HIFS
FEDERAL DEPOSIT INSURANCE CORPORATION
WASHINGTON, D.C. 20492
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 12, 2024 (April 12, 2024)
HINGHAMINSTITUTION FOR SAVINGS
(Exact name of registrant as specified in its charter)
Massachusetts
No.90211-0
04-1442480
(State
or Other Jurisdiction of
(FDIC File Number)
(I.R.S. Employer
Incorporation)
Identification No.)
55 Main Street, Hingham, Massachusetts, 02043
(Address
of principal executive offices)
(Zip Code)
(Registrant's
(781)
749-2200
including area code)
telephone number,
N/A
(Former
name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
❑
❑
❑
❑
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre -commencement communications pursuant to Rule 13e-4(c) under the
Exchange
Act (17 CFR 240.13e-4(c))
Item
2.02.
Results
of Operations and Financial Condition
On April
12,
2024,
Hingham
Institution
for Savings
announced
its financial
results
for the
quarter
ended
March
31, 2024
. Thefulltextofthepressreleaseissuedinconnectionwiththe
announcement
is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Form 8-K (including Exhibit 99.1) shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or
otherwise subject to the liabilities of that section, nor shall it be deemed incorporatedby referenceinanyfilingundertheSecuritiesActof1933ortheExchangeAct,exceptasexpressly
set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits
(c) Exhibits
The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:
99.1 Press Release entitled "Hingham Reports First Quarter 2024 Results" issued by the Bank on April 12, 2024
2
EXHIBIT
INDEX
Exhibit No.
Description
99.1
Press Release entitled "Hingham Reports First Quarter 2024 Results"
issued by the Bank on April 12, 2024.
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date:
April 12, 2024
Hingham Institution forSavings
(Registrant)
By:
Cristian Melej
Vice President & Chief Financial Officer
4
PRESS
RELEASE
FROM:
Robert H. Gaughen, Jr., Chairman and Chief Executive Officer
Hingham Institution for Savings
Hingham, MA (NASDAQ: HIFS)
DATE:
April 12, 2024
CONTACT:
Patrick R. Gaughen, President and Chief Operating Officer (781) 783-1761
HINGHAM REPORTS FIRST QUARTER 2024 RESULTS
HINGHAM INSTITUTION FOR SAVINGS (NASDAQ: HIFS), Hingham, Massachusetts announced results for the quarter ended March 31, 2024.
Earnings
NetincomeforthequarterendedMarch31,2024was$6,868,000or$3.17persharebasicand$3.13 persharediluted,ascomparedto$8,510,000or$3.96persharebasicand$3.87persharedilutedfor thesameperiodlastyear. TheBank'sannualizedreturnonaverageequityforthefirstquarterof 2024was6.63%,andtheannualizedreturnonaverageassetswas0.63%,ascomparedto8.67%and 0.82% for the same periodlastyear. Netincomepershare(diluted)forthefirstquarterof2024 decreased by 19% compared to the same period in 2023.
CorenetincomeforthequarterendedMarch31,2024,whichrepresentsnetincomeexcludingthe
after -taxgainsonequitysecurities,bothrealizedandunrealized,was$2,213,000or$1.02pershare basicand$1.01persharediluted,ascomparedto$5,744,000or$2.67persharebasicand$2.61per
sharedilutedforthesameperiodlastyear. TheBank'sannualizedcorereturnonaverageequityfor
thefirstquarterof2024was2.14%andtheannualizedcorereturnonaverageassetswas0.20%,as
comparedto5.85%and0.56%forthesameperiodlastyear. Corenetincomepershare(diluted)for
the first quarter of 2024 decreased by 61% over the same period in 2023.
See
Page
9
for
a Non
-GAAP reconciliation
between
Generally
Accepted
Accounting
Principles
("GAAP")netincomeandcorenetincome
. Incalculatingcorenetincome,theBankdidnotmake
any
adjustments
other
than
those
relating
to after -tax gains
on equity
securities,
realized
and
unrealized
.
