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First Savings Financial Group, Inc. Reports Financial Results for The Second Fiscal Quarter Ended March 31, 2024

JEFFERSONVILLE, Ind., April 25, 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 $4.9 million, or $0.72 per diluted share, for the quarter ended March 31, 2024 compared to net income of $3.7 million, or $0.54 per diluted share, for the quarter ended March 31, 2023. Excluding nonrecurring items, the Company reported net income of $3.6 million (non-GAAP measure)(1) and net income per diluted share of $0.52 (non-GAAP measure)(1) for the quarter ended March 31, 2024. The core banking segment reported net income of $4.5 million, or $0.66 per diluted share for the quarter ended March 31, 2024. Excluding nonrecurring items, the core banking segment reported net income of $3.6 million, or $0.53 per diluted share for the quarter ended March 31, 2024 (non-GAAP measure)(1).

Commenting on the Company’s performance, Larry W. Myers, President and CEO, stated, “We continue to 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’ve been successful in executing these strategies and we continue to move on the right trajectory, which we believe will deliver increasing financial results and shareholder value.”

(1) Non-GAAP net income and net income per diluted share exclude certain nonrecurring items. A reconciliation to GAAP and discussion of the use of non-GAAP measures is included in the table at the end of this release.

Results of Operations for the Three Months Ended March 31, 2024 and 2023

Net interest income decreased $574,000, or 3.9%, to $14.3 million for the three months ended March 31, 2024 as compared to the same period 2023. The decrease in net interest income was due to a $5.8 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 $199.9 million, from $2.02 billion for 2023 to $2.22 billion for 2024, and an increase in the weighted-average tax-equivalent yield, from 5.01% for 2023 to 5.48% for 2024. The increase in the average balance of interest-earning assets was due primarily to a $293.5 million increase in the average balance of loans, partially offset by a decrease in the average balance of investment securities of $92.2 million. Interest expense increased due to an increase in the average balance of interest-bearing liabilities of $254.8 million, from $1.68 billion for 2023 to $1.93 billion for 2024, and an increase in the average cost of interest-bearing liabilities, from 2.36% for 2023 to 3.25% for 2024. The increase in the average cost of interest-bearing liabilities for 2024 was due primarily to higher rates for borrowings and brokered deposits as a result of increased market interest rates due to competition and higher U.S. Treasury rates, and migration of deposits from lower-yielding transaction and savings accounts to higher-yielding money market accounts and certificates of deposits.

The Company recognized a provision for credit losses for loans of $454,000 and a provision for credit losses for securities of $23,000 for the three months ended March 31, 2024, compared to a provision for loan losses of $372,000 for the same period in 2023. The Company recognized net charge-offs of $110,000 for the three months ended March 31, 2024, of which $42,000 was related to unguaranteed portions of SBA loans, compared to net recoveries of $6,000 in 2023.

Noninterest income decreased $3.8 million for the three months ended March 31, 2024 as compared to the same period in 2023. The decrease was due primarily to a $4.1 million decrease in mortgage banking income due to the cessation of national mortgage banking operations in the quarter ended December 31, 2023.

Noninterest expense decreased $6.2 million for the three months ended March 31, 2024 as compared to the same period in 2023. The decrease was due primarily to decreases in compensation and benefits expense of $2.8 million and other operating expense of $2.4 million. The decrease in compensation and benefits expense was due primarily to a reduction in staffing related to the cessation of national mortgage banking operations in the quarter ended December 31, 2023. The decrease in other operating expense was due primarily to a decrease in loss contingency for SBA-guaranteed loans of $656,000 in 2024 compared to an increase of $490,000 in 2023, and an adjustment to the valuation allowance related to sale of residential mortgage servicing rights of $247,000 in 2024 with no corresponding amounts in 2023.

The Company recognized income tax expense of $866,000 for the three months ended March 31, 2024 compared to $333,000 for the same period in 2023. The effective tax rate for 2024 was 14.9%, which was an increase from the effective tax rate of 8.2% in 2023. The increase was due to higher pre-tax income in 2024 as compared to 2023.

