GlobeNewswire Inc | Apr 26, 2021 02:00PM EDT

April 26, 2021

JEFFERSONVILLE, Ind., April 26, 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 $10.5 million, or $4.39 per diluted share, for the quarter ended March 31, 2021 compared to a net loss of $627,000, or a net loss of $0.26 per diluted share, for the quarter ended March 31, 2020.

Commenting on the Companys performance, Larry W. Myers, President and CEO stated: We continued to be very pleased with the performance of our staff and the fundamentals of our organization, both of which continue to deliver meaningful value to our shareholders. We continue to experience strong earnings, loan 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 despite recent market headwinds that are adversely affecting loan origination volumes. I continue to have confidence in the Companys ability to thrive during challenging environments and I appreciate the dedication of our staff to ensure such.

COVID-19 Pandemic Loan Information

We assisted customers that experienced COVID-19 pandemic related hardships by approving payment extensions or loan forbearance agreements, and by waiving or refunding certain fees. During the onset of the COVID-19 pandemic in early 2020, 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 entertained requests for extended periods on a case-by-case basis, which generally included 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 April 19, 2021.



Outstanding Principal Balance Number of Loans (Dollars in thousands) Residential real estate 2 $ 113 Commercial real estate 3 9,889 Commercial business 1 120 SBA commercial real estate 1 1,117 SBA commercial business 4 2,269 Consumer 1 6 Total 12 $ 13,514

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 March 31, 2021, management believes adequate 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 March 31, 2021, the outstanding principal balance of loans secured by restaurant related collateral was $168.6 million, of which $75.3 million is fully guaranteed by the SBA (including $74.9 million of PPP loans) and $82.2 million is secured by commercial real estate where the collateral property is leased to national-brand, investment-grade tenants. The commercial business loan included in the preceding table is secured by restaurant related collateral. None of the SBA commercial loans included in the preceding table are secured by restaurant related collateral.

At March 31, 2021, the outstanding principal balances of loans secured by hotel real estate was $17.6 million, of which $3.9 million is fully guaranteed by the SBA (including $878,000 of PPP loans). The three commercial real estate and the SBA commercial real estate loans included in the preceding table totaling $9.9 million and $1.1 million, respectively, are 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 made 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 SBA clients 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 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, provides additional SBA-provided loan payments to eligible SBA clients beginning in February 2021, including the aforementioned five SBA clients following the expiration of their payment extensions or loan forbearance agreements.

The Company participated in the first round of the SBAs Paycheck Protection Program (PPP), which was originally authorized by the CARES Act, and the second round of the PPP, which was authorized by the CRRSAA. At March 31, 2021, the outstanding principal balance of PPP loans was $159.3 million and net deferred loan fees related to PPP loans was approximately $2.1 million, which will be recognized over the life of the loans and as borrowers are granted forgiveness. As of March 31, 2021, the Company had processed and received forgiveness for 378 PPP loans totaling $49.2 million.

Results of Operations for the Three Months Ended March 31, 2021 and 2020

Net interest income increased $4.0 million, or 37.2%, to $14.8 million for the quarter ended March 31, 2021 as compared to the same quarter in 2020. The increase in net interest income was due to a $3.3 million increase in interest income and a $723,000 decrease in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $435.6 million, from $1.20 billion for 2020 to $1.64 billion for 2021, partially offset by a decrease in the weighted-average tax-equivalent yield, from 4.61% for 2020 to 4.19% for 2021. The decrease in the weighted-average tax-equivalent yield for 2021 is primarily due to lower market interest rates on loans and investment securities in 2021, as well as the Companys participation in the PPP. Interest expense decreased due to a decrease in the average cost of interest-bearing liabilities, from 1.13% for 2020 to 0.63% for 2021, partially offset by an increase in the average balance of interest-bearing liabilities of $328.4 million, from $984.2 million for 2020 to $1.31 billion for 2021. The decrease in the average cost of interest-bearing liabilities for 2021 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). PPPLF borrowings carry a fixed interest rate of 0.35% and are secured by the Companys PPP loans.

