Earnings
Net income for the quarter ended
Core net income for the quarter ended
Net income for the six months ended
Core net income for the six months ended
See Page 10 for a reconciliation between Generally Accepted Accounting Principles (“GAAP”) net income and Non-GAAP core net income. GAAP requires that gains and losses on equity securities, net of tax, realized and unrealized, be recognized in the Consolidated Statements of Income. In calculating core net income, the Bank did not make any adjustments other than those relating to after-tax gains on equity securities, realized and unrealized. The Bank did not realize any equity securities gains or losses in the first six months of 2024.
Balance Sheet
Total assets increased to
Net loans were
Retail and business deposits were
Growth in non-interest bearing and money market balances in the first six months of 2024 reflected the Bank’s focus on developing and deepening deposit relationships with new and existing commercial and non-profit customers. Investments in new relationship managers over the last nine months combined with changes to our marketing approach, continued to contribute to deposit growth in the second quarter of 2024. The Bank continues to recruit actively for talented commercial bankers in
The stability of the Bank’s balance sheet, as well as full and unlimited deposit insurance through the Bank’s participation in the
Wholesale funds, which includes
Book value per share was
On
The Bank has also generally declared special cash dividends in each of the last twenty-nine years, typically in the fourth quarter, but did not declare a special dividend in 2023. 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, particularly the incremental return on capital from new loan originations. 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
Key credit and operational metrics remained strong in the second quarter of 2024. At
The Bank did not have any delinquent or non-performing commercial real estate loans as of
The efficiency ratio, as defined on page 5 below, decreased to 68.57% for the second quarter of 2024, as compared to 77.24% in the prior quarter, but increased when compared to 55.03% for the same period last year. Operating expenses as a percentage of average assets fell to 0.67% for the second quarter of 2024, as compared to 0.71% for the same period last year. As the efficiency ratio can be significantly influenced by the level of net interest income, the Bank utilizes these paired figures together to assess its operational efficiency over time. During periods of significant net interest income volatility, the efficiency ratio in isolation may over or understate the underlying operational efficiency of the Bank. The Bank remains focused on reducing waste through an ongoing process of continuous improvement and standard work that supports operational leverage, positioning the Bank to operate more efficiently in future.
Chairman
This challenge will begin to fade this year, as our assets continue to reprice. Where the yield curve remains inverted, we will continue to capitalize on it via our wholesale funding activities.
While this market environment has been extraordinarily challenging, the Bank’s business model has been built over time to compound shareholder capital through economic cycles. During all 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. I believe that over the past twenty-four months we have retained this focus and it will serve us well as we begin to emerge from this challenge.”
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
Incorporated in 1834,
The Bank’s shares of common stock are listed and traded on
Selected Financial Ratios | |||||||||||
Three Months Ended | Six Months Ended | ||||||||||
2023 | 2024 | 2023 | 2024 | ||||||||
(Unaudited) | |||||||||||
Key Performance Ratios | |||||||||||
Return on average assets (1) | 0.80 | % | 0.38 | % | 0.81 | % | 0.50 | % | |||
Return on average equity (1) | 8.27 | 3.92 | 8.47 | 5.27 | |||||||
Core return on average assets (1) (5) | 0.39 | 0.20 | 0.47 | 0.20 | |||||||
