2017 ANNUAL REPORT
F i n a n c i a l H i g h l i g h t s
Fr o m t h e P r e s i d e n t
13.4
22.3
19.3
23.4
25.8
1.34 2.10 1.46 1.56 1.66
48.49 57.08 64.83 75.50 87.29
16.5
1.32
1.24
1.16
1.06
1.10
13 14 15 16 17
Net Income*
($ in millions)
13 14 15 16 17
Dividends Declared**
($ per share)
13 14 15 16 17
Book Value
($ per share)
1,356.4 1,552.2 1,768.5 2,014.6 2,284.6
940.9 1,089.2 1,217.0 1,366.1 1,505.9
1,078.9 1,238.7 1,405.5 1,605.6 1,834.0
To Our Business Partners:
2017 was another outstanding year for Hingham Institution for Savings.
We earned $25.8 million for our owners, a 10.0% increase from 2016. Our return on
average equity of 14.73% and return on average assets of 1.21% place us among the
most profitable banks in the country. Net loans increased by 14.2% to $1.834 billion,
deposits increased by 10.2% to $1.506 billion, and total assets increased by 13.4% to
$2.285 billion. Book value per share rose 15.6% in 2017 from $75.50 to $87.29 per
share. This excludes capital returned to the shareholders through regular and special
dividends - we declared $1.66 in dividends per share in 2017. The trailing five year
compound annual growth rate in book value per share, the best measure of long-term
value creation, rose to 14.9%. The efficiency ratio fell to a record low of 30.06%, a reflection of our disciplined cost control
and process improvement culture.
Although our financial results in 2017 were strong, the Bank’s success reflects the fact that banking is a long-term business.
Performance in any one period, particularly one where tailwinds were with us, should be viewed cautiously. Such periods are
historically fraught with peril in our industry. The real test of performance in banking is a company’s record of compounding
shareholder capital over time and through cycles. As a publicly-traded, closely-held business, we are corporate in form but
a partnership in spirit. Our partnership will always lend and invest with this in mind.
This means that we must balance improving near-term efficiency with ensuring that we have the people, products, and tech-
nology necessary to serve our customers and manage risk as we grow. We made significant investments this year in digital
banking capabilities - from our new consumer website to payments and cash management tools for businesses - that support
our relationship-focused approach. We anticipate significant product and design enhancements in coming years, including
online account opening and new payment options, for which there is considerable market demand. We also continue to
develop strong teams to support our digital and private banking efforts. Our model - personalized service, combined with
digital excellence and low fees - is the future of our industry.
We also began building our business in greater Washington D.C., providing commercial real estate financing and private bank-
ing services to the same kind of real estate investors, families, and nonprofits that we serve in Boston. We believe that the
banking market in Washington, D.C. has experienced a level of consolidation and disruption that has left these customers
underserved. We offer a commitment to independence, a balance sheet that can support meaningful lending relationships
up to $35 million, and speed and surety of execution. If you own or manage commercial real estate in Boston or Washington,
call us.
Since the present management group became associated with the Bank twenty five years ago, it has been our objective to
build one of America’s great banks, characterized by superior long-term financial results, a fortress balance sheet that pro-
vides unquestionable assurance to our depositors, and an enduring culture of growth and success. We are well on our way.
13 14 15 16 17
13 14 15 16 17
13 14 15 16 17
Assets
($ in millions)
Deposits
($ in millions)
Loans, net
($ in millions)
*Net Income: 2014 includes a one-time net gain of $5.7 million related to a non-taxable life insurance death benefit
(light shading reflects this one-time gain).
**Dividends Declared: Dividends declared chart includes the total regular dividends declared (dark shading) and the total dividends declared
including any special dividends (light shading).
Very truly yours,
Robert H. Gaughen, Jr.
