First Savings Financial Group, Inc. Reports Financial Results for the Fiscal Year Ended September 30, 2022

First Savings Financial Group, Inc.

JEFFERSONVILLE, Ind., Oct. 27, 2022 (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 $16.4 million, or $2.30 per diluted share, for the year ended September 30, 2022 compared to net income of $29.6 million, or $4.12 per diluted share, for the year ended September 30, 2021.

Commenting on the Company’s performance, Larry W. Myers, President and CEO, stated “While fiscal 2022 was a challenging year, we are pleased in delivering another year of increased value to our shareholders. The core banking segment, which is the strength of the organization, experienced positive trends that included significant loan originations and portfolio growth, stable net interest margin, improved efficiency and asset quality ratios, and enhanced profitability. The SBA lending segment underperformed in recent quarters, but we have continued to rebuild the lending team and pipeline for expected enhanced performance in the new fiscal year. We continue to fight headwinds for the mortgage banking segment and reduce expenses, including cost reductions made that will be fully recognized in the following fiscal quarter and year, in light of decreasing origination volumes and margin. Lastly, the Company repurchased 143,030 of its common shares during the quarter, in addition to the 59,120 purchased in the preceding quarter, which together totaled more than 2.8% of outstanding shares. We are encouraged by the strong performance of the core banking segment and perceive opportunity for enhanced performance of the SBA lending and mortgage banking segments. I’m optimistic that each of these business lines will thrive and deliver exceptional value to our shareholders in fiscal 2023.”

Results of Operations for the Fiscal Years Ended September 30, 2022 and 2021

Net interest income increased $3.5 million, or 6.1%, to $60.7 million for the year ended September 30, 2022 as compared to 2021. The increase in net interest income was due to a $5.7 million increase in interest income, partially offset by a $2.2 million increase in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $76.1 million, from $1.59 billion for 2021 to $1.67 billion for 2022, and an increase in the weighted-average tax-equivalent yield, from 4.18% for 2021 to 4.35% for 2022. The increase in the average balance of interest-earning assets was primarily due to increases in the average balance of investment securities and total loans of $69.9 million and $21.1 million, respectively. When excluding the impact from PPP loan payoffs, the increase in the average balance of loans was $144.6 million when comparing the two periods. Interest expense increased due to an increase in the average balance of interest-bearing liabilities of $54.3 million, from $1.27 billion for 2021 to $1.32 billion for 2022, and an increase in the average cost of interest-bearing liabilities, from 0.64% for 2021 to 0.78% for 2022. The increase in the average cost of interest-bearing liabilities for 2022 was due primarily to higher rates paid for brokered deposits during the period.

The Company recognized a provision for loan losses of $1.9 million for the year ended September 30, 2022 due primarily to loan portfolio growth, compared to a credit of $1.8 million for 2021. Nonperforming loans, which consist of nonaccrual loans and loans over 90 days past due and still accruing interest, decreased $4.6 million from $15.5 million at September 30, 2021 to $10.9 million at September 30, 2022. The Company recognized net charge-offs of $849,000 for the year ended September 30, 2022, of which $733,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $958,000 in 2021, of which $894,000 was related to unguaranteed portions of SBA loans.

Noninterest income decreased $69.2 million for the year ended September 30, 2022 as compared to 2021. The decrease was due primarily to decreases in mortgage banking income and net gain on sale of SBA loans of $66.2 million and $5.0 million, respectively. The decrease in mortgage banking income was primarily due to a $84.6 million decrease in production revenue from lower originations for sale and a $25.5 million decrease in capitalized residential mortgage loan servicing rights, partially offset by a $16.3 million increase in realized and unrealized hedging gains in 2022, a $4.2 million decrease in the fair value of loans held for sale and interest rate lock commitments as compared to a $18.8 million decrease in fair value recognized in 2021, and a $2.5 million increase in the fair value of the residential mortgage loan servicing rights portfolio in 2022 as compared to an $8.8 million decrease in fair value recognized in 2021. Mortgage loans originated for sale were $1.61 billion in the year ended September 30, 2022 as compared to $4.09 billion in 2021. The decrease in net gain on sales of SBA loans was due primarily to decreases in production and sales volume from the SBA lending segment, as well as lower premiums in the secondary market.

