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Integrated Financial Holdings, Inc. Second Quarter 2022 Financial Results
Press Releases

Integrated Financial Holdings, Inc. Second Quarter 2022 Financial Results

RALEIGH, N.C., Aug. 12, 2022 (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 six months ended June 30, 2022. Highlights from the 2022 second quarter and year-to-date results include the following:

  • Second quarter net income of $1.4 million or $0.63 per diluted share, compared to second quarter 2021 net income of $4.6 million or $2.07 per diluted share. Year-to-date net income was $5.0 million or $2.22 per diluted share compared to $8.5 million or $3.82 per diluted share in the prior year.
  • Net interest income of $5.1 million for the second quarter of 2022, compared to $4.1 million for the same period in 2021. For the year, net interest income was $10.4 million compared to $7.9 million for the same six-month period in 2021.
  • Return on average assets of 1.29% and 2.29% for the three and six-month periods ending June 30, 2022 compared to 4.39% and 4.20%, respectively for the same periods in 2021.
  • Return on average tangible common equity (a non-GAAP financial measure) of 7.91% and 14.08% for the three and six-month periods ending June 30, 2022 compared to 29.84% and 28.61%, respectively for the same periods in 2021.

BALANCE SHEET
On June 30, 2022, the Company’s total assets were $435.5 million, net loans held for investment were $259.9 million, loans held for sale (“HFS”) were $59.6 million, total deposits were $333.6 million and total shareholders’ equity attributable to IFHI was $92.5 million. Compared with December 31, 2021, total assets decreased $17.5 million or 4%, net loans held for investment increased $5.8 million or 2%, HFS loans increased $31.7 million or 114%, total deposits decreased $14.5 million or 4%, and total shareholders’ equity attributable to IFHI increased $3.9 million or 4%. The cash side of the balance sheet continued to decrease as the Company continued to redeploy cash into higher yielding loans. The Bank has continued to see strong growth in HFS loans primarily as a result of a strong loan pipeline for the Government Guaranteed Lending (“GGL”) type loans. At $59.6 million in volume, HFS loans at June 30, 2022 represent significant potential future GGL revenues as those loans are sold in the market and the associated premiums are recognized. Noninterest bearing deposits declined $30.8 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 increase in total shareholders’ equity since year-end 2021 was primarily a result of net income posted for the six-month period ended June 30, 2022.

CAPITAL LEVELS
At June 30, 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% 15.52%
Tier 1 risk-based capital ratio 8.00% 8.50% 15.52%
Total risk-based capital ratio 10.00% 10.50% 16.78%
Tier 1 leverage ratio 5.00% 4.00% 12.19%
       

The Company’s book value per common share increased from $38.32 as of June 30, 2021, to $41.15 at June 30, 2022. The Company’s tangible book value per common share (a non-GAAP financial measure) increased from $29.29 as of June 30, 2021, to $32.62 at June 30, 2022, primarily as a result of the net income of the Company.

ASSET QUALITY
The Company’s nonperforming assets to total assets ratio decreased from 1.65% at December 31, 2021, to 1.07% at June 30, 2022, as management continued to aggressively work to reduce its special assets portfolio. Nonaccrual loans at June 30, 2022 decreased $2.2 million or 32% as compared to December 31, 2021. Neither Patriarch, LLC, a subsidiary of the Company formed to expedite the liquidation and recovery of certain Bank asset, nor the Bank held any foreclosed assets as of June 30, 2022.  

The Company recorded $460,000 and $640,000 in provision for loan losses during the three and six-months periods ending June 30, 2022, respectively, as compared to provisions of $50,000 and $672,000 for the same periods in 2021 as the loan portfolio increased for those periods. The Company recorded $279,000 in net recoveries during the second quarter of 2022 compared to $24,000 in charge-offs for the same period in 2021. Management continues to make 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) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21
Nonaccrual loans $ 4,656   $ 6,558   $ 6,848   $ 7,575   $ 5,765  
Foreclosed assets           618     618     618  
90 days past due and still accruing                   447  
Total nonperforming assets $ 4,656   $ 6,558   $ 7,466   $ 8,193   $ 6,830  
           
