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What changed in First Savings Financial Group, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of First Savings Financial Group, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+251 added−263 removedSource: 10-K (2024-12-13) vs 10-K (2023-12-20)

Top changes in First Savings Financial Group, Inc.'s 2024 10-K

251 paragraphs added · 263 removed · 215 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

46 edited+3 added−11 removed180 unchanged
Biggest changeCertain of our employees have been granted individual lending limits, which is $2.0 million for the aggregate loan balance, of which 75% or greater is guaranteed by the SBA. Generally, all SBA 7(a) program loan requests for lending relationships that exceed the individual officer lending limits require approval by the SBA Officer Loan Committee.
Biggest changeOur SBA 7(a) program lending activities also follow underwriting standards and loan origination procedures established by our Board of Directors and management. Certain of our employees have been granted individual lending limits, which is $2.0 million for the aggregate loan balance, of which 75% or greater is guaranteed by the SBA.
Federal Securities Laws First Savings Financial Group’s common stock is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. First Savings Financial Group is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934, as amended. INCOME TAXATION Federal Taxation General.
Federal Securities Laws First Savings Financial Group’s common stock is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. First Savings Financial Group is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934, as amended. TAXATION Federal Income Taxation General.
Other Regulations First Savings Bank’s operations are also subject to federal laws applicable to credit transactions, including the: ● Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; ● Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; ● Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; ● Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies; ● Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and ● Rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.
Other Regulations First Savings Bank’s operations are also subject to federal laws applicable to credit transactions, including the: ● Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; ● Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; ● Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; 13 Table of Contents ● Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies; ● Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and ● Rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.
The operations of First Savings Bank also are subject to laws such as the: ● Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; 14 Table of Contents ● Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; and ● Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check.
The operations of First Savings Bank also are subject to laws such as the: ● Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; ● Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; and ● Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check.
The FRB has authority to establish individual minimum capital requirements in appropriate cases upon a determination that an institution’s capital level is or may become inadequate in light of the particular risks or circumstances. As of September 30, 2023, First Savings Bank met all applicable capital adequacy requirements in effect at that date. Prompt Corrective Regulatory Action.
The FRB has authority to establish individual minimum capital requirements in appropriate cases upon a determination that an institution’s capital level is or may become inadequate in light of the particular risks or circumstances. As of September 30, 2024, First Savings Bank met all applicable capital adequacy requirements in effect at that date. Prompt Corrective Regulatory Action.
The Federal Home Loan Bank System provides a central credit facility primarily for member institutions. First Savings Bank, as a member of the FHLB, is required to acquire and hold shares of capital stock in the FHLB. First Savings Bank was in compliance with this requirement with an investment in FHLB capital stock of $23.1 million at September 30, 2023.
The Federal Home Loan Bank System provides a central credit facility primarily for member institutions. First Savings Bank, as a member of the FHLB, is required to acquire and hold shares of capital stock in the FHLB. First Savings Bank was in compliance with this requirement with an investment in FHLB capital stock of $23.1 million at September 30, 2024.
Federal Reserve Board System. The FRB regulations require banks to maintain reserves against their transaction accounts (primarily Negotiable Order of Withdrawal (NOW) and regular checking accounts). On March 26, 2020, in response to the COVID-19 pandemic, the FRB reduced the reserve requirement to zero, and the requirement remained at zero at September 30, 2023 and 2022.
Federal Reserve Board System. The FRB regulations require banks to maintain reserves against their transaction accounts (primarily Negotiable Order of Withdrawal (NOW) and regular checking accounts). On March 26, 2020, in response to the COVID-19 pandemic, the FRB reduced the reserve requirement to zero, and the requirement remained at zero at September 30, 2024 and 2023.
This regulatory structure is intended primarily for the protection of the Deposit Insurance Fund and depositors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of an adequate allowance for loan losses for regulatory purposes.
This regulatory structure is intended primarily for the protection of the Deposit Insurance Fund and depositors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of an adequate allowance for credit losses for regulatory purposes.
As a member of the Federal Reserve System and Federal Home Loan Bank System, in particular a member of the Federal Home Loan Bank of Indianapolis (“FHLB”), First Savings Bank is also required to acquire and hold shares of capital stock in the Federal Reserve Bank and FHLB. At September 30, 2023, our investment portfolio consisted primarily of U.S.
As a member of the Federal Reserve System and Federal Home Loan Bank System, in particular a member of the Federal Home Loan Bank of Indianapolis (“FHLB”), First Savings Bank is also required to acquire and hold shares of capital stock in the Federal Reserve Bank and FHLB. At September 30, 2024, our investment portfolio consisted primarily of U.S.
The Company’s Indiana tax returns for the fiscal years ended September 30, 2020 and 2021 were audited by the Indiana Department of Revenue. These audits were closed during the fiscal year ended September 30, 2023. Our other state income tax returns have not been audited during the last five years. ​ 17 Table of Contents
The Company’s Indiana tax returns for the fiscal years ended September 30, 2020 and 2021 were audited by the Indiana Department of Revenue. These audits were closed during the fiscal year ended September 30, 2023. Our other state income tax returns have not been audited during the last five years. ​ 16 Table of Contents
The regulations also provide that a capital restoration plan must be filed with the FRB within 45 days of the date an institution is deemed to have received notice that it is “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” Compliance with the plan must be guaranteed by any parent holding company up to the lesser of 5% of the institution’s total assets when it was deemed to be undercapitalized or the amount necessary to achieve compliance with applicable capital requirements.
The regulations also provide that a capital restoration plan must be filed with the FRB 11 Table of Contents within 45 days of the date an institution is deemed to have received notice that it is “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” Compliance with the plan must be guaranteed by any parent holding company up to the lesser of 5% of the institution’s total assets when it was deemed to be undercapitalized or the amount necessary to achieve compliance with applicable capital requirements.
We generally review our deposit mix and pricing weekly. Our deposit pricing strategy has typically been to offer competitive rates on all types of deposit products, and to periodically offer special rates in order to attract deposits of a specific type or term. 9 Table of Contents Borrowings. We use advances from the FHLB to supplement our investable funds.
We generally review our deposit mix and pricing weekly. Our deposit pricing strategy has typically been to offer competitive rates on all types of deposit products, and to periodically offer special rates in order to attract deposits of a specific type or term. Borrowings. We use advances from the FHLB to supplement our investable funds.
The assessment rates (inclusive of adjustments) currently range from two and one half to 45 basis points of total capital less tangible assets, depending upon the particular institution’s risk category. The rate schedules will 12 Table of Contents automatically adjust in the future when the Deposit Insurance Fund reaches certain milestones.
The assessment rates (inclusive of adjustments) currently range from two and one half to 45 basis points of total capital less tangible assets, depending upon the particular institution’s risk category. The rate schedules will automatically adjust in the future when the Deposit Insurance Fund reaches certain milestones.
There is an exception for loans made pursuant to a 13 Table of Contents benefit or compensation program that is widely available to all employees of the institution and does not give preference to insiders over other employees. Loans to executive officers are subject to additional limitations based on the type of loan involved. Enforcement.
There is an exception for loans made pursuant to a benefit or compensation program that is widely available to all employees of the institution and does not give preference to insiders over other employees. Loans to executive officers are subject to additional limitations based on the type of loan involved. Enforcement.
First Savings Financial Group has elected to become a financial holding company because of the activities of the Captive. Bank holding companies are generally subject to consolidated capital requirements established by the FRB.
First Savings Financial Group elected to become a financial holding company because of the former activities of the Captive. Bank holding companies are generally subject to consolidated capital requirements established by the FRB.
Also included in Tier 2 capital is the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity 11 Table of Contents securities with readily determinable fair market values.
Also included in Tier 2 capital is the allowance for credit and lease losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values.
Because First Savings Financial Group owns 100% of the issued and outstanding capital stock of First Savings Bank, First Savings Financial Group and First Savings Bank are members of an affiliated group within the meaning of Section 1504(a) of the Internal Revenue Code, of which group First Savings Financial Group is the common parent corporation.
Because First Savings Financial Group owns 100% of the issued and outstanding capital stock of First Savings Bank, First Savings Financial Group and First 15 Table of Contents Savings Bank are members of an affiliated group within the meaning of Section 1504(a) of the Internal Revenue Code, of which group First Savings Financial Group is the common parent corporation.
Generally, our loan commitments expire after 30 days. See Note 17, “Commitments and Contingencies” of the Notes to Consolidated Financial Statements beginning on page F-1 of this annual report for additional information regarding our loan commitments at September 30, 2023. Investment Activities We have legal authority to invest in various types of liquid assets, including U.S.
Generally, our loan commitments expire after 30 days. See Note 17, “Commitments and Contingencies” of the Notes to Consolidated Financial Statements beginning on page F-1 of this annual report for additional information regarding our loan commitments at September 30, 2024. 8 Table of Contents Investment Activities We have legal authority to invest in various types of liquid assets, including U.S.
Loans with loan-to-value ratios in excess of 80% generally require private mortgage insurance. However, the total balance of residential mortgage loans secured by one-to-four family residential properties with loan-to-value ratios exceeding 90% amounted to $18.4 million, of which some do not have private mortgage insurance or government guaranty.
Loans with loan-to-value ratios in excess of 80% generally require private mortgage insurance. However, the total balance of residential mortgage loans secured by one-to-four family residential properties with loan-to-value ratios exceeding 90% amounted to $17.2 million, of which some do not have private mortgage insurance or government guaranty.
At September 30, 2023, acquired participation interests of loans totaled $25.5 million. 7 Table of Contents Beginning in April 2015, the Bank hired a management team, business development officers (loan officers), underwriters and supporting staff that are seasoned and experienced in SBA lending in order to enhance the Company’s proficiency in SBA 7(a) program loan originations and sales.
At September 30, 2024, acquired participation interests totaled $37.5 million. 7 Table of Contents Beginning in April 2015, the Bank hired a management team, business development officers (loan officers), underwriters and supporting staff that are seasoned and experienced in SBA lending in order to enhance the Company’s proficiency in SBA 7(a) program loan originations and sales.
For the Company’s tax year ended September 30, 2023, Indiana imposed a 5.00% franchise tax based on a financial institution’s adjusted gross income as defined by statute. The Indiana franchise tax rate will be reduced to 4.90% for the Company’s tax years ending September 30, 2024 and years thereafter, respectively.
For the Company’s tax year ended September 30, 2023, Indiana imposed a 5.00% franchise tax based on a financial institution’s adjusted gross income as defined by statute. The Indiana franchise tax rate was reduced to 4.90% for the Company’s tax years ending September 30, 2024 and years thereafter.
Technological advances, for example, have lowered barriers to entry, 3 Table of Contents allowing banks to expand their geographic reach by providing services over the Internet, and made it possible for non-depository institutions to offer products and services that traditionally have been provided by banks.
Technological advances, for example, have lowered barriers to entry, allowing banks to expand their geographic reach by providing services over the Internet, and made it possible for non-depository institutions to offer products and services that traditionally have been provided by banks.
The assessments paid to the INDFI by First Savings Bank for the year ended September 30, 2023 totaled $96,000. Federal Home Loan Bank System. First Savings Bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks.
The assessments paid to the INDFI by First Savings Bank for the year ended September 30, 2024 totaled $129,000. Federal Home Loan Bank System. First Savings Bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks.
This lending platform is also designed to diversify the Company’s geographic and interest rate risk profile with respect to the retained unguaranteed amounts given the geographic dispersion of the loans and collateral, and their floating rate structure. The Company originated SBA loans with a total commitment of $54.4 million during the year ended September 30, 2023.
This lending platform is also designed to diversify the Company’s geographic and interest rate risk profile with respect to the retained unguaranteed amounts given the geographic dispersion of the loans and collateral, and their floating rate structure. The Company originated SBA loans with a total commitment of $79.3 million during the year ended September 30, 2024.
The average size of these loans originated was $1.8 million and the portfolio balance was $757.4 million at September 30, 2023. Construction Loans. We originate construction loans for one to four family homes and commercial properties such as small industrial buildings, warehouses, retail shops and office units.
The average size of these loans originated was $1.8 million and the portfolio balance was $750.6 million at September 30, 2024. Construction Loans. We originate construction loans for one to four family homes and commercial properties such as small industrial buildings, warehouses, retail shops and office units.
The maximum amount that we may lend to one borrower and the borrower’s related entities is limited, by regulation, to generally 15% of our stated capital and reserves. At September 30, 2023, our regulatory limit on loans to one borrower was $33.0 million.
The maximum amount that we may lend to one borrower and the borrower’s related entities is limited, by regulation, to generally 15% of our stated capital and reserves. At September 30, 2024, our regulatory limit on loans to one borrower was $36.3 million.
A bank holding company is generally required to give the FRB prior written notice of any purchase or redemption of then outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the company’s consolidated net worth.
The Dodd-Frank Act codified the source of strength doctrine. 14 Table of Contents A bank holding company is generally required to give the FRB prior written notice of any purchase or redemption of then outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the company’s consolidated net worth.
These limits are similar to those applicable to First Savings Bank under its previous federal savings bank charter. Capital Requirements .
These limits are similar to those applicable to First Savings Bank under its previous federal savings bank charter. 10 Table of Contents Capital Requirements .
Our Federal income tax returns have not been audited during the last five years. 16 Table of Contents Bad Debt Reserves.
Our Federal income tax returns have not been audited during the last five years. Bad Debt Reserves.
As a member bank of the Federal Reserve System, First Savings Bank’s primary federal regulator is the Federal Reserve Board (“FRB”). First Savings Bank is also a member of the Federal Home Loan Bank System and its deposit accounts are insured up to applicable limits by the Deposit Insurance Fund of the FDIC.
First Savings Bank is also a member of the Federal Home Loan Bank System and its deposit accounts are insured up to applicable limits by the Deposit Insurance Fund of the FDIC.
Certain transactions with affiliates are required to be secured by collateral in an amount and of a type specified by federal law. The purchase of low quality assets from affiliates is generally prohibited.
The aggregate amount of covered transactions with all affiliates is limited to 20% of a bank’s capital and surplus. Certain transactions with affiliates are required to be secured by collateral in an amount and of a type specified by federal law. The purchase of low quality assets from affiliates is generally prohibited.
At June 30, 2023, which is the most recent date for which data is available from the FDIC, we held approximately 33.27%, 19.64%, 2.66%, 23.38%, 100.00% and 25.52% of the FDIC-insured deposits in Clark, Daviess, Floyd, Harrison, Crawford and Washington Counties, Indiana, respectively. This data does not reflect deposits held by credit unions with which we also compete.
At June 30, 2024, which is the most recent date for which data is available from the FDIC, we held approximately 33.22%, 18.12%, 2.23%, 23.80%, 100.00% and 28.74% of the FDIC-insured deposits in Clark, Daviess, Floyd, Harrison, Crawford and Washington Counties, Indiana, respectively. This data does not reflect deposits held by credit unions with which we also compete.
At September 30, 2023, $301.6 million of SBA loans included sold guaranteed portions of $209.6 million, for a net position of $92.0 million outstanding in our portfolio. All SBA loans held for sale were carried at the lower of cost or fair market value at September 30, 2023 and 2022. Mortgage Banking.
At September 30, 2024, $299.7 million of SBA loans included sold guaranteed portions of $194.4 million, for a net position of $105.3 million outstanding in our portfolio. All SBA loans held for sale were carried at the lower of cost or fair market value at September 30, 2024 and 2023. Mortgage Banking.
Our competition for loans comes primarily from financial institutions in our primary market area and from other financial service providers, such as mortgage companies, mortgage brokers and credit unions. Competition for loans also comes from non-depository financial service companies entering the mortgage market, such as insurance companies, securities companies, and specialty and captive finance companies.
Our competition for loans comes primarily from financial institutions in our primary market area and from other financial service providers, such as mortgage companies, mortgage brokers and credit unions.
The FRB may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe and unsound practice, or violate any law, regulation, FRB order or directive, or any condition imposed by, or written agreement with, the FRB.
The FRB may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe and unsound practice, or violate any law, regulation, FRB order or directive, or any condition imposed by, or written agreement with, the FRB. There is an exception to this approval requirement for well-capitalized bank holding companies that meet certain other conditions.
In October 2023, the Company announced the Board of Directors' decision to exit the Bank's residential mortgage banking operations during the first fiscal quarter ending December 31, 2023. The Bank will continue to offer residential mortgage lending in its primary market areas, but will exit the national out-of-market business. Loan Approval Procedures and Authority.
In October 2023, the Company announced the Board of Directors’ decision to wind down the Bank’s residential mortgage banking operations, which was completed during the quarter ended December 31, 2023. The Bank continues to offer residential mortgage lending in its primary market areas. Loan Approval Procedures and Authority.
The Board Credit Committee consists of the President and three independent Board members, and the Officer Loan Committee consists of members of senior management and certain other officers designated by the Board of Directors.
The Board Credit Committee consists of the President and three independent Board members, and the Officer Loan Committee consists of members of senior management and certain other officers designated by the Board of Directors. Loans resulting in aggregated lending relationships in excess of $14.0 million require approval by the Board of Directors.
First Savings Bank received a “satisfactory” Community Reinvestment Act rating in its most recently completed examination. Transactions with Related Parties. Federal law limits First Savings Bank’s authority to engage in transactions with “affiliates” ( e.g ., any entity that controls or is under common control with First Savings Bank, including First Savings Financial Group and its other subsidiaries).
Federal law limits First Savings Bank’s authority to engage in transactions with “affiliates” ( e.g ., any entity that controls or is under common control with First Savings Bank, including First Savings Financial Group and its other subsidiaries). The aggregate amount of covered transactions with any individual affiliate is limited to 10% of the capital and surplus of a bank.
The Company originated $587.7 million and sold $603.6 million of one- to four-family residential real estate loans within this lending platform during the year ended September 30, 2023. The amount outstanding in the Bank’s portfolio at September 30, 2023 included $24.7 million in loans held for sale, recorded at fair market value.
The Company originated $60.8 million and sold $83.2 million of one- to four-family residential real estate loans within this lending platform during the year ended September 30, 2024. The were no outstanding one- to four-family residential real estate loans within the lending platform in the Bank’s portfolio at September 30, 2024.
At September 30, 2023, $163.3 million of loans included sold participation interests of $111.2 million, for a net position of $52.0 million outstanding in our portfolio.
At September 30, 2024, loans totaling $154.8 million included sold participation interests of $103.9 million, for a net position of $50.9 million outstanding in our portfolio.
We also utilize brokered certificates of deposit and reciprocal time deposits as sources of borrowings and may use broker repurchase agreements and internet certificates of deposit from time to time, depending on our liquidity needs and pricing of these facilities versus other funding alternatives.