Noninterest expense decreased $48.3 million for the year ended September 30, 2022 as compared to 2021. The decrease was due primarily to decreases in compensation and benefits and advertising expense of $41.4 million and $3.4 million, respectively. The decrease in compensation and benefits expense was due primarily to a reduction in staff and incentive compensation for the Company’s mortgage banking segment as a result of decreased mortgage banking income. The decrease in advertising expense was related to the reduced loan origination volume of the mortgage banking segment.

The Company recognized income tax expense of $2.4 million for the year ended September 30, 2022 compared to tax expense of $10.0 million for 2021. The effective tax rate for 2022 was 12.6% as compared to 25.0% for 2021. The lower effective tax rate for 2022 was primarily due to lower taxable income and lower nondeductible executive compensation expense in 2022 as compared to 2021.

Results of Operations for the Three Months Ended September 30, 2022 and 2021

The Company reported net income of $2.5 million, or $0.35 per diluted share, for the three months ended September 30, 2022 compared to net income of $4.8 million, or $0.67 per diluted share, for the three months ended September 30, 2021.

Net interest income increased $2.4 million, or 16.6%, to $16.8 million for the three months ended September 30, 2022 as compared to the same period in 2021. The increase in net interest income was due to a $4.7 million increase in interest income, partially offset by a $2.3 million increase in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $296.8 million, from $1.56 billion for 2021 to $1.85 billion for 2022, and an increase in the weighted-average tax-equivalent yield, from 4.26% for 2021 to 4.64% for 2022. The increase in the average balance of interest-earning assets was due to increases in the average balance of investment securities and total loans of $130.4 million and $200.6 million, respectively. When excluding the impact from PPP loan payoffs, the increase in the average balance of loans was $283.6 million when comparing the two periods. Interest expense increased due to an increase in the average balance of interest-bearing liabilities of $254.1 million, from $1.22 billion for 2021 to $1.48 billion for 2022, and an increase in the average cost of interest-bearing liabilities, from 0.60% for 2021 to 1.12% for 2022. The increase in the average cost of interest-bearing liabilities was due to increases in the cost of brokered deposits and FHLB borrowings due to rising market interest rates during the period.

The Company recognized a provision for loan losses of $880,000 for the three months ended September 30, 2022, due to loan portfolio growth, compared to $8,000 for the same period in 2021. The Company recognized net charge-offs of $500,000 for the three months ended September 30, 2022, compared to net charge-offs of $349,000 for the same period in 2021.

Noninterest income decreased $12.0 million for the three months ended September 30, 2022 as compared to the same period in 2021. The decrease was due primarily to decreases in mortgage banking income and gain on sale of SBA loans of $10.3 million and $1.7 million, respectively. The decrease in mortgage banking income was primarily due to a $10.2 million decrease in production revenue from lower originations for sale and a $3.4 million decrease in capitalized residential mortgage loan servicing rights, partially offset by a $1.3 million realized and unrealized hedging gain in 2022 compared to a $1.2 million loss in 2021, and a $1.1 million decrease in the fair value of loans held for sale and interest rate lock commitments as compared to a $3.3 million decrease in fair value recognized in 2021. Mortgage loans originated for sale were $186.0 million in the three months ended September 30, 2022 as compared to $579.5 million in the same period in 2021. The decrease in net gain on sales of SBA loans was due primarily to decreases in production and sales volume from the SBA lending segment, as well as lower premiums in the secondary market.

Noninterest expense decreased $7.1 million for the three months ended September 30, 2022 as compared to the same period in 2021. The decrease was due primarily to a decrease in compensation and benefits of $6.7 million. The decrease in compensation and benefits expense is due primarily to a reduction in staff and incentive compensation for the Company’s mortgage banking segment as a result of decreased mortgage banking income.

The Company recognized income tax expense of $9,000 for the three months ended September 30, 2022 compared to $958,000 for the same period in 2021. The effective tax rate for 2022 was 0.4% as compared to 16.5% for 2021. The lower effective tax rate for 2022 was primarily due to lower taxable income in 2022 as compared to 2021.

Comparison of Financial Condition at September 30, 2022 and September 30, 2021

Total assets increased $336.3 million, from $1.72 billion at September 30, 2021 to $2.06 billion at September 30, 2022. Net loans held for investment increased $360.6 million during the year ended September 30, 2022, due primarily to growth in single-tenant net lease commercial real estate loans and residential mortgage loans, partially offset by a $55.8 million decrease in PPP loans. Residential mortgage and SBA loans held for sale decreased $129.2 million and $2.2 million, respectively, during the year ended September 30, 2022 due to lower loan originations. Single tenant net lease loans held for sale decreased $23.0 million during the year ended September 30, 2022, due to loan sales and transfers from held-for-sale to held-for-investment during the period. Residential mortgage loan servicing rights increased $13.7 million, or 27.6%, to $63.3 million at September 30, 2022.