The Company recognized $287,000 in provision for loan losses for the quarter ended March 31, 2021 compared to $1.7 million for 2020. The Company recognized net recoveries of $8,000 for the quarter ended March 31, 2021 compared to net charge-offs of $544,000 for 2020. The lower provision for loan losses in 2021 is primarily due to changes in qualitative factors within the allowance for losses calculation related to economic uncertainties surrounding COVID-19 made in 2020 and lesser net charge-offs in 2021.

Noninterest income increased $27.8 million for the quarter ended March 31, 2021 as compared to 2020. The increase was primarily due to increases in mortgage banking income of $24.0 million and net gains on sales of SBA loans of $2.0 million. The increase in mortgage banking income was due to production from the secondary-market residential mortgage lending segment. The increase in net gain on sales of SBA loans was primarily due to increases in production and sales volume from the SBA lending segment, as well as higher premiums in the secondary market. 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 $17.2 million for the quarter ended March 31, 2021 as compared to 2020. The increase was primarily due to an increase in compensation and benefits of $14.6 million and an increase in professional fees of $1.1 million. 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 increase in professional fees was primarily due to the mortgage banking segment and represented various outsourced services.

The Company recognized income tax expense of $3.7 million for the quarter ended March 31, 2021 compared to an income tax benefit of $774,000 for 2020. The tax benefit for 2020 was primarily the result of a pretax operating loss for the quarter. The effective tax rate for 2021 was 26.1%.

Results of Operations for the Six Months Ended March 31, 2021 and 2020

The Company reported net income of $20.4 million, or $8.55 per diluted share, for the six months ended March 31, 2021 compared to net income of $2.8 million, or $1.18 per diluted share, for the six months ended ended March 31, 2020, resulting in an increase of 625% on a per share basis.

Net interest income increased $7.0 million, or 32.3%, to $28.5 million for the six months ended March 31, 2021 as compared to the same period in 2020. The increase in net interest income was due to a $5.7 million increase in interest income and a $1.3 million decrease in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $447.8 million, from $1.18 billion for 2020 to $1.63 billion for 2021, partially offset by a decrease in the weighted-average tax-equivalent yield, from 4.74% for 2020 to 4.11% for 2021. The decrease in the weighted-average tax-equivalent yield for 2021 is primarily due to lower market interest rates on loans and investment securities in 2021, as well as the Companys participation in the PPP. Interest expense decreased due to a decrease in the average cost of interest-bearing liabilities, from 1.18% for 2020 to 0.66% for 2021, partially offset by an increase in the average balance of interest-bearing liabilities of $352.2 million, from $959.5 million for 2020 to $1.31 billion for 2021. The decrease in the average cost of interest-bearing liabilities for 2021 was due primarily to decreasing market interest rates on deposits and FHLB borrowings, as well as the Companys participation in the PPPLF.

The Company recognized $955,000 in provision for loan losses for the six months ended March 31, 2021 compared to $2.2 million for the same period in 2020. Nonperforming loans, which consist of nonaccrual loans and loans over 90 days past due and still accruing interest, decreased $2.2 million, from $13.6 million at September 30, 2020 to $11.4 million at March 31, 2021. The Company recognized net charge-offs of $562,000 for the six months ended March 31, 2021, of which $496,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $559,000 for the same period in 2020. The lower provision for loan losses in 2021 is primarily due to changes in qualitative factors within the allowance for losses calculation related to economic uncertainties surrounding COVID-19 made in 2020.

Noninterest income increased $55.8 million for the six months ended March 31, 2021 as compared to the same period in 2020. The increase was primarily due to increases in mortgage banking income of $50.4 million, net gains on sales of SBA loans of $2.5 million and other income of $2.5 million. The increase in mortgage banking income was due to production from the secondary-market residential mortgage lending segment. The increase in net gain on sales of SBA loans was primarily due to increases in production and sales volume from the SBA lending segment, as well as higher premiums in the secondary market. The increase in other income was primarily due to service fee income from the mortgage banking segment. 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 $37.3 million for the six months ended March 31, 2021 as compared to the same period in 2020. The increase was primarily due to an increase in compensation and benefits of $30.6 million and an increase in other operating expense of $2.3 million. 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 increase in other operating expense was primarily due to the mortgage banking segment.

