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Integrated Financial Holdings, Inc. Second Quarter 2022 Financial Results

·27 min read
Integrated Financial Holdings, Inc.
Integrated Financial Holdings, Inc.

RALEIGH, N.C., Aug. 12, 2022 (GLOBE NEWSWIRE) -- Integrated Financial Holdings, Inc. (OTCQX: IFHI) (the “Company” or “IFHI”), the financial holding company for West Town Bank & Trust (“the Bank”), released its financial results for the three months and six months ended June 30, 2022. Highlights from the 2022 second quarter and year-to-date results include the following:

  • Second quarter net income of $1.4 million or $0.63 per diluted share, compared to second quarter 2021 net income of $4.6 million or $2.07 per diluted share. Year-to-date net income was $5.0 million or $2.22 per diluted share compared to $8.5 million or $3.82 per diluted share in the prior year.

  • Net interest income of $5.1 million for the second quarter of 2022, compared to $4.1 million for the same period in 2021. For the year, net interest income was $10.4 million compared to $7.9 million for the same six-month period in 2021.

  • Return on average assets of 1.29% and 2.29% for the three and six-month periods ending June 30, 2022 compared to 4.39% and 4.20%, respectively for the same periods in 2021.

  • Return on average tangible common equity (a non-GAAP financial measure) of 7.91% and 14.08% for the three and six-month periods ending June 30, 2022 compared to 29.84% and 28.61%, respectively for the same periods in 2021.

BALANCE SHEET
On June 30, 2022, the Company’s total assets were $435.5 million, net loans held for investment were $259.9 million, loans held for sale (“HFS”) were $59.6 million, total deposits were $333.6 million and total shareholders’ equity attributable to IFHI was $92.5 million. Compared with December 31, 2021, total assets decreased $17.5 million or 4%, net loans held for investment increased $5.8 million or 2%, HFS loans increased $31.7 million or 114%, total deposits decreased $14.5 million or 4%, and total shareholders’ equity attributable to IFHI increased $3.9 million or 4%. The cash side of the balance sheet continued to decrease as the Company continued to redeploy cash into higher yielding loans. The Bank has continued to see strong growth in HFS loans primarily as a result of a strong loan pipeline for the Government Guaranteed Lending (“GGL”) type loans. At $59.6 million in volume, HFS loans at June 30, 2022 represent significant potential future GGL revenues as those loans are sold in the market and the associated premiums are recognized. Noninterest bearing deposits declined $30.8 million since the prior year-end, in part, as a result of some ongoing merger and acquisition activity in one of the targeted industries that the Company banks.   The increase in total shareholders’ equity since year-end 2021 was primarily a result of net income posted for the six-month period ended June 30, 2022.

CAPITAL LEVELS
At June 30, 2022, the regulatory capital ratios of West Town Bank & Trust exceeded the minimum thresholds established for well-capitalized banks under applicable banking regulations.

 

"Well Capitalized" Minimum

Basel III Fully Phased-In

West Town Bank & Trust

Tier 1 common equity ratio

6.50%

7.00%

15.52%

Tier 1 risk-based capital ratio

8.00%

8.50%

15.52%

Total risk-based capital ratio

10.00%

10.50%

16.78%

Tier 1 leverage ratio

5.00%

4.00%

12.19%

 

 

 

 

The Company’s book value per common share increased from $38.32 as of June 30, 2021, to $41.15 at June 30, 2022. The Company’s tangible book value per common share (a non-GAAP financial measure) increased from $29.29 as of June 30, 2021, to $32.62 at June 30, 2022, primarily as a result of the net income of the Company.

ASSET QUALITY
The Company’s nonperforming assets to total assets ratio decreased from 1.65% at December 31, 2021, to 1.07% at June 30, 2022, as management continued to aggressively work to reduce its special assets portfolio. Nonaccrual loans at June 30, 2022 decreased $2.2 million or 32% as compared to December 31, 2021. Neither Patriarch, LLC, a subsidiary of the Company formed to expedite the liquidation and recovery of certain Bank asset, nor the Bank held any foreclosed assets as of June 30, 2022.

