First Savings Financial Group, Inc. Reports Financial Results for the First Fiscal Quarter Ended December 31, 2023
JEFFERSONVILLE, Ind., Jan. 30, 2024 (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 $920,000, or $0.13 per diluted share, for the quarter ended December 31, 2023 compared to net income of $2.9 million, or $0.41 per diluted share, for the quarter ended December 31, 2022. The core banking segment reported net income of $4.0 million, or $0.59 per diluted share for the quarter ending December 31, 2023.
During the quarter ended December 31, 2023, the Company ceased its national originate-to-sell residential mortgage banking operations, consummated the bulk sale of substantially all residential mortgage loan servicing rights with Nationstar Mortgage LLC (“Nationstar”), and entered into a letter of intent for the mini-bulk sale of its remaining residential mortgage servicing rights, which were valued at December 31, 2023 at the net expected realizable value on the expected close date of February 29, 2024. As a result of these actions, the Company does not anticipate recognizing material financial effects to its future financial performance related to the former mortgage banking operations. Notwithstanding the forgoing, the Company has an accrued estimated contingent liability of $1.1 million for possible reimbursement to Nationstar for mortgage servicing rights it purchased that are associated with loans that experience early payoffs (“EPOs”) and early payment defaults (“EPDs”) in the first 90 days following the close of the sale on November 30, 2023. Depending on repayment activity related to such during that 90-day period, the Company may recognize a material financial effect upon final settlement with Nationstar in the quarter ending March 31, 2024. The Company continues to originate residential mortgage loans in its local southern Indiana markets and first-lien home equity lines of credit from its loan production office in Franklin, Tennessee.
The Company modified the manner in which it recognizes dividends from the Federal Home Loan Bank of Indianapolis, which adversely impacted the Company’s net interest margin by approximately 8 basis points for the quarter ended December 31, 2023. This adverse effect will not be recognized in future quarter.
Commenting on the Company’s performance, Larry W. Myers, President and CEO, stated “While the former national mortgage banking division was a financial success for several years, we are pleased to have finalized the winddown of those operations and pivot to improving financial results. The core banking segment performed reasonably well while the SBA lending segment underperformed due to higher than anticipated provisions for credit losses. We continue to move on the right trajectory and expect the financial performance of both the core banking and SBA lending segments to improve. We continue our focus on reducing balance sheet and operating inefficiencies; strong asset quality; selective high-quality lending; deposit growth; and improvement of liquidity, capital and interest rate sensitivity positions. We believe these measures will deliver increasing financial results and shareholder value.”
Results of Operations for the Three Months Ended December 31, 2023 and 2022
Net interest income decreased $2.1 million, or 13.2%, to $14.1 million for the three months ended December 31, 2023 as compared to the same period 2022. The decrease in net interest income was due to a $7.3 million increase in interest expense, partially offset by a $5.2 million increase in interest income. Interest income increased due to an increase in the average balance of interest-earning assets of $190.5 million, from $1.98 billion for 2022 to $2.17 billion for 2023, and an increase in the weighted-average tax-equivalent yield, from 4.87% for 2022 to 5.37% for 2023. The increase in the average balance of interest-earning assets was due primarily to a $274.5 million increase in the average balance of loans, partially offset by a decrease in the average balance of investment securities of $89.8 million. Interest expense increased due to an increase in the average balance of interest-bearing liabilities of $265.8 million, from $1.61 billion for 2022 to $1.88 billion for 2023, and an increase in the average cost of interest-bearing liabilities, from 1.79% for 2022 to 3.10% for 2023. The increase in the average cost of interest-bearing liabilities for 2023 was due primarily to higher rates for FHLB borrowings, brokered deposits, and money market deposit accounts as a result of increased market interest rates due to competition and higher U.S. Treasury rates.
The Company recognized a provision for credit losses of $412,000 for the three months ended December 31, 2023, compared to $984,000 for the same period in 2022. The Company recognized net charge-offs of $9,000 for the three months ended December 31, 2023, compared to net charge-offs of $264,000 in 2022, of which $247,000 was related to unguaranteed portions of SBA loans. Nonperforming loans, which consist of nonaccrual loans and loans over 90 days past due and still accruing interest, increased $1.6 million from $13.9 million at September 30, 2023 to $15.5 million at December 31, 2023.
Noninterest income decreased $2.4 million for the three months ended December 31, 2023 as compared to the same period in 2022. The decrease was due primarily to a $2.4 million decrease in mortgage banking income, which was a result of the winddown of the national mortgage banking operations that was completed in December 2023.
Noninterest expense decreased $1.5 million for the three months ended December 31, 2023 as compared to the same period in 2022. The decrease was due primarily to decreases in compensation and benefits expense of $1.0 million and other operating expense of $1.0 million. The decrease in compensation and benefits expense was due primarily to a reduction in staffing related to the winddown of the national mortgage banking operations. The decrease in other operating expense was due primarily to litigation accruals and adjustments of $460,000 and captive insurance losses of $385,000 in 2022 with no corresponding amounts in 2023, and the reversal of a litigation accrual of $275,000 in 2023.