The Company recognized income tax expense of $8.2 million for the six months ended March 31, 2021 compared to an income tax benefit of $136,000 for the same period in 2020. The tax benefit for 2020 was the result of the Companys tax-exempt income and investments in tax credit bonds. The effective tax rate for 2021 was 28.3%.

Comparison of Financial Condition at March 31, 2021 and September 30, 2020

Total assets decreased $14.0 million, from $1.76 billion at September 30, 2020 to $1.75 billion at March 31, 2021. Net loans increased $38.3 million during the six months ended March 31, 2021, primarily due to continued growth in the single tenant net lease commercial real estate loan portfolio. Residential mortgage and SBA loans held for sale decreased by $73.0 million and $5.4 million, respectively, due to loan sales outpacing originations during the period. Total liabilities decreased $29.5 million primarily due to decreases of $46.3 million and $21.6 million in PPPLF and FHLB borrowings, respectively, partially offset by a $47.4 million increase in total deposits.

Common stockholders equity increased $15.7 million, from $157.3 million at September 30, 2020 to $173.0 million at March 31, 2021, due primarily to increases in retained net income of $19.6 million, partially offset by decreases in net unrealized gains on available for sale securities included in accumulated other comprehensive income of $2.0 million and additional paid in capital of $1.8 million, which was due to the acquisition of the minority interests in Q2 Business Capital, LLC on December 31, 2020. At March 31, 2021 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) Three Months Ended Six Months Ended March 31, March 31, OPERATING DATA: 2021 2020 2021 2020 (In thousands, exceptshare and per share data) Total interest income $ 16,840 $ 13,554 $ 32,866 $ 27,215 Total interest expense 2,060 2,783 4,347 5,658 Net interest income 14,780 10,771 28,519 21,557 Provision for loan 287 1,705 955 2,210 losses Net interest incomeafter provision for 14,493 9,066 27,564 19,347 loan losses Total noninterest 38,973 11,133 85,156 29,365 incomeTotal noninterest 39,284 22,075 83,686 46,347 expense Income (loss) before 14,182 (1,876 ) 29,034 2,365 income taxesIncome tax expense 3,695 (774 ) 8,222 (136 ) (benefit) Net income (loss) 10,487 (1,102 ) 20,812 2,501 Less: Net income(loss) attributable to - (475 ) 402 (311 ) noncontrollinginterests Net income (loss)attributable to the $ 10,487 $ (627 ) $ 20,410 $ 2,812 Company Net income (loss) per $ 4.43 $ (0.27 ) $ 8.62 $ 1.20 share, basicWeighted averageshares outstanding, 2,369,642 2,355,750 2,368,338 2,348,145 basic Net income (loss) per $ 4.39 $ (0.26 ) $ 8.55 $ 1.18 share, dilutedWeighted averageshares outstanding, 2,388,063 2,379,901 2,386,375 2,381,356 diluted Performance ratios(three-month and six-month dataannualized)Return on average 2.34 % (0.19 %) 2.29 % 0.44 % assetsReturn on average 24.97 % (3.51 %) 25.20 % 4.03 % equityReturn on averagecommon stockholders' 24.97 % (2.00 %) 24.75 % 4.54 % equityNet interest margin 3.69 % 3.68 % 3.58 % 3.78 % (tax equivalent basis)Efficiency ratio 73.08 % 100.78 % 73.62 % 91.02 % March 31, September 30, Increase FINANCIAL CONDITION 2021 2020 (Decrease) DATA:(In thousands, except per share data) Total assets $ 1,750,609 $ 1,764,625 $ (14,016 ) Cash and cash 30,837 33,726 (2,889 ) equivalentsInvestment securities 207,331 204,067 3,264 Loans held for sale 207,141 285,525 (78,384 ) Gross loans (1) 1,145,767 1,107,089 38,678 Allowance for loan 17,419 17,026 393 lossesInterest earning 1,582,349 1,620,831 (38,482 ) assetsGoodwill 9,848 9,848 - Core deposit 1,095 1,202 (107 ) intangiblesLoan servicing rights 49,367 25,451 23,916 Noninterest-bearing 284,742 242,673 42,069 depositsInterest-bearing 810,754 805,403 5,351 deposits (2)Federal Home Loan Bank 289,237 310,858 (21,621 ) borrowingsFederal Reserve PPPLF 128,494 174,834 (46,340 ) borrowingsTotal liabilities 1,577,569 1,607,060 (29,491 ) Stockholders' equity,net of noncontrolling 173,040 157,272 15,768 interests Book value per share $ 72.86 $ 66.21 $ 6.65 Tangible book value 68.25 61.56 6.69 per share (3) Non-performing assets: Nonaccrual loans - SBA $ 3,709 $ 3,709 $ - guaranteedNonaccrual loans - 7,697 9,906 (2,209 ) unguaranteedTotal nonaccrual loans $ 11,406 $ 13,615 $ (2,209 ) Accruing loans past - - - due 90 daysTotal non-performing 11,406 13,615 (2,209 ) loansForeclosed real estate 315 - 315 Troubled debtrestructurings 2,019 3,069 (1,050 ) classified asperforming loansTotal non-performing $ 13,740 $ 16,684 $ (2,944 ) assets Asset quality ratios: Allowance for loanlosses as a percent of 1.52 % 1.54 % (0.02 %) total gross loansAllowance for loanlosses as a percent oftotal gross loans, 1.77 % 1.84 % (0.07 %) excluding PPP loans(4)Allowance for loanlosses as a percent of 152.72 % 125.05 % 27.66 % nonperforming loansNonperforming loans asa percent of total 1.00 % 1.23 % (0.23 %) gross loansNonperforming assetsas a percent of total 0.78 % 0.95 % (0.16 %) assets (1) Includes $159.3 million and $180.6 million of PPPloans at March 31, 2021 and September 30, 2020, respectively. (2) Includes $77.0 million and $132.1 million of brokered certificates of deposit at March 31, 2021 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. March 31, September 30, Increase Tangible Book Value 2021 2020 (Decrease) Per Share(In thousands, exceptshare and per share data) Stockholders' equity,net of noncontrolling $ 173,040 $ 157,272 $ 15,768 interests (GAAP)Less: goodwill andcore deposit (10,943 ) (11,050 ) 107 intangiblesTangible equity $ 162,097 $ 146,222 $ 109,789 (non-GAAP) Outstanding common 2,375,027 2,375,324 (297 ) shares Tangible book value $ 68.25 $ 61.56 $ 6.69 per share (non-GAAP) Book value per share $ 72.86 $ 66.21 $ 6.65 (GAAP) SUMMARIZED FINANCIALINFORMATION As of(UNAUDITED):SummarizedConsolidated Balance March 31, December 31, September 30, June 30, March 31,Sheets(In thousands, except 2021 2020 2020 2020 2020 per share data)Total cash and cash $ 30,837 $ 35,392 $ 33,726 $ 27,544 $ 22,603 equivalentsTotal investment 207,331 205,661 204,067 205,960 186,873 