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See Page 10 for a reconciliation between Generally Accepted Accounting Principles (“GAAP”) net income and core net income. In calculating core net income, the Bank did not make any adjustments other than those relating to the after-tax net gain on equity securities, both realized and unrealized, and after-tax gains on the disposal of fixed assets, as applicable. The Bank did not sell any fixed assets in 2024. In 2023, the Bank sold a former branch location.

Balance Sheet

Total assets decreased to $4.458 billion at December 31, 2024, a 1% decline from December 31, 2023.

Net loans decreased to $3.874 billion at December 31, 2024, a 1% decline from December 31, 2023. This decline was not consistent with the Bank’s long-term growth objectives and was the result of lower loan originations and, to a lesser extent, normalizing prepayment activity and payoffs in the construction portfolio in the latter half of the year. Origination activity was concentrated in the Boston and Washington D.C. markets. The Bank hired its first local lender in San Francisco at the end of the year. The Bank’s focus across markets remained on stabilized multifamily commercial real estate and multifamily construction.

Retail and business deposits were $1.997 billion at December 31, 2024, representing 7% growth from December 31, 2023. Non-interest-bearing deposits, included in retail and business deposits, increased to $397.5 million at December 31, 2024, representing 17% growth from December 31, 2023.

Growth in non-interest bearing and money market balances in 2024 reflected the Bank’s focus on developing and deepening deposit relationships with new and existing commercial and non-profit customers. The Bank continues to invest in its Specialized Deposit Group, where deposit growth was concentrated in the fourth quarter of 2024. We continue to recruit actively for talented relationship managers in Boston, Washington, and San Francisco, particularly as respected competitors exit these markets or merge with larger regional banks.

The stability of the Bank’s balance sheet, as well as full and unlimited deposit insurance through the Bank’s participation in the Massachusetts Depositors Insurance Fund, continues to be appealing to customers in times of uncertainty.

Wholesale funds, which include Federal Home Loan Bank borrowings, brokered deposits, and Internet listing service deposits, were $1.992 billion at December 31, 2024, a 9% decline from December 31, 2023, as the Bank replaced a portion of these funds with retail and commercial deposits. In 2024, the Bank continued to manage its wholesale funding mix to optimize the cost of funds while taking advantage of the inverted yield curve by adding lower rate longer term liabilities. Wholesale deposits, which include brokered and Internet listing service time deposits, were $494.9 million at December 31, 2024, representing 1% growth from December 31, 2023. Borrowings from the Federal Home Loan Bank totaled $1.497 billion at December 31, 2024, a 12% decline from December 31, 2023. As of December 31, 2024, the Bank maintained an additional $866.6 million in immediately available borrowing capacity at the Federal Home Loan Bank of Boston and the Federal Reserve Bank, in addition to $351.8 million in cash and cash equivalents.

Book value per share was $198.03 as of December 31, 2024, representing 5% growth from December 31, 2023. This growth was not consistent with the Bank’s long-term performance history or expectations. In addition to the increase in book value per share, the Bank has declared $2.52 in regular dividends per share since December 31, 2023. The trailing five year compound annual growth rate in book value per share, an important measure of long-term value creation, was 11.3%.

Operational Performance Metrics

The net interest margin for the quarter ended December 31, 2024 increased 17 basis points to 1.24%, as compared to 1.07% in the quarter ended September 30, 2024. This was the third consecutive quarter of continued expansion and this expansion has started to accelerate modestly. This improvement was the result of a decline in the cost of interest-bearing liabilities, partially offset by a decline in the yield on interest-earning assets. The cost of interest-bearing liabilities fell 21 basis points in the fourth quarter of 2024, as the Bank continued to reduce retail and commercial deposit rates, and to take advantage of the inverted yield curve by adding lower rate FHLB advances and brokered deposits. The yield on interest-earning assets declined by two basis points in the fourth quarter of 2024, driven primarily by a lower yield on cash held at the Federal Reserve Bank, partially offset by a higher yield on loans, as the Bank continued to originate loans at higher rates and reprice existing loans. The net interest margin in the final month of the fourth quarter of 2024 was 1.36% annualized.

Key credit and operational metrics remained strong in the fourth quarter. At both December 31, 2024 and December 31, 2023, non-performing assets totaled 0.03% of total assets. Non-performing loans as a percentage of the total loan portfolio totaled 0.04% at both December 31, 2024 and December 31, 2023. The Bank did not record any charge-offs during the years ended December 31, 2024 and December 31, 2023. All non-performing assets and loans cited above were and are residential, owner-occupant loans.

The Bank had no non-performing commercial real estate loans at December 31, 2024 or December 31, 2023. The Bank did not own any foreclosed property on December 31, 2024 or December 31, 2023.

The efficiency ratio, as defined on page 10, fell to 52.30% for the fourth quarter of 2024, as compared to 62.19% in the prior quarter and 71.58% for the same period last year. Operating expenses as a percentage of average assets were 0.66% for the fourth quarter of 2024, as compared to 0.68% for the prior quarter, and 0.65% 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 the future.

These operational metrics reflect the Bank’s disciplined focus on credit quality and expense management.

Chairman Robert H. Gaughen Jr. stated, “Returns on equity and assets in 2024 were significantly lower than our long-term expectations, reflecting the challenge from the increase in interest rates over the last two years and a historically long and deep inversion of the yield curve. We faced a similar challenge in 2006 and 2007, a period during which our returns on equity fell below 10% and growth slowed significantly. We worked through both periods deliberately, making adjustments where appropriate while maintaining the key elements of our business model. We emerged from the first cycle a stronger and more efficient bank. I am confident that as we emerge from this cycle, the same will be true.

As our assets continue to reprice higher and our liabilities, including both deposits and wholesale funding, reprice lower, conditions have started to become more favorable. We have growing momentum in our Specialized Deposit Group, where our service model resonates with customers poorly served elsewhere, and we remain focused on recruiting talented relationship managers looking for a platform where they can provide outstanding service for their customers.

While this market environment has been extraordinarily challenging, the Bank’s business model has been built over thirty years 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.”

The Bank’s annual financial results are summarized in the earnings release, but shareholders are encouraged to read the Bank’s annual report on Form 10-K, which is generally available several weeks after the earnings release. The Bank expects to file Form 10-K for the year ended December 31, 2024 with the Federal Deposit Insurance Corporation (FDIC) on or about March 5, 2025.

The Bank expects to hold its Annual Meeting of Shareholders in Hingham, Massachusetts on Wednesday, April 30, 2025 in the afternoon. Additional information will follow in the Bank’s Proxy Statement later in the first quarter of 2025.

Incorporated in 1834, Hingham Institution for Savings is one of America’s oldest banks. The Bank maintains offices in Boston, Nantucket, Washington, D.C., and San Francisco.

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

 

 

The Bank believes the presentation of the following non-GAAP financial measures provide useful supplemental information that is essential to an investor’s proper understanding of results of operations and financial condition of the Bank. Management uses these measures in its analysis of the Bank’s performance. These non-GAAP measures should not be viewed as substitutes for the financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks.

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 net gain on equity securities, both realized and unrealized, and after-tax gain on disposal of fixed assets.

The table below presents the calculation of the efficiency ratio, a non-U.S. GAAP performance measure that management uses to assess operational efficiency which represents total operating expenses, divided by the sum of net interest income and total other income, excluding net gain on equity securities, both realized and unrealized, and gain on disposal of fixed assets.

CONTACT: Patrick R. Gaughen, President and Chief Operating Officer (781) 783-1761