• Hingham Savings Reports Third Quarter 2022 Results

    来源: Nasdaq GlobeNewswire / 14 10月 2022 16:01:00   America/New_York

    HINGHAM, Mass., Oct. 14, 2022 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ: HIFS), announced third quarter results for 2022.

    Earnings

    Net income for the quarter ended September 30, 2022 was $10,499,000 or $4.89 per share basic and $4.77 per share diluted, as compared to $14,012,000 or $6.54 per share basic and $6.36 per share diluted for the same period last year.  The Bank’s annualized return on average equity for the third quarter of 2022 was 11.07%, and the annualized return on average assets was 1.05%, as compared to 16.57% and 1.85% for the same period in 2021.  Net income per share (diluted) for the third quarter of 2022 decreased by 25% over the same period in 2021. 

    Core net income for the quarter ended September 30, 2022, which represents net income excluding the after-tax gains and losses on securities, both realized and unrealized, was $14,491,000 or $6.75 per share basic and $6.58 per share diluted, as compared to $14,010,000 or $6.54 per share basic and $6.36  per share diluted for the same period last year.  The Bank’s annualized core return on average equity for the third quarter of 2022 was 15.28%, and the annualized core return on average assets was 1.45%, as compared to 16.56% and 1.85% for the same period in 2021.  Core net income per share (diluted) for the third quarter of 2022 increased by 3% over the same period in 2021.

    Net income for the nine months ended September 30, 2022 was $25,554,000 or $11.92 per share basic and $11.60 per share diluted, as compared to $50,784,000 or $23.72 per share basic and $23.09 per share diluted for the same period last year.  The Bank’s annualized return on average equity for the first nine months of 2022 was 9.18%, and the annualized return on average assets was 0.91%, as compared to 21.16% and 2.33% for the same period in 2021.  Net income per share (diluted) for the first nine months of 2022 decreased by 50% over the same period in 2021.

    Core net income for the nine months ended September 30, 2022, which represents net income excluding the after-tax gains and losses on securities, both realized and unrealized, and the after-tax gains on the disposal of fixed assets, was $44,856,000 or $20.92 per share basic and $20.36 per share diluted, as compared to $41,530,000 or $19.40 per share basic and $18.88 per share diluted for the same period last year.  The Bank’s annualized core return on average equity for the first nine months of 2022 was 16.11%, and the annualized core return on average assets was 1.60%, as compared to 17.31% and 1.90% for the same period in 2021.  Core net income per share (diluted) for the first nine months of 2022 increased by 8% over the same period in 2021.

    See Page 9 for a Non-GAAP reconciliation between net income and core net income.  In calculating core net income, the Bank did not make any adjustments other than those relating to after-tax gains and losses on equity securities, realized and unrealized and after-tax gains on the disposal of fixed assets.

    Balance Sheet

    Total assets increased to $4.062 billion at September 30, 2022, representing 25% annualized growth year-to-date and 28% growth from September 30, 2021.

    Net loans increased to $3.563 billion at September 30, 2022, representing 25% annualized growth year-to-date and 27% growth from September 30, 2021.  Growth slowed significantly in the third quarter and was concentrated in multifamily assets in the Bank’s commercial real estate portfolio. 

    Total deposits, including wholesale deposits, increased to $2.589 billion at September 30, 2022, representing 11% annualized growth year-to-date and 7% growth from September 30, 2021.  Total retail and business deposits increased to $1.893 billion at September 30, 2022, representing 14% annualized growth year-to-date and 12% growth from September 30, 2021.  Non-interest-bearing deposits, included in retail and business deposits, increased to $418.8 million at September 30, 2022, representing 10% annualized growth year-to-date and 14% growth from September 30, 2021.  During the first nine months of 2022, the Bank continued to focus on growing its base of non-interest bearing commercial deposits, implemented special time deposit offerings, and used wholesale funds to help fund the strong loan growth experienced during the period.

    Book value per share was $175.52 as of September 30, 2022, representing 8% annualized growth year-to-date and 10% growth from September 30, 2021.  In addition to the increase in book value per share, the Bank has declared $3.07 in dividends per share since September 30, 2021, including a special dividend of $0.75 per share declared during the fourth quarter of 2021.  The Bank increased its regular dividend per share in each of the last four quarters.

