Integrated Financial Holdings, Inc. Second Quarter 2022 Financial Results
08/12/2022 - 08:30 AM
RALEIGH, N.C., Aug. 12, 2022 (GLOBE NEWSWIRE) -- Integrated Financial Holdings, Inc. (OTCQX: IFHI) (the “Company” or “IFHI”), the financial holding company for West Town Bank & Trust (“the Bank”), released its financial results for the three months and six months ended June 30, 2022. Highlights from the 2022 second quarter and year-to-date results include the following:
Second quarter net income of $1.4 million or $0.63 per diluted share, compared to second quarter 2021 net income of $4.6 million or $2.07 per diluted share. Year-to-date net income was $5.0 million or $2.22 per diluted share compared to $8.5 million or $3.82 per diluted share in the prior year. Net interest income of $5.1 million for the second quarter of 2022, compared to $4.1 million for the same period in 2021. For the year, net interest income was $10.4 million compared to $7.9 million for the same six-month period in 2021. Return on average assets of 1.29% and 2.29% for the three and six-month periods ending June 30, 2022 compared to 4.39% and 4.20% , respectively for the same periods in 2021. Return on average tangible common equity (a non-GAAP financial measure) of 7.91% and 14.08% for the three and six-month periods ending June 30, 2022 compared to 29.84% and 28.61% , respectively for the same periods in 2021. BALANCE SHEET On June 30, 2022, the Company’s total assets were $435.5 million , net loans held for investment were $259.9 million , loans held for sale (“HFS”) were $59.6 million , total deposits were $333.6 million and total shareholders’ equity attributable to IFHI was $92.5 million . Compared with December 31, 2021, total assets decreased $17.5 million or 4% , net loans held for investment increased $5.8 million or 2% , HFS loans increased $31.7 million or 114% , total deposits decreased $14.5 million or 4% , and total shareholders’ equity attributable to IFHI increased $3.9 million or 4% . The cash side of the balance sheet continued to decrease as the Company continued to redeploy cash into higher yielding loans. The Bank has continued to see strong growth in HFS loans primarily as a result of a strong loan pipeline for the Government Guaranteed Lending (“GGL”) type loans. At $59.6 million in volume, HFS loans at June 30, 2022 represent significant potential future GGL revenues as those loans are sold in the market and the associated premiums are recognized. Noninterest bearing deposits declined $30.8 million since the prior year-end, in part, as a result of some ongoing merger and acquisition activity in one of the targeted industries that the Company banks. The increase in total shareholders’ equity since year-end 2021 was primarily a result of net income posted for the six-month period ended June 30, 2022.
CAPITAL LEVELS At June 30, 2022, the regulatory capital ratios of West Town Bank & Trust exceeded the minimum thresholds established for well-capitalized banks under applicable banking regulations.
"Well Capitalized" Minimum Basel III Fully Phased-In West Town Bank & Trust Tier 1 common equity ratio 6.50% 7.00% 15.52% Tier 1 risk-based capital ratio 8.00% 8.50% 15.52% Total risk-based capital ratio 10.00% 10.50% 16.78% Tier 1 leverage ratio 5.00% 4.00% 12.19%
The Company’s book value per common share increased from $38.32 as of June 30, 2021, to $41.15 at June 30, 2022. The Company’s tangible book value per common share (a non-GAAP financial measure) increased from $29.29 as of June 30, 2021, to $32.62 at June 30, 2022, primarily as a result of the net income of the Company.
ASSET QUALITY The Company’s nonperforming assets to total assets ratio decreased from 1.65% at December 31, 2021, to 1.07% at June 30, 2022, as management continued to aggressively work to reduce its special assets portfolio. Nonaccrual loans at June 30, 2022 decreased $2.2 million or 32% as compared to December 31, 2021. Neither Patriarch, LLC, a subsidiary of the Company formed to expedite the liquidation and recovery of certain Bank asset, nor the Bank held any foreclosed assets as of June 30, 2022.
