First Savings Financial Group, Inc. Reports Financial Results For the Third Fiscal Quarter Ended June 30, 2021

·31 min read

JEFFERSONVILLE, Ind., July 26, 2021 (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 $4.3 million, or $1.80 per diluted share, for the quarter ended June 30, 2021 compared to net income of $15.4 million, or $6.51 per diluted share, for the quarter ended June 30, 2020.

Commenting on the Company’s performance, Larry W. Myers, President and CEO stated: “We continued to be very pleased with the fundamentals of our organization, which continue to deliver meaningful value to our shareholders. The core banking segment continues to experience strong earnings, loan and deposit growth; resiliency of asset quality; and stability of the net interest margin. The SBA lending segment also continues to experience strong earnings, robust origination volume and resiliency of asset quality. The mortgage banking segment experienced unfavorable market conditions during the quarter, which resulted in decreased volumes, margin compression and adverse market value adjustments. However, we’re optimistic regarding the continued opportunity in mortgage banking and invested in high-caliber management during the quarter in preparation for continued growth and profitability. I have confidence in the each of the Company’s business lines to continue thriving and thus delivering exceptional value to our shareholders.”

COVID-19 Pandemic Loan Information

The table below summarizes payment extensions or loan forbearance agreements that were in effect at July 20, 2021.

Number of Loans

Outstanding Principal Balance

(Dollars in thousands)

Residential real estate

2

$

127

Commercial real estate

2

8,609

Commercial business

1

5

Total

5

$

8,741

As a result of the COVID-19 pandemic, the leisure and hospitality industries carry a higher degree of credit risk. Based on our evaluation of the allowance for loan losses at June 30, 2021, management believes adequate reserves are in place to cover estimated losses at that date. However, as the pandemic continues, additional losses could be recognized and additional provisions for loan losses may be required.

At June 30, 2021, the outstanding principal balance of loans secured by restaurant related collateral was $146.0 million, of which $48.9 million is fully guaranteed by the SBA (including $48.5 million of PPP loans) and $86.7 million is secured by commercial real estate where the collateral property is leased to national-brand, investment-grade tenants.

At June 30, 2021, the outstanding principal balances of loans secured by hotel real estate was $17.5 million, of which $3.9 million is fully guaranteed by the SBA (including $865,000 of PPP loans). The two commercial real estate loans included in the preceding table totaling $8.6 million are secured by hotel real estate and are not guaranteed by the SBA.

Under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which was signed into law on March 27, 2020, the SBA made six months of principal and interest payments for loans of existing SBA clients that were in “regular servicing status” (not delinquent) at March 27, 2020 and for loans of new SBA clients originated between March 27, 2020 and September 27, 2020. The CARES Act provided financial support for many of the SBA clients, which resulted in relatively few SBA clients requiring payment extensions or loan forbearance agreements. The Coronavirus Response and Relief Supplemental Appropriations Act (“CRRSAA”), which was signed into law on December 27, 2020, provides additional SBA-provided loan payments to eligible SBA clients beginning in February 2021.

The Company participated in the first round of the SBA’s Paycheck Protection Program (“PPP”), which was originally authorized by the CARES Act, and the second round of the PPP, which was authorized by the CRRSAA. At June 30, 2021, the outstanding principal balance of PPP loans was $100.6 million and net deferred loan fees related to PPP loans were approximately $1.4 million, which will be recognized over the life of the loans and as borrowers are granted forgiveness. As of June 30, 2021, the Company had processed and received forgiveness for 538 PPP loans totaling $118.0 million.

Results of Operations for the Three Months Ended June 30, 2021 and 2020

Net interest income increased $2.1 million, or 16.8%, to $14.2 million for the quarter ended June 30, 2021 as compared to the same quarter in 2020. The increase in net interest income was due to a $1.4 million increase in interest income and a $622,000 decrease in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $131.6 million, from $1.42 billion for 2020 to $1.55 billion for 2021, and an increase in the weighted-average tax-equivalent yield, from 4.24% for 2020 to 4.25% for 2021. The increase in the weighted-average tax-equivalent yield for 2021 was due primarily to an increase in the yield on PPP loans from 2.34% for 2020 to 3.71% for 2021. The increase in the yield on PPP loans was due to accelerated recognition of deferred PPP loan fees related to forgiveness payoffs during the quarter ended June 30, 2021. Interest expense decreased due to a decrease in the average cost of interest-bearing liabilities, from 0.88% for 2020 to 0.63% for 2021, partially offset by an increase in the average balance of interest-bearing liabilities of $55.9 million, from $1.16 billion for 2020 to $1.21 billion for 2021. The decrease in the average cost of interest-bearing liabilities for 2021 was due primarily to decreasing market interest rates on deposits and Federal Home Loan Bank (“FHLB”) borrowings, as well as increased borrowings under the Federal Reserve Bank’s PPP Liquidity Facility (“PPPLF”). PPPLF borrowings carry a fixed interest rate of 0.35% and are secured by the Company’s PPP loans.

