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First Savings Financial Group, Inc. Reports Financial Results for the Fiscal Year Ended September 30, 2022
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First Savings Financial Group, Inc. Reports Financial Results for the Fiscal Year Ended September 30, 2022

JEFFERSONVILLE, Ind., Oct. 27, 2022 (GLOBE NEWSWIRE) — First Savings Financial Group, Inc. (NASDAQ: FSFG – news) (the "Company"), the holding company for First Savings Bank (the "Bank"), today reported net income of $16.4 million, or $2.30 per diluted share, for the year ended September 30, 2022 compared to net income of $29.6 million, or $4.12 per diluted share, for the year ended September 30, 2021.

Commenting on the Company’s performance, Larry W. Myers, President and CEO, stated “While fiscal 2022 was a challenging year, we are pleased in delivering another year of increased value to our shareholders. The core banking segment, which is the strength of the organization, experienced positive trends that included significant loan originations and portfolio growth, stable net interest margin, improved efficiency and asset quality ratios, and enhanced profitability. The SBA lending segment underperformed in recent quarters, but we have continued to rebuild the lending team and pipeline for expected enhanced performance in the new fiscal year. We continue to fight headwinds for the mortgage banking segment and reduce expenses, including cost reductions made that will be fully recognized in the following fiscal quarter and year, in light of decreasing origination volumes and margin. Lastly, the Company repurchased 143,030 of its common shares during the quarter, in addition to the 59,120 purchased in the preceding quarter, which together totaled more than 2.8% of outstanding shares. We are encouraged by the strong performance of the core banking segment and perceive opportunity for enhanced performance of the SBA lending and mortgage banking segments. I’m optimistic that each of these business lines will thrive and deliver exceptional value to our shareholders in fiscal 2023.”

Results of Operations for the Fiscal Years Ended September 30, 2022 and 2021

Net interest income increased $3.5 million, or 6.1%, to $60.7 million for the year ended September 30, 2022 as compared to 2021. The increase in net interest income was due to a $5.7 million increase in interest income, partially offset by a $2.2 million increase in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $76.1 million, from $1.59 billion for 2021 to $1.67 billion for 2022, and an increase in the weighted-average tax-equivalent yield, from 4.18% for 2021 to 4.35% for 2022. The increase in the average balance of interest-earning assets was primarily due to increases in the average balance of investment securities and total loans of $69.9 million and $21.1 million, respectively. When excluding the impact from PPP loan payoffs, the increase in the average balance of loans was $144.6 million when comparing the two periods. Interest expense increased due to an increase in the average balance of interest-bearing liabilities of $54.3 million, from $1.27 billion for 2021 to $1.32 billion for 2022, and an increase in the average cost of interest-bearing liabilities, from 0.64% for 2021 to 0.78% for 2022. The increase in the average cost of interest-bearing liabilities for 2022 was due primarily to higher rates paid for brokered deposits during the period.

The Company recognized a provision for loan losses of $1.9 million for the year ended September 30, 2022 due primarily to loan portfolio growth, compared to a credit of $1.8 million for 2021. Nonperforming loans, which consist of nonaccrual loans and loans over 90 days past due and still accruing interest, decreased $4.6 million from $15.5 million at September 30, 2021 to $10.9 million at September 30, 2022. The Company recognized net charge-offs of $849,000 for the year ended September 30, 2022, of which $733,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $958,000 in 2021, of which $894,000 was related to unguaranteed portions of SBA loans.

Noninterest income decreased $69.2 million for the year ended September 30, 2022 as compared to 2021. The decrease was due primarily to decreases in mortgage banking income and net gain on sale of SBA loans of $66.2 million and $5.0 million, respectively. The decrease in mortgage banking income was primarily due to a $84.6 million decrease in production revenue from lower originations for sale and a $25.5 million decrease in capitalized residential mortgage loan servicing rights, partially offset by a $16.3 million increase in realized and unrealized hedging gains in 2022, a $4.2 million decrease in the fair value of loans held for sale and interest rate lock commitments as compared to a $18.8 million decrease in fair value recognized in 2021, and a $2.5 million increase in the fair value of the residential mortgage loan servicing rights portfolio in 2022 as compared to an $8.8 million decrease in fair value recognized in 2021. Mortgage loans originated for sale were $1.61 billion in the year ended September 30, 2022 as compared to $4.09 billion in 2021. The decrease in net gain on sales of SBA loans was due primarily to decreases in production and sales volume from the SBA lending segment, as well as lower premiums in the secondary market.

Noninterest expense decreased $48.3 million for the year ended September 30, 2022 as compared to 2021. The decrease was due primarily to decreases in compensation and benefits and advertising expense of $41.4 million and $3.4 million, respectively. The decrease in compensation and benefits expense was due primarily to a reduction in staff and incentive compensation for the Company’s mortgage banking segment as a result of decreased mortgage banking income. The decrease in advertising expense was related to the reduced loan origination volume of the mortgage banking segment.

