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Press release content from Globe Newswire. The AP news staff was not involved in its creation.

First Savings Financial Group, Inc. Reports Financial Results for Fiscal Year Ended September 30, 2019

November 19, 2019 GMT

CLARKSVILLE, Ind., Nov. 19, 2019 (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 $16.2 million, or $6.82 per diluted share, for the year ended September 30, 2019 compared to net income of $10.9 million, or $4.60 per diluted share, for the year ended September 30, 2018, resulting in an increase of 48% on a per share basis.

Commenting on the Company’s quarterly performance, Larry W. Myers, President and CEO, stated: “We are very pleased with the Company’s performance for the quarter and the fiscal year, including record earnings for the year, exceptional asset growth, robust deposit growth, and strong contributions to earnings from the mortgage banking and U.S. Small Business Administration (“SBA”) lending segments. The core banking, mortgage banking and SBA lending segments continue to grow significantly and the lending pipelines for each are very healthy entering into our new fiscal year.”

Net interest income increased $4.3 million, or 11.9%, to $40.1 million for the year ended September 30, 2019 as compared to 2018. The increase in net interest income is due to an $8.8 million increase in interest income, which was partially offset by a $4.6 million increase in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $132.4 million, from $929.2 million for 2018 to $1.06 billion for 2019, and an increase in the weighted average tax-equivalent yield, from 4.67% for 2018 to 4.91% for 2019. Interest expense increased due to an increase in the average balance of interest-bearing liabilities of $106.3 million, from $743.3 million for 2018 to $849.6 million for 2019, and an increase in the average cost of interest-bearing liabilities, from 0.85% for 2018 to 1.28% for 2019. These increases for the 2019 fiscal year included an increase in subordinated debt interest expense of $1.2 million, including amortization of debt issuance costs, and an increase of $19.1 million in subordinated debt included in the average balance of interest-bearing liabilities, net of debt issuance costs. The increase in the average cost of interest-bearing liabilities for 2019 was due primarily to increasing market interest rates on deposits and short-term funding alternatives including FHLB advances and brokered deposits, and the subordinated debt’s average cost of 6.48%, including amortization of debt issuance costs. Additional details are included in the “Summarized Consolidated Average Balance Sheets” table at the end of this release.

The Company recognized $1.5 million in provision for loan losses for the year ended September 30, 2019, compared to $1.4 million in provision for loan losses recognized in 2018. Nonperforming loans, which consist of nonaccrual loans and loans over 90 days past due and still accruing interest, increased $907,000, from $4.3 million at September 30, 2018 to $5.2 million at September 30, 2019. The Company recognized net charge-offs of $746,000 for the year ended September 30, 2019 compared to $122,000 in 2018. The increase in net charge-offs is due primarily to charge-offs of the unguaranteed portions of SBA loans.

Noninterest income increased $30.6 million for the year ended September 30, 2019 as compared to 2018. The increase was due primarily to an increase in mortgage banking income of $30.7 million and a $589,000 increase in real estate lease income. These increases were partially offset by a decrease in the net gain on sale of loans guaranteed by the SBA of $924,000. The increase in mortgage banking income is due to production from the secondary-market residential mortgage lending segment that commenced operations in April 2018. The Bank’s SBA lending activities are performed under Q2 Business Capital, LLC (“Q2”), which specializes in the origination and servicing of SBA loans. The Bank owns 51% of Q2 with the option to purchase the minority interest in September 2020. Gross revenues and expenses related to Q2 are reported in the consolidated statements of income and the net income or net loss attributable to noncontrolling interests is then subtracted (in the case of net income) or added (in the case of net loss) to arrive at net income attributable to the Company. 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 $29.4 million for the year ended September 30, 2019 as compared to 2018. The increase was due primarily to increases in compensation and benefits, occupancy and equipment, and other operating expense of $23.2 million, $2.5 million and $2.0 million, respectively. The increase in compensation and benefits expense is attributable to the addition of new employees to support the growth of the Company, including its mortgage banking and SBA lending activities, and normal salary and benefits adjustments. The increase in occupancy and equipment expense is primarily attributable to increases in lease and rental, depreciation and equipment, and software licensing expenses that are all primarily related to the mortgage banking segment.

The Company recognized income tax expense of $3.1 million for the year ended September 30, 2019, for an effective tax rate of 15.4%, as compared to income tax expense of $2.4 million, for an effective tax rate of 16.4%, for 2018.

