Earnings release
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PRESS RELEASE FROM: Robert H. Gaughen, Jr., Chairman and Chief Executive Officer Hingham Institution for Savings Hingham, MA (NASDAQ: HIFS) DATE: July 11, 2025 CONTACT: Patrick R. Gaughen, President and Chief Operating Officer (781) 783-1761 HINGHAM REPORTS SECOND QUARTER 2025 RESULTS HINGHAM INSTITUTION FOR SA VINGS (NASDAQ: HIFS), Hingham, Massachusetts announced results for the quarter ended June 30, 2025. Earnings Net income for the quarter ended June 30, 2025 was $9,414,000 or $4.32 per share basic and $4.28 per share diluted, as compared to $4,102,000 or $1.88 per share basic and diluted for the same period last year. The Bank’s annualized return on average equity for the second quarter of 2025 was 8.43%, and the annualized return on average assets was 0.85%, as compared to 3.92% and 0.38% for the same period last year. Net income per share (diluted) for the second quarter of 2025 increased by 127.7% compared to the same period in 2024. Core net income for the quarter ended June 30, 2025, which represents net income excluding the after-tax net gain on equity securities, both realized and unrealized, was $7,453,000 or $3.42 per share basic and $3.39 per share diluted, as compared to $2,181,000 or $1.00 per share basic and per share diluted for the same period last year. The Bank’s annualized core return on average equity for the second quarter of 2025 was 6.67% and the annualized core return on average assets was 0.67%, as compared to 2.08% and 0.20% for the same period last year. Core net income per share (diluted) for the second quarter of 2025 increased by 239.0% compared to the same period in 2024. Net income for the six months ended June 30, 2025 was $16,538,000 or $7.58 per share basic and $7.52 per share diluted, as compared to $10,970,000 or $5.04 per share basic and $5.01 per share diluted for the same period last year. The Bank’s annualized return on average equity for the first six months of 2025 was 7.45%, and the annualized return on average assets was 0.75%, as compared to 5.27% and 0.50% for the same period in 2024. Net income per share (diluted) for the first six months of 2025 increased by 50.1% over the same period in 2024. Core net income for the six months ended June 30, 2025, which represents net income excluding the Page 1 of 10
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after-tax net gain on equity securities, both realized and unrealized, was $13,578,000 or $6.23 per share basic and $6.17 per share diluted, as compared to $4,395,000 or $2.02 per share basic and $2.01 per share diluted for the same period last year. The Bank’s annualized core return on average equity for the first six months of 2025 was 6.12%, and the annualized core return on average assets was 0.61%, as compared to 2.11% and 0.20% for the same period in 2024. Core net income per share (diluted) for the first six months of 2025 increased by 207.0% over the same period in 2024. See Page 10 for a reconciliation between Generally Accepted Accounting Principles (“GAAP”) net income and Non-GAAP core net income. GAAP requires that gains and losses on equity securities, net of tax, realized and unrealized, be recognized in the Consolidated Statements of Income. In calculating core net income, the Bank did not make any adjustments other than those relating to the after-tax net gain on equity securities, both realized and unrealized. In the first six months of 2024, both net income and core net income were positively impacted by lower income tax expense driven by excess tax benefit associated with the exercise of stock options and the revision of state income tax estimates. Balance Sheet Total assets increased to $4.539 billion at June 30, 2025, representing 3.7% annualized growth year-to-date and a 0.4% increase from June 30, 2024. Net loans increased to $3.932 billion at June 30, 2025, representing 3.0% annualized growth year-to-date and stable when compared to June 30, 2024. Origination activity was concentrated in the Boston and Washington D.C. markets and remained focused on stabilized multifamily commercial real estate. Retail and commercial deposits were $1.998 billion at June 30, 2025, flat year-to-date and representing 4.0% growth from June 30, 2024. Non-interest-bearing deposits, included in retail and commercial deposits, were $437.6 million at June 30, 2025, representing 20.2% annualized growth year-to-date and 27.5% growth from June 30, 2024, while interest-bearing deposits fell, reflecting some specific customer business needs. Growth in non-interest bearing deposits in the first six months of 2025 continued to reflect the Bank’s focus on developing and deepening deposit relationships with new and existing commercial and non-profit customers. The Bank continues to invest in its Specialized Deposit Group, actively recruiting for talented relationship managers in Boston, Washington, and San Francisco, particularly as respected competitors exit these markets or merge with larger regional banks. 