Hingham Savings Reports 2023 Results
HINGHAM, Mass., Jan. 19, 2024 (GLOBE NEWSWIRE) -- HINGHAM INSTITUTION FOR SAVINGS (NASDAQ: HIFS), Hingham, Massachusetts announced earnings for the fourth quarter and the year ended December 31, 2023.
*Earnings*
Net income for the year ended December 31, 2023 was $26,371,000 or $12.26 per share basic and $12.02 per share diluted, as compared to $37,519,000 or $17.49 per share basic and $17.04 per share diluted for the same period last year. The Bank’s return on average equity for the year ended December 31, 2023 was 6.57%, and the return on average assets was 0.63%, as compared to 10.01% and 0.98% for the same period in 2022. Net income per share (diluted) for 2023 decreased by 29% over the same period in 2022.
Core net income for the year ended December 31, 2023, which represents net income excluding the after-tax gains and losses on securities, both realized and unrealized, and the after-tax gains on the disposal of fixed assets, was $14,539,000 or $6.76 per share basic and $6.63 per share diluted, as compared to $54,569,000 or $25.44 per share basic and $24.78 per share diluted for the same period last year. The Bank’s core return on average equity for the year ended December 31, 2023 was 3.62%, and the core return on average assets was 0.35%, as compared to 14.56% and 1.43% for the same period in 2022. Core net income per share (diluted) for 2023 decreased by 73% over the same period in 2022.
Net income for the quarter ended December 31, 2023 was $6,315,000 or $2.93 per share basic and $2.89 per share diluted, as compared to $11,965,000 or $5.58 per share basic and $5.44 per share diluted for the same period last year. The Bank’s annualized return on average equity for the fourth quarter of 2023 was 6.21%, and the annualized return on average assets was 0.59%, as compared to 12.40% and 1.18% for the same period in 2022. Net income per share (diluted) for the fourth quarter of 2023 decreased by 47% over the same period in 2022.
Core net income for the quarter ended December 31, 2023, which represents net income excluding the after-tax gains and losses on securities, both realized and unrealized, was $1,854,000 or $0.86 per share basic and $0.85 per share diluted, as compared to $9,713,000 or $4.53 per share basic and $4.42 per share diluted for the same period last year. The Bank’s annualized core return on average equity for the fourth quarter of 2023 was 1.82%, and the annualized core return on average assets was 0.17%, as compared to 10.07% and 0.96% for the same period in 2022. Core net income per share (diluted) for the fourth quarter of 2023 decreased by 81% over the same period in 2022.
See Page 11 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 after-tax gains and losses on equity securities, realized and unrealized and after-tax gains on the disposal of fixed assets, as applicable.
*Balance Sheet*
Total assets increased to $4.484 billion at December 31, 2023, representing 7% growth from December 31, 2022.
Net loans increased to $3.914 billion at December 31, 2023, representing 7% growth from December 31, 2022. Lending was concentrated in the Boston and Washington D.C. markets and remained focused on multifamily commercial real estate. Lending in the San Francisco Bay Area market was relatively limited in 2023; the Bank continues to evaluate new opportunities, but the Bank’s customers have been less active given market conditions. As noted below, asset quality remained strong.
Retail and business deposits were $1.861 billion at December 31, 2023, representing a 2% decline from December 31, 2022. Non-interest-bearing deposits, included in retail and business deposits, decreased to $339.1 million at December 31, 2023, representing a 12% decline from December 31, 2022. A portion of the non-interest bearing deposits shifted towards higher-rate alternatives at the Bank. In 2023, the Bank continued to focus on developing new relationships with commercial, non-profit, and existing customers. 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, has historically been appealing to customers in times of uncertainty and helped the Bank mitigate the challenging deposit environment experienced in 2023.
Although the environment for deposit growth was a challenging one in a number of respects, it also presented significant opportunities that the Bank did not adequately capitalize on. The Bank’s performance with respect to retail and commercial deposit growth in 2023 was not consistent with the Bank’s historical performance. The Bank has taken a number of steps to address this matter, including hiring several new commercial relationship managers in our Specialized Deposit Group, obtaining branch powers for our Washington D.C. office, and hiring a dedicated relationship manager in San Francisco who will start in 2024.
