We have found a new year, and what better way to begin than to digest the feast of community bank earnings?
Last year at this time we profiled the Hingham Institution of Savings (Hingham, MA). Though already much admired, Hingham has seemed to only bolster its reputation further in 2014–retaining its spot as the #1 thrift in the East, and moving up to #2 in the US (per SNL Financial [PR]).
The close of 2013 found Hingham with a book value per common share of $48.49, a return on average assets of 1.07%, and a share price of $77.50 per share, or roughly, 1.6x BV.
2014 saw them improve nearly every operating metric of significance. [PR] Return on average assets and equity rose to 1.13% and 14.32%, respectively (after adjusting for a large one-time life insurance death benefit). Non-performing assets decreased to 0.20% of total assets, compared to 0.46% at December 31, 2013. And non-interest expense as a percentage of average assets settled at 1.37% in 2014, vs. 1.40% in 2013.
Book value per share reached $57.08 at 12/31/14, and today’s price of $88 represents a multiple of 1.54x BV.
Like last year, the most impressive aspects of 2014’s performance were Hingham’s large loan portfolio (i.e., as a percent of total assets) and low efficiency ratio (37.19%). The most obvious negatives remain their relatively high cost of funds (now 0.78% in 2014, down from 0.93% in 2013), low level of demand deposits, and low level of non-interest income (when excluding the one-time insurance death benefit).
Disclosure: No position
Wide Moat Investing 