• First Savings Financial Group, Inc. Reports Financial Results for the Second Fiscal Quarter Ended March 31, 2023

    Source: Nasdaq GlobeNewswire / 27 Apr 2023 17:15:01   America/Chicago

    JEFFERSONVILLE, Ind., April 27, 2023 (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 $3.7 million, or $0.54 per diluted share, for the quarter ended March 31, 2023 compared to net income of $7.0 million, or $0.98 per diluted share, for the quarter ended March 31, 2022.

    Commenting on the Company’s performance, Larry W. Myers, President and CEO, stated, “There continues to be a challenging environment for the banking industry, but we have taken and will continue to take prudent actions to perform while such exists. The aggressive measures taken to restructure the mortgage banking segment through expense reductions, efforts to rebuild the SBA lending segment’s lending team, and continued focus on balance sheet management for the core banking segment have provided positive results for the quarter and position the Company for enhanced performance. We continue to be selective in our lending, both in terms of asset quality and yield opportunities. We also have lengthened certain wholesale funding maturities for intermediate duration, which was a contributing factor in adversely impacting net interest margin for the quarter but somewhat protects from persistently higher interest rates while still remaining well-positioned to benefit from a potential rates-down environment, particularly on the short end of the curve. We are encouraged by the performance of the core banking segment and are optimistic for enhanced performance of the SBA lending and mortgage banking segments in future periods. Lastly, the Company repurchased 50,000 of its common shares during the quarter, which together with repurchases during the three preceding fiscal quarters totaled approximately 4.6% of outstanding shares.”

    Results of Operations for the Three Months Ended March 31, 2023 and 2022

    Net interest income increased $899,000, or 6.4%, to $14.9 million for the three months ended March 31, 2023 as compared to the same period 2022. The increase in net interest income was due to a $9.0 million increase in interest income, partially offset by a $8.1 million increase in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $465.3 million, from $1.56 billion for 2022 to $2.02 billion for 2023, and an increase in the weighted-average tax-equivalent yield, from 4.14% for 2022 to 5.01% for 2023. 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 $139.3 million and $330.1 million, respectively. When excluding the impact from PPP loan payoffs, the increase in the average balance of loans was $351.6 million when comparing the two periods. Interest expense increased due to an increase in the average balance of interest-bearing liabilities of $449.0 million, from $1.23 billion for 2022 to $1.68 billion for 2023, and an increase in the average cost of interest-bearing liabilities, from 0.58% for 2022 to 2.36% for 2023. The increase in the average cost of interest-bearing liabilities for 2023 was due primarily to higher rates paid for FHLB borrowings, brokered deposits and money market deposit accounts primarily due to the increase in market interest rates.

    The Company recognized a provision for loan losses of $372,000 for the three months ended March 31, 2023 due primarily to loan portfolio growth, compared to a credit for loan losses of $30,000 for the same period in 2022. The Company recognized net charge-offs of $6,000 for the three months ended March 31, 2023, compared to net charge-offs of $275,000 in 2022.

    Noninterest income decreased $12.6 million for the three months ended March 31, 2023 as compared to the same period in 2022. The decrease was due primarily to decreases in mortgage banking income, net gain on sale of single tenant net lease loans and net gain on sale of SBA loans of $12.1 million, $557,000 and $420,000, respectively. The decrease in mortgage banking income was primarily due to a $12.7 million decrease in realized and unrealized hedging gains, a $3.1 million decrease in capitalized residential mortgage loan servicing rights, and a $1.3 million decrease in the fair value of the residential mortgage loan servicing rights portfolio in 2023 as compared to a $5.6 million increase in fair value recognized in 2022, partially offset by a $2.0 million increase in production revenue from originations for sale in 2023 and a $1.3 million increase in the fair value of loans held for sale and interest rate lock commitments in 2023 as compared to a $7.2 million decrease in fair value recognized in 2022. Mortgage loans originated for sale were $115.0 million in the three months ended March 31, 2023 as compared to $459.4 million for the same period in 2022. 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, and lower premiums in the secondary market. There were no sales of single tenant net lease loans during the 2023 period.