The Company recognized income tax expense of $2.4 million for the year ended September 30, 2022 compared to tax expense of $10.0 million for 2021. The effective tax rate for 2022 was 12.6% as compared to 25.0% for 2021. The lower effective tax rate for 2022 was primarily due to lower taxable income and lower nondeductible executive compensation expense in 2022 as compared to 2021.

Results of Operations for the Three Months Ended September 30, 2022 and 2021

The Company reported net income of $2.5 million, or $0.35 per diluted share, for the three months ended September 30, 2022 compared to net income of $4.8 million, or $0.67 per diluted share, for the three months ended September 30, 2021.

Net interest income increased $2.4 million, or 16.6%, to $16.8 million for the three months ended September 30, 2022 as compared to the same period in 2021. The increase in net interest income was due to a $4.7 million increase in interest income, partially offset by a $2.3 million increase in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $296.8 million, from $1.56 billion for 2021 to $1.85 billion for 2022, and an increase in the weighted-average tax-equivalent yield, from 4.26% for 2021 to 4.64% for 2022. The increase in the average balance of interest-earning assets was due to increases in the average balance of investment securities and total loans of $130.4 million and $200.6 million, respectively. When excluding the impact from PPP loan payoffs, the increase in the average balance of loans was $283.6 million when comparing the two periods. Interest expense increased due to an increase in the average balance of interest-bearing liabilities of $254.1 million, from $1.22 billion for 2021 to $1.48 billion for 2022, and an increase in the average cost of interest-bearing liabilities, from 0.60% for 2021 to 1.12% for 2022. The increase in the average cost of interest-bearing liabilities was due to increases in the cost of brokered deposits and FHLB borrowings due to rising market interest rates during the period.

The Company recognized a provision for loan losses of $880,000 for the three months ended September 30, 2022, due to loan portfolio growth, compared to $8,000 for the same period in 2021. The Company recognized net charge-offs of $500,000 for the three months ended September 30, 2022, compared to net charge-offs of $349,000 for the same period in 2021.

Noninterest income decreased $12.0 million for the three months ended September 30, 2022 as compared to the same period in 2021. The decrease was due primarily to decreases in mortgage banking income and gain on sale of SBA loans of $10.3 million and $1.7 million, respectively. The decrease in mortgage banking income was primarily due to a $10.2 million decrease in production revenue from lower originations for sale and a $3.4 million decrease in capitalized residential mortgage loan servicing rights, partially offset by a $1.3 million realized and unrealized hedging gain in 2022 compared to a $1.2 million loss in 2021, and a $1.1 million decrease in the fair value of loans held for sale and interest rate lock commitments as compared to a $3.3 million decrease in fair value recognized in 2021. Mortgage loans originated for sale were $186.0 million in the three months ended September 30, 2022 as compared to $579.5 million in the same period in 2021. The decrease in net gain on sales of SBA loans was due primarily to decreases in production and sales volume from the SBA lending segment, as well as lower premiums in the secondary market.

Noninterest expense decreased $7.1 million for the three months ended September 30, 2022 as compared to the same period in 2021. The decrease was due primarily to a decrease in compensation and benefits of $6.7 million. The decrease in compensation and benefits expense is due primarily to a reduction in staff and incentive compensation for the Company’s mortgage banking segment as a result of decreased mortgage banking income.

The Company recognized income tax expense of $9,000 for the three months ended September 30, 2022 compared to $958,000 for the same period in 2021. The effective tax rate for 2022 was 0.4% as compared to 16.5% for 2021. The lower effective tax rate for 2022 was primarily due to lower taxable income in 2022 as compared to 2021.

Comparison of Financial Condition at September 30, 2022 and September 30, 2021

Total assets increased $336.3 million, from $1.72 billion at September 30, 2021 to $2.06 billion at September 30, 2022. Net loans held for investment increased $360.6 million during the year ended September 30, 2022, due primarily to growth in single-tenant net lease commercial real estate loans and residential mortgage loans, partially offset by a $55.8 million decrease in PPP loans. Residential mortgage and SBA loans held for sale decreased $129.2 million and $2.2 million, respectively, during the year ended September 30, 2022 due to lower loan originations. Single tenant net lease loans held for sale decreased $23.0 million during the year ended September 30, 2022, due to loan sales and transfers from held-for-sale to held-for-investment during the period. Residential mortgage loan servicing rights increased $13.7 million, or 27.6%, to $63.3 million at September 30, 2022.

Total liabilities increased $364.0 million due primarily to increases in total deposits, FHLB borrowings and other borrowings of $288.3 million, $57.3 million and $30.4 million, respectively. The increase in FHLB borrowings was primarily used to fund loan growth. The increase in other borrowings was due to a $31.0 million subordinated debt issuance in March 2022.