Net charge-offs $ (279 ) $ 105   $ 1,038   $ 325   $ 24  
Annualized net charge-offs to total average portfolio loans   -0.43 %   0.16 %   1.65 %   0.50 %   0.03 %
           
Ratio of total nonperforming assets to total assets   1.07 %   1.52 %   1.65 %   1.84 %   1.55 %
Ratio of total nonperforming loans to total loans, net of allowance   1.79 %   2.56 %   2.70 %   2.99 %   2.40 %
Ratio of total allowance for loan losses to total loans   2.39 %   2.14 %   2.14 %   2.24 %   2.13 %


NET INTEREST INCOME AND MARGIN
Net interest income for the three months ended June 30, 2022, increased $1.0 million or 25% in comparison to the second quarter of 2021 as loan yields increased year over year from 6.43% to 6.90%. The increase in yield from the prior year resulted from a change in loan mix and also reflecting the impact of 150 basis points of rate increases by the Federal Open Market Committee (“FOMC”) since the beginning of 2022 in response to current economic conditions. Overall cost of funds decreased from 0.82% in the second quarter of 2021 to 0.64% for the same period in 2022, however the Company expects to see an upward trend in its costs of funds as average retail certificate of deposit (“CD”) rates trend up and new CDs are originated at a higher market rate. Net interest margin increased from 4.63% during the three months ended June 30, 2021, to 5.51% for the same period in 2022. The increase in margin was also driven by the increase in loan yield as a result of the FOMC actions.

Net interest income for the six months ended June 30, 2022, increased $2.4 million or 31% in comparison to the same period of 2021 as loan yields increased year over year from 6.34% to 7.30% as a result of the FOMC rate increases during the period and the recapture of interest on several large nonaccrual loans in the first quarter of 2022 as previously reported.

  Three Months Ended   Year-To-Date
  (Dollars in thousands) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21   6/30/22 6/30/21
Average balances:                
Loans $ 319,115 $ 294,502 $ 277,510 $ 272,994 $ 292,166   $ 306,809 $ 290,433
Available-for-sale securities   21,879   21,088   20,367   19,393   17,969     21,484   28,668
Other interest-bearing balances   33,328   56,359   86,261   93,682   46,545     44,844   41,263
Total interest-earning assets   374,322   371,949   384,138   386,069   356,680     373,137   360,364
Total assets   438,732   437,402   442,139   446,822   418,741     438,067   409,258
                 
Noninterest-bearing deposits   85,042   98,546   104,472   103,708   85,918     91,794   83,272
Interest-bearing liabilities:                
Interest-bearing deposits   244,363   235,092   237,847   240,957   235,013     239,727   231,870
Borrowings   8,626   6,306   5,272   5,196   5,187     7,466   4,593
Total interest-bearing liabilities   252,989   241,398   243,119   246,153   240,200     247,193   236,463
Common shareholders’ equity   90,721   90,441   86,549   85,683   81,584     90,581   80,112
Tangible common equity (1)   71,437   70,939   66,877   65,843   61,587     71,188   60,047
                 
Interest income/expense:                
Loans $ 5,491 $ 5,623 $ 4,571 $ 4,759 $ 4,686   $ 11,114 $ 9,128
Available-for-sale securities   104   89   77   75   66     193   116
Interest-bearing balances and other   89   42   53   67   33     131   68
Total interest income   5,684   5,754   4,701   4,901   4,785     11,438   9,312
Deposits   523   522   566   645   665     1,045   1,369
Borrowings   15   9   1         24  
Total interest expense   538   531   567   645   665     1,069   1,369
Net interest income $ 5,146 $ 5,223 $ 4,134 $ 4,256 $ 4,120   $ 10,369 $ 7,943
                 
(1) See reconciliation of non-GAAP financial measures.            
                 

