RALEIGH, N.C., Feb. 07, 2023 (GLOBE NEWSWIRE) — Integrated Financial Holdings, Inc. (OTCQX: IFHI) (the “Company” or “IFHI”), the financial holding company for West Town Bank & Trust (the “Bank”), released its financial results for the three months and year ended December 31, 2022. Highlights from the 2022 fourth quarter and year-to-date results include the following:
- Fourth quarter net income of $2.4 million or $1.04 per diluted share, compared to fourth quarter 2021 net income of $1.3 million or $0.57 per diluted share. Year-to-date net loss of $199,000 or $0.09 per diluted share compared to $12.7 million in net income or $5.71 per diluted share in the prior year.
- Net interest income of $5.9 million for the fourth quarter of 2022, compared to $4.1 million for the same period in 2021. For the year, net interest income was $22.0 million compared to $16.3 million for the same twelve-month period in 2021.
- Return on average assets of 2.15% and -0.05% for the three and twelve-month periods ending December 31, 2022 compared to 1.14% and 2.98%, respectively for the same periods in 2021.
- Return on average tangible common equity (a non-GAAP financial measure) of 14.23% and -0.29% for the three and twelve-month periods ending December 31, 2022 compared to 7.57% and 20.14%, respectively for the same periods in 2021.
Marc McConnell, Chairman, President and CEO of the Company said, “We believe our positive fourth quarter performance indicates that we are well positioned to continue refining our strategic initiatives while preparing for the upcoming year. Our earnings were strong, we are continuing to see net interest margin increase as a result of Fed rate increases, and credit quality ratios have improved across the board. With more than $500 million in renewable energy sector loans currently in the pipeline, we remain focused on maintaining our stronghold in government-guaranteed lending while also streamlining our organization in ways intended to reduce non-interest expense in our less profitable business lines.”
BALANCE SHEET
On December 31, 2022, the Company’s total assets were $447.9 million, net loans held for investment were $294.1 million, loans held for sale (“HFS”) were $34.3 million, total deposits were $313.1 million and total shareholders’ equity attributable to IFHI was $87.5 million. Compared with December 31, 2021, total assets decreased $5.1 million or 1%, net loans held for investment increased $40.0 million or 16%, HFS loans increased $6.4 million or 23%, total deposits decreased $35.0 million or 10%, and total shareholders’ equity attributable to IFHI decreased $1.0 million or 1%. Cash and cash equivalents increased slightly from the prior quarter but have decreased since the prior year end as the Company has redeployed over $46.3 million in cash into higher yielding loans. The Bank has continued to see growth in loans held for investment primarily as a result of activity in the Government Guaranteed Lending (“GGL”) type loans. At $34.3 million in volume, HFS loans at December 31, 2022 represents potential, significant future GGL revenues as those loans are sold in the market and the associated premiums are recognized. Noninterest bearing deposits remained approximately static from the prior quarter at $106.3 million but are down $8.1 million since the prior year-end, in part, as a result of some ongoing merger and acquisition activity in one of the targeted industries that the Company banks. The decrease in total shareholders’ equity since year-end 2021 was primarily associated with a decline in the market value of the available for sale investment portfolio. The accumulated other comprehensive loss component (“AOCI”) of equity related to the change in market pricing for the available-for-sale investment portfolio increased from a loss of $99,000 at December 31, 2021 to a loss of $2.3 million at December 31, 2022 as a result of significant changes in market interest rates.
CAPITAL LEVELS
At December 31, 2022, the regulatory capital ratios of West Town Bank & Trust exceeded the minimum thresholds established for well-capitalized banks under applicable banking regulations.
| "Well Capitalized" Minimum | Basel III Fully Phased-In | West Town Bank & Trust | |
| Tier 1 common equity ratio | 6.50% | 7.00% | 12.47% |
| Tier 1 risk-based capital ratio | 8.00% | 8.50% | 12.47% |
| Total risk-based capital ratio | 10.00% | 10.50% | 13.73% |
| Tier 1 leverage ratio | 5.00% | 4.00% | 11.58% |
Primarily as a result of the increased AOCI loss, the Company’s book value per common share decreased from $40.35 as of December 31, 2021, to $38.69 at December 31, 2022. The Company’s tangible book value per common share (a non-GAAP financial measure) also decreased from $31.44 as of December 31, 2021, to $30.36 at December 31, 2022, primarily as a result of the AOCI loss.
