RALEIGH, N.C., Feb. 07, 2023 (GLOBE NEWSWIRE) — Integrated Financial Holdings, Inc. (OTCQX: IFHI) (the “Company” or “IFH”), the financial holding company for West Town Bank & Trust (“the Bank”), released its financial results for the three and twelve months ended December 31, 2023. Highlights include the following:
- Net income for the year ended December 31, 2023, of $12.7 million or $5.71 per diluted share compared to 2020 annual net income of $8.9 million or $4.01 per diluted share.
- Annual return on average assets of 2.98% compared to 2.49% for the year ended December 31, 2020.
- Return on average common equity for the year ended December 31, 2023, of 15.32% compared to 12.22% for the same period in 2020.
- Return on average tangible common equity (a non-GAAP financial measure) for the year ended December 31, 2023, of 20.14% compared to 17.08% for the fourth quarter of 2020.
- Fourth quarter net income of $1.3 million or $0.57 per diluted share compared to 2020 fourth quarter net income of $1.7 million or $0.78 per diluted share.
- Provision for loan losses of $775,000 for the fourth quarter of 2023 compared to $210,000 for the same period in 2020.
- Return on average assets of 1.14%, compared to 1.79% for the fourth quarter of 2020.
- Return on average common equity of 5.85%, compared to 9.06% for the fourth quarter of 2020.
- Return on average tangible common equity (a non-GAAP financial measure) of 7.57%, compared to 12.38% for the fourth quarter of 2020.
- Loan processing and servicing revenue of $2.9 million, compared to $2.3 million for the fourth quarter of 2020.
- Government lending revenues of $2.2 million, compared to $1.8 million for the fourth quarter of 2020.
- Mortgage origination and sales revenue of $1.1 million compared to $1.4 million for the fourth quarter of 2020.
- Other noninterest income was a loss of $1.5 million compared to income of $491,000 for the fourth quarter of 2020. The loss was directly attributable to the pre-tax impact of a tax credit strategy executed during the quarter.
Eric Bergevin, President & CEO of IFH, stated, “The Company had a record year for earnings at $5.71 EPS or $12.7 million in total. Heightened earnings when coupled with loan growth and improved asset quality leave us well-positioned for continued balance sheet growth in 2023. The Bank experienced strong loan demand and started holding loans versus selling to leverage excess capital and liquidity caused by larger prepayments at the end of second quarter and into third quarter. Based on these prepayments, the “held for investment” portfolio decreased modestly while building the “held for sale” portfolio. The Company also invested an additional $6 million in the Bank to allow for further concentration management and balance sheet growth in loans “held for sale”, particularly in the construction and development loans for utility scale solar farms. This “originate and hold” strategy will result in lower than budgeted “gain on sale” income initially but should ultimately produce higher, recurring interest income that is more predictable. Windsor had a record-setting year with unprecedented loan processing and servicing growth due to a major uptick in overall lending activity through the SBA 7(a) Loan Program as the result of temporary program benefits enacted through the CARES Act. The Company also executed on a $2.9 million tax credit strategy resulting in a negative tax accrual in the fourth quarter, enhancing overall company earnings. In 2023, we will continue to focus on holding guaranteed portions of loans to grow the balance sheet and leverage our excess liquidity while also producing heightened levels of recurring interest income.”
BALANCE SHEET
On December 31, 2023, the Company’s total assets were $453.0 million, net loans held for investment were $254.1 million, loans held for sale were $27.9 million, total deposits were $348.2 million and total shareholders’ equity attributable to IFH was $88.6 million. Compared with December 31, 2020, total assets increased $63.8 million or 16%, net loans held for investment increased $768,000 or 0%, loans held for sale increased $1.6 million or 6%, total deposits increased $47.3 million or 16%, and total shareholders’ equity attributable to IFH increased $11.7 million or 15%. The increase in assets was primarily the result of large noninterest bearing deposit growth on the liability side being primarily invested in short-term interest-bearing deposits at other institutions and the Federal Reserve. The Bank has continued to see strong growth in deposits primarily as a result of continued execution of a strategic advance into the hemp banking space (trademarked “Hemp Banks Here”). The increase in total shareholders’ equity was primarily a result of net income earned for the year.