  Three Months Ended   Year-To-Date
  6/30/22 3/31/22 12/31/21 9/30/21 6/30/21   6/30/22 6/30/21
Average yields and costs:                
Loans 6.90 % 7.74 % 6.53 % 6.92 % 6.43 %   7.30 % 6.34 %
Available-for-sale securities 1.90 % 1.69 % 1.51 % 1.55 % 1.47 %   1.80 % 0.81 %
Interest-bearing balances and other 1.07 % 0.30 % 0.24 % 0.28 % 0.28 %   0.59 % 0.33 %
Total interest-earning assets 6.09 % 6.27 % 4.86 % 5.04 % 5.38 %   6.18 % 5.21 %
Interest-bearing deposits 0.86 % 0.90 % 0.94 % 1.06 % 1.13 %   0.88 % 1.19 %
Borrowings 0.70 % 0.58 % 0.08 % 0.00 % 0.00 %   0.65 % 0.00 %
Total interest-bearing liabilities 0.85 % 0.89 % 0.93 % 1.04 % 1.11 %   0.87 % 1.17 %
Cost of funds 0.64 % 0.63 % 0.65 % 0.73 % 0.82 %   0.64 % 0.86 %
Net interest margin 5.51 % 5.69 % 4.27 % 4.37 % 4.63 %   5.60 % 4.44 %

NONINTEREST INCOME
Noninterest income for the three months ended June 30, 2022, was $6.7 million, a decrease of $5.8 million or 46% as compared to the three months ended June 30, 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 $2.4 million, a decrease of $3.4 million or 59% as compared to the $5.8 million in income earned during the same prior-year period. The decrease is entirely attributable to $3.5 million in PPP fee related income realized in the second quarter of 2021 compared to no such income in the same period in 2022.
  • Mortgage revenue totaled $1.1 million, a decrease of $707,000 or 40% as compared to the second quarter of 2021. Mortgage originations have continued to decline due to rising interest rates. To that effect, mortgage loans originated to sell to the secondary market decreased from $51.0 million in the second quarter 2021 to $37.7 million in the second quarter 2022.   The decrease in both the core mortgage revenue and origination volume can be attributable to the nationwide slowdown in refinancing volume with housing supplies continuing to be an issue along with the impact of a nationwide increase of almost 20% for the median price of a new home and a doubling of long-term mortgage rates year-over-year.  
  • Government Guaranteed Lending (“GGL”) revenue was $2.8 million in the second quarter of 2022, a decrease of $1.0 million or 27% in comparison to the $3.8 million of revenues for the same period in 2021. However, the loans held for sale portfolio, representing future premium income, significantly increased quarter over quarter and year-over-year. GGL related HFS loans were $52.4 million as of June 30, 2022, compared to $25.4 million at December 31, 2021 and $4.5 million at June 30, 2021.
  • Other noninterest income was $290,000 in the second quarter of 2022 compared to income of $908,000 in the same period in 2021. The decrease is mostly attributable to a $383,000 decrease in deferred PPP fees recognized in 2021.

Noninterest income for the six months ended June 30, 2022, was $17.1 million compared to $27.1 million for the same period in 2021, a decrease of $10.1 million or 37%. The decrease is primarily due to a decrease of $10.0 million in loan processing and servicing revenue driven by the decrease in PPP-related revenue during the period.

NONINTEREST EXPENSE
Noninterest expense for the second quarter of 2022 was $9.6 million, a decrease of $979,000 or 9%, from $10.6 million for the second quarter of 2021. Contributing to the year-over-year decrease was software expenses, which decreased due to Windsor fully expensing the PPP platform in 2021. Software expenses were $426,000, a decrease of $1.1 million or 72% in the second quarter of 2022 compared to the same period in 2021 as a result of no additional costs related to the processing of PPP loans during the second quarter of 2022. Compensation increased $275,000 from $6.0 million to $6.3 million due to additional costs for new hires in 2022. The decreases in most of the noninterest expense categories, including special assets, data processing, software, communications, and other operating expenses are primarily related to management’s overall effort to grow profitability.

Noninterest expense for the six months ended June 30, 2022, was $20.0 million compared to $23.3 million for the same period in 2021, a decrease of $3.3 million or 14%. The decrease is primarily due to a decrease of $4.1 million in software expenses associated with the PPP platform slightly offset by other expense increases.