Results of Operations for the Three Months Ended September 30, 2019 and 2018

The Company reported net income of $5.3 million, or $2.24 per diluted share, for the three months ended September 30, 2019 compared to net income of $2.7 million, or $1.15 per diluted share, for the three months ended September 30, 2018, resulting in an increase of 95% on a per share basis. Net income for the quarter ended September 30, 2018 was negatively impacted by a loss of $109,000, net of taxes, related to the new secondary-market mortgage lending division and decreased income from SBA lending activities.

Net interest income increased $1.2 million, or 12.9%, to $10.8 million for the three months ended September 30, 2019 as compared to the same period in 2018. The increase in net interest income is due to a $2.4 million increase in interest income, which was partially offset by a $1.2 million increase in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $151.8 million, from $976.6 million for 2018 to $1.13 billion for 2019, and an increase in the weighted-average tax-equivalent yield, from 4.79% for 2018 to 5.00% for 2019. Interest expense increased due to an increase in the average balance of interest-bearing liabilities of $143.2 million, from $765.5 million for 2018 to $908.7 million for 2019, and an increase in the average cost of interest-bearing liabilities, from 0.96% for 2018 to 1.35% for 2019. These increases for the three months ended September 30, 2019, included an increase in subordinated debt interest expense of $285,000, including amortization of debt issuance costs, and an increase of $17.4 million in subordinated debt included in the average balance of interest-bearing liabilities, net of debt issuance costs. The increase in the average cost of interest-bearing liabilities for the three months ended September 30, 2019 was due primarily to increasing market interest rates on deposits and short-term funding alternatives including FHLB advances and brokered deposits and the subordinated debt’s average cost of 6.45%, including amortization of debt issuance costs. Additional details are included in the “Summarized Consolidated Average Balance Sheets” table at the end of this release.

The Company recognized $471,000 in provision for loan losses for the three months ended September 30, 2019, compared to $254,000 in provision for loan losses recognized in the same period in 2018. The Company recognized net charge-offs of $47,000 for the three months ended September 30, 2019 compared to net recoveries of $43,000 for the same period in 2018.

Noninterest income increased $13.8 million for the three months ended September 30, 2019 as compared to the same period in 2018. The increase was due primarily to an increase in mortgage banking income of $13.0 million and an increase in gain the sale of SBA loans of $661,000 when compared to the same period in 2018. The increase in mortgage banking income is 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 $11.5 million for the three months ended September 30, 2019 as compared to the same period in 2018. The increase was due primarily to increases in compensation and benefits, advertising, and occupancy and equipment expenses of $9.5 million, $711,000 and $707,000, respectively. The increase in compensation and benefits expense is attributable to the addition of new employees to support the growth of the Company, including its mortgage banking and SBA lending activities, and normal salary and benefits adjustments. The increase in advertising is primarily due to the new mortgage banking segment. The increase in occupancy and equipment expense is primarily attributable to increases in lease and rental, depreciation and equipment, and software licensing expenses that are all primarily related to the new mortgage banking segment.

The Company recognized income tax expense of $1.4 million for the three months ended September 30, 2019, for an effective tax rate of 19.4%, as compared to income tax expense of $766,000, for an effective tax rate of 20.6%, for the same period in 2018.

Comparison of Financial Condition at September 30, 2019 and September 30, 2018

Total assets increased $188.2 million, from $1.03 billion at September 30, 2018 to $1.22 billion at September 30, 2019. Net loans increased $106.4 million during the year ended September 30, 2019, due primarily to continued growth in the commercial real estate and SBA loan portfolios. Residential mortgage loans held for sale also increased by $70.0 million during the year ended September 30, 2019 due to increased production from the mortgage banking segment. Total liabilities increased $167.2 million primarily due to a $132.5 million increase in Federal Home Loan Bank borrowings and a $23.3 million increase in total deposits.

Common stockholders’ equity increased $22.3 million, from $98.8 million at September 30, 2018 to $121.1 million at September 30, 2019, due primarily to retained net income of $14.7 million and net unrealized gains of $6.9 million on the available-for-sale securities portfolio. At September 30, 2019 and September 30, 2018, the Bank was considered “well-capitalized” under applicable regulatory capital guidelines.