The Company recorded $460,000 and $640,000 in provision for loan losses during the three and six-months periods ending June 30, 2022, respectively, as compared to provisions of $50,000 and $672,000 for the same periods in 2021 as the loan portfolio increased for those periods. The Company recorded $279,000 in net recoveries during the second quarter of 2022 compared to $24,000 in charge-offs for the same period in 2021. Management continues to make progress in improving overall asset quality. Set forth in the table below is certain asset quality information as of the dates indicated:
(Dollars in thousands) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 Nonaccrual loans $ 4,656 $ 6,558 $ 6,848 $ 7,575 $ 5,765 Foreclosed assets - - 618 618 618 90 days past due and still accruing - - - - 447 Total nonperforming assets $ 4,656 $ 6,558 $ 7,466 $ 8,193 $ 6,830 Net charge-offs $ (279 ) $ 105 $ 1,038 $ 325 $ 24 Annualized net charge-offs to total average portfolio loans -0.43 % 0.16 % 1.65 % 0.50 % 0.03 % Ratio of total nonperforming assets to total assets 1.07 % 1.52 % 1.65 % 1.84 % 1.55 % Ratio of total nonperforming loans to total loans, net of allowance 1.79 % 2.56 % 2.70 % 2.99 % 2.40 % Ratio of total allowance for loan losses to total loans 2.39 % 2.14 % 2.14 % 2.24 % 2.13 %
NET INTEREST INCOME AND MARGIN Net interest income for the three months ended June 30, 2022, increased $1.0 million or 25% in comparison to the second quarter of 2021 as loan yields increased year over year from 6.43% to 6.90% . The increase in yield from the prior year resulted from a change in loan mix and also reflecting the impact of 150 basis points of rate increases by the Federal Open Market Committee (“FOMC”) since the beginning of 2022 in response to current economic conditions. Overall cost of funds decreased from 0.82% in the second quarter of 2021 to 0.64% for the same period in 2022, however the Company expects to see an upward trend in its costs of funds as average retail certificate of deposit (“CD”) rates trend up and new CDs are originated at a higher market rate. Net interest margin increased from 4.63% during the three months ended June 30, 2021, to 5.51% for the same period in 2022. The increase in margin was also driven by the increase in loan yield as a result of the FOMC actions.
Net interest income for the six months ended June 30, 2022, increased $2.4 million or 31% in comparison to the same period of 2021 as loan yields increased year over year from 6.34% to 7.30% as a result of the FOMC rate increases during the period and the recapture of interest on several large nonaccrual loans in the first quarter of 2022 as previously reported.
Three Months Ended Year-To-Date (Dollars in thousands) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 Average balances: Loans $ 319,115 $ 294,502 $ 277,510 $ 272,994 $ 292,166 $ 306,809 $ 290,433 Available-for-sale securities 21,879 21,088 20,367 19,393 17,969 21,484 28,668 Other interest-bearing balances 33,328 56,359 86,261 93,682 46,545 44,844 41,263 Total interest-earning assets 374,322 371,949 384,138 386,069 356,680 373,137 360,364 Total assets 438,732 437,402 442,139 446,822 418,741 438,067 409,258 Noninterest-bearing deposits 85,042 98,546 104,472 103,708 85,918 91,794 83,272 Interest-bearing liabilities: Interest-bearing deposits 244,363 235,092 237,847 240,957 235,013 239,727 231,870 Borrowings 8,626 6,306 5,272 5,196 5,187 7,466 4,593 Total interest-bearing liabilities 252,989 241,398 243,119 246,153 240,200 247,193 236,463 Common shareholders' equity 90,721 90,441 86,549 85,683 81,584 90,581 80,112 Tangible common equity (1) 71,437 70,939 66,877 65,843 61,587 71,188 60,047 Interest income/expense: Loans $ 5,491 $ 5,623 $ 4,571 $ 4,759 $ 4,686 $ 11,114 $ 9,128 Available-for-sale securities 104 89 77 75 66 193 116 Interest-bearing balances and other 89 42 53 67 33 131 68 Total interest income 5,684 5,754 4,701 4,901 4,785 11,438 9,312 Deposits 523 522 566 645 665 1,045 1,369 Borrowings 15 9 1 - - 24 - Total interest expense 538 531 567 645 665 1,069 1,369 Net interest income $ 5,146 $ 5,223 $ 4,134 $ 4,256 $ 4,120 $ 10,369 $ 7,943 (1) See reconciliation of non-GAAP financial measures.
