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

11/20, 12:00 AM (Source: GlobeNewswire)

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, CPA
Chief Financial Officer
812-283-0724

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 interests 343   200   818   1,434 
        
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 division initial operating expenses, net of tax effect -   -   -   (481)
Less:  Effect of adjustment to deferred taxes due to tax law change -   -   -   122 
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 division initial operating expenses, net of tax effect -   -   -   (0.20)
Less:  Effect of adjustment to deferred taxes due to tax law change -   -   -   0.05 
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 division net initial operating expenses -   -   -   (661)
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) (non-GAAP) 74.79%  73.01%  74.51%  63.96%
        
        
 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 (GAAP)$121,053  $98,813     
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 SheetsSeptember 30, June 30, March 31, December 31, September 30,
(In thousands, except per share data) 2019   2019   2019   2018   2018 
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 loan losses 810,658   796,994   762,661   734,061   704,271 
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 Home Loan Bank 222,544   189,255   160,938   107,019   90,000 
          
Stockholders' equity, net of noncontrolling interests 121,053   114,971   108,688   102,968   98,813 
Noncontrolling interests in subsidiary 204   176   1,241   1,593   1,432 
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 of IncomeSeptember 30, June 30, March 31, December 31, September 30,
(In thousands, except per share data) 2019   2019   2019   2018   2018 
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 for loan losses 10,289   9,555   9,521   9,261   9,285 
          
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 to noncontrolling interests 343   571   (269)  173   200 
Net income attributable to the Company$5,321  $4,392  $3,533  $2,931  $2,744 
          
          
Net income per share, basic$2.28  $1.88  $1.53  $1.28  $1.20 
Weighted average shares outstanding, basic 2,337,472   2,333,502   2,307,155   2,284,665   2,277,709 
          
Net income per share, diluted$2.24  $1.85  $1.50  $1.24  $1.15 
Weighted average shares outstanding, diluted 2,378,221   2,373,578   2,360,004   2,371,480   2,379,520 
          
          
  Three Months Ended
 September 30, June 30, March 31, December 31, September 30,
Consolidated Performance Ratios (Annualized) 2019   2019   2019   2018   2018 
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 stockholders' equity 18.12%  15.90%  13.55%  11.82%  11.16%
Net interest margin (tax equivalent basis) 3.92%  3.72%  3.92%  3.98%  4.04%
Efficiency ratio (excluding nonrecurring items) (non-GAAP) 74.79%  73.16%  75.99%  74.34%  73.01%
          
          
  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 of total loans 0.63%  0.63%  0.70%  0.62%  0.60%
Nonperforming assets as a percentage of total assets 1.02%  1.09%  1.23%  1.28%  1.31%
Allowance for loan losses as a percentage of total loans 1.22%  1.19%  1.29%  1.29%  1.31%
Allowance for loan losses as a percentage of nonperforming loans 193.82%  188.29%  184.96%  208.77%  218.18%
Net charge-offs (recoveries) to average outstanding loans 0.01%  0.08%  0.00%  0.00%  -0.01%
                    

_______________
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 InformationSeptember 30, June 30, March 31, December 31, September 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 - Core Banking$9,074  $8,577  $9,309  $8,590  $8,520 
Net interest income after provision for loan losses - SBA Lending (Q2) 870   891   102   577   696 
Net interest income after provision for loan losses - Mortgage Banking 345   87   110   94   69 
Total net interest income after provision for loan losses$10,289  $9,555  $9,521  $9,261  $9,285 
          
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 (Q2) 702   1,164   (547)  352   409 
Income (loss) before income taxes - Mortgage Banking 3,186   2,195   626   (110)  (183)
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 Banking$2,663  $2,301  $3,272  $2,879  $2,724 
Net income (loss) attributable to the Company - SBA Lending (Q2) 269   445   (208)  134   157 
Net income (loss) attributable to the Company - Mortgage Banking 2,389   1,646   469   (82)  (137)
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 (Q2) 0.12   0.19   (0.09)  0.06   0.07 
Net income (loss) per share, basic - Mortgage Banking 1.02   0.71   0.20   (0.04)  (0.06)
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 (Q2) 0.11   0.19   (0.09)  0.06   0.07 
Net income (loss) per share, diluted - Mortgage Banking 1.00   0.69   0.20   (0.03)  (0.06)
Total net income per share, diluted$2.24  $1.85  $1.50  $1.24  $1.15 
          
          
  Three Months Ended
SBA Lending (Q2) DataSeptember 30, June 30, March 31, December 31, September 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 DataSeptember 30, June 30, March 31, December 31, September 30,
(In thousands, except percentage data)2019 2019 2019 2018 2018
          
Mortgage originations for sale in the secondary market447,616  258,743  110,680  66,046  38,976 
          
Mortgage sales447,819  204,565  102,022  60,409  31,768 
          
Gross gain on sales of loans, mortgage banking14,244  7,335  3,715  2,071  1,067 
Weighted average gross gain on sales of loans, mortgage banking3.18% 3.59% 3.64% 3.43% 3.36%
          
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 SheetsSeptember 30, June 30, March 31, December 31, September 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 basis)$14,116  $13,354  $12,588  $12,078  $11,702 
          
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 basis, annualized) 3.65%  3.45%  3.68%  3.73%  3.83%
          
Net interest margin (tax equivalent basis, annualized) 3.92%  3.72%  3.92%  3.98%  4.04%
                    

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

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