Results of Operations for the Six Months Ended March 31, 2024 and 2023

The Company reported net income of $5.8 million, or $0.85 per diluted share, for the six months ended March 31, 2024 compared to net income of $6.6 million, or $0.95 per diluted share, for the six months ended March 31, 2023. Excluding nonrecurring items, the Company reported net income of $4.5 million (non-GAAP measure)(1) and net income per diluted share of $0.65 (non-GAAP measure)(1) for the six months ended March 31, 2024. The core banking segment reported net income of $8.6 million, or $1.25 per diluted share for the six months ended March 31, 2024. Excluding nonrecurring items, the core banking segment reported net income of $7.7 million, or $1.12 per diluted share for the six months ended March 31, 2024 (non-GAAP measure)(1).

Net interest income decreased $2.7 million, or 8.7%, to $28.5 million for the six months ended March 31, 2024 as compared to the same period 2023. The decrease in net interest income was due to a $13.1 million increase in interest expense, partially offset by a $10.4 million increase in interest income. Interest income increased due to an increase in the average balance of interest-earning assets of $195.3 million, from $2.00 billion for 2023 to $2.20 billion for 2024, and an increase in the weighted-average tax-equivalent yield, from 4.94% for 2023 to 5.43% for 2024. The increase in the average balance of interest-earning assets was due primarily to a $284.0 million increase in the average balance of loans, partially offset by a decrease in the average balance of investment securities of $91.0 million. Interest expense increased due to an increase in the average balance of interest-bearing liabilities of $260.5 million, from $1.64 billion for 2023 to $1.90 billion for 2024, and an increase in the average cost of interest-bearing liabilities, from 2.08% for 2023 to 3.17% for 2024. The increase in the average cost of interest-bearing liabilities for 2024 was due primarily to higher rates for borrowings and brokered deposits as a result of increased market interest rates due to competition and higher U.S. Treasury rates, and migration of deposits from lower-yielding transaction and savings accounts to higher-yielding money market accounts and certificates of deposits.

The Company recognized a provision for credit losses for loans of $866,000 and a provision for credit losses for securities of $23,000 for the six months ended March 31, 2024, compared to a provision for loan losses of $1.4 million for the same period in 2023. Nonperforming loans, which consist of nonaccrual loans and loans over 90 days past due and still accruing interest, increased $1.7 million from $13.9 million at September 30, 2023 to $15.6 million at March 31, 2024. The Company recognized net charge-offs of $119,000 for the six months ended March 31, 2024, of which $22,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $258,000 in 2023, of which $238,000 was related to unguaranteed portions of SBA loans.

Noninterest income decreased $6.2 million for the six months ended March 31, 2024 as compared to the same period in 2023. The decrease was due primarily to a $6.5 million decrease in mortgage banking income due to the cessation of national mortgage banking operations in the quarter ended December 31, 2023.

Noninterest expense decreased $7.7 million for the six months ended March 31, 2024 as compared to the same period in 2023. The decrease was due primarily to decreases in compensation and benefits expense of $3.8 million and other operating expense of $3.4 million. The decrease in compensation and benefits expense was due primarily to a reduction in staffing related to the cessation of national mortgage banking operations in the quarter ended December 31, 2023. The decrease in other operating expense was due primarily to a decrease in loss contingency for SBA-guaranteed loans of $721,000 in 2024 compared to an increase of $490,000 in 2023, and a decrease in loss contingency for restitution to mortgage borrowers of $17,000 in 2024 compared to an increase of $609,000 in 2023.

The Company recognized income tax expense of $390,000 for the six months ended March 31, 2024 compared to tax expense of $416,000 for the same period in 2023. The effective tax rate for 2024 was 6.3%, which was an increase from the effective tax rate of 5.9% in 2023.

Comparison of Financial Condition at March 31, 2024 and September 30, 2023

Total assets increased $76.1 million, from $2.29 billion at September 30, 2023 to $2.36 billion at March 31, 2024. Net loans held for investment increased $112.2 million during the six months ended March 31, 2024 due primarily to growth in residential construction and mortgage loans. Residential mortgage loan servicing rights decreased $59.8 million during the six months ended March 31, 2024, due to the sale of the entire residential mortgage loan servicing rights portfolio during the period.