Three Months Ended Year-To-Date 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 Average yields and costs: Loans 6.90 % 7.74 % 6.53 % 6.92 % 6.43 % 7.30 % 6.34 % Available-for-sale securities 1.90 % 1.69 % 1.51 % 1.55 % 1.47 % 1.80 % 0.81 % Interest-bearing balances and other 1.07 % 0.30 % 0.24 % 0.28 % 0.28 % 0.59 % 0.33 % Total interest-earning assets 6.09 % 6.27 % 4.86 % 5.04 % 5.38 % 6.18 % 5.21 % Interest-bearing deposits 0.86 % 0.90 % 0.94 % 1.06 % 1.13 % 0.88 % 1.19 % Borrowings 0.70 % 0.58 % 0.08 % 0.00 % 0.00 % 0.65 % 0.00 % Total interest-bearing liabilities 0.85 % 0.89 % 0.93 % 1.04 % 1.11 % 0.87 % 1.17 % Cost of funds 0.64 % 0.63 % 0.65 % 0.73 % 0.82 % 0.64 % 0.86 % Net interest margin 5.51 % 5.69 % 4.27 % 4.37 % 4.63 % 5.60 % 4.44 %
NONINTEREST INCOME Noninterest income for the three months ended June 30, 2022, was $6.7 million , a decrease of $5.8 million or 46% as compared to the three months ended June 30, 2021. Specific items to note include:
Windsor Advantage, LLC (“Windsor”), a subsidiary of the Company which offers an SBA and USDA loan servicing platform, had processing and servicing revenue totaling $2.4 million , a decrease of $3.4 million or 59% as compared to the $5.8 million in income earned during the same prior-year period. The decrease is entirely attributable to $3.5 million in PPP fee related income realized in the second quarter of 2021 compared to no such income in the same period in 2022. Mortgage revenue totaled $1.1 million , a decrease of $707,000 or 40% as compared to the second quarter of 2021. Mortgage originations have continued to decline due to rising interest rates. To that effect, mortgage loans originated to sell to the secondary market decreased from $51.0 million in the second quarter 2021 to $37.7 million in the second quarter 2022. The decrease in both the core mortgage revenue and origination volume can be attributable to the nationwide slowdown in refinancing volume with housing supplies continuing to be an issue along with the impact of a nationwide increase of almost 20% for the median price of a new home and a doubling of long-term mortgage rates year-over-year. Government Guaranteed Lending (“GGL”) revenue was $2.8 million in the second quarter of 2022, a decrease of $1.0 million or 27% in comparison to the $3.8 million of revenues for the same period in 2021. However, the loans held for sale portfolio, representing future premium income, significantly increased quarter over quarter and year-over-year. GGL related HFS loans were $52.4 million as of June 30, 2022, compared to $25.4 million at December 31, 2021 and $4.5 million at June 30, 2021. Other noninterest income was $290,000 in the second quarter of 2022 compared to income of $908,000 in the same period in 2021. The decrease is mostly attributable to a $383,000 decrease in deferred PPP fees recognized in 2021. Noninterest income for the six months ended June 30, 2022, was $17.1 million compared to $27.1 million for the same period in 2021, a decrease of $10.1 million or 37% . The decrease is primarily due to a decrease of $10.0 million in loan processing and servicing revenue driven by the decrease in PPP-related revenue during the period.
NONINTEREST EXPENSE Noninterest expense for the second quarter of 2022 was $9.6 million , a decrease of $979,000 or 9% , from $10.6 million for the second quarter of 2021. Contributing to the year-over-year decrease was software expenses, which decreased due to Windsor fully expensing the PPP platform in 2021. Software expenses were $426,000 , a decrease of $1.1 million or 72% in the second quarter of 2022 compared to the same period in 2021 as a result of no additional costs related to the processing of PPP loans during the second quarter of 2022. Compensation increased $275,000 from $6.0 million to $6.3 million due to additional costs for new hires in 2022. The decreases in most of the noninterest expense categories, including special assets, data processing, software, communications, and other operating expenses are primarily related to management’s overall effort to grow profitability.
Noninterest expense for the six months ended June 30, 2022, was $20.0 million compared to $23.3 million for the same period in 2021, a decrease of $3.3 million or 14% . The decrease is primarily due to a decrease of $4.1 million in software expenses associated with the PPP platform slightly offset by other expense increases.