The Company recognized a negative provision for loan losses of $2.7 million for the quarter ended June 30, 2021 compared to a provision of $3.0 million for 2020. The negative provision for loan losses for the quarter ended June 30, 2021 was primarily the result of decreases in certain segments of the loan portfolio and in nonperforming assets, as well as reductions of certain qualitative risk factors within the allowance for loan losses calculation related to the COVID-19 pandemic. The Company recognized net charge-offs of $47,000 for the quarter ended June 30, 2021 compared to net charge-offs of $31,000 for 2020.

Noninterest income decreased $28.2 million for the quarter ended June 30, 2021 as compared to 2020, due primarily to a decrease in mortgage banking income of $29.5 million, which was partially offset by a $1.0 million increase in net gain on sales of SBA loans. The decrease in mortgage banking income was due to decreased loan originations and sales by the mortgage banking segment, as well as margin compression in the residential mortgage loan secondary market. The increase in net gain on sales of SBA loans was due primarily to increases in production and sales volume from the SBA lending segment, as well as higher premiums in the secondary market. Additional details regarding the financial performance of the mortgage banking and SBA lending segments are included in the “Segmented Statements of Income Information” table at the end of this release.

Noninterest expense decreased $4.4 million for the quarter ended June 30, 2021 as compared to 2020. The decrease was due primarily to a decrease in compensation and benefits of $5.6 million, which was partially offset by increases in other noninterest expense and professional fees of $753,000 and $567,000, respectively. The decrease in compensation and benefits expense is due primarily to a reduction in incentive compensation for the Company’s mortgage banking segment as a result of decreased mortgage banking income.

The Company recognized income tax expense of $817,000 for the quarter ended June 30, 2021 compared to income tax expense of $5.5 million for 2020. The decrease is primarily the result of lower pretax income in 2021. The effective tax rate for 2021 was 15.9% compared to 26.2% for 2020. The reduction in the effective tax rate is due to lower nondeductible executive compensation in 2021.

Results of Operations for the Nine Months Ended June 30, 2021 and 2020

The Company reported net income of $24.7 million, or $10.35 per diluted share, for the nine months ended June 30, 2021 compared to net income of $18.2 million, or $7.66 per diluted share, for the nine months ended June 30, 2020, resulting in an increase of 35.1% on a per share basis.

Net interest income increased $9.0 million, or 26.8%, to $42.7 million for the nine months ended June 30, 2021 as compared to the same period in 2020. The increase in net interest income was due to a $7.1 million increase in interest income and a $1.9 million decrease in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $342.7 million, from $1.26 billion for 2020 to $1.61 billion for 2021, partially offset by a decrease in the weighted-average tax-equivalent yield, from 4.52% for 2020 to 4.15% for 2021. The decrease in the weighted-average tax-equivalent yield for 2021 is due primarily to lower market interest rates on loans and investment securities in 2021. Interest expense decreased due to a decrease in the average cost of interest-bearing liabilities, from 1.07% for 2020 to 0.65% for 2021, partially offset by an increase in the average balance of interest-bearing liabilities of $253.7 million, from $1.03 billion for 2020 to $1.28 billion for 2021. The decrease in the average cost of interest-bearing liabilities for 2021 was due primarily to decreasing market interest rates on deposits and FHLB borrowings, as well as increased PPPLF borrowings.

The Company recognized a negative provision for loan losses of $1.8 million for the nine months ended June 30, 2021 compared to a provision of $5.2 million for the same period in 2020. Nonperforming loans, which consist of nonaccrual loans and loans over 90 days past due and still accruing interest, decreased $1.2 million, from $13.6 million at September 30, 2020 to $12.4 million at June 30, 2021. The negative provision for loan losses for 2021 was primarily the result of decreases in certain segments of the loan portfolio and nonperforming assets, as well as reductions of certain qualitative risk factors within the allowance for loan losses calculation related to the COVID-19 pandemic. The Company recognized net charge-offs of $609,000 for the nine months ended June 30, 2021, of which $565,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $590,000 for the same period in 2020, of which $353,000 was related to unguaranteed portions of SBA loans.