    Noninterest expense decreased $7.5 million for the three months ended March 31, 2023 as compared to the same period in 2022. The decrease was due primarily to a decrease in compensation and benefits of $7.1 million. 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 Company recognized an income tax expense of $333,000 for the three months ended March 31, 2023 compared to income tax expense of $1.6 million for the same period in 2022. The effective tax rate for 2023 was 8.2%, which was a decrease from the effective tax rate of 18.7% in 2022. The decrease was due to recognition of investment tax credits related to solar projects in 2023 and lower pre-tax income in 2023 as compared to 2022.

    Results of Operations for the Six Months Ended March 31, 2023 and 2022

    The Company reported net income of $6.6 million, or $0.95 per diluted share, for the six months ended March 31, 2023 compared to net income of $11.3 million, or $1.58 per diluted share, for the six months ended March 31, 2022.

    Net interest income increased $3.3 million, or 11.7%, to $31.2 million for the six months ended March 31, 2023 as compared to the same period 2022. The increase in net interest income was due to a $16.7 million increase in interest income, partially offset by a $13.5 million increase in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $457.3 million, from $1.54 billion for 2022 to $2.00 billion for 2023, and an increase in the weighted-average tax-equivalent yield, from 4.18% for 2022 to 4.94% for 2023. 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 $145.8 million and $320.0 million, respectively. When excluding the impact from PPP loan payoffs, the increase in the average balance of loans was $356.2 million when comparing the two periods. Interest expense increased due to an increase in the average balance of interest-bearing liabilities of $431.9 million, from $1.21 billion for 2022 to $1.64 billion for 2023, and an increase in the average cost of interest-bearing liabilities, from 0.60% for 2022 to 2.08% for 2023. The increase in the average cost of interest-bearing liabilities for 2023 was due primarily to higher rates paid for FHLB borrowings, brokered deposits and money market deposit accounts primarily due to the increase in market interest rates.

    The Company recognized a provision for loan losses of $1.4 million for the six months ended March 31, 2023 due primarily to loan portfolio growth, compared to $496,000 for the same period in 2022. Nonperforming loans, which consist of nonaccrual loans and loans over 90 days past due and still accruing interest, increased $1.6 million from $10.9 million at September 30, 2022 to $12.5 million at March 31, 2023. The Company recognized net charge-offs of $258,000 for the six months ended March 31, 2023, of which $238,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $322,000 in 2022, of which $292,000 was related to unguaranteed portions of SBA loans.

    Noninterest income decreased $24.0 million for the six months ended March 31, 2023 as compared to the same period in 2022. The decrease was due primarily to decreases in mortgage banking income, net gain on sale of SBA loans, and net gain on sale of single tenant net lease loans of $22.4 million, $1.3 million, and $719,000, respectively. The decrease in mortgage banking income was primarily due to a $14.0 million decrease in realized and unrealized hedging gains, a $7.4 million decrease in capitalized residential mortgage loan servicing rights, $1.9 million decrease in production revenue, and a $2.5 million decrease in the fair value of the residential mortgage loan servicing rights portfolio in 2023 as compared to a $6.2 million increase in fair value recognized in 2022, partially offset by a $2.5 million increase in the fair value of loans held for sale and interest rate lock commitments in 2023 as compared to a $7.4 million decrease in fair value recognized in 2022. Mortgage loans originated for sale were $192.6 million in the six months ended March 31, 2023 as compared to $1.0 billion in 2022. 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, and lower premiums in the secondary market. There were no sales of single tenant net lease loans during the 2023 period.

    Noninterest expense decreased $14.8 million for the six months ended March 31, 2023 as compared to the same period in 2022. The decrease was due primarily to a decrease in compensation and benefits, professional fees and advertising expense of $13.7 million, $992,000 and $857,000, 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 decreases in professional fees and advertising expense were related to the reduced activity and loan origination volume of the mortgage banking segment.

    The Company recognized an income tax expense of $416,000 for the six months ended March 31, 2023 compared to tax expense of $2.4 million for the same period in 2022. The effective tax rate for 2023 was 5.9%, which was a decrease from the effective tax rate of 17.6% in 2022. The decrease was due to recognition of investment tax credits related to solar projects in 2023 and lower pre-tax income in 2023 as compared to 2022.

