GlobeNewswire Inc | Oct 30, 2020 05:00PM EDT

October 30, 2020

JEFFERSONVILLE, Ind., Oct. 30, 2020 (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 $33.4 million, or $14.04 per diluted share, for the year ended September 30, 2020 compared to net income of $16.2 million, or $6.82 per diluted share, for the year ended September 30, 2019, resulting in an increase of 106% on a per share basis.

Commenting on the Companys performance, Larry W. Myers, President and CEO stated: We are very pleased with another outstanding quarter and fiscal year, including record earnings and asset growth for the year, resiliency of asset quality during a challenging environment, stability of the net interest margin, significant increase in stockholders equity, and substantial increase in shareholder value. The core bank and ancillary business lines continue to perform exceptionally well and generate meaningful returns for our shareholders. I continue to have confidence that the Company is well-positioned to thrive during what is otherwise a very challenging banking environment and I continue to be very proud of our Company and staff.

COVID-19 Response

The COVID-19 pandemic has placed, and continues to place, significant health, economic and other major hardships throughout the communities we serve, the United States and the entire world. The Company has implemented a number of procedures in response to the pandemic to support the safety and well-being of our customers, employees, and communities:

-- Following the guidelines of the Center for Disease Control and local governments, we have updated our branch operating procedures. While our branches have remained open, the lobbies were temporarily closed and transactions were being conducted through drive-up windows or by appointment. Our branches have returned to pre-pandemic service levels, but have implemented safety precautions, including use of personal protective equipment (PPE) (where and when prudent), enhanced daily cleaning and instructions to maintain appropriate social distancing. We also actively encourage customers to utilize PPE and alternative banking channels, such as our online and mobile banking platforms. Our customer service and retail departments remain fully staffed and available to assist customers remotely. -- Our corporate and operations offices have predominately returned to pre-pandemic schedules and processes, but we have enhanced daily cleaning and instructed employees to maintain appropriate social distancing. Our employees maintain the ability to work remotely, both safely and efficiently using technology, in the event that is required or necessary. -- We continue to assist customers experiencing COVID-19 related hardships by approving payment extensions or loan forbearance agreements, and by waiving or refunding certain fees. During the initial onset of COVID-19, we proactively contacted all commercial borrowers and offered uniform payment extensions or loan forbearance agreements, while requests from consumer borrowers were reviewed and approved a on case-by-case basis. Beginning on March 18, 2020 and through October 23, 2020, we had approved 199 payment extensions or loan forbearance agreements on balances of approximately $86.2 million, of which $77.7 million related to commercial real estate loans, $7.0 million related to residential real estate and consumer loans, and $1.5 million related to Small Business Administration (SBA) lending relationships. These payment extensions or loan forbearance agreements were generally for periods of three months and included deferment of both principal and interest. As of October 23, 2020, we had 14 loans with payment extensions or loan forbearance agreements on balances of approximately $10.9 million that were still in effect and set to expire between November 25, 2020 and April 4, 2021. Included in those 14 agreements in effect as of October 23, 2020, 10 were for second deferral periods ranging from three to six months. Of the 10 agreements in the second deferral period, 6 were commercial business and commercial real estate loans, and 4 were residential mortgage loans. Following the expiration of the initial payment extensions or loan forbearance agreements, we will entertain requests for extended periods on a case-by-case basis, which will generally include deferment of only the principal portion of payments (but both principal and interest for hotel loans) for a period of up to three months. -- As a result of the passage of the CARES Act, 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 SBA loans of new clients originated between March 27, 2020 and September 27, 2020. The aforementioned $1.5 million of SBA lending relationships that were provided payment extensions or forbearance by the Company will also receive the six months of SBA-made payments once the extension or forbearance periods have expired. In addition, the majority of the Companys SBA clients applied for participation in the SBAs Paycheck Protection Program (PPP). -- We are actively participating in the PPP and had $180.6 million of outstanding PPP loan balances as of September 30, 2020. At September 30, 2020, we had approximately $3.2 million of net deferred loan fees related to PPP loans that will be recognized over the life of the loans and as borrowers are granted forgiveness. -- The leisure and hospitality industries carry a higher degree of credit risk due to the COVID-19 pandemic. Based on our evaluation of the allowance for loan losses at September 30, 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. -- The Company had outstanding loan balances to restaurants totaling $167.3 million as of September 30, 2020, of which $75.4 million is fully guaranteed by the SBA, including $74.5 million of PPP loans, and of which $82.5 million represents commercial real estate loans where the collateral property is leased to national-brand, investment-grade tenants. -- The Company had outstanding loan balances to hotels totaling $17.4 million as of September 30, 2020, of which $3.7 million is fully guaranteed by the SBA, including $606,000 of PPP loans.

