Cash and Cash Equivalents - Cash and cash equivalents increased by $11.6 million, from $30.8 million at September 30, 2023 to $42.4 million at June 30, 2024[204] - The Bank had cash and cash equivalents of $42.4 million and securities available-for-sale with a fair value of $237.7 million at June 30, 2024[230] Loans and Receivables - Net loans receivable increased by $56.7 million, from $1.77 billion at September 30, 2023 to $1.83 billion at June 30, 2024, driven by growth in residential construction loans ($26.1 million) and commercial business loans ($16.9 million)[204] - Loans held for sale increased by $80.0 million, from $45.9 million at September 30, 2023 to $125.9 million at June 30, 2024, primarily due to a transfer of $108.6 million in residential first lien home equity loans[205] - Nonperforming loans increased by $2.8 million from $13.9 million at September 30, 2023 to $16.8 million at June 30, 2024[226] - Net charge-offs were $224,000 for the nine months ended June 30, 2024, compared to $320,000 in 2023[227] Securities - Securities available for sale increased by $9.9 million, from $227.7 million at September 30, 2023 to $237.7 million at June 30, 2024, driven by a net increase in fair value of $15.4 million[206] Deposits and Borrowings - Total deposits increased by $30.4 million, from $1.68 billion at September 30, 2023 to $1.71 billion at June 30, 2024, with interest-bearing deposits up $70.7 million and non-interest bearing deposits down $40.4 million[208] - FHLB borrowings increased by $61.8 million, from $363.2 million at September 30, 2023 to $425.0 million at June 30, 2024, due to less favorable rates in the brokered deposit market[209] - Uninsured deposits were estimated to be $218.0 million, or 12.7% of total deposits, as of June 30, 2024[232] Net Income and Earnings - Net income for the three-month period ended June 30, 2024 was $4.1 million, or $0.60 per diluted share, compared to $2.3 million, or $0.34 per diluted share, for the same period in 2023[210] - The Company reported net income of $9.9 million, or $1.45 per diluted share, for the nine-month period ended June 30, 2024 compared to net income of $8.9 million, or $1.29 per diluted share, for the same period in 2023[220] Net Interest Income and Margin - Net interest income decreased by $331,000, or 2.2%, for the three-month period ended June 30, 2024 compared to the same period in 2023, with a tax-equivalent net interest margin of 2.67% for 2024 versus 2.94% for 2023[210] - Net interest income decreased by $3.1 million, or 6.6%, for the nine-month period ended June 30, 2024 compared to the same period in 2023[220] - The tax-equivalent net interest margin was 2.67% for 2024 compared to 3.13% for 2023[220] - Net interest income decreased by $3.359 million for the nine months ended June 30, 2024, compared to the same period in 2023[226] Interest Income and Expense - Total interest income increased by $4.3 million for the three-month period ended June 30, 2024 compared to 2023, driven by a $145.8 million increase in the average balance of interest-earning assets and a rise in the average tax equivalent yield from 5.20% to 5.60%[211] - Total interest expense increased by $4.6 million for the three-month period ended June 30, 2024 compared to 2023, due to a $210.3 million increase in the average balance of interest-bearing liabilities and a rise in the average cost from 2.71% to 3.36%[212] - Total interest income increased by $14.7 million due to an increase in the average balance of interest-earning assets by $178.7 million, from $2.04 billion in 2023 to $2.22 billion in 2024[221] - Total interest expense increased by $17.7 million due to an increase in the average balance of interest-bearing liabilities by $243.7 million, from $1.68 billion in 2023 to $1.93 billion in 2024[222] - The average tax equivalent yield on interest-earning assets increased from 5.03% in 2023 to 5.49% in 2024[221] - The average cost of interest-bearing liabilities increased from 2.30% in 2023 to 3.24% in 2024[222] Credit Loss Provisions - The Company recognized a provision for credit losses for loans of $501,000, a provision for unfunded lending commitments of $158,000, and a provision for credit losses for securities of $84,000 for the three months ended June 30, 2024[216] - Provision for credit losses for loans was $1.7 million for the nine months ended June 30, 2024, compared to $1.8 million in 2023[226] Noninterest Income and Expense - Noninterest income decreased by $4.0 million for the three-month period ended June 30, 2024, primarily due to a $4.6 million decrease in mortgage banking income[217] - Noninterest expense decreased by $6.5 million for the three-month period ended June 30, 2024, primarily due to a $3.7 million decrease in compensation and benefits expense[218] - Noninterest income decreased by $10.2 million for the nine months ended June 30, 2024, primarily due to a $11.1 million decrease in mortgage banking income[227] - Noninterest expense decreased by $14.2 million for the nine months ended June 30, 2024, primarily due to decreases in compensation and benefits expense of $7.5 million and other operating expense of $4.3 million[228] Income Tax - Income tax expense increased to $873,000 for the nine months ended June 30, 2024, compared to $747,000 in 2023, with an effective tax rate of 8.1%[229] Capital Ratios - The Bank's Tier 1 capital ratio was 9.19%, common equity Tier 1 capital ratio was 11.28%, and total capital ratio was 12.26% as of June 30, 2024[233] Internal Controls and Financial Reporting - The company identified material weaknesses in internal control over financial reporting, particularly in the review of the allowance for credit losses and the design and operation of monthly and quarterly closing routines[243] - Management has taken steps to remediate the material weakness by enhancing internal control documentation and improving the precision of qualitative factor reviews[244] - The company modified the timing and frequency of general ledger account reconciliations, with a greater emphasis on quarter-end dates, and implemented quarterly checklists and a disclosure checklist[244] - The company identified material weaknesses in internal control over financial reporting, specifically in the review of the allowance for credit losses and the design and operation of monthly and quarterly closing routines[243] - Management has taken steps to remediate the material weakness related to controls over the allowance for credit losses by enhancing internal control documentation and improving the precision of management review of qualitative factors[244] - The company has modified the timing and frequency of general ledger account reconciliations and review of reconciliations, with a greater emphasis on quarter-end dates[244] - Certain members of financial management have developed and completed quarterly checklists, and a disclosure checklist is now being completed on a quarterly basis[244] - No other changes in internal controls over financial reporting occurred during the three months ended June 30, 2024, that materially affected or are reasonably likely to materially affect the company's internal control over financial reporting[245] Interest Rate Risk Management - The company's net interest income could decrease by $1.7 million (2.82%) with a 1.00% increase in interest rates, $3.7 million (5.96%) with a 2.00% increase, and $5.7 million (9.33%) with a 3.00% increase over a one-year horizon[241] - A 1.00% decrease in interest rates could increase the company's net interest income by $2.5 million (4.07%), while a 2.00% decrease could increase it by $5.3 million (8.65%) over a one-year horizon[241] - The company's principal financial objective is to achieve long-term profitability while reducing exposure to fluctuating market interest rates by managing asset and liability maturities and interest rates[237] - The company relies on retail deposits as its primary source of funds, complemented by brokered and reciprocal certificates of deposit and FHLB borrowings, to reduce the effects of interest rate fluctuations[237] - The company does not engage in hedging activities or purchase high-risk derivative instruments, and is not subject to foreign currency exchange rate risk or commodity price risk[238] - The company uses a Net Interest Income at Risk simulation model to measure and monitor interest rate risk, projecting the impact of various interest rate scenarios on net interest income over a one-year horizon[239]
First Savings Financial (FSFG) - 2024 Q3 - Quarterly Report