    On September 28, 2022, the Bank’s Board of Directors declared a regular cash dividend of $0.61 per share.  This represents an increase of 3% over the previous regular quarterly dividend of $0.59 per share.  The dividend will be paid on November 9, 2022 to stockholders of record as of November 1, 2022.  This will be the Bank’s 115th consecutive quarterly dividend and the Bank has consistently increased regular quarterly cash dividends over the last twenty-seven years.  The Bank has also declared special cash dividends in each of the last twenty-seven years, typically in the fourth quarter.

    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.

    Operational Performance Metrics

    The net interest margin for the quarter ended September 30, 2022 decreased 72 basis points to 2.76%, as compared to 3.48% for the same period last year.  The net interest margin for the nine months ended September 30, 2022 decreased 41 basis points to 3.08%, as compared to 3.49% for the same period last year.  In the quarter ended September 30, 2022, and to a lesser extent, in the nine months ended September 30, 2022, the Bank experienced an increase in the cost of interest-bearing liabilities, including retail and commercial deposits and wholesale funding, when compared to the same periods in the prior year.  This was combined with a decline in the yield on interest-earning assets, driven primarily by a lower yield on loans, partially offset by an increase in the interest on excess reserves held at the Federal Reserve Bank of Boston and Federal Home Loan Bank of Boston stock dividends.

    Key credit and operational metrics remained satisfactory in the third quarter.  At September 30, 2022, non-performing assets totaled 0.02% of total assets, compared to 0.01% at December 31, 2021 and September 30, 2021.  Non-performing loans as a percentage of the total loan portfolio totaled 0.02% at September 30, 2022, compared to 0.01% at December 31, 2021 and September 30, 2021. 

    The Bank recorded $50,000 of net recoveries for the nine months ended September 30, 2022, as compared to $1,000 of net charge-offs for the same period last year.

    The Bank did not own any foreclosed property on September 30, 2022, December 31, 2021 and September 30, 2021.

    The efficiency ratio, as defined on page 4 below, increased to 24.98% for the third quarter of 2022, as compared to 21.29% for the same period last year.  Operating expenses as a percentage of average assets fell to 0.69% in the third quarter of 2022, as compared to 0.74% for the same period last year.  The Bank remains focused on reducing waste through an ongoing process of continuous improvement and standard work that supports operational leverage.

    These operational metrics reflect the Bank’s disciplined focus on credit quality and expense management.

    Chairman Robert H. Gaughen Jr. stated, “Returns on equity and assets were modest in the third quarter of 2022 and should be viewed in the context of the continuing pressure on the net interest margin as the Bank’s balance sheet adjusts to significantly higher short-term interest rates.  Such adjustments are particularly challenging for our business model.  During such periods, 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, 2022 with the FDIC on or about November 4, 2022.

    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., and provides commercial mortgage and banking services in the San Francisco Bay Area.

    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,
     2021 2022 2021 2022
    (Unaudited)           
                
    Key Performance Ratios           
    Return on average assets (1)1.85% 1.05% 2.33% 0.91%
    Return on average equity (1)16.57  11.07  21.16  9.18 
    Core return on average assets (1) (5)1.85  1.45  1.90  1.60 
    Core return on average equity (1) (5)16.56  15.28  17.31  16.11 
    Interest rate spread (1) (2)3.42  2.55  3.41  2.94 
    Net interest margin (1) (3)3.48  2.76  3.49  3.08 
    Operating expenses to average assets (1)0.74  0.69  0.75  0.69 
    Efficiency ratio (4)21.29  24.98  21.56  22.65 
    Average equity to average assets11.20  9.48  11.00  9.92 
    Average interest-earning assets to average interest-
           bearing liabilities
    128.29  123.53  127.30  124.71 
                


     September 30,
    2021
     December 31,
    2021
     September 30,
    2022
    (Unaudited)           
                
    Asset Quality Ratios           
    Allowance for loan losses/total loans 0.68% 0.68%  0.68%
    Allowance for loan losses/non-performing loans 5,297.80

      4,784.78   3,336.25

     
               
    Non-performing loans/total loans 0.01  0.01   0.02 
    Non-performing loans/total assets 0.01  0.01   0.02 
    Non-performing assets/total assets 0.01  0.01   0.02 
               
    Share Related          
    Book value per share$159.03  $165.52  $175.52 
    Market value per share$336.70  $419.88  $251.11 
    Shares outstanding at end of period 2,142,400   2,142,400   2,145,400 


    (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.
       
    (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, and the after-tax gain on disposal of fixed assets. 
       


