020 and, with de minimis exceptions, all such modifications were completed in the first and second quarters. All such modifications are performing in accordance with their modified terms or have returned to their original contractual terms.  The Bank has not extended and does not plan to extend further forbearance other than as may be required by law.  As previously noted, the Bank did not defer the collection of interest on any commercial mortgages.   

The efficiency ratio, as defined on page 4 below, was 23.50% for the third quarter of 2020, as compared to 29.28% for the same period last year.  Operating expenses as a percentage of average assets remained stable at 0.81% in the third quarter of 2020, the same as the comparable period last year.  The Bank remains focused on reducing waste through an ongoing process of continuous improvement.

Chairman Robert H. Gaughen Jr. stated, “During this rapidly developing period of economic uncertainty, there may be unusual opportunities - to deploy capital on attractive terms, to develop new relationships with strong customers, to recruit talented staff, and to invest in digital tools to reduce costs and deliver more value for our customers.  We are capitalizing on these opportunities.  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 the earnings release, but shareholders are encouraged to read the Bank’s quarterly reports on Form 10-Q, which are generally available several weeks after the earnings release.  The Bank expects to file Form 10-Q for the quarter ended September 30, 2020 with the FDIC on or about November 4, 2020.

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 
September 30,
  Nine Months Ended 
September 30,
  2019   2020   2019   2020
(Unaudited)                      
                       
Key Performance Ratios                      
Return on average assets (1) 1.40 %   2.26 %   1.47 %   1.68 %
Return on average equity (1) 15.33     22.23     16.17     17.19  
Core return on average assets (1) (5) 1.37     1.84     1.29     1.59  
Core return on average equity (1) (5) 14.94     18.12     14.19     16.21  
Interest rate spread (1) (2) 2.42     3.31     2.36     2.93  
Net interest margin (1) (3) 2.77     3.46     2.69     3.15  
Operating expenses to average assets (1) 0.81     0.81     0.83     0.82  
Efficiency ratio (4) 29.28     23.50     30.70     26.10  
Average equity to average assets 9.16     10.18     9.08     9.79  
Average interest-earning assets to average interest-                       
bearing liabilities 120.49      124.72      120.31      122.96  
                       


  September 30,
2019
  December 31,
2019

  September 30,
2020
(Unaudited)                      
                       
Asset Quality Ratios                      
Allowance for loan losses/total loans   0.70 %     0.69 %     0.71 %
Allowance for loan losses/non-performing loans   1,138.01       274.57       699.75  
                       
Non-performing loans/total loans   0.06       0.25       0.10  
Non-performing loans/total assets   0.05       0.22       0.09  
Non-performing assets/total assets   0.05       0.22       0.23  
                       
Share Related                      
Book value per share $ 111.47     $ 115.75     $           130.24  
Market value per share $ 189.00     $ 210.20     $           184.00  
Shares outstanding at end of period   2,133,750       2,135,750       2,136,900  

(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, 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) September 30,
2019
  December 31,
2019
  September 30,
2020
(Unaudited)                
ASSETS                
                 
Cash and due from banks $ 10,233   $ 9,057   $ 9,816
Federal Reserve and other short-term investments   221,022     243,090     229,555
Cash and cash equivalents   231,255     252,147     239,371
                 
CRA investment   7,948     7,910     8,604
Debt securities available for sale   11     11     6
Other marketable equity securities   38,981     39,265     48,744
Securities, at fair value   46,940     47,186     57,354
Federal Home Loan Bank stock, at cost   23,615     24,890     18,985
Loans, net of allowance for loan losses of $15,090                
at September 30, 2019, $15,376 at December 31, 2019                
and $16,780 at September 30, 2020   2,140,514     2,227,062      2,358,983
Foreclosed assets           3,926
Bank-owned life insurance   12,661     12,727     12,895
Premises and equipment, net   14,339     14,548     15,294
Accrued interest receivable   4,912     4,926     5,116
Deferred income tax asset, net   1,303     1,213     1,176
Other assets   4,833     5,647     6,045
Total assets $ 2,480,372   $ 2,590,346   $ 2,719,145