In the
first
quarter
of 2024,
both
net
income
and
core
net
income
were
positively
impactedbylowerincometaxexpensedrivenbyexcesstaxbenefitassociatedwiththeexerciseof
stock
options and the revision of income tax estimates.
Page1of 9
Balance Sheet
Total assets increased to $ 4.529 billion at March 31, 2024, representing 4% annualized growth year -to-date and 8% growth from March 31, 2023.
Net
loans
increased
to $ 3.938 billion
at
March
31,
2024,
representing
2%
annualized
growth
year -to-date and
7%
growth
from
March
31,
2023
. Origination
activity
was
concentratedinthe
BostonandWashingtonD
.C.marketsandremainedfocusedonstabilizedmultifamilycommercial
realestateandmultifamilyconstruction
. TheBankcontinuestoevaluatenewopportunitiesinthe
San
Francisco
market,
where
interest
in
acquisitions
and
refinancing
activity
from
the
Bank's
customers
began to pick up in early 2024. As noted below, asset quality remained strong.
Retail and business deposits were $1.893 billion at March 31, 2024,representing7%annualized growthyear-to-dateanda5%declinefromMarch31,2023.Non-interest-bearingdeposits,included
inretailandbusinessdeposits,were$347.4millionatMarch31,2024,representing10%annualized growth year-to-date and an 8% decline from March 31, 2023.
Growthinnon-interestbearingandmoneymarketbalancesreflectedtheBank'sfocusondeveloping and deepening deposit relationships with new and existing commercialandnon-profitcustomers.
Investments in new relationship managers in late 2023, combinedwithchangestoourmarketing
approach,begantoshowsomeinitialresults. TheBankalsoaddedanewrelationshipmanagerinits SpecializedDepositGroupinSanFranciscoduringthequarter,aswellasaspecialistthatsupports
the delivery of cash managementservices to our commercial customers . TheBankcontinuesto recruitactivelyfortalentedretailandcommercialbankersinBoston,Washington,andSanFrancisco,
particularly as respected competitors have exited these markets or merged with larger regional banks.
ThestabilityoftheBank'sbalancesheet,aswellasfullandunlimiteddepositinsurancethroughthe
Bank'sparticipationintheMassachusettsDepositorsInsuranceFund,continuestobeappealingto
customers in times of uncertainty.
Wholesale funds, which includes Federal Home Loan Bank borrowings, brokered deposits, and
listingservicedepositswere$2.185billionatMarch31,2024,representing1%annualizedgrowth year -to-dateand22%growthfromMarch31,2023,astheBankcontinuedtomanageitswholesale funding mix to optimize the cost of funds while adding duration where appropriate. Wholesale
deposits,whichincludebrokeredandlistingservicetimedeposits,were$500.4millionatMarch31,
2024,
representing
10%
annualized
growth
year -to-date and
a 6%
decline
from
March
31,2023
.
Borrowings
from
the
Federal
Home
Loan
Bank
totaled
$ 1.685 billion
at March
31,
2024,
representing
a 2%annualizeddeclinefromDecember31,2023,and33%growthfromMarch31,
2023
.
As of March
31,
2024,
the Bank
maintained
an additional $677.8millioninimmediately
available
borrowing
capacity
at the FederalHomeLoanBankofBostonandtheFederalReserve
Bank,
in addition to $373.2 million in cash and cash equivalents.
Book value per share was $ 190.07 as of March 31, 2024, representing a 3% annualized growth
year -to-date and 4% growth from March31,2023. Inadditiontotheincreaseinbookvalueper
share, the Bank declared $2.52 in dividends per share since March 31, 2023.
OnMarch27,2024,theBankdeclaredaregularcashdividendof$0.63pershare. Thisdividendwill
bepaidonMay15,2024tostockholdersofrecordasofMay6,2024. ThiswastheBank's121st consecutive quarterly dividend.