SUBSEQUENT EVENTS
Entry into Merger Agreement with MVB Financial Corp. On August 12, 2022, it was publicly announced that the Company had entered into a definitive merger agreement with MVB Financial Corp. (“MVB”), the holding company for MVB Bank, Inc., a West Virginia state-chartered bank. Under the terms of the merger agreement, which is an all-stock transaction, the Company would be merged with and into MVB, with MVB as the surviving corporation in the proposed merger. Readers are strongly encouraged to read the full merger announcement release (the “Merger Release”), which is available under the Investor Relations section of the Company’s website (https://ifhinc.com ) and contains additional detail on the proposed strategic combination with MVB. Readers are also directed to the end of this press release and the section entitled “Additional Information on the Merger and Where to Find it.”
RESPA Class Action Litigation . On February 19, 2019, a group of plaintiffs filed a putative class action lawsuit against West Town Bank & Trust alleging that they were subject to an illegal kickback and price fixing scheme designed and executed by All Star Title, Inc. for the referral of settlement services. The case is styled Joseph and Karen Somerville, III, et al. v. West Town Bank & Trust, a/k/a West Town Savings Bank , Case No. 1.19-CV-00490, pending in the United States District Court for the District of Maryland (such case, the “RESPA Litigation”). Based on this alleged conduct, plaintiffs accused the Bank of violating Section 8(a) of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2607; Section 1 of the Sherman Act, 15 U.S.C. § 1; and Section 1962 of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962. These claims were asserted on a class basis, and the plaintiffs sought to represent other similar borrowers of the Bank whose loans were closed or settled by All Star Title, Inc. The plaintiffs seek to recover three times the charges they paid for settlement services in addition to actual damages trebled and attorneys’ fees and costs.
On May 28, 2019, the Bank moved to dismiss the putative class action complaint for failure to state a claim upon which relief can be granted. On November 19, 2019, the court granted in part and denied in part the Bank’s motion. The court dismissed the plaintiffs’ claim for price-fixing under Section 1 of the Sherman Act but allowed the plaintiffs’ RESPA Section 8 and RICO claims to survive dismissal and proceed with discovery. On February 4, 2021, the court certified a class comprised of borrowers who obtained a loan originated or brokered by the Bank for which All Star Title, Inc. provided a settlement service between January 1, 2010 and December 31, 2015. The court also certified two subclasses: a RICO subclass and a RESPA subclass. West Town Bank & Trust sought permission to appeal the certification order and permission was denied by the United States Court of Appeals for the Fourth Circuit on March 29, 2021. Notice of the pending litigation and certification of the class was mailed to the members of the class on December 10, 2021. As of June 30, 2022, the parties were still engaged in discovery, and no trial date had been scheduled.
During July 2022 following the close of the June 30, 2022 fiscal quarter, and precipitated, in part, by its ongoing strategic discussions with MVB, the Company initiated informal settlement discussions with plaintiffs’ counsel in the RESPA Litigation. Litigation such as the foregoing is time consuming, often takes years to resolve and can complicate a company’s strategic initiatives. On August 10, 2022, the Bank agreed to settle the RESPA Litigation for an aggregate sum of $10.0 million , subject to execution of a definitive settlement agreement with plaintiffs and court approval of the settlement. Accordingly, during the third quarter of 2022, the Company established a $10.0 million liability and expense for estimated settlement costs associated with the RESPA Litigation.
ABOUT INTEGRATED FINANCIAL HOLDINGS, INC. Integrated Financial Holdings, Inc. is a financial holding company based in Raleigh, North Carolina. The Company is the holding company for West Town Bank & Trust, an Illinois state-chartered bank. West Town Bank & Trust provides banking services through its full-service office located in the greater Chicago area. The Company is also the parent company of: Windsor Advantage, LLC, a loan servicing company; West Town Insurance Agency, Inc., an insurance agency; Patriarch, LLC, a real estate management company; and SBA Loan Documentation Services, LLC, a loan documentation origination company. The Company is registered with and supervised by the Federal Reserve. West Town Bank & Trust’s primary regulators are the Illinois Department of Financial and Professional Regulation and the FDIC. The Bank also has an investment in West Town Payments, LLC. Due to the nature of the investment, West Town Payments, LLC is considered a variable interest entity, and as a result, is consolidated for accounting purposes.
For more information, visit https://ifhinc.com/ .