Common stockholders’ equity decreased $27.8 million, from $180.4 million at September 30, 2021 to $152.6 million at September 30, 2022, due primarily to a decrease in accumulated other comprehensive income of $36.0 million, partially offset by retained net income of $12.8 million. The decrease in accumulated other comprehensive income was primarily due to increasing market interest rates during the year ended September 30, 2022, which resulted in a decrease in the fair value of the available-for-sale securities portfolio. At September 30, 2022 and September 30, 2021, the Bank was considered “well-capitalized” under applicable regulatory capital guidelines.

First Savings Bank is an entrepreneurial community bank headquartered in Jeffersonville, Indiana, which is directly across the Ohio River from Louisville, Kentucky, and operates fifteen depository branches within Southern Indiana. The Bank also has three national lending programs, including single-tenant net lease commercial real estate, SBA lending and residential mortgage banking, with offices located throughout the United States. The Bank is a recognized leader, both in its local communities and nationally for its lending programs. The employees of First Savings Bank strive daily to achieve the organization’s vision, We Expect To Be The BEST community BANK, which fuels our success. The Company’s common shares trade on The NASDAQ Stock Market under the symbol “FSFG.”

This release may contain forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts; rather, they are statements based on the Company’s current expectations regarding its business strategies and their intended results and its future performance. Forward-looking statements are preceded by terms such as "expects," "believes," "anticipates," "intends" and similar expressions.

Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties could cause or contribute to the Company’s actual results, performance and achievements to be materially different from those expressed or implied by the forward-looking statements. Factors that may cause or contribute to these differences include, without limitation, changes in general economic conditions, including the duration, extent and severity of the COVID-19 pandemic, including its effect on our customers, service providers and on the economy and financial markets in general; changes in market interest rates; changes in monetary and fiscal policies of the federal government; legislative and regulatory changes; and other factors disclosed periodically in the Company’s filings with the Securities and Exchange Commission.

Because of the risks and uncertainties inherent in forward-looking statements, readers are cautioned not to place undue reliance on them, whether included in this report or made elsewhere from time to time by the Company or on its behalf. Except as may be required by applicable law or regulation, the Company assumes no obligation to update any forward-looking statements.

 

FIRST SAVINGS FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
                   
* All share and per share amounts have been adjusted to reflect the three-for-one stock split effective September 15, 2021.      
                   
  Three Months Ended   Years Ended    
OPERATING DATA: September 30,   September 30,    
(In thousands, except share and per share data)   2022       2021       2022       2021      
                   
Total interest income $ 20,956     $ 16,243     $ 70,998     $ 65,259      
Total interest expense   4,131       1,819       10,346       8,087      
                   
Net interest income   16,825       14,424       60,652       57,172      
Provision (credit) for loan losses   880       8       1,908       (1,767 )    
                   
Net interest income after provision (credit) for loan losses   15,945       14,416       58,744       58,939      
                   
Total noninterest income   4,531       16,495       51,227       120,436      
Total noninterest expense   18,001       25,104       91,149       139,409      
                   
Income before income taxes   2,475       5,807       18,822       39,966      
Income tax expense   9       958       2,378       9,997      
                   
Net income   2,466       4,849       16,444       29,969      
                   
Less: Net income attributable to noncontrolling interests                     402      
                   
Net income attributable to the Company $ 2,466     $ 4,849     $ 16,444     $ 29,567      
                   
Net income per share, basic $ 0.35     $ 0.68     $ 2.33     $ 4.16      
Weighted average shares outstanding, basic   6,988,873       7,111,594       7,058,550       7,107,786      
                   
Net income per share, diluted $ 0.35     $ 0.67     $ 2.30     $ 4.12      
Weighted average shares outstanding, diluted   7,056,138       7,200,357       7,141,846       7,173,733      
                   
                   
Performance ratios (three-month data annualized)                  
Return on average assets   0.49 %     1.12 %     0.89 %     1.69 %    
Return on average equity   5.78 %     10.92 %     9.25 %     17.59 %    
Return on average common stockholders’ equity   5.78 %     10.92 %     9.25 %     17.37 %    
Net interest margin (tax equivalent basis)   3.75 %     3.79 %     3.73 %     3.67 %    
Efficiency ratio   84.29 %     81.19 %     81.47 %     78.49 %    
                   
                   
          QTD       FYTD
FINANCIAL CONDITION DATA: September 30,   June 30,   Increase   September 30,   Increase
(In thousands, except per share data)   2022       2022     (Decrease)     2021     (Decrease)
                   