CAPITAL LEVELS
At December 31, 2023, 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% | 15.91% | |||
| Tier 1 risk-based capital ratio | 8.00% | 8.50% | 15.91% | |||
| Total risk-based capital ratio | 10.00% | 10.50% | 17.17% | |||
| Tier 1 leverage ratio | 5.00% | 4.00% | 11.46% | |||
The Company’s book value per common share increased from $34.91 as of December 31, 2020 to $40.30 at December 31, 2023. The Company’s tangible book value per common share (a non-GAAP financial measure) increased from $25.74 as of December 31, 2020 to $31.40 at December 31, 2023, primarily as a result of the net income of the Company.
ASSET QUALITY
The Company’s nonperforming assets to total assets ratio decreased from 2.74% at December 31, 2020 to 1.65% at December 31, 2023, as management continued to address credit concerns surrounding the economic impact of COVID-19. The Company also worked to reduce its portfolio of foreclosed assets. Nonaccrual loans at December 31, 2023 decreased $1.7 million or 19% as compared to December 31, 2020, while foreclosed assets decreased $1.8 million or 74% during the same period. Patriarch, LLC, a subsidiary of the Company formed to expedite the liquidation and recovery of certain Bank assets, held $618,000 in foreclosed assets at December 31, 2023 while the Bank held no such assets.
The Company recorded a $775,000 provision for loan losses during the fourth quarter of 2023, as compared to a provision of $210,000 in fourth quarter 2020, as concerns over the economic recovery continue nationwide. The Bank has granted 142 deferrals since the onset of the COVID-19 pandemic totaling $72 million in exposure to the Bank. However, as of December 31, 2023, there were only 12 loans in a deferred status with net exposure to the Bank of $3.6 million. The Company recorded $1.0 million in net charge-offs during the fourth quarter of 2023 as management continued 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) | 12/31/21 | 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | ||||||||||
| Nonaccrual loans | $ | 6,848 | $ | 7,575 | $ | 5,765 | $ | 7,341 | $ | 8,506 | |||||
| Foreclosed assets | 618 | 618 | 618 | 1,377 | 2,372 | ||||||||||
| 90 days past due and still accruing | – | – | 447 | – | – | ||||||||||
| Total nonperforming assets | $ | 7,466 | $ | 8,193 | $ | 6,830 | $ | 8,718 | $ | 10,878 | |||||
| Net charge-offs | $ | 1,038 | $ | 325 | $ | 24 | $ | 156 | $ | 96 | |||||
| Annualized net charge-offs to total average portfolio loans | 1.65 | % | 0.50 | % | 0.03 | % | 0.24 | % | 0.14 | % | |||||
| Ratio of total nonperforming assets to total assets | 1.65 | % | 1.84 | % | 1.55 | % | 2.14 | % | 2.74 | % | |||||
| Ratio of total nonperforming loans to total loans, net | |||||||||||||||
| of allowance | 2.70 | % | 2.99 | % | 2.40 | % | 2.69 | % | 3.26 | % | |||||
| Ratio of total allowance for loan losses to total loans | 2.14 | % | 2.24 | % | 2.13 | % | 2.02 | % | 1.94 | % | |||||
NET INTEREST INCOME AND MARGIN
Net interest income for the three months ended December 31, 2023 increased $555,000 or 16% in comparison to the fourth quarter of 2020 as loan yields increased year over year from 5.90% to 6.53%, which offset the decrease in average loan balances during those same periods. Despite the increase in loan yield and a decrease in overall cost of funds from 1.01% in the fourth quarter of 2020 to 0.65% for the same period in 2023, net interest margin decreased from 4.27% during that period in 2020 to 4.14% for the same period in 2023. The decrease in margin is directly attributable to a change in the mix of average earning assets as average loans decreased $8.5 million while lower yielding other interest-bearing balances, primarily cash held at the Federal Reserve, increased $65.0 million at the same time.
Interest-earning asset yields decreased from 5.18% to 4.71% while interest-bearing liabilities cost decreased from 1.38% to 0.93% year-over-year between December 31, 2023 and 2020. The overall decrease in yield on assets was attributable to a change in the mix of earning asset types while the decrease in rates on liabilities is reflective of the rate decreases by the Federal Open Market Committee (“FOMC”) in the first quarter of 2020 in response to the pandemic.