TheBankhasalsogenerallydeclaredspecialcashdividendsineachofthelasttwenty-nineyears,
Page2of 9
typicallyinthefourthquarter,butdidnotdeclareaspecialdividendin2023. TheBanksetsthelevel ofthespecialdividendbasedontheBank'scapitalrequirementsandtheprospectivereturnonother
capitalallocationoptions,particularlytheincrementalreturnoncapitalfromnewloanoriginations. This may result in special dividends, if any, significantly above or below the regular quarterly
dividend . FutureregularandspecialdividendswillbeconsideredbytheBoardofDirectorsona
quarterly basis.
Operational Performance Metrics
ThenetinterestmarginforthequarterendedMarch31,2024decreased4basispointsto0.85%,as
compared to 0 .89% in the quarter ended December 31, 2023 . It was stable on a monthly basis
throughoutthequarter. Thiswasprimarilytheresultofanincreaseinthecostofinterest-bearing liabilities,drivenprimarilybyanincreaseinthecostoftheBank'swholesalefundingsourcesand higherratesontheBank'sretailandcommercialdeposits,partiallyoffsetbyanincreaseintheyield
on loans from thepriorquarter. Theincreaseintheyieldonloanswasdrivenbybothnewloan
originationsathigherratesandtherepricingofexistingadjustablerateloans. Thepaceofnetinterest
margin compressionslowed substantiallyas compared to prior quarters . Thenetinterestmargin
appearstobestabilizingatthispoint,asshort-termmarketrateshaveremainedstable,thepaceof
increase in the Bank's deposit costs has slowed or reversed in some products, and asset yields continue to climb slowly and sustainably.
ThenetinterestmarginforthequarterendedMarch31,2024decreased61basispointsto0.85%,as comparedto1.46%forthesameperiodlastyear. TheBankexperiencedasubstantialincreaseinthe costofinterest-bearingliabilitieswhencomparedtotheprioryear. Thiswasdrivenprimarilybythe repricingoftheBank'sfundingsources. Duringthisperiod,theincreaseinthecostoffundswas partially offset by ahigheryieldoninterest-earningassets,drivenprimarilybyanincreaseinthe interestonreservesheldattheFederalReserveBankofBoston,ahigherFederalHomeLoanBank of Boston stock dividend and an increase in the yield on loans.
Key credit and operational metrics remained strong in the first quarter . At March 31, 2024,
non -performingassetstotaled0.04%oftotalassets,comparedto0.03%atDecember31,2023and 0.01%atMarch31,2023. Non-performingloansasapercentageofthetotalloanportfoliototaled
0 .04%atMarch31,2024,comparedto0.04%atDecember31,2023and0.01%atMarch31,2023. The Bank did not record any charge-offs in the first three months of 2024 or 2023. All non-performing assets and loans cited above were and are residential, owner-occupant loans.
TheBankdidnothaveanydelinquentornon-performingcommercialrealestateloansasofMarch
31,2024,December31,2023,orMarch31,2023. TheBankdidnotownanyforeclosedpropertyat
March 31, 2024, December 31, 2023 or March 31, 2023.
Theefficiencyratio,asdefinedonpage5below,increasedto77.24%forthefirstquarterof2024,as comparedto45.96%forthesameperiodlastyear. Operatingexpensesasapercentageofaverage
assetsfellto0.67%forthefirstquarterof2024,ascomparedto0.68%forthesameperiodlastyear. Astheefficiencyratiocanbesignificantlyinfluencedbythelevelofnetinterestincome,theBank utilizesthesepairedfigurestogethertoassessitsoperationalefficiencyovertime. Duringperiodsof
significantnetinterestincomevolatility,theefficiencyratioinisolationmayoverorunderstatethe
underlyingoperationalefficiencyoftheBank. TheBankremainsfocusedonreducingwastethrough
an ongoing process of continuous improvement and standard work that supports operational leverage.