The Company recorded $460,000 and $640,000 in provision for loan losses during the three and six-months periods ending June 30, 2022, respectively, as compared to provisions of $50,000 and $672,000 for the same periods in 2021 as the loan portfolio increased for those periods. The Company recorded $279,000 in net recoveries during the second quarter of 2022 compared to $24,000 in charge-offs for the same period in 2021. Management continues to make progress in improving overall asset quality. Set forth in the table below is certain asset quality information as of the dates indicated:

  (Dollars in thousands)

6/30/22

3/31/22

12/31/21

9/30/21

6/30/21

Nonaccrual loans

$

4,656

 

$

6,558

 

$

6,848

 

$

7,575

 

$

5,765

 

Foreclosed assets

 

-

 

 

-

 

 

618

 

 

618

 

 

618

 

90 days past due and still accruing

 

-

 

 

-

 

 

-

 

 

-

 

 

447

 

Total nonperforming assets

$

4,656

 

$

6,558

 

$

7,466

 

$

8,193

 

$

6,830

 

 

 

 

 

 

 

Net charge-offs

$

(279

)

$

105

 

$

1,038

 

$

325

 

$

24

 

Annualized net charge-offs to total average portfolio loans

 

-0.43

%

 

0.16

%

 

1.65

%

 

0.50

%

 

0.03

%

 

 

 

 

 

 

Ratio of total nonperforming assets to total assets

 

1.07

%

 

1.52

%

 

1.65

%

 

1.84

%

 

1.55

%

Ratio of total nonperforming loans to total loans, net of allowance

 

1.79

%

 

2.56

%

 

2.70

%

 

2.99

%

 

2.40

%

Ratio of total allowance for loan losses to total loans

 

2.39

%

 

2.14

%

 

2.14

%

 

2.24

%

 

2.13

%


NET INTEREST INCOME AND MARGIN
Net interest income for the three months ended June 30, 2022, increased $1.0 million or 25% in comparison to the second quarter of 2021 as loan yields increased year over year from 6.43% to 6.90%. The increase in yield from the prior year resulted from a change in loan mix and also reflecting the impact of 150 basis points of rate increases by the Federal Open Market Committee (“FOMC”) since the beginning of 2022 in response to current economic conditions. Overall cost of funds decreased from 0.82% in the second quarter of 2021 to 0.64% for the same period in 2022, however the Company expects to see an upward trend in its costs of funds as average retail certificate of deposit (“CD”) rates trend up and new CDs are originated at a higher market rate. Net interest margin increased from 4.63% during the three months ended June 30, 2021, to 5.51% for the same period in 2022. The increase in margin was also driven by the increase in loan yield as a result of the FOMC actions.

Net interest income for the six months ended June 30, 2022, increased $2.4 million or 31% in comparison to the same period of 2021 as loan yields increased year over year from 6.34% to 7.30% as a result of the FOMC rate increases during the period and the recapture of interest on several large nonaccrual loans in the first quarter of 2022 as previously reported.

 

Three Months Ended

 

Year-To-Date

  (Dollars in thousands)

6/30/22

3/31/22

12/31/21

9/30/21

6/30/21

 

6/30/22

6/30/21

Average balances:

 

 

 

 

 

 

 

 

Loans

$

319,115

$

294,502

$

277,510

$

272,994

$

292,166

 

$

306,809

$

290,433

Available-for-sale securities

 

21,879

 

21,088

 

20,367

 

19,393

 

17,969

 

 

21,484

 

28,668

Other interest-bearing balances

 

33,328

 

56,359

 

86,261

 

93,682

 

46,545

 

 

44,844

 

41,263

Total interest-earning assets

 

374,322

 

371,949

 

384,138

 

386,069

 

356,680

 

 

373,137

 

360,364

Total assets

 

438,732

 

437,402

 

442,139

 

446,822

 

418,741

 

 

438,067

 

409,258

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

85,042

 

98,546

 

104,472

 

103,708

 

85,918

 

 

91,794

 

83,272

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

244,363

 

235,092

 

237,847

 

240,957

 

235,013

 

 

239,727

 

231,870

Borrowings

 

8,626

 

6,306

 

5,272

 

5,196

 

5,187

 

 

7,466

 

4,593

Total interest-bearing liabilities

 

252,989

 

241,398

 

243,119

 

246,153

 

240,200

 

 

247,193

 

236,463

Common shareholders' equity

 

90,721

 

90,441

 

86,549

 

85,683

 

81,584

 

 

90,581

 

80,112

Tangible common equity (1)

 

71,437

 

70,939

 

66,877

 

65,843

 

61,587

 

 

71,188

 

60,047

 

 

 

 

 

 

 

 

 

Interest income/expense:

 

 

 

 

 

 

 

 

Loans

$

5,491

$

5,623

$

4,571

$

4,759

$

4,686

 

$

11,114

$

9,128

Available-for-sale securities

 

104

 

89

 

77

 

75

 

66

 

 

193

 

116

Interest-bearing balances and other

 

89

 

42

 

53

 

67

 

33

 

 

131

 

68

Total interest income

 

5,684

 

5,754

 

4,701

 

4,901

 

4,785

 

 

11,438

 

9,312

Deposits

 

523

 

522

 

566

 

645

 

665

 

 

1,045

 

1,369

Borrowings

 

15

 

9

 

1

 

-

 

-

 

 

24

 

-

Total interest expense

 

538

 

531

 

567

 

645

 

665

 

 

1,069

 