ASSET QUALITY
The Company’s nonperforming assets to total assets ratio decreased from 1.65% at December 31, 2021, to 1.04% at December 31, 2022, as management continued to aggressively work to reduce its special assets portfolio. Nonaccrual loans at December 31, 2022 decreased $2.3 million or 34% as compared to December 31, 2021. The Bank held $101,000 in foreclosed assets as of December 31, 2022.
The Company recorded a negative provision for loan losses of $150,000 in the fourth quarter of 2022 but had $810,000 in net provision for loan loss additions during the twelve-month period ending December 31, 2022 as compared to provisions of $775,000 and $1,974,000 for the same periods in 2021. The negative provision in the three months ended December 31, 2022 reflected the impact of continued credit improvements. The Company recorded $149,000 in net recoveries during the fourth quarter of 2022 compared to $1.0 million in net charge-offs for the same period in 2021. Management continues to believe it is making progress in improving overall asset quality. Set forth in the table below is certain asset quality information as of the dates indicated:
| (Dollars in thousands) | 12/31/22 | 9/30/22 | 6/30/22 | 3/31/22 | 12/31/21 | ||||||||||
| Nonaccrual loans | $ | 4,552 | $ | 4,612 | $ | 4,656 | $ | 6,558 | $ | 6,848 | |||||
| Foreclosed assets | 101 | – | – | – | 618 | ||||||||||
| 90 days past due and still accruing | – | – | – | – | – | ||||||||||
| Total nonperforming assets | $ | 4,653 | $ | 4,612 | $ | 4,656 | $ | 6,558 | $ | 7,466 | |||||
| Net charge-offs | $ | (149 | ) | $ | (29 | ) | $ | (279 | ) | $ | 105 | $ | 1,038 | ||
| Annualized net charge-offs (recoveries) to total | |||||||||||||||
| average portfolio loans | -0.20 | % | -0.04 | % | -0.43 | % | 0.16 | % | 1.65 | % | |||||
| Ratio of total nonperforming assets to total assets | 1.04 | % | 1.05 | % | 1.07 | % | 1.52 | % | 1.65 | % | |||||
| Ratio of total nonperforming loans to total loans, net | |||||||||||||||
| of allowance | 1.55 | % | 1.60 | % | 1.79 | % | 2.56 | % | 2.70 | % | |||||
| Ratio of total allowance for loan losses to total loans | 2.23 | % | 2.27 | % | 2.39 | % | 2.14 | % | 2.14 | % | |||||
NET INTEREST INCOME AND MARGIN
Net interest income for the three months ended December 31, 2022, increased $1.8 million or 43% in comparison to the fourth quarter of 2021 as loan yields increased year over year from 6.53% to 7.69%. The increase in yield from the prior year reflected the impact of 425 basis points of rate increases by the Federal Open Market Committee (“FOMC”) since the beginning of 2022 in response to current economic conditions as well as a change in loan mix. Overall cost of funds increased from 0.65% in the fourth quarter of 2021 to 0.98% for the same period in 2022, as average retail certificate of deposit (“CD”) rates trended up and new CDs were originated at a higher market rate. Net interest margin increased from 4.27% during the three months ended December 31, 2021, to 6.35% for the same period in 2022. The increase in margin was also driven by the increase in loan yield resulting from the FOMC actions.
Net interest income for the twelve months ended December 31, 2022, increased $5.6 million or 34% in comparison to the same period of 2021 as loan yields increased year over year from 6.53% to 7.47% primarily as a result of the FOMC rate increases during the period.