securitiesTotal loans held for 207,141 357,242 285,525 210,077 163,927 saleTotal loans, net ofallowance for loan 1,128,348 1,114,708 1,090,063 1,081,381 877,276 lossesPPP loans 159,320 178,499 180,561 180,536 - Loan servicing rights 49,367 35,232 25,451 13,563 6,946 Total assets 1,750,609 1,872,911 1,764,625 1,661,281 1,368,252 Total deposits $ 1,095,496 $ 1,121,320 $ 1,048,076 $ 982,870 $ 937,306 Federal Home Loan Bank 289,237 340,092 310,858 298,622 270,000 borrowingsFederal Reserve PPPLF 128,494 172,772 174,834 174,834 - borrowings Stockholders' equity,net of noncontrolling $ 173,040 $ 165,745 $ 157,272 $ 142,362 $ 116,659 interestsNoncontrollinginterests in - - 293 (214 ) (414 )subsidiaryTotal equity 173,040 165,745 157,565 142,148 116,245 Outstanding common 2,375,027 2,374,927 2,375,324 2,375,324 2,375,324 shares Three Months EndedSummarizedConsolidated March 31, December 31, September 30, June 30, March 31,Statements of Income(In thousands, except 2021 2020 2020 2020 2020 per share data)Total interest income $ 16,840 $ 16,026 $ 15,765 $ 14,719 $ 13,554 Total interest expense 2,060 2,287 2,337 2,543 2,783 Net interest income 14,780 13,739 13,428 12,176 10,771 Provision for loan 287 668 2,772 2,980 1,705 lossesNet interest incomeafter provision for 14,493 13,071 10,656 9,196 9,066 loan losses Total noninterest 38,973 46,183 57,024 46,962 11,133 incomeTotal noninterest 39,284 44,402 44,452 35,009 22,075 expenseIncome (loss) before 14,182 14,852 23,228 21,149 (1,876 )income taxesIncome tax expense 3,695 4,527 7,257 5,540 (774 )(benefit)Net income (loss) 10,487 10,325 15,971 15,609 (1,102 )Less: net income(loss) attributable to - 402 834 204 (475 )noncontrollinginterestsNet income (loss)attributable to the $ 10,487 $ 9,923 $ 15,137 $ 15,405 $ (627 )Company Net income (loss) per $ 4.43 $ 4.19 $ 6.40 $ 6.51 $ (0.27 )share, basicWeighted averageshares outstanding, 2,369,642 2,367,061 2,365,217 2,365,217 2,355,750 basic Net income (loss) per $ 4.39 $ 4.16 $ 6.39 $ 6.51 $ (0.26 )share, dilutedWeighted averageshares outstanding, 2,388,063 2,384,702 2,370,694 2,366,787 2,379,901 diluted SUMMARIZED FINANCIALINFORMATION Three Months Ended(UNAUDITED)(CONTINUED): March 31, December 31, September 30, June 30, March 31,ConsolidatedPerformance Ratios 2021 2020 2020 2020 2020 (Annualized)Return on average 2.34 % 2.23 % 3.44 % 4.02 % (0.19 %)assetsReturn on average 24.97 % 25.43 % 43.46 % 48.75 % (3.51 %)equityReturn on averagecommon stockholders' 24.97 % 24.52 % 41.08 % 47.91 % (2.00 %)equityNet interest margin 3.69 % 3.46 % 3.40 % 3.52 % 3.68 %(tax equivalent basis)Efficiency ratio 73.08 % 74.10 % 63.10 % 59.20 % 100.78 % As of or for the Three Months Ended March 31, December 31, September 30, June 30, March 31,Consolidated Asset 2021 2020 2020 2020 2020 Quality RatiosNonperforming loans asa percentage of total 1.00 % 1.10 % 1.23 % 1.26 % 1.55 %loansNonperforming assetsas a percentage of 0.78 % 0.78 % 0.95 % 1.17 % 1.45 %total assetsAllowance for loanlosses as a percentage 1.52 % 1.51 % 1.54 % 1.34 % 1.32 %of total loansAllowance for loanlosses