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HINGHAM INSTITU FOR SAVINGS
Symbol	HIFS
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Hingham Institution for Savings Reports 23% Increase in Quarterly Earnings

2011-07-21 12:24 ET - News Release

HINGHAM, Mass. -- (Business Wire)

Hingham Institution for Savings (NASDAQ – HIFS), Hingham, Massachusetts announced second quarter earnings for 2011. Net income for the quarter ended June 30, 2011 was $2,967,000 or $1.40 per share (basic and diluted) as compared to $2,421,000 or $1.14 per share (basic and diluted) for the same period last year. The Bank’s return on average equity for the second quarter of 2011 was 15.32%, and the return on average assets was 1.13%. Net income for the six months ended June 30, 2011 was $5,847,000 or $2.75 per share (basic and diluted) as compared to $4,736,000 or $2.23 per share (basic and diluted) for the same period last year. The Bank’s annualized return on average equity for the first six months of 2011 was 15.34% and the return on average assets was 1.13%.

Strong growth trends of recent years continued, as deposits increased by $26 million from December 31, 2010 and $73 million from June 30, 2010, representing a 7% annualized growth year to date and 11% from June 30, 2010. Net loans increased by $34 million from December 31, 2010 and $82 million from June 30, 2010 representing 9% annualized growth year to date and 11% growth from the second quarter 2010. Total assets increased by $49 million from December 31, 2010 and $95 million from June 30, 2010, representing a 10% annualized growth year to date and 10% from the second quarter 2010. Stockholders’ equity increased to $77.6 million as of June 30, 2011, representing a 13% annualized growth year to date and a 13% increase from June 30, 2010. Book value per share increased to $36.54 per share at June 30, 2011 from $34.24 per share at December 31, 2010 and $32.47 per share at June 30, 2010.

At June 30, 2011 non-performing assets totaled 1.10% of total assets, an increase from the 0.91% at December 31, 2010 and down from the 1.57% at June 30, 2010. For the quarter ended June 30, 2011, a provision of $300,000 was made to the allowance for loan losses compared to $300,000 for the same period in 2010. Foreclosure related expenses totaled $185,000 for the quarter ended June 30, 2011 compared to $161,000 for the quarter ended June 30, 2010.

President Robert H. Gaughen, Jr. stated, “We are pleased to report that our current quarterly and year to date earnings represent a 23% increase over the second quarter and first half of 2010. We continue to see strong performance year over year, reflecting our continued commitment to shareholder value through quality growth and effective cost control.”

Hingham Institution for Savings is a Massachusetts-chartered savings bank located in Hingham, Massachusetts. Incorporated in 1834, it is the oldest financial institution headquartered in Hingham and one of the oldest in the Commonwealth. The Bank’s main office is located on Main Street, Hingham, Massachusetts. The Bank also maintains branch offices in South Hingham and the neighboring towns of Cohasset, Hull, Scituate, Weymouth and Norwell as well as the South End of Boston. The Bank anticipates opening its 10^th branch in the Beacon Hill/Back Bay area of Boston in late summer.

The Bank’s shares of common stock are listed and traded on The NASDAQ Stock Market under the symbol HIFS.


HINGHAM INSTITUTION FOR SAVINGS Consolidated Balance Sheets

(Dollars in thousands except per share data)	June 30, 2011		December 31, 2010		June 30, 2010
(Unaudited)
ASSETS

Cash and due from banks	$	5,315	$	6,298	$	6,565
Short-term investments		82,873		61,566		61,919
Cash and cash equivalents		88,188		67,864		68,484

Certificates of deposit		14,228		13,929		13,564
Securities available for sale, at fair value		87,556		95,071		95,053
Federal Home Loan Bank stock, at cost		13,373		13,373		13,373
Loans, net of allowance for loan losses of $7,222 at June 30, 2011, $6,905 at December 31, 2010 and $6,426 at June 30, 2010		826,877		792,910		744,410
Foreclosed assets		3,277		3,559		7,393
Bank-owned life insurance		14,304		14,074		13,843
Premises and equipment, net		9,977		7,985		5,698
Accrued interest receivable		2,990		2,992		3,214
Prepaid FDIC assessment		1,929		2,474		2,927
Deferred income tax asset, net		2,784		2,803		2,039
Other assets		1,115		811		1,781
Total assets	$	1,066,598	$	1,017,845	$	971,779

LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits	$	755,621	$	729,960	$	682,612
Federal Home Loan Bank advances		227,019		207,580		214,132
Mortgage payable		1,127		1,147		1,166
Mortgagors’ escrow accounts		2,319		2,344		2,056
Accrued interest payable		535		591		645
Other liabilities		2,356		3,487		2,199
Total liabilities		988,977		945,109		902,810

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; 2,124,250 shares issued and outstanding		2,124		2,124		2,124
Additional paid-in capital		10,447		10,417		10,417
Undivided profits		64,805		59,999		56,058
Accumulated other comprehensive income		245		196		370
Total stockholders’ equity		77,621		72,736		68,969
Total liabilities and stockholders’ equity	$	1,066,598	$	1,017,845	$	971,779


HINGHAM INSTITUTION FOR SAVINGS Consolidated Statements of Income

				Three Months Ended				Six Months Ended
				June 30,				June 30,
					2011		2010	2011		2010
(Unaudited)				(In thousands, except per share amounts)
Interest and dividend income:
		Loans		$	11,743	$	10,961	$	23,311		$	21,834
		Debt securities			215		400		454			849
		Equity securities			35		27		69			55
		Short-term investments and certificates of deposit			96		114		178			224
			Total interest and dividend income		12,089		11,502		24,012			22,962
Interest expense:
		Deposits			1,764		2,053		3,522			4,221
		Federal Home Loan Bank advances			1,487		1,742		2,979			3,551
		Mortgage payable			17		17		34			35
			Total interest expense		3,268		3,812		6,535			7,807
			Net interest income		8,821		7,690		17,477			15,155
Provision for loan losses					300		300		600			700
		Net interest income, after provision for loan losses			8,521		7,390		16,877			14,455
Other income:
	Customer service fees on deposits				247		204		482			404
	Increase in bank-owned life insurance				114		114		230			228
	Miscellaneous				60		62		120			125
			Total other income		421		380		832			757
Operating expenses:
		Salaries and employee benefits			2,205		2,097		4,355			4,141
		Data processing			217		210		438			425
		Occupancy and equipment			349		316		704			660
		Deposit insurance			263		275		582			555
		Foreclosure			185		161		353			287
		Marketing			142		138		253			246
		Other general and administrative			598		595		1,185			1,125
			Total operating expenses		3,959		3,792		7,870			7,439
Income before income taxes					4,983		3,978		9,839			7,773
Income tax provision					2,016		1,557		3,992			3,037
			Net income	$	2,967	$	2,421	$	5,847		$	4,736

Weighted average common shares outstanding:
		Basic			2,124		2,124		2,124			2,124
		Diluted			2,126		2,124		2,125			2,124

Earnings per common share:
		Basic		$	1.40	$	1.14	$	2.75		$	2.23
		Diluted		$	1.40	$	1.14	$	2.75		$	2.23


HINGHAM INSTITUTION FOR SAVINGS Net Interest Income Analysis

	Three Months Ended June 30,
	2011						2010
	AVERAGE BALANCE		INTEREST		YIELD/ RATE		AVERAGE BALANCE		INTEREST		YIELD/ RATE
(Dollars in thousands)
(Unaudited)

Loans (1) (2)	$	819,037	$	11,743	5.74	%	$	742,030	$	10,961	5.91	%
Securities (3) (4)		104,597		250	0.96			105,176		427	1.62
Short-term investments and certificates of deposit		92,929		96	0.41			85,782		114	0.53
Total earning assets		1,016,563		12,089	4.76			932,988		11,502	4.93
Other assets		34,913						32,894
Total assets	$	1,051,476					$	965,882

Interest-bearing deposits (5)	$	705,540		1,764	1.00		$	630,787		2,053	1.30
Borrowed funds		208,568		1,504	2.88			213,523		1,759	3.30
Total interest-bearing liabilities		914,108		3,268	1.43			844,310		3,812	1.81
Demand deposits		56,883						50,293
Other liabilities		3,028						2,820
Total liabilities		974,019						897,423
Stockholders’ equity		77,457						68,459
Total liabilities and stockholders’ equity	$	1,051,476					$	965,882
Net interest income			$	8,821					$	7,690

Weighted average spread					3.33	%					3.12	%

Net interest margin (6)					3.47	%					3.30	%

Average interest-earning assets to average interest-bearing liabilities (7)					111.21	%					111.50	%
(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 available for sale.
(4)Includes Federal Home Loan Bank stock.
(5)Includes mortgagors' escrow accounts.
(6)Net interest income divided by average total earning assets.
(7)Total earning assets divided by total interest-bearing liabilities.