| Three Months Ended | Year-To-Date | ||||||||||||||
| (Dollars in thousands) | 12/31/22 | 9/30/22 | 6/30/22 | 3/31/22 | 12/31/21 | 12/31/22 | 12/31/21 | ||||||||
| Average balances: | |||||||||||||||
| Loans | $ | 331,508 | $ | 312,475 | $ | 319,115 | $ | 294,502 | $ | 277,510 | $ | 321,033 | $ | 282,843 | |
| Available-for-sale securities | 17,446 | 19,096 | 21,879 | 21,088 | 20,367 | 19,473 | 30,274 | ||||||||
| Other interest-bearing balances | 20,367 | 30,378 | 33,328 | 56,359 | 86,261 | 27,813 | 65,617 | ||||||||
| Total interest-earning assets | 369,321 | 361,949 | 374,322 | 371,949 | 384,138 | 368,319 | 378,734 | ||||||||
| Total assets | 436,695 | 428,983 | 438,732 | 437,402 | 442,139 | 434,803 | 426,869 | ||||||||
| Noninterest-bearing deposits | 113,851 | 94,013 | 85,042 | 98,546 | 104,472 | 97,635 | 93,681 | ||||||||
| Interest-bearing liabilities: | |||||||||||||||
| Interest-bearing deposits | 212,069 | 233,464 | 244,363 | 235,092 | 237,847 | 229,965 | 235,636 | ||||||||
| Borrowings | 8,913 | 2,174 | 8,626 | 6,306 | 5,272 | 6,571 | 4,914 | ||||||||
| Total interest-bearing liabilities | 220,982 | 235,638 | 252,989 | 241,398 | 243,119 | 236,536 | 240,550 | ||||||||
| Common shareholders’ equity | 84,831 | 88,043 | 90,721 | 90,441 | 86,549 | 87,865 | 83,114 | ||||||||
| Tangible common equity (1) | 65,879 | 68,924 | 71,437 | 70,939 | 66,877 | 68,747 | 63,203 | ||||||||
| Interest income/expense: | |||||||||||||||
| Loans | $ | 6,422 | $ | 5,943 | $ | 5,491 | $ | 5,623 | $ | 4,571 | $ | 23,479 | $ | 18,458 | |
| Available-for-sale securities | 64 | 105 | 104 | 89 | 77 | 362 | 268 | ||||||||
| Interest-bearing balances and other | 257 | 169 | 89 | 42 | 53 | 557 | 188 | ||||||||
| Total interest income | 6,743 | 6,217 | 5,684 | 5,754 | 4,701 | 24,398 | 18,914 | ||||||||
| Deposits | 735 | 532 | 523 | 522 | 566 | 2,312 | 2,580 | ||||||||
| Borrowings | 93 | 13 | 15 | 9 | 1 | 130 | 1 | ||||||||
| Total interest expense | 828 | 545 | 538 | 531 | 567 | 2,442 | 2,581 | ||||||||
| Net interest income | $ | 5,915 | $ | 5,672 | $ | 5,146 | $ | 5,223 | $ | 4,134 | $ | 21,956 | $ | 16,333 | |
| (1) See reconciliation of non-GAAP financial measures. | |||||||||||||||
| Three Months Ended | Year-To-Date | ||||||||||||||
| 12/31/22 | 9/30/22 | 6/30/22 | 3/31/22 | 12/31/21 | 12/31/22 | 12/31/21 | |||||||||
| Average yields and costs: | |||||||||||||||
| Loans | 7.69 | % | 7.55 | % | 6.90 | % | 7.74 | % | 6.53 | % | 7.47 | % | 6.53 | % | |
| Available-for-sale securities | 1.47 | % | 2.20 | % | 1.90 | % | 1.69 | % | 1.51 | % | 1.82 | % | 0.89 | % | |
| Interest-bearing balances and other | 5.01 | % | 2.21 | % | 1.07 | % | 0.30 | % | 0.24 | % | 1.59 | % | 0.29 | % | |
| Total interest-earning assets | 7.24 | % | 6.81 | % | 6.09 | % | 6.27 | % | 4.86 | % | 6.61 | % | 4.99 | % | |
| Interest-bearing deposits | 1.38 | % | 0.90 | % | 0.86 | % | 0.90 | % | 0.94 | % | 1.00 | % | 1.09 | % | |
| Borrowings | 4.14 | % | 2.37 | % | 0.70 | % | 0.58 | % | 0.08 | % | 2.00 | % | 0.02 | % | |
| Total interest-bearing liabilities | 1.49 | % | 0.92 | % | 0.85 | % | 0.89 | % | 0.93 | % | 1.03 | % | 1.07 | % | |
| Cost of funds | 0.98 | % | 0.66 | % | 0.64 | % | 0.63 | % | 0.65 | % | 0.73 | % | 0.77 | % | |
| Net interest margin | 6.35 | % | 6.22 | % | 5.51 | % | 5.69 | % | 4.27 | % | 5.94 | % | 4.31 | % | |
NONINTEREST INCOME
Noninterest income for the three months ended December 31, 2022, was $5.9 million, an increase of $887,000 or 18% as compared to the three months ended December 31, 2021. Specific items to note include:
- Windsor Advantage, LLC (“Windsor”), a subsidiary of the Company which offers an SBA and USDA loan servicing platform, had processing and servicing revenue totaling $2.8 million, a decrease of $14,000 or less than 1% as compared to the $2.9 million in income earned during the same prior-year period.