LIABILITIES AND STOCKHOLDERS’ EQUITY

Interest-bearing deposits $ 1,474,113   $ 1,583,280   $ 1,722,970
Non-interest-bearing deposits   231,616     237,554     303,774
Total deposits   1,705,729     1,820,834     2,026,744
Federal Home Loan Bank advances   519,900     505,200     399,031
Mortgage payable   703     687    
Mortgagors’ escrow accounts   7,544     7,815     8,105
Accrued interest payable   2,198     960     274
Other liabilities   6,445     7,627     6,679
Total liabilities   2,242,519     2,343,123     2,440,833
                 
Stockholders’ equity:                
Preferred stock, $1.00 par value,                
2,500,000 shares authorized, none issued            
Common stock, $1.00 par value, 5,000,000 shares                
authorized; 2,133,750 shares issued and outstanding at                 
September 30, 2019, 2,135,750 shares issued and outstanding                
and December 31, 2019 and 2,136,900 shares issued and                
outstanding at September 30, 2020   2,134     2,136      2,137
Additional paid-in capital   12,073     12,234     12,371
Undivided profits   223,646     232,853     263,804
Accumulated other comprehensive income          
Total stockholders’ equity   237,853     247,223     278,312
Total liabilities and stockholders’ equity $ 2,480,372   $ 2,590,346   $ 2,719,145

HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of Income

  Three Months Ended
  Nine Months Ended
  September 30,
  September 30,
(In thousands, except per share amounts) 2019   2020   2019
  2020
(Unaudited)                      
Interest and dividend income:                      
Loans $ 26,153   $ 26,193   $ 74,049   $ 77,759
Equity securities   518     441     1,503     1,402
Federal Reserve and other short-term investments   1,527     47     4,716     844
Total interest and dividend income   28,198     26,681     80,268     80,005
Interest expense:                      
Deposits   7,585     3,285     20,805     13,618
Federal Home Loan Bank and Federal Reserve Bank advances   3,099     567     9,766     4,456
Mortgage payable   11         33     3
Total interest expense   10,695     3,852     30,604     18,077
Net interest income   17,503     22,829     49,664     61,928
Provision for loan losses   302     350     1,282     2,113
Net interest income, after provision for loan losses   17,201     22,479     48,382     59,815
Other income:                      
Customer service fees on deposits   213     181     598     501
Increase in cash surrender value of bank-owned life insurance   61     51     185     168
Gain on equity securities, net   298     3,607     4,337     2,463
Gain on disposal of fixed assets               218
Miscellaneous   42     33     125     114
Total other income   614     3,872     5,245     3,464
Operating expenses:                      
Salaries and employee benefits   3,290     3,210     9,614     9,877
Occupancy and equipment   453     503     1,354     1,432
Data processing   419     502     1,154     1,466
Deposit insurance   22     212     530     649
Foreclosure   34     167     101     321
Marketing   188     116     497     400
Other general and administrative   811     718     2,276     2,281
Total operating expenses   5,217     5,428     15,526     16,426
Income before income taxes   12,598     20,923     38,101     46,853
Income tax provision   3,565     5,717     10,538     13,124
Net income $ 9,033   $ 15,206   $ 27,563   $ 33,729
                       
Cash dividends declared per share $ 0.40   $ 0.45   $ 1.17   $ 1.30
                       
Weighted average shares outstanding:                      
Basic   2,134     2,137     2,133     2,137
Diluted   2,183     2,183     2,182     2,181
                       
Earnings per share:                      
Basic $ 4.23   $ 7.12   $ 12.92   $ 15.79
Diluted $ 4.14   $ 6.96   $ 12.63   $ 15.46

HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis

  Three Months Ended September 30,  
  2019     2020  
  AVERAGE
BALANCE
  INTEREST   YIELD/
RATE (8)
    AVERAGE
BALANCE
   INTEREST   YIELD/
RATE (8)
 
(Dollars in thousands)                                  
(Unaudited)                                  
                                   
Loans (1) (2) $ 2,191,324   $ 26,153   4.77 %   $ 2,391,761   $ 26,193   4.38 %
Securities (3) (4)   58,133     518   3.56       63,151     441   2.79  
Federal Reserve and other short-term investments   279,802     1,527   2.18       184,710     47   0.10  
Total interest-earning assets   2,529,259     28,198   4.46       2,639,622     26,681   4.04  
Other assets   43,578                 48,456            
Total assets $ 2,572,837               $ 2,688,078            
                                   
