RALEIGH, N.C., Feb. 10, 2021 (GLOBE NEWSWIRE) -- Integrated Financial Holdings, Inc. (OTC PINK: 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, 2020. Highlights include the following:
- Fourth quarter net income of $1.7 million or $0.78 per diluted share, similar to net income of $1.7 million or $0.78 per diluted share for the fourth quarter of 2019. Income quarter over quarter for 2020 was positively impacted by increased mortgage loan activity and realization of a tax credit.
- Provision for loan losses of $210,000 for the fourth quarter of 2020 compared to $1.2 million for the same period in 2019.
- Return on average assets of 1.73%, compared to 2.21% for the fourth quarter of 2019.
- Return on average common equity of 8.95%, compared to 10.24% for the fourth quarter of 2019.
- Return on average tangible common equity (a non-GAAP financial measure) of 12.14%, compared to 14.79% for the third quarter of 2019.
- Loan processing and servicing revenue of $2.3 million, unchanged for the same period in 2019.
- Mortgage origination and sales revenue of $1.4 million as compared to $716,000 for the same period in 2019.
As previously announced, on May 6, 2019, Sound Bank (now known as Dogwood State Bank), formerly a wholly owned subsidiary of IFH, completed a recapitalization that resulted in a significant reduction in IFH’s ownership position in the Bank. Therefore, on a comparative basis, the Company’s year-to-date financial results for 2020 do not include the operating impact from Sound Bank, whereas the financial results through May 6, 2019 are impacted by the performance of Sound Bank.
Eric Bergevin, President & CEO, commented, “We are pleased to have finished 2020 with strong fourth quarter earnings, overall growth and improved asset quality. Recent updates to legislation through the Consolidated Appropriations Act are expected to yield continued improvements in earnings and asset quality. First, the SBA announced new guidelines specific to the SBA 7(a) Loan Program (“the Program”), including a temporary increase to the guaranteed amount on all transactions and an increased allocation of overall funds available through the Program. In addition, with “Second Round” PPP loans underway, our teams at the Bank, Windsor Advantage and SBA Loan Documentation Services expect to be very active, just as with the first round. During 2020, we recognized strong deposit growth as the Bank’s Hemp and Commercial Account Services teams continue to be laser focused on providing a best-in-class experience for these businesses and lowering our cost of funds while enhancing margin. The low interest rate environment has led to continued mortgage loan growth in the fourth quarter as we continued to scale the department back up to efficiently process increased originations. We believe that the year-to-date performance metrics we reached in 2020; 26% growth in the balance sheet, dilutive earnings-per-share in excess of $4.00, double digit Return on Equity of 12.18% and a Return on Assets of almost 2.50%, all represent significant milestones given the economic crisis as a result of the pandemic that occurred during the year. The entire Company is hopeful for 2021 as we are beginning to see the reopening of businesses that have been significantly affected during the COVID-19 crisis. This will ultimately lead to continued growth, better asset quality and enhance long-term earnings.”
BALANCE SHEET
At December 31, 2020, the Company’s total assets were $396.5 million, net loans held for investment were $260.6 million, loans held for sale were $26.3 million, total deposits were $300.9 million and total shareholders’ equity attributable to IFH was $76.9 million. Compared with December 31, 2019, total assets increased $82.3 million or 26%, net loans held for investment increased $41.0 million or 19%, loans held for sale increased $13.7 million or 109%, total deposits increased $80.4 million or 36%, and total shareholders’ equity attributable to IFH increased $9.2 million or 14%. The increases in assets and loans reflect the Bank’s continued growth in its Government Guaranteed Loans (“GGL”) program as well as participation in the PPP. The Bank funded $22.8 million of PPP loans for its existing customers during 2020 with $11.0 million of those fundings still on the balance sheet at year end. In addition, excluding $60.0 million originated specifically for the Main Street Lending Program, the Bank originated $148.7 million in Government Guaranteed Loans (“GGL”) during the year. The Bank sold $30.4 million in GGL loans in 2020 after ending its “Originate and Hold” strategy which began in mid-first quarter of 2020 as a method of increasing leverage and short-term net interest income. The Bank has continued to see strong growth in deposits primarily as a result of corresponding growth in in GGL loans, many of which require customer deposits, as well as 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 posted for the year.