- Mortgage revenue totaled $99,000, a decrease of $991,000 or 91% as compared to the fourth quarter of 2021. Due to the nationwide slowdown in refinancing volume and the impact of a doubling of long-term mortgage rates year-over-year, the Company has begun to deemphasize its mortgage operations in the fourth quarter of 2022.
- Government Guaranteed Lending revenue was $2.1 million in the fourth quarter of 2022, a decrease of $121,000 or 5% in comparison to the $2.2 million of revenues for the same period in 2021.
- Other noninterest income was $549,000 in the fourth quarter of 2022 compared to loss of $1.5 million in the same period in 2021. The fourth quarter of 2021 reflected the impact of a $2.1 million pre-tax loss associated with a tax credit taken during that period. The tax benefit of the losses plus the tax credit itself netted a total after-tax positive impact to the Company of about $1.2 million. In addition, income associated with the Company’s minority investment, West Town Payments (“WTP”) increased from $79,000 in the fourth quarter of 2021 to $1.2 million for the same period in 2022.
Noninterest income for the twelve months ended December 31, 2022, was $28.3 million compared to $41.1 million for the same period in 2021, a decrease of $12.8 million or 31%. The decrease is primarily due to a decrease of $13.8 million in loan processing and servicing revenue driven by the decrease in revenue during the period related to the Paycheck Protection Program (“PPP”). Mortgage revenues during the period decreased $4.3 million due to a general slowdown in the refinancing market as a result of the current rate environment. These two declines were partially offset by an increase in other noninterest income of $5.2 million primarily associated with a gain in the market value of marketable equity securities.
NONINTEREST EXPENSE
Noninterest expense for the fourth quarter of 2022 was $9.8 million, a decrease of $499,000 or 5%, from $10.3 million for the fourth quarter of 2021. This change was primarily due to decreased loan-related expenses, which tend to fluctuate unexpectedly, but was also affected by a $92,000 recovery of expenses reimbursed by the SBA. Also contributing to the year-over-year decrease in noninterest expense was a decrease in software expense, which decreased from $830,000 in the fourth quarter of 2021 to $467,000 during the same period in 2022. This $363,000 decrease was primarily due to a decline in software expenses associated with processing and servicing PPP loans at Windsor in the fourth quarter of 2021. Software costs at Windsor decreased from $413,000 in the fourth quarter of 2021 to $164,000 in the same period in 2022. Additionally, advertising costs dropped from $453,000 in the fourth quarter of 2021 to $211,000 in the same period of 2022, primarily tied to a decline in fee generation costs at Windsor. These increases were partially offset by merger-related expenses of $192,000 associated with the Company’s proposed merger with MVB Financial Corp. (“MVB”) announced during the third quarter of 2022, as well as a $479,000 increase in other operating expenses caused in part by commissions paid to outside parties for fee generation for WTP resulting in the related $1.2 million increase in revenues.
Noninterest expense for the twelve months ended December 31, 2022, was $50.8 million compared to $42.5 million for the same period in 2021, an increase of $8.2 million or 19%. The primary difference period over period was the $10.0 million litigation expense recognized in the third quarter of 2022.
ABOUT INTEGRATED FINANCIAL HOLDINGS, INC.
Integrated Financial Holdings, Inc. is a financial holding company based in Raleigh, North Carolina. The Company is the holding company for West Town Bank & Trust, an Illinois state-chartered bank. West Town Bank & Trust provides banking services through its full-service office located in the greater Chicago area. The Company is also the parent company of Windsor Advantage, LLC, a loan service provider that offers community banks and credit unions with a comprehensive outsourced U.S. Small Business Association (“SBA”) 7(a) and U.S. Department of Agriculture (“USDA”) lending platform. The Company is registered with and supervised by the Federal Reserve. West Town Bank & Trust’s primary regulators are the Illinois Department of Financial and Professional Regulation and the FDIC.
For more information, visit https://ifhinc.com/.
