First Savings Financial Group, Inc. Reports Financial Results For the Fiscal Year Ended September 30, 2020

JEFFERSONVILLE, Ind., Oct. 30, 2020 (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 $33.4 million, or $14.04 per diluted share, for the year ended September 30, 2020 compared to net income of $16.2 million, or $6.82 per diluted share, for the year ended September 30, 2019, resulting in an increase of 106% on a per share basis.

Commenting on the Companys performance, Larry W. Myers, President and CEO stated: We are very pleased with another outstanding quarter and fiscal year, including record earnings and asset growth for the year, resiliency of asset quality during a challenging environment, stability of the net interest margin, significant increase in stockholders equity, and substantial increase in shareholder value. The core bank and ancillary business lines continue to perform exceptionally well and generate meaningful returns for our shareholders. I continue to have confidence that the Company is well-positioned to thrive during what is otherwise a very challenging banking environment and I continue to be very proud of our Company and staff.

COVID-19 Response

The COVID-19 pandemic has placed, and continues to place, significant health, economic and other major hardships throughout the communities we serve, the United States and the entire world. The Company has implemented a number of procedures in response to the pandemic to support the safety and well-being of our customers, employees, and communities:

• Following the guidelines of the Center for Disease Control and local governments, we have updated our branch operating procedures. While our branches have remained open, the lobbies were temporarily closed and transactions were being conducted through drive-up windows or by appointment. Our branches have returned to pre-pandemic service levels, but have implemented safety precautions, including use of personal protective equipment (PPE) (where and when prudent), enhanced daily cleaning and instructions to maintain appropriate social distancing. We also actively encourage customers to utilize PPE and alternative banking channels, such as our online and mobile banking platforms. Our customer service and retail departments remain fully staffed and available to assist customers remotely.
  

• Our corporate and operations offices have predominately returned to pre-pandemic schedules and processes, but we have enhanced daily cleaning and instructed employees to maintain appropriate social distancing. Our employees maintain the ability to work remotely, both safely and efficiently using technology, in the event that is required or necessary.
  

• We continue to assist customers experiencing COVID-19 related hardships by approving payment extensions or loan forbearance agreements, and by waiving or refunding certain fees. During the initial onset of COVID-19, we proactively contacted all commercial borrowers and offered uniform payment extensions or loan forbearance agreements, while requests from consumer borrowers were reviewed and approved a on case-by-case basis. Beginning on March 18, 2020 and through October 23, 2020, we had approved 199 payment extensions or loan forbearance agreements on balances of approximately $86.2 million, of which $77.7 million related to commercial real estate loans, $7.0 million related to residential real estate and consumer loans, and $1.5 million related to Small Business Administration (SBA) lending relationships. These payment extensions or loan forbearance agreements were generally for periods of three months and included deferment of both principal and interest. As of October 23, 2020, we had 14 loans with payment extensions or loan forbearance agreements on balances of approximately $10.9 million that were still in effect and set to expire between November 25, 2020 and April 4, 2021. Included in those 14 agreements in effect as of October 23, 2020, 10 were for second deferral periods ranging from three to six months. Of the 10 agreements in the second deferral period, 6 were commercial business and commercial real estate loans, and 4 were residential mortgage loans. Following the expiration of the initial payment extensions or loan forbearance agreements, we will entertain requests for extended periods on a case-by-case basis, which will generally include deferment of only the principal portion of payments (but both principal and interest for hotel loans) for a period of up to three months.
  

• As a result of the passage of the CARES Act, the SBA will make 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 SBA loans of new clients originated between March 27, 2020 and September 27, 2020. The aforementioned $1.5 million of SBA lending relationships that were provided payment extensions or forbearance by the Company will also receive the six months of SBA-made payments once the extension or forbearance periods have expired. In addition, the majority of the Companys SBA clients applied for participation in the SBAs Paycheck Protection Program (PPP).
  

• We are actively participating in the PPP and had $180.6 million of outstanding PPP loan balances as of September 30, 2020. At September 30, 2020, we had approximately $3.2 million of net deferred loan fees related to PPP loans that will be recognized over the life of the loans and as borrowers are granted forgiveness.
  

• The leisure and hospitality industries carry a higher degree of credit risk due to the COVID-19 pandemic. Based on our evaluation of the allowance for loan losses at September 30, 2020, management believes sufficient reserves are in place to cover estimated losses at that date. However, as the pandemic continues, additional losses could be recognized.
  