1,369

Net interest income

$

5,146

$

5,223

$

4,134

$

4,256

$

4,120

 

$

10,369

$

7,943

 

 

 

 

 

 

 

 

 

(1) See reconciliation of non-GAAP financial measures.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Three Months Ended

 

Year-To-Date

 

6/30/22

3/31/22

12/31/21

9/30/21

6/30/21

 

6/30/22

6/30/21

Average yields and costs:

 

 

 

 

 

 

 

 

Loans

6.90

%

7.74

%

6.53

%

6.92

%

6.43

%

 

7.30

%

6.34

%

Available-for-sale securities

1.90

%

1.69

%

1.51

%

1.55

%

1.47

%

 

1.80

%

0.81

%

Interest-bearing balances and other

1.07

%

0.30

%

0.24

%

0.28

%

0.28

%

 

0.59

%

0.33

%

Total interest-earning assets

6.09

%

6.27

%

4.86

%

5.04

%

5.38

%

 

6.18

%

5.21

%

Interest-bearing deposits

0.86

%

0.90

%

0.94

%

1.06

%

1.13

%

 

0.88

%

1.19

%

Borrowings

0.70

%

0.58

%

0.08

%

0.00

%

0.00

%

 

0.65

%

0.00

%

Total interest-bearing liabilities

0.85

%

0.89

%

0.93

%

1.04

%

1.11

%

 

0.87

%

1.17

%

Cost of funds

0.64

%

0.63

%

0.65

%

0.73

%

0.82

%

 

0.64

%

0.86

%

Net interest margin

5.51

%

5.69

%

4.27

%

4.37

%

4.63

%

 

5.60

%

4.44

%

NONINTEREST INCOME
Noninterest income for the three months ended June 30, 2022, was $6.7 million, a decrease of $5.8 million or 46% as compared to the three months ended June 30, 2021. Specific items to note include:

  • Windsor Advantage, LLC (“Windsor”), a subsidiary of the Company which offers an SBA and USDA loan servicing platform, had processing and servicing revenue totaling $2.4 million, a decrease of $3.4 million or 59% as compared to the $5.8 million in income earned during the same prior-year period. The decrease is entirely attributable to $3.5 million in PPP fee related income realized in the second quarter of 2021 compared to no such income in the same period in 2022.

  • Mortgage revenue totaled $1.1 million, a decrease of $707,000 or 40% as compared to the second quarter of 2021. Mortgage originations have continued to decline due to rising interest rates. To that effect, mortgage loans originated to sell to the secondary market decreased from $51.0 million in the second quarter 2021 to $37.7 million in the second quarter 2022.   The decrease in both the core mortgage revenue and origination volume can be attributable to the nationwide slowdown in refinancing volume with housing supplies continuing to be an issue along with the impact of a nationwide increase of almost 20% for the median price of a new home and a doubling of long-term mortgage rates year-over-year.

  • Government Guaranteed Lending (“GGL”) revenue was $2.8 million in the second quarter of 2022, a decrease of $1.0 million or 27% in comparison to the $3.8 million of revenues for the same period in 2021. However, the loans held for sale portfolio, representing future premium income, significantly increased quarter over quarter and year-over-year. GGL related HFS loans were $52.4 million as of June 30, 2022, compared to $25.4 million at December 31, 2021 and $4.5 million at June 30, 2021.

  • Other noninterest income was $290,000 in the second quarter of 2022 compared to income of $908,000 in the same period in 2021. The decrease is mostly attributable to a $383,000 decrease in deferred PPP fees recognized in 2021.

Noninterest income for the six months ended June 30, 2022, was $17.1 million compared to $27.1 million for the same period in 2021, a decrease of $10.1 million or 37%. The decrease is primarily due to a decrease of $10.0 million in loan processing and servicing revenue driven by the decrease in PPP-related revenue during the period.

NONINTEREST EXPENSE
Noninterest expense for the second quarter of 2022 was $9.6 million, a decrease of $979,000 or 9%, from $10.6 million for the second quarter of 2021. Contributing to the year-over-year decrease was software expenses, which decreased due to Windsor fully expensing the PPP platform in 2021. Software expenses were $426,000, a decrease of $1.1 million or 72% in the second quarter of 2022 compared to the same period in 2021 as a result of no additional costs related to the processing of PPP loans during the second quarter of 2022. Compensation increased $275,000 from $6.0 million to $6.3 million due to additional costs for new hires in 2022. The decreases in most of the noninterest expense categories, including special assets, data processing, software, communications, and other operating expenses are primarily related to management’s overall effort to grow profitability.

Noninterest expense for the six months ended June 30, 2022, was $20.0 million compared to $23.3 million for the same period in 2021, a decrease of $3.3 million or 14%. The decrease is primarily due to a decrease of $4.1 million in software expenses associated with the PPP platform slightly offset by other expense increases.