During the third quarter, the Bank formed a new company, West Town Payments, LLC (“WTP”), and entered into an agreement whereby the Bank owns a minority interest in the entity. WTP provides physical point-of-sale, online, contactless and mobile payment solutions to both targeted and generalist verticals and is well-equipped with the experience and compliance-driven framework to work directly with the Bank’s hemp-related customers. The financial position and results of the first year of operation of WTP are included in the consolidated balances for IFH and the noncontrolling interest portion shown separately.
CAPITAL LEVELS
At December 31, 2020, 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% | 12.04% |
| Tier 1 risk-based capital ratio | 8.00% | 8.50% | 12.04% |
| Total risk-based capital ratio | 10.00% | 10.50% | 13.30% |
| Tier 1 leverage ratio | 5.00% | 4.00% | 10.06% |
The Company’s book value per common share increased from $30.78 at December 31, 2019 to $34.91 at December 31, 2020. The Company’s tangible book value per common share (a non-GAAP financial measure) increased from $21.27 at December 31, 2019 to $25.74 at December 31, 2020, primarily as a result of the net income of the Company.
ASSET QUALITY
The Company’s nonperforming assets to total assets ratio decreased from 3.99% at December 31, 2019 to 2.74% at December 31, 2020, as management continued to address credit concerns surrounding the potential economic impact of COVID-19 and the widespread societal responses to the pandemic. Nonaccrual loans decreased $694,000 or 8% as of December 31, 2020 as compared to December 31,2019 while foreclosed assets decreased $998,000 or 30% during the same period. Patriarch, LLC, a subsidiary of the Company, formed to expedite the liquidation and recovery of certain Bank assets, held $2.3 million in foreclosed assets while the Bank held no such assets. The Company regularly conducts impairment analyses on all nonperforming assets with updated appraisals to ensure the assets are carried at the lower of fair market value (less cost to sell) or book value.
The Company recorded a $210,000 provision for loan losses during the fourth quarter of 2020, as compared to a provision of $1.2 million in fourth quarter 2019, as the problem loan portfolio decreased for the period. The Company had 32 COVID-related deferred loans as of December 31, 2020, with net exposure of $15.6 million. Since June 30, 2020, COVID-related deferrals have decreased by 100 loans, with a net exposure decrease of $41.4 million. Expected loss estimates consider the impacts of decreased economic activity and higher unemployment, partially offset by the mitigating benefits of government stimulus and industry-wide loan modification efforts. The Company recorded minimal net charge-offs during the fourth quarter 2020.
| (Dollars in thousands) | 12/31/20 | 9/30/20 | 6/30/20 | 3/31/20 | 12/31/19 | ||||||||||
| Nonaccrual loans | $ | 8,506 | $ | 8,790 | $ | 7,799 | $ | 7,732 | $ | 9,200 | |||||
| Foreclosed assets | 2,372 | 3,522 | 4,464 | 5,243 | 3,370 | ||||||||||
| 90 days past due and still accruing | - | - | - | - | - | ||||||||||
| Total nonperforming assets | $ | 10,878 | $ | 12,312 | $ | 12,263 | $ | 12,975 | $ | 12,570 | |||||
| Net charge-offs | $ | 96 | $ | 2 | $ | 667 | $ | 2,390 | $ | 779 | |||||
| Annualized net charge-offs to total average portfolio loans | 0.14 | % | 0.00 | % | 1.13 | % | 4.39 | % | 1.36 | % | |||||
| Ratio of total nonperforming assets to total assets | 2.74 | % | 3.29 | % | 3.45 | % | 4.16 | % | 3.99 | % | |||||
| Ratio of total nonperforming loans to total loans, net | |||||||||||||||
| of allowance | 3.26 | % | 3.66 | % | 3.33 | % | 3.66 | % | 4.19 | % | |||||
| Ratio of total allowance for loan losses to total loans | 1.94 | % | 2.05 | % | 2.05 | % | 2.27 | % | 1.72 | % | |||||
NET INTEREST INCOME AND MARGIN
Net interest income for the three months ended December 31, 2020 increased $310,000 or 9% in comparison to the fourth quarter of 2019, as loan growth year over year offset the decrease in the low interest rate environment. The net interest margin was 4.07% for the fourth quarter of 2020 compared to 4.84% for the same period in 2019. Interest-earning asset yields decreased from 6.38% to 4.93% and interest-bearing liabilities cost decreased from 2.22% to 1.35% year-over-year between December 31, 2019 and December 31, 2020. The overall decrease in both yield on assets and rates on liabilities are reflective of the rate decreases by the Federal Open Market Committee (“FOMC”) in response to the pandemic.