• The Company had outstanding loan balances to restaurants totaling $167.3 million as of September 30, 2020, of which $75.4 million is fully guaranteed by the SBA, including $74.5 million of PPP loans, and of which $82.5 million represents commercial real estate loans where the collateral property is leased to national-brand, investment-grade tenants.
  

• The Company had outstanding loan balances to hotels totaling $17.4 million as of September 30, 2020, of which $3.7 million is fully guaranteed by the SBA, including $606,000 of PPP loans.

Management continues to closely monitor the pandemic and may take additional action to respond to the pandemics effects on the Companys business as the situation continues to evolve. We cannot determine or estimate the impact on our business at this time because the length and severity of the economic downturn is not yet known. We are confident that we are well-positioned to withstand any challenges that may be presented, and we are committed to continuing to serve our customers, employees and communities.

Results of Operations for the Fiscal Years Ended September 30, 2020 and 2019

Net interest income increased $9.3 million, or 23.2%, to $49.4 million for the year ended September 30, 2020 as compared to 2019. The increase in net interest income was due to an $8.9 million increase in interest income and a $368,000 decrease in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $290.4 million, from $1.06 billion for 2019 to $1.35 billion for 2020, partially offset by a decrease in the weighted-average tax-equivalent yield, from 4.91% for 2019 to 4.52% for 2020. The decrease in the weighted-average tax-equivalent yield was due primarily to declining market rates for loans and investment securities, which is typical during periods of declining U.S. treasury yields. Interest expense decreased due to a decrease in the average cost of interest-bearing liabilities, from 1.28% for 2019 to 0.96% for 2020, partially offset by an increase in the average balance of interest-bearing liabilities of $252.4 million, from $849.6 million for 2019 to $1.10 billion for 2020. The decrease in the average cost of interest-bearing liabilities for the year ended September 30, 2020 was due primarily to decreasing market interest rates on deposits and FHLB borrowings, as well as the Companys participation in the Federal Reserve Banks PPP Liquidity Facility (PPPLF), which began during the quarter ended June 30, 2020. Additional details are included in the Summarized Consolidated Average Balance Sheets table at the end of this release.

The Company recognized $8.0 million in provision for loan losses for the year ended September 30, 2020, compared to $1.5 million in provision for loan losses recognized in 2019. Nonperforming loans, which consist of nonaccrual loans and loans over 90 days past due and still accruing interest, increased $8.4 million, from $5.2 million at September 30, 2019 to $13.6 million at September 30, 2020, of which $3.7 million was guaranteed by the SBA. The Company recognized net charge-offs of $975,000 for the year ended September 30, 2020, of which $679,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $746,000 for the year ended September 30, 2019, of which $645,000 was related to unguaranteed portions of SBA loans. The increase in the provision for loan losses for 2020 was primarily due to increased nonperforming assets for the year, as well as changes to qualitative factors within the allowance for loan losses calculation related to economic uncertainties surrounding COVID-19.

Noninterest income increased $87.3 million for the year ended September 30, 2020 as compared to 2019. The increase was due primarily to an increase in mortgage banking income of $84.8 million. Additional details regarding the financial performance of the mortgage banking and SBA lending segments are included in the Segmented Income Statement Information table at the end of this release.

Noninterest expense increased $63.4 million for the year ended September 30, 2020 as compared to 2019. The increase was due primarily to increases in compensation and benefits, advertising expense and other operating expenses of $50.0 million, $4.6 million and $4.2 million, respectively. The increase in compensation and benefits expense is attributable to the addition of new employees primarily to support the growth of the Companys mortgage banking and SBA lending activities, routine salary and benefits adjustments, and increased incentive compensation as a result of the Companys performance. The increases in advertising expense and other operating expenses are primarily due to the mortgage banking segment.

The Company recognized income tax expense of $12.7 million for the year ended September 30, 2020, compared to $3.1 million for 2019. The effective tax rate increased from 15.4% for the year ended September 30, 2019 to 27.1% for 2020 primarily due to increases in pre-tax income and nondeductible executive compensation.

Comparison of Results of Operations for the Three Months Ended September 30, 2020 and 2019

The Company reported net income of $15.1 million, or $6.39 per diluted share, for the three months ended September 30, 2020 compared to net income of $5.3 million, or $2.24 per diluted share, for the three months ended September 30, 2019, resulting in an increase of 185% on a per share basis.