SUBSEQUENT EVENTS

Entry into Merger Agreement with MVB Financial Corp. On August 12, 2022, it was publicly announced that the Company had entered into a definitive merger agreement with MVB Financial Corp. (“MVB”), the holding company for MVB Bank, Inc., a West Virginia state-chartered bank. Under the terms of the merger agreement, which is an all-stock transaction, the Company would be merged with and into MVB, with MVB as the surviving corporation in the proposed merger. Readers are strongly encouraged to read the full merger announcement release (the “Merger Release”), which is available under the Investor Relations section of the Company’s website (https://ifhinc.com) and contains additional detail on the proposed strategic combination with MVB. Readers are also directed to the end of this press release and the section entitled “Additional Information on the Merger and Where to Find it.”

RESPA Class Action Litigation. On February 19, 2019, a group of plaintiffs filed a putative class action lawsuit against West Town Bank & Trust alleging that they were subject to an illegal kickback and price fixing scheme designed and executed by All Star Title, Inc. for the referral of settlement services. The case is styled Joseph and Karen Somerville, III, et al. v. West Town Bank & Trust, a/k/a West Town Savings Bank, Case No. 1.19-CV-00490, pending in the United States District Court for the District of Maryland (such case, the “RESPA Litigation”). Based on this alleged conduct, plaintiffs accused the Bank of violating Section 8(a) of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2607; Section 1 of the Sherman Act, 15 U.S.C. § 1; and Section 1962 of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962. These claims were asserted on a class basis, and the plaintiffs sought to represent other similar borrowers of the Bank whose loans were closed or settled by All Star Title, Inc. The plaintiffs seek to recover three times the charges they paid for settlement services in addition to actual damages trebled and attorneys’ fees and costs.

On May 28, 2019, the Bank moved to dismiss the putative class action complaint for failure to state a claim upon which relief can be granted. On November 19, 2019, the court granted in part and denied in part the Bank’s motion. The court dismissed the plaintiffs’ claim for price-fixing under Section 1 of the Sherman Act but allowed the plaintiffs’ RESPA Section 8 and RICO claims to survive dismissal and proceed with discovery.   On February 4, 2021, the court certified a class comprised of borrowers who obtained a loan originated or brokered by the Bank for which All Star Title, Inc. provided a settlement service between January 1, 2010 and December 31, 2015. The court also certified two subclasses: a RICO subclass and a RESPA subclass. West Town Bank & Trust sought permission to appeal the certification order and permission was denied by the United States Court of Appeals for the Fourth Circuit on March 29, 2021. Notice of the pending litigation and certification of the class was mailed to the members of the class on December 10, 2021. As of June 30, 2022, the parties were still engaged in discovery, and no trial date had been scheduled.

During July 2022 following the close of the June 30, 2022 fiscal quarter, and precipitated, in part, by its ongoing strategic discussions with MVB, the Company initiated informal settlement discussions with plaintiffs’ counsel in the RESPA Litigation. Litigation such as the foregoing is time consuming, often takes years to resolve and can complicate a company’s strategic initiatives. On August 10, 2022, the Bank agreed to settle the RESPA Litigation for an aggregate sum of $10.0 million, subject to execution of a definitive settlement agreement with plaintiffs and court approval of the settlement. Accordingly, during the third quarter of 2022, the Company established a $10.0 million liability and expense for estimated settlement costs associated with the RESPA Litigation.

ABOUT INTEGRATED FINANCIAL HOLDINGS, INC.
Integrated Financial Holdings, Inc. is a financial holding company based in Raleigh, North Carolina. The Company is the holding company for West Town Bank & Trust, an Illinois state-chartered bank. West Town Bank & Trust provides banking services through its full-service office located in the greater Chicago area. The Company is also the parent company of: Windsor Advantage, LLC, a loan servicing company; West Town Insurance Agency, Inc., an insurance agency; Patriarch, LLC, a real estate management company; and SBA Loan Documentation Services, LLC, a loan documentation origination company. The Company is registered with and supervised by the Federal Reserve. West Town Bank & Trust’s primary regulators are the Illinois Department of Financial and Professional Regulation and the FDIC. The Bank also has an investment in West Town Payments, LLC. Due to the nature of the investment, West Town Payments, LLC is considered a variable interest entity, and as a result, is consolidated for accounting purposes.

For more information, visit https://ifhinc.com/.