Management continues to closely monitor the pandemic and may take additional action to respond to the pandemics effects on the Companys business as the situation continues to evolve. We cannot determine or estimate the impact on our business at this time because the length and severity of the economic downturn is not yet known. We are confident that we are well-positioned to withstand any challenges that may be presented, and we are committed to continuing to serve our customers, employees and communities.

Results of Operations for the Fiscal Years Ended September 30, 2020 and 2019

Net interest income increased $9.3 million, or 23.2%, to $49.4 million for the year ended September 30, 2020 as compared to 2019. The increase in net interest income was due to an $8.9 million increase in interest income and a $368,000 decrease in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $290.4 million, from $1.06 billion for 2019 to $1.35 billion for 2020, partially offset by a decrease in the weighted-average tax-equivalent yield, from 4.91% for 2019 to 4.52% for 2020. The decrease in the weighted-average tax-equivalent yield was due primarily to declining market rates for loans and investment securities, which is typical during periods of declining U.S. treasury yields. Interest expense decreased due to a decrease in the average cost of interest-bearing liabilities, from 1.28% for 2019 to 0.96% for 2020, partially offset by an increase in the average balance of interest-bearing liabilities of $252.4 million, from $849.6 million for 2019 to $1.10 billion for 2020. The decrease in the average cost of interest-bearing liabilities for the year ended September 30, 2020 was due primarily to decreasing market interest rates on deposits and FHLB borrowings, as well as the Companys participation in the Federal Reserve Banks PPP Liquidity Facility (PPPLF), which began during the quarter ended June 30, 2020. Additional details are included in the Summarized Consolidated Average Balance Sheets table at the end of this release.

The Company recognized $8.0 million in provision for loan losses for the year ended September 30, 2020, compared to $1.5 million in provision for loan losses recognized in 2019. Nonperforming loans, which consist of nonaccrual loans and loans over 90 days past due and still accruing interest, increased $8.4 million, from $5.2 million at September 30, 2019 to $13.6 million at September 30, 2020, of which $3.7 million was guaranteed by the SBA. The Company recognized net charge-offs of $975,000 for the year ended September 30, 2020, of which $679,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $746,000 for the year ended September 30, 2019, of which $645,000 was related to unguaranteed portions of SBA loans. The increase in the provision for loan losses for 2020 was primarily due to increased nonperforming assets for the year, as well as changes to qualitative factors within the allowance for loan losses calculation related to economic uncertainties surrounding COVID-19.

Noninterest income increased $87.3 million for the year ended September 30, 2020 as compared to 2019. The increase was due primarily to an increase in mortgage banking income of $84.8 million. Additional details regarding the financial performance of the mortgage banking and SBA lending segments are included in the Segmented Income Statement Information table at the end of this release.

Noninterest expense increased $63.4 million for the year ended September 30, 2020 as compared to 2019. The increase was due primarily to increases in compensation and benefits, advertising expense and other operating expenses of $50.0 million, $4.6 million and $4.2 million, 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 as a result of the Companys performance. The increases in advertising expense and other operating expenses are primarily due to the mortgage banking segment.

The Company recognized income tax expense of $12.7 million for the year ended September 30, 2020, compared to $3.1 million for 2019. The effective tax rate increased from 15.4% for the year ended September 30, 2019 to 27.1% for 2020 primarily due to increases in pre-tax income and nondeductible executive compensation.

Comparison of Results of Operations for the Three Months Ended September 30, 2020 and 2019

The Company reported net income of $15.1 million, or $6.39 per diluted share, for the three months ended September 30, 2020 compared to net income of $5.3 million, or $2.24 per diluted share, for the three months ended September 30, 2019, resulting in an increase of 185% on a per share basis.

Net interest income increased $4.0 million, or 37.4%, to $14.8 million for the quarter ended September 30, 2020 as compared to the same quarter in 2019. The increase in net interest income was due to a $3.3 million increase in interest income and a $732,000 decrease in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $489.8 million, from $1.13 billion for 2019 to $1.62 billion for 2020, partially offset by a decrease in the weighted-average tax-equivalent yield, from 5.00% for 2019 to 4.32% for 2020. Interest expense decreased due to a decrease in the average cost of interest-bearing liabilities, from 1.35% for 2019 to 0.70% for 2020, partially offset by an increase in the average balance of interest-bearing liabilities of $421.2 million, from $908.7 million for 2019 to $1.33 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 PPPLF previously discussed.