President and Chairman of the Board
2 5 Ye a r s o f P e r f o r m a n c e
B o o k V a l u e P e r S h a r e
$90
$80
$70
$60
$50
$40
$30
$20
$10
$7.35
$87.29
$90
$80
$70
$60
$50
$40
$30
$20
$10
(dollars in thousands,
except per share data)
*
1993
*
1994
*
1995
*
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Total Assets
Total Net Loans
Book Value Per Share
Return on Equity
Earnings Per Share (Basic)
$
$
$
$
147,889 $
76,936 $
7.35 $
153,192 $
100,398 $
8.24 $
175,409 $
119,472 $
9.17 $
201,586 $
151,166 $
9.87 $
222,584 $
172,839 $
10.93 $
260,076 $
204,774 $
12.05 $
291,183 $
229,687 $
12.83 $
337,881 $
266,568 $
14.46 $
386,181 $
282,386 $
16.38 $
426,430 $
320,692 $
18.48 $
483,954 $
358,778 $
19.68 $
547,051 $
415,538 $
21.29 $
628,251 $
488,126 $
23.01 $
1.34%
17.09%
11.11%
11.06%
13.00%
13.18%
13.07%
15.17%
15.95%
16.58%
13.53%
13.56%
13.20%
691,652 $
539,104 $
24.47 $
9.18%
744,602 $
593,915 $
25.85 $
8.40%
806,193 $
647,255 $
28.20 $
11.08%
0.10 $
1.33 $
0.98 $
1.05 $
1.36 $
1.53 $
1.65 $
2.07 $
2.49 $
2.91 $
2.58 $
2.80 $
2.95 $
2.19 $
2.12 $
2.96 $
* per share data for 1993, 1994, 1995 and 1996 adjusted for the 3 for 2 stock split
925,560 $ 1,017,845 $ 1,127,276 $ 1,205,884 $ 1,356,441 $ 1,552,205 $ 1,768,528 $ 2,014,599 $ 2,284,599
949,662 $ 1,078,879 $ 1,238,656 $ 1,405,533 $ 1,605,647 $ 1,833,987
718,242 $
87.29
30.74 $
14.73%
12.08
792,910 $
34.24 $
849,776 $
38.70 $
10.46 $
57.08 $
10.99 $
64.83 $
43.65 $
75.50 $
48.49 $
5.68 $
3.79 $
6.28 $
6.25 $
4.81 $
9.09 $
15.34%
13.52%
14.67%
12.78%
15.05%
19.30%
14.81%
15.59%
A l a n G a u n o u x
Owner, G Properties
Washington, D.C.
Alan Gaunoux is the owner of G Properties, a real estate investment firm in
Washington, D.C. He worked with Hingham to finance his properties in Georgetown
because of the Bank’s competitive rates and flexible approach to a complex
transaction. With projects across Washington, Alan appreciates Hingham’s ability to
serve his banking needs remotely with dedicated lenders and relationship managers.
His father first acquired property on M Street in 1954 and he was pleased to partner
with another multi-generational, family-run business.
“Hingham was critical to executing a challenging
real estate transaction for me. They humanize the
banking experience.”
ALAN GAUNOUX
U n i t e d S o u t h E n d S e t t l e m e n t s
Maicharia Z. Weir Lytle, President & CEO
Nikki Stewart, Vice President of Development
For over a century, United South End Settlements has worked to disrupt the cycle of
poverty by offering education, job training, and enrichment programs to the South
End community in Boston. USES’s programs include early childhood education,
enrichment programming for school-aged children, and workforce development
training designed to empower youth and adults in their everyday lives. Hingham
provided financing to USES which gave them added flexibility during their capital
campaign. USES utilizes the Bank for its business banking needs and is pleased with
Hingham’s attention to detail and high-touch client service. Hingham’s dedication
to philanthropy and the local community is a meaningful aspect of the relationship
with USES.
“Hingham’s support of the local community aligns
“Hingham’s support of the local community aligns
with the USES’ mission. We value our partnership
with USES’s mission. We value our partnership with
the Bank.”
with the Bank.”
MACHARIA Z. WEIR LYTLE
MAICHARIA Z. WEIR LYTLE
J o s h P o s n e r
Founder & CEO, Rising Tide Development, LLC
Cambridge, MA
“The people at Hingham genuinely care about my
business and our relationship - that’s not something
you experience at many other banks.”