Important Note Regarding Forward-Looking Statements
This release contains certain forward-looking statements with respect to the financial condition, results of operations, and business of the Company, as well as regarding the announced merger with MVB. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of the Company and on the information available to management at the time this release was prepared. These statements can be identified by the use of words such as "expect," "anticipate," "estimate," "believe," variations of these words, and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause a difference include, among others: changes in the national and local economies or market conditions; changes in interest rates, deposit flows, loan demand, and asset quality, including real estate and other collateral values; changes in Small Business Administration rules, regulations, or loan products, including the section 7(a) program; changes in other government guaranteed loan programs or our ability to participate in such programs; changes in tax law, including the impact of such changes on our tax assets and liabilities; future governmental shutdowns that may impact revenues associated with our lending and other operations that are dependent on government guaranteed loan programs; changes in banking regulations and accounting principles, policies, or guidelines; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with the Company’s acquisition and divesture activities; the failure of our strategic investments or acquisitions to perform as anticipated and the impact of any impairments to our intangible assets, such as goodwill; the impact of our strategic initiatives on our ability to retain key employees; adverse results (including judgments, costs, fines, reputational harm, financial settlements and/or other negative effects) from current or future litigation, regulatory proceedings, investigations, or similar matters, or developments related thereto; that costs or estimated liabilities and expenses associated with the RESPA Litigation may be greater than currently estimated or that a definitive settlement agreement with plaintiffs is not reached or court approved; the impact of competition from traditional or new sources, including non-bank financial service providers, such as Fintechs; and, with respect to the Company’s announced merger with MVB, those factors detailed in the “Forward Looking Statements” section of the Merger Release, which are incorporated herein by this reference. These, and other factors that may emerge, could cause decisions and actual results to differ materially from current expectations. The Company assumes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.

Additional Information on the Merger and Where to Find It

In connection with the proposed merger, MVB will file a registration statement on Form S-4 with the U.S. Securities and Exchange Commission (“SEC”). The registration statement will include a joint proxy statement of MVB and IFHI, which also constitutes a prospectus of MVB, that will be sent to IFHI’s and MVB’s shareholders seeking certain approvals related to the proposed transaction.

The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. INVESTORS AND SECURITY HOLDERS OF IFHI AND MVB AND THEIR RESPECTIVE AFFILIATES ARE URGED TO READ, WHEN AVAILABLE, THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS TO BE INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT IFHI, MVB AND THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain a free copy of the registration statement, including the joint proxy statement/prospectus, as well as other relevant documents filed by MVB with the SEC containing information about IFHI and MVB, without charge, at the SEC’s website (http://www.sec.gov). In addition, copies of documents filed with the SEC by MVB will be made available free of charge in the “Investor Relations” section of MVB’s website, https://www.mvbbanking.com, under the heading “SEC Filings;” and investors may obtain free copies of the joint proxy statement/prospectus (when available) by contacting Integrated Financial Holdings, Inc., Attn: Eric J. Bergevin, 8450 Falls of Neuse Road, Suite 202, Raleigh, NC 27615, telephone: (252) 482-4400.

Participants in Solicitation

IFHI, MVB, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction under the rules of the SEC. Information regarding MVB’s directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on April 7, 2022, and certain other documents filed by MVB with the SEC. Other information regarding the participants in the solicitation of proxies in respect of the proposed transaction and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC. Free copies of these documents, when available, may be obtained as described in the preceding paragraph.

Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance

  (Dollars in thousands, unaudited)

6/30/22

3/31/22

12/31/21

9/30/21

6/30/21

Assets

 

 

 

 

 

Cash and due from banks

$

4,700

 

$

3,900

 

$

3,803

 

$

4,452

 

$

3,537

 

Interest-bearing deposits

 

21,981

 

 

28,876

 

 

79,910

 

 

83,327

 

 

76,957

 

 

Total cash and cash equivalents

 

26,681

 

 

32,776

 

 

83,713

 

 

87,779

 

 

80,494

 

Interest-bearing time deposits

 

1,499

 

 

1,746

 

 

1,746

 

 

1,996

 

 

2,746

 

Available-for-sale securities

 

19,038

 

 

20,386

 

 

20,659

 

 

19,341

 

 

18,928

 

Marketable equity securities

 

17,982

 

 

18,000

 

 

12,000

 

 

12,000

 

 

12,000

 

Loans held for sale

 

59,592

 

 

51,095

 

 

27,880

 

 

20,610

 

 

14,621

 

Loans held for investment

 

266,259

 

 

262,281

 

 

259,625

 

 

259,206

 

 

264,402

 

 

Allowance for loan and lease losses

 

(6,361

)

 

(5,622

)

 

(5,547

)

 

(5,810

)

 

(5,635

)

 

 

Loans held for investment, net

 

259,898

 

 

256,659

 

 

254,078

 

 

253,396

 

 

258,767

 

Premises and equipment, net

 

4,238

 

 

4,235

 

 

4,106

 

 

4,127

 

 

4,599

 

Foreclosed assets

 

-

 

 

-

 

 

618

 

 

618

 

 

618

 

Loan servicing assets

 

4,178

 

 

4,014

 

 

3,993

 

 

3,830

 

 

3,936

 

Bank-owned life insurance

 