The Company recognized $2.8 million in provision for loan losses for the quarter ended September 30, 2020, compared to $471,000 for the comparable quarter in 2019. The Company recognized net charge-offs of $385,000 for the quarter ended September 30, 2020, of which $326,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $47,000 for the same quarter in 2019. The increase in the provision for loan losses for 2020 was primarily due to increased nonperforming assets as well as changes to qualitative factors within the allowance for loan losses calculation related to economic uncertainties surrounding COVID-19.

Noninterest income increased $37.3 million for the quarter ended September 30, 2020 as compared to the same quarter in 2019. The increase was due primarily to an increase in mortgage banking income of $35.6 million. 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 $22.8 million for the quarter ended September 30, 2020 as compared to the same quarter in 2019. The increase was due primarily to an increase in compensation and benefits of $17.6 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 as a result of the Companys performance.

The Company recognized income tax expense of $7.3 million for the quarter ended September 30, 2020, as compared to income tax expense of $1.4 million for 2019. The effective tax rate increased from 19.4% for the quarter ended September 20, 2019 to 31.2% for the quarter ended September 30, 2020 primarily due to increases in pre-tax income and nondeductible executive compensation.

Comparison of Financial Condition at September 30, 2020 and September 30, 2019

Total assets increased $542.0 million, from $1.22 billion at September 30, 2019 to $1.76 billion at September 30, 2020. Net loans increased $279.4 million during the year ended September 30, 2020, due primarily to continued growth in the commercial business, commercial real estate and SBA loan portfolios, as well as $180.6 million in PPP loans outstanding at September 30, 2020. Residential mortgage loans held for sale and SBA loans held for sale also increased by $182.9 million and $6.5 million, respectively, during the year ended September 30, 2020 due to increased production from the mortgage banking and SBA lending segments. Total liabilities increased $505.7 million primarily due to an increase of $213.7 million in total deposits, an increase of $174.8 million in Federal Reserve PPPLF advances and an increase of $88.3 million in FHLB borrowings.

Common stockholders equity increased $36.2 million, from $121.1 million at September 30, 2019 to $157.3 million at September 30, 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 $31.9 million and $3.9 million, respectively. At September 30, 2020 and September 30, 2019, 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 Years Ended September 30, September 30,OPERATING 2020 2019 2020 2019 DATA:(In thousands,except share and per sharedata) Total interest $ 17,125 $ 13,829 $ 59,929 $ 50,995 incomeTotal interest 2,337 3,069 10,538 10,906 expense Net interest 14,788 10,760 49,391 40,089 incomeProvision for 2,772 471 7,962 1,463 loan losses Net interestincome after 12,016 10,289 41,429 38,626 provision forloan losses Totalnoninterest 55,664 18,340 131,121 43,854 incomeTotalnoninterest 44,452 21,606 125,808 62,390 expense Income before 23,228 7,023 46,742 20,090 income taxesIncome tax 7,257 1,359 12,661 3,095 expense Net income 15,971 5,664 34,081 16,995 Less: Netincomeattributable 834 343 727 818 tononcontrollinginterests Net incomeattributable $ 15,137 $ 5,321 $ 33,354 $ 16,177 to the Company Net income per $ 6.40 $ 2.28 $ 14.15 $ 6.99 share, basicWeightedaverage shares 2,365,217 2,337,472 2,356,680 2,315,697 outstanding,basic Net income per $ 6.39 $ 2.24 $ 14.04 $ 6.82 share, dilutedWeightedaverage shares 2,370,694 2,378,221 2,375,954 2,372,084 outstanding,diluted Performanceratios (annualized)Return on 3.44 % 1.75 % 2.27 % 1.42 %average assetsReturn onaverage common 41.08 % 18.12 % 25.46 % 15.00 %stockholders'equityInterest ratespread (tax 3.62 % 3.65 % 3.56 % 3.63 %equivalentbasis)Net interestmargin (tax 3.74 % 3.92 % 3.75 % 3.88 %equivalentbasis)Efficiency 63.10 % 74.25 % 69.70 % 74.32 %ratio