Total assets $ 2,057,662     $ 2,006,666     $ 50,996     $ 1,721,394     $ 336,268  
Cash and cash equivalents   41,665       37,468       4,197       33,428       8,237  
Investment securities   318,075       309,027       9,048       208,518       109,557  
Loans held for sale (1)   60,462       188,031       (127,569 )     214,940       (154,478 )
Gross loans (1) (2)   1,451,915       1,282,796       169,119       1,090,237       361,678  
Allowance for loan losses   15,360       14,980       380       14,301       1,059  
Interest earning assets   1,860,062       1,809,588       50,474       1,540,111       319,951  
Goodwill   9,848       9,848             9,848        
Core deposit intangibles   775       828       (53 )     988       (213 )
Loan servicing rights   67,194       69,039       (1,845 )     54,026       13,168  
Noninterest-bearing deposits   340,172       343,292       (3,120 )     291,039       49,133  
Interest-bearing deposits (3)   1,175,662       1,002,415       173,247       936,541       239,121  
Federal Home Loan Bank borrowings   307,303       404,098       (96,795 )     250,000       57,303  
Total liabilities   1,905,039       1,837,453       67,586       1,541,017       364,022  
Accumulated other comprehensive income (loss)   (27,079 )     (12,560 )     (14,519 )     8,900       (35,979 )
Stockholders’ equity, net of noncontrolling interests   152,623       169,213       (16,590 )     180,377       (27,754 )
                   
Book value per share $ 21.90     $ 23.80     $ (1.90 )   $ 25.31       (3.41 )
Tangible book value per share (4)   20.37       22.30       (1.92 )     23.79       (3.41 )
                   
Non-performing assets:                  
Nonaccrual loans – SBA guaranteed $ 5,474     $ 5,165     $ 309     $ 6,748     $ (1,274 )
Nonaccrual loans – unguaranteed   5,382       4,717       665       8,252       (2,870 )
Total nonaccrual loans $ 10,856     $ 9,882     $ 974     $ 15,000     $ (4,144 )
Accruing loans past due 90 days                     472       (472 )
Total non-performing loans   10,856       9,882       974       15,472       (4,616 )
Troubled debt restructurings classified as performing loans   2,714       2,822       (108 )     1,743       971  
Total non-performing assets $ 13,570     $ 12,704     $ 866     $ 17,215     $ (3,645 )
                   
Asset quality ratios:                  
Allowance for loan losses as a percent of total gross loans   1.06 %     1.17 %     (0.11 %)     1.31 %     (0.25 %)
Allowance for loan losses as a percent of total gross loans, excluding PPP loans (5)   1.06 %     1.17 %     (0.11 %)     1.38 %     (0.33 %)
Allowance for loan losses as a percent of nonperforming loans   141.49 %     151.59 %     (10.10 %)     92.43 %     49.06 %
Nonperforming loans as a percent of total gross loans   0.75 %     0.77 %     (0.02 %)     1.42 %     (0.67 %)
Nonperforming assets as a percent of total assets   0.66 %     0.63 %     0.03 %     1.00 %     (0.34 %)
                   
(1) The $127.6 million decrease in loans held for sale and $169.1 million increase in gross loans from June 30, 2022 to September 30, 2022 include a transfer of $73.3 million of single tenant net lease loans from held-for-sale to held-for-investment.
                   
(2) Includes $862,000, $1.8 million and $56.7 million of PPP loans at September 30, 2022, June 30, 2022 and September 30, 2021, respectively.    
                   
(3) Includes $292.5 million, $159.1 million and $100.1 million of brokered certificates of deposit at September 30, 2022, June 30, 2022 and September 30, 2021, respectively.  
                   
(4) See reconciliation of GAAP and non-GAAP financial measures for additional information relating to calculation of this item.      
                   
(5) Denominator excludes PPP loans, which are fully guaranteed by the SBA. This ratio is non-GAAP, but is believed by management to be meaningful because it provides a comparable ratio after eliminating PPP loans.
                   
                   
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES (UNAUDITED):       
The following non-GAAP financial measures used by the Company provide information useful to investors in understanding the Company’s performance. The Company believes the financial measures presented below are important because of their widespread use by investors as a means to evaluate capital adequacy and earnings. The following table summarizes the non-GAAP financial measures derived from amounts reported in the Company’s consolidated financial statements and reconciles those non-GAAP financial measures with the comparable GAAP financial measures.     
                   
          QTD       FYTD
  September 30,   June 30,   Increase   September 30,   Increase
Tangible Book Value Per Share   2022       2022     (Decrease)     2021     (Decrease)
(In thousands, except share and per share data)                  
                   
Stockholders’ equity, net of noncontrolling interests (GAAP) $ 152,623     $ 169,213     $ (16,590 )   $ 180,377     $ (27,754 )
Less: goodwill and core deposit intangibles   (10,623 )     (10,676 )     53       (10,836 )     213  
Tangible equity (non-GAAP) $ 142,000     $ 158,537       (16,537 )   $ 169,541       (27,541 )
                   
Outstanding common shares   6,970,631       7,110,706       (140,075 )     7,125,888       (155,257 )
                   