Noninterest income increased $27.6 million for the nine months ended June 30, 2021 as compared to the same period in 2020. The increase was due primarily to increases in mortgage banking income of $23.2 million and net gain on sales of SBA loans of $3.5 million. The increase in mortgage banking income was due to increased production from the secondary-market residential mortgage lending segment. The increase in net gain on sales of SBA loans was due primarily to increases in production and sales volume from the SBA lending segment, as well as higher premiums in the secondary market. Additional details regarding the financial performance of the mortgage banking and SBA lending segments are included in the “Segmented Statements of Income Information” table at the end of this release.

Noninterest expense increased $32.9 million for the nine months ended June 30, 2021 as compared to the same period in 2020. The increase was due primarily to increases in compensation and benefits of $25.1 million, other operating expense of $3.0 million, professional fees of $2.3 million and occupancy and equipment of $1.6 million. The increase in compensation and benefits expense is attributable to the addition of new employees primarily to support the growth of the Company’s mortgage banking and SBA lending activities, routine salary and benefits adjustments, and increased incentive compensation primarily as a result of the performance of the Company’s mortgage banking segment. The increases in other operating expense, professional fees and occupancy and equipment were primarily to support the growth of the mortgage banking segment.

The Company recognized income tax expense of $9.0 million for the nine months ended June 30, 2021 compared to $5.4 million for the same period in 2020. The increase for 2021 was due primarily to higher pretax income. The effective tax rate for 2021 was 26.5% as compared to 23.0% for 2020.

Comparison of Financial Condition at June 30, 2021 and September 30, 2020

Total assets decreased $6.0 million from September 30, 2020 to June 30, 2021. Net loans decreased $24.2 million during the nine months ended June 30, 2021, due primarily to an $80.0 million decrease in PPP loans, partially offset by continued growth in the single tenant net lease commercial real estate loan portfolio. Residential mortgage and SBA loans held for sale decreased by $21.0 million and $4.6 million, respectively, due to loan sales outpacing originations during the period. Single tenant net lease loans held for sale increased by $17.5 million due to a transfer from held-for-investment to held-for-sale during the period. Total liabilities decreased $26.2 million due primarily to decreases of $67.0 million and $27.6 million in PPPLF and FHLB borrowings, respectively, partially offset by a $79.1 million increase in total deposits.

Common stockholders’ equity increased $20.5 million, from $157.3 million at September 30, 2020 to $177.7 million at June 30, 2021, due primarily to increases in retained net income of $23.0 million, partially offset by decreases in net unrealized gains on available for sale securities included in accumulated other comprehensive income of $851,000 and additional paid in capital of $1.8 million, which was due to the acquisition of the minority interests in Q2 Business Capital, LLC on December 31, 2020. At June 30, 2021 and September 30, 2020, 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 river from Louisville, Kentucky, and operates fifteen depository branches within Southern Indiana. The Bank also has three national lending programs, including single-tenant net lease commercial real estate, SBA lending and residential mortgage banking, with offices located throughout the United States. The Bank is a recognized leader, both in its local communities and nationally for its lending programs. The employees of First Savings Bank strive daily to achieve the organization’s vision, We Expect To Be The BEST community BANK, which fuels our success. The Company’s common shares trade on The NASDAQ Stock Market under the symbol “FSFG.”

This release may contain forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts; rather, they are statements based on the Company's current expectations regarding its business strategies and their intended results and its future performance. Forward-looking statements are preceded by terms such as "expects," "believes," "anticipates," "intends" and similar expressions.

Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties could cause or contribute to the Company's actual results, performance and achievements to be materially different from those expressed or implied by the forward-looking statements. Factors that may cause or contribute to these differences include, without limitation, changes in general economic conditions, including the duration, extent and severity of the COVID-19 pandemic, including its effect on our customers, service providers and on the economy and financial markets in general; changes in market interest rates; changes in monetary and fiscal policies of the federal government; legislative and regulatory changes; and other factors disclosed periodically in the Company's filings with the Securities and Exchange Commission.