We also utilize brokered certificates of deposit and reciprocal time deposits as sources of borrowings and may use broker repurchase agreements and internet certificates of deposit from time to time, depending on our liquidity needs and pricing of these facilities versus other funding alternatives. 9 Table of Contents Employees and Human Capital Resources We believe that the success of a business is largely due to the quality of its employees, the development of each employee’s full potential, and the Company’s ability to provide timely and satisfying rewards.
We invest in learning and development including tuition reimbursement for courses, degree programs and fees paid for certifications. As of September 30, 2023, we had 370 full-time employees and 52 part-time employees, none of whom is represented by a collective bargaining unit. Subsidiaries The Company has two wholly-owned subsidiaries, First Savings Bank and First Savings Risk Management, Inc. (the “Captive”).
We encourage and support the development of our employees and, whenever possible, strive to fill vacancies from within. We invest in learning and development including tuition reimbursement for courses, degree programs and fees paid for certifications. As of September 30, 2024, we had 250 full-time employees and 24 part-time employees, none of whom is represented by a collective bargaining unit.
We expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry.
Competition for loans also comes from non-depository financial service companies entering the mortgage market, such as insurance companies, securities companies, and specialty and captive finance companies. 3 Table of Contents We expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry.
There is an exception to this approval requirement for well-capitalized bank holding companies that meet certain other conditions. 15 Table of Contents The FRB has issued a policy statement regarding the payment of dividends and the repurchase of shares of common stock by bank holding companies.
The FRB has issued a policy statement regarding the payment of dividends and the repurchase of shares of common stock by bank holding companies.
Effective September 30, 2023, the Captive was dissolved and is no longer active. ​ 10 Table of Contents REGULATION AND SUPERVISION General First Savings Bank, as an Indiana commercial bank, is subject to extensive regulation, examination and supervision by the Indiana Department of Financial Institutions (“INDFI”).
REGULATION AND SUPERVISION General First Savings Bank, as an Indiana commercial bank, is subject to extensive regulation, examination and supervision by the Indiana Department of Financial Institutions (“INDFI”). As a member bank of the Federal Reserve System, First Savings Bank’s primary federal regulator is the Federal Reserve Board (“FRB”).
The SBA Officer Loan Committee consists of the President, Chief Financial Officer, Chief Lending Officer, Chief of Credit Administration, Chief of SBA Lending.
Generally, all SBA 7(a) program loan requests for lending relationships that exceed the individual officer lending limits require approval by the SBA Officer Loan Committee. The SBA Officer Loan Committee consists of the President, Chief Financial Officer, Chief Lending Officer, Chief of Credit Administration, Chief of SBA Lending.
Removed
Beginning in 2019, the Bank began to augment its mortgage banking originations by purchasing whole loans from third party originators. The Bank’s Third Party Origination (“TPO”) program expanded significantly in 2020 and 2021 and accounted for the majority of the Bank’s activity in the mortgage banking division in 2022 and 2023.
Added
Subsidiaries The Company has one wholly-owned subsidiary, First Savings Bank.
Removed
Loans purchased from third party originators generally have a higher cost and result in a lower profit margin for the Bank upon the sale of loans. Our decision to sell or purchase loans is based on prevailing market interest rate conditions, interest rate risk management considerations, regulatory lending restrictions and liquidity needs.
Added
The capital conservation buffer requirement was 2.50% for 2024 and 2023. The Bank met all capital adequacy requirements to which it was subject as of September 30, 2024 and 2023.
Removed
The residential mortgage industry is highly competitive, and we compete with other community banks, regional banks, national banks, credit unions, financial service companies and online mortgage companies. Due to the highly competitive nature of the residential mortgage industry, we expect to continue to face competitive pressures related to changing market conditions that could reduce our margins and mortgage banking revenue.
Added
First Savings Bank received a “satisfactory” Community Reinvestment Act rating in its most recently completed examination. 12 Table of Contents Transactions with Related Parties.
Removed
The mortgage volume industry-wide could decline, which could result in a significant decline in our mortgage banking revenue. Our mortgage banking office leases are generally short-term in nature and the compensation arrangements provide scalability to our business model.
Removed
See Note 25, “Segment Reporting,” and Note 27, “Mortgage Banking” of the Notes to Consolidated Financial Statements beginning on page F-1 of this annual report for additional information regarding the financial performance of the mortgage banking segment.
Removed
Loans resulting in aggregated lending relationships in excess of $14.0 million require approval by the Board of Directors. 8 Table of Contents Our SBA 7(a) program lending activities also follow underwriting standards and loan origination procedures established by our Board of Directors and management.
Removed
Employees and Human Capital Resources We believe that the success of a business is largely due to the quality of its employees, the development of each employee’s full potential, and the Company’s ability to provide timely and satisfying rewards. We encourage and support the development of our employees and, whenever possible, strive to fill vacancies from within.
Removed
The Captive, which is a wholly-owned insurance subsidiary of the Company, is a Nevada corporation that provided property and casualty insurance to the Company, the Bank and the Bank’s active subsidiaries. In addition, the Captive provided reinsurance to 11 other third-party insurance captives for which insurance may not be currently available or economically feasible in the insurance marketplace.
Removed
The capital conservation buffer requirement was phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increased each year until fully implemented at 2.5% on January 1, 2019.
Removed
The aggregate amount of covered transactions with any individual affiliate is limited to 10% of the capital and surplus of a bank. The aggregate amount of covered transactions with all affiliates is limited to 20% of a bank’s capital and surplus.
Removed
The Dodd-Frank Act codified the source of strength doctrine.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

40 edited+9 added−8 removed77 unchanged
Biggest changeOur ability to acquire deposits or borrow could also be impaired by factors that are not specific to us, such as a severe disruption of the financial markets or negative views and expectations about the prospects for the financial services industry as a whole. 21 Table of Contents Risks Related to Mergers and Acquisitions and Other Expansionary Activities Market expansion and acquisitions may not produce revenue enhancements or cost savings at levels or within timeframes originally anticipated and may result in unforeseen integration difficulties and dilution to existing shareholder value.
Biggest changeOur ability to acquire deposits or borrow could also be impaired by factors that are not specific to us, such as a severe disruption of the financial markets or negative views and expectations about the prospects for the financial services industry as a whole.
Furthermore, we may need to increase our allowance for loan losses through future charges to income as the portfolio of these types of loans grows, which would adversely affect our earnings. For more information about the credit risk we face, see “Item 7.
Furthermore, we may need to increase our allowance for credit losses through future charges to income as the portfolio of these types of loans grows, which would adversely affect our earnings. For more information about the credit risk we face, see “Item 7.
Market expansion and acquisitions involve a number of expenses and risks, including: ● the time and costs of associated with identifying and evaluating potential new markets, hiring experienced local management and opening new offices, and the time lags between these activities and the generation of sufficient assets and deposits to support the costs of the expansion; ● the time and costs associated with identifying potential acquisition and merger targets; ● the accuracy of the estimates and judgments used to evaluate credit, operations, management and market risks with respect to a target institution; ● the diversion of our management’s attention to the negotiation of a transaction, and the integration of the operations and personnel of the combined businesses; ● our ability to finance an acquisition and possible dilution to our existing shareholders; ● closing delays and expenses related to the resolution of lawsuits filed by shareholders of targets; ● entry into new markets where we lack experience; ● introduction of new products and services into our business; ● the risk of loss of key employees and customers; and ● incurrence and possible impairment of goodwill associated with an acquisition and possible adverse short-term effects on our results of operations.
Market expansion and acquisitions involve a number of expenses and risks, including but not limited to: ● the time and costs of associated with identifying and evaluating potential new markets, hiring experienced local management and opening new offices, and the time lags between these activities and the generation of sufficient assets and deposits to support the costs of the expansion; ● the time and costs associated with identifying potential acquisition and merger targets; ● the accuracy of the estimates and judgments used to evaluate credit, operations, management and market risks with respect to a target institution; ● the diversion of our management’s attention to the negotiation of a transaction, and the integration of the operations and personnel of the combined businesses; ● our ability to finance an acquisition and possible dilution to our existing shareholders; ● closing delays and expenses related to the resolution of lawsuits filed by shareholders of targets; ● entry into new markets where we lack experience; ● introduction of new products and services into our business; ● the risk of loss of key employees and customers; and ● incurrence and possible impairment of goodwill associated with an acquisition and possible adverse short-term effects on our results of operations.
Goodwill represents the amount of consideration exchanged over the fair value of net assets we acquired in the purchase of another financial institution. We review goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate the carrying value of the asset might be impaired. At September 30, 2023, our goodwill totaled $9.8 million.
Goodwill represents the amount of consideration exchanged over the fair value of net assets we acquired in the purchase of another financial institution. We review goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate the carrying value of the asset might be impaired. At September 30, 2024, our goodwill totaled $9.8 million.
Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets and determination of the level of our allowance for loan losses. If our regulators require us to charge-off loans or increase our allowance for loan losses, our earnings would suffer.
Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets and determination of the level of our allowance for credit losses. If our regulators require us to charge-off loans or increase our allowance for credit losses, our earnings would suffer.
Because our liabilities tend to be shorter in duration than our assets, when the yield curve flattens or even inverts, as it has in recent quarters, we could experience pressure on our net interest margin as our cost of funds increases relative to the yield we can earn on our assets.
Because our liabilities tend to be shorter in duration than our assets, when the yield curve flattens or even inverts, as it has in recent years, we could experience pressure on our net interest margin as our cost of funds increases relative to the yield we can earn on our assets.
Our allowance for loan losses is based on our historical loss experience as well as an evaluation of the risks associated with our loan portfolio, including the size and composition of the loan portfolio, loan portfolio performance, fair value of collateral securing the loans, current economic conditions and geographic concentrations within the portfolio.
Our allowance for credit losses for loans is based on our historical loss experience as well as an evaluation of the risks associated with our loan portfolio, including the size and composition of the loan portfolio, loan portfolio performance, fair value of collateral securing the loans, current and forecasted economic conditions and geographic concentrations within the portfolio.
Risks Related to an Investment in Our Common Stock Our ability to pay dividends is subject to certain limitations and restrictions, and there is no guarantee that we will be able to continue paying the same level of dividends in the future that we paid in 2023 or that we will be able to pay future dividends at all.
Risks Related to an Investment in Our Common Stock Our ability to pay dividends is subject to certain limitations and restrictions, and there is no guarantee that we will be able to continue paying the same level of dividends in the future that we paid in 2024 or that we will be able to pay future dividends at all.
Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations. The Dodd-Frank Act has created a new federal agency to administer consumer protection and fair lending laws, a function that was formerly performed by the depository institution regulators.
Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations. 23 Table of Contents The Dodd-Frank Act has created a new federal agency to administer consumer protection and fair lending laws, a function that was formerly performed by the depository institution regulators.
Future acquisitions could be material to the Company and it may issue additional shares of stock to pay for those acquisitions, which would dilute current shareholder’s ownership interests. If the goodwill that we recorded in connection with a business acquisition becomes impaired, it could have a significant negative impact on our profitability.
Future acquisitions could be material to the Company and it may issue additional shares of stock to pay for those acquisitions, which would dilute current shareholder’s ownership interests. 21 Table of Contents If the goodwill that we recorded in connection with a business acquisition becomes impaired, it could have a significant negative impact on our profitability.
Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us. Risks Related to Our Liquidity Position Liquidity risk could impair our ability to fund operations and jeopardize our financial condition.
Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us. 20 Table of Contents Risks Related to Our Liquidity Position Liquidity risk could impair our ability to fund operations and jeopardize our financial condition.
Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. Recently, there have been market indicators of a pronounced rise in inflation and the Federal Reserve Board has raised certain benchmark interest rates in an effort to combat inflation.
Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. In recent years, there have been market indicators of a pronounced rise in inflation and the Federal Reserve Board has raised certain benchmark interest rates in an effort to combat inflation.
For a further discussion, see “Item 1. Business – Regulation and Supervision.” 24 Table of Contents We rely heavily on our management team and the unexpected loss of any of those personnel could adversely affect our operations, and we depend on our ability to attract and retain key personnel. We are a customer-focused and relationship-driven organization.
For a further discussion, see “Item 1. Business – Regulation and Supervision.” We rely heavily on our management team and the unexpected loss of any of those personnel could adversely affect our operations, and we depend on our ability to attract and retain key personnel. We are a customer-focused and relationship-driven organization.
If such new regulatory requirements were not met, the Bank would not be able to pay dividends to the Company, and consequently we may be unable to pay dividends on our common stock. The trading volume of our stock varies and you may not be able to resell your shares at or above the price you paid for them.
If such new regulatory requirements were not met, the Bank would not be able to pay dividends to the Company, and consequently we may be unable to pay dividends on our common stock. 24 Table of Contents The trading volume of our stock varies and you may not be able to resell your shares at or above the price you paid for them.
Insiders have substantial control over us, and this control may limit our shareholders’ ability to influence corporate matters and may delay or prevent a third party from acquiring control over us. As of December 4, 2023, our directors, executive officers, and their related entities and persons currently beneficially own, in the aggregate, approximately 15.44% of our outstanding common stock.
Insiders have substantial control over us, and this control may limit our shareholders’ ability to influence corporate matters and may delay or prevent a third party from acquiring control over us. As of December 6, 2024, our directors, executive officers, and their related entities and persons currently beneficially own, in the aggregate, approximately 15.32% of our outstanding common stock.
Our allowance for loan losses may not be adequate to cover actual loan losses, and future provisions for loan losses could materially and adversely affect our earnings and financial condition. For more information about our analysis and determination of allowance for loan losses, see “Item 7.
Our allowance for credit losses for securities may not be adequate to cover actual credit losses on securities, and future provisions for credit losses could materially and adversely affect our earnings and financial condition. For more information about our analysis and determination of allowance for credit losses, see “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management.” Our allowance for loan losses may not be adequate to cover actual losses. Like all financial institutions, we maintain an allowance for loan losses to provide for probable incurred losses due to loan defaults, non-performance, and other qualitative factors.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management.” Our allowance for credit losses may not be adequate to cover actual losses. Like all financial institutions, we maintain an allowance for credit losses for loans to provide for current expected credit losses due to loan defaults, non-performance, and other qualitative factors.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management.” Our concentration in non-owner occupied residential real estate loans may expose us to increased credit risk. At September 30, 2023, $23.7 million, or 4.5% of our residential mortgage loan portfolio and 1.3% of our total loan portfolio, consisted of loans secured by non-owner occupied residential properties.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management.” Our concentration in non-owner occupied residential real estate loans may expose us to increased credit risk. At September 30, 2024, $24.9 million, or 3.7% of our residential mortgage loan portfolio and 1.3% of our total loan portfolio, consisted of loans secured by non-owner occupied residential properties.
Consequently, an adverse development with respect to one loan or one credit relationship may expose us to a greater risk of loss compared to an adverse development with respect to a one- to four-family residential mortgage loan. At September 30, 2023, nonperforming commercial real estate loans totaled $7.9 million. At September 30, 2023 nonperforming commercial business loans totaled $3.0 million.
Consequently, an adverse development with respect to one loan or one credit relationship may expose us to a greater risk of loss compared to an adverse development with respect to a one- to four-family residential mortgage loan. At September 30, 2024, nonperforming commercial real estate loans totaled $8.8 million. At September 30, 2024 nonperforming commercial business loans totaled $3.2 million.
At September 30, 2023, approximately $770.2 million, or 43.1% of the total loan portfolio, consisted of fixed-rate loans with maturity dates after September 30, 2024. This investment in fixed-rate loans exposes the Company to increased levels of interest rate risk. Changes in interest rates also affect the value of our interest-earning assets, and in particular our securities portfolio.
At September 30, 2024, approximately $977.3 million, or 49.3% of the total loan portfolio, consisted of fixed-rate loans with maturity dates after September 30, 2025. This investment in fixed-rate loans exposes the Company to increased levels of interest rate risk. Changes in interest rates also affect the value of our interest-earning assets, and in particular our securities portfolio.
Our investment portfolio consists primarily of U.S. government agency and sponsored enterprises securities, mortgage backed securities and collateralized mortgage obligations issued by U.S. government agencies and sponsored enterprises, municipal bonds, and privately-issued collateralized mortgage obligations and asset-backed securities. We must evaluate these securities for other-than-temporary impairment loss (“OTTI”) on a periodic basis.
Our investment portfolio consists primarily of U.S. government agency and sponsored enterprises securities, mortgage backed securities and collateralized mortgage obligations issued by U.S. government agencies and sponsored enterprises, municipal bonds, and privately-issued collateralized mortgage obligations and asset-backed securities. We must evaluate these securities for credit losses on a periodic basis.
Subject to market conditions, we intend to increase our origination of these loans. Commercial real estate loans generally expose a lender to greater risk of non-payment and loss than one- to four-family residential mortgage loans because repayment of the loans often depends on the successful operation of the property and the income stream of the borrowers.
Commercial real estate loans generally expose a lender to greater risk of non-payment and loss than one- to four-family residential mortgage loans because repayment of the loans often depends on the successful operation of the property and the income stream of the borrowers.
When residential mortgage loans are sold, whether as whole loans or pursuant to a securitization, we are required to make customary representations and warranties to purchasers, guarantors and insurers about the mortgage loans and the manner in which they were originated.
We may be required to repurchase mortgage loans or indemnify buyers against losses in some circumstances. When residential mortgage loans are sold, whether as whole loans or pursuant to a securitization, we are required to make customary representations and warranties to purchasers, guarantors and insurers about the mortgage loans and the manner in which they were originated.
If the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded or serviced by us, the SBA may seek recovery of the principal loss related to the deficiency from us, which could adversely affect our business and earnings.
If the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded or serviced by us, the SBA may seek recovery of the principal loss related to the deficiency from us, which could adversely affect our business and earnings. 18 Table of Contents The laws, regulations and standard operating procedures that are applicable to SBA loan products may change in the future.
The occurrence of any failures or interruptions of these information systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations.
The occurrence of any failures or interruptions of these information systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations. 22 Table of Contents We rely on the secure processing, storage and transmission of confidential and other information on our computer systems and networks.
The privately-issued collateralized mortgage obligations and asset-backed securities exhibit signs of weakness, which may necessitate an OTTI charge in the future should the financial condition of the pools deteriorate further. Any future OTTI charges could have a significant adverse effect our earnings.
The privately-issued collateralized mortgage obligations and asset-backed securities exhibit signs of weakness, which may necessitate a provision for credit loss in the future should the financial condition of the pools deteriorate further. Any future provisions for credit losses on securities could have a significant adverse effect our earnings.
Given the increasingly high volume of our transactions, certain errors may be repeated or compounded before they can be discovered and rectified. 23 Table of Contents We are inherently exposed to risks caused by the use of computer, internet and telecommunications systems, and susceptible to fraudulent activity that may be committed against us or our clients, which may result in financial losses to us or our clients, privacy breaches against our clients or damage to our reputation.