Net interest income for the twelve months ended December 31, 2020 decreased $2.4 million or 14% in comparison to the same period in 2019, largely due to the deconsolidation of Sound Bank from the consolidated financial statements as of May 6, 2019 and the decrease in margin as a result of the rate changes by the FOMC.
| Three Months Ended | Year-To-Date | |||||||||||||||||||||
| (Dollars in thousands) | 12/31/20 | 9/30/20 | 6/30/20 | 3/31/20 | 12/31/19 | 12/31/20 | 12/31/19 | |||||||||||||||
| Average balances: | ||||||||||||||||||||||
| Loans | $ | 292,092 | $ | 270,897 | $ | 250,125 | $ | 226,683 | $ | 229,965 | $ | 259,949 | $ | 295,228 | ||||||||
| Available-for-sale securities | 25,711 | 25,581 | 24,743 | 23,861 | 21,572 | 24,974 | 21,192 | |||||||||||||||
| Other interest-bearing balances | 31,403 | 22,596 | 22,326 | 17,046 | 16,238 | 23,343 | 33,537 | |||||||||||||||
| Total interest-earning assets | 349,206 | 319,074 | 297,194 | 267,590 | 267,775 | 308,266 | 349,957 | |||||||||||||||
| Total assets | 396,539 | 371,395 | 353,179 | 313,476 | 311,293 | 358,647 | 400,199 | |||||||||||||||
| Noninterest-bearing deposits | 80,854 | 77,857 | 64,617 | 56,329 | 52,464 | 69,914 | 71,802 | |||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||
| Interest-bearing deposits | 220,035 | 204,204 | 185,507 | 166,567 | 179,162 | 194,079 | 230,107 | |||||||||||||||
| Borrowed funds | 4,000 | 6,793 | 23,459 | 16,475 | 6,167 | 12,682 | 16,803 | |||||||||||||||
| Total interest-bearing liabilities | 224,035 | 210,997 | 208,966 | 183,042 | 185,329 | 206,761 | 246,910 | |||||||||||||||
| Common shareholders' equity | 76,723 | 73,970 | 71,035 | 68,445 | 67,078 | 72,653 | 74,064 | |||||||||||||||
| Tangible common equity (1) | 56,525 | 53,463 | 50,343 | 47,570 | 46,448 | 52,085 | 49,144 | |||||||||||||||
| Interest income/expense: | ||||||||||||||||||||||
| Loans | $ | 4,250 | $ | 4,394 | $ | 4,283 | $ | 4,559 | $ | 4,139 | $ | 17,486 | $ | 20,794 | ||||||||
| Investment securities | 52 | 64 | 72 | 95 | 82 | 283 | 343 | |||||||||||||||
| Interest-bearing balances and other | 38 | 35 | 36 | 76 | 83 | 185 | 867 | |||||||||||||||
| Total interest income | 4,340 | 4,493 | 4,391 | 4,730 | 4,304 | 17,954 | 22,004 | |||||||||||||||
| Deposits | 759 | 855 | 835 | 845 | 979 | 3,294 | 4,457 | |||||||||||||||
| Borrowings | 2 | 1 | 70 | 109 | 56 | 182 | 630 | |||||||||||||||
| Total interest expense | 761 | 856 | 905 | 954 | 1,035 | 3,476 | 5,087 | |||||||||||||||
| Net interest income | $ | 3,579 | $ | 3,637 | $ | 3,486 | $ | 3,776 | $ | 3,269 | $ | 14,478 | $ | 16,917 | ||||||||
| (1) See reconciliation of non-GAAP financial measures. | ||||||||||||||||||||||
| Three Months Ended | Year-To-Date | ||||||||||||||
| 12/31/20 | 9/30/20 | 6/30/20 | 3/31/20 | 12/31/19 | 12/31/20 | 12/31/19 | |||||||||
| Average yields and costs: | |||||||||||||||
| Loans | 5.77 | % | 6.44 | % | 6.87 | % | 8.07 | % | 7.14 | % | 6.71 | % | 7.02 | % | |
| Available-for-sale securities | 0.81 | % | 1.00 | % | 1.16 | % | 1.59 | % | 1.52 | % | 1.13 | % | 1.62 | % | |
| Interest-bearing balances and other | 0.48 | % | 0.61 | % | 0.65 | % | 1.79 | % | 2.03 | % | 0.79 | % | 2.58 | % | |
| Total interest-earning assets | 4.93 | % | 5.59 | % | 5.93 | % | 7.09 | % | 6.38 | % | 5.81 | % | 6.27 | % | |
| Interest-bearing deposits | 1.37 | % | 1.66 | % | 1.81 | % | 2.03 | % | 2.17 | % | 1.69 | % | 1.93 | % | |
| Borrowed funds | 0.20 | % | 0.06 | % | 1.20 | % | 2.65 | % | 3.60 | % | 1.43 | % | 3.74 | % | |
| Total interest-bearing liabilities | 1.35 | % | 1.61 | % | 1.74 | % | 2.09 | % | 2.22 | % | 1.68 | % | 2.05 | % | |