JOSH POSNER
Josh Posner is a well-known developer in Massachusetts who has devoted his career
to affordable housing. Unlike other developers, Rising Tide Development focuses
on bridging the divide between traditional and affordable housing by creating
communities where both exist side-by-side. By building high quality homes in
prosperous communities, Posner’s approach transforms the once negative perception
of affordable housing. Hingham has worked with Josh for several years financing
the construction of his newest community, Beach Plum Village, on Nantucket. Josh
appreciated Hingham’s customized approach to lending.
S t a c y K o e p p e l
Executive Director of the Ellis South End Neighborhood Association
S e t h K o e p p e l
Senior Vice President of Sales, eRAD Technologies
“The people at Hingham are professional,
trustworthy, and genuine. We feel fortunate to have
found a bank that puts their clients first.”
STACY & SETH KOEPPEL
The South End has a special place in the hearts of Stacy and Seth Koeppel. The couple
lived in the Boston neighborhood as newlyweds and although careers took them
away, they promised each other that someday they would come back. In 2000, they
returned to purchase a beautiful brownstone on Union Park where they live today with
their two children. Seth and Stacy came to Hingham when they had the opportunity to
purchase another unit in their building. The transaction was seamless and they built a
meaningful relationship with our South End Manager in the process. Seth and Stacy are
family-oriented and deeply involved in the community - they were happy to find a bank
similarly committed.
J o e P e r r y
Head of School, Derby Academy
Hingham, MA
Derby Academy and Hingham Institution for Savings are two of the oldest organizations
in Hingham. Two years ago, they jointly established the Hingham Institution for Savings
Merit Scholarship. The full-tuition scholarship is granted to one recipient per year
who could not otherwise afford Derby and supports them throughout their tenure at
the school. The Bank and its principals have supported Derby’s educational mission
financially and through service on the Board for over twenty years. We are pleased to
support the expansion of this mission to underserved communities in years to come.
“Thanks to the generosity of the Bank, the Hingham
Institution for Savings Merit Scholarship brings an
ongoing partnership between two of Hingham’s
oldest institutions while continuing to support a
new generation of learners.”
JOE PERRY
B o b Y o u n g
President, The Young Group
Falls Church, VA
“A small bank with exceptional client service is vital
to my business and Hingham has filled that role.”
BOB YOUNG
Bob Young’s firm, The Young Group, is a real estate development firm that specializes
in commercial and residential projects throughout Northern Virginia. Bob is known
for his Art-Nouveau floral style buildings which are prominent in the city of Falls
Church. The Bank has worked with Bob to finance several of his Falls Church projects.
He chose Hingham for its personal, hands-on approach. Bob views his employees as
an extension of his family and was looking for a Bank that shared these values. Our
relationship with The Young Group has expanded to include a full range of banking
services for the business.
S e l e c t e d F i n a n c i a l D a t a
B o a r d o f D i r e c t o r s
At December 31,
2013
2014
2015
2016
2017
$
1,356,441
102,847
106,369
$
532,845
498,592
53,520
913
8,509
940,906
302,732
103,217
(In Thousands)
$
1,768,528
261,013
40,603
635,522
681,601
95,433
644
9,905
1,217,027
402,464
138,015
1,552,205
177,222
70,570
576,665
607,851
60,371
996
9,108
1,089,217
329,602
121,515
$
2,014,599
322,932
27,168
685,674
796,063
131,778
678
11,030
1,366,109
475,318
161,024
$ 2,284,599
355,229
34,304
721,809
998,567
122,715
701
12,537
1,505,862
579,164
186,158
At or For the Years Ended December 31,
2013
2014
2015
2016
2017