The Company recognized income tax benefit of $476,000 for the three months ended December 31, 2023 compared to tax expense of $83,000 for the same period in 2022. The decrease in income tax expense was due primarily to lower pre-tax income and utilization of investment tax credits related to solar projects in the 2023 period.
Comparison of Financial Condition at December 31, 2023 and September 30, 2023
Total assets increased $19.2 million, from $2.29 billion at September 30, 2023 to $2.31 billion at December 31, 2023. Net loans held for investment increased $71.7 million during the quarter ended December 31, 2023 due primarily to growth in residential mortgage and commercial business loans. Debt securities available for sale increased $17.8 million during the quarter ended December 31, 2023 due primarily to a decrease in the unrealized loss on securities available for sale. Residential mortgage loan servicing rights decreased $59.1 million during the quarter ended December 31, 2023, due to the sale of substantially all residential mortgage loan servicing rights during the period.
Total liabilities increased $5.7 million due primarily to increases in accrued expenses and other liabilities and total deposits of $7.2 million and $2.1 million, respectively, offset by a decrease in FHLB borrowings of $6.5 million. As of December 31, 2023, deposits exceeding the FDIC insurance limit of $250,000 per insured account were 26.6% of total deposits and 11.7% of total deposits when excluding public funds insured by the Indiana Public Deposit Insurance Fund.
Common stockholders’ equity increased $13.5 million, from $151.0 million at September 30, 2023 to $164.5 million at December 31, 2023, due primarily to a $16.0 million decrease in accumulated other comprehensive loss, partially offset by a decrease in retained net income of $2.6 million. The increase in accumulated other comprehensive loss was due primarily to decreasing long term market interest rates during the quarter ended December 31, 2023, which resulted in an increase in the fair value of securities available for sale. The decrease in retained net income was due primarily to the Company’s adoption of ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (commonly referred to as “CECL”) effective October 1, 2023, resulting in a one-time adjustment of $2.5 million. At December 31, 2023 and September 30, 2023, 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 two national lending programs, including single-tenant net lease commercial real estate and SBA lending, with offices located predominately in the Midwest. 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; 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) | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| OPERATING DATA: | December 31, | ||||||||||||||||||
| (In thousands, except share and per share data) | 2023 | 2022 | |||||||||||||||||
| Total interest income | $ | 28,655 | $ | 23,483 | |||||||||||||||
| Total interest expense | 14,542 | 7,222 | |||||||||||||||||
| Net interest income | 14,113 | 16,261 | |||||||||||||||||
| Provision for credit losses | 412 | 984 | |||||||||||||||||
| Net interest income after provision for credit losses | 13,701 | 15,277 | |||||||||||||||||
| Total noninterest income | 2,782 | 5,188 | |||||||||||||||||
| Total noninterest expense | 16,039 | 17,511 | |||||||||||||||||
| Income before income taxes | 444 | 2,954 | |||||||||||||||||
| Income tax expense (benefit) | (476 | ) | 83 | ||||||||||||||||
| Net income | $ | 920 | $ | 2,871 | |||||||||||||||
| Net income per share, basic | $ | 0.13 | $ | 0.42 | |||||||||||||||
| Weighted average shares outstanding, basic | 6,823,948 | 6,915,909 | |||||||||||||||||
| Net income per share, diluted | $ | 0.13 | $ | 0.41 | |||||||||||||||
| Weighted average shares outstanding, diluted | 6,839,704 | 6,972,055 | |||||||||||||||||
| Performance ratios (annualized) | |||||||||||||||||||
| Return on average assets | 0.16 | % | 0.54 | % | |||||||||||||||
