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Hingham Institution for Savings saw its earnings increase by 50 percent in the fourth quarter and 30 percent for the year, as the bank saw its net interest margin rise during the year.
The bank’s net income in 2020 was $50.77 million, or $23.76 per share basic and $23.25 per share diluted, compared to $38.93 million, or $18.24 per share basic and $17.83 per share diluted, in 2019. The return on average equity in 2020 was 18.96 percent, and the return on average assets was 1.88 percent, compared to 16.82 percent and 1.55 percent, respectively, in 2019.
Fourth quarter net income was $17.04 million, or $7.97 per share basic and $7.78 per share diluted, compared to $11.36 million, or $5.32 per share basic and $5.20 per share diluted, for the for the fourth quarter of 2019.
“Returns on equity and assets were satisfactory in 2020, although performance in any one period should always be viewed cautiously, especially when tailwinds are blowing strongly in our favor,” Chairman and CEO Robert H. Gaughen Jr. said in a statement announcing the earnings results. “These tailwinds will not blow forever, and we must be prepared for environments in which headwinds prevail. In doing so, 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.”
Hingham Institution for Savings saw its net interest margin increase both in the fourth quarter and for the full year. The fourth quarter net interest margin was 3.43 percent compared to 2.79 percent in the same quarter last year. For full-year 2020, the net interest margin was 3.22 percent, 50 basis points higher compared to 2019.
The bank said it benefited from a sharp decline in the cost of interest-bearing liabilities, including retail and commercial deposits and wholesale funding, along with growth in its non-interest bearing deposits. A lower yield on loans and a declining yield on the bank’s interest-bearing assets, including excess reserves held at the Federal Reserve Bank of Boston, partially offset the benefits, the bank said.
The bank said it continued to reduce the balance of excess reserves held at the Federal Reserve Bank during 2020, reducing its cost of funds by managing the wholesale funding mix between wholesale time deposits and Federal Home Loan Bank advances.
Total deposits increased to $2.14 billion on Dec. 31, a 17 percent growth from the end of 2019, including an 11 percent growth in retail and business deposits to $1.59 billion. The retail and business deposits included $313.5 million in non-interest bearing deposits, a 32 percent increase compared to 2019.
Hingham Institution for Savings had about $2.86 billion in total assets at the end of 2020, a 10 percent growth year-over-year. Net loans totaled nearly $2.5 billion on Dec. 31, 12 percent higher compared to 2019. The bank said the growth was concentrated in its commercial real estate portfolio.
Less than 1 percent of the commercial real estate loans were receiving COVID-related modifications on Dec. 31, with seven of these loans totaling $21.2 million receiving modifications, representing 1.25 percent of its CRE loan balance. The bank on Sept. 30 had 10 CRE loans receiving COVID modifications.
The residential real estate portfolio, including home equity lines of credit, saw loan modifications at the end of the year remaining on five of the bank’s roughly 2,400 residential loans, down from 24 loans receiving modifications at the end of September. Less than 1 percent of the bank’s combined $2.5 billion commercial and consumer loan balance had modifications at the end of 2020.