We are inherently exposed to risks caused by the use of computer, internet and telecommunications systems, and susceptible to fraudulent activity that may be committed against us or our clients, which may result in financial losses to us or our clients, privacy breaches against our clients or damage to our reputation.
While we have recorded no such impairment charges since we initially recorded the goodwill, there can be no assurance that our future evaluations of goodwill will not result in findings of impairment and related write-downs, which may have a material adverse effect on our financial condition and results of operations. 22 Table of Contents Risks Related to Our Investment Portfolio If an other-than-temporary-impairment is recorded in connection with our investment portfolio it could have a significant negative impact on our profitability.
While we have recorded no such impairment charges since we initially recorded the goodwill, there can be no assurance that our future evaluations of goodwill will not result in findings of impairment and related write-downs, which may have a material adverse effect on our financial condition and results of operations.
No assurance can be given that our underwriting practices or monitoring procedures and policies will reduce certain lending risks. Loan losses can cause insolvency and failure of a financial institution and, in such an event, our stockholders could lose their entire investment. In addition, future provisions for loan losses could materially and adversely affect our earnings and financial condition.
Loan losses can cause insolvency and failure of a financial institution and, in such an event, our stockholders could lose their entire investment. In addition, future provisions for loan losses could materially and adversely affect our earnings and financial condition.
At September 30, 2023, $56.7 million, or 3.18% of our loan portfolio consisted of construction loans, and land and land development loans, and $3.3 million, or 8.34% of the construction loan portfolio (excluding undisbursed commitments and portions participated to other financial institutions), consisted of speculative construction loans at that date.
At September 30, 2024, $80.1 million, or 4.0% of our loan portfolio consisted of construction loans, and land and land development loans, and $6.4 million, or 10.2% of the construction loan portfolio (excluding undisbursed commitments and portions participated to other financial institutions), consisted of speculative construction loans at that date.
Our profitability depends upon 20 Table of Contents our continued ability to compete successfully in our primary market area. See “Item 1. Business — Market Area” and “Item 1. Business — Competition” for more information about our primary market area and the competition we face.
Our profitability depends upon our continued ability to compete successfully in our primary market area. See “Item 1. Business — Market Area” and “Item 1. Business — Competition” for more information about our primary market area and the competition we face. Risks Related to Changes in Market Interest Rates Changing interest rates may hurt our earnings and asset value.
Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies, changes in the laws, regulations and procedures applicable to SBA loans could adversely affect our business and earnings. 19 Table of Contents Decreased residential mortgage origination volume and pricing decisions of competitors may adversely affect our profitability.
We cannot predict the effects of these changes on our business and profitability. Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies, changes in the laws, regulations and procedures applicable to SBA loans could adversely affect our business and earnings.
Price competition for loans and deposits might result in us earning less on our loans and paying more on our deposits, which would reduce net interest income. Competition also makes it more difficult to grow loans and deposits.
We face intense competition both in making loans and attracting deposits. This competition has made it more difficult for us to make new loans and attract deposits. Price competition for loans and deposits might result in us earning less on our loans and paying more on our deposits, which would reduce net interest income.
At June 30, 2023, which is the most recent date for which data is available from the FDIC, we held approximately 33.27%, 19.64%, 2.66%, 23.38%, 100.00% and 25.52% of the FDIC-insured deposits in Clark, Daviess, Floyd, Harrison, Crawford and Washington Counties, Indiana, respectively.
Competition also makes it more difficult to grow loans and deposits. At June 30, 2024, which is the most recent date for which data is available from the FDIC, we held approximately 33.22%, 18.12%, 2.23%, 23.80%, 100.00% and 28.74% of the FDIC-insured deposits in Clark, Daviess, Floyd, Harrison, Crawford and Washington Counties, Indiana, respectively.
Item 1A. RISK FACTORS Risks Related to Our Lending Activities Our emphasis on commercial real estate lending and commercial business lending may expose us to increased lending risks. At September 30, 2023, $1.13 billion, or 63.1%, of our loan portfolio consisted of commercial real estate loans and commercial business loans.
Risks Related to Our Lending Activities Our emphasis on commercial real estate lending and commercial business lending may expose us to increased lending risks. At September 30, 2024, $1.15 billion, or 58.2%, of our loan portfolio consisted of commercial real estate loans and commercial business loans. Subject to market conditions, we intend to increase our origination of these loans.
Our net interest margin is the difference between the yield we earn on our assets and the interest rate we pay for deposits and our other sources of funding. Changes in interest rates—up or down—could adversely affect our net interest margin and, as a result, our net interest income.
Our net interest income is the interest we earn on loans and investments less the interest we pay on our deposits and borrowings. Our net interest margin is the difference between the yield we earn on our assets and the interest rate we pay for deposits and our other sources of funding.
At September 30, 2023, we had five non-owner occupied residential loan relationships, each having an outstanding balance over $500,000, with aggregate outstanding balances of $5.3 million. Consequently, an adverse development with respect to one credit relationship may expose us to a greater risk of loss compared to an adverse development with respect to an owner occupied residential mortgage loan.
Consequently, an adverse development with respect to one credit relationship may expose us to a greater risk of loss compared to an adverse development with respect to an owner occupied residential mortgage loan. At September 30, 2024, the Bank had three nonperforming non-owner occupied residential loans totaling $157,000.
However, borrowers do not always repay their loans. The risk of non-payment is historically small, but if nonpayment levels are greater than anticipated, our earnings and overall financial condition, as well as the value of our common stock, could be adversely affected.
The risk of non-payment is historically small, but if nonpayment levels are greater than anticipated, our earnings and overall financial condition, as well as the value of our common stock, could be adversely affected. No assurance can be given that our underwriting practices or monitoring procedures and policies will reduce certain lending risks.
At September 30, 2023, the Bank had one nonperforming non-owner occupied residential loan totaling $15,000. At September 30, 2023, the Bank did not have any non-owner occupied residential properties held as real estate owned. For more information about the credit risk we face, see “Item 7.
At September 30, 2024, the Bank did not have any non-owner occupied residential properties held as real estate owned. For more information about the credit risk we face, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management.” We may suffer losses in our loan portfolio despite our underwriting practices.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management.” 18 Table of Contents We may suffer losses in our loan portfolio despite our underwriting practices. Our results of operations are significantly affected by the ability of borrowers to repay their loans. Lending money is an essential part of the banking business.
Our results of operations are significantly affected by the ability of borrowers to repay their loans. Lending money is an essential part of the banking business. However, borrowers do not always repay their loans.
Removed
The laws, regulations and standard operating procedures that are applicable to SBA loan products may change in the future. We cannot predict the effects of these changes on our business and profitability.
Added
Item 1A. RISK FACTORS The following discussion sets forth the material risk factors that could affect First Savings Financial Group’s consolidated financial condition and results of operations and an investment in its securities. Readers should not consider any descriptions of these factors to be a complete set of all potential risks that could affect us.
Removed
Our mortgage banking operation originates and sells residential mortgage loans. Changes in interest rates, housing prices, applicable government regulations and pricing decisions by our loan competitors may adversely affect demand for our residential mortgage loan products and the revenue realized on the sale of loans and, ultimately, reduce our net income.
Added
Any of the risk factors discussed below could by itself, or combined with other factors, materially and adversely affect our business, results of operations, financial condition, capital position, liquidity, competitive position or reputation, including by materially increasing expenses or decreasing revenues, which could result in a decrease in earnings or material losses.
Removed
New regulations, increased regulatory reviews, and/or changes in the structure of the secondary mortgage markets which we utilize to sell mortgage loans may increase costs and make it more difficult to operate a residential mortgage origination business. Our revenue from the mortgage banking business was $14.2 million in the year ended September 30, 2023.
Added
At September 30, 2024, we had four non-owner 17 Table of Contents occupied residential loan relationships, each having an outstanding balance over $500,000, with aggregate outstanding balances of $6.8 million.
Removed
This revenue could significantly decline in future periods if interest rates continue to rise and the other risks highlighted in this paragraph were realized, which may adversely affect our profitability.
Added
Our allowance for credit losses may not be adequate to cover actual loan losses, and future provisions for credit losses could materially and adversely affect our earnings and financial condition. Similarly, we maintain an allowance for credit losses for securities to provide for current expected credit losses due to payment defaults or significant adverse financial performance of the issuer.
Removed
As is noted above under Loan Underwriting Risks, in October 2023, the Company announced the Board of Directors’ decision to exit the Bank’s residential mortgage banking operations during the first fiscal quarter ending December 31, 2023. We may be required to repurchase mortgage loans or indemnify buyers against losses in some circumstances.
Added
As of September 30, 2024, the Company had no residential loans mortgage loan servicing rights due to the wind down of the national mortgage banking operation and subsequent sale of the residential mortgage loan servicing rights portfolio, which was completed during the year ended September 30, 2024. 19 Table of Contents Risks Related to Competition Strong competition within our primary market area could hurt our profits and slow growth.
Removed
Risks Related to Competition Strong competition within our primary market area could hurt our profits and slow growth. We face intense competition both in making loans and attracting deposits. This competition has made it more difficult for us to make new loans and attract deposits.
Added
Changes in interest rates—up or down—could adversely affect our net interest margin and, as a result, our net interest income.
Removed
Risks Related to Changes in Market Interest Rates Changing interest rates may hurt our earnings and asset value. Our net interest income is the interest we earn on loans and investments less the interest we pay on our deposits and borrowings.
Added
Risks Related to Mergers and Acquisitions and Other Expansionary Activities Market expansion and acquisitions may not produce revenue enhancements or cost savings at levels or within timeframes originally anticipated and may result in unforeseen integration difficulties and dilution to existing shareholder value.
Removed
We rely on the secure processing, storage and transmission of confidential and other information on our computer systems and networks.
Added
Risks Related to Our Investment Portfolio If additional provisions for credit losses are recorded in connection with our investment portfolio it could have a significant negative impact on our profitability.
Added
Given the increasingly high volume of our transactions, certain errors may be repeated or compounded before they can be discovered and rectified.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table sets forth certain information relating to these facilities as of September 30, 2023. ​ ​ ​ ​ ​ Year ​ Owned/ Location ​ Opened ​ Leased Main Office: ​ ​ ​ ​ ​ Jeffersonville Main Office 702 North Shore Drive, Suite 300 Jeffersonville, Indiana ​ 2019 ​ Owned ​ ​ ​ ​ ​ Branch Offices: ​ ​ ​ ​ ​ ​ ​ Clarksville Office 501 East Lewis & Clark Parkway Clarksville, Indiana ​ 1968 ​ Owned ​ ​ ​ ​ ​ Jeffersonville – 10 th Street Office 3538 E 10 th Street Jeffersonville, Indiana ​ 2020 ​ Owned ​ ​ ​ ​ ​ Charlestown Office 1100 Market Street Charlestown, Indiana ​ 1993 ​ Owned ​ ​ ​ ​ ​ Georgetown Office 1000 Copperfield Drive Georgetown, Indiana ​ 2003 ​ Owned ​ ​ ​ ​ ​ Jeffersonville - Court Avenue Office 202 East Court Avenue Jeffersonville, Indiana ​ 1986 ​ Owned ​ ​ ​ ​ ​ Sellersburg Office 125 Hunter Station Way Sellersburg, Indiana ​ 1995 ​ Owned ​ ​ ​ ​ ​ Corydon Office 900 Hwy 62 NW Corydon, Indiana ​ 1996 ​ Owned ​ ​ ​ ​ ​ Salem Office 1336 S Jackson Street Salem, Indiana ​ 1995 ​ Owned ​ ​ ​ ​ ​ English Office 200 Indiana Avenue English, Indiana ​ 1925 ​ Owned ​ ​ ​ ​ ​ Marengo Office 165 E State Rd 64 Marengo, Indiana ​ 1984 ​ Owned ​ ​ ​ ​ ​ Lanesville Office 7340 Main Street NE Lanesville, Indiana ​ 1948 ​ Owned ​ ​ ​ ​ ​ Elizabeth Office 8160 Beech Street SE Elizabeth, Indiana ​ 1975 ​ Owned ​ ​ ​ ​ ​ New Albany Office 2218 State Street New Albany, Indiana ​ 2013 ​ Leased ​ ​ ​ ​ ​ Odon Office 501 West Main Street Odon, Indiana ​ 1982 ​ Owned ​ ​ ​ ​ ​ Montgomery Office 478 West Meyers Street Montgomery, Indiana ​ 1992 ​ Owned ​ ​ 26 Table of Contents The Company purchased an 8.097 acre parcel of land in Jeffersonville, Indiana, in July 2013 upon which it intended to construct an office building, relocate its corporate headquarters, and subsequently divest of additional unused acreage in future years.
Biggest changeThe following table sets forth certain information relating to these facilities as of September 30, 2024. ​ ​ ​ ​ ​ Year ​ Owned/ Location ​ Opened ​ Leased Main Office: ​ ​ ​ ​ ​ Jeffersonville Main Office 702 North Shore Drive, Suite 300 Jeffersonville, Indiana ​ 2019 ​ Owned ​ ​ ​ ​ ​ Branch Offices: ​ ​ ​ ​ ​ ​ ​ Clarksville Office 501 East Lewis & Clark Parkway Clarksville, Indiana ​ 1968 ​ Owned ​ ​ ​ ​ ​ Jeffersonville – 10 th Street Office 3538 E 10 th Street Jeffersonville, Indiana ​ 2020 ​ Owned ​ ​ ​ ​ ​ Charlestown Office 1100 Market Street Charlestown, Indiana ​ 1993 ​ Owned ​ ​ ​ ​ ​ Georgetown Office 1000 Copperfield Drive Georgetown, Indiana ​ 2003 ​ Owned ​ ​ ​ ​ ​ Jeffersonville - Court Avenue Office 202 East Court Avenue Jeffersonville, Indiana ​ 1986 ​ Owned ​ ​ ​ ​ ​ Sellersburg Office 125 Hunter Station Way Sellersburg, Indiana ​ 1995 ​ Owned ​ ​ ​ ​ ​ Corydon Office 900 Hwy 62 NW Corydon, Indiana ​ 1996 ​ Owned ​ ​ ​ ​ ​ Salem Office 1336 S Jackson Street Salem, Indiana ​ 1995 ​ Owned ​ ​ ​ ​ ​ English Office 200 Indiana Avenue English, Indiana ​ 1925 ​ Owned ​ ​ ​ ​ ​ Marengo Office 165 E State Rd 64 Marengo, Indiana ​ 1984 ​ Owned ​ ​ ​ ​ ​ Lanesville Office 7340 Main Street NE Lanesville, Indiana ​ 1948 ​ Owned ​ ​ ​ ​ ​ Elizabeth Office 8160 Beech Street SE Elizabeth, Indiana ​ 1975 ​ Owned ​ ​ ​ ​ ​ New Albany Office 2218 State Street New Albany, Indiana ​ 2013 ​ Leased ​ ​ ​ ​ ​ Odon Office 501 West Main Street Odon, Indiana ​ 1982 ​ Owned ​ ​ ​ ​ ​ Montgomery Office 478 West Meyers Street Montgomery, Indiana ​ 1992 ​ Owned ​ ​ 27 Table of Contents The Company purchased an 8.097 acre parcel of land in Jeffersonville, Indiana, in July 2013 upon which it intended to construct an office building, relocate its corporate headquarters, and subsequently divest of additional unused acreage in future years.
As of September 30, 2023, the 3.907 acre parcel of land, which has a carrying value of approximately $203,000, is listed for sale and is included in other real estate owned, held for sale on the balance sheet of the Consolidated Financial Statements.
As of September 30, 2024, the 3.907 acre parcel of land, which has a carrying value of approximately $203,000, is listed for sale and is included in other real estate owned, held for sale on the balance sheet of the Consolidated Financial Statements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe Bank is in discussions with the Federal Reserve Board regarding an alleged violation of law or regulation occurring during 2019. These discussions with the Federal Reserve Board regarding the allegation began in March 2023. The Bank is cooperating with the Federal Reserve Board and continues to review this matter internally and with external legal counsel.
Biggest changeThese discussions with the Federal Reserve Board regarding the allegation began in March 2023. The Bank is cooperating with the Federal Reserve Board and continues to review this matter internally and with external legal counsel. The foregoing could result in enforcement action against the Bank, including remedial measures, but is not expected to include civil money penalties.
Item 3. LEGAL PROCEEDINGS Periodically, there have been various claims and lawsuits against us, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business.
Item 3. LEGAL PROCEEDINGS Periodically, there have been various claims and lawsuits involving the Bank, primarily as plaintiff, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business.
We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.
We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows. The Bank is in discussions with the Federal Reserve Board regarding an alleged violation of law or regulation occurring during 2019.
The foregoing could result in enforcement action against the Bank including civil money penalties and remedial measures. The Company has accrued a loss contingency for this pending litigation at September 30, 2023, the amount of which had an immaterial effect on the Consolidated financial statements. ​ Item 4. MINE SAFETY DISCLOSURES Not applicable. ​ 27 Table of Contents PART II
The Company has not accrued a loss contingency for this pending litigation at September 30, 2024 in the consolidated financial statements. ​ Item 4. MINE SAFETY DISCLOSURES Not applicable. ​ 28 Table of Contents PART II
Removed
The Bank received notice of a class action lawsuit on March 23, 2021 regarding its policy and practice of assessing customer fees related to items presented on accounts with insufficient funds (NSF items).
Removed
The Company has reached a verbal settlement agreement with the claimant, and the Company has accrued a loss contingency for this pending settlement at September 30, 2023, the amount of which had an immaterial effect on the consolidated financial statements.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed9 unchanged
Biggest changeThe following table presents information regarding the Company’s stock repurchase activity during the quarter ended September 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (d) ​ ​ ​ ​ ​ ​ ​ (c) ​ Maximum number ​ ​ ​ ​ ​ ​ ​ Total number ​ (or appropriate ​ ​ ​ ​ ​ ​ ​ of shares (or ​ dollar value) of ​ ​ (a) ​ (b) ​ units) purchased ​ shares (or units) that ​ ​ Total number ​ Average price ​ as part of publicly ​ may yet be ​ ​ of shares (or ​ paid per share ​ announced plans ​ purchased under Period ​ units) purchased ​ (or unit) ​ or programs (1) ​ the plans or programs July 1, 2023 through July 31, 2023 ​ — ​ $ — ​ — ​ 27,548 August 1, 2023 through August 31, 2023 ​ — ​ $ — ​ — ​ 27,548 September 1, 2023 through September 30, 2023 ​ — ​ $ — ​ — ​ 27,548 Total — ​ $ — — 27,548 ​ Equity Compensation Plan Information The following table sets forth information as of September 30, 2023 about Company common stock that may be issued under the Company’s equity compensation plans.