September 30, September 30, IncreaseFINANCIAL CONDITION DATA: 2020 2019 (Decrease)(In thousands, except per share data) Total assets $ 1,764,625 $ 1,222,579 $ 542,046 Cash and cash equivalents 33,726 41,432 (7,706 )Investment securities 204,067 179,638 24,429 Loans held for sale 285,525 96,070 189,455 Gross loans (1) 1,107,089 820,698 286,391 Allowance for loan losses 17,026 10,040 6,986 Interest earning assets 1,620,831 1,130,095 490,736 Goodwill 9,848 9,848 - Core deposit intangibles 1,202 1,416 (214 )Mortgage servicing rights 21,703 934 20,769 Noninterest-bearing 242,673 173,072 69,601 depositsInterest-bearing deposits 805,403 661,312 144,091 (2)Federal Home Loan Bank 310,858 222,544 88,314 borrowingsFederal Reserve PPPLF 174,834 - 174,834 borrowingsTotal liabilities 1,607,060 1,101,322 505,738 Stockholders' equity, net 157,272 121,053 36,219 of noncontrolling interests Book value per share $ 66.21 $ 51.51 $ 14.70 Tangible book value per 61.56 46.71 14.84 share (3) Non-performing assets: Nonaccrual loans - SBA $ 3,709 $ 450 $ 3,259 guaranteedNonaccrual loans - 9,906 4,718 5,188 unguaranteedTotal nonaccrual loans $ 13,615 $ 5,168 $ 8,447 Accruing loans past due 90 - 12 (12 )daysTotal non-performing loans 13,615 5,180 8,435 Foreclosed real estate - 55 (55 )Troubled debtrestructurings classified 3,069 7,265 (4,196 )as performing loansTotal non-performing assets $ 16,684 $ 12,500 $ 4,184 Asset quality ratios: Allowance for loan lossesas a percent of total gross 1.54 % 1.22 % 0.31 %loansAllowance for loan lossesas a percent of total gross 1.84 % 1.22 % 0.62 %loans, excluding PPP loans(4)Allowance for loan lossesas a percent of 125.05 % 193.82 % -68.77 %nonperforming loansNonperforming loans as apercent of total gross 1.23 % 0.63 % 0.60 %loansNonperforming assets as a 0.95 % 1.02 % (0.08 %)percent of total assets

_______________(1) Includes $180.6 million of PPP loans at September 30, 2020. There were no such loans at September 30, 2019.

(2) Includes $132.1 million and $99.7 million of brokered certificates of deposit at September 30, 2020 and 2019, 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. This ratio is non-GAAP, but is believed by management to be meaningful because it provides 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.

September 30, September 30, IncreaseTangible Book Value Per Share 2020 2019 (Decrease)(In thousands, except share and per share data) Stockholders' equity, net ofnoncontrolling interests $ 157,272 $ 121,053 $ 36,219(GAAP)Less: goodwill and core (11,050 ) (11,264 ) 214deposit intangiblesTangible equity (non-GAAP) $ 146,222 $ 109,789 $ 36,433 Outstanding common shares 2,375,324 2,350,229 25,095 Tangible book value per share $ 61.56 $ 46.71 $ 14.84(non-GAAP) Book value per share (GAAP) $ 66.21 $ 51.51 $ 14.70