Total liabilities increased $62.1 million due primarily to increases in total deposits of $105.7 million, partially offset by a decrease in FHLB borrowings of $48.2 million. As of March 31, 2024, deposits exceeding the FDIC insurance limit of $250,000 per insured account were 27.1% of total deposits and 13.1% of total deposits when excluding public funds insured by the Indiana Public Deposit Insurance Fund.

Common stockholders’ equity increased $14.1 million, from $151.0 million at September 30, 2023 to $165.1 million at March 31, 2024, due primarily to a $12.4 million decrease in accumulated other comprehensive loss and an increase in retained net income of $1.3 million. The decrease in accumulated other comprehensive loss was due primarily to decreasing long term market interest rates during the six months ended March 31, 2024, which resulted in an increase in the fair value of securities available for sale. At March 31, 2024 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 Six Months Ended  
OPERATING DATA:March 31, March 31,  
(In thousands, except share and per share data) 2024   2023   2024   2023   
          
Total interest income$30,016  $24,811  $58,671  $48,294   
Total interest expense 15,678   9,899   30,220   17,121   
          
Net interest income 14,338   14,912   28,451   31,173   
          
Provision for credit losses - loans 454   372   866   1,356   
Provision for credit losses - securities 23   -   23   -   
          
Net interest income after provision for credit losses 13,861   14,540   27,562   29,817   
          
Total noninterest income 3,710   7,516   6,492   12,704   
Total noninterest expense 11,778   17,999   27,817   35,510   
          
Income before income taxes 5,793   4,057   6,237   7,011   
Income tax expense 866   333   390   416   
          
Net income$4,927  $3,724  $5,847  $6,595   
          
Net income per share, basic$0.72  $0.54  $0.86  $0.96   
Weighted average shares outstanding, basic 6,832,130   6,842,897   6,828,017   6,879,805   
          
Net income per share, diluted$0.72  $0.54  $0.85  $0.95   
Weighted average shares outstanding, diluted 6,859,611   6,881,496   6,849,928   6,926,277   
          
          
Performance ratios (annualized)         
Return on average assets 0.92%  0.68%  0.58%  0.61%  
Return on average equity 13.06%  9.15%  8.48%  8.36%  
Return on average common stockholders' equity 13.06%  9.15%  8.48%  8.36%  
Net interest margin (tax equivalent basis) 2.66%  3.06%  2.68%  3.23%  
Efficiency ratio 65.26%  80.25%  79.61%  80.93%  
          
          
     QTD   FYTD
FINANCIAL CONDITION DATA:March 31, December 31, Increase September 30, Increase
(In thousands, except per share data) 2024   2023  (Decrease)  2023  (Decrease)
          
Total assets$2,364,983  $2,308,092  $56,891  $2,288,854  $76,129 
Cash and cash equivalents 62,969   33,366   29,603   30,845   32,124 
Investment securities 240,142   246,801   (6,659)  229,039   11,103 
Loans held for sale 19,108   22,866   (3,758)  45,855   (26,747)
Gross loans 1,901,850   1,860,742   41,108   1,787,143   114,707 
Allowance for credit losses (1) 19,392   18,789   603   16,900   2,492 
Interest earning assets 2,214,039   2,152,941   61,098   2,083,397   130,642 
Goodwill 9,848   9,848   -   9,848   - 
Core deposit intangibles 479   520   (41)  561   (82)
Loan servicing rights 3,028   3,711   (683)  62,819   (59,791)
Noninterest-bearing deposits 196,239   202,769   (6,530)  242,237   (45,998)
Interest-bearing deposits (customer) 1,043,032   978,182   64,850   1,001,238   41,794 
Interest-bearing deposits (brokered) 548,175   502,895   45,280   438,319   109,856 
Federal Home Loan Bank borrowings 315,000   356,699   (41,699)  363,183   (48,183)
Subordinated debt and other borrowings 48,523   48,484   39   48,444   79 
Total liabilities 2,199,927   2,143,569   56,358   2,137,873   62,054 
Accumulated other comprehensive loss (17,144)  (13,606)  (3,538)  (29,587)  12,443 
Stockholders' equity 165,056   164,523   533   150,981   14,075 
          
Book value per share$23.98  $23.90   0.08  $21.99  $1.99 
Tangible book value per share - Non-GAAP (2) 22.48   22.40   0.08   20.47   2.01 
          