Wholesale deposits, which include brokered and listing service time deposits, were $488.7 million at December 31, 2023, representing a 20% decline from December 31, 2022, as the Bank continued to manage its wholesale funding mix between wholesale time deposits and Federal Home Loan Bank advances in order to mitigate the negative impact of increasing short term rates in the cost of funds. This decline in wholesale deposits was primarily driven by the decline in the Bank’s listing service time deposits, as the Bank opted to replace this funding with brokered certificates of deposit and borrowings from the Federal Home Loan Bank. Pricing in the listing service market generally exceeded other wholesale funding sources during 2023.Borrowings from the Federal Home Loan Bank totaled $1.693 billion at December 31, 2023, representing a 33% growth from December 31, 2022. As of December 31, 2023, the Bank maintained $598.9 million in immediately available borrowing capacity at the Federal Home Loan Bank of Boston and the Federal Reserve Bank, in addition to the $345.0 million cash balance held at the Federal Reserve Bank. Borrowings from the Federal Home Loan Bank have always comprised a significant portion of the Bank’s balance sheet.
Book value per share was $188.50 as of December 31, 2023, representing 5% growth from December 31, 2022. In addition to the increase in book value per share, the Bank has declared $2.52 in regular dividends per share since December 31, 2022. The trailing five year compound annual growth rate in book value per share, an important measure of long-term value creation, was 13.6%.
On January 1, 2023, the Bank adopted ASU 2016-13 - Measurement of Credit Losses on Financial Instruments, and recorded a one-time transition amount of $545,000, net of taxes, as a decrease to retained earnings. This amount represents additional reserves for loans that existed upon adopting the new guidance. No reserves were recorded for unfunded commitments, based upon management’s evaluation of the probability of funding and risk of loss, which indicated the required reserve was not material. The adoption of CECL did not have a material impact on the Bank’s regulatory capital ratios.
*Operational Performance Metrics*
The net interest margin for the year ended December 31, 2023 decreased 164 basis points to 1.17%, as compared to 2.81% in the prior year. In the year ended December 31, 2023, the Bank experienced a substantial increase in the cost of interest-bearing liabilities when compared to the prior year. This was driven primarily by the repricing of the Bank’s wholesale borrowings, wholesale deposits, and higher rates on the Bank’s retail and commercial deposits. During this period, the increase in the cost of funds was partially offset by a higher yield on interest-earning assets, driven primarily by an increase in the yield on loans, an increase in the interest on reserves held at the Federal Reserve Bank of Boston and a higher Federal Home Loan Bank of Boston stock dividend.
The net interest margin for the quarter ended December 31, 2023 decreased 120 basis points to 0.89%, as compared to 2.09% in the same quarter in 2022. During this period, the Bank experienced a significant increase in the cost of interest-bearing liabilities when compared to the same period in the prior year, driven by the same factors described above. The higher cost of funds was partially offset by an increase in the yield on interest-earning assets, driven by the same factors described above.
In a linked quarter comparison, the net interest margin for the quarter ended December 31, 2023 decreased 16 basis points to 0.89%, as compared to 1.05% in the quarter ended September 30, 2023. This was primarily the result of the continued increase in the cost of interest-bearing liabilities. This was partially offset by an increase in the yield on loans and an increase in the interest rate on reserve balances held at the Federal Reserve Bank of Boston from the prior quarter. The increase in the yield on loans was driven by both new loan originations at higher rates and the repricing of existing adjustable rate loans. As noted in the prior quarter, the Bank has experienced declining pressure on negotiated money market deposit rates, although the market for retail CDs remains highly competitive. During the quarter, the Bank began extending some short-term borrowings slightly to capture the benefit of inversion at the front-end of the yield curve.
Key credit and operational metrics remained strong in the fourth quarter. At both December 31, 2023 and 2022, non-performing assets totaled 0.03% of total assets. Non-performing loans as a percentage of the total loan portfolio totaled 0.04% at December 31, 2023, as compared to 0.03% at December 31, 2022. The Bank had no non-performing commercial real estate loans at December 31, 2023. The Bank did not record any charge-offs during the year ended December 31, 2023, as compared to $50,000 of net recoveries during the year ended December 31, 2022.
The Bank did not own any foreclosed property on December 31, 2023 and 2022. In the first quarter of 2023, the Bank foreclosed on a small commercial property in Massachusetts and purchased the property at auction. The Bank subsequently sold the property within the quarter and recovered all principal, interest and expenses. The Bank also recognized an additional $85,000 gain on sale, reflected as a contra expense in foreclosure and related expense in the Consolidated Statement of Net Income.