Core return on average equity (1) (5) | 4.06 | 2.08 | 4.95 | 2.11 | |||||||
Interest rate spread (1) (2) | 0.66 | 0.25 | 0.79 | 0.19 | |||||||
Net interest margin (1) (3) | 1.28 | 0.96 | 1.37 | 0.91 | |||||||
Operating expenses to average assets (1) | 0.71 | 0.67 | 0.69 | 0.67 | |||||||
Efficiency ratio (4) | 55.03 | 68.57 | 50.19 | 72.63 | |||||||
Average equity to average assets | 9.66 | 9.59 | 9.58 | 9.56 | |||||||
Average interest-earning assets to average interest-bearing liabilities | 121.66 | 119.93 | 121.67 | 119.92 | |||||||
2023 | 2023 | 2024 | |||||||||
(Unaudited) | |||||||||||
Asset Quality Ratios | |||||||||||
Allowance for credit losses/total loans | 0.69 | % | 0.68 | % | 0.68 | % | |||||
Allowance for credit losses/non-performing loans | 15,376.47 | 1,804.47 | 1,577.28 | ||||||||
Non-performing loans/total loans | — | 0.04 | 0.04 | ||||||||
Non-performing loans/total assets | — | 0.03 | 0.04 | ||||||||
Non-performing assets/total assets | — | 0.03 | 0.04 | ||||||||
Share Related | |||||||||||
Book value per share | $ | 185.94 | $ | 188.50 | $ | 191.34 | |||||
Market value per share | $ | 213.18 | $ | 194.40 | $ | 178.88 | |||||
Shares outstanding at end of period | 2,150,400 | 2,162,400 | 2,180,250 |
(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 is a non-GAAP measure that 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. | |
Consolidated Balance Sheets | ||||||||
(In thousands, except share amounts) | 2023 | 2023 | 2024 | |||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Cash and due from banks | $ | 6,764 | $ | 5,654 | $ | 5,990 | ||
347,320 | 356,823 | 363,151 | ||||||
Cash and cash equivalents | 354,084 | 362,477 | 369,141 | |||||
CRA investment | 8,229 | 8,853 | 8,722 | |||||
Other marketable equity securities | 65,744 | 70,949 | 83,860 | |||||
Securities, at fair value | 73,973 | 79,802 | 92,582 | |||||
Securities held to maturity, at amortized cost | 3,500 | 3,500 | 6,493 | |||||
60,897 | 69,574 | 66,189 | ||||||
Loans, net of allowance for credit losses of | 3,761,572 | 3,914,244 | 3,933,419 | |||||
Bank-owned life insurance | 13,478 | 13,642 | 13,805 | |||||
Premises and equipment, net | 18,383 | 17,008 | 16,676 | |||||
Accrued interest receivable | 7,388 | 8,554 | 9,082 | |||||
Deferred income tax asset, net | 2,236 | 974 | — | |||||
Other assets | 15,216 | 14,172 | 13,344 | |||||
Total assets | $ | 4,310,727 | $ | 4,483,947 | $ | 4,520,731 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Interest-bearing deposits | $ | 2,049,918 | $ | 2,010,918 | $ | 2,075,002 | ||
Non-interest-bearing deposits | 363,827 | 339,059 | 343,262 | |||||
Total deposits | 2,413,745 | 2,349,977 | 2,418,264 | |||||
1,470,000 | 1,692,675 | 1,648,675 | ||||||
Mortgagors’ escrow accounts | 13,248 | 13,942 | 14,577 | |||||
Accrued interest payable | 6,355 | 12,261 | 12,242 | |||||
Deferred income tax liability, net | — | — | 989 | |||||
Other liabilities | 7,526 | 7,472 | 8,806 | |||||
Total liabilities | 3,910,874 | 4,076,327 | 4,103,553 | |||||
Stockholders’ equity: | ||||||||
Preferred stock, | — | — | — | |||||
Common stock, | 2,150 | 2,162 | 2,180 | |||||
Additional paid-in capital | 13,288 | 14,150 | 15,467 | |||||
Undivided profits | 384,415 | 391,308 | 399,531 | |||||
Total stockholders’ equity | 399,853 | 407,620 | 417,178 | |||||
Total liabilities and stockholders’ equity | $ | 4,310,727 | $ | 4,483,947 | $ | 4,520,731 |
Consolidated Statements of Income | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
(In thousands, except per share amounts) | 2023 | 2024 | 2023 | 2024 | ||||||||
(Unaudited) | ||||||||||||
Interest and dividend income: | ||||||||||||
Loans | $ | 37,806 | $ | 44,665 | $ | 74,222 | $ | 87,785 | ||||
Debt securities | 33 | 87 | 66 | 132 | ||||||||
Equity securities | 1,044 | 1,551 | 1,947 | 3,001 | ||||||||
3,106 | 2,745 | 6,480 | 5,572 | |||||||||
Total interest and dividend income | 41,989 | 49,048 | 82,715 | 96,490 | ||||||||
Interest expense: | ||||||||||||
Deposits | 16,808 | 22,141 | 30,608 | 43,287 | ||||||||
12,151 | 16,539 | 24,166 | 33,751 | |||||||||
Total interest expense | 28,959 | 38,680 | 54,774 | 77,038 | ||||||||
