GlobeNewswire Inc | Feb 1, 2021 04:44PM EST

February 01, 2021

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 Companys 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 SBA- Guaranteed Loans Outstanding Principal Principal Balance Balance (1)(Dollars in thousands)Residential real 4 $ 315 $ -estateCommercial real 4 10,788 -estateSBA commercial 10 7,444 3,063real estateMultifamily 1 3,590 -SBA commercial 15 4,134 -businessConsumer 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 SBAs 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 Companys participation in the Federal Reserve Banks PPP Liquidity Facility (PPPLF), which carries a fixed interest rate of 0.35% and is secured by the Companys 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 Companys mortgage banking and SBA lending activities, routine salary and benefits adjustments, and increased incentive compensation primarily as a result of the performance of the Companys 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 December 31, per share data) 2020 2019 Total interest $ 16,026 $ 13,661 incomeTotal interest 2,287 2,875 expense Net interest income 13,739 10,786 Provision for loan 668 505 losses Net interest incomeafter provision for 13,071 10,281 loan losses Total noninterest 46,183 18,232 incomeTotal noninterest 44,402 24,272 expense Income before 14,852 4,241 income taxesIncome tax expense 4,527 638 Net income 10,325 3,603 Less: Net incomeattributable to 402 164 noncontrollinginterests Net incomeattributable to the $ 9,923 $ 3,439 Company Net income per $ 4.19 $ 1.47 share, basicWeighted averageshares outstanding, 2,367,061 2,340,619 basic Net income per $ 4.16 $ 1.44 share, dilutedWeighted averageshares outstanding, 2,384,702 2,382,754 diluted Performance ratios (annualized):Return on average 2.23 % 1.09 % assetsReturn on averagecommon 24.52 % 11.24 % stockholders'equityInterest ratespread (tax 3.33 % 3.56 % equivalent basis)Net interest margin(tax equivalent 3.46 % 3.80 % basis)Efficiency ratio 74.10 % 83.64 % FINANCIAL CONDITION December 31, September 30, Increase DATA:(In thousands,except per share 2020 2020 (Decrease) data)Total assets $ 1,872,911 $ 1,764,625 $ 108,286 Cash and cash 35,392 33,726 1,666 equivalentsInvestment 205,661 204,067 1,594 securitiesLoans held for sale 357,242 285,525 71,717 Gross loans (1) 1,131,832 1,107,089 24,743 Allowance for loan 17,124 17,026 98 lossesInterest earning 1,718,994 1,620,831 98,163 assetsGoodwill 9,848 9,848 - Core deposit 1,149 1,202 (53 ) intangiblesLoan servicing 35,232 25,451 9,781 rightsNoninterest-bearing 272,241 242,673 29,568 depositsInterest-bearing 849,079 805,403 43,676 deposits (2)Federal Home Loan 340,092 310,858 29,234 Bank borrowingsFederal Reserve 172,772 174,834 (2,062 ) PPPLF borrowingsTotal liabilities 1,707,166 1,607,060 100,106 Stockholders'equity, net of 165,745 157,272 8,473 noncontrollinginterests Book value per $ 69.79 $ 66.21 $ 3.61 shareTangible book value 65.16 61.56 3.63 per share (3) Non-performing assets:Nonaccrual loans - $ 3,709 $ 3,709 $ - SBA guaranteedNonaccrual loans - 8,698 9,906 (1,208 ) unguaranteedTotal nonaccrual $ 12,407 $ 13,615 $ (1,208 ) loansAccruing loans past - - - due 90 daysTotalnon-performing 12,407 13,615 (1,208 ) loansForeclosed real 