Net interest income increased $4.0 million, or 37.4%, to $14.8 million for the quarter ended September 30, 2020 as compared to the same quarter in 2019. The increase in net interest income was due to a $3.3 million increase in interest income and a $732,000 decrease in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $489.8 million, from $1.13 billion for 2019 to $1.62 billion for 2020, partially offset by a decrease in the weighted-average tax-equivalent yield, from 5.00% for 2019 to 4.32% for 2020. Interest expense decreased due to a decrease in the average cost of interest-bearing liabilities, from 1.35% for 2019 to 0.70% for 2020, partially offset by an increase in the average balance of interest-bearing liabilities of $421.2 million, from $908.7 million for 2019 to $1.33 billion for 2020. The decrease in the average cost of interest-bearing liabilities for 2020 was due primarily to decreasing market interest rates on deposits and Federal Home Loan Bank (FHLB) borrowings, as well as the Companys participation in the PPPLF previously discussed.

The Company recognized $2.8 million in provision for loan losses for the quarter ended September 30, 2020, compared to $471,000 for the comparable quarter in 2019. The Company recognized net charge-offs of $385,000 for the quarter ended September 30, 2020, of which $326,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $47,000 for the same quarter in 2019. The increase in the provision for loan losses for 2020 was primarily due to increased nonperforming assets as well as changes to qualitative factors within the allowance for loan losses calculation related to economic uncertainties surrounding COVID-19.

Noninterest income increased $37.3 million for the quarter ended September 30, 2020 as compared to the same quarter in 2019. The increase was due primarily to an increase in mortgage banking income of $35.6 million. The increase in mortgage banking income was due to production from the secondary-market residential mortgage lending segment that commenced operations in April 2018. 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 $22.8 million for the quarter ended September 30, 2020 as compared to the same quarter in 2019. The increase was due primarily to an increase in compensation and benefits of $17.6 million. The increase in compensation and benefits expense is attributable to the addition of new employees primarily to support the growth of the Companys mortgage banking and SBA lending activities, routine salary and benefits adjustments, and increased incentive compensation as a result of the Companys performance.

The Company recognized income tax expense of $7.3 million for the quarter ended September 30, 2020, as compared to income tax expense of $1.4 million for 2019. The effective tax rate increased from 19.4% for the quarter ended September 20, 2019 to 31.2% for the quarter ended September 30, 2020 primarily due to increases in pre-tax income and nondeductible executive compensation.

Comparison of Financial Condition at September 30, 2020 and September 30, 2019

Total assets increased $542.0 million, from $1.22 billion at September 30, 2019 to $1.76 billion at September 30, 2020. Net loans increased $279.4 million during the year ended September 30, 2020, due primarily to continued growth in the commercial business, commercial real estate and SBA loan portfolios, as well as $180.6 million in PPP loans outstanding at September 30, 2020. Residential mortgage loans held for sale and SBA loans held for sale also increased by $182.9 million and $6.5 million, respectively, during the year ended September 30, 2020 due to increased production from the mortgage banking and SBA lending segments. Total liabilities increased $505.7 million primarily due to an increase of $213.7 million in total deposits, an increase of $174.8 million in Federal Reserve PPPLF advances and an increase of $88.3 million in FHLB borrowings.

Common stockholders equity increased $36.2 million, from $121.1 million at September 30, 2019 to $157.3 million at September 30, 2020, due primarily to increases in retained net income and net unrealized gains on available for sale securities included in accumulated other comprehensive income of $31.9 million and $3.9 million, respectively. At September 30, 2020 and September 30, 2019, the Bank was considered well-capitalized under applicable regulatory capital guidelines.

First Savings Bank has fifteen offices in the Indiana communities of Clarksville, Jeffersonville, Charlestown, Sellersburg, New Albany, Georgetown, Corydon, Lanesville, Elizabeth, English, Marengo, Salem, Odon and Montgomery. Access to First Savings Bank accounts, including online banking and electronic bill payments, is available anywhere with Internet access through the Bank's website at www.fsbbank.net .