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, continues to appeal to customers in times of uncertainty. Wholesale funds, which includes Federal Home Loan Bank (“FHLB”) borrowings, brokered deposits, and Internet listing service time deposits, were $2.052 billion at June 30, 2025 representing 6.0% annualized growth year-to-date and a 4.4% decline from June 30, 2024, as the Bank used these funds to replace certain commercial deposits in the second quarter of 2025. In the first six months of 2025, the Bank continued to manage its wholesale funding mix to lower its cost of funds while taking advantage of the inverted yield curve at certain durations by adding lower rate longer term liabilities. Wholesale deposits, which include brokered and Internet listing service time deposits, were $480.1 million at June 30, 2025, representing a 6.0% annualized decline year-to-date and a 3.5% decline from June 30, 2024. Borrowings from the FHLB totaled $1.572 billion at June 30, 2025, Page 2 of 10
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representing 10.0% annualized growth from December 31, 2024, and a 4.7% decline from June 30, 2024. As of June 30, 2025, the Bank maintained an additional $802.8 million in immediately available borrowing capacity at the FHLB of Boston and the Federal Reserve Bank, in addition to $360.6 million in cash and cash equivalents. Book value per share was $204.36 as of June 30, 2025, representing 6.4% annualized growth year-to-date and 6.8% growth from June 30, 2024. In addition to the increase in book value per share, the Bank declared $2.52 in dividends per share since June 30, 2024. On June 25, 2025, the Bank declared a regular cash dividend of $0.63 per share. This dividend will be paid on August 13, 2025 to stockholders of record as of August 4, 2025. This will be the Bank’s 126th consecutive quarterly dividend. The Bank has also generally declared special cash dividends in each of the last thirty years, typically in the fourth quarter, but did not declare a special dividend in 2024 and 2023. The Bank sets the level of the special dividend based on the Bank’s capital requirements and the prospective return on other capital allocation options, particularly the incremental return on capital from new loan originations and share repurchases. This may result in special dividends, if any, significantly above or below the regular quarterly dividend. Future regular and special dividends will be considered by the Board of Directors on a quarterly basis. Operational Performance Metrics The net interest margin for the quarter ended June 30, 2025 increased 16 basis points to 1.66%, as compared to 1.50% in the quarter ended March 31, 2025. This was the fifth consecutive quarter of continued expansion, despite the Federal Reserve’s federal funds rate target range remaining unchanged in 2025. This improvement was the result of a decline in the cost of interest-bearing liabilities, combined with an increase in the yield on interest-earning assets. The cost of interest-bearing liabilities fell 10 basis points in the second quarter of 2025, as the Bank’s retail and commercial deposits continued to reprice at lower rates, and the Bank continued to take advantage of the inverted yield curve by adding lower rate FHLB advances and brokered deposits. The yield on interest-earning assets increased by 5 basis points in the second quarter of 2025, driven primarily by a higher yield on loans, as the Bank continued to originate loans at higher rates and reprice existing loans. The net interest margin in the final month of the second quarter of 2025 was 1.72% annualized. Key credit and operational metrics remained acceptable in the second quarter of 2025. At June 30, 2025, non-performing assets totaled 0.70% of total assets, compared to 0.03% at December 31, 2024 and 0.04% at June 30, 2024. Non-performing loans as a percentage of the total loan portfolio totaled 0.81% at June 30, 2025, compared to 0.04% at both December 31, 2024 and June 30, 2024. The Bank did not record any charge-offs in the first six months of 2025 or 2024. In the second quarter of 2025, the Bank placed a commercial real estate loan with an outstanding balance of $30.6 million on nonaccrual, after the borrower failed to make the full payment due at maturity. This loan is secured by an entitled development site for a significant multifamily development in Washington, D.C. and has an associated conditional guarantee from a large national homebuilder and an affordable housing developer. The Bank is working actively to identify a resolution that protects the Bank’s interests. The remaining non-performing assets and loans cited above were and are residential, owner-occupant loans. As of June 30, 2025, the Bank only had the single above-mentioned non-performing commercial real Page 3 of 10