The efficiency ratio, as defined on page 11 below, increased to 57.18% in 2023, as compared to 24.81% in 2022. Operating expenses as a percentage of average assets fell to 0.67% in 2023, as compared to 0.70% in 2022. 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.
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 2023 were significantly lower than our long-term performance, reflecting the challenge from the increase in short-term interest rates over the last twenty-four months and a historically long and deep inversion of the yield curve. These conditions have posed a significant - albeit temporary - challenge to our business model. Our core business was particularly challenged in 2023 and our investment operations were critical to sustaining growth in book value per share this year.
We are cautiously optimistic that this challenge will fade over the coming year and may do so materially. To the extent we can capitalize on this via our wholesale funding activities, we will do so and we are seeing materially lower wholesale funding costs already in 2024. This normalization of the yield curve will eventually allow us to achieve more satisfactory returns as we obtain higher rates on new and adjusting loans and incremental funding pressure abates.
While the current market environment has been extraordinarily challenging, the Bank’s business model has been built over time to compound shareholder capital over an economic cycle. 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. I believe that over the past twenty-four months we have retained this focus.”
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, 2023 with the Federal Deposit Insurance Corporation (FDIC) on or about March 6, 2024.
The Bank expects to hold its Annual Meeting of Shareholders in Hingham, Massachusetts on Thursday, April 25, 2024 in the afternoon. Additional information will follow in the Bank’s Proxy Statement later in the first quarter of 2024.
Incorporated in 1834, Hingham Institution for Savings is one of America’s oldest banks. The Bank maintains offices in Boston, Nantucket, and Washington, D.C., and provides commercial mortgage and banking services in the San Francisco Bay Area.
The Bank’s shares of common stock are listed and traded on The NASDAQ Stock Market under the symbol HIFS.
*HINGHAM INSTITUTION FOR SAVINGS*
*Selected Financial Ratios* *Three Months Ended*
*December 31,* *Twelve Months Ended*
*December 31,* *2022* *2023* *2022* *2023*
(Unaudited)
*Key Performance Ratios*
Return on average assets (1) 1.18 % *0.59* *%* 0.98 % *0.63* %
Return on average equity (1) 12.40 *6.21* 10.01 *6.57*
Core return on average assets (1) (5) 0.96 *0.17* 1.43 *0.35*
Core return on average equity (1) (5) 10.07 *1.82* 14.56 *3.62*
Interest rate spread (1) (2) 1.67 *0.17* 2.60 *0.53*
Net interest margin (1) (3) 2.09 *0.89* 2.81 *1.17*
Operating expenses to average assets (1) 0.70 *0.65* 0.70 *0.67*
Efficiency ratio (4) 33.54 *71.58* 24.81 *57.18*
Average equity to average assets 9.50 *9.49* 9.81 *9.56*
Average interest-earning assets to average interest- bearing liabilities 123.20 *120.15* 124.30 *120.99*
* * *December 31,
2022* * * *December 31,
2023* * * * *
(Unaudited) * * * * * * * * * * * * * * * * * * * * * *
* * * * * * * * * *
*Asset Quality Ratios* * * * * * * * *
Allowance for credit losses/total loans 0.68 % *0.68* % * * * *
Allowance for credit losses/non-performing loans 2,139.39 *1,804.47* * * * * * * * * * *
Non-performing loans/total loans 0.03 *0.04* * * * *
Non-performing loans/total assets 0.03 *0.03* * * * *
Non-performing assets/total assets 0.03 *0.03* * * * * * * * *
*Share Related* * * * *
Book value per share $ 179.74 *$* *188.50* * * * *
Market value per share $ 275.96 *$* *194.40* * * * *
Shares outstanding at end of period 2,147,400 * * *2,162,400* * * * *
(1) Annualized for the three months ended December 31, 2022 and 2023.
(2) Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.
(4) The efficiency ratio represents total operating expenses, divided by the sum of net interest income and total other income (loss), excluding gain (loss) on equity securities, net and and the after-tax gain on disposal of fixed assets.
(5) Non-GAAP measurements that represent return on average assets and return on average equity, excluding the after-tax gain (loss) on equity securities, net, and the after-tax gain on disposal of fixed assets.