as a percentage 152.72 % 138.02 % 125.05 % 106.01 % 84.67 %of nonperforming loansNet charge-offs(recoveries) to 0.00 % 0.04 % 0.03 % 0.00 % 0.06 %average outstandingloans SUMMARIZED FINANCIALINFORMATION Three Months Ended(UNAUDITED)(CONTINUED):Segmented Statements March 31, December 31, September 30, June 30, March 31,of Income Information(In thousands, except 2021 2020 2020 2020 2020 per share data)Core Banking Segment: Net interest income $ 11,114 $ 10,861 $ 10,512 $ 9,645 $ 9,035 Provision for loan 106 702 2,232 1,668 216 lossesNet interest incomeafter provision for 11,008 10,159 8,280 7,977 8,819 loan lossesNoninterest income 1,490 1,552 1,779 1,324 1,411 Noninterest expense 8,991 8,112 7,920 7,633 6,720 Income before income 3,507 3,599 2,139 1,668 3,510 taxesIncome tax expense 507 570 482 276 591 Net incomeattributable to the $ 3,000 $ 3,029 $ 1,657 $ 1,392 $ 2,919 Company SBA Lending Segment (Q2):Net interest income $ 3,227 $ 2,147 $ 1,959 $ 1,584 $ 1,151 (5)Provision (credit) for 181 (34 ) 540 1,312 1,489 loan lossesNet interest income(loss) after provision 3,046 2,181 1,419 272 (338 )for loan lossesNoninterest income 3,407 1,385 2,828 1,785 1,209 Noninterest expense 2,449 2,746 2,545 1,642 1,841 Income (loss) before 4,004 820 1,702 415 (970 )income taxesIncome tax expense 1,005 105 217 53 (124 )(benefit)Net income (loss) 2,999 715 1,485 362 (846 )Less: net income(loss) attributable to - 402 834 204 (475 )noncontrollinginterestsNet income (loss)attributable to the $ 2,999 $ 313 $ 651 $ 158 $ (371 )Company (6) Mortgage Banking Segment:Net interest income $ 439 $ 731 $ 957 $ 947 $ 585 Provision for loan - - - - - lossesNet interest incomeafter provision for 439 731 957 947 585 loan lossesNoninterest income 34,076 43,246 52,417 43,853 8,513 Noninterest expense 27,844 33,544 33,987 25,734 13,514 Income (loss) before 6,671 10,433 19,387 19,066 (4,416 )income taxesIncome tax expense 2,183 3,852 6,558 5,211 (1,241 )(benefit)Net income (loss)attributable to the $ 4,488 $ 6,581 $ 12,829 $ 13,855 $ (3,175 )Company Net Income (Loss) Per Share by SegmentNet income per share, $ 1.27 $ 1.28 $ 0.70 $ 0.59 $ 1.24 basic - Core BankingNet income (loss) pershare, basic - SBA 1.27 0.13 0.28 0.07 (0.16 )Lending (Q2) (7)Net income (loss) pershare, basic - 1.89 2.78 5.42 5.85 (1.35 )Mortgage BankingTotal net income(loss) per share, $ 4.43 $ 4.19 $ 6.40 $ 6.51 $ (0.27 )basic (7) Net Income (Loss) PerDiluted Share by SegmentNet income per share, $ 1.26 $ 1.27 $ 0.70 $ 0.59 $ 1.23 diluted - Core BankingNet income (loss) pershare, diluted - SBA 1.26 0.13 0.27 0.07 (0.16 )Lending (Q2) (8)Net income (loss) pershare, diluted - 1.87 2.76 5.42 5.85 (1.33 )Mortgage BankingTotal net income(loss) per share, $ 4.39 $ 4.16 $ 6.39 $ 6.51 $ (0.26 )diluted (8) (5) Includes netinterest income 1,887 928 861 571 - derived from PPP loansof: (6) Includes netincome attributable tothe Company derived 1,415 810 751 498 - from PPP loans (taxeffected) of: (7) Includes basic netincome per share 0.60 0.34 0.32 0.21 - derived from PPP loans(tax effected) of: (8) Includes