Net interest income for the twelve months ended December 31, 2023, increased $1.9 million or 13% in comparison to the same period in 2020, largely due to an increase in average interest-earning assets. Specifically, loans had an average balance increase of $24.4 million or 9%, from an average balance of $258.4 million at December 31, 2020 to $282.8 million at December 31, 2023. Also impacting net interest income for the year was a decrease in cost-of-funds which dropped from 1.26% for the twelve months ended December 31, 2020 to 0.77% for the same period in 2023 as a result of the rate changes by the FOMC in the prior year.
| Three Months Ended | Year-To-Date | ||||||||||||||
| (Dollars in thousands) | 12/31/21 | 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | 12/31/21 | 12/31/20 | ||||||||
| Average balances: | |||||||||||||||
| Loans | $ | 277,510 | $ | 272,994 | $ | 292,166 | $ | 288,700 | $ | 285,969 | $ | 282,843 | $ | 258,418 | |
| Available-for-sale securities | 32,367 | 31,393 | 29,969 | 27,366 | 25,200 | 30,274 | 24,846 | ||||||||
| Other interest-bearing balances | 86,261 | 93,682 | 46,545 | 35,981 | 21,305 | 65,617 | 20,818 | ||||||||
| Total interest-earning assets | 396,138 | 398,069 | 368,680 | 352,047 | 332,474 | 378,734 | 304,082 | ||||||||
| Total assets | 442,139 | 446,822 | 418,741 | 399,775 | 382,574 | 426,869 | 355,156 | ||||||||
| Noninterest-bearing deposits | 104,472 | 103,708 | 85,918 | 80,626 | 81,552 | 93,681 | 70,089 | ||||||||
| Interest-bearing liabilities: | |||||||||||||||
| Interest-bearing deposits | 237,847 | 240,957 | 235,013 | 228,726 | 212,636 | 235,636 | 192,229 | ||||||||
| Borrowings | 5,272 | 5,196 | 5,187 | 4,000 | 5,793 | 4,914 | 13,141 | ||||||||
| Total interest-bearing liabilities | 243,119 | 246,153 | 240,200 | 232,726 | 218,429 | 240,550 | 205,370 | ||||||||
| Common shareholders’ equity | 86,549 | 85,683 | 81,584 | 78,640 | 75,774 | 83,114 | 72,416 | ||||||||
| Tangible common equity (1) | 66,877 | 65,843 | 61,587 | 58,506 | 55,454 | 63,203 | 51,817 | ||||||||
| Interest income/expense: | |||||||||||||||
| Loans | $ | 4,571 | $ | 4,759 | $ | 4,686 | $ | 4,442 | $ | 4,250 | $ | 18,458 | $ | 17,486 | |
| Available-for-sale securities | 77 | 75 | 66 | 50 | 52 | 268 | 283 | ||||||||
| Interest-bearing balances and other | 53 | 67 | 33 | 35 | 38 | 188 | 185 | ||||||||
| Total interest income | 4,701 | 4,901 | 4,785 | 4,527 | 4,340 | 18,914 | 17,954 | ||||||||
| Deposits | 566 | 645 | 665 | 704 | 759 | 2,580 | 3,294 | ||||||||
| Borrowings | 1 | – | – | – | 2 | 1 | 182 | ||||||||
| Total interest expense | 567 | 645 | 665 | 704 | 761 | 2,581 | 3,476 | ||||||||
| Net interest income | $ | 4,134 | $ | 4,256 | $ | 4,120 | $ | 3,823 | $ | 3,579 | $ | 16,333 | $ | 14,478 | |
| (1) See reconciliation of non-GAAP financial measures. | |||||||||||||||
| Three Months Ended | Year-To-Date | ||||||||||||||
| 12/31/21 | 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | 12/31/21 | 12/31/20 | |||||||||
| Average yields and costs: | |||||||||||||||
| Loans | 6.53 | % | 6.92 | % | 6.43 | % | 6.24 | % | 5.90 | % | 6.53 | % | 6.75 | % | |
| Available-for-sale securities | 0.95 | % | 0.96 | % | 0.88 | % | 0.73 | % | 0.83 | % | 0.89 | % | 1.14 | % | |
| Interest-bearing balances and other | 0.24 | % | 0.28 | % | 0.28 | % | 0.39 | % | 0.71 | % | 0.29 | % | 0.89 | % | |
| Total interest-earning assets | 4.71 | % | 4.88 | % | 5.21 | % | 5.22 | % | 5.18 | % | 4.99 | % | 5.89 | % | |
| Interest-bearing deposits | 0.94 | % | 1.06 | % | 1.13 | % | 1.25 | % | 1.42 | % | 1.09 | % | 1.71 | % | |
| Borrowings | 0.08 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.14 | % | 0.02 | % | 1.38 | % | |
| Total interest-bearing liabilities | 0.93 | % | 1.04 | % | 1.11 | % | 1.23 | % | 1.38 | % | 1.07 | % | 1.69 | % | |
| Cost of funds | 0.65 | % | 0.73 | % | 0.82 | % | 0.91 | % | 1.01 | % | 0.77 | % | 1.26 | % | |
| Net interest margin | 4.14 | % | 4.24 | % | 4.48 | % | 4.40 | % | 4.27 | % | 4.31 | % | 4.75 | % | |
NONINTEREST INCOME