Biggest changeThe following table presents information regarding the Company’s stock repurchase activity during the quarter ended September 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (d) ​ ​ ​ ​ ​ ​ ​ (c) ​ Maximum number ​ ​ ​ ​ ​ ​ ​ Total number ​ (or appropriate ​ ​ ​ ​ ​ ​ ​ of shares (or ​ dollar value) of ​ ​ (a) ​ (b) ​ units) purchased ​ shares (or units) that ​ ​ Total number ​ Average price ​ as part of publicly ​ may yet be ​ ​ of shares (or ​ paid per share ​ announced plans ​ purchased under Period ​ units) purchased ​ (or unit) ​ or programs (1) ​ the plans or programs July 1, 2024 through July 31, 2024 ​ — ​ $ — ​ — ​ 22,453 August 1, 2024 through August 31, 2024 ​ — ​ $ — ​ — ​ 22,453 September 1, 2024 through September 30, 2024 ​ — ​ $ — ​ — ​ 22,453 Total — ​ $ — — 22,453 ​ Equity Compensation Plan Information The following table sets forth information as of September 30, 2024 about Company common stock that may be issued under the Company’s equity compensation plans.
The restricted shares and stock options granted vest ratably over one year or five years and, once vested, the stock options are exercisable in whole or in part for a period up to ten years from the date of the award. ​ Item 6. [RESERVED] ​ ​ 29 Table of Contents
The restricted shares and stock options granted vest ratably over one year or five years and, once vested, the stock options are exercisable in whole or in part for a period up to ten years from the date of the award. ​ Item 6. [RESERVED] ​ 30 Table of Contents
As of September 30, 2023, grants outstanding under the 2010 Plan included 305,043 restricted shares, 559,521 incentive stock options and 203,091 non-statutory stock options to directors, officers and key employees.
As of September 30, 2024, grants outstanding under the 2010 Plan included 305,043 restricted shares, 559,521 incentive stock options and 203,091 non-statutory stock options to directors, officers and key employees.
There were no shares repurchased under either stock repurchase plan during the quarter ended September 30, 2023.
There were no shares repurchased under either stock repurchase plan during the quarter ended September 30, 2024.
All plans were approved by the Company’s stockholders. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of securities ​ ​ ​ ​ Number of securities remaining ​ ​ to be issued upon ​ Weighted-average ​ available for future issuance under ​ ​ exercise of outstanding ​ exercise price of ​ equity compensation plans ​ ​ options, warrants and ​ outstanding options, ​ (excluding securities reflected in ​ ​ rights ​ warrants and rights ​ column (a)) Plan category (a) (b) (c) Equity compensation plans approved by security holders ​ 408,669 ​ $ 20.79 ​ 99,118 ​ ​ ​ ​ ​ Equity compensation plans not approved by security holders ​ N/A ​ ​ N/A ​ N/A ​ ​ Total 408,669 ​ $ 20.79 99,118 ​ 28 Table of Contents In December 2009 the Company adopted the 2010 Equity Incentive Plan (“2010 Plan”), which the Company’s shareholders approved in February 2010.
All plans were approved by the Company’s stockholders. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of securities ​ ​ ​ ​ Number of securities remaining ​ ​ to be issued upon ​ Weighted-average ​ available for future issuance under ​ ​ exercise of outstanding ​ exercise price of ​ equity compensation plans ​ ​ options, warrants and ​ outstanding options, ​ (excluding securities reflected in ​ ​ rights ​ warrants and rights ​ column (a)) Plan category (a) (b) (c) Equity compensation plans approved by security holders ​ 459,547 ​ $ 20.09 ​ 15,160 ​ ​ ​ ​ ​ Equity compensation plans not approved by security holders ​ N/A ​ ​ N/A ​ N/A ​ ​ Total 459,547 ​ $ 20.09 15,160 ​ 29 Table of Contents In December 2009 the Company adopted the 2010 Equity Incentive Plan (“2010 Plan”), which the Company’s shareholders approved in February 2010.
As of December 7, 2022, the Company had approximately 225 holders of record and 6,883,960 shares of common stock outstanding. The figure of shareholders of record does not reflect the number of persons whose shares are in nominee or “street” name accounts through brokers.
As of December 6, 2024, the Company had approximately 218 holders of record and 6,898,157 shares of common stock outstanding. The figure of shareholders of record does not reflect the number of persons whose shares are in nominee or “street” name accounts through brokers.
As of September 30, 2023, grants outstanding under the 2016 Plan included 64,500 restricted shares, 167,019 incentive stock options and 45,900 non-statutory stock options to directors, officers and key employees.
As of September 30, 2024, grants outstanding under the 2016 Plan included 64,500 restricted shares, 156,600 incentive stock options and 42,300 non-statutory stock options to directors, officers and key employees.
As of September 30, 2023, grants outstanding under the 2021 Plan included 65,750 shares of restricted stock, 171,000 incentive stock options and 24,750 non-statutory stock options to directors, officers and key employees.
As of September 30, 2024, grants outstanding under the 2021 Plan included 84,425 shares of restricted stock, 234,733 incentive stock options and 31,500 non-statutory stock options to directors, officers and key employees.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

115 edited+24 added−27 removed72 unchanged
Biggest changeThere were no out-of-period items or adjustments required to be excluded from the following table. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ ​ ​ ​ Interest ​ ​ ​ ​ ​ ​ Interest ​ ​ ​ ​ ​ ​ Interest ​ ​ ​ ​ Average ​ and ​ Yield/ ​ Average ​ and ​ Yield/ ​ Average ​ and ​ Yield/ ​ (Dollars in thousands) Balance Dividends Cost Balance Dividends Cost Balance Dividends Cost ​ Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing deposits with banks ​ $ 22,305 ​ $ 869 3.90 % $ 30,605 ​ $ 161 0.53 % $ 45,847 ​ $ 73 0.16 % Loans ​ 1,680,418 ​ ​ 90,014 5.36 ​ 1,362,382 ​ ​ 62,211 4.57 ​ 1,336,417 ​ 58,182 4.35 ​ Investment securities - taxable ​ 109,249 ​ 3,865 3.54 ​ 74,239 ​ 2,334 3.14 ​ 44,325 ​ 1,771 4.00 ​ Investment securities - nontaxable ​ 219,581 ​ 9,189 4.18 ​ 187,408 ​ 7,419 3.96 ​ 147,385 ​ 5,973 4.05 ​ FRB and FHLB stock ​ 23,196 ​ 1,435 6.19 ​ 19,217 ​ 729 3.79 ​ 18,948 ​ 582 3.07 ​ Total interest-earning assets ​ 2,054,749 ​ 105,372 5.13 ​ 1,673,851 ​ 72,854 4.35 ​ 1,592,922 ​ 66,581 4.18 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-interest-earning assets ​ 161,446 ​ ​ ​ ​ 177,283 ​ ​ 161,386 ​ ​ Total assets ​ $ 2,216,195 ​ ​ ​ ​ $ 1,851,134 ​ ​ $ 1,754,308 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and equity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NOW accounts ​ $ 313,212 ​ $ 1,960 0.63 ​ $ 330,522 ​ $ 1,135 0.34 ​ $ 268,073 ​ $ 766 0.29 ​ Money market deposit accounts ​ 259,506 ​ 6,295 2.43 ​ 225,507 ​ 1,096 0.49 ​ 178,657 ​ 735 0.41 ​ Savings accounts ​ 188,686 ​ 124 0.07 ​ 169,731 ​ 107 0.06 ​ 156,421 ​ 96 0.06 ​ Time deposits ​ 521,094 ​ 19,292 3.70 ​ 264,578 ​ 2,564 0.97 ​ 245,686 ​ 1,598 0.65 ​ Total interest-bearing deposits ​ 1,282,498 ​ 27,671 2.16 ​ 990,338 ​ 4,902 0.49 ​ 848,837 ​ 3,195 0.38 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal funds purchased ​ 21 ​ 1 4.76 ​ — ​ — 0.00 ​ — ​ — 0.00 ​ Borrowings from FHLB ​ 368,239 ​ 10,739 2.92 ​ 292,803 ​ 3,333 1.14 ​ 282,001 ​ 3,199 1.13 ​ Federal Reserve PPPLF ​ ​ — ​ ​ — ​ 0.00 ​ ​ — ​ ​ — ​ 0.00 ​ ​ 114,372 ​ ​ 400 ​ 0.35 ​ Subordinated debt and other borrowings ​ 59,161 ​ 3,244 5.48 ​ 41,094 ​ 2,307 5.61 ​ 19,819 ​ 1,293 6.53 ​ Total interest-bearing liabilities ​ ​ 1,709,919 ​ ​ 41,655 ​ 2.44 ​ ​ 1,324,235 ​ ​ 10,542 ​ 0.80 ​ ​ 1,265,029 ​ ​ 8,087 ​ 0.64 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-interest-bearing deposits ​ 307,356 ​ ​ ​ 313,491 ​ ​ 274,129 ​ ​ Other non-interest-bearing liabilities ​ 36,867 ​ ​ ​ 35,539 ​ ​ 44,782 ​ ​ Total liabilities ​ ​ 2,054,142 ​ ​ ​ ​ ​ ​ ​ 1,673,265 ​ ​ ​ ​ ​ ​ ​ 1,583,940 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total stockholders’ equity ​ 162,053 ​ ​ ​ 177,869 ​ ​ 170,247 ​ ​ Noncontrolling interests in subsidiary ​ — ​ ​ ​ — ​ ​ 121 ​ ​ Total equity ​ ​ 162,053 ​ ​ ​ ​ ​ ​ ​ 177,869 ​ ​ ​ ​ ​ ​ ​ 170,368 ​ ​ ​ ​ ​ ​ Total liabilities and equity ​ $ 2,216,195 ​ ​ ​ $ 1,851,134 ​ ​ $ 1,754,308 ​ ​ Net interest income (taxable equivalent basis) ​ ​ 63,717 ​ ​ 62,312 ​ ​ 58,494 ​ Less: taxable equivalent adjustment ​ ​ ​ (2,143) ​ ​ ​ (1,660) ​ ​ ​ (1,322) ​ Net interest income ​ ​ $ 61,574 ​ ​ ​ $ 60,652 ​ ​ ​ $ 57,172 ​ ​ Interest rate spread (taxable equivalent basis) ​ ​ ​ 2.69 % ​ 3.55 % ​ 3.54 % Net interest margin (taxable equivalent basis) ​ ​ ​ 3.10 ​ ​ 3.72 ​ ​ 3.67 ​ Average interest-earning assets to average interest-bearing liabilities ​ ​ ​ ​ ​ ​ ​ 120.17 ​ ​ ​ ​ ​ ​ ​ 126.40 ​ ​ ​ ​ ​ ​ ​ 125.92 ​ ​ 41 Table of Contents Rate/Volume Analysis.
Biggest changeThere were no out-of-period items or adjustments required to be excluded from the following table. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ ​ ​ ​ Interest ​ ​ ​ ​ ​ ​ Interest ​ ​ ​ ​ ​ ​ Interest ​ ​ ​ ​ Average ​ and ​ Yield/ ​ Average ​ and ​ Yield/ ​ Average ​ and ​ Yield/ ​ (Dollars in thousands) Balance Dividends Cost Balance Dividends Cost Balance Dividends Cost ​ Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing deposits with banks ​ $ 21,951 ​ $ 1,043 4.75 % $ 22,305 ​ $ 869 3.90 % $ 30,605 ​ $ 161 0.53 % Loans ​ 1,926,228 ​ ​ 110,893 5.76 ​ 1,680,418 ​ ​ 90,014 5.36 ​ 1,362,382 ​ ​ 62,211 4.57 ​ Investment securities - taxable ​ 101,902 ​ 3,694 3.63 ​ 109,249 ​ 3,865 3.54 ​ 74,239 ​ 2,334 3.14 ​ Investment securities - nontaxable ​ 158,698 ​ 6,699 4.22 ​ 219,581 ​ 9,189 4.18 ​ 187,408 ​ 7,419 3.96 ​ FRB and FHLB stock ​ 24,982 ​ 1,563 6.26 ​ 23,196 ​ 1,435 6.19 ​ 19,217 ​ 729 3.79 ​ Total interest-earning assets ​ 2,233,761 ​ 123,892 5.55 ​ 2,054,749 ​ 105,372 5.13 ​ 1,673,851 ​ 72,854 4.35 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-interest-earning assets ​ 122,336 ​ ​ ​ ​ 161,446 ​ ​ ​ ​ 177,283 ​ ​ Total assets ​ $ 2,356,097 ​ ​ ​ ​ $ 2,216,195 ​ ​ ​ ​ $ 1,851,134 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and equity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NOW accounts ​ $ 324,518 ​ $ 2,583 0.80 ​ $ 313,212 ​ $ 1,960 0.63 ​ $ 330,522 ​ $ 1,135 0.34 ​ Money market deposit accounts ​ 335,116 ​ 12,534 3.74 ​ 259,506 ​ 6,295 2.43 ​ 225,507 ​ 1,096 0.49 ​ Savings accounts ​ 159,902 ​ 210 0.13 ​ 188,686 ​ 124 0.07 ​ 169,731 ​ 107 0.06 ​ Time deposits ​ 698,864 ​ 32,774 4.69 ​ 521,094 ​ 19,292 3.70 ​ 264,578 ​ 2,564 0.97 ​ Total interest-bearing deposits ​ 1,518,400 ​ 48,101 3.17 ​ 1,282,498 ​ 27,671 2.16 ​ 990,338 ​ 4,902 0.49 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal funds purchased ​ — ​ — — ​ 21 ​ 1 4.76 ​ — ​ — 0.00 ​ Borrowings from FHLB ​ 376,246 ​ 12,609 3.35 ​ 368,239 ​ 10,739 2.92 ​ 292,803 ​ 3,333 1.14 ​ Subordinated debt and other borrowings ​ 48,517 ​ 3,216 6.63 ​ 59,161 ​ 3,244 5.48 ​ 41,094 ​ 2,307 5.61 ​ Total interest-bearing liabilities ​ ​ 1,943,163 ​ ​ 63,926 ​ 3.29 ​ ​ 1,709,919 ​ ​ 41,655 ​ 2.44 ​ ​ 1,324,235 ​ ​ 10,542 ​ 0.80 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-interest-bearing deposits ​ 204,491 ​ ​ ​ 307,356 ​ ​ ​ 313,491 ​ ​ Other non-interest-bearing liabilities ​ 44,857 ​ ​ ​ 36,867 ​ ​ ​ 35,539 ​ ​ Total liabilities ​ ​ 2,192,511 ​ ​ ​ ​ ​ ​ ​ 2,054,142 ​ ​ ​ ​ ​ ​ ​ 1,673,265 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total stockholders’ equity ​ 163,586 ​ ​ ​ 162,053 ​ ​ ​ 177,869 ​ ​ Total liabilities and equity ​ $ 2,356,097 ​ ​ ​ $ 2,216,195 ​ ​ ​ $ 1,851,134 ​ ​ Net interest income (taxable equivalent basis) ​ ​ 59,966 ​ ​ 63,717 ​ ​ 62,312 ​ Less: taxable equivalent adjustment ​ ​ ​ (1,904) ​ ​ ​ (2,143) ​ ​ ​ (1,660) ​ Net interest income ​ ​ $ 58,062 ​ ​ ​ $ 61,574 ​ ​ ​ $ 60,652 ​ ​ Interest rate spread (taxable equivalent basis) ​ ​ ​ 2.26 % ​ ​ 2.69 % ​ 3.55 % Net interest margin (taxable equivalent basis) ​ ​ ​ 2.68 ​ ​ ​ 3.10 ​ ​ 3.72 ​ Average interest-earning assets to average interest-bearing liabilities ​ ​ ​ ​ ​ ​ ​ 114.95 ​ ​ ​ ​ ​ ​ ​ 120.17 ​ ​ ​ ​ ​ ​ ​ 126.40 ​ ​ 43 Table of Contents Rate/Volume Analysis.
Expenses. The noninterest expenses we incur in operating our business consist of salaries and employee benefits expenses, occupancy expenses, data processing expenses, professional service fees, federal deposit insurance premiums, advertising, net losses on foreclosed real estate and other miscellaneous expenses.
The noninterest expenses we incur in operating our business consist of salaries and employee benefits expenses, occupancy expenses, data processing expenses, professional service fees, federal deposit insurance premiums, advertising, net losses on foreclosed real estate and other miscellaneous expenses.
Interest income on investment securities increased $2.9 million, or 35.7%, primarily due to an increase in the average balance of investment securities of $67.2 million, from $261.6 million for 2022 to $328.8 million for 2023 and an increase in the average tax equivalent yield on investments from 3.73% for 2022 to 3.97% for 2023.
In 2023, interest income on investment securities increased $2.9 million, or 35.7%, primarily due to an increase in the average balance of investment securities of $67.2 million, from $261.6 million for 2022 to $328.8 million for 2023 and an increase in the average tax equivalent yield on investments from 3.73% for 2022 to 3.97% for 2023.
Total interest expense increased $31.1 million, or 296.3%, due primarily to an increase in the average cost of funds from 0.80% for 2022 to 2.44% for 2023, and an increase in the average balance of interest-bearing liabilities of $385.7 million, from $1.32 billion for 2022 to $1.71 billion for 2023.
In 2023, total interest expense increased $31.1 million or 296.3%, due primarily to an increase in the average cost of funds from 0.80% for 2022 to 2.44% for 2023, and an increase in the average balance of interest-bearing liabilities of $385.7 million, from $1.32 billion for 2022 to $1.71 billion for 2023.
The regulations also provide for a “special mention” category, described as assets which do not currently expose us to a sufficient degree of risk to warrant classification but do possess credit deficiencies or potential weaknesses deserving our close attention. When we classify an asset as doubtful we may establish a specific allowance for loan losses.
The regulations also provide for a “special mention” category, described as assets which do not currently expose us to a sufficient degree of risk to warrant classification but do possess credit deficiencies or potential weaknesses deserving our close attention. When we classify an asset as doubtful we may establish a specific allowance for credit losses.
Interest income on loans increased $27.7 million, or 44.6%, from $62.1 million for 2022 to $89.8 million for 2023, due primarily to an increase in the average balance of loans outstanding of $318.0 million, from $1.36 billion for 2022 to $1.68 billion for 2023, and an increase in the average tax-equivalent yield on loans from 4.57% for 2022 to 5.36% for 2023.
In 2023, interest income on loans increased $27.7 million, or 44.6%, from $62.1 million for 2022 to $89.8 million for 2023, due primarily to an increase in the average balance of loans outstanding of $318.1 million, from $1.36 billion for 2022 to $1.68 billion for 2023, and an increase in the average tax-equivalent yield on loans from 4.57% for 2022 to 5.36% for 2023.
Average other borrowings, which are comprised subordinated debt for 2023 and subordinated debt and secured borrowings for 2022, increased $18.1 million or 44.0% from $41.1 million for 2022 to $59.2 million for 2023.