Because of the risks and uncertainties inherent in forward-looking statements, readers are cautioned not to place undue reliance on them, whether included in this report or made elsewhere from time to time by the Company or on its behalf. Except as may be required by applicable law or regulation, the Company assumes no obligation to update any forward-looking statements.

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

FIRST SAVINGS FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

Three Months Ended

Nine Months Ended

June 30,

June 30,

OPERATING DATA:

2021

2020

2021

2020

(In thousands, except share and per share data)

Total interest income

$

16,150

$

14,719

$

49,016

$

41,934

Total interest expense

1,921

2,543

6,268

8,201

Net interest income

14,229

12,176

42,748

33,733

Provision (credit) for loan losses

(2,730

)

2,980

(1,775

)

5,190

Net interest income after provision (credit) for loan losses

16,959

9,196

44,523

28,543

Total noninterest income

18,785

46,962

103,941

76,327

Total noninterest expense

30,619

35,009

114,305

81,356

Income before income taxes

5,125

21,149

34,159

23,514

Income tax expense

817

5,540

9,039

5,404

Net income

4,308

15,609

25,120

18,110

Less: Net income (loss) attributable to noncontrolling interests

-

204

402

(107

)

Net income attributable to the Company

$

4,308

$

15,405

$

24,718

$

18,217

Net income per share, basic

$

1.82

$

6.51

$

10.43

$

7.74

Weighted average shares outstanding, basic

2,369,827

2,365,217

2,368,835

2,353,816

Net income per share, diluted

$

1.80

$

6.51

$

10.35

$

7.66

Weighted average shares outstanding, diluted

2,392,981

2,366,787

2,388,745

2,377,399

Performance ratios (three-month and nine-month data annualized)

Return on average assets

1.00

%

4.02

%

1.87

%

1.78

%

Return on average equity

9.94

%

48.75

%

19.95

%

19.26

%

Return on average common stockholders' equity

9.94

%

47.91

%

19.65

%

19.36

%

Net interest margin (tax equivalent basis)

3.75

%

3.52

%

3.63

%

3.66

%

Efficiency ratio

92.75

%

59.20

%

77.92

%

73.92

%

June 30,

September 30,

Increase

FINANCIAL CONDITION DATA:

2021

2020

(Decrease)

(In thousands, except per share data)

Total assets

$

1,758,628

$

1,764,625

$

(5,997

)

Cash and cash equivalents

22,909

33,726

(10,817

)

Investment securities

209,551

204,067

5,484

Loans held for sale

277,374

285,525

(8,151

)

Gross loans (1)

1,080,494

1,107,089

(26,595

)

Allowance for loan losses

14,642

17,026

(2,384

)

Interest earning assets

1,582,782

1,620,831

(38,049

)

Goodwill

9,848

9,848

-

Core deposit intangibles

1,042

1,202

(160

)

Loan servicing rights

51,778

25,451

26,327

Noninterest-bearing deposits

281,942

242,673

39,269

Interest-bearing deposits (2)

845,213

805,403

39,810

Federal Home Loan Bank borrowings

283,289

310,858

(27,569

)

Federal Reserve PPPLF borrowings

107,829

174,834

(67,005

)

Total liabilities

1,580,893

1,607,060

(26,167

)

Stockholders' equity, net of noncontrolling interests

177,735

157,272

20,463

Book value per share

$

74.84

$

66.21

$

8.63

Tangible book value per share (3)

70.26

61.56

8.70

Non-performing assets:

Nonaccrual loans - SBA guaranteed

$

6,768

$

3,709

$

3,059

Nonaccrual loans - unguaranteed

5,653

9,906

(4,253

)

Total nonaccrual loans

$

12,421

$

13,615

$

(1,194

)

Accruing loans past due 90 days

-

-

-

Total non-performing loans

12,421

13,615

(1,194

)

Foreclosed real estate

6

-

6

Troubled debt restructurings classified as performing loans

1,826

3,069

(1,243

)

Total non-performing assets

$

14,253

$

16,684

$

(2,431

)

Asset quality ratios:

Allowance for loan losses as a percent of total gross loans

1.36

%

1.54

%

(0.18

%)

Allowance for loan losses as a percent of total gross loans, excluding PPP loans (4)

1.49

%

1.84

%

(0.34

%)

Allowance for loan losses as a percent of nonperforming loans

117.88

%

125.05

%

(7.17

%)

Nonperforming loans as a percent of total gross loans

1.15

%

1.23

%

(0.08

%)

Nonperforming assets as a percent of total assets

0.81

%

0.95

%

(0.14

%)

(1) Includes $100.6 million and $180.6 million of PPP loans at June 30, 2021 and September 30, 2020, respectively.

