A Community Bank in Every Era
~ By Maryellen Dever
The day my Dad walked me into the Hingham Institution for Savings’ main branch in downtown Hingham to open my very first bank account is still one of those indelible childhood memories. Of course, he had brought us there before when he was making his own deposits, but this was a special day. Like many Hingham children, this was a rite of passage for me – right up there with losing my first tooth, learning to ride my bike without training wheels, andgoing to school.
Hingham Institution for Savings
What my Dad and I didn’t know was, like generations of Hingham families before and since, we were doing exactly what the founders had intended when the bank was established in 1834. In an article in The Hingham Gazette on December 19, 1834, less than a week before the bank opened for business, the founders said, in part, “Parents, by making their children depositors, can teach them the advantages of saving habits and inculcate lessons of economy which may be remembered through life.”
Those lessons were reinforced as the years went by as I deposited money I earned on paper routes and babysitting, eagerly checking my passbook to see how much interest I had earned. Pretty soon, I had my first part time job, and I joined the parade of customers streaming in and out of the bank on Fridays depositing their paychecks.
Celebrating its 178th year as a community bank, Hingham Savings has not only survived the recent banking crisis, but thrived. Robert H. Gaughen, Jr., President and CEO, recently announced a 4% increase in the bank’s quarterly dividend, marking the 18th straight year of dividend increases. This dividend was the 74th consecutive quarterly dividend, in an era where many banks have slashed or suspended dividends. Hingham Savings was added to the Russell 3000 Index in June. The Russell 3000 represents about 98% of the investable U.S. equity market.
According to Gaughen, HIFS was “the most profitable of all publicly traded banks in the state last year.” He said the bank had survived attempts to be acquired in the 1990’s, and changed management in 1993 to ensure that the bank would remain as it has always been, a community bank. “It’s good for our stockholders, and for our community.”
While bank officers will not comment on performance, the stock, trading on the NASDAQ under the symbol HIFS, has done well. Since January, it has gone up over 19%. A more compelling comparison – since the global banking crisis began in summer 2007, HIFS has been up almost 97%. Meanwhile, the NASDAQ was up 20%, and the Standard and Poor’s 500 index was down 3%. A quick review of some of the major national banks’ performance in the past five years shows a few whose stock dropped on a percentage basis as much as Hingham Savings’ rose. Citigroup was down about 94%, and Bank of America lost about 85% of its market value.
So, what’s the difference? How has HIFS managed to weather the storm? Robert Gaughen said they follow a proven formula that the bank’s founders immortalized as the bank’s motto: “Simple Banking. Honest Value. Happy Customers.” He added, “We do it by having strong customer service, controlling our expenses, and being accessible in terms of having senior people available to make exceptions to predetermined cookie-cutter situations.” The top mortgage lender in town, their portfolio is split evenly between residential and commercial loans, and Gaughen pointed out that “we always keep the servicing of the loan.”
Hingham Savings has stood out on the national level for many years. Reporter Dan Rather featured the bank on his show Dan Rather Reports in a March 2009 episode titled “Meltdown”. HIFS was the only community bank featured in a story on the global financial crisis. Robert Gaughen was interviewed at length about the success of the bank during that time. Rather, who compared the bank’s business model with George Bailey’s Building and Loan in “It’s a Wonderful Life”, braved a train trip in a snowstorm just to keep the interview appointment.
Other praise has followed. Nationally, investment bank Keefe, Bruyette, and Woods has named HIFS to their Bank Honor Roll, representing a group of 45 exceptional publicly traded banks for the second year in a row. Financial information firm SNL Financial named them the top performing thrift institution in the East and third in the nation for the past year ending March 31. Locally, they have received #1 rankings in Wicked Local’s town and regional Reader’s Choice Awards since 2010; been named to the Boston Globe’s Globe 100, and have placed on the Boston Business Journal’s Book of Lists in 2012.
Most importantly, Gaughen and his team have never strayed from what they do best. Hingham Savings offers a full line of personal and business checking and money market accounts, CD’s, IRA’s, consumer and commercial loans, mortgages, employee benefit plans, and online banking. “We have a very straight forward product line, tailored to the needs of our banking customers. Our CD rates are among the top in the market because we keep it simple and efficient.” He added that he has never been comfortable with the idea of offering investment products to customers, saying “I don’t want to deliver a second-quality service. There are folks that do investments better than we could.”