ChairmanRobertH.GaughenJr.stated,"Returnsonequityandassetsinthefirstquarterof2024
Page3of 9
weresignificantlylowerthanourlong-termperformance,reflectingthechallengefromtheincreaseinshort-terminterestratesoverthelasttwenty-fourmonthsandahistoricallylonganddeepinversion
oftheyieldcurve. Theseconditionshaveposedasignificant-albeittemporary-challengetoour business model. Our core business has been particularly challenged during this period and our
investment operations have been critical to sustaining growth in book value per share in this environment.
We
are
cautiously
optimistic
that
this
challenge
will
fade
over
this
year . To
the
extent
we
can
capitalize
on the
inverted
yield
curve
and
reduce
liability
sensitivity
slightly
via
our
wholesale
fundingactivities,wewilldoso
. Thisnormalizationoftheyieldcurvewilleventuallyallowusto
achieve
more
satisfactory
returns
as we
obtain
higher
rates
on
new
and
adjusting
loans
and
incremental
funding pressure abates.
While the current market environmenthas been extraordinarilychallenging, the Bank's business
modelhasbeenbuiltovertimetocompoundshareholdercapitaloveraneconomiccycle. Duringall suchperiods,weremainfocusedoncarefulcapitalallocation,defensiveunderwritinganddisciplined
cost control - the building blocks for compounding shareholder capital through all stages of the
economiccycle. Theseremainconstant,regardlessofthemacroeconomicenvironmentinwhichwe
operate. I believe that over the past twenty-four months we have retained this focus."
TheBank'squarterlyfinancialresultsaresummarizedinthisearningsrelease,butshareholdersare
encouragedtoreadtheBank'squarterlyreportonForm10-Q,whichisgenerallyavailableseveral weeksaftertheearningsrelease. TheBankexpectstofileForm10-QforthequarterendedMarch 31, 2024 with the Federal Deposit Insurance Corporation (FDIC) on or about May 8, 2024.
Incorporatedin1834,HinghamInstitutionforSavingsisoneofAmerica'soldestbanks. TheBank maintains offices in Boston, Nantucket, Washington, D.C., and San Francisco.
TheBank'ssharesofcommonstockarelistedandtradedonTheNASDAQStockMarketunderthe symbol HIFS.
Annual Meeting
The Bank will hold its Annual Meeting of Stockholders(the "Meeting") at 2:00PM EST on
Thursday, April 25, 2024 at the Old Derby Academy, located at 34 Main Street, Hingham,
Massachusetts. Stockholders may also observe the Meeting by streaming video. Immediately followingthebusinessmeeting,theBankwillholdaninformalmeetingtodiscusstheresultsofthe
prioryearandtheoperationsoftheBank,aswellasaquestionandanswerssession. Westrongly
encourageallshareholderstovotebyproxy. Electronicvotingwillnotbeavailable. Registrationfor
themeetingisavailableontheBank'swebsite(clickhere ). Inadditiontoparticipatinginthemeeting itself,wealsoencourageshareholderstosubmitquestionsinwritinginadvanceusingtheformonthe
Bank's website.