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estate loan, and no other commercial real estate delinquent loans. The Bank did not have any delinquent or non-performing commercial real estate loans as of December 31, 2024 or June 30, 2024. The Bank did not own any foreclosed property at June 30, 2025, December 31, 2024 or June 30, 2024. The efficiency ratio, as defined on page 5 below, decreased to 41.17% for the second quarter of 2025, as compared to 45.82% in the prior quarter and 68.57% for the same period last year. Operating expenses as a percentage of average assets were 0.68% for the second quarter of 2025, as compared to 0.68% for the prior quarter and 0.67% for the same period last year. This reflects, in part, continuing investment in deposit-gathering infrastructure and relatively stable average assets from period to period. 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. Chairman Robert H. Gaughen Jr. stated, “Returns on equity and assets in the second quarter of 2025 remained somewhat lower than our long-term performance expectations, although they have recovered significantly. Returns in our core business continue to improve steadily, driven by a continued expansion in the net interest margin through asset repricing, falling funding costs, and growth in non-interest bearing deposits. Our operational leverage remains critical to generating satisfactory returns and we remain focused on rigorous cost control and continuous operational improvement. Although our investment returns are likely to remain volatile in any individual period, they continue to contribute meaningfully to growth in book value per share over time. While this period has been extraordinarily challenging, the Bank’s business model has been built to compound shareholder capital over the long-term. We remain focused on careful capital allocation, defensive underwriting and rigorous 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.” The Bank’s quarterly financial results are summarized in this earnings release, but shareholders are encouraged to read the Bank’s quarterly report on Form 10-Q, which is generally available several weeks after the earnings release. The Bank expects to file Form 10-Q for the quarter ended June 30, 2025 with the Federal Deposit Insurance Corporation (FDIC) on or about August 6, 2025. Incorporated in 1834, Hingham Institution for Savings is one of America’s oldest banks. The Bank maintains offices in Boston, Nantucket, Washington, D.C., and San Francisco. The Bank’s shares of common stock are listed and traded on The NASDAQ Stock Market under the symbol HIFS. Page 4 of 10
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HINGHAM INSTITUTION FOR SAVINGS Selected Financial Ratios June 30, 2024 December 31, 2024 June 30, 2025 (Unaudited) Asset Quality Ratios Allowance for credit losses/total loans 0.68 % 0.69 % 0.70 % Allowance for credit losses/non-performing loans 1,577.28 1,775.00 86.97 Non-performing loans/total loans 0.04 0.04 0.81 Non-performing loans/total assets 0.04 0.03 0.70 Non-performing assets/total assets 0.04 0.03 0.70 Share Related Book value per share $ 191.34 $ 198.03 $ 204.36 Market value per share $ 178.88 $ 254.14 $ 248.35 Shares outstanding at end of period 2,180,250 2,180,250 2,181,250 (1) Annualized. (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 is a non-GAAP measure that represents total operating expenses, divided by the sum of net interest income and total other income, excluding the net gain on equity securities, both realized and unrealized. (5) Non-GAAP measurements that represent return on average assets and return on average equity, excluding the after-tax net gain on equity securities, both realized and unrealized. Page 5 of 10 Three Months Ended June 30, Six Months Ended June 30, 2024 2025 2024 2025 (Unaudited) Key Performance Ratios Return on average assets (1) 0.38 % 0.85 % 0.50 % 0.75 % Return on average equity (1) 3.92 8.43 5.27 7.45 Core return on average assets (1) (5) 0.20 0.67 0.20 0.61 Core return on average equity (1) (5) 2.08 6.67 2.11 6.12 Interest rate spread (1) (2) 0.25 0.95 0.19 0.87 Net interest margin (1) (3) 0.96 1.66 0.91 1.58 Operating expenses to average assets (1) 0.67 0.68 0.67 0.68 Efficiency ratio (4) 68.57 41.17 72.63 43.36 Average equity to average assets 9.59 10.05 9.56 10.02 Average interest-earning assets to average interest- bearing liabilities 119.93 122.94 119.92 122.60
