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First Savings Financial Group, Inc. Reports Financial Results for the First Fiscal Quarter Ended December 31, 2020

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First Savings Financial Group, Inc.
·27 min read
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JEFFERSONVILLE, Ind., Feb. 01, 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 $9.9 million, or $4.16 per diluted share, for the quarter ended December 31, 2020 compared to net income of $3.4 million, or $1.44 per diluted share, for the quarter ended December 31, 2019, resulting in an increase of 189% on a per share basis.

Commenting on the Company’s performance, Larry W. Myers, President and CEO stated: “Because of the tireless dedication of our experienced staff who continually serve the needs of our customers and communities during these very challenging times, we continue to deliver meaningful value to our shareholders. We continue to experience strong earnings, asset and deposit growth; resiliency of asset quality; stability of the net interest margin; and substantial increases to stockholders’ equity. The core bank and ancillary business lines continue to perform exceptionally well. I have confidence that the Company is well-positioned to continue thriving during this challenging environment and I thank our staff for their continued efforts during such.”

On December 31, 2020, the Bank completed the acquisition of the minority interest in Q2 Business Capital, LLC (“Q2”), which specializes in the origination, sale and servicing of U.S. Small Business Administration (“SBA”) loans. Effective January 1, 2021, Q2 is a wholly-owned subsidiary of the Bank.

COVID-19 Pandemic Loan Information

We continue to assist customers experiencing COVID-19 pandemic related hardships by approving payment extensions or loan forbearance agreements, and by waiving or refunding certain fees. During the initial onset of the COVID-19 pandemic, we proactively contacted all commercial borrowers and offered uniform payment extensions or loan forbearance agreements, while requests from consumer borrowers were reviewed and approved on a case-by-case basis. Payment extensions or loan forbearance agreements were generally for periods of three months and included deferment of both principal and interest. Following the expiration of the initial payment extensions or loan forbearance agreements, we entertain requests for extended periods on a case-by-case basis, which will generally include deferment of only the principal portion of payments for a period of up to three months. The table below summarizes payment extensions or loan forbearance agreements that were in effect at January 22, 2021.

Number of Loans


Outstanding Principal Balance (1)

SBA- Guaranteed Principal Balance

(Dollars in thousands)

Residential real estate

4

$ 315

$ -

Commercial real estate

4

10,788

-

SBA commercial real estate

10

7,444

3,063

Multifamily

1

3,590

-

SBA commercial business

15

4,134

-

Consumer

1

30

-

Total

35

$ 26,301

$ 3,063

(1) The outstanding principal balance includes amounts guaranteed by the SBA.

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 December 31, 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 and additional provisions for loan losses may be required.

At December 31, 2020, the outstanding principal balance of loans secured by restaurant related collateral was $168.2 million, of which $74.9 million is fully guaranteed by the SBA (including $74.5 million of PPP loans) and $83.8 million is secured by commercial real estate where the collateral property is leased to national-brand, investment-grade tenants. Two of the SBA commercial loans included in the preceding table totaling $361,000 were secured by restaurant related collateral.

At December 31, 2020, the outstanding principal balances of loans secured by hotel real estate was $17.4 million, of which $3.7 million is fully guaranteed by the SBA (including $606,000 of PPP loans). Three of the commercial real estate and two of the SBA commercial real loans included in the preceding table totaling $9.9 million and $5.2 million, respectively, were secured by hotel real estate.

Under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which was signed into law on March 27, 2020, 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 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 of such requiring payment extensions or loan forbearance agreements. Following the expiration of the SBA-provided loan payments under the CARES Act for most of the SBA clients, the twenty five SBA clients included in the preceding table, which operate in COVID-sensitive industries, were granted payment extensions or loan forbearance agreements. The Coronavirus Response and Relief Supplemental Appropriations Act (“CRRSAA”), which was signed into law on December 27, 2020, will provide additional SBA-provided loan payments to eligible SBA clients beginning in February 2021, including the aforementioned twenty five SBA clients following the expiration of their payment extensions or loan forbearance agreements.