315 - 315 estateTroubled debtrestructurings 1,950 3,069 (1,119 ) classified asperforming loansTotalnon-performing $ 14,672 $ 16,684 $ (2,012 ) assetsAsset quality ratios:Allowance for loanlosses as a percent 1.51 % 1.54 % (0.02 %) of total grossloansAllowance for loanlosses as a percentof total gross 1.80 % 1.84 % (0.04 %) loans, excludingPPP loans (4)Allowance for loanlosses as a percent 138.02 % 125.05 % 12.97 % of nonperformingloansNonperforming loansas a percent of 1.10 % 1.23 % (0.13 %) total gross loansNonperformingassets as a percent 0.78 % 0.95 % (0.16 %) of total assets (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 reciprocalcertificates 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. Thisratio is non-GAAP, but is believed by management to be meaningful because itprovides a comparable ratioafter 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'sperformance. The Company believes the financial measures presented below are important because of their widespread use by investors as a means toevaluate capital adequacy and earnings. The following table summarizes the non-GAAP financial measures derived from amounts reported in theCompany's consolidated financial statements and reconciles those non-GAAP financial measures with the comparable GAAP financial measures. Tangible Book Value December 31, September 30, Increase Per Share(In thousands,except share and 2020 2020 (Decrease) per share data)Stockholders'equity, net of $ 165,745 $ 157,272 $ 8,473 noncontrollinginterests (GAAP)Less: goodwill andcore deposit (10,997 ) (11,050 ) 53 intangiblesTangible equity $ 154,748 $ 146,222 $ 109,789 (non-GAAP) Outstanding common 2,374,927 2,375,324 (397 ) shares Tangible book valueper share $ 65.16 $ 61.56 $ 3.60 (non-GAAP) Book value per $ 69.79 $ 66.21 $ 3.58 share (GAAP) SUMMARIZEDFINANCIAL As of INFORMATION(UNAUDITED):SummarizedConsolidated December 31, September 30, June 30, March 31, December 31, Balance Sheets(In thousands,except per share 2020 2020 2020 2020 2019 data)Total cash and cash $ 35,392 $ 33,726 $ 27,544 $ 22,603 $ 41,327 equivalentsTotal investment 205,661 204,067 205,960 186,873 179,991 securitiesTotal loans held 357,242 285,525 210,077 163,927 110,523 for saleTotal loans, net ofallowance for loan 1,114,708 1,090,063 1,081,381 877,276 851,700 lossesPPP loans 178,499 180,561 180,536 - - Loan servicing 35,232 25,451 13,563 6,946 6,258 rightsTotal 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 340,092 310,858 298,622 270,000 239,566 Bank borrowingsFederal Reserve 172,772 174,834 174,834 - - PPPLF borrowings Stockholders'equity, net of $ 165,745 $ 157,272 $ 142,362 $ 116,659 $ 123,810 noncontrollinginterestsNoncontrollinginterests in - 293 (214 ) (414 ) 368 subsidiaryTotal equity 165,745 157,565 142,148 116,245 124,178 Outstanding common 2,374,927 2,375,324 2,375,324 2,375,324 2,357,369 shares Three Months Ended SummarizedConsolidated December 31, September 30, June 30, March 31, December 31, Statements ofIncome(In thousands,except per share 2020 2020 2020 2020 2019 data)Total interest $ 16,026 $ 15,765 $ 14,719 $ 13,554 $ 13,661 incomeTotal interest 2,287 2,337 2,543 2,783 2,875 expenseNet interest income 13,739 13,428 12,176 10,771 10,786 Provision for loan 668 2,772 2,980 1,705 