Page4of 9
HINGHAM
INSTITUTION FOR SAVINGS
Selected
Financial Ratios
Three
Months Ended
March
31,
(Unaudited)
2023
2024
Key
Performance Ratios
0.63 %
Return
on average assets (1)
0.82%
Return
on average equity (1)
8.67
6.63
Core
return on average assets (1) (5)
0.56
0.20
Core
return on average equity (1) (5)
5.85
2.14
Interest
rate spread (1) (2)
0.92
0.13
Net interest margin (1) (3)
1.46
0.85
Operating
expenses to average assets (1)
0.68
0.67
Efficiency
ratio (4)
45.96
77.24
Average
equity to average assets
9.51
9.54
Average
interest-earning assets to average interest
119 .91
bearing
liabilities
121 .68
March
31,
December
31,
March
31,
(Unaudited)
2023
2023
2024
Asset
Quality Ratios
0 .67%
Allowance
for credit losses/total loans
0.69 %
0.68 %
Allowance
for credit losses/non-performing loans
5,169.01
1,804.47
1,530
.95
Non -performing loans/total loans
0.01
0 .04
0.04
Non -performing loans/total assets
0.01
0 .03
0.04
Non -performing assets/total assets
0.01
0 .03
0.04
Share
Related
$
190.07
Book
value per share
$
182.89
$
188 .50
Market
value per share
$
233.44
$
194 .40
$
174.46
Shares
outstanding at end of period
2,147,400
2,162,400
2,180,250
(1) Annualized .
(2) Interestratespreadrepresentsthedifferencebetweentheyieldoninterest-earningassetsandthecostofinterest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.
(4) Theefficiencyratioisanon-GAAPmeasurethatrepresentstotaloperatingexpenses,dividedbythesumofnetinterest income and total other income, excluding gain on equity securities, net.
(5) Non-GAAP measurements that represent return onaverageassetsandreturnonaverageequity,excludingtheafter-tax gain on equity securities, net.
Page5of 9
HINGHAM
INSTITUTION FOR SAVINGS
Consolidated
Balance Sheets
March 31,
December
31,
March 31,
(In thousands, except share amounts)
2023
2023
2024
(Unaudited)
ASSETS
Cash
and due from banks
$
5,727
$
5,654
$
6,200
Federal
Reserve and other short-term investments
346,713
356,823
367,046
Cash
and cash equivalents
352,440
362,477
373,246
CRA
investment
8,361
8,853
8,759
Other
marketable equity securities
59,115
70,949
78,497
Securities,
at fair value
67,476
79,802
87,256
Securities
held to maturity, at amortized cost
3,500
3,500
5,500
Federal
Home Loan Bank stock, at cost
52,316
69,574
69,484
Loans,
net of allowance for credit losses of $25,690
at March 31, 2023, $26,652 at December 31, 2023
3,938,252
and $26,760 at March 31, 2024
3,672,258
3,914,244
Bank
-owned life insurance
13,395
13,642
13,723
Premises
and equipment, net
18,056
17,008
16,844
Accrued
interest receivable
7,161
8,554
8,783
Deferred
income tax asset, net
3,432
974
-
Other
assets
15,901
14,172
16,263
Total
assets
$
4,205,935
$
4,483,947
$
4,529,351
LIABILITIES
AND STOCKHOLDERS' EQUITY
Interest
-bearing deposits
$ 2,144,387
$
2,010,918
$
2,045,524
Non -interest-bearing deposits
375,887
339,059
347,397
Total
deposits
2,520,274
2,349,977
2,392,921
Federal
Home Loan Bank advances
1,265,000
1,692,675
1,684,675
Mortgagors'
escrow accounts
13,123
13,942
13,570
Accrued
interest payable
5,713
12,261
14,040
Deferred
income tax liability, net
-
-
1,765
Other
liabilities
9,087
7,472
7,982
Total
liabilities
3,813,197
4,076,327
4,114,953
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;
2,147,400 shares issued and outstanding at
March
31, 2023, 2,162,400 shares issued and outstanding at
2,180
December
31, 2023 and 2,180,250 shares issued and
2,147
2,162
outstanding
at March 31, 2024
15,416
Additional
paid-in capital
13,068
14,150
Undivided
profits
377,523
391,308
396,802
Accumulated
other comprehensive income
-
-
-
Total
stockholders' equity
392,738
407,620
414,398
Total
liabilities and stockholders' equity
$
4,205,935
$
4,483,947
$
4,529,351
Page6of 9
Disclaimer
Hingham Institution for Savings published this content on 12 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 April 2024 20:26:32 UTC.