Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries First Savings Financial Group, Inc. Reports Financial Results for the First Fiscal Quarter Ended December 31, 2023 By: First Savings Financial Group, Inc. via GlobeNewswire January 30, 2024 at 17:45 PM EST 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 ShareDecember 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 ofSummarized Consolidated Balance SheetsDecember 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 EndedSummarized Consolidated Statements of IncomeDecember 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 EndedNoninterest Income DetailDecember 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 EndedSegmented Statements of Income InformationDecember 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 EndedSegmented Statements of Income InformationDecember 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 EndedNoninterest Expense Detail by SegmentDecember 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 EndedSBA Lending (Q2) DataDecember 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 EndedMortgage Banking DataDecember 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 EndedSummarized Consolidated Average Balance SheetsDecember 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% Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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First Savings Financial Group, Inc. Reports Financial Results for the First Fiscal Quarter Ended December 31, 2023 By: First Savings Financial Group, Inc. via GlobeNewswire January 30, 2024 at 17:45 PM EST 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 ShareDecember 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 ofSummarized Consolidated Balance SheetsDecember 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 EndedSummarized Consolidated Statements of IncomeDecember 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 EndedNoninterest Income DetailDecember 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 EndedSegmented Statements of Income InformationDecember 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 EndedSegmented Statements of Income InformationDecember 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 EndedNoninterest Expense Detail by SegmentDecember 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 EndedSBA Lending (Q2) DataDecember 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 EndedMortgage Banking DataDecember 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 EndedSummarized Consolidated Average Balance SheetsDecember 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%
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 ShareDecember 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 ofSummarized Consolidated Balance SheetsDecember 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 EndedSummarized Consolidated Statements of IncomeDecember 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 EndedNoninterest Income DetailDecember 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 EndedSegmented Statements of Income InformationDecember 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 EndedSegmented Statements of Income InformationDecember 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 EndedNoninterest Expense Detail by SegmentDecember 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 EndedSBA Lending (Q2) DataDecember 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 EndedMortgage Banking DataDecember 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 EndedSummarized Consolidated Average Balance SheetsDecember 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%