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HINGHAM INSTITUTION FOR SAVINGS Consolidated Balance Sheets LIABILITIES AND STOCKHOLDERS’ EQUITY Interest-bearing deposits $ 2,075,002 $ 2,094,626 $ 2,040,271 Non-interest-bearing deposits 343,262 397,469 437,608 Total deposits 2,418,264 2,492,095 2,477,879 Federal Home Loan Bank advances 1,648,675 1,497,000 1,572,000 Mortgagors’ escrow accounts 14,577 16,699 18,478 Accrued interest payable 12,242 8,244 12,959 Deferred income tax liability, net 989 3,787 4,629 Other liabilities 8,806 8,191 7,460 Total liabilities 4,103,553 4,026,016 4,093,405 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; 2,180,250 shares issued and outstanding at June 30, 2024 and December 31, 2024, and 2,181,250 shares issued and outstanding at June 30, 2025 2,180 2,180 2,181 Additional paid-in capital 15,467 15,571 15,777 Undivided profits 399,531 414,004 427,794 Total stockholders’ equity 417,178 431,755 445,752 Total liabilities and stockholders’ equity $ 4,520,731 $ 4,457,771 $ 4,539,157 Page 6 of 10 (In thousands, except share amounts) June 30, 2024 December 31, 2024 June 30, 2025 (Unaudited) ASSETS Cash and due from banks $ 5,990 $ 4,183 $ 8,470 Federal Reserve and other short-term investments 363,151 347,647 352,144 Cash and cash equivalents 369,141 351,830 360,614 CRA investment 8,722 8,769 8,928 Other marketable equity securities 83,860 104,575 113,761 Securities, at fair value 92,582 113,344 122,689 Securities held to maturity, at amortized cost 6,493 6,493 6,494 Federal Home Loan Bank stock, at cost 66,189 61,022 64,659 Loans, net of allowance for credit losses of $26,940 at June 30, 2024, $26,980 at December 31, 2024 and $27,730 at June 30, 2025 3,933,419 3,873,662 3,931,663 Bank-owned life insurance 13,805 13,980 14,143 Premises and equipment, net 16,676 16,397 16,180 Accrued interest receivable 9,082 8,774 8,962 Other assets 13,344 12,269 13,753 Total assets $ 4,520,731 $ 4,457,771 $ 4,539,157
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HINGHAM INSTITUTION FOR SAVINGS Consolidated Statements of Income Three Months Ended Six Months Ended June 30, June 30, (In thousands, except per share amounts) 2024 2025 2024 2025 (Unaudited) Interest and dividend income: Loans $ 44,665 $ 46,752 $ 87,785 $ 91,973 Debt securities 87 97 132 192 Equity securities 1,551 1,365 3,001 2,816 Federal Reserve and other short-term investments 2,745 3,072 5,572 6,127 Total interest and dividend income 49,048 51,286 96,490 101,108 Interest expense: Deposits 22,141 17,841 43,287 36,462 Federal Home Loan Bank 16,539 15,406 33,751 30,571 Total interest expense 38,680 33,247 77,038 67,033 Net interest income 10,368 18,039 19,452 34,075 Provision for credit losses 180 450 288 750 Net interest income, after provision for credit losses 10,188 17,589 19,164 33,325 Other income: Customer service fees on deposits 138 139 275 274 Increase in cash surrender value of bank-owned life insurance 82 79 163 163 Gain on equity securities, net 2,464 2,516 8,434 3,797 Miscellaneous 49 73 104 122 Total other income 2,733 2,807 8,976 4,356 Operating expenses: Salaries and employee benefits 4,234 4,392 8,531 8,859 Occupancy and equipment 394 417 825 856 Data processing 738 758 1,493 1,482 Deposit insurance 819 784 1,629 1,532 Foreclosure and related 14 14 46 24 Marketing 187 222 276 358 Other general and administrative 908 959 1,721 1,905 Total operating expenses 7,294 7,546 14,521 15,016 Income before income taxes 5,627 12,850 13,619 22,665 Income tax provision 1,525 3,436 2,649 6,127 Net income $ 4,102 $ 9,414 $ 10,970 $ 16,538 Cash dividends declared per common share $ 0.63 $ 0.63 $ 1.26 $ 1.26 Weighted average shares outstanding: Basic 2,180 2,181 2,175 2,181 Diluted 2,186 2,200 2,189 2,200 Earnings per share: Basic $ 1.88 $ 4.32 $ 5.04 $ 7.58 Diluted $ 1.88 $ 4.28 $ 5.01 $ 7.52 Page 7 of 10