Non-performing assets:         
Nonaccrual loans - SBA guaranteed$5,053  $5,066  $(13) $5,091  $(38)
Nonaccrual loans 10,585   10,442   143   8,857   1,728 
Total nonaccrual loans$15,638  $15,508  $130  $13,948  $1,690 
Accruing loans past due 90 days -   -   -   -   - 
Total non-performing loans 15,638   15,508   130   13,948   1,690 
Foreclosed real estate 444   444   -   474   (30)
Troubled debt restructurings classified as performing loans -   -   -   1,266   (1,266)
Total non-performing assets$16,082  $15,952  $130  $15,688  $394 
          
Asset quality ratios:         
Allowance for credit losses as a percent of total gross loans 1.02%  1.01%  0.01%  0.95%  0.07%
Allowance for credit losses as a percent of nonperforming loans 124.01%  121.16%  2.85%  121.16%  2.84%
Nonperforming loans as a percent of total gross loans 0.82%  0.83%  (0.01%)  0.78%  0.04%
Nonperforming assets as a percent of total assets 0.68%  0.69%  (0.01%)  0.69%  (0.01%)
          
(1) The Company adopted ASU 2016-13 Topic 326 on October 1, 2023. Allowance was determined using expected loss methodology (CECL) as of March 31, 2024 and December 31, 2024. Allowance was determined using the previous incurred loss methodology as of September 30, 2023.
          
(2) See reconciliation of GAAP and non-GAAP financial measures for additional information relating to calculation of these figures.
          
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.  
          
 Three Months Ended Fiscal Year Ended  
Net IncomeMarch 31, March 31,  
(In thousands) 2024   2023   2024   2023   
          
Net income attributable to the Company (non-GAAP)$3,561  $3,724  $4,481  $6,595   
Plus: Decrease in loss contingency for SBA-guaranteed loans, net of tax effect 492   -   492   -   
Plus: Adjustment to MSR valuation allowance related to sale, net of tax effect 583   -   583   -   
Plus: Gain on sale of premises, net of tax effect 90   -   90   -   
Plus: Adjustment to previous data processing contract termination accrual, net of tax effect 117   -   117   -   
Plus: Distribution from equity investment, net of tax 85   -   85   -   
Net income attributable to the Company (GAAP)$4,927  $3,724  $5,847  $6,595   
          
          
 Three Months Ended Fiscal Year Ended  
Net Income per Share, DilutedMarch 31, March 31,  
  2024   2023   2024   2023   
          
Net income per share, diluted (non-GAAP)$0.52  $0.54  $0.65  $0.95   
Plus: Decrease in loss contingency for SBA-guaranteed loans 0.07   -   0.07   -   
Plus: Adjustment to MSR valuation allowance related to sale 0.08   -   0.08   -   
Plus: Gain on sale of premises 0.01   -   0.01   -   
Plus: Adjustment to previous data processing contract termination accrual 0.02   -   0.02   -   
Plus: Distribution from equity investment 0.02   -   0.02   -   
Net income per share, diluted (GAAP)$0.72  $0.54  $0.85  $0.95   
          
          
 Three Months Ended Fiscal Year Ended  
Efficiency RatioMarch 31, March 31,  
(In thousands) 2024   2023   2024   2023   
          
Net interest income (GAAP)$14,338  $14,912  $28,451  $31,173   
          
Noninterest income (GAAP) 3,710   7,516   6,492   12,704   
          
Noninterest expense (GAAP) 11,778   17,999   27,817   35,510   
          
Efficiency ratio (GAAP) 65.26%  80.25%  79.61%  80.93%  
          
Noninterest income (GAAP) 3,710   7,516   6,492   12,704   
Less: Adjustment to MSR valuation allowance related to sale (530)  -   (530)  -   
Less: Gain on sale of premises (120)  -   (120)  -   
Less: Distribution from equity investment (113)  -   (113)  -   
Noninterest income (Non-GAAP) 2,947   7,516   5,729   12,704   
          