Important Note Regarding Forward-Looking Statements
This release contains certain forward-looking statements with respect to the financial condition, results of operations, and business of the Company. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of the Company and on the information available to management at the time this release was prepared. These statements can be identified by the use of words such as "expect," "anticipate," "estimate," "believe," variations of these words, and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause a difference include, among others: changes in the national and local economies or market conditions; changes in interest rates, deposit flows, loan demand, and asset quality, including real estate and other collateral values; changes in Small Business Administration rules, regulations, or loan products, including the section 7(a) program; changes in other government guaranteed loan programs or our ability to participate in such programs; changes in tax law, including the impact of such changes on our tax assets and liabilities; future governmental shutdowns that may impact revenues associated with our lending and other operations that are dependent on government guaranteed loan programs; changes in banking regulations and accounting principles, policies, or guidelines; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with the Company’s acquisition and divesture activities or the Company’s planned merger with MVB; the failure of our strategic investments or acquisitions to perform as anticipated and the impact of any impairments to our intangible assets, such as goodwill; the impact of our strategic initiatives, including our planned merger with MVB, on our ability to retain key employees; the possibility that the proposed merger with MVB will not close when expected or at all because required regulatory approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all; the possibility that the anticipated benefits of the proposed merger with MVB will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where the Company and MVB do business; adverse results (including judgments, costs, fines, reputational harm, financial settlements and/or other negative effects) from current or future litigation, regulatory proceedings, investigations, or similar matters, or developments related thereto; and the impact of competition from traditional or new sources, including non-bank financial service providers, such as Fintechs. These, and other factors that may emerge, could cause decisions and actual results to differ materially from current expectations. The Company assumes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.
| Consolidated Balance Sheets | ||||||||||||||||||
| Ending Balance | ||||||||||||||||||
| (In thousands, unaudited) | 12/31/22 | 9/30/22 | 6/30/22 | 3/31/22 | 12/31/21 | |||||||||||||
| Assets | ||||||||||||||||||
| Cash and due from banks | $ | 7,553 | $ | 6,272 | $ | 4,700 | $ | 3,900 | $ | 3,803 | ||||||||
| Interest-bearing deposits | 26,430 | 25,011 | 21,981 | 28,876 | 79,910 | |||||||||||||
| Total cash and cash equivalents | 33,983 | 31,283 | 26,681 | 32,776 | 83,713 | |||||||||||||
| Interest-bearing time deposits | 999 | 1,249 | 1,499 | 1,746 | 1,746 | |||||||||||||
| Available-for-sale securities | 17,712 | 17,460 | 19,038 | 20,386 | 20,659 | |||||||||||||
| Marketable equity securities | 17,982 | 17,982 | 17,982 | 18,000 | 12,000 | |||||||||||||
| Loans held for sale | 34,302 | 28,399 | 59,592 | 51,095 | 27,880 | |||||||||||||
| Loans held for investment | 300,764 | 295,416 | 266,259 | 262,281 | 259,625 | |||||||||||||
| Allowance for loan and lease losses | (6,709 | ) | (6,710 | ) | (6,361 | ) | (5,622 | ) | (5,547 | ) | ||||||||