5,304

 

 

5,271

 

 

5,246

 

 

5,220

 

 

5,193

 

Accrued interest receivable

 

2,139

 

 

1,886

 

 

1,373

 

 

1,508

 

 

1,672

 

Goodwill

 

13,161

 

 

13,161

 

 

13,161

 

 

13,161

 

 

13,161

 

Other intangible assets, net

 

6,014

 

 

6,180

 

 

6,400

 

 

6,569

 

 

6,737

 

Other assets

 

15,764

 

 

15,218

 

 

18,001

 

 

13,954

 

 

16,803

 

 

 

 

Total assets

$

435,488

 

$

430,627

 

$

452,974

 

$

444,109

 

$

440,275

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

Liabilities

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing

$

83,544

 

$

92,499

 

$

114,313

 

$

98,940

 

$

98,797

 

 

Interest-bearing

 

250,026

 

 

233,953

 

 

233,842

 

 

241,959

 

 

238,598

 

 

 

Total deposits

 

333,570

 

 

326,452

 

 

348,155

 

 

340,899

 

 

337,395

 

Borrowings

 

-

 

 

5,000

 

 

7,500

 

 

5,000

 

 

5,000

 

Accrued interest payable

 

308

 

 

325

 

 

326

 

 

372

 

 

388

 

Other liabilities

 

9,939

 

 

8,320

 

 

9,212

 

 

11,130

 

 

13,490

 

 

Total liabilities

 

343,817

 

 

340,097

 

 

365,193

 

 

357,401

 

 

356,273

 

Shareholders' equity:

 

 

 

 

 

Common stock, voting

 

2,227

 

 

2,213

 

 

2,176

 

 

2,176

 

 

2,183

 

Common stock, non-voting

 

22

 

 

22

 

 

22

 

 

22

 

 

22

 

Additional paid in capital

 

24,498

 

 

24,013

 

 

23,664

 

 

23,515

 

 

23,545

 

Retained earnings

 

67,781

 

 

66,372

 

 

62,810

 

 

61,534

 

 

58,597

 

Accumulated other comprehensive income (loss)

 

(1,985

)

 

(1,296

)

 

(99

)

 

65

 

 

105

 

 

Total IFH, Inc. shareholders' equity

 

92,543

 

 

91,324

 

 

88,573

 

 

87,312

 

 

84,452

 

Noncontrolling interest

 

(872

)

 

(794

)

 

(792

)

 

(604

)

 

(450

)

 

Total shareholders' equity

 

91,671

 

 

90,530

 

 

87,781

 

 

86,708

 

 

84,002

 

 

 

 

Total liabilities and shareholders' equity

$

435,488

 

$

430,627

 

$

452,974

 

$

444,109

 

$

440,275

 

 

 

 

 

 

 

 

 

 


Consolidated Statements of Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  (Dollars in thousands except per

Three Months Ended

 

Year-To-Date

  share data; unaudited)

6/30/22

3/31/22

12/31/21

9/30/21

6/30/21

 

6/30/22

6/30/21

Interest income

 

 

 

 

 

 

 

 

Loans

$

5,491

 

$

5,623

 

$

4,571

 

$

4,759

 

$

4,686

 

 

$

11,114

 

$

9,128

 

Available-for-sale securities and other

 

193

 

 

131

 

 

130

 

 

142

 

 

99

 

 

 

324

 

 

184

 

Total interest income

 

5,684

 

 

5,754

 

 

4,701

 

 

4,901

 

 

4,785

 

 

 

11,438

 

 

9,312

 

Interest expense

 

 

 

 

 

 

 

 

Interest on deposits

 

523

 

 

522

 

 

566

 

 

645

 

 

665

 

 

 

1,045

 

 

1,369

 

Interest on borrowings

 

15

 

 

9

 

 

1

 

 

-

 

 

-

 

 

 

24

 

 

-

 

Total interest expense

 

538

 

 

531

 

 

567

 

 

645

 

 

665

 

 

 

1,069

 

 

1,369

 

Net interest income

 

5,146

 

 

5,223

 

 

4,134

 

 

4,256

 

 

4,120

 

 

 

10,369

 

 

7,943

 

Provision for loan losses

 

460

 

 

180

 

 

775

 

 

500

 

 

50

 

 

 

640

 

 

672

 

Noninterest income

 

 

 

 

 

 

 

 

Loan processing and servicing

 

 

 

 

 

 

 

 

revenue

 

2,373

 

 

2,207

 

 

2,863

 

 

5,951

 

 

5,765

 

 

 

4,580

 

 

14,603

 

Mortgage

 

1,066

 

 

173

 

 

1,090

 

 

1,537

 

 

1,773

 

 

 

1,239

 

 

3,479

 

Government guaranteed lending

 

2,767

 

 

1,124

 

 