dilutednet income per share 0.59 0.34 0.32 0.21 - derived from PPP loans(tax effected) of: SUMMARIZED FINANCIALINFORMATION Three Months Ended(UNAUDITED)(CONTINUED):Noninterest Expense March 31, December 31, September 30, June 30, March 31,Detail by Segment(In thousands) 2021 2020 2020 2020 2020 Core Banking Segment: Compensation $ 4,895 $ 4,127 $ 4,250 $ 4,219 $ 3,535 Occupancy 1,387 1,392 1,512 1,239 1,133 Advertising 248 177 225 195 151 Other 2,461 2,416 1,933 1,980 1,901 Total Noninterest $ 8,991 $ 8,112 $ 7,920 $ 7,633 $ 6,720 Expense SBA Lending Segment (Q2):Compensation $ 1,929 $ 2,280 $ 1,939 $ 1,314 $ 1,569 Occupancy 129 93 116 118 99 Advertising 8 10 6 - 9 Other 383 363 484 210 164 Total Noninterest $ 2,449 $ 2,746 $ 2,545 $ 1,642 $ 1,841 Expense Mortgage Banking Segment:Compensation $ 22,657 $ 27,455 $ 27,092 $ 21,363 $ 9,803 Occupancy 998 1,100 1,207 855 757 Advertising 1,796 2,124 2,011 1,666 1,617 Other 2,393 2,865 3,677 1,850 1,337 Total Noninterest $ 27,844 $ 33,544 $ 33,987 $ 25,734 $ 13,514 Expense SUMMARIZED FINANCIALINFORMATION Three Months Ended(UNAUDITED)(CONTINUED): March 31, December 31, September 30, June 30, March 31,Mortgage BankingNoninterest Expense 2021 2020 2020 2020 2020 Fixed vs. Variable(In thousands) Noninterest Expense - $ 11,713 $ 13,296 $ 11,838 $ 8,394 $ 6,740 Fixed ExpensesNoninterest Expense - 16,131 20,248 22,149 17,340 6,774 Variable Expenses (9)Total Noninterest $ 27,844 $ 33,544 $ 33,987 $ 25,734 $ 13,514 Expense Three Months EndedSBA Lending (Q2) Data March 31, December 31, September 30, June 30, March 31,(In thousands, except 2021 2020 2020 2020 2020 percentage data)Final funded loansguaranteed portion $ 29,883 $ 14,116 $ 25,623 $ 16,605 $ 16,180 sold, SBA Gross gain on sales of $ 3,858 $ 1,698 $ 3,094 $ 1,771 $ 1,597 loans, SBAWeighted average grossgain on sales of 12.91 % 12.03 % 12.08 % 10.67 % 9.87 %loans, SBA Net gain on sales of $ 3,239 $ 1,267 $ 2,366 $ 1,317 $ 1,229 loans, SBA (10)Weighted average netgain on sales of 10.84 % 8.98 % 9.23 % 7.93 % 7.60 %loans, SBA Three Months EndedMortgage Banking Data March 31, December 31, September 30, June 30, March 31,(In thousands, except 2021 2020 2020 2020 2020 percentage data) Mortgage originationsfor sale in the $ 1,344,873 $ 1,430,628 $ 1,526,809 $ 1,003,518 $ 532,996 secondary market Mortgage sales $ 1,476,198 $ 1,349,044 $ 1,471,501 $ 954,568 $ 488,457 Gross gain on sales ofloans, mortgage $ 27,606 $ 47,224 $ 53,633 $ 31,067 $ 14,912 bankingWeighted average grossgain on sales of 1.87 % 3.50 % 3.64 % 3.25 % 3.05 %loans, mortgagebanking Mortgage banking $ 32,398 $ 42,300 $ 52,035 $ 43,713 $ 8,411 income (11) (9) Variable expenses include incentive compensation and advertising expenses. (10) Net of commissions, referral fees, SBA repair fees and discounts onunguaranteed portions held-for-investment, and inclusive of gains on servicing assets. (11) 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. SUMMARIZED FINANCIALINFORMATION Three Months Ended(UNAUDITED)(CONTINUED):SummarizedConsolidated Average March 31, December 