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 and 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								Years Ended
	September 30,								September 30,
OPERATING DATA:		2020				2019				2020				2019
(In thousands, except share and per share data)
Total interest income	$	17,125			$	13,829			$	59,929			$	50,995
Total interest expense		2,337				3,069				10,538				10,906
Net interest income		14,788				10,760				49,391				40,089
Provision for loan losses		2,772				471				7,962				1,463
Net interest income after provision for loan losses		12,016				10,289				41,429				38,626
Total noninterest income		55,664				18,340				131,121				43,854
Total noninterest expense		44,452				21,606				125,808				62,390
Income before income taxes		23,228				7,023				46,742				20,090
Income tax expense		7,257				1,359				12,661				3,095
Net income		15,971				5,664				34,081				16,995
Less: Net income attributable to noncontrolling interests		834				343				727				818
Net income attributable to the Company	$	15,137			$	5,321			$	33,354			$	16,177
Net income per share, basic	$	6.40			$	2.28			$	14.15			$	6.99
Weighted average shares outstanding, basic		2,365,217				2,337,472				2,356,680				2,315,697
Net income per share, diluted	$	6.39			$	2.24			$	14.04			$	6.82
Weighted average shares outstanding, diluted		2,370,694				2,378,221				2,375,954				2,372,084
Performance ratios (annualized)
Return on average assets		3.44	%			1.75	%			2.27	%			1.42	%
Return on average common stockholders' equity		41.08	%			18.12	%			25.46	%			15.00	%
Interest rate spread (tax equivalent basis)		3.62	%			3.65	%			3.56	%			3.63	%
Net interest margin (tax equivalent basis)		3.74	%			3.92	%			3.75	%			3.88	%
Efficiency ratio		63.10	%			74.25	%			69.70	%			74.32	%

	September 30,				September 30,				Increase
FINANCIAL CONDITION DATA:		2020				2019			(Decrease)
(In thousands, except per share data)
Total assets	$	1,764,625			$	1,222,579			$	542,046
Cash and cash equivalents		33,726				41,432				(7,706	)
Investment securities		204,067				179,638				24,429
Loans held for sale		285,525				96,070				189,455
Gross loans (1)		1,107,089				820,698				286,391
Allowance for loan losses		17,026				10,040				6,986
Interest earning assets		1,620,831				1,130,095				490,736
Goodwill		9,848				9,848				-
Core deposit intangibles		1,202				1,416				(214	)
Mortgage servicing rights		21,703				934				20,769
Noninterest-bearing deposits		242,673				173,072				69,601
Interest-bearing deposits (2)		805,403				661,312				144,091
Federal Home Loan Bank borrowings		310,858				222,544				88,314
Federal Reserve PPPLF borrowings		174,834				-				174,834
Total liabilities		1,607,060				1,101,322				505,738
Stockholders' equity, net of noncontrolling interests		157,272				121,053				36,219
Book value per share	$	66.21			$	51.51			$	14.70
Tangible book value per share (3)		61.56				46.71				14.84
Non-performing assets:
Nonaccrual loans - SBA guaranteed	$	3,709			$	450			$	3,259
Nonaccrual loans - unguaranteed		9,906				4,718				5,188
Total nonaccrual loans	$	13,615			$	5,168			$	8,447
Accruing loans past due 90 days		-				12				(12	)
Total non-performing loans		13,615				5,180				8,435
Foreclosed real estate		-				55				(55	)
Troubled debt restructurings classified as performing loans		3,069				7,265				(4,196	)
Total non-performing assets	$	16,684			$	12,500			$	4,184
Asset quality ratios:
Allowance for loan losses as a percent of total gross loans		1.54	%			1.22	%			0.31	%
Allowance for loan losses as a percent of total gross loans, excluding PPP loans (4)		1.84	%			1.22	%			0.62	%
Allowance for loan losses as a percent of nonperforming loans		125.05	%			193.82	%			-68.77	%
Nonperforming loans as a percent of total gross loans		1.23	%			0.63	%			0.60	%
Nonperforming assets as a percent of total assets		0.95	%			1.02	%			(0.08	%)

_______________
(1) Includes $180.6 million of PPP loans at September 30, 2020. There were no such loans at September 30, 2019.

(2) Includes $132.1 million and $99.7 million of brokered certificates of deposit at September 30, 2020 and 2019, 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.