Important Note Regarding Forward-Looking Statements This release contains certain forward-looking statements with respect to the financial condition, results of operations, and business of the Company, as well as regarding the announced merger with MVB. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of the Company and on the information available to management at the time this release was prepared. These statements can be identified by the use of words such as "expect," "anticipate," "estimate," "believe," variations of these words, and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause a difference include, among others: changes in the national and local economies or market conditions; changes in interest rates, deposit flows, loan demand, and asset quality, including real estate and other collateral values; changes in Small Business Administration rules, regulations, or loan products, including the section 7(a) program; changes in other government guaranteed loan programs or our ability to participate in such programs; changes in tax law, including the impact of such changes on our tax assets and liabilities; future governmental shutdowns that may impact revenues associated with our lending and other operations that are dependent on government guaranteed loan programs; changes in banking regulations and accounting principles, policies, or guidelines; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with the Company’s acquisition and divesture activities; the failure of our strategic investments or acquisitions to perform as anticipated and the impact of any impairments to our intangible assets, such as goodwill; the impact of our strategic initiatives on our ability to retain key employees; adverse results (including judgments, costs, fines, reputational harm, financial settlements and/or other negative effects) from current or future litigation, regulatory proceedings, investigations, or similar matters, or developments related thereto; that costs or estimated liabilities and expenses associated with the RESPA Litigation may be greater than currently estimated or that a definitive settlement agreement with plaintiffs is not reached or court approved; the impact of competition from traditional or new sources, including non-bank financial service providers, such as Fintechs; and, with respect to the Company’s announced merger with MVB, those factors detailed in the “Forward Looking Statements” section of the Merger Release, which are incorporated herein by this reference. These, and other factors that may emerge, could cause decisions and actual results to differ materially from current expectations. The Company assumes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.
Additional Information on the Merger and Where to Find It
In connection with the proposed merger, MVB will file a registration statement on Form S-4 with the U.S. Securities and Exchange Commission (“SEC”). The registration statement will include a joint proxy statement of MVB and IFHI, which also constitutes a prospectus of MVB, that will be sent to IFHI’s and MVB’s shareholders seeking certain approvals related to the proposed transaction.
The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. INVESTORS AND SECURITY HOLDERS OF IFHI AND MVB AND THEIR RESPECTIVE AFFILIATES ARE URGED TO READ, WHEN AVAILABLE, THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS TO BE INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT IFHI, MVB AND THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain a free copy of the registration statement, including the joint proxy statement/prospectus, as well as other relevant documents filed by MVB with the SEC containing information about IFHI and MVB, without charge, at the SEC’s website (http://www.sec.gov). In addition, copies of documents filed with the SEC by MVB will be made available free of charge in the “Investor Relations” section of MVB’s website, https://www.mvbbanking.com, under the heading “SEC Filings;” and investors may obtain free copies of the joint proxy statement/prospectus (when available) by contacting Integrated Financial Holdings, Inc., Attn: Eric J. Bergevin, 8450 Falls of Neuse Road, Suite 202, Raleigh, NC 27615, telephone: (252) 482-4400.
Participants in Solicitation
IFHI, MVB, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction under the rules of the SEC. Information regarding MVB’s directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on April 7, 2022, and certain other documents filed by MVB with the SEC. Other information regarding the participants in the solicitation of proxies in respect of the proposed transaction and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC. Free copies of these documents, when available, may be obtained as described in the preceding paragraph.