Net interest income | 13,030 | 10,368 | 27,941 | 19,452 | ||||||||
Provision for credit losses | 450 | 180 | 606 | 288 | ||||||||
Net interest income, after provision for credit losses | 12,580 | 10,188 | 27,335 | 19,164 | ||||||||
Other income: | ||||||||||||
Customer service fees on deposits | 141 | 138 | 279 | 275 | ||||||||
Increase in cash surrender value of bank-owned life insurance | 83 | 82 | 166 | 163 | ||||||||
Gain on equity securities, net | 5,390 | 2,464 | 8,938 | 8,434 | ||||||||
Miscellaneous | 54 | 49 | 117 | 104 | ||||||||
Total other income | 5,668 | 2,733 | 9,500 | 8,976 | ||||||||
Operating expenses: | ||||||||||||
Salaries and employee benefits | 4,185 | 4,234 | 8,491 | 8,531 | ||||||||
Occupancy and equipment | 380 | 394 | 771 | 825 | ||||||||
Data processing | 746 | 738 | 1,399 | 1,493 | ||||||||
Deposit insurance | 590 | 819 | 1,240 | 1,629 | ||||||||
Foreclosure and related | 26 | 14 | (48 | ) | 46 | |||||||
Marketing | 277 | 187 | 489 | 276 | ||||||||
Other general and administrative | 1,120 | 908 | 1,964 | 1,721 | ||||||||
Total operating expenses | 7,324 | 7,294 | 14,306 | 14,521 | ||||||||
Income before income taxes | 10,924 | 5,627 | 22,529 | 13,619 | ||||||||
Income tax provision | 2,676 | 1,525 | 5,770 | 2,649 | ||||||||
Net income | $ | 8,248 | $ | 4,102 | $ | 16,759 | $ | 10,970 | ||||
Cash dividends declared per share | $ | 0.63 | $ | 0.63 | $ | 1.26 | $ | 1.26 | ||||
Weighted average shares outstanding: | ||||||||||||
Basic | 2,149 | 2,180 | 2,148 | 2,175 | ||||||||
Diluted | 2,191 | 2,186 | 2,196 | 2,189 | ||||||||
Earnings per share: | ||||||||||||
Basic | $ | 3.84 | $ | 1.88 | $ | 7.80 | $ | 5.04 | ||||
Diluted | $ | 3.76 | $ | 1.88 | $ | 7.63 | $ | 5.01 |
Net Interest Income Analysis | ||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||
Average Balance (9) | Interest | Yield/ Rate (10) | Average Balance (9) | Interest | Yield/ Rate (10) | Average Balance (9) | Interest | Yield/ Rate (10) | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||
Loans (1) (2) | $ | 3,725,717 | $ | 37,806 | 4.06 | % | $ | 3,956,135 | $ | 43,120 | 4.36 | % | $ | 3,980,111 | $ | 44,665 | 4.49 | % | ||||||||||||
Securities (3) (4) | 103,153 | 1,077 | 4.18 | 116,203 | 1,495 | 5.15 | 119,477 | 1,638 | 5.48 | |||||||||||||||||||||
Short-term investments (5) | 245,426 | 3,106 | 5.06 | 208,245 | 2,827 | 5.43 | 202,379 | 2,745 | 5.43 | |||||||||||||||||||||
Total interest-earning assets | 4.074.296 | 41,989 | 4.12 | 4,280,583 | 47,442 | 4.43 | 4,301,967 | 49,048 | 4.56 | |||||||||||||||||||||
Other assets | 56,658 | 64,034 | 66,218 | |||||||||||||||||||||||||||
Total assets | $ | 4,130,954 | $ | 4,344,617 | $ | 4,368,185 | ||||||||||||||||||||||||
Liabilities and stockholders’ equity: | ` | |||||||||||||||||||||||||||||
Interest-bearing deposits (6) | $ | 2,196,558 | 16,808 | 3.06 | % | $ | 2,098,851 | 21,146 | 4.03 | % | $ | 2,149,753 | 22,141 | 4.12 | % | |||||||||||||||
Borrowed funds | 1,152,473 | 12,151 | 4.22 | 1,471,027 | 17,212 | 4.68 | 1,437,335 | 16,539 | 4.60 | |||||||||||||||||||||
Total interest-bearing liabilities | 3,349,031 | 28,959 | 3.46 | 3,569,878 | 38,358 | 4.30 | 3,587,088 | 38,680 | 4.31 | |||||||||||||||||||||
Non-interest-bearing deposits | 371,262 | 346,136 | 346,663 | |||||||||||||||||||||||||||
Other liabilities | 11,636 | 14,261 | 15,503 | |||||||||||||||||||||||||||
Total liabilities | 3,731,929 | 3,930,275 | 3,949,254 | |||||||||||||||||||||||||||
Stockholders’ equity | 399,025 | 414,342 | 418,931 | |||||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 4,130,954 | $ | 4,344,617 | $ | 4,368,185 | ||||||||||||||||||||||||
Net interest income | $ | 13,030 | $ | 9,084 | $ | 10,368 | ||||||||||||||||||||||||
Weighted average interest rate spread | 0.66 | % | 0.13 | % | 0.25 | % | ||||||||||||||||||||||||
Net interest margin (7) | 1.28 | % | 0.85 | % | 0.96 | % | ||||||||||||||||||||||||
Average interest-earning assets to average interest-bearing liabilities (8) | 121.66 | % | 119.91 | % | 119.93 | % |
(1) | Before allowance for credit losses. | |
(2) | Includes non-accrual loans. | |