The Company participated in the SBA’s Paycheck Protection Program (“PPP”), which was originally authorized by the CARES Act. At December 31, 2020, the outstanding principal balance of PPP loans was $178.5 million and net deferred loan fees related to PPP loans was approximately $2.7 million, which will be recognized over the life of the loans and as borrowers are granted forgiveness. The Company is also participating in the second round of the PPP, which was authorized by the CRRSAA and is currently in its early stages.

Results of Operations for the Three Months Ended December 31, 2020 and 2019

Net interest income increased $3.0 million, or 27.3%, to $13.7 million for the quarter ended December 31, 2020 as compared to the same quarter in 2019. The increase in net interest income was due to a $2.4 million increase in interest income and a $588,000 decrease in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $460.0 million, from $1.17 billion for 2019 to $1.63 billion for 2020, partially offset by a decrease in the weighted-average tax-equivalent yield, from 4.79% for 2019 to 4.03% for 2020. The decrease in the weighted-average tax-equivalent yield for 2020 is primarily due to an increase in the average balance of PPP loans of $179.3 million as well as decreasing market interest rates on loans. Interest expense decreased due to a decrease in the average cost of interest-bearing liabilities, from 1.23% for 2019 to 0.70% for 2020, partially offset by an increase in the average balance of interest-bearing liabilities of $375.7 million, from $935.1 million for 2019 to $1.31 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 Company’s participation in the Federal Reserve Bank’s PPP Liquidity Facility (“PPPLF”), which carries a fixed interest rate of 0.35% and is secured by the Company’s PPP loans.

The Company recognized $668,000 in provision for loan losses for the quarter ended December 31, 2020, compared to $505,000 for the comparable quarter in 2019. 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 December 31, 2020. The Company recognized net charge-offs of $570,000 for the quarter ended December 31, 2020, of which $506,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $15,000 for the same quarter in 2019. The increase in the provision for loan losses for 2020 was primarily due to increased charge-offs during the quarter as well as changes to qualitative factors within the allowance for loan losses calculation related to economic uncertainties surrounding COVID-19.

Noninterest income increased $28.0 million for the quarter ended December 31, 2020 as compared to the same quarter in 2019. The increase was primarily due to increases in mortgage banking income of $26.4 million and net gains on sales of SBA loans of $506,000. 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 $20.1 million for the quarter ended December 31, 2020 as compared to the same quarter in 2019. The increase was primarily due to an increase in compensation and benefits of $16.0 million and increases in other operating expense and advertising expense of $1.5 million and $845,000, respectively. 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 and advertising expense were primarily due to increased volume from the mortgage banking segment.

The Company recognized income tax expense of $4.5 million for the quarter ended December 31, 2020, as compared to income tax expense of $638,000 for the same quarter in 2019. The effective tax rate increased from 15.0% for the quarter ended December 31, 2019 to 30.5% for the quarter ended December 31, 2020 primarily due to increases in pre-tax income and nondeductible executive compensation.

Comparison of Financial Condition at December 31, 2020 and September 30, 2020

Total assets increased $108.3 million, from $1.76 billion at September 30, 2020 to $1.87 billion at December 31, 2020. Net loans increased $24.6 million during the quarter ended December 31, 2020, primarily due to continued growth in the single tenant net lease commercial real estate loan portfolio. Residential mortgage loans held for sale and SBA loans held for sale also increased by $66.8 million and $4.9 million, respectively, during the quarter ended December 31, 2020 due to increased production from the mortgage banking and SBA lending segments. Total liabilities increased $100.1 million primarily due to an increase of $73.2 million in total deposits and an increase of $29.2 million in FHLB borrowings.