    Comparison of Financial Condition at March 31, 2023 and September 30, 2022

    Total assets increased $145.9 million, from $2.09 billion at September 30, 2022 to $2.24 billion at March 31, 2023. Net loans held for investment increased $123.9 million during the six months ended March 31, 2023, due primarily to growth in residential mortgage loans and single-tenant net lease commercial real estate loans. Excluding the impact of reclassification of $38.0 million of single tenant net lease loans as participated loan sales quarter during ending March 31, 2023, which were accounted for as secured borrowings at September 30, 2022, total assets and net loans held for investment would have increased $183.9 million and $161.9 million, respectively, during the six months ended March 31, 2023.

    Total liabilities increased $130.5 million due primarily to increases in total deposits and FHLB borrowings of $27.0 million and $130.5 million, respectively, partially offset by the aforementioned $38.0 million reclassification in other borrowings. Excluding the impact of this reclassification, total liabilities would have increased $168.5 million during the six months ended March 31, 2023. The increase in FHLB borrowings was primarily used to fund loan growth. The increase in total deposits was primarily due to a $44.2 million increase in brokered deposits, partially offset by a $21.3 million decrease in noninterest-bearing deposits due primarily to customary seasonal outflows of public fund deposits. Deposits exceeding the FDIC insurance amount of $250,000 as of March 31, 2023 were not greater than 13.8% of total deposits. The amount is believed to be less than 13.8% of total deposits due to certain accounts being structured to achieve a level of insurance above the FDIC limit, but is difficult to quantify.

    Common stockholders’ equity increased $15.3 million, from $151.6 million at September 30, 2022 to $166.9 million at March 31, 2023, due primarily to increases in accumulated other comprehensive income and retained net income of $12.9 million and $4.7 million, respectively. The increase in accumulated other comprehensive income (loss) was primarily due to decreasing market interest rates during the six months ended March 31, 2023, which resulted in an increase in the fair value of the available-for-sale securities portfolio. At March 31, 2023 and September 30, 2022, 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.

    Contact:
    Tony A. Schoen, CPA
    Chief Financial Officer
    812-283-0724


     
    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 Six Months Ended  
    OPERATING DATA:March 31, March 31,  
    (In thousands, except share and per share data) 2023   2022   2023   2022   
              
    Total interest income$24,811  $15,801  $48,294  $31,563   
    Total interest expense 9,899   1,788   17,121   3,647   
              
    Net interest income 14,912   14,013   31,173   27,916   
    Provision (credit) for loan losses 372   (30)  1,356   496   
              
    Net interest income after provision (credit) for loan losses 14,540   14,043   29,817   27,420   
              
    Total noninterest income 7,516   20,072   12,704   36,663   
    Total noninterest expense 17,999   25,461   35,510   50,313   
              
    Income before income taxes 4,057   8,654   7,011   13,770   
    Income tax expense 333   1,619   416   2,430   
              
    Net income$3,724  $7,035  $6,595  $11,340   
              
    Net income per share, basic$0.54  $0.99  $0.96  $1.60   
    Weighted average shares outstanding, basic 6,842,897   7,076,355   6,879,805   7,086,739   
              
    Net income per share, diluted$0.54  $0.98  $0.95  $1.58   
    Weighted average shares outstanding, diluted 6,881,496   7,156,229   6,926,277   7,173,710   
              
              
    Performance ratios (three-month data annualized)         
    Return on average assets 0.68%  1.61%  0.61%  1.31%  
    Return on average equity 9.15%  15.24%  8.36%  12.36%  
    Return on average common stockholders' equity 9.15%  15.24%  8.36%  12.36%  
    Net interest margin (tax equivalent basis) 3.06%  3.68%  3.23%  3.71%  
    Efficiency ratio 80.25%  74.70%  80.93%  77.91%  
              
              
         QTD   FYTD
    FINANCIAL CONDITION DATA:March 31, December 31, Increase September 30, Increase
    (In thousands, except per share data) 2023   2022  (Decrease)  2022  (Decrease)
              