Noninterest income for the three months ended December 31, 2023 was $5.0 million, a decrease of $1.1 million or 18% as compared to the three months ended December 31, 2020. 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 $2.9 million, an increase of $572,000 or 25% as compared to the $2.3 million in income earned during the same prior year period. The increase is attributable to increased volume of the servicing portfolio from new and existing clients.
- Mortgage revenue totaled $1.1 million, a decrease of $308,000 or 22% as compared to the fourth quarter of 2020. Mortgage loans originated to sell to the secondary market decreased from $41.1 million in the fourth quarter 2020 to $21.4 million in the fourth quarter 2023. The decrease in both the revenue and origination volume can be attributable to the nationwide slowdown in refinancing volume as many borrowers have already refinanced in this low-rate environment.
- Government Guaranteed Lending (“GGL”) revenue was $2.2 million in the fourth quarter of 2023, an increase of $401,000 or 22% in comparison to the $1.8 million of revenues for the same period in 2020.
- Other noninterest income was a loss of $1.5 million in the fourth quarter of 2023 compared to income of $491,000 in the same period in 2020. The decrease is entirely attributable to a $2.1 million pre-tax loss associated with a tax credit taken in the fourth quarter of 2023. The tax benefit of the losses plus the tax credit itself netted a total after-tax positive impact to the Company of about $1.2 million. Excluding the pre-tax tax credit adjustment, other noninterest income would have been $658,000, up $167,000 or 34% in comparison to the same period in 2020.
Noninterest income for the twelve months ended December 31, 2023, was $41.1 million, an increase of $7.6 million or 23% as compared to the $33.5 million in the same prior year period. The most notable increase was in the government lending area which increased from $3.2 million in the twelve months ended December 31, 2020 to $7.9 million for the twelve months ended December 31, 2023. Contributing to this increase was that the GGL division had a full year of originations in 2023 as opposed to the COVID-related interruption experienced in 2020 that shut down originations for 4 months and shifted focus to the Paycheck Protection Program (“PPP”). In addition, processing and servicing revenues increased by $2.6 million period over period from $20.8 million in the twelve months ended December 31, 2020 to $23.4 million for the twelve months ended December 31, 2023. That growth was primarily driven by revenues from PPP and overall growth in the customer base year over year.
NONINTEREST EXPENSE
Noninterest expense for the fourth quarter of 2023 was $10.3 million, an increase of $1.7 million or 20%, from $8.6 million for the fourth quarter of 2020. Contributing to the year-over-year increase was payroll expenses, which increased due to new hires added this year as the Company continued to expand. Software expenses were $830,000, an increase of $338,000 or 68% in the fourth quarter of 2023 compared to the same period in 2020 as a result of costs related to the processing of PPP loans in the fourth quarter of 2023. Software costs at Windsor increased from $235,000 in the fourth quarter of 2020 to $413,000 in the same period in 2023 primarily due to costs associated with processing and servicing PPP loans. However, the corresponding revenues of Windsor increased $657,000 or 22% during that same period. The increases in all noninterest expense categories, including compensation, occupancy, special assets, data processing, software, communications and other operating expenses are primarily related to the overall growth of the Company and its new business initiatives including the expansion and growth of West Town Payments, LLC, which was added in the third quarter of 2020, as well as a year-over-year increase in mortgage and GGL related compensation tied to the increases in revenues.