2,216

 

 

584

 

 

3,812

 

 

 

3,891

 

 

5,137

 

SBA documentation preparation fees

 

128

 

 

144

 

 

167

 

 

149

 

 

241

 

 

 

272

 

 

675

 

Service charges on deposits

 

118

 

 

104

 

 

85

 

 

77

 

 

49

 

 

 

222

 

 

81

 

Bank-owned life insurance

 

33

 

 

25

 

 

25

 

 

27

 

 

32

 

 

 

58

 

 

57

 

Other noninterest income (loss)

 

290

 

 

6,509

 

 

(1,473

)

 

694

 

 

908

 

 

 

6,799

 

 

3,104

 

Total noninterest income

 

6,775

 

 

10,286

 

 

4,973

 

 

9,019

 

 

12,580

 

 

 

17,061

 

 

27,136

 

Noninterest expense

 

 

 

 

 

 

 

 

Compensation

 

6,271

 

 

7,061

 

 

6,178

 

 

5,462

 

 

5,996

 

 

 

13,332

 

 

12,012

 

Occupancy and equipment

 

254

 

 

344

 

 

254

 

 

324

 

 

300

 

 

 

598

 

 

603

 

Loan and special asset expenses

 

491

 

 

638

 

 

483

 

 

133

 

 

634

 

 

 

1,129

 

 

1,636

 

Professional services

 

491

 

 

551

 

 

845

 

 

732

 

 

560

 

 

 

1,042

 

 

1,240

 

Data processing

 

271

 

 

249

 

 

267

 

 

196

 

 

215

 

 

 

520

 

 

436

 

Software

 

426

 

 

425

 

 

830

 

 

842

 

 

1,524

 

 

 

851

 

 

4,915

 

Communications

 

97

 

 

83

 

 

99

 

 

100

 

 

90

 

 

 

180

 

 

197

 

Advertising

 

321

 

 

214

 

 

453

 

 

474

 

 

393

 

 

 

535

 

 

502

 

Amortization of intangibles

 

170

 

 

170

 

 

170

 

 

170

 

 

172

 

 

 

340

 

 

358

 

Other operating expenses

 

846

 

 

631

 

 

754

 

 

505

 

 

733

 

 

 

1,477

 

 

1,377

 

Total noninterest expense

 

9,638

 

 

10,366

 

 

10,333

 

 

8,938

 

 

10,617

 

 

 

20,004

 

 

23,276

 

Income (loss) before income taxes

 

1,823

 

 

4,963

 

 

(2,001

)

 

3,837

 

 

6,033

 

 

 

6,786

 

 

11,131

 

Income tax expense (benefit)

 

492

 

 

1,403

 

 

(3,090

)

 

1,055

 

 

1,606

 

 

 

1,895

 

 

2,902

 

Net income

 

1,331

 

 

3,560

 

 

1,089

 

 

2,782

 

 

4,427

 

 

 

4,891

 

 

8,229

 

Noncontrolling interest

 

(78

)

 

(2

)

 

(187

)

 

(155

)

 

(155

)

 

 

(80

)

 

(289

)

Net income attributable

 

 

 

 

 

 

 

 

    to IFH, Inc.

$

1,409

 

$

3,562

 

$

1,276

 

$

2,937

 

$

4,582

 

 

$

4,971

 

$

8,518

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.65

 

$

1.65

 

$

0.60

 

$

1.37

 

$

2.14

 

 

$

2.29

 

$

3.93

 

Diluted earnings per common share

$

0.63

 

$

1.59

 

$

0.57

 

$

1.32

 

$

2.07

 

 

$

2.22

 

$

3.82

 

Weighted average common shares

 

 

 

 

 

 

 

 

outstanding

 

2,175

 

 

2,159

 

 

2,140

 

 

2,144

 

 

2,147

 

 

 

2,167

 

 

2,166

 

Diluted average common shares

 

 

 

 

 

 

 

 

outstanding

 

2,244

 

 

2,242

 

 

2,234

 

 

2,219

 

 

2,219

 

 

 

2,243

 

 

2,229

 

 

 

 

 

 

 

 

 

 


Performance Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year-To-Date

 

 

6/30/22

3/31/22

12/31/21

9/30/21

6/30/21

 

6/30/22

6/30/21

PER COMMON SHARE

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.65

 

$

1.65

 

$

0.60

 

$

1.37

 

$

2.14

 

 

$

2.29

 

$

3.93

 

 

Diluted earnings per common share

 

0.63

 

 

1.59

 

 

0.57

 

 

1.32

 

 

2.07

 

 

 

2.22

 

 

3.82

 

 

Book value per common share

 

41.15

 

 

40.86

 

 

40.35

 

 

39.74

 

 

38.32

 

 

 

41.15

 

 

38.32

 

 

Tangible book value per common share (2)

 