              
    Total assets$2,239,606  $2,196,919  $42,687  $2,093,725  $145,881 
    Cash and cash equivalents 41,810   38,278   3,532   41,665   145 
    Investment securities 336,317   330,683   5,634   318,075   18,242 
    Loans held for sale 48,783   44,281   4,502   60,462   (11,679)
    Gross loans (1) 1,614,898   1,599,020   15,878   1,489,904   124,994 
    Allowance for loan losses 16,458   16,080   378   15,360   1,098 
    Interest earning assets 2,032,610   1,994,374   38,236   1,898,051   134,559 
    Goodwill 9,848   9,848   -   9,848   - 
    Core deposit intangibles 668   721   (53)  775   (107)
    Loan servicing rights 65,045   65,598   (553)  67,194   (2,149)
    Noninterest-bearing deposits 318,869   315,390   3,479   340,172   (21,303)
    Interest-bearing deposits (2) 1,224,013   1,222,451   1,562   1,175,662   48,351 
    Federal Home Loan Bank borrowings 437,795   377,643   60,152   307,303   130,492 
    Subordinated debt and other borrowings, net of issuance costs 50,330   95,458   (45,128)  88,206   (37,876)
    Total liabilities 2,072,708   2,036,775   35,933   1,942,160   130,548 
    Accumulated other comprehensive income (loss) (14,199)  (19,000)  4,801   (27,079)  12,880 
    Stockholders' equity, net of noncontrolling interests 166,898   160,144   6,754   151,565   15,333 
              
    Book value per share$24.31  $23.15  $1.16  $21.74  $2.57 
    Tangible book value per share (3) 22.78   21.62   1.16   20.22   2.56 
              
    Non-performing assets:         
    Nonaccrual loans - SBA guaranteed$5,456  $5,465  $(9) $5,474  $(18)
    Nonaccrual loans - unguaranteed 6,993   6,058   935   5,382   1,611 
    Total nonaccrual loans$12,449  $11,523  $926  $10,856  $1,593 
    Accruing loans past due 90 days -   -   -   -   - 
    Total non-performing loans 12,449   11,523   926   10,856   1,593 
    Foreclosed real estate -   -   -   -   - 
    Troubled debt restructurings classified as performing loans 2,446   2,580   (134)  2,714   (268)
    Total non-performing assets$14,895  $14,103  $792  $13,570  $1,325 
              
    Asset quality ratios:         
    Allowance for loan losses as a percent of total gross loans 1.02%  1.01%  0.01%  1.03%  (0.01%)
    Allowance for loan losses as a percent of nonperforming loans 132.20%  139.55%  (7.34%)  141.49%  (9.29%)
    Nonperforming loans as a percent of total gross loans 0.77%  0.72%  0.05%  0.73%  0.04%
    Nonperforming assets as a percent of total assets 0.67%  0.64%  0.02%  0.65%  0.02%
              
    (1) Includes $45.2 million and $38.0 million of single tenant net lease loans accounted for as secured borrowings at December 31, 2022 and September 30, 2022, respectively, which were reclassified as participated loan sales during the quarter ended March 31, 2023.
              
    (2) Includes $337.0 million, $326.2 million and $292.5 million of brokered certificates of deposit at March 31, 2023, December 31, 2022 and September 30, 2022, respectively.
              
    (3) See reconciliation of GAAP and non-GAAP financial measures for additional information relating to calculation of this item.
              
              
              
    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
     March 31, December 31, Increase September 30, Increase
    Tangible Book Value Per Share 2023   2022  (Decrease)  2022  (Decrease)
    (In thousands, except share and per share data)         
              
    Stockholders' equity, net of noncontrolling interests (GAAP)$166,898  $160,144  $6,754  $151,565  $15,333 
    Less: goodwill and core deposit intangibles (10,516)  (10,569)  53   (10,623)  107 
    Tangible equity (non-GAAP)$156,382  $149,575   6,807  $140,942   15,440 
              
    Outstanding common shares 6,865,921   6,917,921   (52,000)  6,970,631   (104,710)
              