| Cost of funds | 0.99 | % | 1.18 | % | 1.33 | % | 1.60 | % | 1.73 | % | 1.25 | % | 1.59 | % | |
| Net interest margin | 4.07 | % | 4.52 | % | 4.70 | % | 5.66 | % | 4.84 | % | 4.68 | % | 4.82 | % | |
NONINTEREST INCOME
Noninterest income for the three months ended December 31, 2020 was $6.1 million, an increase of $683,000 or 13% as compared to the three months ended December 31, 2019. Specific items to note include:
- Windsor, a subsidiary of the Company which offers an SBA and USDA loan servicing platform, had processing and servicing revenue totaling $2.3 million for both the three months ended December 31, 2020, and the three months ended December 31, 2019.
- Mortgage revenue totaled $1.4 million, an increase of $682,000 or 95% as compared to the fourth quarter 2019. Mortgage loans originated to sell to the secondary market increased from $20.62 million in the fourth quarter 2019 to $41.17 million in the fourth quarter 2020. The increase in both the revenue and origination volume can be attributable to the decrease in market rates tied to the FOMC decision to decrease rates.
- GGL revenue was $1.8 million in the fourth quarter of 2020, a decrease of $473,000 or 21% in comparison to the same period in 2019. A slowing economy in 2020 driven by the pandemic was partially offset by the Company’s decision in the fourth quarter to unwind some of the “Originate and Hold” loans as the Company moved to deleverage its balance sheet and take advantage of high premiums on loan sales.
Noninterest income for the twelve months ended December 31, 2020 was $33.5 million, an increase of $9.2 million or 38% as compared to the $24.3 million in the same prior year period. The most notable increase was due to processing and servicing revenues, which increased by $13.3 million period over period from $7.5 million in the twelve months ended December 31, 2019 to $20.8 million for the twelve months ended December 31, 2020. That growth was primarily driven by the Paycheck Protection Program (“PPP”) as Windsor processed more than 17,500 loan applications totaling more than $2.5 billion in loans for over 40 of its institutional lender clients during the second quarter.
NONINTEREST EXPENSE
Noninterest expense for the fourth quarter of 2020 was $8.6 million, an increase of $2.9 million or 50%, from $5.8 million for the fourth quarter of 2019. The primary cause for the change was an increase in compensation expense year-over-year of $1.5 million from $3.8 million in the fourth quarter of 2019 to $5.3 million for the same period in 2020. This increase was partially reflective of the overall growth of the Company and its new business initiatives including the addition of WTP in the third quarter of 2020 as well as a year-over-year increase in mortgage related compensation tied to the increase in revenues. For the twelve-month period ended December 31, 2020, noninterest expense increased from $24.8 million in the first twelve months of 2019 to $33.3 million for the same period in 2020. The increase was primarily the result of the overall growth of the Company, additional compensation due to mortgage revenue growth and PPP originations in the second quarter of 2020, and software and other related processing costs which increased $2.1 million year-over-year as result of the 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; SBA Loan Documentation Services, LLC, a loan documentation origination company; and Glenwood Structured Finance, LLC, a loan broker and large loan syndication 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.