Noninterest expense (GAAP) 11,778   17,999   27,817   35,510   
Plus: Adjustment to MSR valuation allowance related to sale 247   -   247   -   
Plus: Decrease in loss contingency for SBA-guaranteed loans 656   -   656   -   
Plus: Adjustment to previous data processing contract termination accrual 156   -   156   -   
Noninterest expense (non-GAAP)$12,837  $17,999  $28,876  $35,510   
          
Efficiency ratio (excluding nonrecurring items) (non-GAAP) 74.27%  80.25%  84.48%  80.93%  
          
          
     QTD   FYTD
Tangible Book Value Per ShareMarch 31, December 31, Increase September 30, Increase
(In thousands, except share and per share data) 2024   2023  (Decrease)  2023  (Decrease)
          
Stockholders' equity, net of noncontrolling interests (GAAP)$165,056  $164,523  $533  $150,981  $14,075 
Less: goodwill and core deposit intangibles (10,327)  (10,368)  41   (10,409)  82 
Tangible equity (non-GAAP)$154,729  $154,155  $574  $140,572   14,157 
          
Outstanding common shares 6,883,160   6,883,160  $-   6,867,121   16,039 
          
Tangible book value per share (non-GAAP)$22.48  $22.40  $0.08  $20.47  $2.01 
          
Book value per share (GAAP)$23.98  $23.90  $0.08  $21.99  $1.99 
          
          
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED):As of
Summarized Consolidated Balance SheetsMarch 31, December 31, September 30, June 30, March 31,
(In thousands, except per share data) 2024   2023   2023   2023   2023 
          
Total cash and cash equivalents$62,969  $33,366  $30,845  $42,475  $41,810 
Total investment securities 240,142   246,801   229,039   249,788   336,317 
Total loans held for sale 19,108   22,866   45,855   63,142   48,783 
Total loans, net of allowance for credit losses 1,882,458   1,841,953   1,770,243   1,691,289   1,598,440 
Loan servicing rights 3,028   3,711   62,819   64,139   65,045 
Total assets 2,364,983   2,308,092   2,288,854   2,260,421   2,239,606 
          
Customer deposits$1,239,271  $1,180,951  $1,243,475  $1,245,534  $1,206,154 
Brokered deposits 548,175   502,895   438,319   414,231   336,728 
Total deposits 1,787,446   1,683,846   1,681,794   1,659,765   1,542,882 
Federal Home Loan Bank borrowings 315,000   356,699   363,183   345,000   437,795 
          
Common stock and additional paid-in capital$27,475  $27,397  $27,064  $27,518  $27,443 
Retained earnings - substantially restricted 167,648   163,753   166,306   168,015   166,652 
Accumulated other comprehensive income (loss) (17,144)  (13,606)  (29,587)  (17,565)  (14,199)
Unearned stock compensation (1,096)  (1,194)  (1,015)  (1,113)  (1,211)
Less treasury stock, at cost (11,827)  (11,827)  (11,787)  (11,787)  (11,787)
Total stockholders' equity 165,056   164,523   150,981   165,068   166,898 
          
Outstanding common shares 6,883,160   6,883,160   6,867,121   6,865,921   6,865,921 
          
          
 Three Months Ended
Summarized Consolidated Statements of IncomeMarch 31, December 31, September 30, June 30, March 31,
(In thousands, except per share data) 2024   2023   2023   2023   2023 
          
Total interest income$30,016  $28,655  $28,137  $26,798  $24,811 
Total interest expense 15,678   14,542   12,601   11,933   9,899 
Net interest income 14,338   14,113   15,536   14,865   14,912 
Provision for credit losses - loans 454   412   815   441   372 
Provision for credit losses - securities 23   -   -   -   - 
Net interest income after provision for credit losses 13,861   13,701   14,721   14,424   14,540 
          
Total noninterest income 3,710   2,782   5,442   7,196   7,516 
Total noninterest expense 11,778   16,039   21,647   18,965   17,999 
Income (loss) before income taxes 5,793   444   (1,484)  2,655   4,057 
Income tax expense (benefit) 866   (476)  (737)  331   333 
Net income (loss)$4,927  $920  $(747) $2,324  $3,724 
          
          
Net income (loss) per share, basic$0.72  $0.13  $(0.11) $0.34  $0.54 
Weighted average shares outstanding, basic 6,832,130   6,823,948   6,817,365   6,816,608   6,842,897 
          