    Tangible book value per share (non-GAAP)$22.78  $21.62  $1.16  $20.22  $2.56 
              
    Book value per share (GAAP)$24.31  $23.15  $1.16  $21.74  $2.57 
              
              
    SUMMARIZED FINANCIAL INFORMATION (UNAUDITED):As of
    Summarized Consolidated Balance SheetsMarch 31, December 31, September 30, June 30, March 31,
    (In thousands, except per share data) 2023   2022   2022   2022   2022 
              
              
    Total cash and cash equivalents$41,810  $38,278  $41,665  $37,468  $31,105 
    Total investment securities 336,317   330,683   318,075   309,027   284,674 
    Total loans held for sale 48,783   44,281   60,462   188,031   152,652 
    Total loans, net of allowance for loan losses 1,598,440   1,582,940   1,474,544   1,267,816   1,126,818 
    PPP loans 523   591   1,310   1,766   13,415 
    Loan servicing rights 65,045   65,598   67,194   69,039   68,267 
    Total assets 2,239,606   2,196,919   2,093,725   2,006,666   1,801,944 
              
    Retail deposits$1,206,154  $1,211,677  $1,223,330  $1,186,582  $1,151,437 
    Brokered deposits 336,728   326,164   292,504   159,125   69,752 
    Total deposits 1,542,882   1,537,841   1,515,834   1,345,707   1,221,189 
    Federal Home Loan Bank borrowings 437,795   377,643   307,303   404,098   296,592 
              
    Common stock and additional paid-in capital$27,443  $27,425  $26,848  $27,236  $27,154 
    Retained earnings - substantially restricted 166,652   163,890   161,927   161,438   159,732 
    Accumulated other comprehensive income (loss) (14,199)  (19,000)  (27,079)  (12,560)  (1,336)
    Unearned stock compensation (1,211)  (1,361)  (969)  (1,075)  (1,180)
    Less treasury stock, at cost (11,787)  (10,810)  (9,162)  (5,826)  (4,417)
    Total stockholders' equity 166,898   160,144   151,565   169,213   179,953 
              
    Outstanding common shares 6,865,921   6,917,921   6,970,631   7,110,706   7,169,826 
              
              
    SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):Three Months Ended
    Summarized Consolidated Statements of IncomeMarch 31, December 31, September 30, June 30, March 31,
    (In thousands, except per share data) 2023   2022   2022   2022   2022 
              
              
    Total interest income$24,811  $23,483  $21,152  $18,479  $15,801 
    Total interest expense 9,899   7,222   4,327   2,568   1,788 
    Net interest income 14,912   16,261   16,825   15,911   14,013 
    Provision (credit) for loan losses 372   984   880   532   (30)
    Net interest income after provision (credit) for loan losses 14,540   15,277   15,945   15,379   14,043 
              
    Total noninterest income 7,516   5,188   4,531   10,033   20,072 
    Total noninterest expense 17,999   17,511   19,514   22,835   25,461 
    Income before income taxes 4,057   2,954   962   2,577   8,654 
    Income tax expense (benefit) 333   83   (446)  (61)  1,619 
    Net income$3,724  $2,871  $1,408  $2,638  $7,035 
              
              
    Net income per share, basic$0.54  $0.42  $0.20  $0.37  $0.99 
    Weighted average shares outstanding, basic 6,842,897   6,915,909   6,988,873   7,073,204   7,076,355 
              
    Net income per share, diluted$0.54  $0.41  $0.20  $0.37  $0.98 
    Weighted average shares outstanding, diluted 6,881,496   6,972,055   7,056,138   7,145,288   7,156,229 
              
     Three Months Ended
     March 31, December 31, September 30, June 30, March 31,
    Consolidated Performance Ratios (Annualized) 2023   2022   2022   2022   2022 
              
              
    Return on average assets 0.68%  0.54%  0.28%  0.55%  1.61%
    Return on average equity 9.15%  7.50%  3.30%  6.06%  15.24%
    Return on average common stockholders' equity 9.15%  7.50%  3.30%  6.06%  15.24%
    Net interest margin (tax equivalent basis) 3.06%  3.41%  3.75%  3.77%  3.68%
    Efficiency ratio 80.25%  81.64%  91.37%  88.02%  74.70%
              