Common stockholders’ equity increased $8.5 million, from $157.3 million at September 30, 2020 to $165.7 million at December 31, 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 $9.5 million and $680,000, respectively, partially offset by a decrease in additional paid in capital of $1.7 million. The decrease in additional paid in capital was due to the acquisition of the minority interest in Q2. At December 31, 2020 and September 30, 2020, 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)

OPERATING DATA:

Three Months Ended

(In thousands, except share and per share data)

December 31,

2020

2019

Total interest income

$

16,026

$

13,661

Total interest expense

2,287

2,875

Net interest income

13,739

10,786

Provision for loan losses

668

505

Net interest income after provision for loan losses

13,071

10,281

Total noninterest income

46,183

18,232

Total noninterest expense

44,402

24,272

Income before income taxes

14,852

4,241

Income tax expense

4,527

638

Net income

10,325

3,603

Less: Net income attributable to noncontrolling interests

402

164

Net income attributable to the Company

$

9,923

$

3,439

Net income per share, basic

$

4.19

$

1.47

Weighted average shares outstanding, basic

2,367,061

2,340,619

Net income per share, diluted

$

4.16

$

1.44

Weighted average shares outstanding, diluted

2,384,702

2,382,754

Performance ratios (annualized):

Return on average assets

2.23

%

1.09

%

Return on average common stockholders' equity

24.52

%

11.24

%

Interest rate spread (tax equivalent basis)

3.33

%

3.56

%

Net interest margin (tax equivalent basis)

3.46

%

3.80

%

Efficiency ratio

74.10

%

83.64

%

FINANCIAL CONDITION DATA:

December 31,

September 30,

Increase

(In thousands, except per share data)

2020

2020

(Decrease)

Total assets

$

1,872,911

$

1,764,625

$

108,286

Cash and cash equivalents

35,392

33,726

1,666

Investment securities

205,661

204,067

1,594

Loans held for sale

357,242

285,525

71,717

Gross loans (1)

1,131,832

1,107,089

24,743

Allowance for loan losses

17,124

17,026

98

Interest earning assets

1,718,994

1,620,831

98,163

Goodwill

9,848

9,848

-

Core deposit intangibles

1,149

1,202

(53

)

Loan servicing rights

35,232

25,451

9,781

Noninterest-bearing deposits

272,241

242,673

29,568

Interest-bearing deposits (2)

849,079

805,403

43,676

Federal Home Loan Bank borrowings

340,092

310,858

29,234

Federal Reserve PPPLF borrowings

172,772

174,834

(2,062

)

Total liabilities

1,707,166

1,607,060

100,106

Stockholders' equity, net of noncontrolling interests

165,745

157,272

8,473

Book value per share

$

69.79

$

66.21

$

3.61

Tangible book value per share (3)

65.16

61.56

3.63

Non-performing assets:

Nonaccrual loans - SBA guaranteed

$

3,709

$

3,709

$

-

Nonaccrual loans - unguaranteed

8,698

9,906

(1,208

)

Total nonaccrual loans

$

12,407

$

13,615

$

(1,208

)

Accruing loans past due 90 days

-

-

-

Total non-performing loans

12,407

13,615

(1,208

)

Foreclosed real estate

315

-

315

Troubled debt restructurings classified as performing loans

1,950

3,069

(1,119

)

Total non-performing assets

$

14,672

$

16,684

$

(2,012

)

Asset quality ratios:

Allowance for loan losses as a percent of total gross loans

1.51

%

1.54

%

(0.02

%)

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

1.80

%

1.84

%

(0.04

%)

Allowance for loan losses as a percent of nonperforming loans

138.02

%

125.05

%

12.97

%

Nonperforming loans as a percent of total gross loans

1.10

%

1.23

%

(0.13

%)

Nonperforming assets as a percent of total assets

0.78

%

0.95

%

(0.16

%)

(1) Includes $178.5 million and $180.6 million of PPP loans at December 31, 2020 and September 30, 2020, respectively.

(2) Includes $147.5 million and $132.1 million of brokered and reciprocal certificates of deposit at December 31, 2020 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.

