First Savings Financial Group, Inc. Reports Financial Results for the Fiscal Year Ended September 30, 2024
JEFFERSONVILLE, Ind., Oct. 24, 2024 (GLOBE NEWSWIRE) -- First Savings Financial Group, Inc. (NASDAQ:FSFG) (the "Company"), the holding company for First Savings Bank (the "Bank"), today reported net income of $13.6 million, or $1.98 per diluted share, for the year ended September 30, 2024, compared to net income of $8.2 million, or $1.19 per diluted share, for the year ended September 30, 2023. The core banking segment reported net income of $16.9 million, or $2.47 per diluted share for the year ended September 30, 2024, compared to $14.9 million, or $2.18 per diluted share for the year ended September 30, 2023.
Commenting on the Company's performance, Larry W. Myers, President and CEO, stated "Fiscal 2024 was, in many ways, a year of rebuilding, repositioning and refinement. A summary of these enhancement actions is provided below. While we're not entirely pleased with the financial performance in fiscal 2024, we are confident that the Company is well positioned to better perform in fiscal 2025 and the years thereafter regardless of the economic environment. For fiscal 2025 we'll remain focused on core banking; strong asset quality; selective high-quality lending; core deposit growth; increased SBA lending volume; continued improvement of liquidity, capital and interest rate sensitivity positions; and strategic opportunities. We believe the efforts of fiscal 2024 along with the focus for fiscal 2025 will deliver enhanced shareholder value. Additionally, we'll continue to evaluate options and strategies that we believe will further position the Company for future success and deliver shareholder value."
Enhancements Actions During Fiscal Year Ended September 30, 2024
Converted the core operating system immediately prior to the beginning of fiscal 2024 and committed to effectively adapt to the new system and gain efficiencies and expense reductions therewith.
Ceased national mortgage banking operations in the first fiscal quarter, including sale of the residential mortgage servicing rights portfolio.
Implemented additional expense reduction and containment strategies, which were effective.
Experienced the net interest margin floor in the second fiscal quarter and recognized expansion in the subsequent quarters, in addition to a slowed paced of deposit migration to higher cost types.
Maintained a balance sheet position that is expected to benefit in a potential decreasing rate environment but having limited exposure to potential increasing rates.
Remained disciplined in our lending philosophy with respect to both rate expectations and credit quality.
Enhanced our review of asset quality, which remains strong, in order to prepare for any potential financial downturn that may occur.
Enhanced SBA Lending business development staff with new and replacement hires throughout the fiscal year, plus decreased surplus support staff at the end of the fourth fiscal quarter.
Results of Operations for the Fiscal Years Ended September 30, 2024 and 2023
Net interest income decreased $3.5 million, or 5.7%, to $58.1 million for the year ended September 30, 2024 as compared to the prior year. The tax equivalent net interest margin for the year ended September 30, 2024 was 2.68% as compared to 3.10% for the prior year. The decrease in net interest income was due to a $22.3 million increase in interest expense, partially offset by an $18.8 million increase in interest income. A table of average balance sheets, including average asset yields and average liability costs, is included at the end of this release.
The Company recognized a provision for credit losses for loans of $3.5 million, a credit for unfunded lending commitments of $421,000, and a provision for credit losses for securities of $21,000 for the year ended September 30, 2024, compared to a provision for loan losses of $2.6 million only for the prior year. The provision for credit losses for loans increased primarily due to loan growth and the effects of adopting the Current Expected Credit Loss (CECL) methodology during the year ended September 30, 2024. The Company recognized net charge-offs totaling $527,000 during the year, of which $104,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $1.1 million during the prior year, of which $872,000 was related to unguaranteed portions of SBA loans. Nonperforming loans, which consist of nonaccrual loans and loans over 90 days past due and still accruing interest, increased $3.0 million from $13.9 million at September 30, 2023 to $16.9 million at September 30, 2024.
Noninterest income decreased $12.8 million for the year ended September 30, 2024 as compared to the prior year. The decrease was due primarily to a $14.1 million decrease in mortgage banking income due to the cessation of national mortgage banking operations in the quarter ended December 31, 2023.