Prior Period Restatement

On November 19, 2019, the Company filed with the Securities and Exchange Commission a Current Report on Form 8-K to report the Company’s conclusion that its interim consolidated financial statements, and related notes, contained in its Form 10-Q for the period ended June 30, 2019 should no longer be relied upon. The accounting matters underlying this conclusion relate primarily to significant accounting assumptions used in the fair value calculations for interest rate lock commitments and mortgage loans held-for-sale relating to the Company’s mortgage banking operations segment and unrecognized accruals for incentive compensation related to such segment. All financial information at June 30, 2019 and for periods then ended contained in this earnings release have been restated accordingly.

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 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, CPAChief Financial Officer812-283-0724

FIRST SAVINGS FINANCIAL GROUP, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS YEARS ENDED SEPTEMBER 30, 2019 AND 2018 Three Months Ended Years Ended September 30, September 30, ---------------------------- ---------------------------- OPERATING DATA: 2019 2018 2019 2018 - --------- - - --------- - - --------- - - --------- - (In thousands, except share and per share data) Total interest income $ 13,829 $ 11,381 $ 50,995 $ 42,159 Total interest expense 3,069 1,842 10,906 6,337 - --------- - - --------- - - --------- - - --------- - Net interest income 10,760 9,539 40,089 35,822 Provision for loan losses 471 254 1,463 1,353 - --------- - - --------- - - --------- - - --------- - Net interest income after provision for loan losses 10,289 9,285 38,626 34,469 Total noninterest income 18,340 4,568 43,854 13,295 Total noninterest expense 21,606 10,143 62,390 33,006 - --------- - - --------- - - --------- - - --------- - Income before income taxes 7,023 3,710 20,090 14,758 Income tax expense 1,359 766 3,095 2,422 - --------- - - --------- - - --------- - - --------- - Net income 5,664 2,944 16,995 12,336 Less: Net income attributable to noncontrolling 343 200 818 1,434 interests - --------- - - --------- - - --------- - - --------- - Net income attributable to the Company $ 5,321 $ 2,744 $ 16,177 $ 10,902 - --------- - - --------- - - --------- - - --------- - Net income per share, basic $ 2.28 $ 1.20 $ 6.99 $ 4.83 - --------- - - --------- - - --------- - - --------- - Weighted average shares outstanding, basic 2,337,472 2,277,709 2,315,697 2,258,020 Net income per share, diluted $ 2.24 $ 1.15 $ 6.82 $ 4.60 - --------- - - --------- - - --------- - - --------- - Weighted average shares outstanding, diluted 2,378,221 2,379,520 2,372,084 2,372,554 Performance rates (three-month data annualized) Return on average assets 1.75 % 1.06 % 1.42 % 1.11 % Return on average common stockholders’ equity 18.12 % 11.16 % 15.00 % 11.37 % Interest rate spread 3.65 % 3.83 % 3.63 % 3.82 % Net interest margin 3.92 % 4.04 % 3.88 % 3.99 % Efficiency ratio (1) 74.79 % 73.01 % 74.51 % 63.96 %

September 30, September 30, Increase FINANCIAL CONDITION DATA: 2019 2018 (Decrease) - --------- - - --------- - ----------- (In thousands, except per share data) Total assets $ 1,222,579 $ 1,034,406 $ 188,173 Cash and cash equivalents 41,432 42,274 (842 ) Investment securities 179,638 186,980 (7,342 ) Loans held for sale 96,070 32,125 63,945 Gross loans 820,698 713,594 107,104 Allowance for loan losses 10,040 9,323 717 Interest earning assets 1,130,095 963,581 166,514 Goodwill 9,848 9,848 - Core deposit intangibles 1,416 1,727 (311 ) Noninterest-bearing deposits 173,072 167,705 5,367 Interest-bearing deposits 661,312 643,407 17,905 FHLB borrowings 222,544 90,000 132,544 Total liabilities 1,101,322 934,161 167,161 Stockholders’ equity, net of noncontrolling interests 121,053 98,813 22,240 Book value per share $ 51.51 $ 43.11 $ 8.40 Tangible book value per share (1) 46.71 38.06 8.65 Non-performing assets: Nonaccrual loans $ 5,168 $ 4,182 $ 986 Accruing loans past due 90 days 12 91 (79 ) - --------- - - --------- - - ------- - Total non-performing loans 5,180 4,273 907 Foreclosed real estate 55 103 (48 ) Troubled debt restructurings classified as performing loans 7,265 9,145 (1,880 ) - --------- - - --------- - - ------- - Total non-performing assets $ 12,500 $ 13,521 $ (1,021 ) - --------- - - --------- - - ------- - Asset quality ratios: Allowance for loan losses as a percent of total gross loans 1.22 % 1.31 % -0.08 % Allowance for loan losses as a percent of nonperforming loans 193.82 % 218.18 % -24.36 % Nonperforming loans as a percent of total gross loans 0.63 % 0.60 % 0.03 % Nonperforming assets as a percent of total assets 1.02 % 1.31 % -0.28 %

_______________(1) See reconciliation of GAAP and Non-GAAP financial measures for additional information relating to calculation of this item.

RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES (UNAUDITED):

The following non-GAAP financial measures used by the Company provide information useful to investors in understanding the Company’s performance. The Company believes the financial measures presented below are important because of their widespread use by investors as a means to evaluate capital adequacy and earnings. The following table summarizes the non-GAAP financial measures derived from amounts reported in the Company’s consolidated financial statements and reconciles those non-GAAP financial measures with the comparable GAAP financial measures.

Three Months Ended Years Ended September 30, September 30, ---------------------------- ---------------------- Net Income 2019 2018 2019 2018 - --------- - - --------- - - ------ - - ------ - (In thousands) Net income attributable to the Company (non-GAAP) $ 5,321 $ 2,767 $ 16,177 $ 12,240 Less: Merger-related expenses, net of tax effect - (23 ) - (979 ) Less: Secondary-market residential mortgage lending - - - (481 ) division initial operating expenses, net of tax effect Less: Effect of adjustment to deferred taxes due to tax - - - 122 law change Net income attributable to the Company (GAAP) $ 5,321 $ 2,744 $ 16,177 $ 10,902 - --------- - - --------- - - ------ - - ------ - Three Months Ended Years Ended September 30, September 30, ---------------------------- ---------------------- Net Income per Share, Diluted 2019 2018 2019 2018 - --------- - - --------- - - ------ - - ------ - Net income per share, diluted (non-GAAP) $ 2.24 $ 1.16 $ 6.82 $ 5.16 Less: Merger-related expenses, net of tax effect - (0.01 ) - (0.41 ) Less: Secondary-market residential mortgage lending - - - (0.20 ) division initial operating expenses, net of tax effect Less: Effect of adjustment to deferred taxes due to tax - - - 0.05 law change Net income per share, diluted (GAAP) $ 2.24 $ 1.15 $ 6.82 $ 4.60 - --------- - - --------- - - ------ - - ------ - Three Months Ended Years Ended September 30, September 30, ---------------------------- ---------------------- Efficiency Ratio 2019 2018 2019 2018 - --------- - - --------- - - ------ - - ------ - (In thousands) Noninterest expense (GAAP) $ 21,606 $ 10,143 $ 62,390 $ 33,006 Net interest income (GAAP) 10,760 9,539 40,089 35,822 Noninterest income (GAAP) 18,340 4,568 43,854 13,295 Efficiency ratio (GAAP) 74.25 % 71.90 % 74.32 % 67.20 % - --------- - - --------- - - ------ - - ------ - Noninterest expense (GAAP) $ 21,606 $ 10,143 $ 62,390 $ 33,006 Less: Merger-related expenses - (23 ) - (1,303 ) Less: Secondary-market residential mortgage lending - - - (661 ) division net initial operating expenses - --------- - - --------- - - ------ - - ------ - Noninterest expense (non-GAAP) 21,606 10,120 62,390 31,042 Net interest income (GAAP) 10,760 9,539 40,089 35,822 Noninterest income (GAAP) 18,340 4,568 43,854 13,295 Less: Income on tax credit investment (210 ) (245 ) (210 ) (585 ) - --------- - - --------- - - ------ - - ------ - Noninterest income (Non-GAAP) $ 18,130 $ 4,323 $ 43,644 $ 12,710 - --------- - - --------- - - ------ - - ------ - Efficiency ratio (excluding nonrecurring items) 74.79 % 73.01 % 74.51 % 63.96 % (non-GAAP) - --------- - - --------- - - ------ - - ------ - September 30, September 30, Tangible Book Value Per Share 2019 2018 - --------- - - --------- - (In thousands, except share and per share data) Stockholders’ equity, net of noncontrolling interests $ 121,053 $ 98,813 (GAAP) Less: goodwill and core deposit intangibles (11,264 ) (11,575 ) - --------- - - --------- - Tangible equity (non-GAAP) $ 109,789 $ 87,238 - --------- - - --------- - Outstanding common shares 2,350,229 2,292,021 Tangible book value per share (non-GAAP) $ 46.71 $ 38.06 - --------- - - --------- - Book value per share (GAAP) $ 51.51 $ 43.11 - --------- - - --------- -