505 lossesNet interest incomeafter provision for 13,071 10,656 9,196 9,066 10,281 loan losses Total noninterest 46,183 57,024 46,962 11,133 18,232 incomeTotal noninterest 44,402 44,452 35,009 22,075 24,272 expenseIncome (loss) 14,852 23,228 21,149 (1,876 ) 4,241 before income taxesIncome tax expense 4,527 7,257 5,540 (774 ) 638 (benefit)Net income (loss) 10,325 15,971 15,609 (1,102 ) 3,603 Less: net income(loss) attributable 402 834 204 (475 ) 164 to noncontrollinginterestsNet income (loss)attributable to the $ 9,923 $ 15,137 $ 15,405 $ (627 ) $ 3,439 Company Net income (loss) $ 4.19 $ 6.40 $ 6.51 $ (0.27 ) $ 1.47 per share, basicWeighted averageshares outstanding, 2,367,061 2,365,217 2,365,217 2,355,750 2,340,619 basic Net income (loss) $ 4.16 $ 6.39 $ 6.51 $ (0.26 ) $ 1.44 per share, dilutedWeighted averageshares outstanding, 2,384,702 2,370,694 2,366,787 2,379,901 2,382,754 diluted SUMMARIZEDFINANCIALINFORMATION Three Months Ended (UNAUDITED)(CONTINUED): December 31, September 30, June 30, March 31, December 31, ConsolidatedPerformance Ratios 2020 2020 2020 2020 2019 (Annualized)Return on average 2.23 % 3.44 % 4.02 % (0.19 %) 1.09 % assetsReturn on average 25.43 % 43.46 % 48.75 % (3.51 %) 11.76 % equityReturn on averagecommon 24.52 % 41.08 % 47.91 % (2.00 %) 11.24 % stockholders'equityNet interest margin(taxequivalent 3.46 % 3.40 % 3.52 % 3.68 % 3.80 % basis)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 2020 2020 2020 2020 2019 Quality RatiosNonperforming loansas a percentage of 1.10 % 1.23 % 1.26 % 1.55 % 0.64 % total loansNonperformingassets as a 0.78 % 0.95 % 1.17 % 1.45 % 1.00 % percentage of totalassetsAllowance for loanlosses as a 1.51 % 1.54 % 1.34 % 1.32 % 1.22 % percentage of totalloansAllowance for loanlosses as a 138.02 % 125.05 % 106.01 % 84.67 % 191.18 % percentage ofnonperforming loansNet charge-offs(recoveries) to 0.04 % 0.03 % 0.00 % 0.06 % 0.00 % average outstandingloans Three Months Ended SegmentedStatements of December 31, September 30, June 30, March 31, December 31, Income Information(In thousands,except per share 2020 2020 2020 2020 2019 data)Core Banking Segment:Net interest income $ 10,861 $ 10,512 $ 9,645 $ 9,035 $ 9,012 Provision for loan 702 2,232 1,668 216 520 lossesNet interest incomeafter provision for 10,159 8,280 7,977 8,819 8,492 loan lossesNoninterest 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 3,599 2,139 1,668 3,510 2,774 income taxesIncome tax expense 570 482 276 591 330 Net incomeattributable to the $ 3,029 $ 1,657 $ 1,392 $ 2,919 $ 2,444 Company SBA Lending Segment (Q2):Net interest income $ 2,147 $ 1,959 $ 1,584 $ 1,151 $ 1,217 Provision for loan (34 ) 540 1,312 1,489 (15 ) lossesNet interest income(loss) after 2,181 1,419 272 (338 ) 1,232 provision for loanlossesNoninterest income 1,385 2,828 1,785 1,209 929 Noninterest expense 2,746 2,545 1,642 1,841 1,825 Income (loss) 820 1,702 415 (970 ) 336 before income taxesIncome tax expense 105 217 53 (124 ) 43 (benefit)Net income (loss) 715 1,485 362 (846 ) 293 Less: net income(loss) attributable 402 834 204 (475 ) 164 to noncontrollinginterestsNet income (loss)attributable to the $ 313 $ 651 $ 158 $ (371 ) $ 129 Company Mortgage Banking Segment:Net interest income $ 731 $ 957 $ 947 $ 585 $ 557 Provision for loan - - - - - lossesNet interest incomeafter provision for 731 957 947 585 557 loan lossesNoninterest 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) 10,433 19,387 19,066 (4,416 ) 1,131 before income taxesIncome tax expense 3,852 6,558 5,211 (1,241 ) 265 (benefit)Net income (loss)attributable to the $ 6,581 $ 12,829 $ 13,855 $ (3,175 ) $ 866 Company Net Income (Loss)Per Share by SegmentNet income pershare, basic - Core $ 1.28 $ 0.70 $ 0.59 $ 1.24 $ 1.04 BankingNet income (loss)per share, basic - 0.13 0.28 0.07 (0.16 ) 0.06 SBA Lending (Q2)Net income (loss)per share, basic - 2.78 5.42 5.85 (1.35 ) 0.37 Mortgage BankingTotal net income(loss) per share, $ 4.19 $ 6.40 $ 6.51 $ (0.27 ) $ 1.47 basic Net Income (Loss)Per Diluted Share by SegmentNet income pershare, diluted - $ 1.27 $ 0.70 $ 0.59 $ 1.23 $ 1.03 Core BankingNet income (loss)per share, diluted 0.13 0.27 0.07 (0.16 ) 0.05 - SBA Lending (Q2)Net income (loss)per share, diluted 2.76 5.42 5.85 (1.33 ) 0.36 - Mortgage BankingTotal net income(loss) per share, $ 4.16 $ 6.39 $ 6.51 $ (0.26 ) $ 1.44 diluted SUMMARIZEDFINANCIALINFORMATION Three Months Ended (UNAUDITED)(CONTINUED):Noninterest Expense December 31, September 30, June 30, March 31, December 31, Detail by Segment(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 $ 8,112 $ 7,920 $ 7,633 $ 6,720 $ 7,109 Expense 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 $ 2,746 $ 2,545 $ 1,642 $ 1,841 $ 1,825 Expense 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 $ 33,544 $ 33,987 $ 25,734 $ 13,514 $ 15,338 Expense Three Months Ended Mortgage BankingNoninterest Expense December 31, September 30, June 30, March 31, December 31, Fixed vs. Variable(In thousands) 2020 2020 2020 2020 2019 Noninterest Expense $ 13,296 $ 11,838 $ 8,394 $ 6,740 $ 5,671 - Fixed ExpensesNoninterest Expense- Variable Expenses 20,248 22,149 17,340 6,774 9,667 (5)Total Noninterest $ 33,544 $ 33,987 $ 25,734 $ 13,514 $ 15,338 Expense Three Months Ended SBA Lending (Q2) December 31, September 30, June 30, March 31, December 31, Data(In thousands,except percentage 2020 2020 2020 2020 2019 data)Final funded loansguaranteed portion $ 14,116 $ 25,623 $ 16,605 $ 16,180 $ 10,830 sold, SBA Gross gain on sales $ 1,698 $ 3,094 $ 1,771 $ 1,597 $ 1,066 of loans, SBAWeighted averagegross gain on sales 12.03 % 12.08 % 10.67 % 9.87 % 9.84 % of loans, SBA Net gain on sales $ 1,267 $ 2,366 $ 1,317 $ 1,229 $ 761 of loans, SBA (6)Weighted averagenet gain on sales 8.98 % 9.23 % 7.93 % 7.60 % 7.03 % of loans, SBA Three Months Ended Mortgage Banking December 31, September 30, June 30, March 31, December 31, Data(In thousands,except percentage 2020 2020 2020 2020 2019 data)Mortgageoriginations for $ 1,430,628 $ 1,526,809 $ 1,003,518 $ 532,996 $ 542,568 sale in thesecondary market Mortgage sales $ 1,349,044 $ 1,471,501 $ 954,568 $ 488,457 $ 529,344 Gross gain on salesof loans, mortgage $ 47,224 $ 53,633 $ 31,067 $ 14,912 $ 13,411 bankingWeighted averagegross gain on sales 3.50 % 3.64 % 3.25 % 3.05 % 2.53 % of loans, mortgagebanking Mortgage banking $ 42,300 $ 52,035 $ 43,713 $ 8,411 $ 15,923 income (7) (5) Variable expenses includeincentive compensation and advertising expenses. (6) Net of commissions, referral fees, SBA repair fees and discounts onunguaranteed