Average other borrowings, which are comprised of subordinated debt for 2023 and secured borrowings for 2022, increased $18.1 million or 44.0% from $41.1 million for 2022 to $59.2 million for 2023.
Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit. For the year ended September 30, 2023, we did not engage in any off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.
Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit. For the year ended September 30, 2024, we did not engage in any off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.
In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate or that increases will not be necessary should the quality of any loans deteriorate as a result of the factors discussed above.
In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for credit losses is adequate or that increases will not be necessary should the quality of any loans deteriorate as a result of the factors discussed above.
We also had three other federal funds line of credit facilities with other financial institutions from which we had the ability to borrow the lesser of $5.0 million or 50% of the Bank’s equity capital, $22 million and $15 million, respectively. The Bank did not have any outstanding federal funds purchased at September 30, 2023.
We also had three other federal funds line of credit facilities with other financial institutions from which we had the ability to borrow the lesser of $5.0 million or 50% of the Bank’s equity capital, $22 million and $15 million, respectively. The Bank did not have any outstanding federal funds purchased at September 30, 2024.
See Note 15 of the Notes to Consolidated Financial Statements beginning on page F-1 of this annual report for additional information. 31 Table of Contents SELECTED FINANCIAL DATA The following tables contain certain information concerning our consolidated financial position and results of operations, which is derived in part from our audited consolidated financial statements.
See Note 15 of the Notes to Consolidated Financial Statements beginning on page F-1 of this annual report for additional information. 32 Table of Contents SELECTED FINANCIAL DATA The following tables contain certain information concerning our consolidated financial position and results of operations, which is derived in part from our audited consolidated financial statements.
If these maturing time deposits do not remain with us, we will be required to seek other sources of funds, including other certificates of deposit and borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the time deposits due on or before September 30, 2024.
If these maturing time deposits do not remain with us, we will be required to seek other sources of funds, including other certificates of deposit and borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the time deposits due on or before September 30, 2025.
The subordinated note initially bears a fixed interest rate of 6.02% per year through September 30, 2023, and thereafter a floating rate, reset quarterly, equal to the three-month Secured Overnight Financing Rate (“SOFR”) plus 310 basis points. All interest is payable quarterly and the subordinated note is scheduled to mature on September 30, 2028.
The subordinated note initially bore a fixed interest rate of 6.02% per year through September 30, 2023, and thereafter a floating rate, reset quarterly, equal to the three-month Secured Overnight Financing Rate (“SOFR”) plus 310 basis points. All interest is payable quarterly and the subordinated note is scheduled to mature on September 30, 2028.
Management’s Discussion and Analysis of Financial Condition and Results of Operation.” ​ Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Information required by this item is included herein beginning on page F-1. ​ Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ​ 50 Table of Contents
Management’s Discussion and Analysis of Financial Condition and Results of Operation.” ​ Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Information required by this item is included herein beginning on page F-1. ​ Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ​ 52 Table of Contents
In addition, the banking regulators, as an integral part of their examination process, periodically review our allowance for loan losses and may require us to recognize adjustments to the allowance based on their judgments about information available to them at the time of their examination.
In addition, the banking regulators, as an integral part of their examination process, periodically review our allowance for credit losses and may require us to recognize adjustments to the allowance based on their judgments about information available to them at the time of their examination.
The Company recognized a provision for loan losses of $2.6 million for the year ended September 30, 2023 compared to a provision for loan losses of $1.9 million for 2022. Net charge-offs in 2023 were $1.1 million compared to $849,000 for 2022 and nonperforming loans increased $3.1 million to $13.9 million at September 30, 2023.
In 2023, the Company recognized a provision for loan losses of $2.6 million compared to a provision for loan losses of $1.9 million for 2022. Net charge-offs in 2023 were $1.1 million compared to $849,000 for 2022 and nonperforming loans increased $3.1 million to $13.9 million at September 30, 2023.
In addition, we had the ability to borrow the lesser of $20 million or 25% of the Bank’s equity capital, excluding reserves, using a federal funds purchased line of credit facility with another financial institution at September 30, 2023.
In addition, we had the ability to borrow the lesser of $20 million or 25% of the Bank’s equity capital, excluding reserves, using a federal funds purchased line of credit facility with another financial institution at September 30, 2024.
At September 30, 2023, the Bank exceeded all of its regulatory capital requirements. The Bank is considered “well capitalized” under regulatory guidelines. See “Item 1. Business — Regulation and Supervision — Regulation of Federal Savings Associations — Capital Requirement.” Off-Balance Sheet Arrangements.
At September 30, 2024, the Bank exceeded all of its regulatory capital requirements. The Bank is considered “well capitalized” under regulatory guidelines. See “Item 1. Business — Regulation and Supervision — Regulation of Federal Savings Associations — Capital Requirement.” Off-Balance Sheet Arrangements.
Although we believe that we use the best information available to establish the allowance for loan losses, future adjustments to the allowance may be necessary if economic or other conditions differ substantially from the assumptions used in making the evaluation.
Although we believe that we use the best information available to establish the allowance for credit losses, future adjustments to the allowance may be necessary if economic or other conditions differ substantially from the assumptions used in making the evaluation.
Management reviews the level of the allowance at least quarterly and establishes the provision for loan losses based upon an evaluation of the portfolio, past loss experience, current economic conditions and other factors related to the collectability of the loan portfolio.
Management reviews the level of the allowance at least quarterly and establishes the provision for credit losses based upon an evaluation of the portfolio, past loss experience, current and forecasted economic conditions and other factors related to the collectability of the loan portfolio.
Our strategy for credit risk management focuses on having well-defined credit policies and uniform underwriting criteria and providing prompt attention to potential problem loans. When a borrower fails to make a required loan payment, we take a number of steps to have the borrower cure the delinquency and restore the loan to current status.
Our strategy for credit risk management focuses on having well-defined credit policies and uniform underwriting criteria and providing prompt attention to potential problem loans. 45 Table of Contents When a borrower fails to make a required loan payment, we take a number of steps to have the borrower cure the delinquency and restore the loan to current status.
Noninterest Expense. Noninterest expenses decreased $16.5 million, or 17.8%, from $92.7 million for the year ended September 30, 2022 to $76.1 million for the year ended September 30, 2023.
In 2023, noninterest expenses decreased $16.5 million, or 17.8%, from $92.7 million for the year ended September 30, 2022 to $76.1 million for the year ended September 30, 2023.
The decrease was due primarily to a $24.0 million decrease in mortgage banking income in 2023 compared to the same period in 2022. The decrease in mortgage banking income was primarily due to lower origination and sales volume in 2023 compared to 2022.
The decrease was due primarily to a $24.0 million decrease in mortgage banking income in 2023 compared to 2022. The decrease in mortgage banking income was primarily due to lower origination and sales volume in 2023 compared to 2022.
A large loss could deplete the allowance and require increased provisions to replenish the allowance, which would adversely affect earnings. See Note 1 of the Notes to Consolidated Financial Statements beginning on page F-1 of this annual report for additional information regarding the methodology used to determine the allowance for loan losses. Valuation Methodologies .
A large loss could deplete the allowance and require increased provisions to replenish the allowance, which would adversely affect earnings. See Note 1 of the Notes to Consolidated Financial Statements beginning on page F-1 of this annual report for additional information regarding the methodology used to determine the allowance for credit losses. Goodwill Valuation.
The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. Nonaccrual loans are included in average balances only. Loan fees are included in interest income on loans and totaled $1.2 million, $1.5 million and $4.7 million for 2023, 2022 and 2021, respectively.
The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. Nonaccrual loans are included in average balances only. Loan fees are included in interest income on loans and totaled $1.1 million, $1.2 million and $1.5 million for 2024, 2023 and 2022, respectively.
In-market commercial business loans increased $27.6 million during the year due primarily to increased commercial business lending opportunities in our primary market area. Management intends to continue to focus on pursuing commercial business loan opportunities, both within our primary market area as well as through various SBA loan programs, to further diversify the loan portfolio.
In-market commercial business loans increased $7.0 million during the year due primarily to increased commercial business lending opportunities in our primary market area. Management intends to continue to focus on pursuing commercial business loan opportunities, both within our primary market area as well as through various SBA loan programs, to further diversify the loan portfolio.
Included in nonperforming loans are loans for which the Bank has modified the repayment terms, and therefore are considered to be TDRs.
Included in nonperforming loans are loans for which the Bank has modified the repayment terms, and therefore are considered to be FDMs.
The banking regulators may require us to increase our allowance for loan losses based on judgments different from ours.
The banking regulators may require us to increase our allowance for credit losses based on judgments different from ours.
At September 30, 2023, the Company had liquid assets of $7.4 million on a stand-alone, unconsolidated basis. Our primary investing activities are the origination of loans and the purchase of securities. Our primary financing activities consist of activity in deposit accounts and FHLB borrowings.
At September 30, 2024, the Company had liquid assets of $4.2 million on a stand-alone, unconsolidated basis. Our primary investing activities are the origination of loans and the purchase of securities. Our primary financing activities consist of activity in deposit accounts and FHLB borrowings.
The Company reported net income of $8.2 million ($1.19 per common share diluted) for the year ended September 30, 2023, compared to net income of $15.4 million ($2.15 per common share diluted) for the year ended September 30, 2022.
Net income was $8.2 million ($1.19 per common share diluted) for the year ended September 30, 2023, compared to net income of $15.4 million ($2.15 per common share diluted) for the year ended September 30, 2022.
Any material increase in the allowance for loan losses may adversely affect our financial condition and results of operations. 45 Table of Contents Analysis of Loan Loss Experience.
Any material increase in the allowance for credit losses may adversely affect our financial condition and results of operations. 47 Table of Contents Analysis of Loan Loss Experience.
The amount of dividends that the Bank may declare and pay to the Company in any calendar year, without the receipt of prior approval from banking regulators, cannot exceed net income for that year to date plus retained net income (as defined) for the preceding two calendar years.
The Company’s primary source of income is dividends received from the Bank. The amount of dividends that the Bank may declare and pay to the Company in any calendar year, without the receipt of prior approval from banking regulators, cannot exceed net income for that year to date plus retained net income (as defined) for the preceding two calendar years.
This is a non-GAAP financial measure that management believes is useful to investors in understanding the Company’s performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Year Ended September 30, ​ 2023 2022 2021 2020 2019 Asset Quality Ratios: ​ Allowance for loan losses as a percent of total loans 0.95 % 1.03 % 1.31 % 1.54 % 1.22 % ​ ​ ​ ​ Allowance for loan losses as a percent of nonperforming loans 121.16 141.49 92.43 125.05 193.82 ​ ​ ​ ​ ​ ​ ​ ​ Net charge-offs to average outstanding loans during the period 0.06 0.06 0.07 0.09 0.09 ​ ​ ​ ​ ​ ​ ​ ​ Nonperforming loans as a percent of total loans 0.78 0.73 1.42 1.23 0.63 ​ ​ ​ ​ ​ ​ ​ ​ Nonperforming loans as a percent of total assets ​ 0.61 ​ 0.52 ​ 0.90 ​ 0.77 ​ 0.42 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonperforming assets as a percent of total assets 0.69 0.65 1.00 0.95 1.02 ​ ​ ​ ​ ​ ​ ​ ​ Other Data: ​ ​ ​ ​ ​ ​ Number of full service branch offices 15 15 15 15 15 ​ Number of deposit accounts 49,226 48,122 46,361 44,852 44,343 ​ Number of loans 7,796 7,401 7,041 8,074 7,759 ​ ​ Balance Sheet Analysis Cash and Cash Equivalents.
This is a non-GAAP financial measure that management believes is useful to investors in understanding the Company’s performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Year Ended September 30, ​ 2024 2023 2022 2021 2020 Asset Quality Ratios: ​ Allowance for credit losses as a percent of total loans 1.07 % 0.95 % 1.03 % 1.31 % 1.54 % ​ ​ ​ ​ ​ Allowance for credit losses as a percent of nonperforming loans 125.69 121.16 141.49 92.43 125.05 ​ ​ ​ ​ ​ ​ ​ ​ Net charge-offs to average outstanding loans during the period 0.03 0.06 0.06 0.07 0.09 ​ ​ ​ ​ ​ ​ ​ ​ Nonperforming loans as a percent of total loans 0.85 0.78 0.73 1.42 1.23 ​ ​ ​ ​ ​ ​ ​ ​ Nonperforming loans as a percent of total assets ​ 0.69 ​ 0.61 ​ 0.52 ​ 0.90 ​ 0.77 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonperforming assets as a percent of total assets 0.71 0.69 0.65 1.00 0.95 ​ ​ ​ ​ ​ ​ ​ ​ Other Data: ​ ​ ​ ​ ​ ​ Number of full service branch offices 15 15 15 15 15 ​ Number of deposit accounts 51,104 49,226 48,122 46,361 44,852 ​ Number of loans 8,111 7,796 7,401 7,041 8,074 ​ ​ Balance Sheet Analysis Cash and Cash Equivalents.
(4) Represents other expenses, excluding nonrecurring items as discussed below, divided by the sum of net interest income and other income, excluding income (loss) from tax credit investments discussed below.
(3) Represents other expenses divided by the sum of net interest income and other income. 34 Table of Contents (4) Represents other expenses, excluding nonrecurring items as discussed below, divided by the sum of net interest income and other income, excluding income (loss) from tax credit investments discussed below.
At September 30, 2023 and 2022, cash and cash equivalents totaled $30.8 million and $41.7 million, respectively. The Bank is at times required to maintain reserve balances on hand and with the Federal Reserve Bank, which are unavailable for investment but are interest-bearing. Loans Held for Sale.
At September 30, 2024 and 2023, cash and cash equivalents totaled $52.1 million and $30.8 million, respectively. The Bank is at times required to maintain reserve balances on hand and with the Federal Reserve Bank, which are unavailable for investment but are interest-bearing. Loans Held for Sale.
The decrease in net income was due to a decrease in noninterest income of $25.9 million and a $704,000 increase in the provision for loan losses, partially offset by a $922,000 increase in net interest income and a $16.5 million decrease in noninterest expense.
The decrease in net income for 2023 compared to 2022 was due to a decrease in noninterest income of $25.9 million and a $704,000 increase in the provision for credit losses, partially offset by a $922,000 increase in net interest income and a $16.5 million decrease in noninterest expense. Net Interest Income.
The efficiency ratio for 2022 excludes the income from tax credit investments of $12,000 and expenses of $2.0 million related to consulting fees paid in connection with the evaluation and negotiation of a new core processing contract.
The efficiency ratio for 2022 excludes the income from tax credit investments of $12,000 and expenses of $2.0 million related to consulting fees paid in connection with the evaluation and negotiation of a new core processing contract. The efficiency ratio for 2021 and 2020 excludes the income from tax credit investments of $32,000, $426,000 and $210,000, respectively.
Our held to maturity securities portfolio consists of mortgage-backed securities issued by government sponsored enterprises and municipal bonds. Held to maturity securities decreased by $258,000 from $1.6 million at September 30, 2022 to $1.3 million at September 30, 2023, due primarily to maturities and principal repayments.
Our held to maturity securities portfolio consists of mortgage-backed securities issued by government sponsored enterprises and municipal bonds. Held to maturity securities decreased by $260,000 from $1.3 million at September 30, 2023 to $1.0 million at September 30, 2024, due primarily to maturities and principal repayments.
The increase in accumulated other comprehensive loss was primarily due to increasing long term market interest rates during the year ended September 30, 2023, which resulted in a decrease in the fair value of the available-for-sale securities portfolio. Results of Operations for the Years Ended September 30, 2023, 2022 and 2021 Overview.
The decrease in accumulated other comprehensive loss was due primarily to decreasing long term market interest rates during the year ended September 30, 2024, which resulted in an increase in the fair value of securities available for sale. Results of Operations for the Years Ended September 30, 2024, 2023 and 2022 Overview.
The levels of these assets depend on our operating, financing, lending and investing activities during any given period. At September 30, 2023, cash and cash equivalents totaled $30.8 million. Securities classified as available-for-sale, amounting to $227.7 million, at September 30, 2023, provide additional sources of liquidity.
The levels of these assets depend on our operating, financing, lending and investing activities during any given period. At September 30, 2024, cash and cash equivalents totaled $52.1 million. Securities classified as available-for-sale, amounting to $248.7 million, at September 30, 2024, provide additional sources of liquidity.
We believe the large percentage of time deposits that mature within one year reflects customers’ hesitancy to invest their funds for long periods due to the recent increasing interest rate environment and local competitive pressure. The balance also includes $438.3 million in brokered and reciprocal time deposits at September 30, 2023.
We believe the large percentage of time deposits that mature within one year reflects customers’ hesitancy to invest their funds for long periods due to the recent higher interest rate environment and local competitive pressure. The balance also includes $509.2 million in brokered and reciprocal time deposits at September 30, 2024.