SUMMARIZED FINANCIAL INFORMATION (UNAUDITED):

As of ------------------------------------------------------------------------- Summarized Consolidated Balance September 30, June 30, March 31, December 31, September 30, Sheets (In thousands, except per share 2019 2019 2019 2018 2018 data) - --------- - - --------- - - --------- - - --------- - - --------- - Total cash and cash equivalents $ 41,432 $ 65,105 $ 40,442 $ 36,344 $ 42,274 Total investment securities 179,638 182,421 193,547 188,830 186,980 Total loans, net of allowance for 810,658 796,994 762,661 734,061 704,271 loan losses Total assets 1,222,579 1,228,953 1,129,722 1,073,989 1,034,406 Total deposits 834,384 888,145 824,770 832,073 811,112 Total borrowings from the Federal 222,544 189,255 160,938 107,019 90,000 Home Loan Bank Stockholders’ equity, net of 121,053 114,971 108,688 102,968 98,813 noncontrolling interests Noncontrolling interests in 204 176 1,241 1,593 1,432 subsidiary Total equity 121,257 115,147 109,929 104,561 100,245 Outstanding common shares 2,350,229 2,350,229 2,344,836 2,304,310 2,292,021 Three Months Ended ------------------------------------------------------------------------- Summarized Consolidated Statements September 30, June 30, March 31, December 31, September 30, of Income (In thousands, except per share 2019 2019 2019 2018 2018 data) - --------- - - --------- - - --------- - - --------- - - --------- - Total interest income $ 13,829 $ 13,058 $ 12,307 $ 11,801 $ 11,381 Total interest expense 3,069 3,166 2,446 2,225 1,842 - --------- - - --------- - - --------- - - --------- - - --------- - Net interest income 10,760 9,892 9,861 9,576 9,539 Provision for loan losses 471 337 340 315 254 - --------- - - --------- - - --------- - - --------- - - --------- - Net interest income after provision 10,289 9,555 9,521 9,261 9,285 for loan losses Total noninterest income 18,340 12,644 7,089 5,781 4,568 Total noninterest expense 21,606 16,488 12,880 11,416 10,143 - --------- - - --------- - - --------- - - --------- - - --------- - Income before income taxes 7,023 5,711 3,730 3,626 3,710 Income tax expense 1,359 748 466 522 766 - --------- - - --------- - - --------- - - --------- - - --------- - Net income 5,664 4,963 3,264 3,104 2,944 Less: net income (loss) attributable 343 571 (269 ) 173 200 to noncontrolling interests - --------- - - --------- - - --------- - - --------- - - --------- - Net income attributable to the $ 5,321 $ 4,392 $ 3,533 $ 2,931 $ 2,744 Company - --------- - - --------- - - --------- - - --------- - - --------- - Net income per share, basic $ 2.28 $ 1.88 $ 1.53 $ 1.28 $ 1.20 - --------- - - --------- - - --------- - - --------- - - --------- - Weighted average shares outstanding, 2,337,472 2,333,502 2,307,155 2,284,665 2,277,709 basic Net income per share, diluted $ 2.24 $ 1.85 $ 1.50 $ 1.24 $ 1.15 - --------- - - --------- - - --------- - - --------- - - --------- - Weighted average shares outstanding, 2,378,221 2,373,578 2,360,004 2,371,480 2,379,520 diluted Three Months Ended ------------------------------------------------------------------------- September 30, June 30, March 31, December 31, September 30, Consolidated Performance Ratios 2019 2019 2019 2018 2018 (Annualized) - --------- - - --------- - - --------- - - --------- - - --------- - Return on average assets 1.75 % 1.50 % 1.28 % 1.11 % 1.06 % Return on average equity 19.28 % 17.95 % 12.34 % 12.35 % 11.83 % Return on average common 18.12 % 15.90 % 13.55 % 11.82 % 11.16 % stockholders’ equity Net interest margin (tax equivalent 3.92 % 3.72 % 3.92 % 3.98 % 4.04 % basis) Efficiency ratio (excluding 74.79 % 73.16 % 75.99 % 74.34 % 73.01 % nonrecurring items) (non-GAAP) As of or for the Three Months Ended ------------------------------------------------------------------------- September 30, June 30, March 31, December 31, September 30, Consolidated Asset Quality Ratios 2019 2019 2019 2018 2018 - --------- - - --------- - - --------- - - --------- - - --------- - Nonperforming loans as a percentage 0.63 % 0.63 % 0.70 % 0.62 % 0.60 % of total loans Nonperforming assets as a percentage 1.02 % 1.09 % 1.23 % 1.28 % 1.31 % of total assets Allowance for loan losses as a 1.22 % 1.19 % 1.29 % 1.29 % 1.31 % percentage of total loans Allowance for loan losses as a 193.82 % 188.29 % 184.96 % 208.77 % 218.18 % percentage of nonperforming loans Net charge-offs (recoveries) to 0.01 % 0.08 % 0.00 % 0.00 % -0.01 % average outstanding loans