SUBSEQUENT EVENTS

Entry into Merger Agreement with MVB Financial Corp. On August 12, 2022, it was publicly announced that the Company had entered into a definitive merger agreement with MVB Financial Corp. (“MVB”), the holding company for MVB Bank, Inc., a West Virginia state-chartered bank. Under the terms of the merger agreement, which is an all-stock transaction, the Company would be merged with and into MVB, with MVB as the surviving corporation in the proposed merger. Readers are strongly encouraged to read the full merger announcement release (the “Merger Release”), which is available under the Investor Relations section of the Company’s website (https://ifhinc.com) and contains additional detail on the proposed strategic combination with MVB. Readers are also directed to the end of this press release and the section entitled “Additional Information on the Merger and Where to Find it.”

RESPA Class Action Litigation. On February 19, 2019, a group of plaintiffs filed a putative class action lawsuit against West Town Bank & Trust alleging that they were subject to an illegal kickback and price fixing scheme designed and executed by All Star Title, Inc. for the referral of settlement services. The case is styled Joseph and Karen Somerville, III, et al. v. West Town Bank & Trust, a/k/a West Town Savings Bank, Case No. 1.19-CV-00490, pending in the United States District Court for the District of Maryland (such case, the “RESPA Litigation”). Based on this alleged conduct, plaintiffs accused the Bank of violating Section 8(a) of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2607; Section 1 of the Sherman Act, 15 U.S.C. § 1; and Section 1962 of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962. These claims were asserted on a class basis, and the plaintiffs sought to represent other similar borrowers of the Bank whose loans were closed or settled by All Star Title, Inc. The plaintiffs seek to recover three times the charges they paid for settlement services in addition to actual damages trebled and attorneys’ fees and costs.

On May 28, 2019, the Bank moved to dismiss the putative class action complaint for failure to state a claim upon which relief can be granted. On November 19, 2019, the court granted in part and denied in part the Bank’s motion. The court dismissed the plaintiffs’ claim for price-fixing under Section 1 of the Sherman Act but allowed the plaintiffs’ RESPA Section 8 and RICO claims to survive dismissal and proceed with discovery.   On February 4, 2021, the court certified a class comprised of borrowers who obtained a loan originated or brokered by the Bank for which All Star Title, Inc. provided a settlement service between January 1, 2010 and December 31, 2015. The court also certified two subclasses: a RICO subclass and a RESPA subclass. West Town Bank & Trust sought permission to appeal the certification order and permission was denied by the United States Court of Appeals for the Fourth Circuit on March 29, 2021. Notice of the pending litigation and certification of the class was mailed to the members of the class on December 10, 2021. As of June 30, 2022, the parties were still engaged in discovery, and no trial date had been scheduled.  

During July 2022 following the close of the June 30, 2022 fiscal quarter, and precipitated, in part, by its ongoing strategic discussions with MVB, the Company initiated informal settlement discussions with plaintiffs’ counsel in the RESPA Litigation. Litigation such as the foregoing is time consuming, often takes years to resolve and can complicate a company’s strategic initiatives. On August 10, 2022, the Bank agreed to settle the RESPA Litigation for an aggregate sum of $10.0 million, subject to execution of a definitive settlement agreement with plaintiffs and court approval of the settlement. Accordingly, during the third quarter of 2022, the Company established a $10.0 million liability and expense for estimated settlement costs associated with the RESPA Litigation.

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 servicing company; West Town Insurance Agency, Inc., an insurance agency; Patriarch, LLC, a real estate management company; and SBA Loan Documentation Services, LLC, a loan documentation origination company. 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. The Bank also has an investment in West Town Payments, LLC. Due to the nature of the investment, West Town Payments, LLC is considered a variable interest entity, and as a result, is consolidated for accounting purposes.