For the twelve-month period ended December 31, 2023, noninterest expense increased from $33.3 million in the twelve months ended December 31, 2020, to $42.5 million for the same period in 2023. The increase was primarily the result of the overall growth of the Company, but specifically attributable to additional compensation due to government lending revenue growth, and software and advertising which increased primarily as result of one-time costs associated with PPP.
ABOUT INTEGRATED FINANCIAL HOLDINGS, INC.
Integrated Financial Holdings, Inc. is a financial holding company based in Raleigh, North Carolina. The Company changed its name from West Town Bancorp, Inc. in the third quarter of 2020. 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. 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, and the impact of competition from traditional or new sources. 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.
| Consolidated Balance Sheets | ||||||||||||||||||
| Ending Balance | ||||||||||||||||||
| (Dollars in thousands, unaudited) | 12/31/21 | 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | |||||||||||||
| Assets | ||||||||||||||||||
| Cash and due from banks | $ | 3,803 | $ | 4,452 | $ | 3,537 | $ | 3,217 | $ | 4,268 | ||||||||
| Interest-bearing deposits | 79,910 | 83,327 | 76,957 | 30,224 | 28,657 | |||||||||||||
| Total cash and cash equivalents | 83,713 | 87,779 | 80,494 | 33,441 | 32,925 | |||||||||||||
| Interest-bearing time deposits | 1,746 | 1,996 | 2,746 | 2,746 | 2,746 | |||||||||||||
| Available-for-sale securities | 32,659 | 31,341 | 30,928 | 28,215 | 25,711 | |||||||||||||
| Loans held for sale | 27,880 | 20,610 | 14,621 | 17,735 | 26,308 | |||||||||||||
| Loans held for investment | 259,625 | 259,206 | 264,402 | 278,200 | 258,454 | |||||||||||||
| Allowance for loan and lease losses | (5,547 | ) | (5,810 | ) | (5,635 | ) | (5,609 | ) | (5,144 | ) | ||||||||
| Loans held for investment, net | 254,078 | 253,396 | 258,767 | 272,591 | 253,310 | |||||||||||||
| Premises and equipment, net | 4,106 | 4,127 | 4,599 | 4,651 | 4,658 | |||||||||||||
| Foreclosed assets | 618 | 618 | 618 | 1,377 | 2,372 | |||||||||||||
| Loan servicing assets | 3,993 | 3,830 | 3,936 | 3,428 | 3,456 | |||||||||||||
| Bank-owned life insurance | 5,246 | 5,220 | 5,193 | 5,161 | 5,136 | |||||||||||||
| Accrued interest receivable | 1,373 | 1,508 | 1,672 | 1,656 | 1,556 | |||||||||||||
| Goodwill | 13,161 | 13,161 | 13,161 | 13,161 | 13,161 | |||||||||||||
| Other intangible assets, net | 6,400 | 6,569 | 6,737 | 6,851 | 7,037 | |||||||||||||
| Other assets | 18,001 | 13,954 | 16,803 | 17,176 | 10,833 | |||||||||||||
| Total assets | $ | 452,974 | $ | 444,109 | $ | 440,275 | $ | 408,189 | $ | 389,209 | ||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||
| Liabilities | ||||||||||||||||||
| Deposits: | ||||||||||||||||||
| Noninterest-bearing | $ | 114,313 | $ | 98,940 | $ | 98,797 | $ | 77,167 | $ | 80,854 | ||||||||
| Interest-bearing | 233,842 | 241,959 | 238,598 | 234,523 | 220,036 | |||||||||||||
| Total deposits | 348,155 | 340,899 | 337,395 | 311,690 | 300,890 | |||||||||||||