_______________As previously discussed, financial information at June 30, 2019 and for periods then ended contained in this earnings release have been restated.

SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): Three Months Ended ---------------------------------------------------------- Segmented Statements of Income Information September June 30, March 31, December September 30, 31, 30, (In thousands, except per share data) 2019 2019 2019 2018 2018 - ------ - - ------ - - ------ - - ------ - - ------ - Net interest income - Core Banking $ 9,178 $ 8,739 $ 8,817 $ 8,574 $ 8,537 Net interest income - SBA Lending (Q2) 1,237 1,066 934 908 933 Net interest income - Mortgage Banking 345 87 110 94 69 - ------ - - ------ - - ------ - - ------ - - ------ - Total net interest income $ 10,760 $ 9,892 $ 9,861 $ 9,576 $ 9,539 - ------ - - ------ - - ------ - - ------ - - ------ - Provision for loan losses - Core Banking $ 104 $ 162 $ (492 ) $ (16 ) $ 17 Provision for loan losses - SBA Lending (Q2) 367 175 832 331 237 Provision for loan losses - Mortgage Banking - - - - - - ------ - - ------ - - ------ - - ------ - - ------ - Total provision for loan losses $ 471 $ 337 $ 340 $ 315 $ 254 - ------ - - ------ - - ------ - - ------ - - ------ - Net interest income after provision for loan losses $ 9,074 $ 8,577 $ 9,309 $ 8,590 $ 8,520 - Core Banking Net interest income after provision for loan losses 870 891 102 577 696 - SBA Lending (Q2) Net interest income after provision for loan losses 345 87 110 94 69 - Mortgage Banking Total net interest income after provision for loan $ 10,289 $ 9,555 $ 9,521 $ 9,261 $ 9,285 losses - ------ - - ------ - - ------ - - ------ - - ------ - Noninterest income - Core Banking $ 1,582 $ 1,351 $ 1,337 $ 1,380 $ 1,735 Noninterest income - SBA Lending (Q2) 1,715 1,658 673 1,137 875 Noninterest income - Mortgage Banking 15,043 9,635 5,079 3,264 1,958 - ------ - - ------ - - ------ - - ------ - - ------ - Total noninterest income $ 18,340 $ 12,644 $ 7,089 $ 5,781 $ 4,568 - ------ - - ------ - - ------ - - ------ - - ------ - Noninterest expense - Core Banking $ 7,521 $ 7,576 $ 6,995 $ 6,586 $ 6,771 Noninterest expense - SBA Lending (Q2) 1,883 1,385 1,322 1,362 1,162 Noninterest expense - Mortgage Banking 12,202 7,527 4,563 3,468 2,210 - ------ - - ------ - - ------ - - ------ - - ------ - Total noninterest expense $ 21,606 $ 16,488 $ 12,880 $ 11,416 $ 10,143 - ------ - - ------ - - ------ - - ------ - - ------ - Income before income taxes - Core Banking $ 3,135 $ 2,352 $ 3,651 $ 3,384 $ 3,484 Income (loss) before income taxes - SBA Lending 702 1,164 (547 ) 352 409 (Q2) Income (loss) before income taxes - Mortgage 3,186 2,195 626 (110 ) (183 ) Banking - ------ - - ------ - - ------ - - ------ - - ------ - Total income before income taxes $ 7,023 $ 5,711 $ 