SUMMARIZEDFINANCIAL INFORMATION(UNAUDITED): As ofSummarized September SeptemberConsolidated 30, June 30, March 31, December 31, 30,Balance Sheets(In thousands,except per 2020 2020 2020 2019 2019share data)Total cash andcash $ 33,726 $ 27,544 $ 22,603 $ 41,327 $ 41,432equivalentsTotalinvestment 204,067 205,960 186,873 179,991 179,638securitiesTotal loans 285,525 210,077 163,927 110,523 96,070held for saleTotal loans,net of 1,090,063 1,081,381 877,276 851,700 810,658allowance forloan lossesPPP loans 180,561 180,536 - - -Mortgageservicing 21,703 10,372 4,055 3,254 934rightsTotal assets 1,764,625 1,661,281 1,368,252 1,292,573 1,222,579 Total deposits $ 1,048,076 $ 982,870 $ 937,306 $ 885,598 $ 834,384Federal HomeLoan Bank 310,858 298,622 270,000 239,566 222,544borrowingsFederalReserve PPPLF 174,834 174,834 - - -borrowings Stockholders'equity, net of $ 157,272 $ 142,362 $ 116,659 $ 123,810 $ 121,053noncontrollinginterestsNoncontrollinginterests in 293 (214 ) (414 ) 368 204subsidiaryTotal equity 157,565 142,148 116,245 124,178 121,257 Outstanding 2,375,324 2,375,324 2,375,324 2,357,369 2,350,229common shares Three Months EndedSummarizedConsolidated September June 30, March 31, December 31, SeptemberStatements of 30, 30,Income(In thousands,except per 2020 2020 2020 2019 2019share data)Total interest $ 17,125 $ 15,344 $ 13,693 $ 13,767 $ 13,829incomeTotal interest 2,337 2,543 2,783 2,875 3,069expenseNet interest 14,788 12,801 10,910 10,892 10,760incomeProvision for 2,772 2,980 1,705 505 471loan lossesNet interestincome after 12,016 9,821 9,205 10,387 10,289provision forloan losses Totalnoninterest 55,664 46,337 10,994 18,126 18,340incomeTotalnoninterest 44,452 35,009 22,075 24,272 21,606expenseIncome (loss)before income 23,228 21,149 (1,876 ) 4,241 7,023taxesIncome taxexpense 7,257 5,540 (774 ) 638 1,359(benefit)Net income 15,971 15,609 (1,102 ) 3,603 5,664(loss)Less: netincome (loss)attributable 834 204 (475 ) 164 343tononcontrollinginterestsNet income(loss) $ 15,137 $ 15,405 $ (627 ) $ 3,439 $ 5,321attributableto the Company Net income(loss) per $ 6.40 $ 6.51 $ (0.27 ) $ 1.47 $ 2.28share, basicWeightedaverage shares 2,365,217 2,365,217 2,355,750 2,340,619 2,337,472outstanding,basic Net income(loss) per $ 6.39 $ 6.51 $ (0.26 ) $ 1.44 $ 2.24share, dilutedWeightedaverage shares 2,370,694 2,366,787 2,379,901 2,382,754 2,378,221outstanding,diluted