| Return on average equity | 2.42 | % | 7.50 | % | |||||||||||||||
| Return on average common stockholders’ equity | 2.42 | % | 7.50 | % | |||||||||||||||
| Net interest margin (tax equivalent basis) | 2.69 | % | 3.41 | % | |||||||||||||||
| Efficiency ratio | 94.93 | % | 81.64 | % | |||||||||||||||
| QTD | |||||||||||||||||||
| FINANCIAL CONDITION DATA: | December 31, | September 30, | Increase | ||||||||||||||||
| (In thousands, except per share data) | 2023 | 2023 | (Decrease) | ||||||||||||||||
| Total assets | $ | 2,308,092 | $ | 2,288,854 | $ | 19,238 | |||||||||||||
| Cash and cash equivalents | 33,366 | 30,845 | 2,521 | ||||||||||||||||
| Investment securities | 246,801 | 229,039 | 17,762 | ||||||||||||||||
| Loans held for sale | 22,866 | 45,855 | (22,989 | ) | |||||||||||||||
| Gross loans | 1,860,742 | 1,787,143 | 73,599 | ||||||||||||||||
| Allowance for credit losses (1) | 18,789 | 16,900 | 1,889 | ||||||||||||||||
| Interest earning assets | 2,152,941 | 2,083,397 | 69,544 | ||||||||||||||||
| Goodwill | 9,848 | 9,848 | – | ||||||||||||||||
| Core deposit intangibles | 520 | 561 | (41 | ) | |||||||||||||||
| Loan servicing rights | 3,711 | 62,819 | (59,108 | ) | |||||||||||||||
| Noninterest-bearing deposits | 202,769 | 242,237 | (39,468 | ) | |||||||||||||||
| Interest-bearing deposits (retail) | 978,182 | 1,001,238 | (23,056 | ) | |||||||||||||||
| Interest-bearing deposits (brokered) | 502,895 | 438,319 | 64,576 | ||||||||||||||||
| Federal Home Loan Bank borrowings | 356,699 | 363,183 | (6,484 | ) | |||||||||||||||
| Subordinated debt and other borrowings | 48,484 | 48,444 | 40 | ||||||||||||||||
| Total liabilities | 2,143,569 | 2,137,873 | 5,696 | ||||||||||||||||
| Accumulated other comprehensive loss | (13,606 | ) | (29,587 | ) | 15,981 | ||||||||||||||
| Stockholders’ equity | 164,523 | 150,981 | 13,542 | ||||||||||||||||
| Book value per share | $ | 23.90 | $ | 21.99 | $ | 1.92 | |||||||||||||
| Tangible book value per share – Non-GAAP (2) | 22.40 | 20.47 | 1.93 | ||||||||||||||||
| Non-performing assets: | |||||||||||||||||||
| Nonaccrual loans – SBA guaranteed | $ | 5,066 | $ | 5,091 | $ | (25 | ) | ||||||||||||
| Nonaccrual loans | 10,442 | 8,857 | 1,585 | ||||||||||||||||
| Total nonaccrual loans | $ | 15,508 | $ | 13,948 | $ | 1,560 | |||||||||||||
| Accruing loans past due 90 days | – | – | – | ||||||||||||||||
| Total non-performing loans | 15,508 | 13,948 | 1,560 | ||||||||||||||||
| Foreclosed real estate | 444 | 474 | (30 | ) | |||||||||||||||
| Troubled debt restructurings classified as performing loans | – | 1,266 | (1,266 | ) | |||||||||||||||
| Total non-performing assets | $ | 15,952 | $ | 15,688 | $ | 264 | |||||||||||||
| Asset quality ratios: | |||||||||||||||||||
| Allowance for credit losses as a percent of total gross loans | 1.01 | % | 0.95 | % | 0.06 | % | |||||||||||||
| Allowance for credit losses as a percent of nonperforming loans | 121.16 | % | 121.16 | % | (0.01 | %) | |||||||||||||
| Nonperforming loans as a percent of total gross loans | 0.83 | % | 0.78 | % | 0.05 | % | |||||||||||||
| Nonperforming assets as a percent of total assets | 0.69 | % | 0.69 | % | 0.01 | % | |||||||||||||
| (1) The Company adopted ASU 2016-13 Topic 326 on October 1, 2023. Allowance as of December 31, 2023 was determined using expected loss methodology (CECL). Allowance as of September 30, 2023 was determined using the previous incurred loss methodology. | |||||||||||||||||||
| (2) 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. | |||||||||||||||||||
| Tangible Book Value Per Share | December 31, | September 30, | Increase | ||||||||||||||||
| (In thousands, except share and per share data) | 2023 | 2023 | (Decrease) | ||||||||||||||||
| Stockholders’ equity, net of noncontrolling interests (GAAP) | $ | 164,523 | $ | 150,981 | $ | 13,542 | |||||||||||||
| Less: goodwill and core deposit intangibles | (10,368 | ) | (10,409 | ) | 41 | ||||||||||||||