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HINGHAM INSTITUTION FOR SAVINGS Net Interest Income Analysis Three Months Ended June 30, 2024 March 31, 2025 June 30, 2025 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) $ 3,980,111 $ 44,665 4.49 % $ 3,929,828 $ 45,221 4.67 % $ 3,952,477 $ 46,752 4.74 % Securities (3) (4) 119,477 1,638 5.48 130,674 1,546 4.80 135,541 1,462 4.33 Short-term investments (5) 202,379 2,745 5.43 278,722 3,055 4.45 277,146 3,072 4.45 Total interest-earning assets 4,301,967 49,048 4.56 4,339,224 49,822 4.66 4,365,164 51,286 4.71 Other assets 66,218 79,209 78,230 Total assets $ 4,368,185 $ 4,418,433 $ 4,443,394 Liabilities and stockholders’ equity: ` Interest-bearing deposits (6) $ 2,149,753 $ 22,141 4.12 % $ 2,141,294 $ 18,621 3.53 % $ 2,102,662 $ 17,841 3.40 % Borrowed funds 1,437,335 16,539 4.60 1,407,844 15,165 4.37 1,448,078 15,406 4.27 Total interest-bearing liabilities 3,587,088 38,680 4.31 3,549,138 33,786 3.86 3,550,740 33,247 3.76 Non-interest-bearing deposits 346,663 413,877 429,537 Other liabilities 15,503 14,464 16,378 Total liabilities 3,949,254 3,977,479 3,996,655 Stockholders’ equity 418,931 440,954 446,739 Total liabilities and stockholders’ equity $ 4,368,185 $ 4,418,433 $ 4,443,394 Net interest income $ 10,368 $ 16,036 $ 18,039 Weighted average interest rate spread 0.25 % 0.80 % 0.95 % Net interest margin (7) 0.96 % 1.50 % 1.66 % Average interest-earning assets to average interest-bearing liabilities (8) 119.93 % 122.26 % 122.94 % (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 based on the actual number of days in the period. Page 8 of 10
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HINGHAM INSTITUTION FOR SAVINGS Net Interest Income Analysis Six Months Ended June 30, 2024 2025 Average Balance (9) Interest Yield/ Rate (10) Average Balance (9) Interest Yield/ Rate (10) (Dollars in thousands) (Unaudited) Loans (1) (2) $ 3,968,123 $ 87,785 4.42 % $ 3,941,215 $ 91,973 4.71 % Securities (3) (4) 117,840 3,133 5.32 133,121 3,008 4.56 Short-term investments (5) 205,312 5,572 5.43 277,930 6,127 4.45 Total interest-earning assets 4,291,275 96,490 4.50 4,352,266 101,108 4.68 Other assets 65,126 78,717 Total assets $ 4,356,401 $ 4,430,983 Interest-bearing deposits (6) $ 2,124,302 $ 43,287 4.08 % $ 2,121,871 $ 36,462 3.47 % Borrowed funds 1,454,181 33,751 4.64 1,428,072 30,571 4.32 Total interest-bearing liabilities 3,578,483 77,038 4.31 3,549,943 67,033 3.81 Non-interest-bearing deposits 346,399 421,750 Other liabilities 14,882 15,428 Total liabilities 3,939,764 3,987,121 Stockholders’ equity 416,637 443,862 Total liabilities and stockholders’ equity $ 4,356,401 $ 4,430,983 Net interest income $ 19,452 $ 34,075 Weighted average interest rate spread 0.19 % 0.87 % Net interest margin (7) 0.91 % 1.58 % Average interest-earning assets to average interest-bearing liabilities (8) 119.92 % 122.60 % (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 based on the actual number of days in the period. Page 9 of 10
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HINGHAM INSTITUTION FOR SAVINGS Non-GAAP Reconciliation The Bank believes the presentation of the following non-GAAP financial measures provide useful supplemental information that is essential to an investor’s proper understanding of the results of operations and financial condition of the Bank. Management uses these measures in its analysis of the Bank’s performance. These non-GAAP measures should not be viewed as substitutes for the financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks. 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 net gain on equity securities, both realized and unrealized. Three Months Ended Six Months Ended June 30, June 30, (In thousands, unaudited) 2024 2025 2024 2025 Non-GAAP reconciliation: Net income $ 4,102 $ 9,414 $ 10,970 $ 16,538 Gain on equity securities, net (2,464) (2,516) (8,434) (3,797) Income tax expense (1) 543 555 1,859 837 Core net income $ 2,181 $ 7,453 $ 4,395 $ 13,578 (1) The equity securities are held in a tax-advantaged subsidiary corporation. The income tax effect of the gain on equity securities, net, was calculated using the effective tax rate applicable to the subsidiary. The table below presents the calculation of the efficiency ratio, a non-U.S. GAAP performance measure that management uses to assess operational efficiency which represents total operating expenses, divided by the sum of net interest income and total other income, excluding net gain on equity securities, both realized and unrealized. Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, (In thousands, unaudited) 2024 2025 2025 2024 2025 Non-U.S. GAAP efficiency ratio calculation: Operating expenses $ 7,294 $ 7,470 $ 7,546 $ 14,521 $ 15,016 Net interest income $ 10,368 $ 16,036 $ 18,039 $ 19,452 $ 34,075 Other income 2,733 1,549 2,807 8,976 4,356 Gain on equity securities, net (2,464) (1,281) (2,516) (8,434) (3,797) Total revenue $ 10,637 $ 16,304 $ 18,330 $ 19,994 $ 34,634 Efficiency ratio 68.57 % 45.82 % 41.17 % 72.63 % 43.36 % Page 10 of 10