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Hingham Savings Reports First Quarter 2022 Results
ソース: Nasdaq GlobeNewswire / 14 4 2022 16:01:00 America/New_York
HINGHAM, Mass., April 14, 2022 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ: HIFS), Hingham, Massachusetts announced results for the quarter ended March 31, 2022.
Earnings
Net income for the quarter ended March 31, 2022 was $11,864,000 or $5.54 per share basic and $5.38 per share diluted, as compared to $16,350,000 or $7.65 per share basic and $7.45 per share diluted for the same period last year. The Bank’s annualized return on average equity for the first quarter of 2022 was 13.10%, and the annualized return on average assets was 1.37%, as compared to 21.72% and 2.32% for the same period last year. Net income per share (diluted) for the first quarter of 2022 decreased by 28% compared to the same period in 2021.
Core net income for the quarter ended March 31, 2022, which represents net income excluding the after-tax gains and losses on equity securities, both realized and unrealized, was $15,105,000 or $7.05 per share basic and $6.85 per share diluted, as compared to $13,725,000 or $6.42 per share basic and $6.25 per share diluted for the same period last year. The Bank’s annualized core return on average equity for the first quarter of 2022 was 16.68% and the annualized core return on average assets was 1.74%, as compared to 18.23% and 1.95% for the same period last year. Core net income per share (diluted) for the first quarter of 2022 increased by 10% over the same period in 2021.
See Page 8 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.
Balance Sheet and Capital Management
Total assets were $3.647 billion at March 31, 2022, representing 25% annualized growth year-to-date and 28% growth from March 31, 2021.
Net loans increased to $3.177 billion at March 31, 2022, representing 24% annualized growth year-to-date and 27% growth from March 31, 2021. Growth was concentrated in the Bank’s commercial real estate portfolio.
Total deposits, including wholesale deposits, were $2.395 billion at March 31, 2022, in line with December 31, 2021 and 5% higher than March 31, 2021. Total retail and business deposits increased to $1.797 billion at March 31, 2022, representing 21% annualized growth year-to-date and 11% growth from March 31, 2021. Non-interest-bearing deposits, included in retail and business deposits, increased to $404.0 million at March 31, 2022, representing 15% annualized growth year-to-date and 23% growth from March 31, 2021. Total retail and business deposits growth was impacted by a continued decline in retail time deposits, as the Bank allowed higher rate maturing time deposits to roll off. In 2022, the Bank continued to carefully monitor the balance of excess reserves held at the Federal Reserve Bank and managed its wholesale funding mix between wholesale time deposits and Federal Home Loan Bank advances in order to achieve a lower cost of funds.
Book value per share was $170.49 as of March 31, 2022, representing 12% annualized growth year-to-date and 18% growth from March 31, 2021. In addition to the increase in book value per share, the Bank declared $2.91 in dividends per share since March 31, 2021, including a special dividend of $0.75 per share declared during the fourth quarter of 2021. The Bank announced increases in its regular quarterly dividend in each of the last four quarters.
On March 30, 2022, the Bank declared a regular cash dividend of $0.57 per share. This represented an increase of 4% over the previous regular quarterly dividend of $0.55 per share. This dividend will be paid on May 11, 2022 to stockholders of record as of May 2, 2022. This was the Bank’s 113th 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 March 31, 2022 decreased 24 basis points to 3.30%, as compared to 3.54% for the same period last year. This decline was driven by a declining yield on interest-earning assets, resulting primarily from a lower yield on loans, partially offset by a lower cost of interest-bearing liabilities.
Key credit and operational metrics remained strong in the first quarter. At March 31, 2022, non-performing assets totaled 0.00% of total assets, compared to 0.01% at December 31, 2021 and 0.02% at March 31, 2021. Non-performing loans as a percentage of the total loan portfolio totaled 0.00% at March 31, 2022, compared to 0.01% at December 31, 2021 and 0.02% at March 31, 2021. The Bank did not record any charge-offs in the first three months of 2022, as compared to $1,000 in net charge-offs for the same period last year.