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, as well as regarding the announced merger with MVB. 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; 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 on our ability to retain key employees; 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; that costs or estimated liabilities and expenses associated with the RESPA Litigation may be greater than currently estimated or that a definitive settlement agreement with plaintiffs is not reached or court approved; the impact of competition from traditional or new sources, including non-bank financial service providers, such as Fintechs; and, with respect to the Company’s announced merger with MVB, those factors detailed in the “Forward Looking Statements” section of the Merger Release, which are incorporated herein by this reference. 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.        

Additional Information on the Merger and Where to Find It

In connection with the proposed merger, MVB will file a registration statement on Form S-4 with the U.S. Securities and Exchange Commission (“SEC”). The registration statement will include a joint proxy statement of MVB and IFHI, which also constitutes a prospectus of MVB, that will be sent to IFHI’s and MVB’s shareholders seeking certain approvals related to the proposed transaction.

The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. INVESTORS AND SECURITY HOLDERS OF IFHI AND MVB AND THEIR RESPECTIVE AFFILIATES ARE URGED TO READ, WHEN AVAILABLE, THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS TO BE INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT IFHI, MVB AND THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain a free copy of the registration statement, including the joint proxy statement/prospectus, as well as other relevant documents filed by MVB with the SEC containing information about IFHI and MVB, without charge, at the SEC’s website (http://www.sec.gov). In addition, copies of documents filed with the SEC by MVB will be made available free of charge in the “Investor Relations” section of MVB’s website, https://www.mvbbanking.com, under the heading “SEC Filings;” and investors may obtain free copies of the joint proxy statement/prospectus (when available) by contacting Integrated Financial Holdings, Inc., Attn: Eric J. Bergevin, 8450 Falls of Neuse Road, Suite 202, Raleigh, NC 27615, telephone: (252) 482-4400.

Participants in Solicitation

IFHI, MVB, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction under the rules of the SEC. Information regarding MVB’s directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on April 7, 2022, and certain other documents filed by MVB with the SEC. Other information regarding the participants in the solicitation of proxies in respect of the proposed transaction and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC. Free copies of these documents, when available, may be obtained as described in the preceding paragraph.

Consolidated Balance Sheets          
                 
        Ending Balance
  (Dollars in thousands, unaudited) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21
Assets
         
Cash and due from banks $ 4,700   $ 3,900   $ 3,803   $ 4,452   $ 3,537  
Interest-bearing deposits   21,981     28,876     79,910     83,327     76,957  
  Total cash and cash equivalents   26,681     32,776     83,713     87,779     80,494  
Interest-bearing time deposits   1,499     1,746     1,746     1,996     2,746  
Available-for-sale securities   19,038     20,386     20,659     19,341     18,928  
Marketable equity securities   17,982     18,000     12,000     12,000     12,000  
Loans held for sale   59,592     51,095     27,880     20,610     14,621  
Loans held for investment   266,259     262,281     259,625     259,206     264,402  
  Allowance for loan and lease losses   (6,361 )   (5,622 )   (5,547 )   (5,810 )   (5,635 )
    Loans held for investment, net   259,898     256,659     254,078     253,396     258,767  
Premises and equipment, net   4,238     4,235     4,106     4,127     4,599  
Foreclosed assets           618     618     618  
Loan servicing assets   4,178     4,014     3,993     3,830     3,936  
Bank-owned life insurance   5,304     5,271     5,246     5,220     5,193  
Accrued interest receivable   2,139     1,886     1,373     1,508     1,672  
Goodwill   13,161     13,161     13,161     13,161     13,161  
Other intangible assets, net   6,014     6,180     6,400     6,569     6,737  
Other assets   15,764     15,218     18,001     13,954     16,803  
      Total assets $ 435,488   $ 430,627   $ 452,974   $ 444,109   $ 440,275  
                 