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 Sheet | |||||||||||||||
| Ending Balance | |||||||||||||||
| (Dollars in thousands, unaudited) | 12/31/20 | 9/30/20 | 6/30/20 | 3/31/20 | 12/31/19 | ||||||||||
| Assets | |||||||||||||||
| Cash and due from banks | $ | 4,268 | $ | 6,007 | $ | 6,183 | $ | 5,928 | $ | 5,021 | |||||
| Interest-bearing deposits | 28,657 | 13,294 | 11,644 | 8,518 | 9,849 | ||||||||||
| Total cash and cash equivalents | 32,925 | 19,301 | 17,827 | 14,446 | 14,870 | ||||||||||
| Interest-bearing time deposits | 2,746 | 2,746 | 2,746 | 2,746 | 2,746 | ||||||||||
| Available-for-sale securities | 25,711 | 24,462 | 26,081 | 24,946 | 21,087 | ||||||||||
| Loans held for sale | 26,308 | 35,743 | 23,072 | 11,839 | 12,568 | ||||||||||
| Loans held for investment | 265,784 | 244,994 | 238,926 | 216,423 | 223,470 | ||||||||||
| Allowance for loan and lease losses | (5,144 | ) | (5,029 | ) | (4,906 | ) | (4,907 | ) | (3,837 | ) | |||||
| Loans held for investment, net | 260,640 | 239,965 | 234,020 | 211,516 | 219,633 | ||||||||||
| Premises and equipment, net | 4,658 | 4,628 | 4,761 | 4,740 | 4,761 | ||||||||||
| Foreclosed assets | 2,372 | 3,522 | 4,464 | 5,243 | 3,370 | ||||||||||
| Loan servicing assets | 3,456 | 3,265 | 3,262 | 3,528 | 3,358 | ||||||||||
| Bank-owned life insurance | 5,136 | 5,109 | 5,082 | 5,048 | 5,021 | ||||||||||
| Accrued interest receivable | 1,556 | 1,705 | 1,422 | 1,067 | 1,116 | ||||||||||
| Goodwill | 13,161 | 13,161 | 13,161 | 13,161 | 13,150 | ||||||||||
| Other intangible assets, net | 7,037 | 7,224 | 7,409 | 7,596 | 7,782 | ||||||||||
| Other assets | 10,833 | 13,186 | 12,349 | 6,370 | 4,729 | ||||||||||
| Total assets | $ | 396,539 | $ | 374,017 | $ | 355,656 | $ | 312,246 | $ | 314,191 | |||||
| Liabilities and Shareholders' Equity | |||||||||||||||
| Liabilities | |||||||||||||||
| Deposits: | |||||||||||||||
| Noninterest-bearing | $ | 80,854 | $ | 78,849 | $ | 66,874 | $ | 59,360 | $ | 49,573 | |||||
| Interest-bearing | 220,036 | 206,913 | 198,108 | 162,059 | 170,869 | ||||||||||
| Total deposits | 300,890 | 285,762 | 264,982 | 221,419 | 220,442 | ||||||||||
| Borrowings | 4,000 | 4,000 | 6,000 | 17,649 | 19,295 | ||||||||||
| Accrued interest payable | 427 | 396 | 391 | 433 | 429 | ||||||||||
| Other liabilities | 14,469 | 8,845 | 10,771 | 5,735 | 6,300 | ||||||||||
| Total liabilities | 319,786 | 299,003 | 282,144 | 245,236 | 246,466 | ||||||||||
| Shareholders’ equity: | |||||||||||||||
| Common stock, voting | 2,181 | 2,181 | 2,193 | 2,193 | 2,166 | ||||||||||
| Common stock, non-voting | 22 | 22 | 22 | 22 | 22 | ||||||||||
| Additional paid in capital | 24,361 | 24,220 | 24,357 | 24,162 | 24,245 | ||||||||||
| Retained earnings | 50,079 | 48,349 | 46,629 | 40,371 | 41,203 | ||||||||||
| Accumulated other comprehensive income | 271 | 308 | 311 | 262 | 89 | ||||||||||
| Total IFH, Inc. shareholders’ equity | 76,914 | 75,080 | 73,512 | 67,010 | 67,725 | ||||||||||