The Bank did not own any foreclosed property at March 31, 2022, December 31, 2021 and March 31, 2021.
The efficiency ratio, as defined on page 4 below, fell to 21.82% for the first quarter of 2022, as compared to 22.02% for the same period last year. Operating expenses as a percentage of average assets fell to 0.72% for the first quarter of 2022, as compared to 0.77% 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.
Annual Meeting
The Bank will hold its Annual Meeting of Stockholders (the “Meeting”) at 2:00PM EST on Thursday, April 28, 2022 at the Old Derby Academy, located at 34 Main Street, Hingham, Massachusetts. Stockholders may also attend the Meeting by means of remote communication via a video conference. 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 question 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 website (click here). In addition to participating in the meeting itself, we also encourage shareholders to submit questions in writing in advance using the form on the Bank’s website.
Chairman Robert H. Gaughen Jr. stated, “Returns on equity and assets were adequate in the first quarter of 2022. 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, 2022 with the Federal Deposit Insurance Corporation (FDIC) on or about May 6, 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.
CONTACT: Patrick R. Gaughen, President and Chief Operating Officer (781) 783-1761
HINGHAM INSTITUTION FOR SAVINGS
Selected Financial RatiosThree Months Ended
March 31,2021 2022 (Unaudited) Key Performance Ratios Return on average assets (1) 2.32 % 1.37 % Return on average equity (1) 21.72 13.10 Core return on average assets (1) (5) 1.95 1.74 Core return on average equity (1) (5) 18.23 16.68 Interest rate spread (1) (2) 3.44 3.24 Net interest margin (1) (3) 3.54 3.30 Operating expenses to average assets (1) 0.77 0.72 Efficiency ratio (4) 22.02 21.82 Average equity to average assets 10.70 10.45 Average interest-earning assets to average interest bearing liabilities 126.10 125.86 March 31, 2021 December 31, 2021 March 31, 2022 (Unaudited) Asset Quality Ratios Allowance for loan losses/total loans 0.70 % 0.68 % 0.68 % Allowance for loan losses/non-performing loans 2,870.29 4,784.78 16,606.92 Non-performing loans/total loans 0.02 0.01 — Non-performing loans/total assets 0.02 0.01 — Non-performing assets/total assets 0.02 0.01 — Share Related Book value per share $ 144.12 $ 165.52 $ 170.49 Market value per share $ 283.76 $ 419.88 $ 343.20 Shares outstanding at end of period 2,139,400 2,142,400 2,142,400 (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.
(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, 2021 December 31, 2021 March 31, 2022 (Unaudited) ASSETS Cash and due from banks $ 6,267 $ 5,428 $ 5,371 Federal Reserve and other short-term investments 208,206 265,733 291,497 Cash and cash equivalents 214,473 271,161 296,868 CRA investment 9,412 9,306 8,874 Other marketable equity securities 59,448 79,167 83,190 Securities, at fair value 68,865 88,473 92,064 Securities available for sale, at fair value 5 — — Securities held to maturity, at amortized cost — 3,500 3,500 Federal Home Loan Bank stock, at cost 14,185 29,908 35,508 Loans, net of allowance for loan losses of $17,681 at March 31, 2021, $20,431 at December 31, 2021 and $21,589 at March 31, 2022 2,507,873 2,999,096 3,176,975 Bank-owned life insurance 12,738 12,980 13,073 Premises and equipment, net 15,247 15,825 16,210 Accrued interest receivable 5,109 5,467 5,887 Deferred income tax asset, net 203 — 387 Other assets 5,421 4,755 6,394 Total assets $ 2,844,114 $ 3,431,165 $ 3,646,866 LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing deposits $ 1,946,327 $ 2,003,717 $ 1,990,848 Non-interest-bearing deposits 327,279 389,148 404,045 Total deposits 2,273,606 2,392,865 