    HINGHAM INSTITUTION FOR SAVINGS
    Consolidated Balance Sheets

    (In thousands, except share amounts)September 30,
    2021
     December 31,
    2021
     September 30,
    2022
    (Unaudited)         
    ASSETS 
             
    Cash and due from banks$5,711 $5,428 $6,682
    Federal Reserve and other short-term investments 213,442  265,733  320,346
    Cash and cash equivalents 219,153  271,161  327,028
             
    CRA investment 9,395  9,306  8,212
    Other marketable equity securities 72,702  79,167  64,062
    Equity securities, at fair value 82,097  88,473  72,274
    Securities available for sale, at fair value 5    
    Securities held to maturity, at amortized cost 3,500  3,500  3,500
    Federal Home Loan Bank stock, at cost 18,908  29,908  44,716
    Loans, net of allowance for loan losses of $19,231
          at September 30, 2021, $20,431 at December 31, 2021
          and $24,388 at September 30, 2022
     2,800,477  2,999,096  3,562,745
    Bank-owned life insurance 12,901  12,980  13,232
    Premises and equipment, net 15,476  15,825  17,213
    Accrued interest receivable 5,270  5,467  6,380
    Deferred income tax asset, net     4,918
    Other assets 7,042  4,755  10,108
    Total assets$3,164,829 $3,431,165 $4,062,114
             


    LIABILITIES AND STOCKHOLDERS’ EQUITY

             
    Interest-bearing deposits$2,049,930 $2,003,717 $2,169,763
    Non-interest-bearing deposits 366,398  389,148  418,753
    Total deposits 2,416,328  2,392,865  2,588,516
    Federal Home Loan Bank advances 390,000  665,000  1,075,000
    Mortgagors’ escrow accounts 8,683  9,183  11,764
    Accrued interest payable 179  198  2,536
    Deferred income tax liability, net 1,206  536  
    Other liabilities 7,717  8,771  7,740
    Total liabilities 2,824,113  3,076,553  3,685,556
             
    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; 2,142,400 shares issued and outstanding at September 30, 2021 and December 31, 2021 and 2,145,400 shares issued and outstanding at September 30, 2022
     2,142  2,142  2,145
    Additional paid-in capital 12,722  12,728  12,914
    Undivided profits 325,852  339,742  361,499
    Total stockholders’ equity 340,716  354,612  376,558
    Total liabilities and stockholders’ equity$3,164,829 $3,431,165 $4,062,114
             


    HINGHAM INSTITUTION FOR SAVINGS
    Consolidated Statements of Income

          Three Months Ended Nine Months Ended
          September 30, September 30,
    (In thousands, except per share amounts)  2021  2022   2021   2022 
    (Unaudited)          
    Interest and dividend income:             
     Loans   $27,303 $34,209  $80,267  $96,375 
     Debt securities    33  33   51   99 
     Equity securities    171  492   562   1,036 
     Federal Reserve and other short-term investments 78  1,660   184   2,289 
      Total interest and dividend income  27,585  36,394   81,064   99,799 
    Interest expense:              
     Deposits    1,551  4,483   5,350   8,089 
     Federal Home Loan Bank and Federal Reserve Bank advances    202  4,608   858   6,531 
      Total interest expense   1,753  9,091   6,208   14,620 
      Net interest income   25,832  27,303   74,856   85,179 
    Provision for loan losses   1,000  301   1,828   3,908 
    Net interest income, after provision for loan losses 24,832  27,002   73,028   81,271 
    Other income (loss):              
     Customer service fees on deposits  181  141   554   456 
     Increase in cash surrender value of bank-owned life insurance    79  82   244   252 
     Gain (loss) on equity securities, net    2  (5,117)  9,715   (24,756)
     Gain on disposal of fixed assets         2,337    
     Miscellaneous    24  21   60   67 
      Total other income (loss)   286  (4,873)  12,910   (23,981)
    Operating expenses:              
     Salaries and employee benefits   3,437  4,172   10,422   11,678 
     Occupancy and equipment    351  339   1,082   1,028 
     Data processing    489  691   1,432   1,953 
     Deposit insurance    231  546   681   1,347 
     Foreclosure and related    24  18   (51)  5 
     Marketing    195  246   423   752 
     Other general and administrative    833  869   2,333   2,706 
      Total operating expenses   5,560  6,881   16,322   19,469 
    Income before income taxes   19,558  15,248   69,616   37,821 
    Income tax provision    5,546  4,749   18,832   12,267 
      Net income   $14,012 $10,499  $50,784  $25,554 
                     