     As of or for the Three Months Ended
     March 31, December 31, September 30, June 30, March 31,
    Consolidated Asset Quality Ratios 2023   2022   2022   2022   2022 
              
              
    Nonperforming loans as a percentage of total loans 0.77%  0.72%  0.73%  0.77%  0.88%
    Nonperforming assets as a percentage of total assets 0.67%  0.64%  0.65%  0.63%  0.73%
    Allowance for loan losses as a percentage of total loans 1.02%  1.01%  1.03%  1.17%  1.27%
    Allowance for loan losses as a percentage of nonperforming loans 132.20%  139.55%  141.49%  151.59%  143.94%
    Net charge-offs to average outstanding loans -0.00%  0.02%  0.03%  0.00%  0.02%
              
              
    SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):Three Months Ended
    Segmented Statements of Income InformationMarch 31, December 31, September 30, June 30, March 31,
    (In thousands, except per share data) 2023   2022   2022   2022   2022 
              
    Core Banking Segment:         
    Net interest income$13,632  $15,008  $14,994  $13,848  $11,847 
    Provision (credit) for loan losses 422   701   769   910   (240)
    Net interest income after provision (credit) for loan losses 13,210   14,307   14,225   12,938   12,087 
    Noninterest income 1,733   1,928   1,808   2,379   2,163 
    Noninterest expense 10,651   9,797   10,499   10,187   9,811 
    Income before income taxes 4,292   6,438   5,534   5,130   4,439 
    Income tax expense 401   946   735   568   330 
    Net income$3,891  $5,492  $4,799  $4,562  $4,109 
              
    SBA Lending Segment (Q2):         
    Net interest income$1,093  $995  $1,182  $1,449  $1,602 
    Provision (credit) for loan losses (50)  283   111   (378)  210 
    Net interest income after provision (credit) for loan losses 1,143   712   1,071   1,827   1,392 
    Noninterest income 1,636   754   480   584   1,658 
    Noninterest expense 2,662   1,924   1,891   2,341   2,253 
    Income (loss) before income taxes 117   (458)  (340)  70   797 
    Income tax expense (benefit) 20   (107)  (123)  26   240 
    Net income (loss)$97  $(351) $(217) $44  $557 
              
    Mortgage Banking Segment:         
    Net interest income 187  $258  $649  $614  $564 
    Provision for loan losses -   -   -   -   - 
    Net interest income after provision for loan losses 187   258   649   614   564 
    Noninterest income 4,147   2,506   2,243   7,070   16,251 
    Noninterest expense 4,686   5,790   7,124   10,307   13,397 
    Income (loss) before income taxes (352)  (3,026)  (4,232)  (2,623)  3,418 
    Income tax expense (benefit) (88)  (756)  (1,058)  (655)  1,049 
    Net income (loss)$(264) $(2,270) $(3,174) $(1,968) $2,369 
              
              
    SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):Three Months Ended
    Segmented Statements of Income InformationMarch 31, December 31, September 30, June 30, March 31,
    (In thousands, except per share data) 2023   2022   2022   2022   2022 
              
    Net Income (Loss) Per Share by Segment         
    Net income per share, basic - Core Banking$0.57  $0.80  $0.68  $0.64  $0.58 
    Net income (loss) per share, basic - SBA Lending (Q2) 0.01   (0.05)  (0.03)  0.01   0.08 
    Net income (loss) per share, basic - Mortgage Banking (0.04)  (0.33)  (0.45)  (0.28)  0.33 
    Total net income per share, basic$0.54  $0.42  $0.20  $0.37  $0.99 
              
    Net Income (Loss) Per Diluted Share by Segment         
    Net income per share, diluted - Core Banking$0.57  $0.79  $0.68  $0.64  $0.57 
    Net income (loss) per share, diluted - SBA Lending (Q2) 0.01   (0.05)  (0.03)  0.01   0.08 
    Net income (loss) per share, diluted - Mortgage Banking (0.04)  (0.33)  (0.45)  (0.28)  0.33 
    Total net income per share, diluted$0.54  $0.41  $0.20  $0.37  $0.98 
              