Liabilities and Shareholders’ Equity          
Liabilities          
Deposits:          
  Noninterest-bearing $ 83,544   $ 92,499   $ 114,313   $ 98,940   $ 98,797  
  Interest-bearing   250,026     233,953     233,842     241,959     238,598  
    Total deposits   333,570     326,452     348,155     340,899     337,395  
Borrowings       5,000     7,500     5,000     5,000  
Accrued interest payable   308     325     326     372     388  
Other liabilities   9,939     8,320     9,212     11,130     13,490  
  Total liabilities   343,817     340,097     365,193     357,401     356,273  
Shareholders’ equity:          
Common stock, voting   2,227     2,213     2,176     2,176     2,183  
Common stock, non-voting   22     22     22     22     22  
Additional paid in capital   24,498     24,013     23,664     23,515     23,545  
Retained earnings   67,781     66,372     62,810     61,534     58,597  
Accumulated other comprehensive income (loss)   (1,985 )   (1,296 )   (99 )   65     105  
  Total IFH, Inc. shareholders’ equity   92,543     91,324     88,573     87,312     84,452  
Noncontrolling interest   (872 )   (794 )   (792 )   (604 )   (450 )
  Total shareholders’ equity   91,671     90,530     87,781     86,708     84,002  
      Total liabilities and shareholders’ equity $ 435,488   $ 430,627   $ 452,974   $ 444,109   $ 440,275  
                 

Consolidated Statements of Income              
                 
  (Dollars in thousands except per Three Months Ended   Year-To-Date
  share data; unaudited) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21   6/30/22 6/30/21
Interest income                
Loans $ 5,491   $ 5,623   $ 4,571   $ 4,759   $ 4,686     $ 11,114   $ 9,128  
Available-for-sale securities and other   193     131     130     142     99       324     184  
Total interest income   5,684     5,754     4,701     4,901     4,785       11,438     9,312  
Interest expense                
Interest on deposits   523     522     566     645     665       1,045     1,369  
Interest on borrowings   15     9     1               24      
Total interest expense   538     531     567     645     665       1,069     1,369  
Net interest income   5,146     5,223     4,134     4,256     4,120       10,369     7,943  
Provision for loan losses   460     180     775     500     50       640     672  
Noninterest income                
Loan processing and servicing                
revenue   2,373     2,207     2,863     5,951     5,765       4,580     14,603  
Mortgage   1,066     173     1,090     1,537     1,773       1,239     3,479  
Government guaranteed lending   2,767     1,124     2,216     584     3,812       3,891     5,137  
SBA documentation preparation fees   128     144     167     149     241       272     675  
Service charges on deposits   118     104     85     77     49       222     81  
Bank-owned life insurance   33     25     25     27     32       58     57  
Other noninterest income (loss)   290     6,509     (1,473 )   694     908       6,799     3,104  
Total noninterest income   6,775     10,286     4,973     9,019     12,580       17,061     27,136  
Noninterest expense                
Compensation   6,271     7,061     6,178     5,462     5,996       13,332     12,012  
Occupancy and equipment   254     344     254     324     300       598     603  
Loan and special asset expenses   491     638     483     133     634       1,129     1,636  
Professional services   491     551     845     732     560       1,042     1,240  
Data processing   271     249     267     196     215       520     436  
Software   426     425     830     842     1,524       851     4,915  
Communications   97     83     99     100     90       180     197  
Advertising   321     214     453     474     393       535     502  
Amortization of intangibles   170     170     170     170     172       340     358  
Other operating expenses   846     631     754     505     733       1,477     1,377  
Total noninterest expense   9,638     10,366     10,333     8,938     10,617       20,004     23,276  
Income (loss) before income taxes   1,823     4,963     (2,001 )   3,837     6,033       6,786     11,131  
Income tax expense (benefit)   492     1,403     (3,090 )   1,055     1,606       1,895     2,902  
Net income   1,331     3,560     1,089     2,782     4,427       4,891     8,229  
Noncontrolling interest   (78 )   (2 )   (187 )   (155 )   (155 )     (80 )   (289 )
Net income attributable                
    to IFH, Inc. $ 1,409   $ 3,562   $ 1,276   $ 2,937   $ 4,582     $ 4,971   $ 8,518  
                 
Basic earnings per common share $ 0.65   $ 1.65   $ 0.60   $ 1.37   $ 2.14     $ 2.29   $ 3.93  
Diluted earnings per common share $ 0.63   $ 1.59   $ 0.57   $ 1.32   $ 2.07     $ 2.22   $ 3.82  
Weighted average common shares                
outstanding   2,175     2,159     2,140     2,144     2,147       2,167     2,166  
Diluted average common shares                
outstanding   2,244     2,242     2,234     2,219     2,219       2,243     2,229  
                 