Tangible book value per share (non-GAAP) $ 20.37     $ 22.30     $ (1.93 )   $ 23.79     $ (3.42 )
                   
Book value per share (GAAP) $ 21.90     $ 23.80     $ (1.90 )   $ 25.31     $ (3.41 )
                   
                   
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED): As of
Summarized Consolidated Balance Sheets September 30,   June 30,   March 31,   December 31,   September 30,
(In thousands, except per share data)   2022       2022       2022       2021       2021  
Total cash and cash equivalents $ 41,665     $ 37,468     $ 31,105     $ 40,592     $ 33,428  
Total investment securities   318,075       309,027       284,674       220,926       208,518  
Total loans held for sale   60,462       188,031       152,652       161,218       214,940  
Total loans, net of allowance for loan losses   1,436,555       1,267,816       1,126,818       1,142,655       1,075,936  
PPP loans   862       1,766       13,415       46,020       56,656  
Loan servicing rights   67,194       69,039       68,267       59,187       54,026  
Total assets   2,057,662       2,006,666       1,801,944       1,764,589       1,721,394  
                   
Retail deposits $ 1,223,330     $ 1,186,582     $ 1,151,437     $ 1,146,454     $ 1,127,522  
Brokered deposits   292,504       159,125       69,752       120,581       100,058  
Total deposits   1,515,834       1,345,707       1,221,189       1,267,035       1,227,580  
Federal Home Loan Bank borrowings   307,303       404,098       296,592       258,377       250,000  
                   
Common stock and additional paid-in capital $ 26,848     $ 27,236     $ 27,154     $ 27,073     $ 25,799  
Retained earnings – substantially restricted   162,985       161,438       159,732       153,630       150,185  
Accumulated other comprehensive income (loss)   (27,079 )     (12,560 )     (1,336 )     9,219       8,900  
Unearned stock compensation   (969 )     (1,075 )     (1,180 )     (1,285 )     (138 )
Less treasury stock, at cost   (9,162 )     (5,826 )     (4,417 )     (4,417 )     (4,369 )
Total stockholders’ equity   152,623       169,213       179,953       184,220       180,377  
                   
Outstanding common shares   6,970,631       7,110,706       7,169,826       7,169,826       7,125,888  
                   
                   
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): Three Months Ended
Summarized Consolidated Statements of Income September 30,   June 30,   March 31,   December 31,   September 30,
(In thousands, except per share data)   2022       2022       2022       2021       2021  
Total interest income $ 20,956     $ 18,479     $ 15,801     $ 15,762     $ 16,243  
Total interest expense   4,131       2,568       1,788       1,859       1,819  
Net interest income   16,825       15,911       14,013       13,903       14,424  
Provision (credit) for loan losses   880       532       (30 )     526       8  
Net interest income after provision (credit) for loan losses   15,945       15,379       14,043       13,377       14,416  
                   
Total noninterest income   4,531       10,033       20,072       16,591       16,495  
Total noninterest expense   18,001       22,835       25,461       24,852       25,104  
Income before income taxes   2,475       2,577       8,654       5,116       5,807  
Income tax expense (benefit)   9       (61 )     1,619       811       958  
Net income attributable to the Company $ 2,466     $ 2,638     $ 7,035     $ 4,305     $ 4,849  
                   
                   
Net income per share, basic $ 0.35     $ 0.37     $ 0.99     $ 0.60     $ 0.68  
Weighted average shares outstanding, basic   6,988,873       7,073,204       7,076,355       7,116,790       7,111,594  
                   
Net income per share, diluted $ 0.35     $ 0.37     $ 0.98     $ 0.60     $ 0.67  
Weighted average shares outstanding, diluted   7,056,138       7,145,288       7,156,229       7,207,210       7,200,357  
                   
  Three Months Ended
  September 30,   June 30,   March 31,   December 31,   September 30,
Consolidated Performance Ratios (Annualized)   2022       2022       2022       2021       2021  
Return on average assets   0.49 %     0.55 %     1.61 %     1.01 %     1.12 %
Return on average equity   5.78 %     6.06 %     15.24 %     9.45 %     10.92 %
Return on average common stockholders’ equity   5.78 %     6.06 %     15.24 %     9.45 %     10.92 %
Net interest margin (tax equivalent basis)   3.75 %     3.77 %     3.68 %     3.73 %     3.79 %
Efficiency ratio   84.29 %     88.02 %     74.70 %     81.50 %     81.19 %
                   