*HINGHAM INSTITUTION FOR SAVINGS*
*Consolidated Balance Sheets*
(In thousands, except share amounts) *December 31,
2022* *December 31,
**2023*
(Unaudited)
*ASSETS*
Cash and due from banks $ 7,936 *$* *5,654*
Federal Reserve and other short-term investments 354,097 *356,823*
Cash and cash equivalents 362,033 *362,477*
CRA investment 8,229 *8,853*
Other marketable equity securities 54,967 *70,949*
Securities, at fair value 63,196 *79,802*
Securities held to maturity, at amortized cost 3,500 *3,500*
Federal Home Loan Bank stock, at cost 52,606 *69,574*
Loans, net of allowance for credit losses of $24,989 at December 31, 2022 and $26,652 at December 31, 2023 3,657,782 *3,914,244*
Bank-owned life insurance 13,312 *13,642*
Premises and equipment, net 17,859 *17,008*
Accrued interest receivable 7,122 *8,554*
Deferred income tax asset, net 4,061 *974*
Other assets 12,328 *14,172*
Total assets $ 4,193,799 *$* *4,483,947*
*LIABILITIES AND STOCKHOLDERS’ EQUITY*
Interest-bearing deposits $ 2,118,045 *$* *2,010,918*
Non-interest-bearing deposits 387,244 *339,059*
Total deposits 2,505,289 *2,349,977*
Federal Home Loan Bank advances 1,276,000 *1,692,675*
Mortgagors’ escrow accounts 12,323 *13,942*
Accrued interest payable 4,527 *12,261*
Other liabilities 9,694 *7,472*
Total liabilities 3,807,833 *4,076,327*
Stockholders’ equity:
Preferred stock, $1.00 par value,
— *—*
2,500,000 shares authorized, none issued
Common stock, $1.00 par value, 5,000,000 shares authorized;
2,147,400 shares issued and outstanding at December 31, 2022 and 2,162,400 shares issued and outstanding at December 31, 2023 2,147 *2,162*
Additional paid-in capital 13,061 *14,150*
Undivided profits 370,758 *391,308*
Total stockholders’ equity 385,966 *407,620*
Total liabilities and stockholders’ equity $ 4,193,799 *$* *4,483,947*
*HINGHAM INSTITUTION FOR SAVINGS*
*Consolidated Statements of Net Income* *Three Months Ended* *Twelve Months Ended* *December 31,* *December 31,*
(In thousands, except per share amounts) *2022* *2023* *2022* *2023*
(Unaudited) * * * * * * * *
Interest and dividend income: Loans $ 35,714 *$* *42,214* $ 132,089 *$* *156,681* Debt securities 33 *33* 132 *131* Equity securities 716 *1,302* 1,752 *4,412* Federal Reserve and other short-term investments 2,766 *2,960* 5,055 *13,038* Total interest and dividend income 39,229 *46,509* 139,028 *174,262*
Interest expense: * * Deposits 8,793 *20,811* 16,882 *71,429* Federal Home Loan Bank and Federal Reserve Bank advances 9,481 *16,323* 16,012 *54,531* Total interest expense 18,274 *37,134* 32,894 *125,960* Net interest income 20,955 *9,375* 106,134 *48,302*
Provision for credit losses 600 *271* 4,508 *1,118*
Net interest income, after provision for credit losses 20,355 *9,104* 101,626 *47,184*
Other income (loss): Customer service fees on deposits 146 *140* 602 *550* Increase in cash surrender value of bank-owned life insurance 80 *80* 332 *330* Gain (loss) on equity securities, net 2,979 *5,723* (21,777 ) *15,147* Gain on disposal of fixed assets — *—* — *44* Miscellaneous 57 *56* 124 *232* Total other income (loss) 3,262 *5,999* (20,719 ) *16,303*