Total liabilities increased $364.0 million due primarily to increases in total deposits, FHLB borrowings and other borrowings of $288.3 million, $57.3 million and $30.4 million, respectively. The increase in FHLB borrowings was primarily used to fund loan growth. The increase in other borrowings was due to a $31.0 million subordinated debt issuance in March 2022.

Common stockholders’ equity decreased $27.8 million, from $180.4 million at September 30, 2021 to $152.6 million at September 30, 2022, due primarily to a decrease in accumulated other comprehensive income of $36.0 million, partially offset by retained net income of $12.8 million. The decrease in accumulated other comprehensive income was primarily due to increasing market interest rates during the year ended September 30, 2022, which resulted in a decrease in the fair value of the available-for-sale securities portfolio. At September 30, 2022 and September 30, 2021, 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 three national lending programs, including single-tenant net lease commercial real estate, SBA lending and residential mortgage banking, with offices located throughout the United States. The Bank is a recognized leader, both in its local communities and nationally for its lending programs. The employees of First Savings Bank strive daily to achieve the organization’s vision, We Expect To Be The BEST community BANK, which fuels our success. The Company’s common shares trade on The NASDAQ Stock Market under the symbol “FSFG.”

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

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

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

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

FIRST SAVINGS FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
* All share and per share amounts have been adjusted to reflect the three-for-one stock split effective September 15, 2021.
	Three Months Ended								Years Ended
OPERATING DATA:	September 30,								September 30,
(In thousands, except share and per share data)		2022				2021				2022				2021
Total interest income	$	20,956			$	16,243			$	70,998			$	65,259
Total interest expense		4,131				1,819				10,346				8,087
Net interest income		16,825				14,424				60,652				57,172
Provision (credit) for loan losses		880				8				1,908				(1,767	)
Net interest income after provision (credit) for loan losses		15,945				14,416				58,744				58,939
Total noninterest income		4,531				16,495				51,227				120,436
Total noninterest expense		18,001				25,104				91,149				139,409
Income before income taxes		2,475				5,807				18,822				39,966
Income tax expense		9				958				2,378				9,997
Net income		2,466				4,849				16,444				29,969
Less: Net income attributable to noncontrolling interests		-				-				-				402
Net income attributable to the Company	$	2,466			$	4,849			$	16,444			$	29,567
Net income per share, basic	$	0.35			$	0.68			$	2.33			$	4.16
Weighted average shares outstanding, basic		6,988,873				7,111,594				7,058,550				7,107,786
Net income per share, diluted	$	0.35			$	0.67			$	2.30			$	4.12
Weighted average shares outstanding, diluted		7,056,138				7,200,357				7,141,846				7,173,733
Performance ratios (three-month data annualized)
Return on average assets		0.49	%			1.12	%			0.89	%			1.69	%
Return on average equity		5.78	%			10.92	%			9.25	%			17.59	%
Return on average common stockholders' equity		5.78	%			10.92	%			9.25	%			17.37	%
Net interest margin (tax equivalent basis)		3.75	%			3.79	%			3.73	%			3.67	%
Efficiency ratio		84.29	%			81.19	%			81.47	%			78.49	%
									QTD								FYTD
FINANCIAL CONDITION DATA:	September 30,				June 30,				Increase				September 30,				Increase
(In thousands, except per share data)		2022				2022			(Decrease)					2021			(Decrease)
Total assets	$	2,057,662			$	2,006,666			$	50,996			$	1,721,394			$	336,268
Cash and cash equivalents		41,665				37,468				4,197				33,428				8,237
Investment securities		318,075				309,027				9,048				208,518				109,557
Loans held for sale (1)		60,462				188,031				(127,569	)			214,940				(154,478	)
Gross loans (1) (2)		1,451,915				1,282,796				169,119				1,090,237				361,678
Allowance for loan losses		15,360				14,980				380				14,301				1,059
