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Hingham Institution for Savings saw second quarter earnings decline 84 percent year-over-year while the bank continued to increase its quarterly dividend.
The Hingham-based bank had net income of $3.19 million, or $1.49 per share basic and $1.45 per share diluted, compared to $20.42 million, or $9.54 per share basic and $9.28 per share diluted, in the second quarter of 2021.
“Returns on equity and assets in our core operations were adequate in the second quarter of 2022, although we face a range of headwinds, including significant near-term pressure on our net interest margin,” Chairman Robert H. Gaughen Jr. said in the statement. “In our business operations, we had significant growth across all three markets in our commercial real estate group with both new and existing relationship customers. We are carefully managing this growth moving forward, particularly as growth in our commercial deposits in the same period was modest by comparison.”
The Hingham-based bank said in its second quarter earnings statement that its annualized return on average equity was 3.43 percent compared to 25.51 percent in the second quarter of 2021. The bank had an annualized return on average assets of 0.34 percent compared to 2.83 percent in the same quarter last year.
Hingham Institution for Savings’ board of directors increased its regular cash dividend to $0.59 per share, up 4 percent from the previous quarter. The bank said it has consistently increased regular quarterly cash dividends during the past 27 years
Total deposits, including wholesale deposits, were $2.47 billion at the end of the second quarter, up 5 percent from June 30, 2021. The bank said it used wholesale funds during the first half of 2022 to help fund its loan growth.
Net loans increased to $3.5 billion in the second quarter, up 33 percent from the same quarter last year. The bank said growth was concentrated in its commercial real estate portfolio.
Total assets were $3.99 billion in the second quarter, up 34 percent year-over-year.
Higher costs for interest-bearing deposits have started to affect the bank’s net interest margin. The net interest margin for the second quarter decreased year-over-year by 25 basis points to 3.21 percent. The bank attributed the drop to a declining yield on interest-earning assets, which resulted primarily from a lower yield on loans, as well as a higher cost of interest-bearing liabilities. The net interest margin was lower by 9 basis points when compared to the first quarter of 2022.
The bank’s already low efficiency ratio was 21.30 percent in the second quarter compared to 21.37 percent in the second quarter of 2021. Operating expenses as a percentage of average assets was 0.68 percent in the second quarter compared to 0.74 percent in the same quarter last year.
“As always, 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,” Gaughen said. “These remain constant, regardless of the macroeconomic environment in which we operate.”