Net income (loss) per share, diluted$0.72  $0.13  $(0.11) $0.34  $0.54 
Weighted average shares outstanding, diluted 6,859,611   6,839,704   6,837,919   6,819,748   6,881,496 
          
          
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):Three Months Ended
Noninterest Income DetailMarch 31, December 31, September 30, June 30, March 31,
(In thousands) 2024   2023   2023   2023   2023 
          
Service charges on deposit accounts$387  $473  $479  $509  $471 
ATM and interchange fees 585   449   816   615   586 
Net loss on sales of available for sale securities -   -   (11)  (540)  - 
Net unrealized gain on equity securities 6   38   11   11   21 
Net gain on sales of loans, Small Business Administration 951   834   538   497   907 
Mortgage banking income 53   89   3,018   4,668   4,149 
Increase in cash surrender value of life insurance 333   329   311   279   266 
Commission income 220   222   182   247   189 
Real estate lease income 115   115   116   119   117 
Net gain on premises and equipment 120   -   20   -   29 
Gain from repurchase of subordinated debt -   -   -   660   - 
Other income 940   233   (38)  131   781 
Total noninterest income$3,710  $2,782  $5,442  $7,196  $7,516 
          
          
 Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
Consolidated Performance Ratios (Annualized) 2024   2023   2023   2023   2023 
          
Return on average assets 0.92%  0.16%  (0.13%)  0.41%  0.68%
Return on average equity 13.06%  2.42%  (1.82%)  5.60%  9.15%
Return on average common stockholders' equity 13.06%  2.42%  (1.82%)  5.60%  9.15%
Net interest margin (tax equivalent basis) 2.66%  2.69%  3.03%  2.94%  3.06%
Efficiency ratio 65.26%  94.93%  103.19%  85.97%  80.25%
          
          
 As of or for the Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
Consolidated Asset Quality Ratios 2024   2023   2023   2023   2023 
          
Nonperforming loans as a percentage of total loans 0.82%  0.83%  0.78%  0.69%  0.77%
Nonperforming assets as a percentage of total assets 0.68%  0.69%  0.69%  0.62%  0.67%
Allowance for credit losses as a percentage of total loans 1.02%  1.01%  0.95%  0.99%  1.02%
Allowance for credit losses as a percentage of nonperforming loans 124.01%  121.16%  121.16%  143.83%  132.20%
Net charge-offs to average outstanding loans 0.01%  0.00%  0.04%  0.00%  -0.00%
          
          
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):Three Months Ended
Segmented Statements of Income InformationMarch 31, December 31, September 30, June 30, March 31,
(In thousands) 2024   2023   2023   2023   2023 
          
Core Banking Segment:         
Net interest income$13,469  $13,113  $14,167  $13,407  $13,632 
Provision (credit) for credit losses - loans 650   (49)  1,266   880   422 
Provision for credit losses - securities 23   -   -   -   - 
Net interest income after provision for credit losses 12,796   13,162   12,901   12,527   13,210 
Noninterest income 2,537   1,679   2,136   1,965   1,733 
Noninterest expense 10,093   10,252   13,559   11,010   10,651 
Income before income taxes 5,240   4,589   1,478   3,482   4,292 
Income tax expense 729   541   3   561   401 
Net income$4,511  $4,048  $1,475  $2,921  $3,891 
          
SBA Lending Segment (Q2 Business Capital, LLC):         
Net interest income$869  $1,003  $990  $1,098  $1,093 
Provision (credit) for credit losses - loans (196)  461   (451)  (439)  (50)
Provision for credit losses - securities -   -   -   -   - 
Net interest income after provision for credit losses 1,065   542   1,441   1,537   1,143 
Noninterest income 1,173   1,003   367   580   1,636 
Noninterest expense 1,685   2,146   2,907   2,107   2,662 
Income (loss) before income taxes 553   (601)  (1,099)  10   117 
Income tax expense (benefit) 137   (131)  (273)  (21)  20 
Net income (loss)$416  $(470) $(826) $31  $97 
          
Mortgage Banking Segment: (3)         
Net interest income (loss)$-   (3) $379  $360  $187 
Provision for credit losses - loans -   -   -   -   - 
Provision for credit losses - securities -   -   -   -   - 
Net interest income (loss) after provision for credit losses -   (3)  379   360   187 
Noninterest income -   100   2,939   4,651   4,147 
Noninterest expense -   3,641   5,181   5,848   4,686 
Loss before income taxes -   (3,544)  (1,863)  (837)  (352)
Income tax benefit -   (886)  (467)  (209)  (88)
Net loss$-  $(2,658) $(1,396) $(628) $(264)
          
(3) National mortgage banking operations were ceased in the quarter ended December 31, 2023 and subsequent immaterial mortgage lending activity is reported within the Core Banking segment.
          