    Cash dividends declared per share $0.53 $0.61  $1.53  $1.77 
                 
    Weighted average shares outstanding:            
     Basic    2,142  2,145   2,141   2,144 
     Diluted    2,202  2,201   2,199   2,203 
                     
    Earnings per share:             
     Basic   $6.54 $4.89  $23.72  $11.92 
     Diluted   $6.36 $4.77  $23.09  $11.60 
                       


    HINGHAM INSTITUTION FOR SAVINGS
    Net Interest Income Analysis

     Three Months Ended September 30,  
     2021  2022 
     AVERAGE BALANCE INTEREST YIELD/
    RATE (8)
      AVERAGE BALANCE INTEREST YIELD/
    RATE (8)
     
    (Dollars in thousands)                 
    (Unaudited)                 
                      
    Loans (1) (2)$2,693,457 $27,303 4.05% $3,558,317 $34,209 3.85%
    Securities (3) (4) 69,978  204 1.17   114,946  525 1.83 
    Federal Reserve and other short-term investments 202,685  78 0.15   285,832  1,660 2.32 
    Total interest-earning assets 2,966,120  27,585 3.72   3,959,095  36,394 3.68 
    Other assets 55,606        42,768      
    Total assets$3,021,726       $4,001,863      
                      
    Interest-bearing deposits (5)$2,032,203  1,551 0.31  $2,174,098  4,483 0.82 
    Borrowed funds 279,796  202 0.29   1,030,979  4,608 1.79 
    Total interest-bearing liabilities 2,311,999  1,753 0.30   3,205,077  9,091 1.13 
    Non-interest-bearing deposits 364,599        410,403      
    Other liabilities 6,812        7,092      
    Total liabilities 2,683,410        3,622,572      
    Stockholders’ equity 338,316        379,291      
    Total liabilities and stockholders’ equity$3,021,726       $4,001,863      
    Net interest income   $25,832       $27,303   
                      
    Weighted average spread      3.42%       2.55%
                      
    Net interest margin (6)      3.48%       2.76%
                      
    Average interest-earning assets to average
         interest-bearing liabilities (7)
     

    128.29


    %
            

    123.53


    %
         


    (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,  
     2021  2022 
     AVERAGE BALANCE INTEREST YIELD/
    RATE (8)
      AVERAGE BALANCE INTEREST YIELD/
    RATE (8)
     
    (Dollars in thousands)                 
    (Unaudited)                 
                      
    Loans (1) (2)$2,586,723 $80,267 4.14% $3,330,511 $96,375 3.86%
    Securities (3) (4) 66,478  613 1.23   106,481  1,135 1.42 
    Federal Reserve and other short-term investments 204,395  184 0.12   255,627  2,289 1.19 
    Total interest-earning assets 2,857,596  81,064 3.78   3,692,619  99,799 3.60 
    Other assets 51,469        47,707      
    Total assets$2,909,065       $3,740,326      
                      
    Interest-bearing deposits (5)$1,962,300  5,350 0.36  $2,084,032  8,089 0.52 
    Borrowed funds 282,419  858 0.41   876,915  6,531 0.99 
    Total interest-bearing liabilities 2,244,719  6,208 0.37   2,960,947  14,620 0.66 
    Non-interest-bearing deposits 337,507        400,848      
    Other liabilities 6,852        7,377      
    Total liabilities 2,589,078        3,369,172      
    Stockholders’ equity 319,987        371,154      
    Total liabilities and stockholders’ equity$2,909,065       $3,740,326      
    Net interest income   $74,856       $85,179   
                      
    Weighted average spread      3.41%       2.94%
                      
    Net interest margin (6)      3.49%       3.08%
                      
    Average interest-earning assets to average
         interest-bearing liabilities (7)
     127.30%       124.71%     


    (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, and after-tax gain on disposal of fixed assets.

          Three Months Ended Nine Months Ended
          September 30, September 30,
    (In thousands, unaudited)  2021   2022   2021   2022 
               
    Non-GAAP reconciliation:             
    Net income  $14,012  $10,499  $50,784  $25,554 
    (Gain) loss  on equity securities, net   (2)  5,117   (9,715)  24,756 
    Income tax expense (benefit) (1)      (1,125)  2,141   (5,454)
    Gain on disposal of fixed assets         (2,337)   
    Income tax expense          657    
    Core net income  $14,010  $14,491  $41,530  $44,856 

    (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.

    CONTACT:    Patrick R. Gaughen, President and Chief Operating Officer (781) 783-1761


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