The following is only a summary and should be read in conjunction with the audited consolidated financial statements and notes thereto beginning on page F-1 of this annual report. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At September 30, (In thousands) 2023 2022 2021 2020 2019 Financial Condition Data: ​ ​ ​ ​ ​ Total assets ​ $ 2,288,854 ​ $ 2,093,725 ​ $ 1,721,394 ​ $ 1,764,625 ​ $ 1,222,579 Cash and cash equivalents ​ 30,845 ​ 41,665 ​ 33,428 ​ 33,726 ​ 41,432 Securities available-for-sale ​ 227,739 ​ 316,517 ​ 206,681 ​ 201,965 ​ 177,302 Securities held-to-maturity ​ 1,300 ​ 1,558 ​ 1,837 ​ 2,102 ​ 2,336 Loans held for sale ​ 45,855 ​ 60,462 ​ 214,940 ​ 285,525 ​ 96,070 Loans, net ​ 1,770,243 ​ 1,474,544 ​ 1,075,936 ​ 1,090,063 ​ 810,658 Deposits ​ 1,688,316 ​ 1,515,834 ​ ​ 1,227,580 ​ ​ 1,048,076 ​ ​ 834,384 Borrowings from FHLB ​ 363,183 ​ 307,303 ​ 250,000 ​ 310,858 ​ 222,544 Other borrowings ​ 48,444 ​ 88,206 ​ 19,865 ​ 194,631 ​ 23,729 Stockholders’ equity ​ 150,981 ​ 151,565 ​ 180,377 ​ 157,272 ​ 121,053 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended September 30, (In thousands) 2023 2022 2021 2020 2019 Operating Data: ​ ​ ​ ​ ​ ​ Interest income ​ $ 103,229 ​ $ 71,194 ​ $ 65,259 ​ $ 57,699 ​ $ 50,995 Interest expense ​ 41,655 ​ 10,542 ​ 8,087 ​ 10,538 ​ 10,906 Net interest income ​ 61,574 ​ 60,652 ​ 57,172 ​ 47,161 ​ 40,089 Provision (credit) for loan losses ​ 2,612 ​ 1,908 ​ (1,767) ​ 7,962 ​ 1,463 Net interest income after provision (credit) for loan losses ​ 58,962 ​ 58,744 ​ 58,939 ​ 39,199 ​ 38,626 Noninterest income ​ 25,342 ​ 51,227 ​ 120,436 ​ 133,351 ​ 43,854 Noninterest expense ​ 76,122 ​ 92,662 ​ 139,409 ​ 125,808 ​ 62,390 Income before income taxes ​ 8,182 ​ 17,309 ​ 39,966 ​ 46,742 ​ 20,090 Income tax expense ​ 10 ​ 1,923 ​ 9,997 ​ 12,661 ​ 3,095 Net income ​ ​ 8,172 ​ ​ 15,386 ​ ​ 29,969 ​ ​ 34,081 ​ ​ 16,995 Less: net income attributable to noncontrolling interests ​ — ​ — ​ 402 ​ 727 ​ 818 Net income attributable to First Savings Financial Group ​ ​ 8,172 ​ ​ 15,386 ​ ​ 29,567 ​ ​ 33,354 ​ ​ 16,177 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended September 30, ​ 2023 2022 2021 2020 2019 Per Share Data (1): ​ ​ ​ ​ ​ Net income per common share, basic ​ $ 1.19 ​ $ 2.18 ​ $ 4.16 ​ $ 4.72 ​ $ 2.33 Net income per common share, diluted ​ 1.19 ​ 2.15 ​ 4.12 ​ 4.68 ​ 2.27 Dividends per common share ​ 0.55 ​ 0.51 ​ 0.36 ​ 0.22 ​ 0.21 ​ (1) Per share amounts have been adjusted to reflect the three-for-one stock split effective September 15, 2021. 32 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Year Ended September 30, ​ 2023 2022 2021 2020 2019 Performance Ratios: ​ Return on average assets 0.37 % 0.83 % 1.69 % 2.27 % 1.42 % ​ ​ ​ ​ ​ ​ ​ Return on average equity 5.04 8.65 17.59 26.06 15.65 ​ ​ ​ ​ ​ ​ ​ ​ Return on average common stockholders’ equity 5.04 8.65 17.37 25.46 15.00 ​ ​ ​ ​ ​ ​ ​ ​ Interest rate spread (1) 2.69 3.55 3.54 3.37 3.63 ​ ​ ​ ​ ​ ​ ​ ​ Net interest margin (2) 3.10 3.72 3.67 3.55 3.88 ​ ​ ​ ​ ​ ​ ​ ​ Other expenses to average assets 3.43 5.01 7.95 8.58 5.48 ​ ​ ​ ​ ​ ​ ​ ​ Efficiency ratio (3) 87.58 82.82 78.49 69.70 74.32 ​ ​ ​ ​ ​ ​ ​ ​ Efficiency ratio (excluding nonrecurring items) (4) 80.61 81.03 78.51 69.86 74.51 ​ ​ ​ ​ ​ ​ ​ ​ Average interest-earning assets to average interest-bearing liabilities 120.17 126.40 125.92 123.65 124.96 ​ ​ ​ ​ ​ ​ ​ ​ Dividend payout ratio 46.41 23.68 8.59 4.77 9.10 ​ ​ ​ ​ ​ ​ ​ ​ Average equity to average assets 7.31 9.61 9.71 8.92 9.54 ​ ​ ​ ​ ​ ​ ​ ​ Capital Ratios: ​ ​ ​ ​ ​ ​ Total capital (to risk-weighted assets): ​ ​ ​ ​ ​ ​ Consolidated 11.47 % 12.33 % 14.28 % 13.37 % 13.85 % Bank 11.27 11.44 13.60 12.75 12.88 ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 capital (to risk-weighted assets): ​ ​ ​ ​ ​ ​ Consolidated 8.22 8.73 11.76 10.58 10.70 ​ Bank 10.42 10.59 12.54 11.53 11.81 ​ ​ ​ ​ ​ ​ ​ ​ Common equity Tier 1 capital (to risk-weighted assets): ​ ​ ​ ​ ​ ​ Consolidated 8.22 8.73 11.76 10.58 10.70 ​ Bank 10.42 10.59 12.54 11.53 11.81 ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 capital (to average adjusted total assets): ​ ​ ​ ​ ​ ​ Consolidated 7.24 7.96 9.73 8.53 8.39 ​ Bank 9.17 9.58 10.07 9.37 9.34 ​ ​ (1) Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost on average interest-bearing liabilities.
The following is only a summary and should be read in conjunction with the audited consolidated financial statements and notes thereto beginning on page F-1 of this annual report. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At September 30, (In thousands) 2024 2023 2022 2021 2020 Financial Condition Data: ​ ​ ​ ​ ​ Total assets ​ $ 2,450,368 ​ $ 2,288,854 ​ $ 2,093,725 ​ $ 1,721,394 ​ $ 1,764,625 Cash and cash equivalents ​ 52,142 ​ 30,845 ​ 41,665 ​ 33,428 ​ 33,726 Securities available-for-sale ​ 248,679 ​ 227,739 ​ 316,517 ​ 206,681 ​ 201,965 Securities held-to-maturity ​ 1,040 ​ 1,300 ​ 1,558 ​ 1,837 ​ 2,102 Loans held for sale ​ 25,716 ​ 45,855 ​ 60,462 ​ 214,940 ​ 285,525 Loans, net ​ 1,963,852 ​ 1,770,243 ​ 1,474,544 ​ 1,075,936 ​ 1,090,063 Deposits ​ 1,880,881 ​ 1,681,794 ​ ​ 1,515,834 ​ ​ 1,227,580 ​ ​ 1,048,076 Borrowings from FHLB ​ 301,640 ​ 363,183 ​ 307,303 ​ 250,000 ​ 310,858 Other borrowings ​ 48,603 ​ 48,444 ​ 88,206 ​ 19,865 ​ 194,631 Stockholders’ equity ​ 177,115 ​ 150,981 ​ 151,565 ​ 180,377 ​ 157,272 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended September 30, (In thousands) 2024 2023 2022 2021 2020 Operating Data: ​ ​ ​ ​ ​ ​ Interest income ​ $ 121,988 ​ $ 103,229 ​ $ 71,194 ​ $ 65,259 ​ $ 57,699 Interest expense ​ 63,926 ​ 41,655 ​ 10,542 ​ 8,087 ​ 10,538 Net interest income ​ 58,062 ​ 61,574 ​ 60,652 ​ 57,172 ​ 47,161 Total provision (credit) for credit losses ​ 3,092 ​ 2,612 ​ 1,908 ​ (1,767) ​ 7,962 Net interest income after provision (credit) for loan losses ​ 54,970 ​ 58,962 ​ 58,744 ​ 58,939 ​ 39,199 Noninterest income ​ 12,530 ​ 25,342 ​ 51,227 ​ 120,436 ​ 133,351 Noninterest expense ​ 52,890 ​ 76,122 ​ 92,662 ​ 139,409 ​ 125,808 Income before income taxes ​ 14,610 ​ 8,182 ​ 17,309 ​ 39,966 ​ 46,742 Income tax expense ​ 1,018 ​ 10 ​ 1,923 ​ 9,997 ​ 12,661 Net income ​ ​ 13,592 ​ ​ 8,172 ​ ​ 15,386 ​ ​ 29,969 ​ ​ 34,081 Less: net income attributable to noncontrolling interests ​ — ​ — ​ — ​ 402 ​ 727 Net income attributable to First Savings Financial Group ​ ​ 13,592 ​ ​ 8,172 ​ ​ 15,386 ​ ​ 29,567 ​ ​ 33,354 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended September 30, ​ 2024 2023 2022 2021 2020 Per Share Data (1): ​ ​ ​ ​ ​ Net income per common share, basic ​ $ 1.99 ​ $ 1.19 ​ $ 2.18 ​ $ 4.16 ​ $ 4.72 Net income per common share, diluted ​ 1.98 ​ 1.19 ​ 2.15 ​ 4.12 ​ 4.68 Dividends per common share ​ 0.59 ​ 0.55 ​ 0.51 ​ 0.36 ​ 0.22 ​ (1) Per share amounts have been adjusted to reflect the three-for-one stock split effective September 15, 2021. 33 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Year Ended September 30, ​ 2024 2023 2022 2021 2020 Performance Ratios: ​ Return on average assets 0.58 % 0.37 % 0.83 % 1.69 % 2.27 % ​ ​ ​ ​ ​ ​ ​ Return on average equity 8.31 5.04 8.65 17.59 26.06 ​ ​ ​ ​ ​ ​ ​ ​ Return on average common stockholders’ equity 8.31 5.04 8.65 17.37 25.46 ​ ​ ​ ​ ​ ​ ​ ​ Interest rate spread (1) 2.26 2.69 3.55 3.54 3.37 ​ ​ ​ ​ ​ ​ ​ ​ Net interest margin (2) 2.68 3.10 3.72 3.67 3.55 ​ ​ ​ ​ ​ ​ ​ ​ Other expenses to average assets 2.24 3.43 5.01 7.95 8.58 ​ ​ ​ ​ ​ ​ ​ ​ Efficiency ratio (3) 74.92 87.58 82.82 78.49 69.70 ​ ​ ​ ​ ​ ​ ​ ​ Efficiency ratio (excluding nonrecurring items) (4) 74.92 80.61 81.03 78.51 69.86 ​ ​ ​ ​ ​ ​ ​ ​ Average interest-earning assets to average interest-bearing liabilities 114.95 120.17 126.40 125.92 123.65 ​ ​ ​ ​ ​ ​ ​ ​ Dividend payout ratio 29.80 46.41 23.68 8.59 4.77 ​ ​ ​ ​ ​ ​ ​ ​ Average equity to average assets 6.94 7.31 9.61 9.71 8.92 ​ ​ ​ ​ ​ ​ ​ ​ Capital Ratios: ​ ​ ​ ​ ​ ​ Total capital (to risk-weighted assets): ​ ​ ​ ​ ​ ​ Consolidated 12.53 % 11.47 % 12.33 % 14.28 % 13.37 % Bank 12.42 11.27 11.44 13.60 12.75 ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 capital (to risk-weighted assets): ​ ​ ​ ​ ​ ​ Consolidated 9.20 8.22 8.73 11.76 10.58 ​ Bank 11.38 10.42 10.59 12.54 11.53 ​ ​ ​ ​ ​ ​ ​ ​ Common equity Tier 1 capital (to risk-weighted assets): ​ ​ ​ ​ ​ ​ Consolidated 9.20 8.22 8.73 11.76 10.58 ​ Bank 11.38 10.42 10.59 12.54 11.53 ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 capital (to average adjusted total assets): ​ ​ ​ ​ ​ ​ Consolidated 7.42 7.24 7.96 9.73 8.53 ​ Bank 9.18 9.17 9.58 10.07 9.37 ​ ​ (1) Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost on average interest-bearing liabilities.
The interest rate spread, the difference between the average tax-equivalent yield on interest-earning assets and the average cost of interest-bearing liabilities, decreased from 3.55% for 2022 to 2.69% for 2023 due primarily to an increase in the average cost of interest-bearing liabilities from 0.80% for 2022 to 2.44% for 2023.
The interest rate spread, the difference between the average tax-equivalent yield on interest-earning assets and the average cost of interest-bearing liabilities, decreased from 2.69% for 2023 to 2.26% for 2024 due primarily to an increase in the average cost of interest-bearing liabilities from 2.44% for 2023 to 3.29% for 2024.
Deposit accounts, generally obtained from individuals and businesses throughout our primary market area, are our primary source of funds for lending and investments. Our deposit accounts are comprised of noninterest-bearing accounts, interest-bearing savings, checking and money market accounts and time deposits. Deposits increased $172.5 million from $1.52 billion at September 30, 2022 to $1.69 billion at September 30, 2023.
Deposit accounts, generally obtained from individuals and businesses throughout our primary market area, are our primary source of funds for lending and investments. Our deposit accounts are comprised of noninterest-bearing accounts, interest-bearing savings, checking and money market accounts and time deposits. Deposits increased $199.1 million from $1.68 billion at September 30, 2023 to $1.88 billion at September 30, 2024.
This was partially offset by an increase in the average yield on interest earning assets from 4.35% for 2022 to 5.13% for 2023. For the year ended September 30, 2022, net interest income increased $3.5 million or 6.1% as compared to 2021, primarily due to balance sheet growth.
This was partially offset by an increase in the average yield on interest earning assets from 5.13% for 2023 to 5.55% for 2024. For the year ended September 30, 2023, net interest income increased $922,000 or 1.5% as compared to 2022, primarily due to balance sheet growth.
The increase in the average balance of interest-earning assets is due primarily to increases in the average balance of investment securities and total loans of $69.9 million and $26.0 million, respectively.
The increase in the average balance of interest-earning assets is due primarily to increases in the average balance of total loans and investment securities of $318.0 million and $67.2 million, respectively.
The average cost of other borrowings decreased from 5.61% for 2022, net of amortization of debt issuance costs, to 5.48% for 2023, net of amortization of debt issuance costs.
The average cost of other borrowings decreased from 5.61% for 2022, net of amortization of debt issuance costs, to 5.48% for 2023, net of amortization of debt issuance costs. 42 Table of Contents Average Balances and Yields.
The Bank recognized increases in money market deposit accounts of $85.5 million and retail time deposits of $41.1 million, when comparing the two years. Brokered certificates of deposit totaled $438.3 million at September 30, 2023 compared to $292.5 million at September 30, 2022. There were no reciprocal time deposits at September 30, 2023 and 2022.
The Bank recognized increases in money market deposit accounts of $69.5 million and retail time deposits of $132.7 million, when comparing the two years. Brokered certificates of deposit totaled $509.2 million at September 30, 2024 compared to $438.3 million at September 30, 2023. There were no reciprocal time deposits at September 30, 2024 and 2023.
Management informs the Board of Directors monthly of all loans in nonaccrual status, all loans in foreclosure and all repossessed property and assets that we own. 43 Table of Contents Analysis of Nonperforming and Classified Assets. We consider nonaccrual loans, troubled debt restructurings (“TDRs”), repossessed assets and loans that are 90 days or more past due to be nonperforming assets.
Management informs the Board of Directors monthly of all loans in nonaccrual status, all loans in foreclosure and all repossessed property and assets that we own. Analysis of Nonperforming and Classified Assets. We consider nonaccrual loans, financial difficulty modifications (“FDMs”), repossessed assets and loans that are 90 days or more past due to be nonperforming assets.
Furthermore, rate increases of 2.00% and 3.00% would cause net interest income to decrease by 7.65% and 11.71%, respectively. An immediate and sustained decrease in rates of 1.00% and 2.00% will increase our net interest income by $2.2 million and $4.5 million, or 3.89% and 7.83%, respectively, over a one year horizon compared to a flat interest rate scenario.
Furthermore, rate increases of 2.00% and 3.00% would cause net interest income to decrease by 6.62% and 10.11%, respectively. An immediate and sustained decrease in rates of 1.00% and 2.00% would increase our net interest income by $3.2 million and $6.3 million, or 4.75% and 9.38%, respectively, over a one year horizon compared to a flat interest rate scenario.
The following table sets forth certain information regarding the Bank’s use of FHLB borrowings. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, (Dollars in thousands) 2023 2022 2021 Maximum amount of FHLB borrowings outstanding at any month-end during period $ 486,886 $ 404,098 $ 340,092 ​ Average FHLB borrowings outstanding during period ​ 368,239 ​ 292,803 ​ 282,001 ​ Weighted average interest rate during period ​ 2.92 % ​ 1.14 % ​ 1.13 % Balance outstanding at end of period $ 363,183 $ 307,303 $ 250,000 ​ Weighted average interest rate at end of period ​ 2.90 % ​ 2.05 % ​ 1.13 % ​ 38 Table of Contents Other borrowings were comprised of subordinated debt at September 30, 2023.
The following table sets forth certain information regarding the Bank’s use of FHLB borrowings. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, (Dollars in thousands) 2024 2023 2022 Maximum amount of FHLB borrowings outstanding at any month-end during period $ 489,168 $ 486,886 $ 404,098 ​ Average FHLB borrowings outstanding during period ​ 376,246 ​ 368,239 ​ 292,803 ​ Weighted average interest rate during period ​ 3.35 % ​ 2.92 % ​ 1.14 % Balance outstanding at end of period $ 301,640 $ 363,183 $ 307,303 ​ Weighted average interest rate at end of period ​ 3.20 % ​ 2.90 % ​ 2.05 % ​ Other borrowings were comprised of subordinated debt at September 30, 2024 and 2023.
Commercial real estate loans, including in-market commercial real estate loans, single tenant net lease loans, and SBA real commercial real estate loans, totaled $991.7 million, or 55.5% of total loans at September 30, 2023, compared to $903.8 million, or 60.7% of total loans at September 30, 2022.
Commercial real estate loans, including in-market commercial real estate loans, single tenant net lease loans, and SBA real commercial real estate loans, totaled $1.01 billion, or 51.0% of total loans at September 30, 2024, compared to $991.7 million, or 55.5% of total loans at September 30, 2023.
Tax exempt income is reported on a tax equivalent basis using a federal marginal tax rate of 21% for 2023, 2022, 2021, 2020 and 2019. (2) Represents net interest income as a percent of average interest-earning assets.
Tax exempt income is reported on a tax equivalent basis using a federal marginal tax rate of 21% for all years presented. (2) Represents net interest income as a percent of average interest-earning assets. Tax exempt income is reported on a tax equivalent basis using a federal marginal tax rate of 21% for all years presented.
At September 30, 2023, we had the ability to borrow a total of approximately $600.0 million from the FHLB, of which $363.2 million was borrowed and outstanding.
At September 30, 2024, we had the ability to borrow a total of approximately $800.0 million from the FHLB, of which $301.6 million was borrowed and outstanding.