Operating expenses: Salaries and employee benefits 4,153 *3,853* 15,831 *16,413* Occupancy and equipment 350 *422* 1,378 *1,628* Data processing 804 *732* 2,757 *2,874* Deposit insurance 515 *795* 1,862 *2,701* Foreclosure and related 19 *19* 24 — Marketing 279 *128* 1,031 *769* Other general and administrative 1,003 *959* 3,709 *3,872* Total operating expenses 7,123 *6,908* 26,592 *28,257*
Income before income taxes 16,494 *8,195* 54,315 *35,230*
Income tax provision 4,529 *1,880* 16,796 *8,859* Net income $ 11,965 *$* *6,315* $ 37,519 *$* *26,371* * *
Cash dividends declared per share $ 1.26 *$* *0.63* $ 3.03 *$* *2.52* * *
Weighted average shares outstanding: * * Basic 2,146 *2,157* 2,145 *2,151* Diluted 2,198 *2,188* 2,202 *2,193* * *
Earnings per share: * * Basic $ 5.58 *$* *2.93* $ 17.49 *$* *12.26* Diluted $ 5.44 *$* *2.89* $ 17.04 *$* *12.02*
*HINGHAM INSTITUTION FOR SAVINGS*
*Net Interest Income Analysis* *Three Months Ended* *December 31, 2022* * * *September 30, 2023* *December 31, 2023* *Average
Balance
(9)* * * * **Interest
* *Yield/ *
*Rate
(10)* * * *Average
Balance
(9)* * * *Interest
* *Yield/
Rate
(10)* *Average
Balance
(9)* * * *Interest
* *Yield/
**Rate
(10)* * *
(Dollars in thousands) * *
(Unaudited) * * * * * * * * * * * * * * * *
*Assets* * * * * * * * * * * * * * * * *
Loans (1) (2) $ 3,624,745 $ 35,714 3.94 % $ 3,802,045 $ 40,245 4.23 % *$* *3,896,425* *$* *42,214* *4.33* *%*
Securities (3) (4) 103,033 749 2.91 107,432 1,195 4.45 * * *111,913* * * *1,335* *4.77* * *
Short-term investments (5) 287,286 2,766 3.85 264,160 3,598 5.45 * * *215,323* * * *2,960* *5.50* * *
Total interest-earning assets 4,015,064 39,229 3.91 4,173,637 45,038 4.32 * * *4,223,661* * * *46,509* *4.40* * *
Other assets 47,959 61,529 * * *58,768* * * * * * * * *
Total assets $ 4,063,023 $ 4,235,166 *$* *4,282,429* * * * * * * * * * * * * * * * * * *
*Liabilities and stockholders’ equity:* ` * * * * * * * * * *
Interest-bearing deposits (6) $ 2,221,963 8,793 1.58 % $ 2,200,952 20,010 3.64 % *$* *2,119,506* * * *20,811* *3.93* *%*
Borrowed funds 1,036,944 9,481 3.66 1,261,652 14,042 4.45 * * *1,395,744* * * *16,323* *4.68* * *
Total interest-bearing liabilities 3,258,907 18,274 2.24 3,462,604 34,052 3.93 * * *3,515,250* * * *37,134* *4.23* * *
Non-interest-bearing deposits 408,951 353,543 * * *345,743* * * * * * *
Other liabilities 9,282 12,958 * * *14,843* * * * * * *
Total liabilities 3,677,140 3,829,105 * * *3,875,836* * * * * * *
Stockholders’ equity 385,883 406,061 * * *406,593* * * * * * *
Total liabilities and
stockholders’ equity $ 4,063,023 *$* 4,235,166 *$* * **4,282,429* * * * * * *
Net interest income $ 20,955 $ 10,986 * * *$* *9,375* * * * * * *
Weighted average interest rate spread 1.67 % 0.39 % *0.17* *%* * * * * * *
Net interest margin (7) 2.09 % 1.05 % * * *0.89* *%*
Average interest earning assets
to average interest-bearing liabilities (8) 123.20 % 120.53 % *120.15* *%*
(1) Before allowance for credit losses.
(2) Includes non-accrual loans.
(3) Excludes the impact of the average net unrealized gain or loss on securities.
(4) Includes Federal Home Loan Bank stock.
(5) Includes cash held at the Federal Reserve Bank.
(6) Includes mortgagors' escrow accounts.
(7) Net interest income divided by average total interest-earning assets.
(8) Total interest-earning assets divided by total interest-bearing liabilities.
(9) Average balances are calculated on a daily basis.
(10) Annualized.