| Net loss attributable to noncontrolling | |||||||||||||||
| interest | (161 | ) | (66 | ) | - | - | - | ||||||||
| Total shareholders’ equity | 76,753 | 75,014 | 73,512 | 67,010 | 67,725 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 396,539 | $ | 374,017 | $ | 355,656 | $ | 312,246 | $ | 314,191 | |||||
| Financial Performance (Consolidated) | ||||||||||||||||||||||
| (Dollars in thousands except per | Three Months Ended | Year-To-Date | ||||||||||||||||||||
| share data; unaudited) | 12/31/20 | 9/30/20 | 6/30/20 | 3/31/20 | 12/31/19 | 12/31/20 | 12/31/19 | |||||||||||||||
| Interest income | ||||||||||||||||||||||
| Loans | $ | 4,250 | $ | 4,394 | $ | 4,283 | $ | 4,559 | $ | 4,139 | $ | 17,486 | $ | 20,794 | ||||||||
| Available-for-sale securities and other | 90 | 99 | 108 | 171 | 165 | 468 | 1,210 | |||||||||||||||
| Total interest income | 4,340 | 4,493 | 4,391 | 4,730 | 4,304 | 17,954 | 22,004 | |||||||||||||||
| Interest expense | ||||||||||||||||||||||
| Interest on deposits | 759 | 855 | 835 | 845 | 979 | 3,294 | 4,457 | |||||||||||||||
| Interest on borrowings | 2 | 1 | 70 | 109 | 56 | 182 | 630 | |||||||||||||||
| Total interest expense | 761 | 856 | 905 | 954 | 1,035 | 3,476 | 5,087 | |||||||||||||||
| Net interest income | 3,579 | 3,637 | 3,486 | 3,776 | 3,269 | 14,478 | 16,917 | |||||||||||||||
| Provision for loan losses | 210 | 125 | 665 | 3,460 | 1,155 | 4,460 | 2,005 | |||||||||||||||
| Noninterest income | ||||||||||||||||||||||
| Loan processing and servicing | ||||||||||||||||||||||
| revenue | 2,291 | 2,579 | 14,186 | 1,713 | 2,256 | 20,769 | 7,487 | |||||||||||||||
| Mortgage | 1,398 | 2,400 | 1,573 | 1,418 | 716 | 6,789 | 3,239 | |||||||||||||||
| Government guaranteed lending | 1,815 | 571 | 37 | 755 | 2,288 | 3,178 | 5,905 | |||||||||||||||
| SBA documentation preparation fees | 57 | 195 | 423 | 74 | 15 | 749 | 15 | |||||||||||||||
| Bank-owned life insurance | 20 | 15 | 34 | 27 | 28 | 65 | 157 | |||||||||||||||
| Service charges on deposits | 26 | 28 | 11 | 19 | 29 | 115 | 377 | |||||||||||||||
| Gain on deconsolidation of Sound Bank | - | - | - | - | - | - | 6,635 | |||||||||||||||
| Other noninterest income | 491 | 771 | (56 | ) | 635 | 83 | 1,841 | 449 | ||||||||||||||
| Total noninterest income | 6,098 | 6,559 | 16,208 | 4,641 | 5,415 | 33,506 | 24,264 | |||||||||||||||
| Noninterest expense | ||||||||||||||||||||||
| Compensation | 5,250 | 4,422 | 5,682 | 3,753 | 3,750 | 19,107 | 14,595 | |||||||||||||||
| Occupancy and equipment | 286 | 289 | 211 | 256 | 221 | 1,042 | 1,408 | |||||||||||||||
| Loan and special asset expenses | 655 | 1,013 | 816 | 242 | 318 | 2,726 | 484 | |||||||||||||||
| Professional services | 559 | 534 | 676 | 490 | 359 | 2,259 | 1,943 | |||||||||||||||
| Data processing | 196 | 187 | 165 | 148 | 109 | 696 | 813 | |||||||||||||||
| Software | 492 | 415 | 2,221 | 249 | 172 | 3,377 | 757 | |||||||||||||||
| Communications | 94 | 83 | 82 | 89 | 80 | 348 | 449 | |||||||||||||||