| Loans held for investment, net | 294,055 | 288,706 | 259,898 | 256,659 | 254,078 | |||||||||||||
| Premises and equipment, net | 4,098 | 4,264 | 4,238 | 4,235 | 4,106 | |||||||||||||
| Foreclosed assets | 101 | – | – | – | 618 | |||||||||||||
| Loan servicing assets | 3,715 | 3,979 | 4,178 | 4,014 | 3,993 | |||||||||||||
| Bank-owned life insurance | 5,357 | 5,330 | 5,304 | 5,271 | 5,246 | |||||||||||||
| Accrued interest receivable | 2,997 | 2,485 | 2,139 | 1,886 | 1,373 | |||||||||||||
| Goodwill | 13,161 | 13,161 | 13,161 | 13,161 | 13,161 | |||||||||||||
| Other intangible assets, net | 5,682 | 5,848 | 6,014 | 6,180 | 6,400 | |||||||||||||
| Other assets | 13,719 | 17,293 | 15,764 | 15,218 | 18,001 | |||||||||||||
| Total assets | $ | 447,863 | $ | 437,439 | $ | 435,488 | $ | 430,627 | $ | 452,974 | ||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||
| Liabilities | ||||||||||||||||||
| Deposits: | ||||||||||||||||||
| Noninterest-bearing | $ | 106,255 | $ | 106,272 | $ | 83,544 | $ | 92,499 | $ | 114,313 | ||||||||
| Interest-bearing | 206,872 | 218,835 | 250,026 | 233,953 | 233,842 | |||||||||||||
| Total deposits | 313,127 | 325,107 | 333,570 | 326,452 | 348,155 | |||||||||||||
| Borrowings | 30,000 | 5,000 | – | 5,000 | 7,500 | |||||||||||||
| Accrued interest payable | 379 | 370 | 308 | 325 | 326 | |||||||||||||
| Other liabilities | 17,600 | 23,557 | 9,939 | 8,320 | 9,212 | |||||||||||||
| Total liabilities | 361,106 | 354,034 | 343,817 | 340,097 | 365,193 | |||||||||||||
| Shareholders’ equity: | ||||||||||||||||||
| Common stock, voting | 2,239 | 2,239 | 2,227 | 2,213 | 2,176 | |||||||||||||
| Common stock, non-voting | 22 | 22 | 22 | 22 | 22 | |||||||||||||
| Additional paid in capital | 24,916 | 24,674 | 24,498 | 24,013 | 23,664 | |||||||||||||
| Retained earnings | 62,611 | 60,248 | 67,781 | 66,372 | 62,810 | |||||||||||||
| Accumulated other comprehensive loss | (2,301 | ) | (2,866 | ) | (1,985 | ) | (1,296 | ) | (99 | ) | ||||||||
| Total IFH, Inc. shareholders’ equity | 87,487 | 84,317 | 92,543 | 91,324 | 88,573 | |||||||||||||
| Noncontrolling interest | (730 | ) | (912 | ) | (872 | ) | (794 | ) | (792 | ) | ||||||||
| Total shareholders’ equity | 86,757 | 83,405 | 91,671 | 90,530 | 87,781 | |||||||||||||
| Total liabilities and shareholders’ equity | $ | 447,863 | $ | 437,439 | $ | 435,488 | $ | 430,627 | $ | 452,974 | ||||||||
| Consolidated Statements of Income | ||||||||||||||||||||||
| (In thousands except per | Three Months Ended | Year-To-Date | ||||||||||||||||||||
| share data; unaudited) | 12/31/22 | 9/30/22 | 6/30/22 | 3/31/22 | 12/31/21 | 12/31/22 | 12/31/21 | |||||||||||||||
| Interest income | ||||||||||||||||||||||
| Loans | $ | 6,422 | $ | 5,943 | $ | 5,491 | $ | 5,623 | $ | 4,571 | $ | 23,479 | $ | 18,458 | ||||||||
| Available-for-sale securities and other | 321 | 274 | 193 | 131 | 130 | 919 | 456 | |||||||||||||||
| Total interest income | 6,743 | 6,217 | 5,684 | 5,754 | 4,701 | 24,398 | 18,914 | |||||||||||||||
| Interest expense | ||||||||||||||||||||||
| Interest on deposits | 735 | 532 | 523 | 522 | 566 | 2,312 | 2,580 | |||||||||||||||
| Interest on borrowings | 93 | 13 | 15 | 9 | 1 | 130 | 1 | |||||||||||||||
| Total interest expense | 828 | 545 | 538 | 531 | 567 | 2,442 | 2,581 | |||||||||||||||
| Net interest income | 5,915 | 5,672 | 5,146 | 5,223 | 4,134 | 21,956 | 16,333 | |||||||||||||||
| Provision for loan losses | (150 | ) | 320 | 460 | 180 | 775 | 810 | 1,947 | ||||||||||||||
| Noninterest income | ||||||||||||||||||||||
| Loan processing and servicing | ||||||||||||||||||||||
| revenue | 2,849 | 2,163 | 2,373 | 2,207 | 2,863 | 9,592 | 23,417 | |||||||||||||||