| Tangible equity (non-GAAP) | $ | 154,155 | $ | 140,572 | 13,583 | ||||||||||||||
| Outstanding common shares | 6,883,160 | 6,867,121 | 16,039 | ||||||||||||||||
| Tangible book value per share (non-GAAP) | $ | 22.40 | $ | 20.47 | $ | 1.93 | |||||||||||||
| Book value per share (GAAP) | $ | 23.90 | $ | 21.99 | $ | 1.91 | |||||||||||||
| SUMMARIZED FINANCIAL INFORMATION (UNAUDITED): | As of | ||||||||||||||||||
| Summarized Consolidated Balance Sheets | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||
| (In thousands, except per share data) | 2023 | 2023 | 2023 | 2023 | 2022 | ||||||||||||||
| Total cash and cash equivalents | $ | 33,366 | $ | 30,845 | $ | 42,475 | $ | 41,810 | $ | 38,278 | |||||||||
| Total investment securities | 246,801 | 229,039 | 249,788 | 336,317 | 330,683 | ||||||||||||||
| Total loans held for sale | 22,866 | 45,855 | 63,142 | 48,783 | 44,281 | ||||||||||||||
| Total loans, net of allowance for credit losses | 1,841,953 | 1,770,243 | 1,691,289 | 1,598,440 | 1,582,940 | ||||||||||||||
| Loan servicing rights | 3,711 | 62,819 | 64,139 | 65,045 | 65,598 | ||||||||||||||
| Total assets | 2,308,092 | 2,288,854 | 2,260,421 | 2,239,606 | 2,196,919 | ||||||||||||||
| Retail deposits | $ | 1,180,951 | $ | 1,243,475 | $ | 1,245,534 | $ | 1,206,154 | $ | 1,211,677 | |||||||||
| Brokered deposits | 502,895 | 438,319 | 414,231 | 336,728 | 326,164 | ||||||||||||||
| Total deposits | 1,683,846 | 1,681,794 | 1,659,765 | 1,542,882 | 1,537,841 | ||||||||||||||
| Federal Home Loan Bank borrowings | 356,699 | 363,183 | 345,000 | 437,795 | 377,643 | ||||||||||||||
| Common stock and additional paid-in capital | $ | 27,397 | $ | 27,064 | $ | 27,518 | $ | 27,443 | $ | 27,425 | |||||||||
| Retained earnings – substantially restricted | 163,753 | 166,306 | 168,015 | 166,652 | 163,890 | ||||||||||||||
| Accumulated other comprehensive income (loss) | (13,606 | ) | (29,587 | ) | (17,565 | ) | (14,199 | ) | (19,000 | ) | |||||||||
| Unearned stock compensation | (1,194 | ) | (1,015 | ) | (1,113 | ) | (1,211 | ) | (1,361 | ) | |||||||||
| Less treasury stock, at cost | (11,827 | ) | (11,787 | ) | (11,787 | ) | (11,787 | ) | (10,810 | ) | |||||||||
| Total stockholders’ equity | 164,523 | 150,981 | 165,068 | 166,898 | 160,144 | ||||||||||||||
| Outstanding common shares | 6,883,160 | 6,867,121 | 6,865,921 | 6,865,921 | 6,917,921 | ||||||||||||||
| Three Months Ended | |||||||||||||||||||
| Summarized Consolidated Statements of Income | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||
| (In thousands, except per share data) | 2023 | 2023 | 2023 | 2023 | 2022 | ||||||||||||||
| Total interest income | $ | 28,655 | $ | 28,137 | $ | 26,798 | $ | 24,811 | $ | 23,483 | |||||||||
| Total interest expense | 14,542 | 12,601 | 11,933 | 9,899 | 7,222 | ||||||||||||||
| Net interest income | 14,113 | 15,536 | 14,865 | 14,912 | 16,261 | ||||||||||||||
| Provision for credit losses | 412 | 815 | 441 | 372 | 984 | ||||||||||||||
| Net interest income after provision for credit losses | 13,701 | 14,721 | 14,424 | 14,540 | 15,277 | ||||||||||||||
| Total noninterest income | 2,782 | 5,442 | 7,196 | 7,516 | 5,188 | ||||||||||||||
| Total noninterest expense | 16,039 | 21,647 | 18,965 | 17,999 | 17,511 | ||||||||||||||
| Income (loss) before income taxes | 444 | (1,484 | ) | 2,655 | 4,057 | 2,954 | |||||||||||||
| Income tax expense (benefit) | (476 | ) | (737 | ) | 331 | 333 | 83 | ||||||||||||
| Net income (loss) | $ | 920 | $ | (747 | ) | $ | 2,324 | $ | 3,724 | $ | 2,871 | ||||||||
| Net income (loss) per share, basic | $ | 0.13 | $ | (0.11 | ) | $ | 0.34 | $ | 0.54 | $ | 0.42 | ||||||||
| Weighted average shares outstanding, basic | 6,823,948 | 6,817,365 | 6,816,608 | 6,842,897 | 6,915,909 | ||||||||||||||
| Net income (loss) per share, diluted | $ | 0.13 | $ | (0.11 | ) | $ | 0.34 | $ | 0.54 | $ | 0.41 | ||||||||
| Weighted average shares outstanding, diluted | 6,839,704 | 6,837,919 | 6,819,748 | 6,881,496 | 6,972,055 | ||||||||||||||
| SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): | Three Months Ended | ||||||||||||||||||
| Noninterest Income Detail | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||
| (In thousands) | 2023 | 2023 | 2023 | 2023 | 2022 | ||||||||||||||
| Service charges on deposit accounts | $ | 473 | $ | 479 | $ | 509 | $ | 471 | $ | 558 | |||||||||
| ATM and interchange fees | 449 | 816 | 615 | 586 | 739 | ||||||||||||||
| Net gain (loss) on sales of available for sale securities | – | (11 | ) | (540 | ) | – | – | ||||||||||||
| Net unrealized gain (loss) on equity securities | 38 | 11 | 11 | 21 | 14 | ||||||||||||||
| Other than temporary impairment loss on securities | – | – | – | – | (28 | ) | |||||||||||||
| Net gain on sales of loans, Small Business Administration | 834 | 538 | 497 | 907 | 775 | ||||||||||||||
| Mortgage banking income | 89 | 3,018 | 4,668 | 4,149 | 2,496 | ||||||||||||||
| Increase in cash surrender value of life insurance | 329 | 311 | 279 | 266 | 225 | ||||||||||||||
| Commission income | 222 | 182 | 247 | 189 | 128 | ||||||||||||||
| Real estate lease income | 115 | 116 | 119 | 117 | 117 | ||||||||||||||
| Net gain on premises and equipment | – | 20 | – | 29 | – | ||||||||||||||
| Gain from repurchase of subordinated debt | – | – | 660 | – | – | ||||||||||||||
| Other income | 233 | (38 | ) | 131 | 781 | 164 | |||||||||||||
| Total noninterest income | $ | 2,782 | $ | 5,442 | $ | 7,196 | $ | 7,516 | $ | 5,188 | |||||||||
| Three Months Ended | |||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
| Consolidated Performance Ratios (Annualized) | 2023 | 2023 | 2023 | 2023 | 2022 | ||||||||||||||
| Return on average assets | 0.16 | % | (0.13 | %) | 0.41 | % | 0.68 | % | 0.54 | % | |||||||||
| Return on average equity | 2.42 | % | (1.82 | %) | 5.60 | % | 9.15 | % | 7.50 | % | |||||||||
| Return on average common stockholders’ equity | 2.42 | % | (1.82 | %) | 5.60 | % | 9.15 | % | 7.50 | % | |||||||||
| Net interest margin (tax equivalent basis) | 2.69 | % | 3.03 | % | 2.94 | % | 3.06 | % | 3.41 | % | |||||||||
| Efficiency ratio | 94.93 | % | 103.19 | % | 85.97 | % | 80.25 | % | 81.64 | % | |||||||||
| As of or for the Three Months Ended | |||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
| Consolidated Asset Quality Ratios | 2023 | 2023 | 2023 | 2023 | 2022 | ||||||||||||||
| Nonperforming loans as a percentage of total loans | 0.83 | % | 0.78 | % | 0.69 | % | 0.77 | % | 0.72 | % | |||||||||
| Nonperforming assets as a percentage of total assets | 0.69 | % | 0.69 | % | 0.62 | % | 0.67 | % | 0.64 | % | |||||||||
| Allowance for credit losses as a percentage of total loans | 1.01 | % | 0.95 | % | 0.99 | % | 1.02 | % | 1.01 | % | |||||||||
| Allowance for credit losses as a percentage of nonperforming loans | 121.16 | % | 121.16 | % | 143.83 | % | 132.20 | % | 139.55 | % | |||||||||
| Net charge-offs to average outstanding loans | 0.00 | % | 0.04 | % | 0.00 | % | -0.00 | % | 0.02 | % | |||||||||
| SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): | Three Months Ended | ||||||||||||||||||
| Segmented Statements of Income Information | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||
| (In thousands) | 2023 | 2023 | 2023 | 2023 | 2022 | ||||||||||||||
| Core Banking Segment: | |||||||||||||||||||
| Net interest income | $ | 13,113 | $ | 14,167 | $ | 13,407 | $ | 13,632 | $ | 15,008 | |||||||||
| Provision (credit) for credit losses | (49 | ) | 1,266 | 880 | 422 | 701 | |||||||||||||
| Net interest income after provision for credit losses | 13,162 | 12,901 | 12,527 | 13,210 | 14,307 | ||||||||||||||
| Noninterest income | 1,679 | 2,136 | 1,965 | 1,733 | 1,928 | ||||||||||||||
| Noninterest expense | 10,252 | 13,559 | 11,010 | 10,651 | 9,797 | ||||||||||||||
| Income before income taxes | 4,589 | 1,478 | 3,482 | 4,292 | 6,438 | ||||||||||||||
| Income tax expense | 541 | 3 | 561 | 401 | 946 | ||||||||||||||
| Net income | $ | 4,048 | $ | 1,475 | $ | 2,921 | $ | 3,891 | $ | 5,492 | |||||||||