3,730 $ 3,626 $ 3,710 - ------ - - ------ - - ------ - - ------ - - ------ - Income tax expense (benefit) - Core Banking $ 472 51 379 505 760 Income tax expense (benefit) - SBA Lending (Q2) 90 148 (70 ) 45 52 Income tax expense (benefit) - Mortgage Banking 797 549 157 (28 ) (46 ) - ------ - - ------ - - ------ - - ------ - - ------ - Total income tax expense $ 1,359 $ 748 $ 466 $ 522 $ 766 - ------ - - ------ - - ------ - - ------ - - ------ - Net income - Core Banking $ 2,663 $ 2,301 $ 3,272 $ 2,879 $ 2,724 Net income (loss) - SBA Lending (Q2) 612 1,016 (477 ) 307 357 Net income (loss) - Mortgage Banking 2,389 1,646 469 (82 ) (137 ) - ------ - - ------ - - ------ - - ------ - - ------ - Total net income $ 5,664 $ 4,963 $ 3,264 $ 3,104 $ 2,944 - ------ - - ------ - - ------ - - ------ - - ------ - Net income attributable to the Company - Core $ 2,663 $ 2,301 $ 3,272 $ 2,879 $ 2,724 Banking Net income (loss) attributable to the Company - SBA 269 445 (208 ) 134 157 Lending (Q2) Net income (loss) attributable to the Company - 2,389 1,646 469 (82 ) (137 ) Mortgage Banking - ------ - - ------ - - ------ - - ------ - - ------ - Total net income attributable to the Company $ 5,321 $ 4,392 $ 3,533 $ 2,931 $ 2,744 - ------ - - ------ - - ------ - - ------ - - ------ - Net income per share, basic - Core Banking $ 1.14 $ 0.98 $ 1.42 $ 1.26 $ 1.19 Net income (loss) per share, basic - SBA Lending 0.12 0.19 (0.09 ) 0.06 0.07 (Q2) Net income (loss) per share, basic - Mortgage 1.02 0.71 0.20 (0.04 ) (0.06 ) Banking - ------ - - ------ - - ------ - - ------ - - ------ - Total net income per share, basic $ 2.28 $ 1.88 $ 1.53 $ 1.28 $ 1.20 - ------ - - ------ - - ------ - - ------ - - ------ - Net income per share, diluted - Core Banking $ 1.13 $ 0.97 $ 1.39 $ 1.21 $ 1.14 Net income (loss) per share, diluted - SBA Lending 0.11 0.19 (0.09 ) 0.06 0.07 (Q2) Net income (loss) per share, diluted - Mortgage 1.00 0.69 0.20 (0.03 ) (0.06 ) Banking - ------ - - ------ - - ------ - - ------ - - ------ - Total net income per share, diluted $ 2.24 $ 1.85 $ 1.50 $ 1.24 $ 1.15 - ------ - - ------ - - ------ - - ------ - - ------ - Three Months Ended ---------------------------------------------------------- SBA Lending (Q2) Data September June 30, March 31, December September 30, 31, 30, (In thousands, except percentage data) 2019 2019 2019 2018 2018 - ------ - - ------ - - ------ - - ------ - - ------ - Final funded loans guaranteed portion sold, SBA $ 19,471 $ 22,310 $ 9,133 $ 12,943 $ 12,109 Gross gain on sales of loans, SBA $ 2,138 $ 2,085 $ 977 $ 1,203 $ 1,246 Weighted average gross gain on sales of loans, SBA 10.98 % 9.35 % 10.70 % 9.29 % 10.29 % Net gain on sales of loans, SBA (1) $ 1,569 $ 1,515 $ 521 $ 964 $ 907 Weighted average net gain on sales of loans, SBA 8.06 % 6.79 % 5.70 % 7.45 % 7.49 %