          
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):Three Months Ended
Segmented Statements of Income InformationMarch 31, December 31, September 30, June 30, March 31,
(In thousands, except percentage data) 2024   2023   2023   2023   2023 
          
Net Income (Loss) Per Share by Segment         
Net income per share, basic - Core Banking$0.66  $0.59  $0.22  $0.43  $0.57 
Net income (loss) per share, basic - SBA Lending (Q2 Business Capital, LLC) 0.06   (0.07)  (0.12)  -   0.01 
Net income (loss) per share, basic - Mortgage Banking 0.00   (0.40)  (0.21)  (0.09)  (0.04)
Total net income (loss) per share, basic$0.72  $0.12  $(0.11) $0.34  $0.54 
          
Net Income (Loss) Per Diluted Share by Segment         
Net income per share, diluted - Core Banking$0.66  $0.59  $0.22  $0.43  $0.57 
Net income (loss) per share, diluted - SBA Lending (Q2 Business Capital, LLC) 0.06   (0.07)  (0.12)  -   0.01 
Net loss per share, diluted - Mortgage Banking 0.00   (0.40)  (0.21)  (0.09)  (0.04)
Total net income (loss) per share, diluted$0.72  $0.12  $(0.11) $0.34  $0.54 
          
Return on Average Assets by Segment (annualized) (4)         
Core Banking 0.80%  0.73%  0.28%  0.61%  0.85%
SBA Lending 1.81%  (2.11%)  (3.81%)  0.15%  0.42%
          
Efficiency Ratio by Segment (annualized) (4)         
Core Banking 63.06%  69.31%  83.17%  71.62%  69.32%
SBA Lending 82.52%  106.98%  214.22%  125.57%  97.54%
          
          
 Three Months Ended
Noninterest Expense Detail by SegmentMarch 31, December 31, September 30, June 30, March 31,
(In thousands) 2024   2023   2023   2023   2023 
          
Core Banking Segment:         
Compensation$5,656  $5,691  $6,528  $4,978  $5,578 
Occupancy 1,615   1,481   1,418   1,738   1,401 
Advertising 205   189   404   334   298 
Other 2,617   2,891   5,209   3,960   3,374 
Total Noninterest Expense$10,093  $10,252  $13,559  $11,010  $10,651 
          
SBA Lending Segment (Q2 Business Capital, LLC):         
Compensation$1,933  $1,826  $1,533  $1,803  $1,800 
Occupancy 58   91   68   70   70 
Advertising 7   10   10   11   8 
Other (313)  219   1,296   223   784 
Total Noninterest Expense$1,685  $2,146  $2,907  $2,107  $2,662 
          
Mortgage Banking Segment: (3) (5)         
Compensation$-  $2,146  $3,647  $4,357  $3,029 
Occupancy -   469   395   469   449 
Advertising -   119   129   191   213 
Other -   907   1,010   831   995 
Total Noninterest Expense$-  $3,641  $5,181  $5,848  $4,686 
          
(4) Ratios for Mortgage Banking Segment are not considered meaningful due to cessation of national mortgage banking operations in the quarter ended December 31, 2023.
          
(5) 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 
          
          
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): 
 Three Months Ended
SBA Lending (Q2 Business Capital, LLC) DataMarch 31, December 31, September 30, June 30, March 31,
(In thousands, except percentage data) 2024   2023   2023   2023   2023 
          
Final funded loans guaranteed portion sold, SBA$15,144  $14,098  $8,431  $7,721  $15,337 
          
Gross gain on sales of loans, SBA$1,443  $1,303  $809  $780  $1,293 
Weighted average gross gain on sales of loans, SBA 9.53%  9.24%  9.60%  10.10%  8.43%
          
Net gain on sales of loans, SBA (6)$951  $834  $538  $497  $907 
Weighted average net gain on sales of loans, SBA 6.28%  5.92%  6.38%  6.44%  5.91%
          
(6) Inclusive of gains on servicing assets and net of commissions, referral fees, SBA repair fees and discounts on unguaranteed portions held-for-investment.
          