| Advertising | 128 | 109 | 215 | 55 | 86 | 507 | 358 | |||||||||||||||
| Transaction-related | - | - | 4 | 17 | 16 | 21 | 976 | |||||||||||||||
| Amortization of intangibles | 186 | 186 | 186 | 186 | 186 | 744 | 935 | |||||||||||||||
| Other operating expenses | 792 | 545 | 589 | 545 | 464 | 2,471 | 2,084 | |||||||||||||||
| Total noninterest expense | 8,638 | 7,783 | 10,847 | 6,030 | 5,761 | 33,298 | 24,802 | |||||||||||||||
| Income (loss) before income taxes | 829 | 2,288 | 8,182 | (1,073 | ) | 1,768 | 10,226 | 14,374 | ||||||||||||||
| Income tax expense (benefit) | (805 | ) | 634 | 1,924 | (241 | ) | 37 | 1,512 | 3,295 | |||||||||||||
| Net income (loss) | 1,634 | 1,654 | 6,258 | (832 | ) | 1,731 | 8,714 | 11,079 | ||||||||||||||
| Noncontrolling interest | (96 | ) | (66 | ) | - | - | - | (162 | ) | - | ||||||||||||
| Net income (loss) attributable | ||||||||||||||||||||||
| to IFH, Inc. | $ | 1,730 | $ | 1,720 | $ | 6,258 | $ | (832 | ) | $ | 1,731 | $ | 8,876 | $ | 11,079 | |||||||
| Basic earnings (loss) per common share | $ | 0.80 | $ | 0.79 | $ | 2.87 | $ | (0.38 | ) | $ | 0.79 | $ | 4.07 | $ | 4.20 | |||||||
| Diluted earnings (loss) per common share | $ | 0.78 | $ | 0.78 | $ | 2.84 | $ | (0.37 | ) | $ | 0.78 | $ | 4.01 | $ | 4.12 | |||||||
| Weighted average common shares | ||||||||||||||||||||||
| outstanding | 2,169 | 2,176 | 2,177 | 2,193 | 2,196 | 2,179 | 2,639 | |||||||||||||||
| Diluted average common shares | ||||||||||||||||||||||
| outstanding | 2,212 | 2,206 | 2,204 | 2,232 | 2,234 | 2,213 | 2,688 | |||||||||||||||
| Performance Ratios | |||||||||||||||||||||||
| Three Months Ended | Year-To-Date | ||||||||||||||||||||||
| 12/31/20 | 9/30/20 | 6/30/20 | 3/31/20 | 12/31/19 | 12/31/20 | 12/31/19 | |||||||||||||||||
| PER COMMON SHARE | |||||||||||||||||||||||
| Basic earnings (loss) per common share | $ | 0.80 | $ | 0.79 | $ | 2.87 | $ | (0.38 | ) | $ | 0.79 | $ | 4.07 | $ | 4.20 | ||||||||
| Diluted earnings (loss) per common share | 0.78 | 0.78 | 2.84 | (0.37 | ) | 0.78 | 4.01 | 4.12 | |||||||||||||||
| Book value per common share | 34.91 | 34.08 | 33.19 | 30.25 | 30.78 | 34.91 | 30.78 | ||||||||||||||||
| Tangible book value per common share (2) | 25.74 | 24.83 | 23.90 | 20.88 | 21.27 | 25.74 | 21.27 | ||||||||||||||||
| FINANCIAL RATIOS (ANNUALIZED) | |||||||||||||||||||||||
| Return on average assets | 1.73 | % | 1.84 | % | 7.11 | % | -1.06 | % | 2.21 | % | 2.47 | % | 2.76 | % | |||||||||
| Return on average common shareholders' | |||||||||||||||||||||||
| equity | 8.95 | % | 9.23 | % | 35.34 | % | -4.88 | % | 10.24 | % | 12.18 | % | 14.92 | % | |||||||||
| Return on average tangible common | |||||||||||||||||||||||
| equity (2) | 12.14 | % | 12.76 | % | 49.86 | % | -7.02 | % | 14.79 | % | 16.99 | % | 23.59 | % | |||||||||
| Net interest margin | 4.07 | % | 4.52 | % | 4.70 | % | 5.66 | % | 4.84 | % | 4.68 | % | 4.82 | % | |||||||||
| Efficiency ratio (1) | 89.3 | % | 76.3 | % | 55.1 | % | 71.4 | % | 66.2 | % | 69.4 | % | 69.0 | % | |||||||||