_______________(1) Net of commissions, referral fees, SBA repair fees and discounts on unguaranteed portions held-for-investment, and inclusive of gains on servicing assets

As previously discussed, financial information at June 30, 2019 and for periods then ended contained in this earnings release have been restated.

Three Months Ended --------------------------------------------------- Mortgage Banking Data September June 30, March 31, December September 30, 31, 30, (In thousands, except percentage data) 2019 2019 2019 2018 2018 --------- --------- --------- -------- -------- Mortgage originations for sale in the secondary market 447,616 258,743 110,680 66,046 38,976 Mortgage sales 447,819 204,565 102,022 60,409 31,768 Gross gain on sales of loans, mortgage banking 14,244 7,335 3,715 2,071 1,067 Weighted average gross gain on sales of loans, mortgage 3.18 % 3.59 % 3.64 % 3.43 % 3.36 % banking Net mortgage banking income (2) 15,033 9,611 5,074 3,289 2,059

_______________(2) Net of lender credits and other investor expenses, and inclusive of loan fees, fair value adjustments and gains (losses) on derivative instruments

SUMMARIZED FINANCIAL INFORMATION (UNAUDITED) (CONTINUED): Three Months Ended --------------------------------------------------------------------- Summarized Consolidated Average Balance September 30, June 30, March 31, December September Sheets 31, 30, (In thousands) 2019 2019 2019 2018 2018 - --------- - - --------- - - --------- - - ------- - - ------- - Interest-earning assets Average balances: Interest-bearing deposits with banks $ 52,736 $ 38,332 $ 36,317 $ 30,271 $ 26,716 Loans 891,477 859,525 802,652 763,637 745,078 Investment securities 156,070 163,185 161,170 156,570 157,834 Agency mortgage-backed securities 15,178 21,993 24,682 29,133 37,393 FRB and FHLB stock 13,020 12,505 10,196 10,171 9,621 Total interest-earning assets $ 1,128,481 $ 1,095,540 $ 1,035,017 $ 989,782 $ 976,642 - --------- - - --------- - - --------- - - ------- - - ------- - Interest income (tax equivalent basis): Interest-bearing deposits with banks $ 277 $ 205 $ 221 $ 153 $ 138 Loans 11,788 10,924 10,227 9,828 9,349 Investment securities 1,762 1,877 1,819 1,783 1,822 Agency mortgage-backed securities 105 152 179 193 274 FRB and FHLB stock 184 196 142 121 119 Total interest income (tax equivalent $ 14,116 $ 13,354 $ 12,588 $ 12,078 $ 11,702 basis) - --------- - - --------- - - --------- - - ------- - - ------- - Weighted average yield (tax equivalent basis, annualized): Interest-bearing deposits with banks 2.10 % 2.14 % 2.43 % 2.02 % 2.07 % Loans 5.29 % 5.08 % 5.10 % 5.15 % 5.02 % Investment securities 4.52 % 4.60 % 4.51 % 4.56 % 4.62 % Agency mortgage-backed securities 2.77 % 2.76 % 2.90 % 2.65 % 2.93 % FRB and FHLB stock 5.65 % 6.27 % 5.57 % 4.76 % 4.95 % Total interest-earning assets 5.00 % 4.88 % 4.86 % 4.88 % 4.79 % Interest-bearing liabilities Average balances: Interest-bearing deposits $ 712,692 $ 684,736 $ 693,127 $ 651,060 $ 664,526 Repurchase agreements 250 1,354 1,353 1,352 1,351 Fed funds purchased 130 - - - - Borrowings from Federal Home Loan Bank 175,912 178,707 114,044 104,999 97,262 Other borrowings 19,718 19,701 19,684 19,667 2,352 Total interest-bearing liabilities $ 908,702 $ 884,498 $ 828,208 $ 777,078 $ 765,491 - --------- - - --------- - - --------- - - ------- - - ------- - Interest expense: Interest-bearing deposits $ 1,965 $ 1,948 $ 1,607 $ 1,424 $ 1,389 Repurchase agreements - 1 1 1 - Fed funds purchased 1 - - - - Borrowings from Federal Home Loan Bank 785 898 520 478 420 Other borrowings 318 319 318 322 33 Total interest expense $ 3,069 $ 3,166 $ 2,446 $ 2,225 $ 1,842 - --------- - - --------- - - --------- - - ------- - - ------- - Weighted average cost (annualized): Interest-bearing deposits 1.10 % 1.14 % 0.93 % 0.87 % 0.84 % Repurchase agreements 0.00 % 0.30 % 0.30 % 0.30 % 0.00 % Fed funds purchased 3.08 % 0.00 % 0.00 % 0.00 % 0.00 % Borrowings from Federal Home Loan Bank 1.78 % 2.01 % 1.82 % 1.82 % 1.73 % Other borrowings 6.45 % 6.48 % 6.46 % 6.55 % 5.61 % Total interest-bearing liabilities 1.35 % 1.43 % 1.18 % 1.15 % 0.96 % Interest rate spread (tax equivalent 3.65 % 3.45 % 3.68 % 3.73 % 3.83 % basis, annualized) Net interest margin (tax equivalent 3.92 % 3.72 % 3.92 % 3.98 % 4.04 % basis, annualized)

_______________As previously discussed, financial information at June 30, 2019 and for periods then ended contained in this earnings release have been restated.