    Return on Average Assets by Segment (three-month data annualized)         
    Core Banking 0.85%  1.17%  1.08%  1.12%  1.14%
    SBA Lending 0.42%  (1.38%)  (0.85%)  0.17%  1.80%
    Mortgage Banking (1.14%)  (9.31%)  (9.44%)  (4.50%)  5.38%
              
    Efficiency Ratio by Segment (three-month data annualized)         
    Core Banking 69.32%  57.85%  62.49%  62.78%  70.03%
    SBA Lending 97.54%  110.01%  113.78%  115.15%  69.11%
    Mortgage Banking 108.12%  209.48%  246.33%  134.14%  79.67%
              
              
    SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):Three Months Ended
    Noninterest Expense Detail by SegmentMarch 31, December 31, September 30, June 30, March 31,
    (In thousands) 2023   2022   2022   2022   2022 
              
    Core Banking Segment:         
    Compensation (4)$5,578  $5,275  $4,444  $5,995  $5,207 
    Occupancy 1,401   1,443   1,374   1,412   1,393 
    Advertising 298   213   272   284   297 
    Other 3,374   2,866   4,409   2,496   2,914 
    Total Noninterest Expense$10,651  $9,797  $10,499  $10,187  $9,811 
              
    SBA Lending Segment (Q2):         
    Compensation$1,800  $1,622  $1,690  $1,619  $1,724 
    Occupancy 70   54   41   60   64 
    Advertising 8   2   8   3   9 
    Other 784   246   152   659   456 
    Total Noninterest Expense$2,662  $1,924  $1,891  $2,341  $2,253 
              
    Mortgage Banking Segment:         
    Compensation (4)$3,029  $3,788  $5,091  $7,601  $10,292 
    Occupancy 449   363   491   597   622 
    Advertising 213   203   319   519   696 
    Other 995   1,436   1,223   1,590   1,787 
    Total Noninterest Expense$4,686  $5,790  $7,124  $10,307  $13,397 
              
    (4) 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: 1,328  1,192  945  1,164  869 
              
    SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):Three Months Ended
     March 31, December 31, September 30, June 30, March 31,
    Mortgage Banking Noninterest Expense Fixed vs. Variable 2023   2022   2022   2022   2022 
    (In thousands)         
    Noninterest Expense - Fixed Expenses$3,513  $4,561  $5,724  $6,989  $7,936 
    Noninterest Expense - Variable Expenses (5) 1,173   1,229   1,400   3,318   5,461 
    Total Noninterest Expense$4,686  $5,790  $7,124  $10,307  $13,397 
              
              
     Three Months Ended
    SBA Lending (Q2) DataMarch 31, December 31, September 30, June 30, March 31,
    (In thousands, except percentage data) 2023   2022   2022   2022   2022 
    Final funded loans guaranteed portion sold, SBA$15,337  $11,293  $3,772  $5,364  $14,355 
              
    Gross gain on sales of loans, SBA$1,293  $936  $393  $592  $1,670 
    Weighted average gross gain on sales of loans, SBA 8.43%  8.29%  10.42%  11.04%  11.63%
              
    Net gain on sales of loans, SBA (6)$907  $775  $249  $486  $1,327 
    Weighted average net gain on sales of loans, SBA 5.91%  6.86%  6.60%  9.06%  9.24%
              
              
     Three Months Ended
    Mortgage Banking DataMarch 31, December 31, September 30, June 30, March 31,
    (In thousands, except percentage data) 2023   2022   2022   2022   2022 
              
    Mortgage originations for sale in the secondary market$115,011  $77,605  $185,981  $421,426  $459,434 
              
    Mortgage sales$99,711  $96,177  $241,804  $426,200  $478,816 
              
    Gross gain on sales of loans, mortgage banking (7)$2,308  $1,217  $2,630  $7,419  $10,988 
    Weighted average gross gain on sales of loans, mortgage banking 2.31%  1.27%  1.09%  1.74%  2.29%
              
    Mortgage banking income (8)$4,149  $2,496  $2,246  $7,093  $16,254 
              
    (5) Variable expenses include incentive compensation and advertising expenses.
              