| (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 and consolidation and the fair value | ||
| adjustment on the equity investment in Sound Bank. | ||
| (2) | See reconciliation of non-GAAP measures | |
Loan Concentrations
The top ten commercial loan concentrations as of December 31, 2020 were as follows:
| % of | |||||
| Commercial | |||||
| (in millions) | Amount | Loans | |||
| Solar electric power generation | $ | 52.2 | 27 | % | |
| Power and communication line and related structures construction | 29.1 | 15 | % | ||
| Lessors of nonresidential buildings (except miniwarehouses) | 20.2 | 10 | % | ||
| Hotels (except casino hotels) and motels | 13.2 | 7 | % | ||
| Lessors of other real estate property | 9.0 | 5 | % | ||
| Lessors of residential buildings and dwellings | 8.4 | 4 | % | ||
| Other activities related to real estate | 7.9 | 4 | % | ||
| General freight trucking, local | 5.3 | 3 | % | ||
| Golf courses and country clubs | 4.2 | 2 | % | ||
| Colleges, universities, and professional schools | 3.5 | 2 | % | ||
| $ | 153.0 | 79 | % | ||
Reconciliation of Non-GAAP Measures
| (In thousands except book value per share) | 12/31/20 | 9/30/20 | 6/30/20 | 3/31/20 | 12/31/19 | |||||||||||||||||
| Tangible book value per common share | ||||||||||||||||||||||
| Total IFH, Inc. shareholders’ equity | $ | 76,914 | $ | 75,080 | $ | 73,512 | $ | 67,010 | $ | 67,725 | ||||||||||||
| Less: Goodwill | 13,161 | 13,161 | 13,161 | 13,161 | 13,150 | |||||||||||||||||
| Less Other intangible assets, net | 7,037 | 7,224 | 7,409 | 7,596 | 7,782 | |||||||||||||||||
| Total tangible common equity | $ | 56,716 | $ | 54,695 | $ | 52,942 | $ | 46,253 | $ | 46,793 | ||||||||||||
| Ending common shares outstanding | 2,203 | 2,203 | 2,215 | 2,215 | 2,200 | |||||||||||||||||
| Tangible book value per common share | $ | 25.74 | $ | 24.83 | $ | 23.90 | $ | 20.88 | $ | 21.27 | ||||||||||||
| Three Months Ended | Year-To-Date | |||||||||||||||||||||
| (Dollars in thousands) | 12/31/20 | 9/30/20 | 6/30/20 | 3/31/20 | 12/31/19 | 12/31/20 | 12/31/19 | |||||||||||||||
| Return on average tangible common equity | ||||||||||||||||||||||
| Average IFH, Inc. shareholders’ equity | $ | 76,723 | $ | 73,970 | $ | 71,035 | $ | 68,445 | $ | 67,078 | $ | 72,653 | $ | 74,064 | ||||||||
| Less: Average goodwill | 13,161 | 13,161 | 13,161 | 13,157 | 13,160 | 13,160 | 15,935 | |||||||||||||||
| Less Average other intangible assets, net | 7,037 | 7,346 | 7,531 | 7,718 | 7,408 | 7,408 | 8,985 | |||||||||||||||
| Average tangible common equity | 56,525 | 53,463 | 50,343 | 47,570 | 46,510 | 52,085 | 49,144 | |||||||||||||||
| Net income attributable to IFH, Inc. | $ | 1,730 | $ | 1,720 | $ | 6,258 | $ | (832 | ) | $ | 1,731 | $ | 8,876 | $ | 11,079 | |||||||
| Return on average tangible common equity | 12.14 | % | 12.76 | % | 49.86 | % | -7.02 | % | 14.77 | % | 16.99 | % | 22.48 | % | ||||||||
Contact: Eric Bergevin, 252-482-4400