Last week the Hingham Institution for Savings (Hingham, MA) released their 2013 financial results. (PR) Though I have never owned the stock, I have followed it for the better part of seven years, as Hingham consistently produces above average returns on assets and equity, as compared to peer community banks.
Unfortunately, their strong past performance has produced a wide range of admirers, with SNL Financial–for one–naming it the top thrift institution in the East and third overall in the US in 2012. (PR) With so many admirers, Hingham consistently trades at some significant premium to its book value and tangible book value.
As of 12/31/13, Hingham had a book value per common share of $48.49, and it produced a return on average assets and equity of 1.07% and 13.52%, respectively, through the year 2013. For that performance, today’s buyer is willing to pay $77.50 per share, or roughly, 1.6x BV.
From my seat, the most impressive aspects of 2013’s performance were Hingham’s large loan portfolio (i.e., as a percent of total assets) and low efficiency ratio (43.26% for 2013, up from 41.54% in 2012). The most obvious negatives were their relatively high cost of funds (0.93%), low level of demand deposits, and low level of non-interest income.
Disclosure: No position