Tangible Book Value Per Share

December 31,

September 30,

Increase

(In thousands, except share and per share data)

2020

2020

(Decrease)

Stockholders' equity, net of noncontrolling interests (GAAP)

$

165,745

$

157,272

$

8,473

Less: goodwill and core deposit intangibles

(10,997

)

(11,050

)

53

Tangible equity (non-GAAP)

$

154,748

$

146,222

$

109,789

Outstanding common shares

2,374,927

2,375,324

(397

)

Tangible book value per share (non-GAAP)

$

65.16

$

61.56

$

3.60

Book value per share (GAAP)

$

69.79

$

66.21

$

3.58

SUMMARIZED FINANCIAL INFORMATION (UNAUDITED):

As of

Summarized Consolidated Balance Sheets

December 31,

September 30,

June 30,

March 31,

December 31,

(In thousands, except per share data)

2020

2020

2020

2020

2019

Total cash and cash equivalents

$

35,392

$

33,726

$

27,544

$

22,603

$

41,327

Total investment securities

205,661

204,067

205,960

186,873

179,991

Total loans held for sale

357,242

285,525

210,077

163,927

110,523

Total loans, net of allowance for loan losses

1,114,708

1,090,063

1,081,381

877,276

851,700

PPP loans

178,499

180,561

180,536

-

-

Loan servicing rights

35,232

25,451

13,563

6,946

6,258

Total assets

1,872,911

1,764,625

1,661,281

1,368,252

1,292,573

Total deposits

$

1,121,320

$

1,048,076

$

982,870

$

937,306

$

885,598

Federal Home Loan Bank borrowings

340,092

310,858

298,622

270,000

239,566

Federal Reserve PPPLF borrowings

172,772

174,834

174,834

-

-

Stockholders' equity, net of noncontrolling interests

$

165,745

$

157,272

$

142,362

$

116,659

$

123,810

Noncontrolling interests in subsidiary

-

293

(214

)

(414

)

368

Total equity

165,745

157,565

142,148

116,245

124,178

Outstanding common shares

2,374,927

2,375,324

2,375,324

2,375,324

2,357,369

Three Months Ended

Summarized Consolidated Statements of Income

December 31,

September 30,

June 30,

March 31,

December 31,

(In thousands, except per share data)

2020

2020

2020

2020

2019

Total interest income

$

16,026

$

15,765

$

14,719

$

13,554

$

13,661

Total interest expense

2,287

2,337

2,543

2,783

2,875

Net interest income

13,739

13,428

12,176

10,771

10,786

Provision for loan losses

668

2,772

2,980

1,705

505

Net interest income after provision for loan losses

13,071

10,656

9,196

9,066

10,281

Total noninterest income

46,183

57,024

46,962

11,133

18,232

Total noninterest expense

44,402

44,452

35,009

22,075

24,272

Income (loss) before income taxes

14,852

23,228

21,149

(1,876

)

4,241

Income tax expense (benefit)

4,527

7,257

5,540

(774

)

638

Net income (loss)

10,325

15,971

15,609

(1,102

)

3,603

Less: net income (loss) attributable to noncontrolling interests

402

834

204

(475

)

164

Net income (loss) attributable to the Company

$

9,923

$

15,137

$

15,405

$

(627

)

$

3,439

Net income (loss) per share, basic

$

4.19

$

6.40

$

6.51

$

(0.27

)

$

1.47

Weighted average shares outstanding, basic

2,367,061

2,365,217

2,365,217

2,355,750

2,340,619

Net income (loss) per share, diluted

$

4.16

$

6.39

$

6.51

$

(0.26

)

$

1.44

Weighted average shares outstanding, diluted

2,384,702

2,370,694

2,366,787

2,379,901

2,382,754

SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):

Three Months Ended

December 31,

September 30,

June 30,

March 31,

December 31,

Consolidated Performance Ratios (Annualized)

2020

2020

2020

2020

2019

Return on average assets

2.23

%

3.44

%

4.02

%

(0.19

%)