Three Months Ended September June 30, March 31, December 31, September 30, 30,ConsolidatedPerformance 2020 2020 2020 2019 2019 Ratios(Annualized)Return onaverage 3.44 % 4.02 % (0.19 %) 1.09 % 1.75 %assetsReturn onaverage 43.46 % 48.75 % (3.51 %) 11.76 % 19.28 %equityReturn onaveragecommon 41.08 % 47.91 % (2.00 %) 11.24 % 18.12 %stockholders'equityNet interestmargin (tax 3.74 % 3.70 % 3.73 % 3.83 % 3.92 %equivalentbasis)Efficiency 63.10 % 59.20 % 100.78 % 83.64 % 74.25 %ratio As of or for the Three Months Ended September June 30, March 31, December 31, September 30, 30,ConsolidatedAsset Quality 2020 2020 2020 2019 2019 RatiosNonperformingloans as a 1.23 % 1.26 % 1.55 % 0.64 % 0.63 %percentage oftotal loansNonperformingassets as a 0.95 % 1.17 % 1.45 % 1.00 % 1.02 %percentage oftotal assetsAllowance forloan lossesas a 1.54 % 1.34 % 1.32 % 1.22 % 1.22 %percentage oftotal loansAllowance forloan lossesas a 125.05 % 106.01 % 84.67 % 191.18 % 193.82 %percentage ofnonperformingloansNetcharge-offs(recoveries) 0.03 % 0.00 % 0.06 % 0.00 % 0.01 %to averageoutstandingloans SUMMARIZEDFINANCIALINFORMATION (UNAUDITED)(CONTINUED): Three Months EndedSegmentedStatements of September SeptemberIncome 30, June 30, March 31, December 31, 30,Information(5)(Inthousands, 2020 2020 2020 2019 2019 except pershare data)Net interestincome - Core $ 10,512 $ 9,645 $ 9,035 $ 9,012 $ 8,924 BankingNet interestincome - SBA 1,959 1,584 1,151 1,217 1,237 Lending (Q2)Net interestincome - 2,317 1,572 724 663 599 MortgageBanking (5)Total netinterest $ 14,788 $ 12,801 $ 10,910 $ 10,892 $ 10,760 income Provision forloan losses - $ 2,232 $ 1,668 $ 216 $ 520 $ 104 Core BankingProvision forloan losses - 540 1,312 1,489 (15 ) 367 SBA Lending(Q2)Provision forloan losses - - - - - - MortgageBankingTotalprovision for $ 2,772 $ 2,980 $ 1,705 $ 505 $ 471 loan losses Net interestincome afterprovision for $ 8,280 $ 7,977 $ 8,819 $ 8,492 $ 8,820 loan losses -Core BankingNet interestincome (loss)afterprovision for 1,419 272 (338 ) 1,232 870 loan losses -SBA Lending(Q2)Net interestincome afterprovision for 2,317 1,572 724 663 599 loan losses -MortgageBankingTotal netinterestincome after $ 12,016 $ 9,821 $ 9,205 $ 10,387 $ 10,289 provision forloan losses Noninterestincome - Core $ 1,779 $ 1,324 $ 1,411 $ 1,391 $ 1,582 BankingNoninterestincome - SBA 2,828 1,785 1,209 929 1,715 Lending (Q2)Noninterestincome - 51,057 43,228 8,374 15,806 15,043 MortgageBankingTotalnoninterest $ 55,664 $ 46,337 $ 10,994 $ 18,126 $ 18,340 income Noninterestexpense - $ 7,920 $ 7,633 $ 6,720 $ 7,109 $ 6,866 Core BankingNoninterestexpense - SBA 2,545 1,642 1,841 1,825 1,883 Lending (Q2)Noninterestexpense - 33,987 25,734 13,514 15,338 12,857 MortgageBankingTotalnoninterest $ 44,452 $ 35,009 $ 22,075 $ 24,272 $ 21,606 expense Income (loss)before income $ 2,139 $ 1,668 $ 3,510 $ 2,774 $ 3,536 taxes - CoreBankingIncome (loss)before income 1,702 415 (970 ) 336 702 taxes - SBALending (Q2)Income (loss)before incometaxes - 19,387 19,066 (4,416 ) 1,131 2,785 MortgageBankingTotal income(loss) before $ 23,228 $ 21,149 $ (1,876 ) $ 4,241 $ 7,023 income taxes Income taxexpense $ 482 $ 276 $ 591 $ 330 $ 669 (benefit) -Core BankingIncome taxexpense(benefit) - 217 53 (124 ) 43 90 SBA Lending(Q2)Income taxexpense(benefit) - 6,558 5,211 (1,241 ) 265 600 MortgageBankingTotal incometax expense $ 7,257 $ 5,540 $ (774 ) $ 638 $ 1,359 (benefit) Net income(loss) - Core $ 1,657 $ 1,392 $ 2,919 $ 2,444 $ 2,867 BankingNet income(loss) - SBA 1,485 362 (846 ) 293 612 Lending (Q2)Net income(loss) - 12,829 13,855 (3,175 ) 866 2,185 MortgageBankingTotal net $ 15,971 $ 15,609 $ (1,102 ) $ 3,603 $ 5,664 income (loss) Net income(loss)attributable $ 1,657 $ 1,392 $ 2,919 $ 2,444 $ 2,867 to theCompany -Core BankingNet income(loss)attributable 651 158 (371 ) 129 269 to theCompany - SBALending (Q2)Net income(loss)attributableto the 12,829 13,855 (3,175 ) 866 2,185 Company -MortgageBankingTotal netincome (loss)attributable $ 15,137 $ 15,405 $ (627 ) $ 3,439 $ 5,321 to theCompany Net income(loss) pershare, basic $ 0.70 $ 0.59 $ 1.24 $ 1.04 $ 1.23 - CoreBankingNet income(loss) pershare, basic 0.28 0.07 (0.16 ) 0.06 0.12 - SBA Lending(Q2)Net income(loss) pershare, basic 5.42 5.85 (1.35 ) 0.37 0.93 - MortgageBankingTotal netincome (loss) $ 6.40 $ 6.51 $ (0.27 ) $ 1.47 $ 2.28 per share,basic Net income(loss) pershare, $ 0.70 $ 0.59 $ 1.23 $ 1.03 $ 1.21 diluted -Core BankingNet income(loss) pershare, 0.27 0.07 (0.16 ) 0.05 0.11 diluted - SBALending (Q2)Net income(loss) pershare, 5.42 5.85 (1.33 ) 0.36 0.92 diluted -MortgageBankingTotal netincome (loss) $ 6.39 $ 6.51 $ (0.26 ) $ 1.44 $ 2.24 per share,diluted

_______________(5) Adjustments were made to segment reporting for the Core Banking and Mortgage Banking segments in order to more accurately reflect the expenses borne by the Core Banking segmentin support of the Mortgage Banking segment. The adjustments were made for each period presented in this earnings release.