Noninterest expense decreased $23.2 million for the year ended September 30, 2024 as compared to the prior year. The decrease was due primarily to decreases in compensation and benefits, data processing expense and other operating expenses of $12.0 million, $2.2 million and $7.8 million, respectively. The decrease in compensation and benefits expense was due primarily to a reduction in staffing related to the cessation of national mortgage banking operations in the quarter ended December 31, 2023. The decrease in data processing expense was due primarily to expenses recognized in the prior year related to the implementation of the new core operating system in August 2023. The decrease in other operating expense was due primarily to a $1.9 decrease in net loss on captive insurance operations due to the dissolution of the captive insurance company in September 2023; a decrease in loss contingency accrual for SBA-guaranteed loans of $754,000 in 2024 compared to an increase of $1.5 million in 2023; a decrease in the loss contingency accrual for restitution to mortgage borrowers of $283,000 in 2024 compared to an increase of $609,000 in 2023; and a decrease of $853,000 in loan expense for 2024 as compared to 2023 due primarily to lower mortgage loan originations related to the cessation of national mortgage banking operations in the quarter ended December 31, 2023.
The Company recognized income tax expense of $1.0 million for the year ended September 30, 2024 compared to tax expense of $10,000 for the prior year. The increase is primarily due to higher taxable income in the 2024 period. The effective tax rate for 2024 was 7.0%, which was an increase from the effective tax rate of 0.1% in 2023. The effective tax rate is well below the statutory tax rate primarily due to the recognition of investment tax credits related to solar projects in both the 2024 and 2023 periods.
Results of Operations for the Three Months Ended September 30, 2024 and 2023
The Company reported net income of $3.7 million, or $0.53 per diluted share, for the three months ended September 30, 2024, compared to a net loss of $747,000, or $0.11 per diluted share, for the three months ended September 30, 2023. The core banking segment reported net income of $4.1 million, or $0.60 per diluted share, for the three months ended September 30, 2024, compared to $2.3 million, or $0.33 per diluted share, for the three months ended September 30, 2023.
Net interest income decreased $459,000, or 3.0%, to $15.1 million for the three months ended September 30, 2024 as compared to the same period in 2023. The tax equivalent net interest margin was 2.72% for the three months ended September 30, 2024 as compared to 3.03% for the same period in 2023. The decrease in net interest income was due to a $4.5 million increase in interest expense, partially offset by a $4.1 million increase in interest income. A table of average balance sheets, including average asset yields and average liability costs, is included at the end of this release.
The Company recognized a provision for credit losses for loans of $1.8 million, a credit for unfunded lending commitments of $262,000, and a credit for credit losses for securities of $86,000 for the three months ended September 30, 2024, compared to a provision for loan losses of $815,000 only for the same period in 2023. The provision for credit losses for loans increased primarily due to loan growth and the effects of adopting the Current Expected Credit Loss (CECL) methodology during the year ended September 30, 2024. The Company recognized net charge-offs totaling $304,000 during the 2024 period, of which $120,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $753,000 during the 2023 period, of which $609,000 was related to unguaranteed portions of SBA loans.
Noninterest income decreased $2.6 million for the three months ended September 30, 2024 as compared to the same period in 2023. The decrease was due primarily to a $3.0 million decrease in mortgage banking income due to the cessation of national mortgage banking operations in the quarter ended December 31, 2023.
Noninterest expense decreased $9.0 million for the three months ended September 30, 2024 as compared to the same period in 2023. The decrease was due primarily to decreases in compensation and benefits expense, data processing expense, and other operating expenses of $4.5 million, $1.5 million and $3.5 million, respectively. The decrease in compensation and benefits expense was due primarily to a reduction in staffing related to the cessation of national mortgage banking operations in the quarter ended December 31, 2023. The decrease in data processing expense was due primarily to expenses recognized in the prior year period related to the implementation of the new core operating system in August 2023. The decrease in other operating expense was due primarily to a $978,000 decrease in the net loss on captive insurance operations due to the dissolution of the captive insurance company in September 2023; a decrease in loss contingency accrual for SBA-guaranteed loans of $14,000 in 2024 compared to an increase of $1.0 million in 2023; and a decrease of $270,000 in loan expense for 2024 as compared to 2023 due primarily to lower mortgage loan originations related to the cessation of the national mortgage banking operations in the quarter ended December 31, 2023.
The Company recognized income tax expense of $145,000 for the three months ended September 30, 2024 compared to income tax benefit of $737,000 for the same period in 2023. The increase was primarily due to higher taxable income in the 2024 period.
Comparison of Financial Condition at September 30, 2024 and September 30, 2023
Total assets increased $161.5 million, from $2.29 billion at September 30, 2023 to $2.45 billion at September 30, 2024. Net loans held for investment increased $193.6 million during the year ended September 30, 2024 due primarily to growth in residential real estate, residential construction, and commercial real estate loans. Loans held for sale decreased by $20.1 million from $45.9 million at September 30, 2023 to $25.7 million, primarily due to the winddown of the national mortgage banking operations. Residential mortgage loan servicing rights decreased $59.8 million during the year ended September 30, 2024, due to the sale of the entire residential mortgage loan servicing rights portfolio during the year.