Hingham Institution for Savings opened its 10th branch last October on Charles St. in Beacon Hill. This is the second Boston neighborhood branch for the bank, which opened its first on Tremont St. in the South End in 2006. Within the first three months, the Beacon Hill branch exceeded $30 million in deposits, and opened over 250 new deposit and business accounts. Peggie Warner, Hingham Savings’ Assistant Vice President, Marketing, said “We received a warm welcome from our Boston neighbors, who have been waiting for the service, flexibility and simplicity of a local community bank. On Beacon Hill, our renovation of the historic storefront received many compliments for its contribution to the unique streetscape of this neighborhood. Providing a beautiful banking environment for our customers is a hallmark of Hingham Savings, and underscores our focus on comfortable, respectful banking relationships with the merchants and residents we serve.” Indeed, that attention to neighborhood streetscapes may be seen in all bank buildings. Their Cohasset branch, built in 1845, is a traditional colonial design of red brick, gleaming white marble, and a columned entrance typical of the area.
Gaughen said the bank has had a 10% annual growth rate for the past 10 years, making it the largest bank headquartered on the South Shore with the exception of Rockland Trust. “We’ve done that without any acquisitions, totally through organic growth – with expanding existing branches and opening new branches.” He also gives credit to his staff, truly the “face” of the bank in the towns they serve. The 112 full-time employees have an average time with the bank of 13 years. “Customers are familiar with them. We are more productive because of that longevity.”
In 2008, the bank expanded their services to the residents and businesses of Hanover and Norwell. As if to solidify the point that HIFS was there for both communities, the 9th branch was opened in the fully restored and renovated landmark location on Route 53 in Assinippi known as The Line House. The house was built to exhibit the brickwork of Elisha Jacobs; and has been used for many things since, including a market, post office, a selectman’s office, and a private residence. When the boundaries for Norwell and Hanover were created, the town line was drawn right through the center of the building, hence the name. Twice while a private residence this has caused a political firestorm. Most recently, the last resident of the home, George Williams, was questioned about whether he could serve Norwell as selectman when part of his home was in Hanover. Since residence is determined by “where one lays one’s head”, Mr. Williams was careful to sleep on the Norwell side of the bed.
HIFS recently completed a major expansion and renovation of its headquarters on Main Street in downtown Hingham. Like all its buildings, the renovation was done with an eye to historical details in keeping with the bank’s history in the surrounding communities. The three-story, 14,350 square foot addition was seamlessly integrated into the existing structure. Employees and customers can find themselves moving from the old section to the new without any perceivable difference. With the Administration under one roof, there is increased opportunity for efficiency.
HIFS has always grown and changed with its customers and the towns it serves. It was organized by a small group of citizens to benefit their fellow residents. None had any business experience beyond the confines of Hingham, and none could be called a “financier”. They were farmers, merchants, operators of manufacturing plants, even a sea captain. Many had surnames that live on in Hingham – Lincoln, Hersey, Thaxter, Barnes, Beal, and Whiton. Early on, Hingham Institution for Savings shared offices and a close alliance with the Hingham Mutual Fire Insurance Co. When the bank opened for business, the first deposit was in the amount of $60. By the end of the first year, there were 254 accounts, and total deposits of $30,000. One of the bank’s more famous customers was Daniel Webster, who negotiated a loan in 1844 for his farm in Marshfield. The longest continuous customer relationship HIFS enjoys began in 1846 with Hingham’s New North Meeting House Corporation.
If you lived in Hingham in 1834, you probably worked and banked there. Hingham was far from the wealthy suburb it is assumed to be today. Residents were farmers, small merchants, fishermen, and factory laborers. More than fifty vessels made Hingham their home port, and enough were engaged in foreign trade to require a US Custom House in town. Factories made marine hardware, fish packing plants dotted the harbor, buckets and barrels were manufactured in home workshops, and ropemaking was a hugely profitable business.
There have been at least 16 serious financial crises in the United States alone since the bank opened, many like this most recent one. In 1934, in a booklet celebrating Hingham Institution for Savings’ 100th Anniversary, Bank management noted “We shall urge thrift with regularity. We are in league with the sure laws of the universe: which sometimes seems slower, but are invariably reliable and secure in the end. It is the outcome and not the thrill of the plunge that counts.”
Fast forward to 2012: Hingham, Hull, Cohasset, Weymouth, Scituate, Norwell, Hanover, Boston’s South End and Beacon Hill all are served by the same community bank that served their towns’ founders. Robert Gaughen continues to stress the values of the bank’s founders when he says “We are committed to being here, to remaining independent. It’s important to the community that local banking exists because it serves a real need in the community.”