Three Months Ended September 30, June 30, March 31, December 31, September 30, 2020 2020 2020 2019 2019 NoninterestExpense Detail bySegment (5)(In thousands)Compensation- Core $ 4,250 $ 4,219 $ 3,535 $ 4,015 $ 3,771 BankingOccupancy - 1,512 1,239 1,133 1,200 1,140 Core BankingAdvertising- Core 225 195 151 147 183 BankingOther - Core 1,933 1,980 1,901 1,747 1,772 BankingTotalNoninterest $ 7,920 $ 7,633 $ 6,720 $ 7,109 $ 6,866 Expense -Core Banking Compensation- SBA $ 1,939 $ 1,314 $ 1,569 $ 1,469 $ 1,403 Lending (Q2)Occupancy -SBA Lending 116 118 99 89 88 (Q2)Advertising- SBA 6 - 9 5 8 Lending (Q2)Other - SBA 484 210 164 262 384 Lending (Q2)TotalNoninterestExpense - $ 2,545 $ 1,642 $ 1,841 $ 1,825 $ 1,883 SBA Lending(Q2) Compensation- Mortgage $ 27,092 $ 21,363 $ 9,803 $ 12,336 $ 10,522 BankingOccupancy -Mortgage 1,207 855 757 633 549 BankingAdvertising- Mortgage 2,011 1,666 1,617 1,314 871 BankingOther -Mortgage 3,677 1,850 1,337 1,055 915 BankingTotalNoninterestExpense - $ 33,987 $ 25,734 $ 13,514 $ 15,338 $ 12,857 MortgageBanking Three Months Ended September 30, June 30, March 31, December 31, September 30,MortgageBankingNoninterest 2020 2020 2020 2019 2019 ExpenseFixed vs.Variable (5)(In thousands)NoninterestExpense - $ 11,838 $ 8,394 $ 6,740 $ 5,671 $ 4,797 FixedExpensesNoninterestExpense - 22,149 17,340 6,774 9,667 8,060 VariableExpenses (6)TotalNoninterest $ 33,987 $ 25,734 $ 13,514 $ 15,338 $ 12,857 Expense Three Months EndedSBA Lending September 30, June 30, March 31, December 31, September 30,(Q2) Data(Inthousands,except 2020 2020 2020 2019 2019 percentagedata)Final fundedloansguaranteed $ 22,338 $ 16,605 $ 16,180 $ 10,830 $ 19,471 portionsold, SBA Gross gainon sales of $ 3,094 $ 1,771 $ 1,597 $ 1,066 $ 2,138 loans, SBAWeightedaveragegross gain 13.85 % 10.67 % 9.87 % 9.84 % 10.98 %on sales ofloans, SBA Net gain onsales of $ 2,366 $ 1,317 $ 1,229 $ 761 $ 1,569 loans, SBA(7)Weightedaverage netgain on 10.59 % 7.93 % 7.60 % 7.03 % 8.06 %sales ofloans, SBA Three Months EndedMortgage September 30, June 30, March 31, December 31, September 30,Banking Data(Inthousands,except 2020 2020 2020 2019 2019 percentagedata) Mortgageoriginationsfor sale in $ 1,526,809 $ 1,003,518 $ 532,996 $ 542,568 $ 447,616 thesecondarymarket Mortgage $ 1,471,501 $ 954,568 $ 488,457 $ 529,344 $ 447,819 sales Gross gainon sales ofloans, $ 53,633 $ 31,067 $ 14,912 $ 13,411 $ 14,244 mortgagebankingWeightedaveragegross gainon sales of 3.64 % 3.25 % 3.05 % 2.53 % 3.18 %loans,mortgagebanking Mortgagebanking $ 50,675 $ 43,088 $ 8,272 $ 15,817 $ 15,033 income (8)

_______________(5) Adjustments were made to segment reporting for the Core Banking and Mortgage Banking segments in order to more accurately reflect the expenses borne by the Core Banking segmentin support of the Mortgage Banking segment. The adjustments were made for each period presented in this earnings release.

(6) Variable expenses include incentive compensation and advertising expenses.

(7) Net of commissions, referral fees, SBA repair fees and discounts on unguaranteed portions held-for-investment, and inclusive of gains on servicing assets.

(8) Net of lender credits and other investor expenses, and inclusive of loan fees, gains on mortgage servicing rights, fair value adjustments and gains (losses) on derivative instruments.