| SBA Lending Segment (Q2): | |||||||||||||||||||
| Net interest income | $ | 1,003 | $ | 990 | $ | 1,098 | $ | 1,093 | $ | 995 | |||||||||
| Provision (credit) for credit losses | 461 | (451 | ) | (439 | ) | (50 | ) | 283 | |||||||||||
| Net interest income after provision for credit losses | 542 | 1,441 | 1,537 | 1,143 | 712 | ||||||||||||||
| Noninterest income | 1,003 | 367 | 580 | 1,636 | 754 | ||||||||||||||
| Noninterest expense | 2,146 | 2,907 | 2,107 | 2,662 | 1,924 | ||||||||||||||
| Income (loss) before income taxes | (601 | ) | (1,099 | ) | 10 | 117 | (458 | ) | |||||||||||
| Income tax expense (benefit) | (131 | ) | (273 | ) | (21 | ) | 20 | (107 | ) | ||||||||||
| Net income (loss) | $ | (470 | ) | $ | (826 | ) | $ | 31 | $ | 97 | $ | (351 | ) | ||||||
| Mortgage Banking Segment: | |||||||||||||||||||
| Net interest income (loss) | $ | (3 | ) | $ | 379 | $ | 360 | $ | 187 | $ | 258 | ||||||||
| Provision for credit losses | – | – | – | – | – | ||||||||||||||
| Net interest income (loss) after provision for credit losses | (3 | ) | 379 | 360 | 187 | 258 | |||||||||||||
| Noninterest income | 100 | 2,939 | 4,651 | 4,147 | 2,506 | ||||||||||||||
| Noninterest expense | 3,641 | 5,181 | 5,848 | 4,686 | 5,790 | ||||||||||||||
| Loss before income taxes | (3,544 | ) | (1,863 | ) | (837 | ) | (352 | ) | (3,026 | ) | |||||||||
| Income tax benefit | (886 | ) | (467 | ) | (209 | ) | (88 | ) | (756 | ) | |||||||||
| Net loss | $ | (2,658 | ) | $ | (1,396 | ) | $ | (628 | ) | $ | (264 | ) | $ | (2,270 | ) | ||||
| SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): | Three Months Ended | ||||||||||||||||||
| Segmented Statements of Income Information | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||
| (In thousands, except percentage data) | 2023 | 2023 | 2023 | 2023 | 2022 | ||||||||||||||
| Net Income (Loss) Per Share by Segment | |||||||||||||||||||
| Net income per share, basic – Core Banking | $ | 0.59 | $ | 0.22 | $ | 0.43 | $ | 0.57 | $ | 0.80 | |||||||||
| Net income (loss) per share, basic – SBA Lending (Q2) | (0.07 | ) | (0.12 | ) | – | 0.01 | (0.05 | ) | |||||||||||
| Net income (loss) per share, basic – Mortgage Banking | (0.40 | ) | (0.21 | ) | (0.09 | ) | (0.04 | ) | (0.33 | ) | |||||||||
| Total net income (loss) per share, basic | $ | 0.12 | $ | (0.11 | ) | $ | 0.34 | $ | 0.54 | $ | 0.42 | ||||||||
| Net Income (Loss) Per Diluted Share by Segment | |||||||||||||||||||
| Net income per share, diluted – Core Banking | $ | 0.59 | $ | 0.22 | $ | 0.43 | $ | 0.57 | $ | 0.79 | |||||||||
| Net income (loss) per share, diluted – SBA Lending (Q2) | (0.07 | ) | (0.12 | ) | – | 0.01 | (0.05 | ) | |||||||||||
| Net loss per share, diluted – Mortgage Banking | (0.40 | ) | (0.21 | ) | (0.09 | ) | (0.04 | ) | (0.33 | ) | |||||||||
| Total net income (loss) per share, diluted | $ | 0.12 | $ | (0.11 | ) | $ | 0.34 | $ | 0.54 | $ | 0.41 | ||||||||
| Return on Average Assets by Segment (annualized) (3) | |||||||||||||||||||
| Core Banking | 0.73 | % | 0.28 | % | 0.61 | % | 0.85 | % | 1.17 | % | |||||||||
| SBA Lending | (2.11 | %) | (3.81 | %) | 0.15 | % | 0.42 | % | (1.38 | %) | |||||||||
| Efficiency Ratio by Segment (annualized) (3) | |||||||||||||||||||
| Core Banking | 69.31 | % | 83.17 | % | 71.62 | % | 69.32 | % | 57.85 | % | |||||||||
| SBA Lending | 106.98 | % | 214.22 | % | 125.57 | % | 97.54 | % | 110.01 | % | |||||||||
| Three Months Ended | |||||||||||||||||||
| Noninterest Expense Detail by Segment | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||
| (In thousands) | 2023 | 2023 | 2023 | 2023 | 2022 | ||||||||||||||
| Core Banking Segment: | |||||||||||||||||||
| Compensation (4) | $ | 5,691 | $ | 6,528 | $ | 4,978 | $ | 5,578 | $ | 5,275 | |||||||||
| Occupancy | 1,481 | 1,418 | 1,738 | 1,401 | 1,443 | ||||||||||||||
| Advertising | 189 | 404 | 334 | 298 | 213 | ||||||||||||||
| Other | 2,891 | 5,209 | 3,960 | 3,374 | 2,866 | ||||||||||||||