Interest earning assets		1,860,062				1,809,588				50,474				1,540,111				319,951
Goodwill		9,848				9,848				-				9,848				-
Core deposit intangibles		775				828				(53	)			988				(213	)
Loan servicing rights		67,194				69,039				(1,845	)			54,026				13,168
Noninterest-bearing deposits		340,172				343,292				(3,120	)			291,039				49,133
Interest-bearing deposits (3)		1,175,662				1,002,415				173,247				936,541				239,121
Federal Home Loan Bank borrowings		307,303				404,098				(96,795	)			250,000				57,303
Total liabilities		1,905,039				1,837,453				67,586				1,541,017				364,022
Accumulated other comprehensive income (loss)		(27,079	)			(12,560	)			(14,519	)			8,900				(35,979	)
Stockholders' equity, net of noncontrolling interests		152,623				169,213				(16,590	)			180,377				(27,754	)
Book value per share	$	21.90			$	23.80			$	(1.90	)		$	25.31				(3.41	)
Tangible book value per share (4)		20.37				22.30				(1.92	)			23.79				(3.41	)
Non-performing assets:
Nonaccrual loans - SBA guaranteed	$	5,474			$	5,165			$	309			$	6,748			$	(1,274	)
Nonaccrual loans - unguaranteed		5,382				4,717				665				8,252				(2,870	)
Total nonaccrual loans	$	10,856			$	9,882			$	974			$	15,000			$	(4,144	)
Accruing loans past due 90 days		-				-				-				472				(472	)
Total non-performing loans		10,856				9,882				974				15,472				(4,616	)
Troubled debt restructurings classified as performing loans		2,714				2,822				(108	)			1,743				971
Total non-performing assets	$	13,570			$	12,704			$	866			$	17,215			$	(3,645	)
Asset quality ratios:
Allowance for loan losses as a percent of total gross loans		1.06	%			1.17	%			(0.11	%)			1.31	%			(0.25	%)
Allowance for loan losses as a percent of total gross loans, excluding PPP loans (5)		1.06	%			1.17	%			(0.11	%)			1.38	%			(0.33	%)
Allowance for loan losses as a percent of nonperforming loans		141.49	%			151.59	%			(10.10	%)			92.43	%			49.06	%
Nonperforming loans as a percent of total gross loans		0.75	%			0.77	%			(0.02	%)			1.42	%			(0.67	%)
Nonperforming assets as a percent of total assets		0.66	%			0.63	%			0.03	%			1.00	%			(0.34	%)
(1) The $127.6 million decrease in loans held for sale and $169.1 million increase in gross loans from June 30, 2022 to September 30, 2022 include a transfer of $73.3 million of single tenant net lease loans from held-for-sale to held-for-investment.
(2) Includes $862,000, $1.8 million and $56.7 million of PPP loans at September 30, 2022, June 30, 2022 and September 30, 2021, respectively.
(3) Includes $292.5 million, $159.1 million and $100.1 million of brokered certificates of deposit at September 30, 2022, June 30, 2022 and September 30, 2021, respectively.
(4) See reconciliation of GAAP and non-GAAP financial measures for additional information relating to calculation of this item.
(5) 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.
									QTD								FYTD
	September 30,				June 30,				Increase				September 30,				Increase
Tangible Book Value Per Share		2022				2022			(Decrease)					2021			(Decrease)
(In thousands, except share and per share data)
Stockholders' equity, net of noncontrolling interests (GAAP)	$	152,623			$	169,213			$	(16,590	)		$	180,377			$	(27,754	)
Less: goodwill and core deposit intangibles		(10,623	)			(10,676	)			53				(10,836	)			213
Tangible equity (non-GAAP)	$	142,000			$	158,537				(16,537	)		$	169,541				(27,541	)
Outstanding common shares		6,970,631				7,110,706				(140,075	)			7,125,888				(155,257	)
Tangible book value per share (non-GAAP)	$	20.37			$	22.30			$	(1.93	)		$	23.79			$	(3.42	)
Book value per share (GAAP)	$	21.90			$	23.80			$	(1.90	)		$	25.31			$	(3.41	)
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)		2022				2022				2022				2021				2021
Total cash and cash equivalents	$	41,665			$	37,468			$	31,105			$	40,592			$	33,428
Total investment securities		318,075				309,027				284,674				220,926				208,518
Total loans held for sale		60,462				188,031				152,652				161,218				214,940
Total loans, net of allowance for loan losses		1,436,555				1,267,816				1,126,818				1,142,655				1,075,936
PPP loans		862				1,766				13,415				46,020				56,656
Loan servicing rights		67,194				69,039				68,267				59,187				54,026
Total assets		2,057,662				2,006,666				1,801,944				1,764,589				1,721,394