(2) Includes $62.8 million and $132.1 million of brokered certificates of deposit at June 30, 2021 and September 30, 2020, respectively.

(3) See reconciliation of GAAP and Non-GAAP financial measures for additional information relating to calculation of this item.

(4) Denominator excludes PPP loans, which are fully guaranteed by the SBA. This ratio is non-GAAP, but is believed by management to be meaningful because it provides a comparable ratio after eliminating PPP loans.

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.

June 30,

September 30,

Increase

Tangible Book Value Per Share

2021

2020

(Decrease)

(In thousands, except share and per share data)

Stockholders' equity, net of noncontrolling interests (GAAP)

$

177,735

$

157,272

$

20,463

Less: goodwill and core deposit intangibles

(10,890

)

(11,050

)

160

Tangible equity (non-GAAP)

$

166,845

$

146,222

$

109,789

Outstanding common shares

2,374,796

2,375,324

(528

)

Tangible book value per share (non-GAAP)

$

70.26

$

61.56

$

8.70

Book value per share (GAAP)

$

74.84

$

66.21

$

8.63

SUMMARIZED FINANCIAL INFORMATION (UNAUDITED):

As of

Summarized Consolidated Balance Sheets

June 30,

March 31,

December 31,

September 30,

June 30,

(In thousands, except per share data)

2021

2021

2020

2020

2020

Total cash and cash equivalents

$

22,909

$

30,837

$

35,392

$

33,726

$

27,544

Total investment securities

209,551

207,331

205,661

204,067

205,960

Total loans held for sale

277,374

207,141

357,242

285,525

210,077

Total loans, net of allowance for loan losses

1,065,852

1,128,348

1,114,708

1,090,063

1,081,381

PPP loans

100,573

159,320

178,499

180,561

180,536

Loan servicing rights

51,778

49,367

35,232

25,451

13,563

Total assets

1,758,628

1,750,609

1,872,911

1,764,625

1,661,281

Total deposits

$

1,127,155

$

1,095,496

$

1,121,320

$

1,048,076

$

982,870

Federal Home Loan Bank borrowings

283,289

289,237

340,092

310,858

298,622

Federal Reserve PPPLF borrowings

107,829

128,494

172,772

174,834

174,834

Stockholders' equity, net of noncontrolling interests

$

177,735

$

173,040

$

165,745

$

157,272

$

142,362

Noncontrolling interests in subsidiary

-

-

-

293

(214

)

Total equity

177,735

173,040

165,745

157,565

142,148

Outstanding common shares

2,374,796

2,375,027

2,374,927

2,375,324

2,375,324

Three Months Ended

Summarized Consolidated Statements of Income

June 30,

March 31,

December 31,

September 30,

June 30,

(In thousands, except per share data)

2021

2021

2020

2020

2020

Total interest income

$

16,150

$

16,840

$

16,026

$

15,765

$

14,719

Total interest expense

1,921

2,060

2,287

2,337

2,543

Net interest income

14,229

14,780

13,739

13,428

12,176

Provision (credit) for loan losses

(2,730

)

287

668

2,772

2,980

Net interest income after provision for loan losses

16,959

14,493

13,071

10,656

9,196

Total noninterest income

18,785

38,973

46,183

57,024

46,962

Total noninterest expense

30,619

39,284

44,402

44,452

35,009

Income before income taxes

5,125

14,182

14,852

23,228

21,149

Income tax expense

817

3,695

4,527

7,257

5,540

Net income

4,308

10,487

10,325

15,971

15,609

Less: net income attributable to noncontrolling interests

-

-

402

834

204

Net income attributable to the Company

$

4,308

$

10,487

$

9,923

$

15,137

$

15,405

Net income per share, basic

$

1.82

$

4.43

$

4.19

$

6.40

$

6.51

Weighted average shares outstanding, basic

2,369,827

2,369,642

2,367,061

2,365,217

2,365,217

Net income per share, diluted

$

1.80

$

4.39

$

4.16

$

6.39

$

6.51

Weighted average shares outstanding, diluted

2,392,981

2,388,063

2,384,702

2,370,694

2,366,787

Three Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

Consolidated Performance Ratios (Annualized)