1.09

%

Return on average equity

25.43

%

43.46

%

48.75

%

(3.51

%)

11.76

%

Return on average common stockholders' equity

24.52

%

41.08

%

47.91

%

(2.00

%)

11.24

%

Net interest margin (tax equivalent basis)

3.46

%

3.40

%

3.52

%

3.68

%

3.80

%

Efficiency ratio

74.10

%

63.10

%

59.20

%

100.78

%

83.64

%

As of or for the Three Months Ended

December 31,

September 30,

June 30,

March 31,

December 31,

Consolidated Asset Quality Ratios

2020

2020

2020

2020

2019

Nonperforming loans as a percentage of total loans

1.10

%

1.23

%

1.26

%

1.55

%

0.64

%

Nonperforming assets as a percentage of total assets

0.78

%

0.95

%

1.17

%

1.45

%

1.00

%

Allowance for loan losses as a percentage of total loans

1.51

%

1.54

%

1.34

%

1.32

%

1.22

%

Allowance for loan losses as a percentage of nonperforming loans

138.02

%

125.05

%

106.01

%

84.67

%

191.18

%

Net charge-offs (recoveries) to average outstanding loans

0.04

%

0.03

%

0.00

%

0.06

%

0.00

%

Three Months Ended

Segmented Statements of Income Information

December 31,

September 30,

June 30,

March 31,

December 31,

(In thousands, except per share data)

2020

2020

2020

2020

2019

Core Banking Segment:

Net interest income

$

10,861

$

10,512

$

9,645

$

9,035

$

9,012

Provision for loan losses

702

2,232

1,668

216

520

Net interest income after provision for loan losses

10,159

8,280

7,977

8,819

8,492

Noninterest income

1,552

1,779

1,324

1,411

1,391

Noninterest expense

8,112

7,920

7,633

6,720

7,109

Income before income taxes

3,599

2,139

1,668

3,510

2,774

Income tax expense

570

482

276

591

330

Net income attributable to the Company

$

3,029

$

1,657

$

1,392

$

2,919

$

2,444

SBA Lending Segment (Q2):

Net interest income

$

2,147

$

1,959

$

1,584

$

1,151

$

1,217

Provision for loan losses

(34

)

540

1,312

1,489

(15

)

Net interest income (loss) after provision for loan losses

2,181

1,419

272

(338

)

1,232

Noninterest income

1,385

2,828

1,785

1,209

929

Noninterest expense

2,746

2,545

1,642

1,841

1,825

Income (loss) before income taxes

820

1,702

415

(970

)

336

Income tax expense (benefit)

105

217

53

(124

)

43

Net income (loss)

715

1,485

362

(846

)

293

Less: net income (loss) attributable to noncontrolling interests

402

834

204

(475

)

164

Net income (loss) attributable to the Company

$

313

$

651

$

158

$

(371

)

$

129

Mortgage Banking Segment:

Net interest income

$

731

$

957

$

947

$

585

$

557

Provision for loan losses

-

-

-

-

-

Net interest income after provision for loan losses

731

957

947

585

557

Noninterest income

43,246

52,417

43,853

8,513

15,912

Noninterest expense

33,544

33,987

25,734

13,514

15,338

Income (loss) before income taxes

10,433

19,387

19,066

(4,416

)

1,131

Income tax expense (benefit)

3,852

6,558

5,211

(1,241

)

265

Net income (loss) attributable to the Company

$

6,581

$

12,829

$

13,855

$

(3,175

)

$

866

Net Income (Loss) Per Share by Segment

Net income per share, basic - Core Banking

$

1.28

$

0.70

$

0.59

$

1.24

$

1.04

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

0.13

0.28

0.07

(0.16

)

0.06

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

2.78

5.42

5.85

(1.35

)

0.37

Total net income (loss) per share, basic

$

4.19

$

6.40

$

6.51

$

(0.27

)