Total liabilities increased $135.4 million due primarily to increases in total deposits of $199.1 million, which included an increase in brokered deposits of $70.8 million, partially offset by a decrease in FHLB borrowings of $61.5 million. As of September 30, 2024, deposits exceeding the FDIC insurance limit of $250,000 per insured account were 30.1% of total deposits and 13.7% of total deposits when excluding public funds insured by the Indiana Public Deposit Insurance Fund.
Common stockholders' equity increased $26.1 million, from $151.0 million at September 30, 2023 to $177.1 million at September 30, 2024, due primarily to a $18.4 million decrease in accumulated other comprehensive loss and an increase in retained net income of $7.0 million. The decrease in accumulated other comprehensive loss was due primarily to decreasing long term market interest rates during the year ended September 30, 2024, which resulted in an increase in the fair value of securities available for sale. At September 30, 2024 and September 30, 2023, the Bank was considered "well-capitalized" under applicable regulatory capital guidelines.
First Savings Bank is an entrepreneurial community bank headquartered in Jeffersonville, Indiana, which is directly across the Ohio River from Louisville, Kentucky, and operates fifteen depository branches within Southern Indiana. The Bank also has two national lending programs, including single-tenant net lease commercial real estate and SBA lending, with offices located predominately in the Midwest. The Bank is a recognized leader, both in its local communities and nationally for its lending programs. The employees of First Savings Bank strive daily to achieve the organization's vision, We Expect To Be The BEST community BANK, which fuels our success. The Company's common shares trade on The NASDAQ Stock Market under the symbol "FSFG."
This release may contain forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts; rather, they are statements based on the Company's current expectations regarding its business strategies and their intended results and its future performance. Forward-looking statements are preceded by terms such as "expects," "believes," "anticipates," "intends" and similar expressions.
Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties could cause or contribute to the Company's actual results, performance and achievements to be materially different from those expressed or implied by the forward-looking statements. Factors that may cause or contribute to these differences include, without limitation, changes in general economic conditions; changes in market interest rates; changes in monetary and fiscal policies of the federal government; legislative and regulatory changes; and other factors disclosed periodically in the Company's filings with the Securities and Exchange Commission.
Because of the risks and uncertainties inherent in forward-looking statements, readers are cautioned not to place undue reliance on them, whether included in this report or made elsewhere from time to time by the Company or on its behalf. Except as may be required by applicable law or regulation, the Company assumes no obligation to update any forward-looking statements.
Contact: Tony A. Schoen, CPA Chief Financial Officer 812-283-0724
FIRST SAVINGS FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
Three Months Ended
Years Ended
OPERATING DATA:
September 30,
September 30,
(In thousands, except share and per share data)
2024
2023
2024
2023
Total interest income
$
32,223
$
28,137
$
121,988
$
103,229
Total interest expense
17,146
12,601
63,926
41,655
Net interest income
15,077
15,536
58,062
61,574
Provision for credit losses - loans
1,808
815
3,492
2,612
Provision (credit) for unfunded lending commitments
(262
)
-
(421
)
-
Provision (credit) for credit losses - securities
(86
)
-
21
-
Total provision for credit losses
1,460
815
3,092
2,612
Net interest income after provision for credit losses
13,617
14,721
54,970
58,962
Total noninterest income
2,842
5,442
12,530
25,342
Total noninterest expense
12,642
21,647
52,890
76,122
Income (loss) before income taxes
3,817
(1,484
)
14,610
8,182
Income tax expense (benefit)
145
(737
)
1,018
10
Net income (loss)
$
3,672
$
(747
)
$
13,592
$
8,172
Net income (loss) per share, basic
$