Consolidated Balance Sheets Ending Balance (Dollars in thousands, unaudited) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 Assets Cash and due from banks $ 4,700 $ 3,900 $ 3,803 $ 4,452 $ 3,537 Interest-bearing deposits 21,981 28,876 79,910 83,327 76,957 Total cash and cash equivalents 26,681 32,776 83,713 87,779 80,494 Interest-bearing time deposits 1,499 1,746 1,746 1,996 2,746 Available-for-sale securities 19,038 20,386 20,659 19,341 18,928 Marketable equity securities 17,982 18,000 12,000 12,000 12,000 Loans held for sale 59,592 51,095 27,880 20,610 14,621 Loans held for investment 266,259 262,281 259,625 259,206 264,402 Allowance for loan and lease losses (6,361 ) (5,622 ) (5,547 ) (5,810 ) (5,635 ) Loans held for investment, net 259,898 256,659 254,078 253,396 258,767 Premises and equipment, net 4,238 4,235 4,106 4,127 4,599 Foreclosed assets - - 618 618 618 Loan servicing assets 4,178 4,014 3,993 3,830 3,936 Bank-owned life insurance 5,304 5,271 5,246 5,220 5,193 Accrued interest receivable 2,139 1,886 1,373 1,508 1,672 Goodwill 13,161 13,161 13,161 13,161 13,161 Other intangible assets, net 6,014 6,180 6,400 6,569 6,737 Other assets 15,764 15,218 18,001 13,954 16,803 Total assets $ 435,488 $ 430,627 $ 452,974 $ 444,109 $ 440,275 Liabilities and Shareholders' Equity Liabilities Deposits: Noninterest-bearing $ 83,544 $ 92,499 $ 114,313 $ 98,940 $ 98,797 Interest-bearing 250,026 233,953 233,842 241,959 238,598 Total deposits 333,570 326,452 348,155 340,899 337,395 Borrowings - 5,000 7,500 5,000 5,000 Accrued interest payable 308 325 326 372 388 Other liabilities 9,939 8,320 9,212 11,130 13,490 Total liabilities 343,817 340,097 365,193 357,401 356,273 Shareholders' equity: Common stock, voting 2,227 2,213 2,176 2,176 2,183 Common stock, non-voting 22 22 22 22 22 Additional paid in capital 24,498 24,013 23,664 23,515 23,545 Retained earnings 67,781 66,372 62,810 61,534 58,597 Accumulated other comprehensive income (loss) (1,985 ) (1,296 ) (99 ) 65 105 Total IFH, Inc. shareholders' equity 92,543 91,324 88,573 87,312 84,452 Noncontrolling interest (872 ) (794 ) (792 ) (604 ) (450 ) Total shareholders' equity 91,671 90,530 87,781 86,708 84,002 Total liabilities and shareholders' equity $ 435,488 $ 430,627 $ 452,974 $ 444,109 $ 440,275
Consolidated Statements of Income (Dollars in thousands except per Three Months Ended Year-To-Date share data; unaudited) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 Interest income Loans $ 5,491 $ 5,623 $ 4,571 $ 4,759 $ 4,686 $ 11,114 $ 9,128 Available-for-sale securities and other 193 131 130 142 99 324 184 Total interest income 5,684 5,754 4,701 4,901 4,785 11,438 9,312 Interest expense Interest on deposits 523 522 566 645 665 1,045 1,369 Interest on borrowings 15 9 1 - - 24 - Total interest expense 538 531 567 645 665 1,069 1,369 Net interest income 5,146 5,223 4,134 4,256 4,120 10,369 7,943 Provision for loan losses 460 180 775 500 50 640 672 Noninterest income Loan processing and servicing revenue 2,373 2,207 2,863 5,951 5,765 4,580 14,603 Mortgage 1,066 173 1,090 1,537 1,773 1,239 3,479 Government guaranteed lending 2,767 1,124 2,216 584 3,812 3,891 5,137 SBA documentation preparation fees 128 144 167 149 241 272 675 Service charges on deposits 118 104 85 77 49 222 81 Bank-owned life insurance 33 25 25 27 32 58 57 Other noninterest income (loss) 290 6,509 (1,473 ) 694 908 6,799 3,104 Total noninterest income 6,775 10,286 4,973 9,019 12,580 17,061 27,136 Noninterest expense Compensation 6,271 7,061 6,178 5,462 5,996 13,332 12,012 Occupancy and equipment 254 344 254 324 300 598 603 Loan and special asset expenses 491 638 483 133 634 1,129 1,636 Professional services 491 551 845 732 560 1,042 1,240 Data processing 271 249 267 196 215 520 436 Software 426 425 830 842 1,524 851 4,915 Communications 97 83 99 100 90 180 197 Advertising 321 214 453 474 393 535 502 Amortization of intangibles 170 170 170 170 172 340 358 