SUMMARIZEDFINANCIALINFORMATION (UNAUDITED)(CONTINUED): Three Months EndedSummarizedConsolidated September 30, June 30, March 31, December 31, September 30,Average BalanceSheets(In thousands) 2020 2020 2020 2019 2019 Interest-earning assetsAverage balances:Interest-bearingdeposits with $ 58,775 $ 25,985 $ 48,306 $ 46,296 $ 52,736 banksLoans, excluding 1,172,547 1,076,376 970,083 935,211 891,477 PPPPPP loans 180,561 114,721 - - - Investment 181,087 178,611 158,116 157,093 156,070 securitiesAgencymortgage-backed 7,981 8,660 10,870 13,057 15,178 securitiesFRB and FHLB 17,293 16,804 14,878 14,149 13,020 stockTotalinterest-earning $ 1,618,244 $ 1,421,157 $ 1,202,253 $ 1,165,806 $ 1,128,481 assets Interest income(tax equivalent basis):Interest-bearingdeposits with $ 22 $ 37 $ 153 $ 205 $ 277 banksLoans, excluding 14,284 12,789 11,875 11,830 11,788 PPPPPP loans 1,019 671 - - - Investment 1,935 1,947 1,728 1,780 1,762 securitiesAgencymortgage-backed 55 69 76 83 105 securitiesFRB and FHLB 144 168 151 154 184 stockTotal interestincome (tax $ 17,459 $ 15,681 $ 13,983 $ 14,052 $ 14,116 equivalentbasis) Weighted averageyield (taxequivalent basis,annualized):Interest-bearingdeposits with 0.15 % 0.57 % 1.27 % 1.77 % 2.10 %banksLoans, excluding 4.87 % 4.75 % 4.90 % 5.06 % 5.29 %PPPPPP loans 2.26 % 2.34 % 0.00 % 0.00 % 0.00 %Investment 4.27 % 4.36 % 4.37 % 4.53 % 4.52 %securitiesAgencymortgage-backed 2.76 % 3.19 % 2.80 % 2.54 % 2.77 %securitiesFRB and FHLB 3.33 % 4.00 % 4.06 % 4.35 % 5.65 %stockTotalinterest-earning 4.32 % 4.41 % 4.65 % 4.82 % 5.00 %assets Interest-bearing liabilitiesAverage balances:Interest-bearing $ 842,363 $ 770,402 $ 716,051 $ 707,518 $ 712,692 depositsRepurchase - - - - 250 agreementsFed funds - 1,978 143 - 130 purchasedFederal HomeLoan Bank 292,876 292,168 248,205 207,851 175,912 borrowingsFederal Reserve 174,835 74,218 - - - PPPLF borrowingsSubordinateddebt and other 19,786 19,769 19,752 19,735 19,718 borrowingsTotalinterest-bearing $ 1,329,860 $ 1,158,535 $ 984,151 $ 935,104 $ 908,702 liabilities Interest expense:Interest-bearing $ 974 $ 1,311 $ 1,625 $ 1,749 $ 1,965 depositsRepurchase - - - - - agreementsFed funds - 2 - - 1 purchasedFederal HomeLoan Bank 853 846 838 808 785 borrowingsFederal Reserve 154 66 - - - PPPLF borrowingsSubordinateddebt and other 356 318 320 318 318 borrowingsTotal interest $ 2,337 $ 2,543 $ 2,783 $ 2,875 $ 3,069 expense Weighted averagecost (annualized):Interest-bearing 0.46 % 0.68 % 0.91 % 0.99 % 1.10 %depositsRepurchase 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %agreementsFed funds 0.00 % 0.40 % 0.00 % 0.00 % 3.08 %purchasedFederal HomeLoan Bank 1.16 % 1.16 % 1.35 % 1.55 % 1.78 %borrowingsFederal Reserve 0.35 % 0.36 % 0.00 % 0.00 % 0.00 %PPPLF borrowingsSubordinateddebt and other 7.20 % 6.43 % 6.48 % 6.45 % 6.45 %borrowingsTotalinterest-bearing 0.70 % 0.88 % 1.13 % 1.23 % 1.35 %liabilities Interest ratespread (taxequivalent 3.62 % 3.53 % 3.52 % 3.59 % 3.65 %basis,annualized) Net interestmargin (taxequivalent 3.74 % 3.70 % 3.73 % 3.83 % 3.92 %basis,annualized)