  As of or for the Three Months Ended
  September 30,   June 30,   March 31,   December 31,   September 30,
Consolidated Asset Quality Ratios   2022       2022       2022       2021       2021  
Nonperforming loans as a percentage of total loans   0.75 %     0.77 %     0.88 %     1.10 %     1.42 %
Nonperforming assets as a percentage of total assets   0.66 %     0.63 %     0.73 %     0.82 %     1.00 %
Allowance for loan losses as a percentage of total loans   1.06 %     1.17 %     1.27 %     1.28 %     1.31 %
Allowance for loan losses as a percentage of nonperforming loans   141.49 %     151.59 %     143.94 %     116.12 %     92.43 %
Net charge-offs to average outstanding loans   0.03 %     0.00 %     0.02 %     0.00 %     0.03 %
                   
                   
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): Three Months Ended
Segmented Statements of Income Information September 30,   June 30,   March 31,   December 31,   September 30,
(In thousands, except per share data)   2022       2022       2022       2021       2021  
Core Banking Segment:                  
Net interest income $ 14,994     $ 13,848     $ 11,847     $ 11,495     $ 11,517  
Provision (credit) for loan losses   769       910       (240 )     (144 )     (189 )
Net interest income after provision (credit) for loan losses   14,225       12,938       12,087       11,639       11,706  
Noninterest income   1,808       2,379       2,163       1,942       1,780  
Noninterest expense   8,986       10,187       9,811       9,482       8,800  
Income before income taxes   7,047       5,130       4,439       4,099       4,686  
Income tax expense   1,190       568       330       500       569  
Net income attributable to the Company $ 5,857     $ 4,562     $ 4,109     $ 3,599     $ 4,117  
                   
SBA Lending Segment (Q2):                  
Net interest income (6) $ 1,182     $ 1,449     $ 1,602     $ 1,875     $ 2,455  
Provision (credit) for loan losses   111       (378 )     210       670       197  
Net interest income after provision (credit) for loan losses   1,071       1,827       1,392       1,205       2,258  
Noninterest income   480       584       1,658       1,901       2,194  
Noninterest expense   1,891       2,341       2,253       2,236       1,973  
Income (loss) before income taxes   (340 )     70       797       870       2,479  
Income tax expense (benefit)   (123 )     26       240       265       612  
Net income (loss) attributable to the Company (7) $ (217 )   $ 44     $ 557     $ 605     $ 1,867  
                   
Mortgage Banking Segment:                  
Net interest income $ 649     $ 614     $ 564     $ 533     $ 452  
Provision for loan losses                            
Net interest income after provision for loan losses   649       614       564       533       452  
Noninterest income   2,243       7,070       16,251       12,748       12,521  
Noninterest expense   7,124       10,307       13,397       13,134       14,331  
Income (loss) before income taxes   (4,232 )     (2,623 )     3,418       147       (1,358 )
Income tax expense (benefit)   (1,058 )     (655 )     1,049       46       (223 )
Net income (loss) attributable to the Company $ (3,174 )   $ (1,968 )   $ 2,369     $ 101     $ (1,135 )
                   
(6) Includes net interest income derived from PPP loans of: $ 16     $ 173     $ 239     $ 550     $ 1,145  
                   
(7) Includes net income attributable to the Company derived from PPP loans (tax effected) of: $ 12     $ 130     $ 179     $ 413     $ 859  
                   
                   
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): Three Months Ended
Segmented Statements of Income Information September 30,   June 30,   March 31,   December 31,   September 30,
(In thousands, except per share data)   2022       2022       2022       2021       2021  
Net Income (Loss) Per Share by Segment                  
Net income per share, basic – Core Banking $ 0.83     $ 0.64     $ 0.58     $ 0.50     $ 0.58  
Net income (loss) per share, basic – SBA Lending (Q2) (8)   (0.03 )     0.01       0.08       0.09       0.26  
Net income (loss) per share, basic – Mortgage Banking   (0.45 )     (0.28 )     0.33       0.01       (0.16 )
Total net income per share, basic (8) $ 0.35     $ 0.37     $ 0.99     $ 0.60     $ 0.68  
                   
Net Income (Loss) Per Diluted Share by Segment                  
Net income per share, diluted – Core Banking $ 0.83     $ 0.64     $ 0.57     $ 0.50     $ 0.57  
Net income (loss) per share, diluted – SBA Lending (Q2) (9)   (0.03 )     0.01       0.08       0.09       0.26  
Net income (loss) per share, diluted – Mortgage Banking   (0.45 )     (0.28 )     0.33       0.01       (0.16 )
Total net income per share, diluted (9) $ 0.35     $ 0.37     $ 0.98     $ 0.60     $ 0.67  
                   
Return on Average Assets by Segment (three-month data annualized)         
Core Banking   1.31 %     1.12 %     1.14 %     1.05 %     1.24 %
SBA Lending   (0.85 %)     0.17 %     1.80 %     1.55 %     4.01 %
Mortgage Banking   (9.44 %)     (4.50 %)     5.38 %     0.23 %     (2.11 %)
                   