portions held-for-investment, and inclusive of gains on servicing assets. (7) Net of lender credits and other investor expenses, and inclusive of loanfees, gains on mortgage servicing rights, fair value adjustments and gains(losses) on derivative instruments. SUMMARIZEDFINANCIALINFORMATION Three Months Ended (UNAUDITED)(CONTINUED):SummarizedConsolidated December 31, September 30, June 30, March 31, December 31, Average BalanceSheets(In thousands) 2020 2020 2020 2020 2019 Interest-earning assetsAverage balances: Interest-bearing $ 34,412 $ 58,775 $ 25,985 $ 48,306 $ 46,296 deposits with banksLoans, excluding 1,205,278 1,172,547 1,076,376 970,083 935,211 PPPPPP loans 179,316 180,561 114,721 - - Investmentsecurities - 42,462 44,026 43,569 46,216 50,132 taxableInvestmentsecurities - 146,374 145,042 143,702 122,770 120,018 nontaxableFRB and FHLB stock 17,992 17,293 16,804 14,878 14,149 Totalinterest-earning $ 1,625,834 $ 1,618,244 $ 1,421,157 $ 1,202,253 $ 1,165,806 assets Interest income(tax equivalent basis):Interest-bearing $ 18 $ 22 $ 37 $ 153 $ 205 deposits with banksLoans, excluding 13,171 12,924 12,164 11,736 11,724 PPPPPP loans 1,085 1,019 671 - - Investmentsecurities - 471 483 502 504 585 taxableInvestmentsecurities - 1,508 1,507 1,514 1,300 1,278 nontaxableFRB and FHLB stock 108 144 168 151 154 Total interestincome (tax $ 16,361 $ 16,099 $ 15,056 $ 13,844 $ 13,946 equivalent basis) Weighted averageyield (tax equivalent basis,annualized):Interest-bearing 0.21 % 0.15 % 0.57 % 1.27 % 1.77 % deposits with banksLoans, excluding 4.37 % 4.41 % 4.52 % 4.84 % 5.01 % PPPPPP loans 2.42 % 2.26 % 2.34 % 0.00 % 0.00 % Investmentsecurities - 4.44 % 4.39 % 4.61 % 4.36 % 4.67 % taxableInvestmentsecurities - 4.12 % 4.16 % 4.21 % 4.24 % 4.26 % nontaxableFRB and FHLB stock 2.40 % 3.33 % 4.00 % 4.06 % 4.35 % Totalinterest-earning 4.03 % 3.98 % 4.24 % 4.61 % 4.79 % assets Interest-bearing liabilitiesAverage balances: Interest-bearing $ 811,016 $ 842,363 $ 770,402 $ 716,051 $ 707,518 depositsFed funds purchased - - 1,978 143 - Federal Home Loan 306,299 292,876 292,168 248,205 207,851 Bank borrowingsFederal Reserve 173,701 174,835 74,218 - - PPPLF borrowingsSubordinated debtand other 19,803 19,786 19,769 19,752 19,735 borrowingsTotalinterest-bearing $ 1,310,819 $ 1,329,860 $ 1,158,535 $ 984,151 $ 935,104 liabilities Interest expense: Interest-bearing $ 936 $ 974 $ 1,311 $ 1,625 $ 1,749 depositsFed funds purchased - - 2 - - Federal Home Loan 861 853 846 838 808 Bank borrowingsFederal Reserve 153 154 66 - - PPPLF borrowingsSubordinated debtand other 337 356 318 320 318 borrowingsTotal interest $ 2,287 $ 2,337 $ 2,543 $ 2,783 $ 2,875 expense Weighted average cost (annualized):Interest-bearing 0.46 % 0.46 % 0.68 % 0.91 % 0.99 % depositsFed funds purchased 0.00 % 0.00 % 0.40 % 0.00 % 0.00 % Federal Home Loan 1.12 % 1.16 % 1.16 % 1.35 % 1.55 % Bank borrowingsFederal Reserve 0.35 % 0.35 % 0.36 % 0.00 % 0.00 % PPPLF borrowingsSubordinated debtand other 6.81 % 7.20 % 6.43 % 6.48 % 6.45 % borrowingsTotalinterest-bearing 0.70 % 0.70 % 0.88 % 1.13 % 1.23 % liabilities Interest ratespread (tax 3.33 % 3.28 % 3.36 % 3.48 % 3.56 % equivalent basis,annualized) Net interest margin(tax equivalent 3.46 % 3.40 % 3.52 % 3.68 % 3.80 % basis, annualized)