$

1.47

Net Income (Loss) Per Diluted Share by Segment

Net income per share, diluted - Core Banking

$

1.27

$

0.70

$

0.59

$

1.23

$

1.03

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

0.13

0.27

0.07

(0.16

)

0.05

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

2.76

5.42

5.85

(1.33

)

0.36

Total net income (loss) per share, diluted

$

4.16

$

6.39

$

6.51

$

(0.26

)

$

1.44

SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):

Three Months Ended

Noninterest Expense Detail by Segment

December 31,

September 30,

June 30,

March 31,

December 31,

(In thousands)

2020

2020

2020

2020

2019

Core Banking Segment:

Compensation

$

4,127

$

4,250

$

4,219

$

3,535

$

4,015

Occupancy

1,392

1,512

1,239

1,133

1,200

Advertising

177

225

195

151

147

Other

2,416

1,933

1,980

1,901

1,747

Total Noninterest Expense

$

8,112

$

7,920

$

7,633

$

6,720

$

7,109

SBA Lending Segment (Q2):

Compensation

$

2,280

$

1,939

$

1,314

$

1,569

$

1,469

Occupancy

93

116

118

99

89

Advertising

10

6

-

9

5

Other

363

484

210

164

262

Total Noninterest Expense

$

2,746

$

2,545

$

1,642

$

1,841

$

1,825

Mortgage Banking Segment:

Compensation

$

27,455

$

27,092

$

21,363

$

9,803

$

12,336

Occupancy

1,100

1,207

855

757

633

Advertising

2,124

2,011

1,666

1,617

1,314

Other

2,865

3,677

1,850

1,337

1,055

Total Noninterest Expense

$

33,544

$

33,987

$

25,734

$

13,514

$

15,338

Three Months Ended

Mortgage Banking Noninterest Expense Fixed vs. Variable

December 31,

September 30,

June 30,

March 31,

December 31,

(In thousands)

2020

2020

2020

2020

2019

Noninterest Expense - Fixed Expenses

$

13,296

$

11,838

$

8,394

$

6,740

$

5,671

Noninterest Expense - Variable Expenses (5)

20,248

22,149

17,340

6,774

9,667

Total Noninterest Expense

$

33,544

$

33,987

$

25,734

$

13,514

$

15,338

Three Months Ended

SBA Lending (Q2) Data

December 31,

September 30,

June 30,

March 31,

December 31,

(In thousands, except percentage data)

2020

2020

2020

2020

2019

Final funded loans guaranteed portion sold, SBA

$

14,116

$

25,623

$

16,605

$

16,180

$

10,830

Gross gain on sales of loans, SBA

$

1,698

$

3,094

$

1,771

$

1,597

$

1,066

Weighted average gross gain on sales of loans, SBA

12.03

%

12.08

%

10.67

%

9.87

%

9.84

%

Net gain on sales of loans, SBA (6)

$

1,267

$

2,366

$

1,317

$

1,229

$

761

Weighted average net gain on sales of loans, SBA

8.98

%

9.23

%

7.93

%

7.60

%

7.03

%

Three Months Ended

Mortgage Banking Data

December 31,

September 30,

June 30,

March 31,

December 31,

(In thousands, except percentage data)

2020

2020

2020

2020

2019

Mortgage originations for sale in the secondary market

$

1,430,628

$

1,526,809

$

1,003,518

$

532,996

$

542,568

Mortgage sales

$

1,349,044

$

1,471,501

$

954,568

$

488,457

$

529,344

Gross gain on sales of loans, mortgage banking

$

47,224

$

53,633

$

31,067

$

14,912

$

13,411

Weighted average gross gain on sales of loans, mortgage banking

3.50

%

3.64

%

3.25

%

3.05

%

2.53

%

Mortgage banking income (7)

$

42,300

$

52,035

$

43,713

$

8,411

$

15,923

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

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

(7) 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

December 31,

September 30,

June 30,

March 31,

December 31,

(In thousands)

2020

2020

2020

2020

2019

Interest-earning assets

Average balances:

Interest-bearing deposits with banks

$

34,412

$

58,775

$

25,985

$

48,306

$

46,296

Loans, excluding PPP

1,205,278

1,172,547

1,076,376

970,083

935,211

PPP loans

179,316

180,561

114,721

-

-

Investment securities - taxable

42,462

44,026

43,569

46,216

50,132

Investment securities - nontaxable

146,374

145,042

143,702

122,770

120,018

FRB and FHLB stock

17,992

17,293

16,804

14,878

14,149

Total interest-earning assets

$

1,625,834

$

1,618,244

$

1,421,157

$

1,202,253

$

1,165,806

Interest income (tax equivalent basis):

Interest-bearing deposits with banks

$

18

$

22

$

37

$

153

$

205

Loans, excluding PPP

13,171

12,924

12,164

11,736

11,724

PPP loans

1,085

1,019

671

-

-

Investment securities - taxable

471

483

502

504

585

Investment securities - nontaxable

1,508

1,507

1,514

1,300

1,278

FRB and FHLB stock

108

144

168

151

154

Total interest income (tax equivalent basis)

$

16,361

$

16,099

$

15,056

$

13,844

$

13,946

Weighted average yield (tax equivalent basis, annualized):

Interest-bearing deposits with banks

0.21

%

0.15

%

0.57

%

1.27

%

1.77

%

Loans, excluding PPP

4.37

%

4.41

%

4.52

%

4.84

%

5.01

%

PPP loans

2.42

%

2.26

%

2.34

%

0.00

%

0.00

%

Investment securities - taxable

4.44

%

4.39

%

4.61

%

4.36

%

4.67

%

Investment securities - nontaxable

4.12

%

4.16

%

4.21

%

4.24

%

4.26

%

FRB and FHLB stock

2.40

%

3.33

%

4.00

%

4.06

%

4.35

%

Total interest-earning assets

4.03

%

3.98

%

4.24

%

4.61

%

4.79

%

Interest-bearing liabilities

Average balances:

Interest-bearing deposits

$

811,016

$

842,363

$

770,402

$

716,051

$

707,518

Fed funds purchased

-

-

1,978

143

-

Federal Home Loan Bank borrowings

306,299

292,876

292,168

248,205

207,851

Federal Reserve PPPLF borrowings

173,701

174,835

74,218

-

-

Subordinated debt and other borrowings

19,803

19,786

19,769

19,752

19,735

Total interest-bearing liabilities

$

1,310,819

$

1,329,860

$

1,158,535

$

984,151

$

935,104

Interest expense:

Interest-bearing deposits

$

936

$

974

$

1,311

$

1,625

$

1,749

Fed funds purchased

-

-

2

-

-

Federal Home Loan Bank borrowings

861

853

846

838

808

Federal Reserve PPPLF borrowings

153

154

66

-

-

Subordinated debt and other borrowings

337

356

318

320

318

Total interest expense

$

2,287

$

2,337

$

2,543

$

2,783

$

2,875

Weighted average cost (annualized):

Interest-bearing deposits

0.46

%

0.46

%

0.68

%

0.91

%

0.99

%

Fed funds purchased

0.00

%

0.00

%

0.40

%

0.00

%

0.00

%

Federal Home Loan Bank borrowings

1.12

%

1.16

%

1.16

%

1.35

%

1.55

%

Federal Reserve PPPLF borrowings

0.35

%

0.35

%

0.36

%

0.00

%

0.00

%

Subordinated debt and other borrowings

6.81

%

7.20

%

6.43

%

6.48

%

6.45

%

Total interest-bearing liabilities

0.70

%

0.70

%

0.88

%

1.13

%

1.23

%

Interest rate spread (tax equivalent basis, annualized)

3.33

%

3.28

%

3.36

%

3.48

%

3.56

%

Net interest margin (tax equivalent basis, annualized)

3.46

%

3.40

%

3.52

%

3.68

%

3.80

%