Retail deposits	$	1,223,330			$	1,186,582			$	1,151,437			$	1,146,454			$	1,127,522
Brokered deposits		292,504				159,125				69,752				120,581				100,058
Total deposits		1,515,834				1,345,707				1,221,189				1,267,035				1,227,580
Federal Home Loan Bank borrowings		307,303				404,098				296,592				258,377				250,000
Common stock and additional paid-in capital	$	26,848			$	27,236			$	27,154			$	27,073			$	25,799
Retained earnings - substantially restricted		162,985				161,438				159,732				153,630				150,185
Accumulated other comprehensive income (loss)		(27,079	)			(12,560	)			(1,336	)			9,219				8,900
Unearned stock compensation		(969	)			(1,075	)			(1,180	)			(1,285	)			(138	)
Less treasury stock, at cost		(9,162	)			(5,826	)			(4,417	)			(4,417	)			(4,369	)
Total stockholders' equity		152,623				169,213				179,953				184,220				180,377
Outstanding common shares		6,970,631				7,110,706				7,169,826				7,169,826				7,125,888
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):	Three Months Ended
Summarized Consolidated Statements of Income	September 30,				June 30,				March 31,				December 31,				September 30,
(In thousands, except per share data)		2022				2022				2022				2021				2021
Total interest income	$	20,956			$	18,479			$	15,801			$	15,762			$	16,243
Total interest expense		4,131				2,568				1,788				1,859				1,819
Net interest income		16,825				15,911				14,013				13,903				14,424
Provision (credit) for loan losses		880				532				(30	)			526				8
Net interest income after provision (credit) for loan losses		15,945				15,379				14,043				13,377				14,416
Total noninterest income		4,531				10,033				20,072				16,591				16,495
Total noninterest expense		18,001				22,835				25,461				24,852				25,104
Income before income taxes		2,475				2,577				8,654				5,116				5,807
Income tax expense (benefit)		9				(61	)			1,619				811				958
Net income attributable to the Company	$	2,466			$	2,638			$	7,035			$	4,305			$	4,849
Net income per share, basic	$	0.35			$	0.37			$	0.99			$	0.60			$	0.68
Weighted average shares outstanding, basic		6,988,873				7,073,204				7,076,355				7,116,790				7,111,594
Net income per share, diluted	$	0.35			$	0.37			$	0.98			$	0.60			$	0.67
Weighted average shares outstanding, diluted		7,056,138				7,145,288				7,156,229				7,207,210				7,200,357
	Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
Consolidated Performance Ratios (Annualized)		2022				2022				2022				2021				2021
Return on average assets		0.49	%			0.55	%			1.61	%			1.01	%			1.12	%
Return on average equity		5.78	%			6.06	%			15.24	%			9.45	%			10.92	%
Return on average common stockholders' equity		5.78	%			6.06	%			15.24	%			9.45	%			10.92	%
Net interest margin (tax equivalent basis)		3.75	%			3.77	%			3.68	%			3.73	%			3.79	%
Efficiency ratio		84.29	%			88.02	%			74.70	%			81.50	%			81.19	%
	As of or for the Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
Consolidated Asset Quality Ratios		2022				2022				2022				2021				2021
Nonperforming loans as a percentage of total loans		0.75	%			0.77	%			0.88	%			1.10	%			1.42	%
Nonperforming assets as a percentage of total assets		0.66	%			0.63	%			0.73	%			0.82	%			1.00	%
Allowance for loan losses as a percentage of total loans		1.06	%			1.17	%			1.27	%			1.28	%			1.31	%
Allowance for loan losses as a percentage of nonperforming loans		141.49	%			151.59	%			143.94	%			116.12	%			92.43	%
Net charge-offs to average outstanding loans		0.03	%			0.00	%			0.02	%			0.00	%			0.03	%
SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED):	Three Months Ended
Segmented Statements of Income Information	September 30,				June 30,				March 31,				December 31,				September 30,
(In thousands, except per share data)		2022				2022				2022				2021				2021
Core Banking Segment:
Net interest income	$	14,994			$	13,848			$	11,847			$	11,495			$	11,517
Provision (credit) for loan losses		769				910				(240	)			(144	)			(189	)
Net interest income after provision (credit) for loan losses		14,225				12,938				12,087				11,639				11,706
Noninterest income		1,808				2,379				2,163				1,942				1,780
Noninterest expense		8,986				10,187				9,811				9,482				8,800
Income before income taxes		7,047				5,130				4,439				4,099				4,686
Income tax expense		1,190				568				330				500				569