The following table sets forth an analysis of the allowance for loan losses for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, (Dollars in thousands) 2023 2022 2021 ​ Allowance for loan losses at beginning of period ​ $ 15,360 ​ $ 14,301 ​ $ 17,026 ​ Provision (credit) for loan losses ​ 2,612 ​ 1,908 ​ (1,767) ​ Charge offs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential real estate ​ 71 ​ 23 ​ 11 ​ Commercial real estate ​ — ​ — ​ — ​ Single tenant net lease ​ ​ — ​ ​ — ​ ​ — ​ SBA commercial real estate ​ ​ 357 ​ ​ 110 ​ ​ 936 ​ Multi-family ​ — ​ — ​ — ​ Residential construction ​ — ​ — ​ — ​ Commercial construction ​ ​ — ​ ​ — ​ ​ — ​ Land and land development ​ — ​ — ​ — ​ Commercial business ​ — ​ 91 ​ — ​ SBA commercial business ​ ​ 569 ​ ​ 698 ​ ​ 21 ​ Consumer ​ 250 ​ 175 ​ 156 ​ Total charge-offs ​ 1,247 ​ 1,097 ​ 1,124 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recoveries: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential real estate ​ 16 ​ 14 ​ 24 ​ Commercial real estate ​ — ​ — ​ — ​ Single tenant net lease ​ ​ — ​ ​ — ​ ​ — ​ SBA commercial real estate ​ ​ 3 ​ ​ 15 ​ ​ 23 ​ Multi-family ​ — ​ — ​ — ​ Residential construction ​ ​ — ​ ​ — ​ ​ — ​ Commercial construction ​ ​ — ​ ​ — ​ ​ — ​ Land and land development ​ — ​ — ​ — ​ Commercial business ​ 69 ​ 119 ​ 5 ​ SBA commercial business ​ 51 ​ 61 ​ 39 ​ Consumer ​ 36 ​ 39 ​ 75 ​ Total recoveries ​ 175 ​ 248 ​ 166 ​ Net charge-offs ​ 1,072 ​ 849 ​ 958 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for loan losses at end of period ​ $ 16,900 ​ $ 15,360 ​ $ 14,301 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for loan losses to nonaccrual loans ​ 121.16 % 141.49 % 95.34 % Allowance for loan losses to nonperforming loans ​ 121.16 % 141.49 % 92.43 % Allowance for loan losses to total loans outstanding at the end of the period ​ 0.95 ​ 1.03 ​ 1.31 ​ Net charge-offs during the period to average loans outstanding during the period ​ 0.06 ​ 0.06 ​ 0.09 ​ ​ ​ 46 Table of Contents The following table sets forth the ratio of net charge-offs (recoveries) to average loans outstanding for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended September 30, Loan category 2023 2022 2021 Residential real estate 0.01 % 0.00 % (0.01) % Commercial real estate 0.00 0.00 0.00 ​ Single tenant net lease 0.00 0.00 0.00 ​ SBA commercial real estate 0.69 0.15 1.52 ​ Multi-family 0.00 0.00 0.00 ​ Residential construction 0.00 0.00 0.00 ​ Commercial construction 0.00 0.00 0.00 ​ Land and land development 0.00 0.00 0.00 ​ Commercial business (0.07) (0.04) (0.01) ​ SBA commercial business 2.73 1.38 (0.01) ​ Consumer 0.55 0.41 0.18 ​ Total loans 0.06 % 0.06 % 0.09 % ​ Interest Rate Risk Management.
The following table sets forth an analysis of the allowance for credit losses for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, (Dollars in thousands) 2024 2023 2022 ​ Allowance for credit losses at beginning of period ​ $ 16,900 ​ $ 15,360 ​ $ 14,301 ​ ASU 2016 - 13 (CECL) implementation ​ ​ 1,429 ​ ​ — ​ ​ — ​ Provision for credit losses ​ 3,492 ​ 2,612 ​ 1,908 ​ Charge offs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential real estate ​ 168 ​ 71 ​ 23 ​ Commercial real estate ​ — ​ — ​ — ​ Single tenant net lease ​ ​ — ​ ​ — ​ ​ — ​ SBA commercial real estate ​ ​ 58 ​ ​ 357 ​ ​ 110 ​ Multi-family ​ — ​ — ​ — ​ Residential construction ​ — ​ — ​ — ​ Commercial construction ​ ​ — ​ ​ — ​ ​ — ​ Land and land development ​ — ​ — ​ — ​ Commercial business ​ 34 ​ — ​ 91 ​ SBA commercial business ​ ​ 172 ​ ​ 569 ​ ​ 698 ​ Consumer ​ 388 ​ 250 ​ 175 ​ Total charge-offs ​ 820 ​ 1,247 ​ 1,097 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recoveries: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential real estate ​ 67 ​ 16 ​ 14 ​ Commercial real estate ​ — ​ — ​ — ​ Single tenant net lease ​ ​ — ​ ​ — ​ ​ — ​ SBA commercial real estate ​ ​ 63 ​ ​ 3 ​ ​ 15 ​ Multi-family ​ — ​ — ​ — ​ Residential construction ​ ​ — ​ ​ — ​ ​ — ​ Commercial construction ​ ​ — ​ ​ — ​ ​ — ​ Land and land development ​ — ​ — ​ — ​ Commercial business ​ — ​ 69 ​ 119 ​ SBA commercial business ​ 63 ​ 51 ​ 61 ​ Consumer ​ 100 ​ 36 ​ 39 ​ Total recoveries ​ 293 ​ 175 ​ 248 ​ Net charge-offs ​ 527 ​ 1,072 ​ 849 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for credit losses at end of period ​ $ 21,294 ​ $ 16,900 ​ $ 15,360 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for credit losses to nonaccrual loans ​ 125.69 % 121.16 % 141.49 % Allowance for credit losses to nonperforming loans ​ 125.69 % 121.16 % 141.49 % Allowance for credit losses to total loans outstanding at the end of the period ​ 1.07 ​ 0.95 ​ 1.03 ​ Net charge-offs during the period to average loans outstanding during the period ​ 0.03 ​ 0.06 ​ 0.06 ​ ​ ​ 48 Table of Contents The following table sets forth the ratio of net charge offs (recoveries) to average loans outstanding for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended September 30, Loan category 2024 2023 2022 Residential real estate 0.02 % 0.01 % 0.00 % Commercial real estate 0.00 0.00 0.00 ​ Single tenant net lease 0.00 0.00 0.00 ​ SBA commercial real estate (0.01) 0.69 0.15 ​ Multi-family 0.00 0.00 0.00 ​ Residential construction 0.00 0.00 0.00 ​ Commercial construction 0.00 0.00 0.00 ​ Land and land development 0.00 0.00 0.00 ​ Commercial business 0.03 (0.07) (0.04) ​ SBA commercial business 0.61 2.73 1.38 ​ Consumer 0.72 0.55 0.41 ​ Total loans 0.03 % 0.06 % 0.06 % ​ Interest Rate Risk Management.
At September 30, 2023, the Bank did not have any outstanding federal funds purchased under these lines of credit. Stockholders’ Equity . Stockholders’ equity decreased $584,000, from $151.6 million at September 30, 2022 to $151.0 million at September 30, 2023.
At September 30, 2024, the Bank did not have any outstanding federal funds purchased under these lines of credit. Stockholders’ Equity . Stockholders’ equity increased $26.1 million, from $151.0 million at September 30, 2023 to $177.1 million at September 30, 2024.
The following table sets forth the breakdown of the allowance for loan losses by loan category at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At September 30, ​ ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ % of Loans in ​ ​ ​ % of Loans in ​ ​ ​ ​ ​ Allowance Category ​ ​ ​ Allowance Category ​ ​ ​ ​ ​ to Total to Total ​ ​ ​ to Total to Total ​ (Dollars in thousands) Amount Allowance Loans Amount Allowance Loans ​ Residential real estate ​ $ 4,641 27.46 % 29.59 % $ 2,716 17.68 % 24.73 % Commercial real estate ​ 1,777 10.51 10.48 ​ 1,590 10.35 11.41 ​ Single tenant net lease ​ ​ 3,810 ​ 22.54 ​ 42.40 ​ ​ 3,838 ​ 24.99 ​ 45.31 ​ SBA commercial real estate ​ ​ 1,922 ​ 11.37 ​ 2.64 ​ ​ 2,578 ​ 16.78 ​ 3.99 ​ Multi-family ​ 268 1.59 1.95 ​ 251 1.63 2.18 ​ Residential construction ​ 434 2.57 1.40 ​ 305 1.99 1.23 ​ Commercial construction ​ ​ 282 ​ 1.67 ​ 0.82 ​ ​ 107 ​ 0.70 ​ 0.40 ​ Land and land development ​ 307 1.82 0.96 ​ 212 1.38 0.80 ​ Commercial business ​ 1,714 10.14 6.58 ​ 1,193 7.77 6.05 ​ SBA commercial business ​ ​ 1,247 ​ 7.38 ​ 0.95 ​ ​ 2,122 ​ 13.82 ​ 1.36 ​ Consumer ​ 498 2.95 2.23 ​ 448 2.91 2.56 ​ Total allowance for loan losses ​ $ 16,900 100.00 % 100.00 % $ 15,360 100.00 % 100.00 % ​ Although we believe that we use the best information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and our results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations.
The following table sets forth the breakdown of the allowance for credit losses by loan category at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At September 30, ​ ​ 2024 2023 ​ ​ ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ ​ % of Loans in ​ ​ ​ % of Loans in ​ ​ ​ ​ ​ Allowance Category ​ ​ ​ Allowance Category ​ ​ ​ ​ ​ to Total to Total ​ ​ ​ to Total to Total ​ (Dollars in thousands) Amount Allowance Loans Amount Allowance Loans ​ Residential real estate ​ $ 7,485 35.15 % 33.77 % $ 4,641 27.46 % 29.59 % Commercial real estate ​ 1,744 8.19 10.32 ​ 1,777 10.51 10.48 ​ Single tenant net lease ​ ​ 4,038 ​ 18.96 ​ 37.83 ​ ​ 3,810 ​ 22.54 ​ 42.40 ​ SBA commercial real estate ​ ​ 3,100 ​ 14.56 ​ 2.80 ​ ​ 1,922 ​ 11.37 ​ 2.64 ​ Multi-family ​ 341 1.60 1.90 ​ 268 1.59 1.95 ​ Residential construction ​ 405 1.90 2.68 ​ 434 2.57 1.40 ​ Commercial construction ​ ​ 165 ​ 0.77 ​ 0.46 ​ ​ 282 ​ 1.67 ​ 0.82 ​ Land and land development ​ 204 0.96 0.89 ​ 307 1.82 0.96 ​ Commercial business ​ 1,657 7.78 6.28 ​ 1,714 10.14 6.58 ​ SBA commercial business ​ ​ 1,550 ​ 7.28 ​ 0.92 ​ ​ 1,247 ​ 7.38 ​ 0.95 ​ Consumer ​ 605 2.85 2.13 ​ 498 2.95 2.23 ​ Total allowance for credit losses ​ $ 21,294 100.00 % 100.00 % $ 16,900 100.00 % 100.00 % ​ Although we believe that we use the best information available to establish the allowance for credit losses, future adjustments to the allowance for credit losses may be necessary and our results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations.
Significant accounting policies, including the impact of recent accounting pronouncements, are discussed in Note 1 of the Notes to Consolidated Financial Statements. The policies considered to be the critical accounting policies are described below. 30 Table of Contents Allowance for Loan Losses.
Significant accounting policies, including the impact of recent accounting pronouncements, are discussed in Note 1 of the Notes to Consolidated Financial Statements. The policies considered to be the critical accounting policies are described below. 31 Table of Contents Allowance for Credit Losses. Determining the amount of the allowance for credit losses necessarily involves a high degree of judgment.
The outstanding balance of borrowings from the FHLB increased $55.9 million, from $307.3 million at September 30, 2022 to $363.2 million at September 30, 2023. FHLB borrowings are primarily used to fund loan demand and to purchase available for sale securities.
The outstanding balance of borrowings from the FHLB decreased $61.5 million, from $363.2 million at September 30, 2023 to $301.6 million at September 30, 2024. FHLB borrowings are primarily used to fund loan demand and to purchase available for sale securities.
The following table sets forth the amortized costs and fair values of our investment securities at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At September 30, ​ ​ 2023 ​ 2022 ​ 2021 ​ Amortized Fair Amortized Fair Amortized Fair (In thousands) ​ Cost ​ Value ​ Cost ​ Value ​ Cost ​ Value Securities available for sale: ​ ​ ​ ​ ​ ​ US Treasury notes and bills ​ $ 30,598 ​ $ 25,949 ​ $ 30,809 ​ $ 27,295 ​ $ 250 ​ $ 250 Agency mortgage-backed ​ ​ 28,542 ​ ​ 24,268 ​ ​ 30,786 ​ ​ 27,500 ​ ​ 8,143 ​ ​ 8,384 Agency CMO ​ 14,064 ​ 12,742 ​ 15,562 ​ 14,821 ​ 13,315 ​ 13,530 Privately-issued CMO ​ 424 ​ 396 ​ 495 ​ 470 ​ 729 ​ 803 Privately-issued asset-backed ​ 433 ​ 443 ​ 561 ​ 569 ​ 721 ​ 772 SBA certificates ​ 11,587 ​ 10,745 ​ 12,255 ​ 12,012 ​ 2,157 ​ 2,138 Municipal ​ 177,561 ​ 151,484 ​ 260,326 ​ 233,850 ​ 170,102 ​ 180,804 Other ​ ​ 2,000 ​ ​ 1,712 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total ​ $ 265,209 ​ $ 227,739 ​ $ 350,794 ​ $ 316,517 ​ $ 195,417 ​ $ 206,681 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Securities held to maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency mortgage-backed ​ $ 36 ​ $ 35 ​ $ 45 ​ $ 45 ​ $ 64 ​ $ 69 Municipal ​ 1,264 ​ 1,268 ​ 1,513 ​ 1,548 ​ 1,773 ​ 1,985 Total ​ $ 1,300 ​ $ 1,303 ​ $ 1,558 ​ $ 1,593 ​ $ 1,837 ​ $ 2,054 ​ The following table sets forth the stated maturities and weighted average yields of debt securities at September 30, 2023.
The following table sets forth the amortized costs and fair values of our investment securities at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At September 30, ​ ​ 2024 ​ 2023 ​ 2022 ​ Amortized Fair Amortized Fair Amortized Fair (In thousands) ​ Cost ​ Value ​ Cost ​ Value ​ Cost ​ Value Securities available for sale: ​ ​ ​ ​ ​ ​ US Treasury notes and bills ​ $ 30,031 ​ $ 27,411 ​ $ 30,598 ​ $ 25,949 ​ $ 30,809 ​ $ 27,295 Agency mortgage-backed ​ ​ 28,425 ​ ​ 26,276 ​ ​ 28,542 ​ ​ 24,268 ​ ​ 30,786 ​ ​ 27,500 Agency CMO ​ 15,700 ​ 14,926 ​ 14,064 ​ 12,742 ​ 15,562 ​ 14,821 Privately-issued CMO ​ 295 ​ 260 ​ 424 ​ 396 ​ 495 ​ 470 Privately-issued asset-backed ​ 301 ​ 313 ​ 433 ​ 443 ​ 561 ​ 569 SBA certificates ​ 11,993 ​ 11,926 ​ 11,587 ​ 10,745 ​ 12,255 ​ 12,012 Municipal ​ 174,132 ​ 165,687 ​ 177,561 ​ 151,484 ​ 260,326 ​ 233,850 Other ​ ​ 2,000 ​ ​ 1,880 ​ ​ 2,000 ​ ​ 1,712 ​ ​ — ​ ​ — Total ​ $ 262,877 ​ $ 248,679 ​ $ 265,209 ​ $ 227,739 ​ $ 350,794 ​ $ 316,517 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Securities held to maturity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency mortgage-backed ​ $ 29 ​ $ 29 ​ $ 36 ​ $ 35 ​ $ 45 ​ $ 45 Municipal ​ 1,011 ​ 1,023 ​ 1,264 ​ 1,268 ​ 1,513 ​ 1,548 Total ​ $ 1,040 ​ $ 1,052 ​ $ 1,300 ​ $ 1,303 ​ $ 1,558 ​ $ 1,593 ​ 38 Table of Contents The following table sets forth the stated maturities and weighted average yields of debt securities at September 30, 2024.
The Bank had 16 TDRs, totaling $1.3 million, which were performing according to their terms and on accrual status as of September 30, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At September 30, (Dollars in thousands) 2023 2022 2021 2020 2019 ​ Nonaccrual loans ​ $ 13,948 ​ $ 10,856 ​ $ 15,000 ​ $ 13,615 ​ $ 5,168 ​ Accruing loans past due 90 days or more ​ — ​ — ​ 472 ​ — ​ 12 ​ Total nonperforming loans ​ 13,948 ​ 10,856 ​ 15,472 ​ 13,615 ​ 5,180 ​ Performing TDRs ​ 1,266 ​ 2,714 ​ 1,743 ​ 3,069 ​ 7,265 ​ Foreclosed real estate ​ 474 ​ — ​ — ​ — ​ — ​ Total nonperforming assets ​ $ 15,688 ​ $ 13,570 ​ $ 17,215 ​ $ 16,684 ​ $ 12,445 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonaccrual loans to total loans ​ ​ 0.78 % 0.73 % 1.38 % 1.23 % 0.63 % Total nonperforming loans to total loans ​ 0.78 ​ 0.73 ​ 1.42 ​ 1.23 ​ 0.63 ​ Total nonperforming loans to total assets ​ 0.61 ​ 0.52 ​ 0.90 ​ 0.77 ​ 0.42 ​ Total nonperforming assets to total assets ​ 0.69 ​ 0.65 ​ 1.00 ​ 0.95 ​ 1.02 ​ ​ Federal and state banking regulations require us to review and classify our assets on a regular basis.
There were no new FDMs made or modifications of existing FDMs during the year ended September 30, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At September 30, (Dollars in thousands) 2024 2023 2022 2021 2020 ​ Nonaccrual loans ​ $ 16,942 ​ $ 13,948 ​ $ 10,856 ​ $ 15,000 ​ $ 13,615 ​ Accruing loans past due 90 days or more ​ — ​ — ​ — ​ 472 ​ — ​ Total nonperforming loans ​ 16,942 ​ 13,948 ​ 10,856 ​ 15,472 ​ 13,615 ​ Performing FDMs ​ — ​ 1,266 ​ 2,714 ​ 1,743 ​ 3,069 ​ Foreclosed real estate ​ 444 ​ 474 ​ — ​ — ​ — ​ Total nonperforming assets ​ $ 17,386 ​ $ 15,688 ​ $ 13,570 ​ $ 17,215 ​ $ 16,684 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonaccrual loans to total loans ​ ​ 0.85 % 0.78 % 0.73 % 1.38 % 1.23 % Total nonperforming loans to total loans ​ 0.85 ​ 0.78 ​ 0.73 ​ 1.42 ​ 1.23 ​ Total nonperforming loans to total assets ​ 0.69 ​ 0.61 ​ 0.52 ​ 0.90 ​ 0.77 ​ Total nonperforming assets to total assets ​ 0.71 ​ 0.69 ​ 0.65 ​ 1.00 ​ 0.95 ​ ​ Federal and state banking regulations require us to review and classify our assets on a regular basis.
Classified assets include loans that are classified due to factors other than payment delinquencies, such as lack of current financial statements and other required documentation, insufficient cash flows or other deficiencies, and, therefore, are not included as nonperforming assets.