| Total Noninterest Expense | $ | 10,252 | $ | 13,559 | $ | 11,010 | $ | 10,651 | $ | 9,797 | |||||||||
| SBA Lending Segment (Q2): | |||||||||||||||||||
| Compensation | $ | 1,826 | $ | 1,533 | $ | 1,803 | $ | 1,800 | $ | 1,622 | |||||||||
| Occupancy | 91 | 68 | 70 | 70 | 54 | ||||||||||||||
| Advertising | 10 | 10 | 11 | 8 | 2 | ||||||||||||||
| Other | 219 | 1,296 | 223 | 784 | 246 | ||||||||||||||
| Total Noninterest Expense | $ | 2,146 | $ | 2,907 | $ | 2,107 | $ | 2,662 | $ | 1,924 | |||||||||
| Mortgage Banking Segment: | |||||||||||||||||||
| Compensation (4) | $ | 2,146 | $ | 3,647 | $ | 4,357 | $ | 3,029 | $ | 3,788 | |||||||||
| Occupancy | 469 | 395 | 469 | 449 | 363 | ||||||||||||||
| Advertising | 119 | 129 | 191 | 213 | 203 | ||||||||||||||
| Other | 907 | 1,010 | 831 | 995 | 1,436 | ||||||||||||||
| Total Noninterest Expense | $ | 3,641 | $ | 5,181 | $ | 5,848 | $ | 4,686 | $ | 5,790 | |||||||||
| (3) Ratios for Mortgage Banking Segment are not considered meaningful due to the wind down of the national mortgage banking division in the quarter ended December 31, 2023. | |||||||||||||||||||
| (4) Compensation includes increases for the Core Banking segment and corresponding decreases for the 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: | $ | 1,403 | $ | 1,516 | $ | 1,440 | $ | 1,328 | $ | 1,192 | |||||||||
| SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| SBA Lending (Q2) Data | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||
| (In thousands, except percentage data) | 2023 | 2023 | 2023 | 2023 | 2022 | ||||||||||||||
| Final funded loans guaranteed portion sold, SBA | $ | 14,098 | $ | 8,431 | $ | 7,721 | $ | 15,337 | $ | 11,293 | |||||||||
| Gross gain on sales of loans, SBA | $ | 1,303 | $ | 809 | $ | 780 | $ | 1,293 | $ | 936 | |||||||||
| Weighted average gross gain on sales of loans, SBA | 9.24 | % | 9.60 | % | 10.10 | % | 8.43 | % | 8.29 | % | |||||||||
| Net gain on sales of loans, SBA (5) | $ | 834 | $ | 538 | $ | 497 | $ | 907 | $ | 775 | |||||||||
| Weighted average net gain on sales of loans, SBA | 5.92 | % | 6.38 | % | 6.44 | % | 5.91 | % | 6.86 | % | |||||||||
| Three Months Ended | |||||||||||||||||||
| Mortgage Banking Data | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||
| (In thousands, except percentage data) | 2023 | 2023 | 2023 | 2023 | 2022 | ||||||||||||||
| Mortgage originations for sale in the secondary market | $ | 61,769 | $ | 195,469 | $ | 199,601 | $ | 115,011 | $ | 77,605 | |||||||||
| Mortgage sales | $ | 81,376 | $ | 220,609 | $ | 185,557 | $ | 99,711 | $ | 96,177 | |||||||||
| Gross gain on sales of loans, mortgage banking (6) | $ | 1,133 | $ | 3,304 | $ | 3,570 | $ | 2,308 | $ | 1,217 | |||||||||
| Weighted average gross gain on sales of loans, mortgage banking | 1.39 | % | 1.50 | % | 1.92 | % | 2.31 | % | 1.27 | % | |||||||||
| Mortgage banking income (7) | $ | 89 | $ | 3,018 | $ | 4,668 | $ | 4,149 | $ | 2,496 | |||||||||
| (5) Inclusive of gains on servicing assets and net of commissions, referral fees, SBA repair fees and discounts on unguaranteed portions held-for-investment. | |||||||||||||||||||
| (6) Inclusive of gains on capitalized mortgage servicing rights, realized hedging gains and loan fees, and net of lender credits and other investor expenses. | |||||||||||||||||||
| (7) Inclusive of loan fees, servicing income, gains or losses on mortgage servicing rights, fair value adjustments and gains or losses on derivative instruments, and net of lender credits and other investor expenses. | |||||||||||||||||||
| SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): | Three Months Ended | ||||||||||||||||||
| Summarized Consolidated Average Balance Sheets | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||
| (In thousands) | 2023 | 2023 | 2023 | 2023 | 2022 | ||||||||||||||
| Interest-earning assets | |||||||||||||||||||
| Average balances: | |||||||||||||||||||
| Interest-bearing deposits with banks | $ | 20,350 | $ | 21,631 | $ | 20,661 | $ | 27,649 | $ | 19,379 | |||||||||