HINGHAM INSTITUTION FOR SAVINGS Net Interest Income Analysis

	Six Months Ended June 30,
	2011						2010
	AVERAGE BALANCE		INTEREST		YIELD/ RATE		AVERAGE BALANCE		INTEREST		YIELD/ RATE
(Dollars in thousands)
(Unaudited)

Loans (1) (2)	$	812,909	$	23,311	5.74	%	$	735,829	$	21,834	5.93	%
Securities (3) (4)		106,262		523	0.98			104,764		904	1.73
Short-term investments and certificates of deposit		82,704		178	0.43			83,501		224	0.54
Total earning assets		1,001,875		24,012	4.79			924,094		22,962	4.97
Other assets		34,560						32,993
Total assets	$	1,036,435					$	957,087

Interest-bearing deposits (5)	$	693,958		3,522	1.02		$	620,710		4,221	1.36
Borrowed funds		207,553		3,013	2.90			217,034		3,586	3.30
Total interest-bearing liabilities		901,511		6,535	1.45			837,744		7,807	1.86
Demand deposits		55,560						48,689
Other liabilities		3,146						3,062
Total liabilities		960,217						889,495
Stockholders’ equity		76,218						67,592
Total liabilities and stockholders’ equity	$	1,036,435					$	957,087
Net interest income			$	17,477					$	15,155

Weighted average spread					3.34	%					3.11	%

Net interest margin (6)					3.49	%					3.28	%

Average interest-earning assets to average interest-bearing liabilities (7)					111.13	%					110.30	%
(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 available for sale.
(4)Includes Federal Home Loan Bank stock.
(5)Includes mortgagors' escrow accounts.
(6)Net interest income divided by average total earning assets.
(7)Total earning assets divided by total interest-bearing liabilities.


HINGHAM INSTITUTION FOR SAVINGS Selected Financial Ratios

	Three Months Ended June 30,								Six Months Ended June 30,
	2011			2010					2011				2010
(Unaudited)

Key Performance Ratios
Return on average assets (1)	1.13		%	1.00			%		1.13		%		0.99		%
Return on average equity (1)	15.32			14.15					15.34				14.01
Interest rate spread (1) (2)	3.33			3.12					3.34				3.11
Net interest margin (1) (3)	3.47			3.30					3.49				3.28
Non-interest expense to average assets (1)	1.51			1.57					1.52				1.55
Efficiency ratio (4)	42.84			46.99					42.98				46.75
Average equity to average assets	7.37			7.09					7.35				7.06
Average interest-bearing assets to average interest bearing liabilities	111.21			110.50					111.13				110.30

	June 30, 2011					December 31, 2010						June 30, 2010
(Unaudited)

Asset Quality Ratios
Allowance for loan losses/total loans		0.87			%	0.86				%				0.86		%
Allowance for loan losses/non-performing loans		85.77				120.25								81.26

Non-performing loans/total loans		1.01				0.72								1.05
Non-performing loans/total assets		0.79				0.56								0.81
Non-performing assets/total assets		1.10				0.91								1.57

Share Related
Book value per share	$	36.54				$		34.24				$ 32.47
Market value per share	$	52.93				$		44.50				$ 36.93
Shares outstanding at end of period		2,124,250						2,124,250				2,124,250

(1) Annualized
(2) Interest rate spread represents the difference between the yield on earning assets and cost of interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average earning assets.
(4) The efficiency ratio represents non-interest expense, divided by the sum of net interest income and non-interest income.

Contacts:

Hingham Institution for Savings
Robert H. Gaughen, Jr.
781-749-2200
President
or
William M. Donovan, Jr.
781-749-2200
Vice President-Administration

Source: Hingham Institution for Savings