0.54
$
(0.11
)
$
1.99
$
1.19
Weighted average shares outstanding, basic
6,833,376
6,817,365
6,830,466
6,848,311
Net income (loss) per share, diluted
$
0.53
$
(0.11
)
$
1.98
$
1.19
Weighted average shares outstanding, diluted
6,877,518
6,837,919
6,856,520
6,880,072
Performance ratios (annualized)
Return on average assets
0.61
%
(0.13
%)
0.58
%
0.37
%
Return on average equity
8.52
%
(1.82
%)
8.31
%
5.04
%
Return on average common stockholders' equity
8.52
%
(1.82
%)
8.31
%
5.04
%
Net interest margin (tax equivalent basis)
2.72
%
3.03
%
2.68
%
3.10
%
Efficiency ratio
70.55
%
103.19
%
74.92
%
87.58
%
QTD
FYTD
FINANCIAL CONDITION DATA:
September 30,
June 30,
Increase
September 30,
Increase
(In thousands, except per share data)
2024
2024
(Decrease)
2023
(Decrease)
Total assets
$
2,450,368
$
2,393,491
$
56,877
$
2,288,854
$
161,514
Cash and cash equivalents
52,142
42,423
9,719
30,845
21,297
Investment securities
249,719
238,785
10,934
229,039
20,680
Loans held for sale
25,716
125,859
(100,143
)
45,855
(20,139
)
Gross loans
1,985,146
1,846,769
138,377
1,787,143
198,003
Allowance for credit losses (1)
21,294
19,789
1,505
16,900
4,394
Interest earning assets
2,277,512
2,239,109
38,403
2,083,397
194,115
Goodwill
9,848
9,848
-
9,848
-
Core deposit intangibles
398
438
(40
)
561
(163
)
Loan servicing rights
2,754
2,860
(106
)
62,819
(60,065
)
Noninterest-bearing deposits
191,528
201,854
(10,326
)
242,237
(50,709
)
Interest-bearing deposits (customer)
1,180,196
1,111,143
69,053
1,001,238
178,958
Interest-bearing deposits (brokered)
509,157
399,151
110,006
438,319
70,838
Federal Home Loan Bank borrowings
301,640
425,000
(123,360
)
363,183
(61,543
)
Subordinated debt and other borrowings
48,603
48,563
40
48,444
159
Total liabilities
2,273,253
2,225,491
47,762
2,137,873
135,380
Accumulated other comprehensive loss
(11,195
)
(17,415
)
6,220
(29,587
)
18,392
Stockholders' equity
177,115
168,000
9,115
150,981
26,134
Book value per share
$
25.72
$
24.41
$
1.31
$
21.99
$
3.73
Tangible book value per share - Non-GAAP (2)
24.23
22.91
1.32
20.47
3.76
Non-performing assets:
Nonaccrual loans - SBA guaranteed
$
5,036
$
5,049
$
(13
)
$
5,091
$
(55
)
Nonaccrual loans
11,906
11,705
201
8,857
3,049
Total nonaccrual loans
$
16,942
$
16,754
$
188
$
13,948
$
2,994
Accruing loans past due 90 days
-
-
-
-
-
Total non-performing loans
16,942
16,754
188
13,948
2,994
Foreclosed real estate
444
444
-
474
(30
)
Troubled debt restructurings classified as performing loans
-
-
-
1,266
(1,266
)
Total non-performing assets
$
17,386
$
17,198
$
188
$
15,688
$
1,698
Asset quality ratios:
Allowance for credit losses as a percent of total gross loans
1.07
%
1.07
%
0.00
%
0.95
%
0.13
%
Allowance for credit losses as a percent of nonperforming loans
125.69
%
118.12
%
7.57
%
121.16
%
4.52
%
Nonperforming loans as a percent of total gross loans
0.85
%
0.91
%
(0.05
%)
0.78
%
0.07
%
Nonperforming assets as a percent of total assets
0.71
%
0.72
%
(0.01
%)
0.69
%
0.02
%
(1) The Company adopted ASU 2016-13 Topic 326 on October 1, 2023. Allowance was determined using current expected credit loss methodology (CECL) for the quarters ended September, June, and March 2024 and December 2023. Allowance was determined using the previous incurred loss methodology as of September 30, 2023.
(2) See reconciliation of GAAP and non-GAAP financial measures for additional information relating to calculation of these figures.
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES (UNAUDITED):
The following non-GAAP financial measures used by the Company provide information useful to investors in understanding the Company's performance. The Company believes the financial measures presented below are important because of their widespread use by investors as a means to evaluate capital adequacy and earnings. The following table summarizes the non-GAAP financial measures derived from amounts reported in the evaluate capital adequacy and earnings. The following table summarizes the non-GAAP financial measures derived from amounts reported in the evaluate capital adequacy and earnings. The following table summarizes the non-GAAP financial measures derived from amounts reported in the Company's consolidated financial statements and reconciles those non-GAAP financial measures with the comparable GAAP financial measures.