*HINGHAM INSTITUTION FOR SAVINGS
Net Interest Income Analysis* *Twelve Months Ended December 31, * *2022* *2023* *Average
Balance (9)* *Interest* *Yield/
Rate (10)* *Average
Balance (9)* *Interest* *Yield/
Rate (10)*
(Dollars in thousands)
(Unaudited)
Loans (1) (2) $ 3,404,674 $ 132,089 3.88 % *$* *3,777,332* *$* *156,681* *4.15* %
Securities (3) (4) 105,612 1,884 1.78 *105,586* *4,543* *4.30*
Short-term investments (5) 263,606 5,055 1.92 *254,664* *13,038* *5.12*
Total interest-earning assets 3,773,892 139,028 3.68 *4,137,582* *174,262* *4.21*
Other assets 47,772 *57,715*
Total assets $ 3,821,664 *$* *4,195,297*
Interest-bearing deposits (6) $ 2,118,798 16,882 0.80 % *$* *2,191,468* *71,429* *3.26* %
Borrowed funds 917,252 16,012 1.75 *1,228,410* *54,531* *4.44*
Total interest-bearing liabilities 3,036,050 32,894 1.08 *3,419,878* *125,960* *3.68*
Non-interest-bearing deposits 402,890 *362,047*
Other liabilities 7,857 *12,239*
Total liabilities 3,446,797 *3,794,164*
Stockholders’ equity 374,867 *401,133*
Total liabilities and stockholders’ equity $ 3,821,664 *$* *4,195,297*
Net interest income $ 106,134 *$* *48,302*
Weighted average interest rate spread 2.60 % *0.53* %
Net interest margin (7) 2.81 % *1.17* %
Average interest-earning assets
to average interest-bearing liabilities (8) 124.30 % *120.99* %
(1) Before allowance for credit losses.
(2) Includes non-accrual loans.
(3) Excludes the impact of the average net unrealized gain or loss on securities.
(4) Includes Federal Home Loan Bank stock.
(5) Includes cash held at the Federal Reserve Bank.
(6) Includes mortgagors' escrow accounts.
(7) Net interest income divided by average total interest-earning assets.
(8) Total interest-earning assets divided by total interest-bearing liabilities.
(9) Average balances are calculated on a daily basis.
(10) Annualized.
*
*
*HINGHAM INSTITUTION FOR SAVINGS*
*Non-GAAP Reconciliation*
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 gain (loss) on equity securities, net, and after-tax gain on disposal of fixed assets.
*Three Months Ended* *Twelve Months Ended* *December 31,* *December 31,*
(In thousands, unaudited) *2022* *2023* *2022* *2023* * * * * * * * *
Non-GAAP reconciliation:
Net income $ 11,965 $ *6,315* $ 37,519 *$* *26,371*
(Gain) loss on equity securities, net (2,979 ) *(5,723* *)* 21,777 *(15,147* *)*
Income tax expense (benefit) (1) 727 *1,262* (4,727 ) *3,347*
Gain on disposal of fixed assets — *—* — *(44* *)*
Income tax expense — *—* — *12*
Core net income $ 9,713 $ *1,854* $ 54,569 *$* *14,539*
(1) The equity securities are mostly held in a tax-advantaged subsidiary corporation. The income tax effect of the gain (loss) on equity securities, net, was calculated using the applicable effective tax rates. The table below presents the calculation of the efficiency ratio, a non-U.S. GAAP performance measure the management uses to assess operational efficiency which represents total operating expenses, divided by the sum of net interest income and total other income (loss), excluding gain (loss) on equity securities, net, and the after-tax gain on disposal of fixed assets.
*Three Months Ended ** ** ** ** ** * * * * * * * * Twelve Months Ended** ** ** ** ** * * * * December 31,** ** ** ** ** * * * * * * * *December 31, ** ** ** ** ** ** *
(In thousands, unaudited) *2022* * * * * * * * * *2023* * * * * * * *2022 * * * * * * * *2023 * * * * * * * * * * * * * * * * *
Non-U.S. GAAP efficiency ratio calculation:
Operating expenses $ 7,123 *$* *6,908* * * $ 26,592 *$* *28,257* * * * * * * * * * *
Net interest income $ 20,955 *$* *9,375* * * $ 106,134 *$* *48,302* * *
Other income (loss) 3,262 * * *5,999* (20,719 ) *16,303* * *
(Gain) loss on equity securities, net (2,979 ) * * *(5,723* *)* 21,777 *(15,147* *)* * *
Gain on disposal of fixed assets — * * *—* — *(44* *)* * *
Total revenue $ 21,238 *$* *9,651* $ 107,192 *$* *49,414* * * * * * * * * * * * *
Efficiency ratio 33.54 % * * *71.58* *%* 24.81 % * * *57.18* *%*
CONTACT: Patrick R. Gaughen, President and Chief Operating Officer (781) 783-1761