	September 30,				September 30,				Increase
Tangible Book Value Per Share		2020				2019			(Decrease)
(In thousands, except share and per share data)
Stockholders' equity, net of noncontrolling interests (GAAP)	$	157,272			$	121,053			$	36,219
Less: goodwill and core deposit intangibles		(11,050	)			(11,264	)			214
Tangible equity (non-GAAP)	$	146,222			$	109,789			$	36,433
Outstanding common shares		2,375,324				2,350,229				25,095
Tangible book value per share (non-GAAP)	$	61.56			$	46.71			$	14.84
Book value per share (GAAP)	$	66.21			$	51.51			$	14.70

SUMMARIZED FINANCIAL INFORMATION (UNAUDITED):
	As of
Summarized Consolidated Balance Sheets	September 30,			June 30,				March 31,				December 31,			September 30,
(In thousands, except per share data)	2020				2020				2020			2019			2019
Total cash and cash equivalents	$	33,726		$	27,544			$	22,603			$	41,327		$	41,432
Total investment securities		204,067			205,960				186,873				179,991			179,638
Total loans held for sale		285,525			210,077				163,927				110,523			96,070
Total loans, net of allowance for loan losses		1,090,063			1,081,381				877,276				851,700			810,658
PPP loans		180,561			180,536				-				-			-
Mortgage servicing rights		21,703			10,372				4,055				3,254			934
Total assets		1,764,625			1,661,281				1,368,252				1,292,573			1,222,579
Total deposits	$	1,048,076		$	982,870			$	937,306			$	885,598		$	834,384
Federal Home Loan Bank borrowings		310,858			298,622				270,000				239,566			222,544
Federal Reserve PPPLF borrowings		174,834			174,834				-				-			-
Stockholders' equity, net of noncontrolling interests	$	157,272		$	142,362			$	116,659			$	123,810		$	121,053
Noncontrolling interests in subsidiary		293			(214	)			(414	)			368			204
Total equity		157,565			142,148				116,245				124,178			121,257
Outstanding common shares		2,375,324			2,375,324				2,375,324				2,357,369			2,350,229
	Three Months Ended
Summarized Consolidated Statements of Income	September 30,			June 30,				March 31,				December 31,			September 30,
(In thousands, except per share data)	2020				2020				2020			2019			2019
Total interest income	$	17,125		$	15,344			$	13,693			$	13,767		$	13,829
Total interest expense		2,337			2,543				2,783				2,875			3,069
Net interest income		14,788			12,801				10,910				10,892			10,760
Provision for loan losses		2,772			2,980				1,705				505			471
Net interest income after provision for loan losses		12,016			9,821				9,205				10,387			10,289
Total noninterest income		55,664			46,337				10,994				18,126			18,340
Total noninterest expense		44,452			35,009				22,075				24,272			21,606
Income (loss) before income taxes		23,228			21,149				(1,876	)			4,241			7,023
Income tax expense (benefit)		7,257			5,540				(774	)			638			1,359
Net income (loss)		15,971			15,609				(1,102	)			3,603			5,664
Less: net income (loss) attributable to noncontrolling interests		834			204				(475	)			164			343
Net income (loss) attributable to the Company	$	15,137		$	15,405			$	(627	)		$	3,439		$	5,321
Net income (loss) per share, basic	$	6.40		$	6.51			$	(0.27	)		$	1.47		$	2.28
Weighted average shares outstanding, basic		2,365,217			2,365,217				2,355,750				2,340,619			2,337,472
Net income (loss) per share, diluted	$	6.39		$	6.51			$	(0.26	)		$	1.44		$	2.24
Weighted average shares outstanding, diluted		2,370,694			2,366,787				2,379,901				2,382,754			2,378,221

	Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
Consolidated Performance Ratios (Annualized)		2020				2020				2020				2019				2019
Return on average assets		3.44	%			4.02	%			(0.19	%)			1.09	%			1.75	%
Return on average equity		43.46	%			48.75	%			(3.51	%)			11.76	%			19.28	%
Return on average common stockholders' equity		41.08	%			47.91	%			(2.00	%)			11.24	%			18.12	%
Net interest margin (tax equivalent basis)		3.74	%			3.70	%			3.73	%			3.83	%			3.92	%
Efficiency ratio		63.10	%			59.20	%			100.78	%			83.64	%			74.25	%
	As of or for the Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
Consolidated Asset Quality Ratios		2020				2020				2020				2019				2019
Nonperforming loans as a percentage of total loans		1.23	%			1.26	%			1.55	%			0.64	%			0.63	%
Nonperforming assets as a percentage of total assets		0.95	%			1.17	%			1.45	%			1.00	%			1.02	%
Allowance for loan losses as a percentage of total loans		1.54	%			1.34	%			1.32	%			1.22	%			1.22	%
Allowance for loan losses as a percentage of nonperforming loans		125.05	%			106.01	%			84.67	%			191.18	%			193.82	%
Net charge-offs (recoveries) to average outstanding loans		0.03	%			0.00	%			0.06	%			0.00	%			0.01	%
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):
	Three Months Ended
Segmented Statements of Income Information (5)	September 30,				June 30,				March 31,				December 31,				September 30,
(In thousands, except per share data)		2020				2020				2020				2019				2019
Net interest income - Core Banking	$	10,512			$	9,645			$	9,035			$	9,012			$	8,924
Net interest income - SBA Lending (Q2)		1,959				1,584				1,151				1,217				1,237
Net interest income - Mortgage Banking (5)		2,317				1,572				724				663				599
Total net interest income	$	14,788			$	12,801			$	10,910			$	10,892			$	10,760
Provision for loan losses - Core Banking	$	2,232			$	1,668			$	216			$	520			$	104
Provision for loan losses - SBA Lending (Q2)		540				1,312				1,489				(15	)			367
Provision for loan losses - Mortgage Banking		-				-				-				-				-
Total provision for loan losses	$	2,772			$	2,980			$	1,705			$	505			$	471
Net interest income after provision for loan losses - Core Banking	$	8,280			$	7,977			$	8,819			$	8,492			$	8,820
Net interest income (loss) after provision for loan losses - SBA Lending (Q2)		1,419				272				(338	)			1,232				870
Net interest income after provision for loan losses - Mortgage Banking		2,317				1,572				724				663				599
Total net interest income after provision for loan losses	$	12,016			$	9,821			$	9,205			$	10,387			$	10,289
Noninterest income - Core Banking	$	1,779			$	1,324			$	1,411			$	1,391			$	1,582
Noninterest income - SBA Lending (Q2)		2,828				1,785				1,209				929				1,715
Noninterest income - Mortgage Banking		51,057				43,228

8,374 15,806 15,043 Total noninterest income$55,664 $46,337 $10,994 $18,126 $18,340 Noninterest expense - Core Banking$7,920 $7,633 $6,720 $7,109 $6,866 Noninterest expense - SBA Lending (Q2) 2,545 1,642 1,841 1,825 1,883 Noninterest expense - Mortgage Banking 33,987 25,734 13,514 15,338 12,857 Total noninterest expense$44,452 $35,009 $22,075 $24,272 $21,606 Income (loss) before income taxes - Core Banking$2,139 $1,668 $3,510 $2,774 $3,536 Income (loss) before income taxes - SBA Lending (Q2) 1,702 415 (970) 336 702 Income (loss) before income taxes - Mortgage Banking 19,387 19,066 (4,416) 1,131 2,785 Total income (loss) before income taxes$23,228 $21,149 $(1,876) $4,241 $7,023 Income tax expense (benefit) - Core Banking$482 $276 $591 $330 $669 Income tax expense (benefit) - SBA Lending (Q2) 217 53 (124) 43 90 Income tax expense (benefit) - Mortgage Banking 6,558 5,211 (1,241) 265 600 Total income tax expense (benefit)$7,257 $5,540 $(774) $638 $1,359 Net income (loss) - Core Banking$1,657 $1,392 $2,919 $2,444 $2,867 Net income (loss) - SBA Lending (Q2) 1,485 362 (846) 293 612 Net income (loss) - Mortgage Banking 12,829 13,855 (3,175) 866 2,185 Total net income (loss)$15,971 $15,609 $(1,102) $3,603 $5,664 Net income (loss) attributable to the Company - Core Banking$1,657 $1,392 $2,919 $2,444 $2,867 Net income (loss) attributable to the Company - SBA Lending (Q2) 651 158 (371) 129 269 Net income (loss) attributable to the Company - Mortgage Banking 12,829 13,855 (3,175) 866 2,185 Total net income (loss) attributable to the Company$15,137 $15,405 $(627) $3,439 $5,321 Net income (loss) per share, basic - Core Banking$0.70 $0.59 $1.24 $1.04 $1.23 Net income (loss) per share, basic - SBA Lending (Q2) 0.28 0.07 (0.16) 0.06 0.12 Net income (loss) per share, basic - Mortgage Banking 5.42 5.85 (1.35) 0.37 0.93 Total net income (loss) per share, basic$6.40 $6.51 $(0.27) $1.47 $2.28 Net income (loss) per share, diluted - Core Banking$0.70 $0.59 $1.23 $1.03 $1.21 Net income (loss) per share, diluted - SBA Lending (Q2) 0.27 0.07 (0.16) 0.05 0.11 Net income (loss) per share, diluted - Mortgage Banking 5.42 5.85 (1.33) 0.36 0.92 Total net income (loss) per share, diluted$6.39 $6.51 $(0.26) $1.44 $2.24