| Mortgage | 99 | 477 | 1,066 | 173 | 1,090 | 1,815 | 6,106 | |||||||||||||||
| Government guaranteed lending | 2,095 | 2,213 | 2,767 | 1,124 | 2,216 | 8,199 | 7,937 | |||||||||||||||
| SBA documentation preparation fees | 2 | 78 | 128 | 144 | 167 | 352 | 991 | |||||||||||||||
| Service charges on deposits | 240 | 182 | 118 | 104 | 85 | 644 | 243 | |||||||||||||||
| Bank-owned life insurance | 26 | 27 | 33 | 25 | 25 | 111 | 109 | |||||||||||||||
| Other noninterest income (loss) | 549 | 222 | 290 | 6,509 | (1,473 | ) | 7,570 | 2,325 | ||||||||||||||
| Total noninterest income | 5,860 | 5,362 | 6,775 | 10,286 | 4,973 | 28,283 | 41,128 | |||||||||||||||
| Noninterest expense | ||||||||||||||||||||||
| Compensation | 6,168 | 6,880 | 6,271 | 7,061 | 6,178 | 26,380 | 23,652 | |||||||||||||||
| Occupancy and equipment | 303 | 402 | 254 | 344 | 254 | 1,303 | 1,181 | |||||||||||||||
| Loan and special asset expenses | 57 | 969 | 491 | 638 | 483 | 2,155 | 2,252 | |||||||||||||||
| Professional services | 676 | 207 | 491 | 551 | 845 | 1,925 | 2,817 | |||||||||||||||
| Data processing | 272 | 263 | 271 | 249 | 267 | 1,055 | 899 | |||||||||||||||
| Software | 467 | 460 | 426 | 425 | 830 | 1,778 | 6,587 | |||||||||||||||
| Communications | 83 | 86 | 97 | 83 | 99 | 349 | 396 | |||||||||||||||
| Advertising | 211 | 252 | 321 | 214 | 453 | 998 | 1,429 | |||||||||||||||
| Amortization of intangibles | 169 | 170 | 170 | 170 | 170 | 679 | 698 | |||||||||||||||
| Merger related expenses | 192 | 561 | – | – | – | 753 | – | |||||||||||||||
| Other operating expenses | 1,236 | 10,683 | 846 | 631 | 754 | 13,396 | 2,636 | |||||||||||||||
| Total noninterest expense | 9,834 | 20,933 | 9,638 | 10,366 | 10,333 | 50,771 | 42,547 | |||||||||||||||
| Income (loss) before income taxes | 2,091 | (10,219 | ) | 1,823 | 4,963 | (2,001 | ) | (1,342 | ) | 12,967 | ||||||||||||
| Income tax expense (benefit) | (454 | ) | (2,646 | ) | 492 | 1,403 | (3,090 | ) | (1,205 | ) | 867 | |||||||||||
| Net income (loss) | 2,545 | (7,573 | ) | 1,331 | 3,560 | 1,089 | (137 | ) | 12,100 | |||||||||||||
| Noncontrolling interest | 182 | (40 | ) | (78 | ) | (2 | ) | (187 | ) | 62 | (631 | ) | ||||||||||
| Net income (loss) attributable | ||||||||||||||||||||||
| to IFH, Inc. | $ | 2,363 | $ | (7,533 | ) | $ | 1,409 | $ | 3,562 | $ | 1,276 | $ | (199 | ) | $ | 12,731 | ||||||
| Basic earnings (loss) per common share | $ | 1.08 | $ | (3.45 | ) | $ | 0.65 | $ | 1.65 | $ | 0.60 | $ | (0.09 | ) | $ | 5.91 | ||||||
| Diluted earnings (loss) per common share | $ | 1.04 | $ | (3.45 | ) | $ | 0.63 | $ | 1.59 | $ | 0.57 | $ | (0.09 | ) | $ | 5.71 | ||||||
| Weighted average common shares | ||||||||||||||||||||||
| outstanding | 2,194 | 2,185 | 2,175 | 2,159 | 2,140 | 2,178 | 2,154 | |||||||||||||||
| Diluted average common shares | ||||||||||||||||||||||
| outstanding | 2,267 | 2,185 | 2,244 | 2,242 | 2,234 | 2,178 | 2,229 | |||||||||||||||
| Performance Ratios | |||||||||||||||||||||||
| Three Months Ended | Year-To-Date | ||||||||||||||||||||||
| 12/31/22 | 9/30/22 | 6/30/22 | 3/31/22 | 12/31/21 | 12/31/22 | 12/31/21 | |||||||||||||||||
| PER COMMON SHARE | |||||||||||||||||||||||
| Basic earnings (loss) per common share | $ | 1.08 | $ | (3.45 | ) | $ | 0.65 | $ | 1.65 | $ | 0.60 | $ | (0.09 | ) | $ | 5.91 | |||||||
| Diluted earnings (loss) per common share | 1.04 | (3.45 | ) | 0.63 | 1.59 | 0.57 | (0.09 | ) | 5.71 | ||||||||||||||
| Book value per common share | 38.69 | 37.29 | 41.15 | 40.86 | 40.35 | 38.69 | 40.35 | ||||||||||||||||
| Tangible book value per common share (2) | 30.36 | 28.88 | 32.62 | 32.21 | 31.44 | 30.36 | 31.44 | ||||||||||||||||
| FINANCIAL RATIOS (ANNUALIZED) | |||||||||||||||||||||||