(3) | Excludes the impact of the average net unrealized gain or loss on securities. | |
(4) | ||
(5) | Includes cash held at the | |
(6) | Includes mortgagors' escrow accounts. | |
(7) | Net interest income divided by average total interest-earning assets. | |
(8) | Total interest-earning assets divided by total interest-bearing liabilities. | |
(9) | Average balances are calculated on a daily basis. | |
(10) | Annualized. |
Net Interest Income Analysis | |||||||||||||||||
Six Months Ended | |||||||||||||||||
2023 | 2024 | ||||||||||||||||
Average Balance (9) | Interest | Yield/ Rate (10) | Average Balance (9) | Interest | Yield/ Rate (10) | ||||||||||||
(Dollars in thousands) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Loans (1) (2) | $ | 3,704,236 | $ | 74,222 | 4.01 | % | $ | 3,968,123 | $ | 87,785 | 4.42 | % | |||||
Securities (3) (4) | 101,432 | 2,013 | 3.97 | 117,840 | 3,133 | 5.32 | |||||||||||
Short-term investments (5) | 269,834 | 6,480 | 4.80 | 205,312 | 5,572 | 5.43 | |||||||||||
Total interest-earning assets | 4,075,502 | 82,715 | 4.06 | 4,291,275 | 96,490 | 4.50 | |||||||||||
Other assets | 55,242 | 65,126 | |||||||||||||||
Total assets | $ | 4,130,744 | $ | 4,356,401 | |||||||||||||
Interest-bearing deposits (6) | $ | 2,223,225 | 30,608 | 2.75 | $ | 2,124,302 | 43,287 | 4.08 | |||||||||
Borrowed funds | 1,126,459 | 24,166 | 4.29 | 1,454,181 | 33,751 | 4.64 | |||||||||||
Total interest-bearing liabilities | 3,349,684 | 54,774 | 3.27 | 3,578,483 | 77,038 | 4.31 | |||||||||||
Non-interest-bearing deposits | 374,656 | 346,399 | |||||||||||||||
Other liabilities | 10,551 | 14,882 | |||||||||||||||
Total liabilities | 3,734,891 | 3,939,764 | |||||||||||||||
Stockholders’ equity | 395,853 | 416,637 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 4,130,744 | $ | 4,356,401 | |||||||||||||
Net interest income | $ | 27,941 | $ | 19,452 | |||||||||||||
Weighted average interest rate spread | 0.79 | % | 0.19 | % | |||||||||||||
Net interest margin (7) | 1.37 | % | 0.91 | % | |||||||||||||
Average interest-earning assets to average interest-bearing liabilities (8) | 121.67 | % | 119.92 | % |
(1) | Before allowance for credit losses. | |
(2) | Includes non-accrual loans. | |
(3) | Excludes the impact of the average net unrealized gain or loss on securities. | |
(4) | ||
(5) | Includes cash held at the | |
(6) | Includes mortgagors' escrow accounts. | |
(7) | Net interest income divided by average total interest-earning assets. | |
(8) | Total interest-earning assets divided by total interest-bearing liabilities. | |
(9) | Average balances are calculated on a daily basis. | |
(10) | Annualized. |
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.
Three Months Ended | Six Months Ended | ||||||||||||||
(In thousands, unaudited) | 2023 | 2024 | 2023 | 2024 | |||||||||||
Non-GAAP reconciliation: | |||||||||||||||
Net income | $ | 8,248 | $ | 4,102 | $ | 16,759 | $ | 10,970 | |||||||
Gain on equity securities, net | (5,390 | ) | (2,464 | ) | (8,938 | ) | (8,434 | ) | |||||||
Income tax expense (1) | 1,188 | 543 | 1,970 | 1,859 | |||||||||||
Core net income | $ | 4,046 | $ | 2,181 | $ | 9,791 | $ | 4,395 | |||||||
(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.
The table below presents the calculation of the efficiency ratio, a non-
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||
(In thousands, unaudited) | 2023 | 2024 | 2024 | 2023 | 2024 | ||||||||||||||||||||
Non- | |||||||||||||||||||||||||
Operating expenses | $ | 7,324 | $ | 7,227 | $ | 7,294 | $ | 14,306 | $ | 14,521 | |||||||||||||||
Net interest income | $ | 13,030 | $ | 9,084 | $ | 10,368 | $ | 27,941 | $ | 19,452 | |||||||||||||||
Other income | 5,668 | 6,244 | 2,733 | 9,500 | 8,976 | ||||||||||||||||||||
Gain on equity securities, net | (5,390 | ) | (5,971 | ) | (2,464 | ) | (8,938 | ) | (8,434 | ) | |||||||||||||||
Total revenue | $ | 13,308 | $ | 9,357 | $ | 10,637 | $ | 28,503 | $ | 19,994 | |||||||||||||||
Efficiency ratio | 55.03 | % | 77.24 | % | 68.57 | % | 50.19 | % | 72.63 | % | |||||||||||||||
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