31, September 30, June 30, March 31,Balance Sheets(In thousands) 2021 2020 2020 2020 2020 Interest-earning assetsAverage balances: Interest-bearing $ 48,035 $ 34,412 $ 58,775 $ 25,985 $ 48,306 deposits with banksLoans, excluding 1,217,398 1,205,278 1,172,547 1,076,376 970,083 PPPPPP loans 164,533 179,316 180,561 114,721 - Investment 42,424 42,462 44,026 43,569 46,216 securities - taxableInvestmentsecurities - 146,145 146,374 145,042 143,702 122,770 nontaxableFRB and FHLB 19,294 17,992 17,293 16,804 14,878 stockTotalinterest-earning $ 1,637,829 $ 1,625,834 $ 1,618,244 $ 1,421,157 $ 1,202,253 assets Interest income (tax equivalent basis):Interest-bearing $ 18 $ 18 $ 22 $ 37 $ 153 deposits with banksLoans, excluding 13,033 13,171 12,924 12,164 11,736 PPPPPP loans 2,031 1,085 1,019 671 - Investment 432 471 483 502 504 securities - taxableInvestmentsecurities - 1,487 1,508 1,507 1,514 1,300 nontaxableFRB and FHLB 167 108 144 168 151 stockTotalinterest income (tax $ 17,168 $ 16,361 $ 16,099 $ 15,056 $ 13,844 equivalent basis) Weighted average yield(tax equivalent basis, annualized):Interest-bearing 0.15 % 0.21 % 0.15 % 0.57 % 1.27 %deposits with banksLoans, excluding 4.28 % 4.37 % 4.41 % 4.52 % 4.84 %PPPPPP loans 4.94 % 2.42 % 2.26 % 2.34 % 0.00 %Investment 4.07 % 4.44 % 4.39 % 4.61 % 4.36 %securities - taxableInvestmentsecurities - 4.07 % 4.12 % 4.16 % 4.21 % 4.24 %nontaxableFRB and FHLB 3.46 % 2.40 % 3.33 % 4.00 % 4.06 %stockTotalinterest-earning 4.19 % 4.03 % 3.98 % 4.24 % 4.61 %assets Interest-bearing liabilitiesAverage balances: Interest-bearing $ 840,556 $ 811,016 $ 842,363 $ 770,402 $ 716,051 depositsFed funds - - - 1,978 143 purchasedFederal Home 293,819 306,299 292,876 292,168 248,205 Loan Bank borrowingsFederal Reserve 158,354 173,701 174,835 74,218 - PPPLF borrowingsSubordinateddebt and other 19,786 19,803 19,786 19,769 19,752 borrowingsTotalinterest-bearing $ 1,312,515 $ 1,310,819 $ 1,329,860 $ 1,158,535 $ 984,151 liabilities Interest expense: Interest-bearing $ 771 $ 936 $ 974 $ 1,311 $ 1,625 depositsFed funds - - - 2 - purchasedFederal Home 833 861 853 846 838 Loan Bank borrowingsFederal Reserve 137 153 154 66 - PPPLF borrowingsSubordinateddebt and other 319 337 356 318 320 borrowingsTotal $ 2,060 $ 2,287 $ 2,337 $ 2,543 $ 2,783 interest expense Weighted average cost (annualized):Interest-bearing 0.37 % 0.46 % 0.46 % 0.68 % 0.91 %depositsRepurchase 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %agreementsFed funds 0.00 % 0.00 % 0.00 % 0.40 % 0.00 %purchasedFederal Home 1.13 % 1.12 % 1.16 % 1.16 % 1.35 %Loan Bank borrowingsFederal Reserve 0.35 % 0.35 % 0.35 % 0.36 % 0.00 %PPPLF borrowingsSubordinateddebt and other 6.45 % 6.81 % 7.20 % 6.43 % 6.48 %borrowingsTotalinterest-bearing 0.63 % 0.70 % 0.70 % 0.88 % 1.13 %liabilities Interest rate spread(tax equivalent basis, 3.56 % 3.33 % 3.28 % 3.36 % 3.48 %annualized) Net interest margin(tax equivalent basis, 3.69 % 3.46 % 3.40 % 3.52 % 3.68 %annualized) Net interest margin,excluding PPP andPPPLF (non-GAAP), (tax 3.59 % 3.63 % 3.59 % 3.65 % 3.68 %equivalent basis,annualized)