Interest-bearing deposits (5) $ 1,616,151     7,585   1.88     $ 1,756,238     3,285   0.75  
Borrowed funds   482,975     3,110   2.58       360,271     567   0.63  
Total interest-bearing liabilities   2,099,126     10,695   2.04       2,116,509     3,852   0.73  
Non-interest-bearing deposits   230,505                 290,803            
Other liabilities   7,514                 7,156            
Total liabilities   2,337,145                 2,414,468            
Stockholders’ equity   235,692                 273,610            
Total liabilities and stockholders’ equity $ 2,572,837               $ 2,688,078            
Net interest income       $ 17,503               $ 22,829      
                                   
Weighted average spread             2.42 %               3.31 %
                                   
Net interest margin (6)             2.77 %               3.46 %
                                   
Average interest-earning assets to average                                  
interest-bearing liabilities (7)   120.49 %               124.72 %          

(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

  Nine Months Ended September 30,  
  2019     2020  
  AVERAGE
BALANCE
  INTEREST   YIELD/
RATE (8)
    AVERAGE
BALANCE
  INTEREST   YIELD/
RATE (8)
 
(Dollars in thousands)                                  
(Unaudited)                                  
                                   
Loans (1) (2) $ 2,134,186   $ 74,049   4.63 %   $ 2,347,466   $ 77,759   4.42 %
Securities (3) (4)   57,118     1,503   3.51       66,107     1,402   2.83  
Federal Reserve and other short-term investments   270,882     4,716   2.32       211,847     844   0.53  
Total interest-earning assets   2,462,186     80,268   4.35       2,625,420     80,005   4.06  
Other assets   41,483                 46,361            
Total assets $ 2,503,669               $ 2,671,781            
                                   
Interest-bearing deposits (5) $ 1,548,791     20,805   1.79     $ 1,621,175     13,618   1.12  
Borrowed funds   497,694     9,799   2.63       513,925     4,459   1.16  
Total interest-bearing liabilities   2,046,485     30,604   1.99       2,135,100     18,077   1.13  
Non-interest-bearing deposits   222,280                 267,162            
Other liabilities   7,635                 7,947            
Total liabilities   2,276,400                 2,410,209            
Stockholders’ equity   227,269                 261,572            
Total liabilities and stockholders’ equity $ 2,503,669               $ 2,671,781            
Net interest income       $ 49,664               $ 61,928      
                                   
Weighted average spread             2.36 %               2.93 %
                                   
Net interest margin (6)             2.69 %               3.15 %
                                   
Average interest-earning assets to average                                  
interest-bearing liabilities (7)   120.31 %               122.96 %          

(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 on equity securities, net.
          

  Three Months Ended   Nine Months Ended
  September 30,   September 30,
(In thousands, unaudited) 2019
  2020
  2019
  2020
                   
Non-GAAP reconciliation:                      
Net income $ 9,033     $ 15,206     $ 27,563     $ 33,729  
Gain on equity securities, net   (298 )     (3,607 )     (4,337 )     (2,463 )
Income tax expense (1)   66       795       956       543  
Core net income $ 8,801     $ 12,394     $ 24,182     $ 31,809  

(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 September 30, 2020, by loan category.  This table reflects all modifications in effect as of September 30, 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
(In thousands, unaudited)                            
                                 
Residential Real Estate (1) 2,473   $ 688,008     24   $ 7,815   0.97 %   1.14 %
Commercial Real Estate 1,396     1,517,821     10     48,841   0.72     3.22  
Construction 64     157,333                
Commercial and Consumer 551     9,729                
Total Loans 4,484   $ 2,372,891     34   $ 56,656   0.76 %   2.39 %

(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


Hingham Institution for Savings Aktie jetzt über den Testsieger (Finanztest 11/2020) handeln, ab 0 € auf Smartbroker.de



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Disclaimer

Hingham Savings Reports Third Quarter 2020 Results HINGHAM, Mass., Oct. 13, 2020 (GLOBE NEWSWIRE) - HINGHAM INSTITUTION FOR SAVINGS (NASDAQ: HIFS), Hingham, Massachusetts announced third quarter results for 2020. Earnings Net income for the quarter ended September 30, 2020 was $15,206,000 or …

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