32.62

 

 

32.21

 

 

31.44

 

 

30.76

 

 

29.29

 

 

 

32.62

 

 

29.29

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL RATIOS (ANNUALIZED)

 

 

 

 

 

 

 

 

 

Return on average assets

 

1.29

%

 

3.30

%

 

1.14

%

 

2.61

%

 

4.39

%

 

 

2.29

%

 

4.20

%

 

Return on average common shareholders'

 

 

 

 

 

 

 

 

 

equity

 

6.23

%

 

15.97

%

 

5.85

%

 

13.60

%

 

22.53

%

 

 

11.07

%

 

21.44

%

 

Return on average tangible common

 

 

 

 

 

 

 

 

 

equity (2)

 

7.91

%

 

20.36

%

 

7.57

%

 

17.70

%

 

29.84

%

 

 

14.08

%

 

28.61

%

 

Net interest margin

 

5.51

%

 

5.69

%

 

4.27

%

 

4.37

%

 

4.63

%

 

 

5.60

%

 

4.44

%

 

Efficiency ratio (1)

 

80.8

%

 

66.8

%

 

113.5

%

 

67.3

%

 

63.6

%

 

 

72.9

%

 

66.4

%

 

 

 

 

 

 

 

 

 

 

 

(1) Efficiency ratio is calculated by dividing noninterest expense less transaction-related costs by the sum of net interest income and noninterest income, less gains or losses on sale of securities.

 

 

 

 

 

 

 

 

(2) See reconciliation of non-GAAP measures

 

 

 

 

 

 

 

 

 

Loan Concentrations

The top ten commercial loan concentrations as of June 30, 2022, were as follows:

 

 

% of

 

 

Commercial

(in millions)

Amount

Loans

Solar electric power generation

$

82.9

38

%

Power and communication line and related structures construction

 

42.3

19

%

Lessors of nonresidential buildings (except miniwarehouses)

 

16.9

8

%

Hotels (except casino hotels) and motels

 

9.6

4

%

Other activities related to real estate

 

9.5

4

%

Lessors of residential buildings and dwellings

 

5.6

3

%

Other heavy and civil engineering construction

 

4.4

2

%

Lessors of other real estate property

 

3.9

2

%

All other amusement and recreation industries

 

3.0

1

%

Amusement arcades

 

2.6

1

%

 

$

180.7

82

%

 

 

 

Reconciliation of Non-GAAP Measures

  (In thousands except book value per share)

6/30/22

3/31/22

12/31/21

9/30/21

6/30/21

 

 

 

Tangible book value per common share

 

 

 

 

 

 

 

 

Total IFH, Inc. shareholders' equity

$

92,543

 

$

91,324

 

$

88,573

 

$

87,312

 

$

84,452

 

 

 

 

Less: Goodwill

 

13,161

 

 

13,161

 

 

13,161

 

 

13,161

 

 

13,161

 

 

 

 

Less Other intangible assets, net

 

6,014

 

 

6,180

 

 

6,400

 

 

6,569

 

 

6,737

 

 

 

 

Total tangible common equity

$

73,368

 

$

71,983

 

$

69,012

 

$

67,582

 

$

64,554

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending common shares outstanding

 

2,249

 

 

2,235

 

 

2,198

 

 

2,204

 

 

2,204

 

 

 

 

Tangible book value per common share

$

32.62

 

$

32.21

 

$

31.44

 

$

30.76

 

$

29.29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year-To-Date

  (Dollars in thousands)

6/30/22

3/31/22

12/31/21

9/30/21

6/30/21

 

12/31/21

12/31/20

Return on average tangible common equity

 

 

 

 

 

 

 

 

Average IFH, Inc. shareholders' equity

$

90,721

 

$

90,441

 

$

86,549

 

$

85,683

 

$

81,584

 

 

$

90,581

 

$

80,112

 

Less: Average goodwill

 

13,161

 

 

13,161

 

 

13,161

 

 

13,161

 

 

13,161

 

 

 

13,161

 

 

13,161

 

Less Average other intangible assets, net

 

6,123

 

 

6,341

 

 

6,511

 

 

6,679

 

 

6,836

 

 

 

6,232

 

 

6,904

 

Average tangible common equity

$

71,437

 

$

70,939

 

$

66,877

 

$

65,843

 

$

61,587

 

 

$

71,188

 

$

60,047

 

 

 

 

 

 

 

 

 

 

Net income attributable to IFH, Inc.

$

1,409

 

$

3,562

 

$

1,276

 

$

2,937

 

$

4,582

 

 

$

4,971

 

$

8,518

 

Return on average tangible common equity

 

7.91

%

 

20.36

%

 

7.57

%

 

17.70

%

 

29.84

%

 

 

14.08

%

 

28.61

%


Contact: Eric Bergevin, 252-482-4400