If we classify an asset as loss, we charge off an amount equal to 100% of the portion of the asset classified loss. 46 Table of Contents Classified assets include loans that are classified due to factors other than payment delinquencies, such as lack of current financial statements and other required documentation, insufficient cash flows or other deficiencies, and, therefore, are not included as nonperforming assets.
The Company launched a national first-lien home equity line of credit product in fiscal 2021, the balance of which was $307.9 million and $178.4 million at September 30, 2023 and 2022, respectively.
The increase in residential mortgage loans is primarily due a $125.1 million increase in first-lien home equity line of credit loans. The Company launched a national first-lien home equity line of credit product in fiscal 2021, the balance of which was $433.0 million and $307.9 million at September 30, 2024 and 2023, respectively.
Mortgage loans originated for sale were $587.7 million in the year ended September 30, 2023 as compared to $1.61 billion for 2022. In 2022, noninterest income decreased $69.2 million, or 57.5%, from $120.4 million for the year ended September 30, 2021 to $51.2 million for the year ended September 30, 2022.
Mortgage loans originated for sale were $60.8 million in the year ended September 30, 2024 as compared to $587.7 million for 2023. In 2023, noninterest income decreased $25.9 million, or 50.5%, from $51.2 million for the year ended September 30, 2022 to $25.3 million for the year ended September 30, 2023.
The following table sets forth the balances of our deposit accounts at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At September 30, (In thousands) 2023 2022 Non-interest-bearing demand deposits ​ $ 242,237 ​ $ 340,172 NOW accounts ​ 336,446 ​ 343,296 Money market accounts ​ 323,739 ​ 238,219 Savings accounts ​ 170,073 ​ 171,779 Retail time deposits ​ 170,980 ​ 129,864 Brokered & reciprocal time deposits ​ 438,319 ​ 292,504 Total ​ $ 1,681,794 ​ $ 1,515,834 ​ The following table indicates the amount of time deposits, by account, that are in excess of the FDIC insurance limit (currently $250,000) by time remaining until maturity as of September 30, 2023. ​ ​ ​ ​ ​ (In thousands) Amount Three months or less ​ $ 21,190 Over three through six months ​ 7,155 Over six through twelve months ​ 20,495 Over twelve months ​ 8,926 Total ​ $ 57,766 ​ Our uninsured deposits, which consist solely of the portion of deposit accounts that exceed the FDIC insurance limit (currently $250,000), were approximately $463.5 million and $494.7 million at September 30, 2023 and 2022, respectively.
The following table sets forth the balances of our deposit accounts at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At September 30, (In thousands) 2024 2023 Non-interest-bearing demand deposits ​ $ 191,528 ​ $ 242,237 NOW accounts ​ 332,388 ​ 336,446 Money market accounts ​ 393,214 ​ 323,739 Savings accounts ​ 150,913 ​ 170,073 Retail time deposits ​ 303,681 ​ 170,980 Brokered & reciprocal time deposits ​ 509,157 ​ 438,319 Total ​ $ 1,880,881 ​ $ 1,681,794 ​ 39 Table of Contents The following table indicates the amount of time deposits, by account, that are in excess of the FDIC insurance limit (currently $250,000) by time remaining until maturity as of September 30, 2024. ​ ​ ​ ​ ​ (In thousands) Amount Three months or less ​ $ 42,144 Over three through six months ​ 58,075 Over six through twelve months ​ 21,364 Over twelve months ​ 11,607 Total ​ $ 133,190 ​ Our uninsured deposits, which consist solely of the portion of deposit accounts that exceed the FDIC insurance limit (currently $250,000), were approximately $565.7 million and $463.5 million at September 30, 2024 and 2023, respectively.
The increase in the average balance of interest-earning assets is due primarily to increases in the average balance of total loans and investment securities of $318.0 million and $67.2 million, respectively. For the year ended September 30, 2022, total interest income increased $5.9 million, or 9.1% as compared to 2021.
The increase in the average balance of interest-earning assets is due primarily to increases in the average balance of total loans of $245.8 million. For the year ended September 30, 2023, total interest income increased $32.0 million, or 45.0% as compared to 2022.
The effective tax rate was 0.1%, 11.1% and 25.0%, for the years ended September 30, 2023, 2022 and 2021, respectively. The lower effective tax rate for 2023 compared to 2022, was primarily due to the recognition of investment tax credits related to solar projects in 2023 and lower pre-tax income in 2023 as compared to 2022.
The higher effective tax rate for 2024 compared to 2023, was primarily due to higher taxable income in the 2024 period. The lower effective tax rate for 2023 compared to 2022, was primarily due to the recognition of investment tax credits related to solar projects in 2023 and lower pre-tax income in 2023 as compared to 2022.
Commercial construction loans totaled $14.6 million, or 0.8% of total loans, at September 30, 2023 compared to $5.9 million, or 0.4% of total loans at September 30, 2022. Land and land development loans totaled $17.2 million, or 1.0% of total loans at September 30, 2023, compared to $11.9 million, or 0.8% of total loans at September 30, 2022.
At September 30, 2023, residential construction loans totaled $24.9 million, or 1.4% of total loans, of which $3.3 million were speculative construction loans. Commercial construction loans totaled $9.2 million, or 0.5% of total loans, at September 30, 2024 compared to $14.6 million, or 0.8% of total loans at September 30, 2023.
Other borrowings decreased from $88.2 million at September 30, 2022 to $48.4 million at September 30, 2023 due to a decrease in secured borrowings of $38.0 million and a decrease in subordinated debt of $1.8 million. On September 20, 2018, the Company entered into a subordinated note purchase agreement in the principal amount of $20 million.
Other borrowings increased from $48.4 million at September 30, 2023 to $48.6 million at September 30, 2024 primarily due to amortization of the subordinated debt issuance costs. On September 20, 2018, the Company entered into a subordinated note purchase agreement in the principal amount of $20 million.
The Company is a separate legal entity from the Bank and must provide for its own liquidity to pay its operating expenses and other financial obligations, to pay any dividends and to repurchase any of its outstanding common stock. The Company’s primary source of income is dividends received from the Bank.
We have the ability to attract and retain deposits by adjusting the interest rates offered. 51 Table of Contents The Company is a separate legal entity from the Bank and must provide for its own liquidity to pay its operating expenses and other financial obligations, to pay any dividends and to repurchase any of its outstanding common stock.
Risk Management Overview. Managing risk is essential to successfully managing a financial institution. Our most prominent risk exposures are credit risk, interest rate risk and market risk. Credit risk is the risk of not collecting the interest and/or the principal balance of a loan or investment when it is due.
Our most prominent risk exposures are credit risk, interest rate risk and market risk. Credit risk is the risk of not collecting the interest and/or the principal balance of a loan or investment when it is due. Interest rate risk is the potential reduction of interest income as a result of changes in interest rates.
Changes attributable to changes in both rate and volume have been allocated proportionally based on the absolute dollar amounts of change in each. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, 2023 ​ Year Ended September 30, 2022 ​ ​ Compared to Compared to ​ ​ Year Ended September 30, 2022 Year Ended September 30, 2021 ​ ​ Increase (Decrease) Increase (Decrease) ​ ​ Due to Due to (In thousands) Volume Rate Net Volume Rate Net Interest income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing deposits with banks $ (184) ​ $ 892 ​ $ 708 ​ $ (53) ​ $ 141 ​ $ 88 Loans ​ 15,790 ​ 11,986 ​ 27,803 ​ 943 ​ 3,086 ​ 4,029 Investment securities - taxable 1,169 ​ 362 ​ 1,531 ​ 1,068 ​ (505) ​ 563 Investment securities - nontaxable 1,309 ​ 461 ​ 1,770 ​ 1,603 ​ (157) ​ 1,446 FRB and FHLB stock 199 ​ 507 ​ 706 ​ 9 ​ 138 ​ 147 Total interest-earning assets 18,283 ​ 14,208 ​ 32,518 ​ 3,570 ​ 2,703 ​ 6,273 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense: ​ ​ ​ ​ ​ ​ Deposits 3,871 ​ 18,898 ​ 22,769 ​ 616 ​ 1,091 ​ 1,707 Federal funds purchased ​ ​ 1 ​ ​ — ​ ​ 1 ​ ​ — ​ ​ — ​ ​ — Borrowings from FHLB ​ 1,531 ​ ​ 5,875 ​ ​ 7,406 ​ ​ 123 ​ ​ 12 ​ ​ 135 Federal Reserve PPPLF ​ ​ — ​ — ​ — ​ (400) ​ — ​ (400) Other borrowings ​ 1,002 ​ (62) ​ 937 ​ 1,210 ​ (197) ​ 1,013 Total interest-bearing liabilities ​ 6,405 ​ ​ 24,711 ​ ​ 31,113 ​ ​ 1,549 ​ ​ 906 ​ ​ 2,455 Net increase (decrease) in net interest income (taxable equivalent basis) ​ $ 11,878 ​ $ (10,503) ​ $ 1,405 ​ $ 2,021 ​ $ 1,797 ​ $ 3,818 ​ Provision for Loan Losses.
Changes attributable to changes in both rate and volume have been allocated proportionally based on the absolute dollar amounts of change in each. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, 2024 ​ Year Ended September 30, 2023 ​ ​ Compared to Compared to ​ ​ Year Ended September 30, 2023 Year Ended September 30, 2022 ​ ​ Increase (Decrease) Increase (Decrease) ​ ​ Due to Due to (In thousands) Volume Rate Net Volume Rate Net Interest income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing deposits with banks $ (15) ​ $ 189 ​ $ 174 ​ $ (184) ​ $ 892 ​ $ 708 Loans ​ 13,667 ​ 7,212 ​ 20,879 ​ 15,790 ​ 11,986 ​ 27,803 Investment securities - taxable (263) ​ 92 ​ (171) ​ 1,169 ​ 362 ​ 1,531 Investment securities - nontaxable (2,557) ​ 67 ​ (2,490) ​ 1,309 ​ 461 ​ 1,770 FRB and FHLB stock 111 ​ 17 ​ 128 ​ 199 ​ 507 ​ 706 Total interest-earning assets 10,942 ​ 7,577 ​ 18,520 ​ 18,283 ​ 14,208 ​ 32,518 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense: ​ ​ ​ ​ ​ ​ Deposits 6,287 ​ 14,143 ​ 20,430 ​ 3,871 ​ 18,898 ​ 22,769 Federal funds purchased ​ ​ (1) ​ ​ — ​ ​ (1) ​ ​ 1 ​ ​ — ​ ​ 1 Borrowings from FHLB ​ 251 ​ ​ 1,619 ​ ​ 1,870 ​ ​ 1,531 ​ ​ 5,875 ​ ​ 7,406 Other borrowings ​ (644) ​ 616 ​ (28) ​ 1,002 ​ (62) ​ 937 Total interest-bearing liabilities ​ 5,893 ​ ​ 16,378 ​ ​ 22,271 ​ ​ 6,405 ​ ​ 24,711 ​ ​ 31,113 Net increase (decrease) in net interest income (taxable equivalent basis) ​ $ 5,050 ​ $ (8,802) ​ $ (3,751) ​ $ 11,878 ​ $ (10,503) ​ $ 1,405 ​ Provision for Credit Losses.
These loans are primarily secured by vacant lots to be improved for residential and nonresidential development, and farmland. Commercial business loans, including in-market commercial business loans and SBA commercial business loans, totaled $134.5 million, or 7.5% of total loans, at September 30, 2023 compared to $110.3 million, or 7.4% of total loans, at September 30, 2022.
Land and land development loans totaled $17.7 million, or 0.9% of total loans at September 30, 2024, compared to $17.2 million, or 1.0% of total loans at September 30, 2023. These loans are primarily secured by vacant lots to be improved for residential and nonresidential development, and farmland.
The lower pre-tax income for 2023 is due primarily to losses incurred for mortgage banking operations, professional fees related to mortgage banking loss contingencies, and expenses related to the conversion of the Bank’s data processing system. The lower effective tax rate for 2022 compared to 2021, was primarily due to lower taxable income and lower nondeductible executive compensation expense.
The lower pre-tax income for 2023 is due primarily to losses incurred for mortgage banking operations, professional fees related to mortgage banking loss contingencies, and expenses related to the conversion of the Bank’s data processing system. Risk Management Overview. Managing risk is essential to successfully managing a financial institution.
The decrease in net income for 2022 compared to 2021 was due to a decrease in noninterest income of $69.2 million and a $3.7 million increase in the provision for loan losses, partially offset by a $3.5 million increase in net interest income and a $46.7 million decrease in noninterest expense. 39 Table of Contents Net Interest Income.
The increase in net income for 2024 compared to 2023 was due to a decrease in noninterest expense of $23.2 million, partially offset by a $12.8 million decrease in noninterest income, a $3.5 million decrease in net interest income and a $480,000 increase in total provision for credit losses.
On March 18, 2022, the Company entered into subordinated note purchase agreements in the aggregate principal amount of $31 million. The subordinated notes initially bear a fixed interest rate of 4.50% per year through March 30, 2027, and thereafter a floating rate, reset quarterly, equal to the three-month SOFR rate plus 276 basis points.
The subordinated notes initially bear a fixed interest rate of 4.50% per year through March 30, 2027, and thereafter a floating rate, reset quarterly, equal to the three-month SOFR rate plus 276 basis points. All interest is payable semi-annually and the subordinated notes are scheduled to mature on March 30, 2032.
In 2022, interest income on loans increased $4.0 million, or 6.9%, from $58.1 million for 2021 to $62.1 million for 2022, due primarily to an increase in the average balance of loans outstanding of $26.0 million, from $1.34 billion for 2021 to $1.36 billion for 2022, and an increase in the average tax-equivalent yield on loans from 4.35% for 2021 to 4.57% for 2022.
Interest income on loans increased $20.6 million, or 22.9%, from $89.8 million for 2023 to $110.4 million for 2024, due primarily to an increase in the average balance of loans outstanding of $245.8 million, from $1.68 billion for 2023 to $1.93 billion for 2024, and an increase in the average tax-equivalent yield on loans from 5.36% for 2023 to 5.76% for 2024.
(2) Includes farmland, land and land development loans. (3) Includes construction loans for which the Bank has committed to provide permanent financing. ​ Fixed vs. Adjustable Rate Loans The following table sets forth the dollar amount of all loans at September 30, 2023 that are due after September 30, 2024, and have either fixed interest rates or adjustable interest rates.
Adjustable Rate Loans The following table sets forth the dollar amount of all loans at September 30, 2024 that are due after September 30, 2025, and have either fixed interest rates or adjustable interest rates.
Multi-family real estate loans totaled $34.9 million, or 2.0% of total loans at September 30, 2023, compared to $32.4 million, or 2.2% of total loans at September 30, 2022. These loans are primarily secured by apartment buildings and other multi-tenant developments in our primary market area.
These loans are primarily secured by apartment buildings and other multi-tenant developments in our primary market area. Residential construction loans totaled $53.2 million, or 2.7% of total loans at September 30, 2024, of which $6.4 million were speculative construction loans.
The following table sets forth the composition of our loan portfolio at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At September 30, ​ ​ ​ 2023 ​ 2022 ​ (Dollars in thousands) Amount Percent Amount Percent Real estate mortgage: ​ ​ Residential ​ $ 528,410 ​ 29.58 % $ 368,211 24.73 % Commercial ​ 187,232 ​ 10.48 ​ 169,861 11.41 ​ Single tenant net lease ​ ​ 757,388 ​ 42.40 ​ ​ 674,567 ​ 45.31 ​ SBA commercial real estate ​ ​ 47,078 ​ 2.64 ​ ​ 59,379 ​ 3.99 ​ Multi-family ​ 34,892 ​ 1.95 ​ 32,411 2.18 ​ Residential construction ​ 24,924 ​ 1.40 ​ 18,261 1.23 ​ Commercial construction ​ 14,588 ​ 0.82 ​ 5,938 0.40 ​ Land and land development ​ 17,234 ​ 0.96 ​ 11,880 0.80 ​ ​ ​ 1,611,746 ​ 90.23 ​ 1,340,508 90.04 ​ ​ ​ ​ ​ ​ ​ ​ Commercial business ​ 117,594 ​ 6.58 ​ 90,010 6.05 ​ SBA commercial business ​ 16,939 ​ 0.95 ​ 20,282 1.36 ​ Consumer ​ 39,915 ​ 2.23 ​ 38,052 2.56 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total loans ​ 1,786,194 100.00 % 1,488,852 100.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred loan origination fees and costs, net ​ 949 ​ 1,052 ​ Allowance for loan losses ​ (16,900) ​ (15,360) ​ Loans, net ​ $ 1,770,243 ​ $ 1,474,544 ​ ​ 35 Table of Contents Loan Maturity The following table sets forth certain information at September 30, 2023 regarding the dollar amount of loan principal repayments becoming due during the period indicated.
Consumer loans totaled $42.2 million, or 2.1% of total loans, at September 30, 2024 compared to $39.9 million, or 2.2% of total loans, at September 30, 2023. 36 Table of Contents The following table sets forth the composition of our loan portfolio at the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At September 30, ​ ​ ​ 2024 ​ 2023 ​ (Dollars in thousands) Amount Percent Amount Percent Real estate mortgage: ​ ​ Residential ​ $ 670,011 ​ 33.77 % $ 528,410 ​ 29.58 % Commercial ​ 204,847 ​ 10.32 ​ 187,232 ​ 10.48 ​ Single tenant net lease ​ ​ 750,642 ​ 37.83 ​ ​ 757,388 ​ 42.40 ​ SBA commercial real estate ​ ​ 55,557 ​ 2.80 ​ ​ 47,078 ​ 2.64 ​ Multi-family ​ 37,763 ​ 1.90 ​ 34,892 ​ 1.95 ​ Residential construction ​ 53,237 ​ 2.68 ​ 24,924 ​ 1.40 ​ Commercial construction ​ 9,172 ​ 0.46 ​ 14,588 ​ 0.82 ​ Land and land development ​ 17,678 ​ 0.89 ​ 17,234 ​ 0.96 ​ ​ ​ 1,798,907 ​ 90.67 ​ 1,611,746 ​ 90.23 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial business ​ 124,639 ​ 6.28 ​ 117,594 ​ 6.58 ​ SBA commercial business ​ 18,342 ​ 0.92 ​ 16,939 ​ 0.95 ​ Consumer ​ 42,213 ​ 2.13 ​ 39,915 ​ 2.23 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total loans ​ 1,984,101 100.00 % 1,786,194 100.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred loan origination fees and costs, net ​ 1,045 ​ 949 ​ Allowance for credit losses ​ (21,294) ​ (16,900) ​ Loans, net ​ $ 1,963,852 ​ $ 1,770,243 ​ ​ Loan Maturity The following table sets forth certain information at September 30, 2024 regarding the dollar amount of loan principal repayments becoming due during the period indicated.

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