Efficiency Ratio by Segment (three-month data annualized)         
Core Banking   53.48 %     62.78 %     70.03 %     70.57 %     66.18 %
SBA Lending   113.78 %     115.15 %     69.11 %     59.22 %     42.44 %
Mortgage Banking   246.33 %     134.14 %     79.67 %     98.89 %     110.47 %
                   
(8) Includes basic net income per share derived from PPP loans (tax effected) of: $ 0.00     $ 0.02     $ 0.03     $ 0.06     $ 0.12  
                   
(9) Includes diluted net income per share derived from PPP loans (tax effected) of: $ 0.00     $ 0.02     $ 0.03     $ 0.06     $ 0.12  
                   
                   
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): Three Months Ended
Noninterest Expense Detail by Segment September 30,   June 30,   March 31,   December 31,   September 30,
(In thousands)   2022       2022       2022       2021       2021  
Core Banking Segment:                  
Compensation (10) $ 4,767     $ 5,995     $ 5,207     $ 5,776     $ 5,220  
Occupancy   1,374       1,412       1,393       1,357       1,415  
Advertising   272       284       297       232       268  
Other   2,573       2,496       2,914       2,117       1,897  
Total Noninterest Expense $ 8,986     $ 10,187     $ 9,811     $ 9,482     $ 8,800  
                   
SBA Lending Segment (Q2):                  
Compensation $ 1,690     $ 1,619     $ 1,724     $ 1,685     $ 1,602  
Occupancy   41       60       64       78       83  
Advertising   8       3       9       9       6  
Other   152       659       456       464       282  
Total Noninterest Expense $ 1,891     $ 2,341     $ 2,253     $ 2,236     $ 1,973  
                   
Mortgage Banking Segment:                  
Compensation (10) $ 5,091     $ 7,601     $ 10,292     $ 9,867     $ 11,456  
Occupancy   491       597       622       678       723  
Advertising   319       519       696       551       588  
Other   1,223       1,590       1,787       2,038       1,564  
Total Noninterest Expense $ 7,124     $ 10,307     $ 13,397     $ 13,134     $ 14,331  
                   
(10) Compensation includes increases for Core Banking and corresponding decreases for Mortgage Banking segment that represent intersegment allocations for loans originated by the Mortgage Banking segment to be held for investment in the Core Banking loan portfolio of: $ 945     $ 1,164     $ 869     $ 975     $ 678  
                   
                   
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): Three Months Ended
  September 30,   June 30,   March 31,   December 31,   September 30,
Mortgage Banking Noninterest Expense Fixed vs. Variable   2022       2022       2022       2021       2021  
(In thousands)                  
Noninterest Expense – Fixed Expenses $ 5,724     $ 6,989     $ 7,936     $ 7,752     $ 7,779  
Noninterest Expense – Variable Expenses (11)   1,400       3,318       5,461       5,382       6,552  
Total Noninterest Expense $ 7,124     $ 10,307     $ 13,397     $ 13,134     $ 14,331  
                   
                   
  Three Months Ended
SBA Lending (Q2) Data September 30,   June 30,   March 31,   December 31,   September 30,
(In thousands, except percentage data)   2022       2022       2022       2021       2021  
Final funded loans guaranteed portion sold, SBA $ 3,772     $ 5,364     $ 14,355     $ 14,131     $ 14,894  
                   
Gross gain on sales of loans, SBA $ 393     $ 592     $ 1,670     $ 1,841     $ 2,134  
Weighted average gross gain on sales of loans, SBA   10.42 %     11.04 %     11.63 %     13.03 %     14.33 %
                   
Net gain on sales of loans, SBA (12) $ 249     $ 486     $ 1,327     $ 1,636     $ 1,912  
Weighted average net gain on sales of loans, SBA   6.60 %     9.06 %     9.24 %     11.58 %     12.84 %
                   
                   
  Three Months Ended
Mortgage Banking Data September 30,   June 30,   March 31,   December 31,   September 30,
(In thousands, except percentage data)   2022       2022       2022       2021       2021  
                   
Mortgage originations for sale in the secondary market $ 185,981     $ 421,426     $ 459,434     $ 541,074     $ 579,458  
                   
Mortgage sales $ 241,804     $ 426,200     $ 478,816     $ 587,928     $ 670,107  
                   
Gross gain on sales of loans, mortgage banking (13) $ 2,630     $ 7,419     $ 10,988     $ 11,082     $ 10,796  
Weighted average gross gain on sales of loans, mortgage banking   1.09 %     1.74 %     2.29 %     1.88 %     1.61 %
                   
Mortgage banking income (14) $ 2,246     $ 7,093     $ 16,254     $ 12,744     $ 12,538  
                   
(11) Variable expenses include incentive compensation and advertising expenses.         
                   
(12) Inclusive of gains on servicing assets and net of commissions, referral fees, SBA repair fees and discounts on unguaranteed portions held-for-investment.    
                   
(13) Inclusive of gains on capitalized mortgage servicing rights, realized hedging gains and loan fees, and net of lender credits and other investor expenses.    
                   