(Dollars in Thousands, Except Per Share Amounts)
$
$
$
$
49,342
10,502
38,840
380
1,604
17,453
22,611
9,240
13,371
6.28
6.28
$
$
$
$
56,193
9,936
46,257
625
7,863
20,089
33,406
11,142
22,264
10.46
10.44
$
$
$
$
61,859
10,910
50,949
625
1,483
19,031
32,776
13,430
19,346
9.09
9.02
$
$
$
$
71,769
13,385
58,384
1,135
1,735
19,215
39,769
16,346
23,423
10.99
10.89
$
$
$
$
81,059
17,261
63,798
1,505
1,410
19,576
44,127
18,370
25,757
12.08
11.81
Balance Sheet Data:
Total assets
Cash & cash equivalents
Securities available for sale
Loans:
Residential loans
Commercial mortgage
Construction
Other
Allowance for loan losses
Deposits
Federal Home Loan Bank advances
Stockholders’ equity
Income Statement Data:
Total interest and dividend income
Total interest expense
Net interest income
Provision for loan losses
Other income
Operating expenses
Income before income taxes
Income tax provision
Net Income
Earnings per common share:
Basic
Diluted
Financial Ratios:
Return on average assets
Return on average equity
Average equity to average assets
Interest rate spread
Net interest margin
Efficiency ratio
Cash dividends declared per common share
Book value per common share
Shares outstanding, at year end
1.07 %
13.52
7.89
3.07
3.19
43.15
1.34
$
$
48.49
2,128,750
1.52 %
19.30
7.87
3.13
3.23
37.12
2.10
$
$
57.08
2,128,750
1.18 %
14.81
7.97
3.06
3.17
36.32
1.46
$
$
64.83
2,128,750
1.22 %
15.59
7.85
2.99
3.10
32.15
1.56
$
$
75.50
2,132,750
1.21 %
14.73
8.22
2.91
3.05
30.06
1.66
$
$
87.29
2,132,750
Standing (left to right):
Edward L. Sparda
Scott L. Moser
Michael J. Desmond
Robert A. Lane, Esq.
Seated (left to right):
Brian T. Kenner, Esq.
Kara Gaughen Smith
Robert H. Gaughen, Jr., Esq.
Jacqueline M. Youngworth
Robert K. Sheridan, Esq.
Patrick R. Gaughen
Julio R. Hernando, Esq.
Kevin W. Gaughen, Esq.
Stacey M. Page
Ronald D. Falcione
Geoffrey C. Wilkinson, Sr.,
Howard M. Berger, Esq.
S t o c k h o l d e r I n f o r m a t i o n
Stock Data
Hingham Institution for Savings’ common shares are
listed and traded on The NASDAQ Stock Market under the
symbol HIFS.
As of December 31, 2017, there were approximately 238
stockholders of record, holding 140,282 outstanding
shares of common stock. These shares do not include the
number of persons who hold their shares in nominee or
street name through various brokerage firms.
The following table presents the quarterly high and low
prices for the Bank’s common stock reported by NASDAQ.
2017
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2016
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
High
Low
$ 200.90
$ 148.02
185.96
196.71
242.00
$ 127.71
137.45
139.90
203.01
166.45
174.47
191.45
$ 115.80
118.00
120.25
132.00
The closing sale price of the Bank’s common stock at
December 31, 2017 was $207.00 per share.
Hingham Institution for Savings
55 Main Street
Hingham, MA 02043
(781) 749-2200
President and
Chief Executive Officer
Robert H. Gaughen, Jr.
Investor Inquiries
Patrick R. Gaughen
Executive Vice President
Transfer Agent and Registrar
Computershare
P.O. Box 505000
Louisville, KY 40233
(800) 288-9541
Online Registered Shareholder Access
www.computershare.com/investor
Independent Registered Public Accounting Firm
Wolf & Company, P.C.
99 High Street
Boston, MA 02110
Special Counsel
Goodwin Procter
100 Northern Avenue
Boston, MA 02210
Form 10-K and Proxy Statement
A copy of the Bank’s Annual Report on Form 10-K and
Proxy Statement for the fiscal year ended December
31, 2017, as filed with the Federal Deposit Insurance
Corporation, may be obtained without charge by
any stockholder of the Bank upon written request
addressed
to
the
Investor Relations Department.
Additionally, the Bank’s Annual Report on Form 10-K
and the Proxy Statement are available electronically at
www.hinghamsavings.com.
BOSTON
Beacon Hill
South End
COHASSET
HINGHAM
Hingham Square
South Hingham
Linden Ponds
HULL
NANTUCKET
NORWELL/HANOVER
SCITUATE
WEYMOUTH
www.hinghamsavings.com
Member FDIC/Member DIF | Equal Housing Lender