2021

2021

2020

2020

2020

Return on average assets

1.00

%

2.34

%

2.23

%

3.44

%

4.02

%

Return on average equity

9.94

%

24.97

%

25.43

%

43.46

%

48.75

%

Return on average common stockholders' equity

9.94

%

24.97

%

24.52

%

41.08

%

47.91

%

Net interest margin (tax equivalent basis)

3.75

%

3.69

%

3.46

%

3.40

%

3.52

%

Efficiency ratio

92.75

%

73.08

%

74.10

%

63.10

%

59.20

%

As of or for the Three Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

Consolidated Asset Quality Ratios

2021

2021

2020

2020

2020

Nonperforming loans as a percentage of total loans

1.15

%

1.00

%

1.10

%

1.23

%

1.26

%

Nonperforming assets as a percentage of total assets

0.81

%

0.78

%

0.78

%

0.95

%

1.17

%

Allowance for loan losses as a percentage of total loans

1.36

%

1.52

%

1.51

%

1.54

%

1.34

%

Allowance for loan losses as a percentage of nonperforming loans

117.88

%

152.72

%

138.02

%

125.05

%

106.01

%

Net charge-offs to average outstanding loans

0.00

%

0.00

%

0.04

%

0.03

%

0.00

%


SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):

Three Months Ended

Segmented Statements of Income Information

June 30,

March 31,

December 31,

September 30,

June 30,

(In thousands, except per share data)

2021

2021

2020

2020

2020

Core Banking Segment:

Net interest income

$

11,401

$

11,114

$

10,861

$

10,512

$

9,645

Provision (credit) for loan losses

(2,401

)

106

702

2,232

1,668

Net interest income after provision (credit) for loan losses

13,802

11,008

10,159

8,280

7,977

Noninterest income

1,509

1,490

1,552

1,779

1,324

Noninterest expense

9,364

8,991

8,112

7,920

7,633

Income before income taxes

5,947

3,507

3,599

2,139

1,668

Income tax expense

792

507

570

482

276

Net income attributable to the Company

$

5,155

$

3,000

$

3,029

$

1,657

$

1,392

SBA Lending Segment (Q2):

Net interest income (5)

$

2,510

$

3,227

$

2,147

$

1,959

$

1,584

Provision (credit) for loan losses

(329

)

181

(34

)

540

1,312

Net interest income after provision (credit) for loan losses

2,839

3,046

2,181

1,419

272

Noninterest income

2,675

3,407

1,385

2,828

1,785

Noninterest expense

2,206

2,449

2,746

2,545

1,642

Income before income taxes

3,308

4,004

820

1,702

415

Income tax expense

790

1,005

105

217

53

Net income

2,518

2,999

715

1,485

362

Less: net income attributable to noncontrolling interests

-

-

402

834

204

Net income attributable to the Company (6)

$

2,518

$

2,999

$

313

$

651

$

158

Mortgage Banking Segment:

Net interest income

$

318

$

439

$

731

$

957

$

947

Provision for loan losses

-

-

-

-

-

Net interest income after provision for loan losses

318

439

731

957

947

Noninterest income

14,601

34,076

43,246

52,417

43,853

Noninterest expense

19,049

27,844

33,544

33,987

25,734

Income (loss) before income taxes

(4,130

)

6,671

10,433

19,387

19,066

Income tax expense (benefit)

(765

)

2,183

3,852

6,558

5,211

Net income (loss) attributable to the Company

$

(3,365

)

$

4,488

$

6,581

$

12,829

$

13,855

Net Income (Loss) Per Share by Segment

Net income per share, basic - Core Banking

$

2.18

$

1.27

$

1.28

$

0.70

$

0.59

Net income per share, basic - SBA Lending (Q2) (7)

1.06

1.27

0.13

0.28

0.07

Net income (loss) per share, basic - Mortgage Banking

(1.42

)

1.89

2.78

5.42

5.85

Total net income per share, basic (7)

$

1.82

$

4.43

$

4.19

$

6.40

$

6.51

Net Income (Loss) Per Diluted Share by Segment

Net income per share, diluted - Core Banking

$

2.15

$

1.26

$

1.27

$

0.70

$

0.59

Net income per share, diluted - SBA Lending (Q2) (8)

1.05

1.26

0.13

0.27

0.07

Net income (loss) per share, diluted - Mortgage Banking

(1.40

)

1.87

2.76

5.42

5.85

Total net income per share, diluted (8)