Three Months Ended
Fiscal Year Ended
September 30,
September 30,
2024
2023
2024
2023
Net Income (In thousands)
Net income attributable to the Company (non-GAAP)
$
3,660
$
2,824
$
11,674
$
12,731
Plus: Reversal of contingent liability, net of tax effect
-
-
212
-
Plus: Record Visa Class C shares, net of tax effect
15
-
342
-
Plus: Decrease in loss contingency for SBA-guaranteed loans, net of tax effect
-
-
492
-
Plus: Adjustment to MSR valuation allowance, net of tax effect
-
-
583
-
Plus: Gain (loss) on premises and equipment, net of tax effect
(3
)
-
87
-
Plus: Adjustment to previous data processing contract termination accrual, net of tax effect
-
-
117
-
Plus: Distribution from equity investment, net of tax effect
-
-
85
-
Plus: Gain from repurchase of subordinated debt, net of tax effect
-
-
-
513
Less: Net loss on sales of available for sale securities and time deposits, net of tax effect
-
-
-
(429
)
Less: Data processing system conversion, net of tax effect
-
(979
)
-
(1,119
)
Less: MSR valuation allowance for intended sale, net of tax effect
-
(598
)
-
(598
)
Less: Loss contingency for SBA-guaranteed loans, net of tax effect
-
(779
)
-
(1,160
)
Less: Mortgage banking loss contingencies, net of tax effect
-
(296
)
-
(847
)
Less: Professional fees related to mortgage banking loss contingencies, net of tax effect
-
(919
)
-
(919
)
Net income attributable to the Company (GAAP)
$
3,672
$
(747
)
$
13,592
$
8,172
Net Income per Share, Diluted
Net income per share, diluted (non-GAAP)
$
0.53
$
0.41
$
1.70
$
1.85
Plus: Reversal of contingent liability, net of tax effect
-
-
0.03
-
Plus: Record Visa Class C shares, net of tax effect
-
-
0.05
-
Plus: Decrease in loss contingency for SBA-guaranteed loans, net of tax effect
-
-
0.07
-
Plus: Adjustment to MSR valuation allowance, net of tax effect
-
-
0.09
-
Plus: Gain (loss) on premises and equipment, net of tax effect
-
-
0.01
-
Plus: Adjustment to previous data processing contract termination accrual, net of tax effect
-
-
0.02
-
Plus: Distribution from equity investment, net of tax effect
-
-
0.01
-
Plus: Gain from repurchase of subordinated debt, net of tax effect
-
-
-
0.07
Less: Net loss on sales of available for sale securities and time deposits, net of tax effect
-
-
-
(0.06
)
Less: Data processing system conversion, net of tax effect
-
(0.14
)
-
(0.16
)
Less: MSR valuation allowance for intended sale, net of tax effect
-
(0.09
)
-
(0.09
)
Less: Loss contingency for SBA-guaranteed loans, net of tax effect
-
(0.11
)
-
(0.17
)
Less: Mortgage banking loss contingencies, net of tax effect
-
(0.05
)
-
(0.12
)
Less: Professional fees related to mortgage banking loss contingencies, net of tax effect
-
(0.13
)
-
(0.13
)
Net income per share, diluted (GAAP)
$
0.53
$
(0.11
)
$
1.98
$
1.19
Core Banking Net Income (In thousands)
Net income attributable to the Core Bank (non-GAAP)
$
4,081
$
5,046
$
15,449
$
18,338
Plus: Reversal of contingent liability, net of tax effect
-
-
212
-
Plus: Record Visa Class C shares, net of tax effect
15
-
342
-
Plus: Adjustment to MSR valuation allowance, net of tax effect
-
-
583
-
Plus: Gain (loss) on premises and equipment, net of tax effect
(3
)
-
87
-
Plus: Adjustment to previous data processing contract termination accrual, net of tax effect
-
-
117
-
Plus: Distribution from equity investment, net of tax effect
-
-
85
-
Plus: Gain from repurchase of subordinated debt, net of tax effect
-
-
-
513
Less: Net loss on sales of available for sale securities and time deposits, net of tax effect
-
-
-
(429
)
Less: Data processing system conversion, net of tax effect
-
(979
)
-
(1,119
)
Less: MSR valuation allowance for intended sale, net of tax effect
-
(598
)
-
(598
)
Less: Mortgage banking loss contingencies, net of tax effect
-
(296
)
-
(847
)
Less: Professional fees related to mortgage banking loss contingencies, net of tax effect
-
(919
)
-
(919
)
Net income (loss) attributable to the Core Bank (GAAP)
$
4,093
$
2,254
$
16,875
$
14,939