Other operating expenses 846 631 754 505 733 1,477 1,377 Total noninterest expense 9,638 10,366 10,333 8,938 10,617 20,004 23,276 Income (loss) before income taxes 1,823 4,963 (2,001 ) 3,837 6,033 6,786 11,131 Income tax expense (benefit) 492 1,403 (3,090 ) 1,055 1,606 1,895 2,902 Net income 1,331 3,560 1,089 2,782 4,427 4,891 8,229 Noncontrolling interest (78 ) (2 ) (187 ) (155 ) (155 ) (80 ) (289 ) Net income attributable to IFH, Inc. $ 1,409 $ 3,562 $ 1,276 $ 2,937 $ 4,582 $ 4,971 $ 8,518 Basic earnings per common share $ 0.65 $ 1.65 $ 0.60 $ 1.37 $ 2.14 $ 2.29 $ 3.93 Diluted earnings per common share $ 0.63 $ 1.59 $ 0.57 $ 1.32 $ 2.07 $ 2.22 $ 3.82 Weighted average common shares outstanding 2,175 2,159 2,140 2,144 2,147 2,167 2,166 Diluted average common shares outstanding 2,244 2,242 2,234 2,219 2,219 2,243 2,229
Performance Ratios Three Months Ended Year-To-Date 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 PER COMMON SHARE Basic earnings per common share $ 0.65 $ 1.65 $ 0.60 $ 1.37 $ 2.14 $ 2.29 $ 3.93 Diluted earnings per common share 0.63 1.59 0.57 1.32 2.07 2.22 3.82 Book value per common share 41.15 40.86 40.35 39.74 38.32 41.15 38.32 Tangible book value per common share (2) 32.62 32.21 31.44 30.76 29.29 32.62 29.29 FINANCIAL RATIOS (ANNUALIZED) Return on average assets 1.29 % 3.30 % 1.14 % 2.61 % 4.39 % 2.29 % 4.20 % Return on average common shareholders' equity 6.23 % 15.97 % 5.85 % 13.60 % 22.53 % 11.07 % 21.44 % Return on average tangible common equity (2) 7.91 % 20.36 % 7.57 % 17.70 % 29.84 % 14.08 % 28.61 % Net interest margin 5.51 % 5.69 % 4.27 % 4.37 % 4.63 % 5.60 % 4.44 % Efficiency ratio (1) 80.8 % 66.8 % 113.5 % 67.3 % 63.6 % 72.9 % 66.4 % (1) Efficiency ratio is calculated by dividing noninterest expense less transaction-related costs by the sum of net interest income and noninterest income, less gains or losses on sale of securities. (2) See reconciliation of non-GAAP measures
Loan Concentrations
The top ten commercial loan concentrations as of June 30, 2022, were as follows:
% of Commercial (in millions) Amount Loans Solar electric power generation $ 82.9 38 % Power and communication line and related structures construction 42.3 19 % Lessors of nonresidential buildings (except miniwarehouses) 16.9 8 % Hotels (except casino hotels) and motels 9.6 4 % Other activities related to real estate 9.5 4 % Lessors of residential buildings and dwellings 5.6 3 % Other heavy and civil engineering construction 4.4 2 % Lessors of other real estate property 3.9 2 % All other amusement and recreation industries 3.0 1 % Amusement arcades 2.6 1 % $ 180.7 82 %
Reconciliation of Non-GAAP Measures
(In thousands except book value per share) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 Tangible book value per common share Total IFH, Inc. shareholders' equity $ 92,543 $ 91,324 $ 88,573 $ 87,312 $ 84,452 Less: Goodwill 13,161 13,161 13,161 13,161 13,161 Less Other intangible assets, net 6,014 6,180 6,400 6,569 6,737 Total tangible common equity $ 73,368 $ 71,983 $ 69,012 $ 67,582 $ 64,554 Ending common shares outstanding 2,249 2,235 2,198 2,204 2,204 Tangible book value per common share $ 32.62 $ 32.21 $ 31.44 $ 30.76 $ 29.29 Three Months Ended Year-To-Date (Dollars in thousands) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 12/31/21 12/31/20 Return on average tangible common equity Average IFH, Inc. shareholders' equity $ 90,721 $ 90,441 $ 86,549 $ 85,683 $ 81,584 $ 90,581 $ 80,112 Less: Average goodwill 13,161 13,161 13,161 13,161 13,161 13,161 13,161 Less Average other intangible assets, net 6,123 6,341 6,511 6,679 6,836 6,232 6,904 Average tangible common equity $ 71,437 $ 70,939 $ 66,877 $ 65,843 $ 61,587 $ 71,188 $ 60,047 Net income attributable to IFH, Inc. $ 1,409 $ 3,562 $ 1,276 $ 2,937 $ 4,582 $ 4,971 $ 8,518 Return on average tangible common equity 7.91 % 20.36 % 7.57 % 17.70 % 29.84 % 14.08 % 28.61 %
Contact: Eric Bergevin, 252-482-4400