2,394,893 Federal Home Loan Bank advances 246,200 665,000 865,000 Mortgagors’ escrow accounts 9,052 9,183 9,646 Accrued interest payable 154 198 298 Deferred income tax liability, net — 536 — Other liabilities 6,761 8,771 11,768 Total liabilities 2,535,773 3,076,553 3,281,605 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; 2,139,400 shares issued and outstanding at March 31, 2021, 2,142,400 shares issued and outstanding at December 31, 2021 and March 31, 2022 2,139 2,142 2,142 Additional paid-in capital 12,556 12,728 12,735 Undivided profits 293,646 339,742 350,384 Accumulated other comprehensive income — — — Total stockholders’ equity 308,341 354,612 365,261 Total liabilities and stockholders’ equity $ 2,844,114 $ 3,431,165 $ 3,646,866 HINGHAM INSTITUTION FOR SAVINGS
Consolidated Statements of IncomeThree Months Ended
March 31,(In thousands, except per share amounts) 2021 2022 (Unaudited) Interest and dividend income: Loans $ 26,749 $ 29,760 Debt securities — 33 Equity securities 218 258 Federal Reserve and other short-term investments 52 110 Total interest and dividend income 27,019 30,161 Interest expense: Deposits 2,107 1,504 Federal Home Loan Bank advances 444 492 Total interest expense 2,551 1,996 Net interest income 24,468 28,165 Provision for loan losses 278 1,158 Net interest income, after provision for loan losses 24,190 27,007 Other income (loss): Customer service fees on deposits 181 175 Increase in cash surrender value of bank-owned life insurance 81 93 Gain (loss) on equity securities, net 3,367 (4,157 ) Miscellaneous 15 26 Total other income (loss) 3,644 (3,863 ) Operating expenses: Salaries and employee benefits 3,526 3,644 Occupancy and equipment 406 374 Data processing 461 614 Deposit insurance 223 283 Foreclosure and related (82 ) (21 ) Marketing 124 191 Other general and administrative 792 1,124 Total operating expenses 5,450 6,209 Income before income taxes 22,384 16,935 Income tax provision 6,034 5,071 Net income $ 16,350 $ 11,864 Cash dividends declared per common share $ 0.49 $ 0.57 Weighted average shares outstanding: Basic 2,138 2,142 Diluted 2,195 2,206 Earnings per share: Basic $ 7.65 $ 5.54 Diluted $ 7.45 $ 5.38 HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income AnalysisThree Months Ended March 31, 2021 2022 AVERAGE BALANCE INTEREST YIELD/ RATE (8) AVERAGE BALANCE INTEREST YIELD/ RATE (8) (Dollars in thousands) (Unaudited) Loans (1) (2) $ 2,497,119 $ 26,749 4.28 % $ 3,077,644 $ 29,760 3.87 % Securities (3) (4) 63,927 218 1.36 94,899 291 1.23 Federal Reserve and other short-term investments 204,887 52 0.10 240,755 110 0.18 Total interest-earning assets 2,765,933 27,019 3.91 3,413,298 30,161 3.53 Other assets 47,705 52,987 Total assets $ 2,813,638 $ 3,466,285 Interest-bearing deposits (5) $ 1,882,830 2,107 0.45 $ 2,028,082 1,504 0.30 Borrowed funds 310,683 444 0.57 683,920 492 0.29 Total interest-bearing liabilities 2,193,513 2,551 0.47 2,712,002 1,996 0.29 Non-interest-bearing deposits 311,800 383,816 Other liabilities 7,246 8,267 Total liabilities 2,512,559 3,104,085 Stockholders’ equity 301,079 362,200 Total liabilities and stockholders’ equity $ 2,813,638 $ 3,466,285 Net interest income $ 24,468 $ 28,165 Weighted average spread 3.44 % 3.24 % Net interest margin (6) 3.54 % 3.30 % Average interest-earning assets to average
interest-bearing liabilities (7)
126.10
%
125.86
%(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 ReconciliationThe 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.
Three Months Ended
March 31,(In thousands, unaudited) 2021 2022 Non-GAAP reconciliation: Net Income $ 16,350 $ 11,864 (Gain) loss on equity securities, net (3,367 ) 4,157 Income tax expense (benefit) (1) 742 (916 ) Core Net Income $ 13,725 $ 15,105 (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.