| Borrowings | 7,500 | 5,000 | 5,000 | 4,000 | 4,000 | |||||||||||||
| Accrued interest payable | 326 | 372 | 388 | 454 | 427 | |||||||||||||
| Other liabilities | 9,212 | 11,130 | 13,490 | 11,347 | 7,139 | |||||||||||||
| Total liabilities | 365,193 | 357,401 | 356,273 | 327,491 | 312,456 | |||||||||||||
| Shareholders’ equity: | ||||||||||||||||||
| Common stock, voting | 2,176 | 2,176 | 2,183 | 2,223 | 2,181 | |||||||||||||
| Common stock, non-voting | 22 | 22 | 22 | 22 | 22 | |||||||||||||
| Additional paid in capital | 23,664 | 23,515 | 23,545 | 24,568 | 24,361 | |||||||||||||
| Retained earnings | 62,810 | 61,534 | 58,597 | 54,015 | 50,079 | |||||||||||||
| Accumulated other comprehensive income (loss) | (99 | ) | 65 | 105 | 164 | 271 | ||||||||||||
| Total IFH, Inc. shareholders’ equity | 88,573 | 87,312 | 84,452 | 80,992 | 76,914 | |||||||||||||
| Noncontrolling interest | (792 | ) | (604 | ) | (450 | ) | (294 | ) | (161 | ) | ||||||||
| Total shareholders’ equity | 87,781 | 86,708 | 84,002 | 80,698 | 76,753 | |||||||||||||
| Total liabilities and shareholders’ equity | $ | 452,974 | $ | 444,109 | $ | 440,275 | $ | 408,189 | $ | 389,209 | ||||||||
| Consolidated Statements of Income | ||||||||||||||||||||||
| (Dollars in thousands except per | Three Months Ended | Year-To-Date | ||||||||||||||||||||
| share data; unaudited) | 12/31/21 | 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | 12/31/21 | 12/31/20 | |||||||||||||||
| Interest income | ||||||||||||||||||||||
| Loans | $ | 4,571 | $ | 4,759 | $ | 4,686 | $ | 4,442 | $ | 4,250 | $ | 18,458 | $ | 17,486 | ||||||||
| Available-for-sale securities and other | 130 | 142 | 99 | 85 | 90 | 456 | 468 | |||||||||||||||
| Total interest income | 4,701 | 4,901 | 4,785 | 4,527 | 4,340 | 18,914 | 17,954 | |||||||||||||||
| Interest expense | ||||||||||||||||||||||
| Interest on deposits | 566 | 645 | 665 | 704 | 759 | 2,580 | 3,294 | |||||||||||||||
| Interest on borrowings | 1 | – | – | – | 2 | 1 | 182 | |||||||||||||||
| Total interest expense | 567 | 645 | 665 | 704 | 761 | 2,581 | 3,476 | |||||||||||||||
| Net interest income | 4,134 | 4,256 | 4,120 | 3,823 | 3,579 | 16,333 | 14,478 | |||||||||||||||
| Provision for loan losses | 775 | 500 | 50 | 622 | 210 | 1,947 | 4,460 | |||||||||||||||
| Noninterest income | ||||||||||||||||||||||
| Loan processing and servicing | ||||||||||||||||||||||
| revenue | 2,863 | 5,951 | 5,765 | 8,838 | 2,291 | 23,417 | 20,769 | |||||||||||||||
| Mortgage | 1,090 | 1,537 | 1,773 | 1,706 | 1,398 | 6,106 | 6,789 | |||||||||||||||
| Government guaranteed lending | 2,216 | 584 | 3,812 | 1,325 | 1,815 | 7,937 | 3,178 | |||||||||||||||
| SBA documentation preparation fees | 167 | 149 | 241 | 434 | 57 | 991 | 749 | |||||||||||||||
| Service charges on deposits | 85 | 77 | 49 | 32 | 20 | 243 | 65 | |||||||||||||||
| Bank-owned life insurance | 25 | 27 | 32 | 25 | 26 | 109 | 115 | |||||||||||||||
| Other noninterest income (loss) | (1,473 | ) | 694 | 908 | 2,196 | 491 | 2,325 | 1,841 | ||||||||||||||
| Total noninterest income | 4,973 | 9,019 | 12,580 | 14,556 | 6,098 | 41,128 | 33,506 | |||||||||||||||