(14) Inclusive of loan fees, servicing income, gains or losses on mortgage servicing rights, fair value adjustments and gains or losses on derivative instruments, and net of lender credits and other investor expenses.
                   
                   
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): Three Months Ended
Summarized Consolidated Average Balance Sheets September 30,   June 30,   March 31,   December 31,   September 30,
(In thousands)   2022       2022       2022       2021       2021  
Interest-earning assets                  
Average balances:                  
Interest-bearing deposits with banks $ 28,318     $ 25,068     $ 36,029     $ 33,065     $ 63,217  
Loans, excluding PPP loans   1,477,857       1,381,366       1,268,983       1,221,879       1,194,277  
PPP loans   1,310       4,271       22,066       51,178       84,288  
Investment securities – taxable   94,836       103,536       50,165       47,717       46,005  
Investment securities – nontaxable   230,312       202,534       163,472       153,452       148,723  
FRB and FHLB stock   19,890       18,691       19,021       19,258       19,258  
Total interest-earning assets $ 1,852,523     $ 1,735,466     $ 1,559,736     $ 1,526,549     $ 1,555,768  
                   
Interest income (tax equivalent basis):                  
Interest-bearing deposits with banks $ 97     $ 37     $ 13     $ 14     $ 23  
Loans, excluding PPP loans   18,012       15,788       13,745       13,424       13,279  
PPP loans   17       177       258       595       1,219  
Investment securities – taxable   740       769       420       405       421  
Investment securities – nontaxable   2,352       1,987       1,571       1,509       1,482  
FRB and FHLB stock   265       169       146       149       146  
Total interest income (tax equivalent basis) $ 21,483     $ 18,927     $ 16,153     $ 16,096     $ 16,570  
                   
Weighted average yield (tax equivalent basis, annualized):                  
Interest-bearing deposits with banks   1.37 %     0.59 %     0.14 %     0.17 %     0.15 %
Loans, excluding PPP loans   4.88 %     4.57 %     4.33 %     4.39 %     4.45 %
PPP loans   5.19 %     16.58 %     4.68 %     4.65 %     5.78 %
Investment securities – taxable   3.12 %     2.97 %     3.35 %     3.40 %     3.66 %
Investment securities – nontaxable   4.08 %     3.92 %     3.84 %     3.93 %     3.99 %
FRB and FHLB stock   5.33 %     3.62 %     3.07 %     3.09 %     3.03 %
Total interest-earning assets   4.64 %     4.36 %     4.14 %     4.22 %     4.26 %
                   
                   
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): Three Months Ended
Summarized Consolidated Average Balance Sheets September 30,   June 30,   March 31,   December 31,   September 30,
(In thousands)   2022       2022       2022       2021       2021  
Interest-bearing liabilities                  
Average balances:                  
Interest-bearing deposits $ 1,125,659     $ 998,868     $ 922,137     $ 913,297     $ 935,800  
Federal Home Loan Bank borrowings   301,027       325,460       280,190       264,617       255,210  
Federal Reserve PPPLF borrowings                           11,937  
Subordinated debt and other borrowings   50,179       50,152       24,592       19,870       19,853  
Total interest-bearing liabilities $ 1,476,865     $ 1,374,480     $ 1,226,919     $ 1,197,784     $ 1,222,800  
                   
Interest expense:                  
Interest-bearing deposits $ 2,306     $ 1,047     $ 738     $ 811     $ 765  
Federal Home Loan Bank borrowings   1,111       811       681       730       725  
Federal Reserve PPPLF borrowings                           12  
Subordinated debt and other borrowings   714       710       369       318       319  
Total interest expense $ 4,131     $ 2,568     $ 1,788     $ 1,859     $ 1,821  
                   
Weighted average cost (annualized):                  
Interest-bearing deposits   0.82 %     0.42 %     0.32 %     0.36 %     0.33 %
Federal Home Loan Bank borrowings   1.48 %     1.00 %     0.97 %     1.10 %     1.14 %
Federal Reserve PPPLF borrowings   0.00 %     0.00 %     0.00 %     0.00 %     0.40 %
Subordinated debt and other borrowings   5.69 %     5.66 %     6.00 %     6.40 %     6.43 %
Total interest-bearing liabilities   1.12 %     0.75 %     0.58 %     0.62 %     0.60 %
                   
Interest rate spread (tax equivalent basis, annualized)   3.52 %     3.61 %     3.56 %     3.60 %     3.66 %
                   
Net interest margin (tax equivalent basis, annualized)   3.75 %     3.77 %     3.68 %     3.73 %     3.79 %
                   
Net interest margin, excluding PPP loans and PPPLF borrowings (non-GAAP), (tax equivalent basis, annualized)   3.75 %     3.74 %     3.67 %     3.70 %     3.68 %

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