_______________
(5) Adjustments were made to segment reporting for the Core Banking and Mortgage Banking segments in order to more accurately reflect the expenses borne by the Core Banking segment in support of the Mortgage Banking segment. The adjustments were made for each period presented in this earnings release.

	Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
		2020				2020				2020				2019				2019
Noninterest Expense Detail by Segment (5)
(In thousands)
Compensation - Core Banking	$	4,250			$	4,219			$	3,535			$	4,015			$	3,771
Occupancy - Core Banking		1,512				1,239				1,133				1,200				1,140
Advertising - Core Banking		225				195				151				147				183
Other - Core Banking		1,933				1,980				1,901				1,747				1,772
Total Noninterest Expense - Core Banking	$	7,920			$	7,633			$	6,720			$	7,109			$	6,866
Compensation - SBA Lending (Q2)	$	1,939			$	1,314			$	1,569			$	1,469			$	1,403
Occupancy - SBA Lending (Q2)		116				118				99				89				88
Advertising - SBA Lending (Q2)		6				-				9				5				8
Other - SBA Lending (Q2)		484				210				164				262				384
Total Noninterest Expense - SBA Lending (Q2)	$	2,545			$	1,642			$	1,841			$	1,825			$	1,883
Compensation - Mortgage Banking	$	27,092			$	21,363			$	9,803			$	12,336			$	10,522
Occupancy - Mortgage Banking		1,207				855				757				633				549
Advertising - Mortgage Banking		2,011				1,666				1,617				1,314				871
Other - Mortgage Banking		3,677				1,850				1,337				1,055				915
Total Noninterest Expense - Mortgage Banking	$	33,987			$	25,734			$	13,514			$	15,338			$	12,857
	Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
Mortgage Banking Noninterest Expense Fixed vs. Variable (5)		2020				2020				2020				2019				2019
(In thousands)
Noninterest Expense - Fixed Expenses	$	11,838			$	8,394			$	6,740			$	5,671			$	4,797
Noninterest Expense - Variable Expenses (6)		22,149				17,340				6,774				9,667				8,060
Total Noninterest Expense	$	33,987			$	25,734			$	13,514			$	15,338			$	12,857
	Three Months Ended
SBA Lending (Q2) Data	September 30,				June 30,				March 31,				December 31,				September 30,
(In thousands, except percentage data)		2020				2020				2020				2019				2019
Final funded loans guaranteed portion sold, SBA	$	22,338			$	16,605			$	16,180			$	10,830			$	19,471
Gross gain on sales of loans, SBA	$	3,094			$	1,771			$	1,597			$	1,066			$	2,138
Weighted average gross gain on sales of loans, SBA		13.85	%			10.67	%			9.87	%			9.84	%			10.98	%
Net gain on sales of loans, SBA (7)	$	2,366			$	1,317			$	1,229			$	761			$	1,569
Weighted average net gain on sales of loans, SBA		10.59	%			7.93	%			7.60	%			7.03	%			8.06	%
	Three Months Ended
Mortgage Banking Data	September 30,				June 30,				March 31,				December 31,				September 30,
(In thousands, except percentage data)		2020				2020				2020				2019				2019
Mortgage originations for sale in the secondary market	$	1,526,809			$	1,003,518			$	532,996			$	542,568			$	447,616
Mortgage sales	$	1,471,501			$	954,568			$	488,457			$	529,344			$	447,819
Gross gain on sales of loans, mortgage banking	$	53,633			$	31,067			$	14,912			$	13,411			$	14,244
Weighted average gross gain on sales of loans, mortgage banking		3.64	%			3.25	%			3.05	%			2.53	%			3.18	%
Mortgage banking income (8)	$	50,675			$	43,088			$	8,272			$	15,817			$	15,033

_______________
(5) Adjustments were made to segment reporting for the Core Banking and Mortgage Banking segments in order to more accurately reflect the expenses borne by the Core Banking segment in support of the Mortgage Banking segment. The adjustments were made for each period presented in this earnings release.