$

1.80

$

4.39

$

4.16

$

6.39

$

6.51

(5) Includes net interest income derived from PPP loans of:

$

1,220

$

1,887

$

928

$

861

$

571

(6) Includes net income attributable to the Company derived from PPP loans (tax effected) of:

$

915

$

1,415

$

810

$

751

$

498

(7) Includes basic net income per share derived from PPP loans (tax effected) of:

$

0.39

$

0.60

$

0.34

$

0.32

$

0.21

(8) Includes diluted net income per share derived from PPP loans (tax effected) of:

$

0.38

$

0.59

$

0.34

$

0.32

$

0.21


SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):

Three Months Ended

Noninterest Expense Detail by Segment

June 30,

March 31,

December 31,

September 30,

June 30,

(In thousands)

2021

2021

2020

2020

2020

Core Banking Segment:

Compensation

$

5,039

$

4,895

$

4,127

$

4,250

$

4,219

Occupancy

1,473

1,387

1,392

1,512

1,239

Advertising

213

248

177

225

195

Other

2,639

2,461

2,416

1,933

1,980

Total Noninterest Expense

$

9,364

$

8,991

$

8,112

$

7,920

$

7,633

SBA Lending Segment (Q2):

Compensation

$

1,697

$

1,929

$

2,280

$

1,939

$

1,314

Occupancy

101

129

93

116

118

Advertising

3

8

10

6

-

Other

405

383

363

484

210

Total Noninterest Expense

$

2,206

$

2,449

$

2,746

$

2,545

$

1,642

Mortgage Banking Segment:

Compensation

$

14,594

$

22,657

$

27,455

$

27,092

$

21,363

Occupancy

1,012

998

1,100

1,207

855

Advertising

1,133

1,796

2,124

2,011

1,666

Other

2,310

2,393

2,865

3,677

1,850

Total Noninterest Expense

$

19,049

$

27,844

$

33,544

$

33,987

$

25,734

Three Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

Mortgage Banking Noninterest Expense Fixed vs. Variable

2021

2021

2020

2020

2020

(In thousands)

Noninterest Expense - Fixed Expenses

$

9,764

$

11,713

$

13,296

$

11,838

$

8,394

Noninterest Expense - Variable Expenses (9)

9,285

16,131

20,248

22,149

17,340

Total Noninterest Expense

$

19,049

$

27,844

$

33,544

$

33,987

$

25,734

Three Months Ended

SBA Lending (Q2) Data

June 30,

March 31,

December 31,

September 30,

June 30,

(In thousands, except percentage data)

2021

2021

2020

2020

2020

Final funded loans guaranteed portion sold, SBA

$

17,969

$

29,883

$

14,116

$

25,623

$

16,605

Gross gain on sales of loans, SBA

$

2,551

$

3,858

$

1,698

$

3,094

$

1,771

Weighted average gross gain on sales of loans, SBA

14.20

%

12.91

%

12.03

%

12.08

%

10.67

%

Net gain on sales of loans, SBA (10)

$

2,322

$

3,239

$

1,267

$

2,366

$

1,317

Weighted average net gain on sales of loans, SBA

12.92

%

10.84

%

8.98

%

9.23

%

7.93

%

Three Months Ended

Mortgage Banking Data

June 30,

March 31,

December 31,

September 30,

June 30,

(In thousands, except percentage data)

2021

2021

2020

2020

2020

Mortgage originations for sale in the secondary market

$

739,502

$

1,344,873

$

1,430,628

$

1,526,809

$

1,003,518

Mortgage sales

$

716,425

$

1,476,198

$

1,349,044

$

1,471,501

$

954,568

Gross gain on sales of loans, mortgage banking

$

11,765

$

27,606

$

47,224

$

53,633

$

31,067

Weighted average gross gain on sales of loans, mortgage banking

1.64

%

1.87

%

3.50

%

3.64

%

3.25

%

Mortgage banking income (11)

$

14,351

$

33,233

$

43,242

$

52,426

$

43,857

(9) Variable expenses include incentive compensation and advertising expenses.

(10) Net of commissions, referral fees, SBA repair fees and discounts on unguaranteed portions held-for-investment, and inclusive of gains on servicing assets.

(11) Net of lender credits and other investor expenses, and inclusive of servicing income, loan fees, gains on mortgage servicing rights, fair value adjustments and gains (losses) on derivative instruments.


SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):

Three Months Ended

Summarized Consolidated Average Balance Sheets

June 30,

March 31,

December 31,

September 30,

June 30,

(In thousands)

2021

2021

2020

2020

2020

Interest-earning assets

Average balances:

Interest-bearing deposits with banks

$

37,683

$

48,035

$

34,412

$

58,775

$

25,985

Loans, excluding PPP

1,155,958

1,217,398

1,205,278

1,172,547

1,076,376

PPP loans

145,227

164,533

179,316

180,561

114,721

Investment securities - taxable

46,392

42,424

42,462

44,026

43,569

Investment securities - nontaxable

148,280

146,145

146,374

145,042

143,702

FRB and FHLB stock

19,258

19,294

17,992

17,293

16,804

Total interest-earning assets

$

1,552,798

$

1,637,829

$

1,625,834

$

1,618,244

$

1,421,157

Interest income (tax equivalent basis):

Interest-bearing deposits with banks

$

14

$

18

$

18

$

22

$

37

Loans, excluding PPP

13,017

13,033

13,171

12,924

12,164

PPP loans

1,347

2,031

1,085

1,019

671

Investment securities - taxable

447

432

471

483

502

Investment securities - nontaxable

1,496

1,487

1,508

1,507

1,514

FRB and FHLB stock

161

167

108

144

168

Total interest income (tax equivalent basis)

$

16,482

$

17,168

$

16,361

$

16,099

$

15,056

Weighted average yield (tax equivalent basis, annualized):

Interest-bearing deposits with banks

0.15

%

0.15

%

0.21

%

0.15

%

0.57

%

Loans, excluding PPP

4.50

%

4.28

%

4.37

%

4.41

%

4.52

%

PPP loans

3.71

%

4.94

%

2.42

%

2.26

%

2.34

%

Investment securities - taxable

3.85

%

4.07

%

4.44

%

4.39

%

4.61

%

Investment securities - nontaxable

4.04

%

4.07

%

4.12

%

4.16

%

4.21

%

FRB and FHLB stock

3.34

%

3.46

%

2.40

%

3.33

%

4.00

%

Total interest-earning assets

4.25

%

4.19

%

4.03

%

3.98

%

4.24

%

Interest-bearing liabilities

Average balances:

Interest-bearing deposits

$

807,342

$

840,556

$

811,016

$

842,363

$

770,402

Fed funds purchased

-

-

-

-

1,978

Federal Home Loan Bank borrowings

272,834

293,819

306,299

292,876

292,168

Federal Reserve PPPLF borrowings

114,453

158,354

173,701

174,835

74,218

Subordinated debt and other borrowings

19,836

19,786

19,803

19,786

19,769

Total interest-bearing liabilities

$

1,214,465

$

1,312,515

$

1,310,819

$

1,329,860

$

1,158,535

Interest expense:

Interest-bearing deposits

$

723

$

771

$

936

$

974

$

1,311

Fed funds purchased

-

-

-

-

2

Federal Home Loan Bank borrowings

780

833

861

853

846

Federal Reserve PPPLF borrowings

98

137

153

154

66

Subordinated debt and other borrowings

320

319

337

356

318

Total interest expense

$

1,921

$

2,060

$

2,287

$

2,337

$

2,543

Weighted average cost (annualized):

Interest-bearing deposits

0.36

%

0.37

%

0.46

%

0.46

%

0.68

%

Repurchase agreements

0.00

%

0.00

%

0.00

%

0.00

%

0.00

%

Fed funds purchased

0.00

%

0.00

%

0.00

%

0.00

%

0.40

%

Federal Home Loan Bank borrowings

1.14

%

1.13

%

1.12

%

1.16

%

1.16

%

Federal Reserve PPPLF borrowings

0.34

%

0.35

%

0.35

%

0.35

%

0.36

%

Subordinated debt and other borrowings

6.45

%

6.45

%

6.81

%

7.20

%

6.43

%

Total interest-bearing liabilities

0.63

%

0.63

%

0.70

%

0.70

%

0.88

%

Interest rate spread (tax equivalent basis, annualized)

3.62

%

3.56

%

3.33

%

3.28

%

3.36

%

Net interest margin (tax equivalent basis, annualized)

3.75

%

3.69

%

3.46

%

3.40

%

3.52

%

Net interest margin, excluding PPP and PPPLF (non-GAAP), (tax equivalent basis, annualized)

3.78

%

3.59

%

3.63

%

3.59

%

3.65

%


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