    (6) Inclusive of gains on servicing assets and net of commissions, referral fees, SBA repair fees and discounts on unguaranteed portions held-for-investment.
              
    (7) Inclusive of gains on capitalized mortgage servicing rights, realized hedging gains and loan fees, and net of lender credits and other investor expenses.
              
    (8) 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 SheetsMarch 31, December 31, September 30, June 30, March 31,
    (In thousands) 2023   2022   2022   2022   2022 
    Interest-earning assets         
    Average balances:         
    Interest-bearing deposits with banks$27,649  $19,379  $28,318  $25,068  $36,029 
    Loans, excluding PPP loans 1,620,589   1,582,538   1,477,857   1,381,366   1,268,983 
    PPP loans 558   644   1,310   4,271   22,066 
    Investment securities - taxable 110,373   111,936   94,836   103,536   50,165 
    Investment securities - nontaxable 242,530   241,504   230,312   202,534   163,472 
    FRB and FHLB stock 23,289   20,063   19,890   18,691   19,021 
    Total interest-earning assets$2,024,988  $1,976,064  $1,852,523  $1,735,466  $1,559,736 
              
    Interest income (tax equivalent basis):         
    Interest-bearing deposits with banks$192  $144  $97  $37  $13 
    Loans, excluding PPP loans 21,337   20,219   18,012   15,788   13,745 
    PPP loans 2   3   17   177   258 
    Investment securities - taxable 957   955   740   769   420 
    Investment securities - nontaxable 2,533   2,505   2,352   1,987   1,571 
    FRB and FHLB stock 364   220   265   169   146 
    Total interest income (tax equivalent basis)$25,385  $24,046  $21,483  $18,927  $16,153 
              
    Weighted average yield (tax equivalent basis, annualized):         
    Interest-bearing deposits with banks 2.78%  2.97%  1.37%  0.59%  0.14%
    Loans, excluding PPP loans 5.27%  5.11%  4.88%  4.57%  4.33%
    PPP loans 1.43%  1.86%  5.19%  16.58%  4.68%
    Investment securities - taxable 3.47%  3.41%  3.12%  2.97%  3.35%
    Investment securities - nontaxable 4.18%  4.15%  4.08%  3.92%  3.84%
    FRB and FHLB stock 6.25%  4.39%  5.33%  3.62%  3.07%
    Total interest-earning assets 5.01%  4.87%  4.64%  4.36%  4.14%
              
              
    SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):Three Months Ended
    Summarized Consolidated Average Balance SheetsMarch 31, December 31, September 30, June 30, March 31,
    (In thousands) 2023   2022   2022   2022   2022 
    Interest-bearing liabilities         
    Average balances:         
    Interest-bearing deposits$1,251,080  $1,213,419  $1,125,659  $998,868  $922,137 
    Federal Home Loan Bank borrowings 374,593   311,146   301,027   325,460   280,190 
    Subordinated debt and other borrowings 50,293   88,304   50,179   50,152   24,592 
    Total interest-bearing liabilities$1,675,966  $1,612,869  $1,476,865  $1,374,480  $1,226,919 
              
    Interest expense:         
    Interest-bearing deposits$6,265  $4,158  $2,306  $1,047  $738 
    Federal Home Loan Bank borrowings 2,915   1,919   1,111   811   681 
    Subordinated debt and other borrowings 719   1,145   714   710   369 
    Total interest expense$9,899  $7,222  $4,131  $2,568  $1,788 
              
    Weighted average cost (annualized):         
    Interest-bearing deposits 2.00%  1.37%  0.82%  0.42%  0.32%
    Federal Home Loan Bank borrowings 3.11%  2.47%  1.48%  1.00%  0.97%
    Subordinated debt and other borrowings 5.72%  5.19%  5.69%  5.66%  6.00%
    Total interest-bearing liabilities 2.36%  1.79%  1.12%  0.75%  0.58%
              
    Interest rate spread (tax equivalent basis, annualized) 2.65%  3.08%  3.52%  3.61%  3.56%
              
    Net interest margin (tax equivalent basis, annualized) 3.06%  3.41%  3.75%  3.77%  3.68%
              

     

     


    Primary Logo

Share on,