| Loans | 1,857,654 | 1,796,749 | 1,719,733 | 1,621,147 | 1,583,182 | ||||||||||||||
| Investment securities – taxable | 103,728 | 105,393 | 109,319 | 110,373 | 111,936 | ||||||||||||||
| Investment securities – nontaxable | 159,907 | 160,829 | 234,118 | 242,530 | 241,504 | ||||||||||||||
| FRB and FHLB stock | 24,968 | 24,939 | 24,509 | 23,289 | 20,063 | ||||||||||||||
| Total interest-earning assets | $ | 2,166,607 | $ | 2,109,541 | $ | 2,108,340 | $ | 2,024,988 | $ | 1,976,064 | |||||||||
| Interest income (tax equivalent basis): | |||||||||||||||||||
| Interest-bearing deposits with banks | $ | 249 | $ | 266 | $ | 267 | $ | 192 | $ | 144 | |||||||||
| Loans | 26,155 | 25,214 | 23,279 | 21,339 | 20,222 | ||||||||||||||
| Investment securities – taxable | 942 | 969 | 984 | 957 | 955 | ||||||||||||||
| Investment securities – nontaxable | 1,687 | 1,695 | 2,456 | 2,533 | 2,505 | ||||||||||||||
| FRB and FHLB stock | 74 | 428 | 423 | 364 | 220 | ||||||||||||||
| Total interest income (tax equivalent basis) | $ | 29,107 | $ | 28,572 | $ | 27,409 | $ | 25,385 | $ | 24,046 | |||||||||
| Weighted average yield (tax equivalent basis, annualized): | |||||||||||||||||||
| Interest-bearing deposits with banks | 4.89 | % | 4.92 | % | 5.17 | % | 2.78 | % | 2.97 | % | |||||||||
| Loans | 5.63 | % | 5.61 | % | 5.41 | % | 5.27 | % | 5.11 | % | |||||||||
| Investment securities – taxable | 3.63 | % | 3.68 | % | 3.60 | % | 3.47 | % | 3.41 | % | |||||||||
| Investment securities – nontaxable | 4.22 | % | 4.22 | % | 4.20 | % | 4.18 | % | 4.15 | % | |||||||||
| FRB and FHLB stock | 1.19 | % | 6.86 | % | 6.90 | % | 6.25 | % | 4.39 | % | |||||||||
| Total interest-earning assets | 5.37 | % | 5.42 | % | 5.20 | % | 5.01 | % | 4.87 | % | |||||||||
| Interest-bearing liabilities | |||||||||||||||||||
| Interest-bearing deposits | $ | 1,389,384 | $ | 1,385,994 | $ | 1,278,776 | $ | 1,251,080 | $ | 1,213,419 | |||||||||
| Fed funds purchased | – | 76 | 11 | – | – | ||||||||||||||
| Federal Home Loan Bank borrowings | 440,786 | 353,890 | 434,182 | 374,593 | 311,146 | ||||||||||||||
| Subordinated debt and other borrowings | 48,458 | 48,406 | 49,339 | 50,293 | 88,304 | ||||||||||||||
| Total interest-bearing liabilities | $ | 1,878,628 | $ | 1,788,366 | $ | 1,762,308 | $ | 1,675,966 | $ | 1,612,869 | |||||||||
| Interest expense: | |||||||||||||||||||
| Interest-bearing deposits | $ | 9,989 | $ | 9,457 | $ | 7,791 | $ | 6,265 | $ | 4,158 | |||||||||
| Fed funds purchased | – | 1 | – | – | – | ||||||||||||||
| Federal Home Loan Bank borrowings | 3,769 | 2,459 | 3,446 | 2,915 | 1,919 | ||||||||||||||
| Subordinated debt and other borrowings | 784 | 684 | 696 | 719 | 1,145 | ||||||||||||||
| Total interest expense | $ | 14,542 | $ | 12,601 | $ | 11,933 | $ | 9,899 | $ | 7,222 | |||||||||
| Weighted average cost (annualized): | |||||||||||||||||||
| Interest-bearing deposits | 2.88 | % | 2.73 | % | 2.44 | % | 2.00 | % | 1.37 | % | |||||||||
| Fed funds purchased | 0.00 | % | 5.26 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||
| Federal Home Loan Bank borrowings | 3.42 | % | 2.78 | % | 3.17 | % | 3.11 | % | 2.47 | % | |||||||||
| Subordinated debt and other borrowings | 6.47 | % | 5.65 | % | 5.64 | % | 5.72 | % | 5.19 | % | |||||||||
| Total interest-bearing liabilities | 3.10 | % | 2.82 | % | 2.71 | % | 2.36 | % | 1.79 | % | |||||||||
| Net interest income (taxable equivalent basis) | $ | 14,565 | $ | 15,971 | $ | 15,476 | $ | 15,486 | $ | 16,824 | |||||||||
| Less: taxable equivalent adjustment | (452 | ) | (435 | ) | (611 | ) | (574 | ) | (563 | ) | |||||||||
| Net interest income | $ | 14,113 | $ | 15,536 | $ | 14,865 | $ | 14,912 | $ | 16,261 | |||||||||
| Interest rate spread (tax equivalent basis, annualized) | 2.27 | % | 2.60 | % | 2.49 | % | 2.65 | % | 3.08 | % | |||||||||
| Net interest margin (tax equivalent basis, annualized) | 2.69 | % | 3.03 | % | 2.94 | % | 3.06 | % | 3.41 | % | |||||||||