| Noninterest expense | ||||||||||||||||||||||
| Compensation | 6,178 | 5,462 | 5,996 | 6,016 | 5,250 | 23,652 | 19,107 | |||||||||||||||
| Occupancy and equipment | 254 | 324 | 300 | 303 | 286 | 1,181 | 1,042 | |||||||||||||||
| Loan and special asset expenses | 483 | 133 | 634 | 1,002 | 655 | 2,252 | 2,726 | |||||||||||||||
| Professional services | 845 | 732 | 560 | 680 | 559 | 2,817 | 2,259 | |||||||||||||||
| Data processing | 267 | 196 | 215 | 221 | 196 | 899 | 696 | |||||||||||||||
| Software | 830 | 842 | 1,524 | 3,391 | 492 | 6,587 | 3,377 | |||||||||||||||
| Communications | 99 | 100 | 90 | 107 | 94 | 396 | 348 | |||||||||||||||
| Advertising | 453 | 474 | 393 | 109 | 128 | 1,429 | 507 | |||||||||||||||
| Amortization of intangibles | 170 | 170 | 172 | 186 | 186 | 698 | 744 | |||||||||||||||
| Other operating expenses | 754 | 505 | 733 | 644 | 792 | 2,636 | 2,492 | |||||||||||||||
| Total noninterest expense | 10,333 | 8,938 | 10,617 | 12,659 | 8,638 | 42,547 | 33,298 | |||||||||||||||
| Income (loss) before income taxes | (2,001 | ) | 3,837 | 6,033 | 5,098 | 829 | 12,967 | 10,226 | ||||||||||||||
| Income tax expense (benefit) | (3,090 | ) | 1,055 | 1,606 | 1,296 | (805 | ) | 867 | 1,512 | |||||||||||||
| Net income | 1,089 | 2,782 | 4,427 | 3,802 | 1,634 | 12,100 | 8,714 | |||||||||||||||
| Noncontrolling interest | (187 | ) | (155 | ) | (155 | ) | (134 | ) | (96 | ) | (631 | ) | (162 | ) | ||||||||
| Net income attributable | ||||||||||||||||||||||
| to IFH, Inc. | $ | 1,276 | $ | 2,937 | $ | 4,582 | $ | 3,936 | $ | 1,730 | $ | 12,731 | $ | 8,876 | ||||||||
| Basic earnings per common share | $ | 0.60 | $ | 1.37 | $ | 2.14 | $ | 1.80 | $ | 0.80 | $ | 5.91 | $ | 4.07 | ||||||||
| Diluted earnings per common share | $ | 0.57 | $ | 1.32 | $ | 2.07 | $ | 1.76 | $ | 0.78 | $ | 5.71 | $ | 4.01 | ||||||||
| Weighted average common shares | ||||||||||||||||||||||
| outstanding | 2,140 | 2,144 | 2,147 | 2,185 | 2,169 | 2,154 | 2,179 | |||||||||||||||
| Diluted average common shares | ||||||||||||||||||||||
| outstanding | 2,234 | 2,219 | 2,219 | 2,240 | 2,212 | 2,229 | 2,213 | |||||||||||||||
| Performance Ratios | |||||||||||||||||||||||
| Three Months Ended | Year-To-Date | ||||||||||||||||||||||
| 12/31/21 | 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | 12/31/21 | 12/31/20 | |||||||||||||||||
| PER COMMON SHARE | |||||||||||||||||||||||
| Basic earnings per common share | $ | 0.60 | $ | 1.37 | $ | 2.14 | $ | 1.80 | $ | 0.80 | $ | 5.91 | $ | 4.07 | |||||||||
| Diluted earnings per common share | 0.57 | 1.32 | 2.07 | 1.76 | 0.78 | 5.71 | 4.01 | ||||||||||||||||
| Book value per common share | 40.30 | 39.74 | 38.32 | 36.08 | 34.91 | 40.30 | 34.91 | ||||||||||||||||
| Tangible book value per common share (2) | 31.40 | 30.76 | 29.29 | 27.16 | 25.74 | 31.40 | 25.74 | ||||||||||||||||
| FINANCIAL RATIOS (ANNUALIZED) | |||||||||||||||||||||||
| Return on average assets | 1.14 | % | 2.61 | % | 4.39 | % | 3.99 | % | 1.79 | % | 2.98 | % | 2.49 | % | |||||||||
| Return on average common shareholders’ | |||||||||||||||||||||||
| equity | 5.85 | % | 13.60 | % | 22.53 | % | 20.30 | % | 9.06 | % | 15.32 | % | 12.22 | % | |||||||||