Performance Ratios                
                   
    Three Months Ended   Year-To-Date
    6/30/22 3/31/22 12/31/21 9/30/21 6/30/21   6/30/22 6/30/21
PER COMMON SHARE                
  Basic earnings per common share $ 0.65   $ 1.65   $ 0.60   $ 1.37   $ 2.14     $ 2.29   $ 3.93  
  Diluted earnings per common share   0.63     1.59     0.57     1.32     2.07       2.22     3.82  
  Book value per common share   41.15     40.86     40.35     39.74     38.32       41.15     38.32  
  Tangible book value per common share (2)   32.62     32.21     31.44     30.76     29.29       32.62     29.29  
                   
FINANCIAL RATIOS (ANNUALIZED)                
  Return on average assets   1.29 %   3.30 %   1.14 %   2.61 %   4.39 %     2.29 %   4.20 %
  Return on average common shareholders’                
  equity   6.23 %   15.97 %   5.85 %   13.60 %   22.53 %     11.07 %   21.44 %
  Return on average tangible common                
  equity (2)   7.91 %   20.36 %   7.57 %   17.70 %   29.84 %     14.08 %   28.61 %
  Net interest margin   5.51 %   5.69 %   4.27 %   4.37 %   4.63 %     5.60 %   4.44 %
  Efficiency ratio (1)   80.8 %   66.8 %   113.5 %   67.3 %   63.6 %     72.9 %   66.4 %
                   
  (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 June 30, 2022, were as follows:

    % of
    Commercial
(in millions) Amount Loans
Solar electric power generation $ 82.9 38 %
Power and communication line and related structures construction   42.3 19 %
Lessors of nonresidential buildings (except miniwarehouses)   16.9 8 %
Hotels (except casino hotels) and motels   9.6 4 %
Other activities related to real estate   9.5 4 %
Lessors of residential buildings and dwellings   5.6 3 %
Other heavy and civil engineering construction   4.4 2 %
Lessors of other real estate property   3.9 2 %
All other amusement and recreation industries   3.0 1 %
Amusement arcades   2.6 1 %
  $ 180.7 82 %
     

Reconciliation of Non-GAAP Measures

  (In thousands except book value per share) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21      
Tangible book value per common share                
Total IFH, Inc. shareholders’ equity $ 92,543   $ 91,324   $ 88,573   $ 87,312   $ 84,452        
Less: Goodwill   13,161     13,161     13,161     13,161     13,161        
Less Other intangible assets, net   6,014     6,180     6,400     6,569     6,737        
Total tangible common equity $ 73,368   $ 71,983   $ 69,012   $ 67,582   $ 64,554        
                 
Ending common shares outstanding   2,249     2,235     2,198     2,204     2,204        
Tangible book value per common share $ 32.62   $ 32.21   $ 31.44   $ 30.76   $ 29.29        
                 
  Three Months Ended   Year-To-Date
  (Dollars in thousands) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21   12/31/21 12/31/20
Return on average tangible common equity                
Average IFH, Inc. shareholders’ equity $ 90,721   $ 90,441   $ 86,549   $ 85,683   $ 81,584     $ 90,581   $ 80,112  
Less: Average goodwill   13,161     13,161     13,161     13,161     13,161       13,161     13,161  
Less Average other intangible assets, net   6,123     6,341     6,511     6,679     6,836       6,232     6,904  
Average tangible common equity $ 71,437   $ 70,939   $ 66,877   $ 65,843   $ 61,587     $ 71,188   $ 60,047  
                 
Net income attributable to IFH, Inc. $ 1,409   $ 3,562   $ 1,276   $ 2,937   $ 4,582     $ 4,971   $ 8,518  
Return on average tangible common equity   7.91 %   20.36 %   7.57 %   17.70 %   29.84 %     14.08 %   28.61 %

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