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

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

(8) Net of lender credits and other investor expenses, and inclusive of 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	September 30,				June 30,				March 31,				December 31,				September 30,
(In thousands)		2020				2020				2020				2019				2019
Interest-earning assets
Average balances:
Interest-bearing deposits with banks	$	58,775			$	25,985			$	48,306			$	46,296			$	52,736
Loans, excluding PPP		1,172,547				1,076,376				970,083				935,211				891,477
PPP loans		180,561				114,721				-				-				-
Investment securities		181,087				178,611				158,116				157,093				156,070
Agency mortgage-backed securities		7,981				8,660				10,870				13,057				15,178
FRB and FHLB stock		17,293				16,804				14,878				14,149				13,020
Total interest-earning assets	$	1,618,244			$	1,421,157			$	1,202,253			$	1,165,806			$	1,128,481
Interest income (tax equivalent basis):
Interest-bearing deposits with banks	$	22			$	37			$	153			$	205			$	277
Loans, excluding PPP		14,284				12,789				11,875				11,830				11,788
PPP loans		1,019				671				-				-				-
Investment securities		1,935				1,947				1,728				1,780				1,762
Agency mortgage-backed securities		55				69				76				83				105
FRB and FHLB stock		144				168				151				154				184
Total interest income (tax equivalent basis)	$	17,459			$	15,681			$	13,983			$	14,052			$	14,116
Weighted average yield (tax equivalent basis, annualized):
Interest-bearing deposits with banks		0.15	%			0.57	%			1.27	%			1.77	%			2.10	%
Loans, excluding PPP		4.87	%			4.75	%			4.90	%			5.06	%			5.29	%
PPP loans		2.26	%			2.34	%			0.00	%			0.00	%			0.00	%
Investment securities		4.27	%			4.36	%			4.37	%			4.53	%			4.52	%
Agency mortgage-backed securities		2.76	%			3.19	%			2.80	%			2.54	%			2.77	%
FRB and FHLB stock		3.33	%			4.00	%			4.06	%			4.35	%			5.65	%
Total interest-earning assets		4.32	%			4.41	%			4.65	%			4.82	%			5.00	%
Interest-bearing liabilities
Average balances:
Interest-bearing deposits	$	842,363			$	770,402			$	716,051			$	707,518			$	712,692
Repurchase agreements		-				-				-				-				250
Fed funds purchased		-				1,978				143				-				130
Federal Home Loan Bank borrowings		292,876				292,168				248,205				207,851				175,912
Federal Reserve PPPLF borrowings		174,835				74,218				-				-				-
Subordinated debt and other borrowings		19,786				19,769				19,752				19,735				19,718
Total interest-bearing liabilities	$	1,329,860			$	1,158,535			$	984,151			$	935,104			$	908,702
Interest expense:
Interest-bearing deposits	$	974			$	1,311			$	1,625			$	1,749			$	1,965
Repurchase agreements		-				-				-				-				-
Fed funds purchased		-				2				-				-				1
Federal Home Loan Bank borrowings		853				846				838				808				785
Federal Reserve PPPLF borrowings		154				66				-				-				-
Subordinated debt and other borrowings		356				318				320				318				318
Total interest expense	$	2,337			$	2,543			$	2,783			$	2,875			$	3,069
Weighted average cost (annualized):
Interest-bearing deposits		0.46	%			0.68	%			0.91	%			0.99	%			1.10	%
Repurchase agreements		0.00	%			0.00	%			0.00	%			0.00	%			0.00	%
Fed funds purchased		0.00	%			0.40	%			0.00	%			0.00	%			3.08	%
Federal Home Loan Bank borrowings		1.16	%			1.16	%			1.35	%			1.55	%			1.78	%
Federal Reserve PPPLF borrowings		0.35	%			0.36	%			0.00	%			0.00	%			0.00	%
Subordinated debt and other borrowings		7.20	%			6.43	%			6.48	%			6.45	%			6.45	%
Total interest-bearing liabilities		0.70	%			0.88	%			1.13	%			1.23	%			1.35	%
Interest rate spread (tax equivalent basis, annualized)		3.62	%			3.53	%			3.52	%			3.59	%			3.65	%
Net interest margin (tax equivalent basis, annualized)		3.74	%			3.70	%			3.73	%			3.83	%			3.92	%