          
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):Three Months Ended
Summarized Consolidated Average Balance SheetsMarch 31, December 31, September 30, June 30, March 31,
(In thousands) 2024   2023   2023   2023   2023 
Interest-earning assets         
Average balances:         
Interest-bearing deposits with banks$24,587  $20,350  $21,631  $20,661  $27,649 
Loans 1,914,609   1,857,654   1,796,749   1,719,733   1,621,147 
Investment securities - taxable 102,699   103,728   105,393   109,319   110,373 
Investment securities - nontaxable 157,960   159,907   160,829   234,118   242,530 
FRB and FHLB stock 24,986   24,968   24,939   24,509   23,289 
Total interest-earning assets$2,224,841  $2,166,607  $2,109,541  $2,108,340  $2,024,988 
          
Interest income (tax equivalent basis):         
Interest-bearing deposits with banks$261  $249  $266  $267  $192 
Loans 27,133   26,155   25,214   23,279   21,339 
Investment securities - taxable 923   942   969   984   957 
Investment securities - nontaxable 1,662   1,687   1,695   2,456   2,533 
FRB and FHLB stock 499   74   428   423   364 
Total interest income (tax equivalent basis)$30,478  $29,107  $28,572  $27,409  $25,385 
          
Weighted average yield (tax equivalent basis, annualized):         
Interest-bearing deposits with banks 4.25%  4.89%  4.92%  5.17%  2.78%
Loans 5.67%  5.63%  5.61%  5.41%  5.27%
Investment securities - taxable 3.59%  3.63%  3.68%  3.60%  3.47%
Investment securities - nontaxable 4.21%  4.22%  4.22%  4.20%  4.18%
FRB and FHLB stock 7.99%  1.19%  6.86%  6.90%  6.25%
Total interest-earning assets 5.48%  5.37%  5.42%  5.20%  5.01%
          
Interest-bearing liabilities         
Interest-bearing deposits$1,549,012  $1,389,384  $1,385,994  $1,278,776  $1,251,080 
Fed funds purchased -   -   76   11   - 
Federal Home Loan Bank borrowings 333,275   440,786   353,890   434,182   374,593 
Subordinated debt and other borrowings 48,497   48,458   48,406   49,339   50,293 
Total interest-bearing liabilities$1,930,784  $1,878,628  $1,788,366  $1,762,308  $1,675,966 
          
Interest expense:         
Interest-bearing deposits$12,546  $9,989  $9,457  $7,791  $6,265 
Fed funds purchased -   -   1   -   - 
Federal Home Loan Bank borrowings 2,298   3,769   2,459   3,446   2,915 
Subordinated debt and other borrowings 833   784   684   696   719 
Total interest expense$15,677  $14,542  $12,601  $11,933  $9,899 
          
Weighted average cost (annualized):         
Interest-bearing deposits 3.24%  2.88%  2.73%  2.44%  2.00%
Fed funds purchased 0.00%  0.00%  5.26%  0.00%  0.00%
Federal Home Loan Bank borrowings 2.76%  3.42%  2.78%  3.17%  3.11%
Subordinated debt and other borrowings 6.87%  6.47%  5.65%  5.64%  5.72%
Total interest-bearing liabilities 3.25%  3.10%  2.82%  2.71%  2.36%
          
Net interest income (taxable equivalent basis)$14,801  $14,565  $15,971  $15,476  $15,486 
Less: taxable equivalent adjustment (463)  (452)  (435)  (611)  (574)
Net interest income$14,338  $14,113  $15,536  $14,865  $14,912 
          
Interest rate spread (tax equivalent basis, annualized) 2.23%  2.27%  2.60%  2.49%  2.65%
          
Net interest margin (tax equivalent basis, annualized) 2.66%  2.69%  3.03%  2.94%  3.06%
          


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