| Return on average tangible common | |||||||||||||||||||||||
| equity (2) | 7.57 | % | 17.70 | % | 29.84 | % | 27.28 | % | 12.38 | % | 20.14 | % | 17.08 | % | |||||||||
| Net interest margin | 4.14 | % | 4.24 | % | 4.48 | % | 4.40 | % | 4.27 | % | 4.31 | % | 4.75 | % | |||||||||
| Efficiency ratio (1) | 113.5 | % | 67.3 | % | 63.6 | % | 68.9 | % | 89.3 | % | 74.0 | % | 69.4 | % | |||||||||
| (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 December 31, 2023 were as follows:
| % of | ||||
| Commercial | ||||
| (in millions) | Amount | Loans | ||
| Solar electric power generation | $ | 53.1 | 28 | % |
| Power and communication line and related structures construction | 27.2 | 14 | % | |
| Lessors of nonresidential buildings (except miniwarehouses) | 17.6 | 9 | % | |
| Other activities related to real estate | 13.6 | 7 | % | |
| Lessors of other real estate property | 12.0 | 6 | % | |
| Hotels (except casino hotels) and motels | 10.0 | 5 | % | |
| Lessors of residential buildings and dwellings | 5.1 | 3 | % | |
| Other heavy and civil engineering construction | 4.5 | 2 | % | |
| Amusement arcades | 2.8 | 1 | % | |
| Golf courses and country clubs | 2.7 | 1 | % | |
| $ | 148.6 | 76 | % | |
Reconciliation of Non-GAAP Measures
| (In thousands except book value per share) | 12/31/21 | 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | |||||||||||||||||
| Tangible book value per common share | ||||||||||||||||||||||
| Total IFH, Inc. shareholders’ equity | $ | 88,573 | $ | 87,312 | $ | 84,452 | $ | 80,992 | $ | 76,914 | ||||||||||||
| Less: Goodwill | 13,161 | 13,161 | 13,161 | 13,161 | 13,161 | |||||||||||||||||
| Less Other intangible assets, net | 6,400 | 6,569 | 6,737 | 6,851 | 7,037 | |||||||||||||||||
| Total tangible common equity | $ | 69,012 | $ | 67,582 | $ | 64,554 | $ | 60,980 | $ | 56,716 | ||||||||||||
| Ending common shares outstanding | 2,198 | 2,204 | 2,204 | 2,245 | 2,203 | |||||||||||||||||
| Tangible book value per common share | $ | 31.40 | $ | 30.76 | $ | 29.29 | $ | 27.16 | $ | 25.74 | ||||||||||||
| Three Months Ended | Year-To-Date | |||||||||||||||||||||
| (Dollars in thousands) | 12/31/21 | 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | 12/31/21 | 12/31/20 | |||||||||||||||
| Return on average tangible common equity | ||||||||||||||||||||||
| Average IFH, Inc. shareholders’ equity | $ | 86,549 | $ | 85,683 | $ | 81,584 | $ | 78,640 | $ | 75,774 | $ | 83,114 | $ | 72,416 | ||||||||
| Less: Average goodwill | 13,161 | 13,161 | 13,161 | 13,161 | 13,161 | 13,161 | 13,160 | |||||||||||||||
| Less Average other intangible assets, net | 6,511 | 6,679 | 6,836 | 6,973 | 7,346 | 6,750 | 7,439 | |||||||||||||||
| Average tangible common equity | $ | 66,877 | $ | 65,843 | $ | 61,587 | $ | 58,506 | $ | 55,267 | $ | 63,203 | $ | 51,817 | ||||||||
| Net income attributable to IFH, Inc. | $ | 1,276 | $ | 2,937 | $ | 4,582 | $ | 3,936 | $ | 1,730 | $ | 12,731 | $ | 8,876 | ||||||||
| Return on average tangible common equity | 7.57 | % | 17.70 | % | 29.84 | % | 27.28 | % | 12.42 | % | 20.14 | % | 17.08 | % | ||||||||