| Return on average assets | 2.15 | % | -6.97 | % | 1.29 | % | 3.30 | % | 1.14 | % | -0.05 | % | 2.98 | % | |||||||||
| Return on average common shareholders’ | |||||||||||||||||||||||
| equity | 11.05 | % | -33.95 | % | 6.23 | % | 15.97 | % | 5.85 | % | -0.22 | % | 15.32 | % | |||||||||
| Return on average tangible common | |||||||||||||||||||||||
| equity (2) | 14.23 | % | -43.36 | % | 7.91 | % | 20.36 | % | 7.57 | % | -0.29 | % | 20.14 | % | |||||||||
| Net interest margin | 6.35 | % | 6.22 | % | 5.51 | % | 5.69 | % | 4.27 | % | 5.94 | % | 4.31 | % | |||||||||
| Efficiency ratio (1) | 83.5 | % | 189.7 | % | 80.8 | % | 66.8 | % | 113.5 | % | 101.1 | % | 74.0 | % | |||||||||
| (1) Efficiency ratio is calculated by dividing noninterest expense less transaction-related costs by the sum of net interest | |||||||||||||||||||||||
| income and noninterest income, less gains or losses on sale of securities. | |||||||||||||||||||||||
| (2) See reconciliation of non-GAAP measures | |||||||||||||||||||||||
Loan Concentrations
The top ten commercial loan concentrations as of December 31, 2022, were as follows:
| % of | ||||
| Commercial | ||||
| (Dollars in millions) | Amount | Loans | ||
| Solar electric power generation | $ | 72.5 | 34 | % |
| Power and communication line and related structures construction | 48.2 | 23 | % | |
| Lessors of nonresidential buildings (except miniwarehouses) | 16.6 | 8 | % | |
| Other activities related to real estate | 10.5 | 5 | % | |
| Hotels (except casino hotels) and motels | 7.4 | 4 | % | |
| Lessors of residential buildings and dwellings | 6.0 | 3 | % | |
| Lessors of other real estate property | 5.9 | 3 | % | |
| Other heavy and civil engineering construction | 4.3 | 2 | % | |
| All other amusement and recreation industries | 3.2 | 2 | % | |
| Marinas | 2.8 | 1 | % | |
| $ | 177.4 | 85 | % | |
Reconciliation of Non-GAAP Measures
| 12/31/22 | 9/30/22 | 6/30/22 | 3/31/22 | 12/31/21 | ||||||||||||||||||
| (Dollars in thousands except book value per share) | ||||||||||||||||||||||
| Tangible book value per common share | ||||||||||||||||||||||
| Total IFH, Inc. shareholders’ equity | $ | 87,487 | $ | 84,317 | $ | 92,543 | $ | 91,324 | $ | 88,573 | ||||||||||||
| Less: Goodwill | 13,161 | 13,161 | 13,161 | 13,161 | 13,161 | |||||||||||||||||
| Less Other intangible assets, net | 5,682 | 5,848 | 6,014 | 6,180 | 6,400 | |||||||||||||||||
| Total tangible common equity | $ | 68,644 | $ | 65,308 | $ | 73,368 | $ | 71,983 | $ | 69,012 | ||||||||||||
| Ending common shares outstanding | 2,261 | 2,261 | 2,249 | 2,235 | 2,198 | |||||||||||||||||
| Tangible book value per common share | $ | 30.36 | $ | 28.88 | $ | 32.62 | $ | 32.21 | $ | 31.44 | ||||||||||||
| Three Months Ended | Year-To-Date | |||||||||||||||||||||
| (Dollars in thousands) | 12/31/22 | 9/30/22 | 6/30/22 | 3/31/22 | 12/31/21 | 12/31/22 | 12/31/21 | |||||||||||||||
| Return on average tangible common equity | ||||||||||||||||||||||
| Average IFH, Inc. shareholders’ equity | $ | 84,831 | $ | 88,043 | $ | 90,721 | $ | 90,441 | $ | 86,549 | $ | 88,509 | $ | 83,114 | ||||||||
| Less: Average goodwill | 13,161 | 13,161 | 13,161 | 13,161 | 13,161 | 13,161 | 13,161 | |||||||||||||||
| Less Average other intangible assets, net | 5,791 | 5,958 | 6,123 | 6,341 | 6,511 | 6,053 | 6,750 | |||||||||||||||
| Average tangible common equity | $ | 65,879 | $ | 68,924 | $ | 71,437 | $ | 70,939 | $ | 66,877 | $ | 69,295 | $ | 63,203 | ||||||||
| Net income (loss) attributable to IFH, Inc. | $ | 2,363 | $ | (7,533 | ) | $ | 1,409 | $ | 3,562 | $ | 1,276 | $ | (199 | ) | $ | 12,731 | ||||||
| Return on average tangible common equity | 14.23 | % | -43.36 | % | 7.91 | % | 20.36 | % | 7.57 | % | -0.29 | % | 20.14 | % | ||||||||
