First Savings Financial Group, Inc. Reports Financial Results for the Fiscal Year Ended September 30, 2024

JEFFERSONVILLE, Ind., Oct. 24, 2024 (GLOBE NEWSWIRE) -- First Savings Financial Group, Inc. (NASDAQ: FSFG - news) (the "Company"), the holding company for First Savings Bank (the "Bank"), today reported net income of $13.6 million, or $1.98 per diluted share, for the year ended September 30, 2024, compared to net income of $8.2 million, or $1.19 per diluted share, for the year ended September 30, 2023. The core banking segment reported net income of $16.9 million, or $2.47 per diluted share for the year ended September 30, 2024, compared to $14.9 million, or $2.18 per diluted share for the year ended September 30, 2023.

Commenting on the Company's performance, Larry W. Myers, President and CEO, stated "Fiscal 2024 was, in many ways, a year of rebuilding, repositioning and refinement. A summary of these enhancement actions is provided below. While we're not entirely pleased with the financial performance in fiscal 2024, we are confident that the Company is well positioned to better perform in fiscal 2025 and the years thereafter regardless of the economic environment. For fiscal 2025 we'll remain focused on core banking; strong asset quality; selective high-quality lending; core deposit growth; increased SBA lending volume; continued improvement of liquidity, capital and interest rate sensitivity positions; and strategic opportunities. We believe the efforts of fiscal 2024 along with the focus for fiscal 2025 will deliver enhanced shareholder value. Additionally, we'll continue to evaluate options and strategies that we believe will further position the Company for future success and deliver shareholder value.”

Enhancements Actions During Fiscal Year Ended September 30, 2024

• Converted the core operating system immediately prior to the beginning of fiscal 2024 and committed to effectively adapt to the new system and gain efficiencies and expense reductions therewith.
• Ceased national mortgage banking operations in the first fiscal quarter, including sale of the residential mortgage servicing rights portfolio.
• Implemented additional expense reduction and containment strategies, which were effective.
• Experienced the net interest margin floor in the second fiscal quarter and recognized expansion in the subsequent quarters, in addition to a slowed paced of deposit migration to higher cost types.
• Maintained a balance sheet position that is expected to benefit in a potential decreasing rate environment but having limited exposure to potential increasing rates.
• Remained disciplined in our lending philosophy with respect to both rate expectations and credit quality.
• Enhanced our review of asset quality, which remains strong, in order to prepare for any potential financial downturn that may occur.
• Enhanced SBA Lending business development staff with new and replacement hires throughout the fiscal year, plus decreased surplus support staff at the end of the fourth fiscal quarter.

Net interest income decreased $3.5 million, or 5.7%, to $58.1 million for the year ended September 30, 2024 as compared to the prior year. The tax equivalent net interest margin for the year ended September 30, 2024 was 2.68% as compared to 3.10% for the prior year. The decrease in net interest income was due to a $22.3 million increase in interest expense, partially offset by an $18.8 million increase in interest income. A table of average balance sheets, including average asset yields and average liability costs, is included at the end of this release.

The Company recognized a provision for credit losses for loans of $3.5 million, a credit for unfunded lending commitments of $421,000, and a provision for credit losses for securities of $21,000 for the year ended September 30, 2024, compared to a provision for loan losses of $2.6 million only for the prior year. The provision for credit losses for loans increased primarily due to loan growth and the effects of adopting the Current Expected Credit Loss (CECL) methodology during the year ended September 30, 2024. The Company recognized net charge-offs totaling $527,000 during the year, of which $104,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $1.1 million during the prior year, of which $872,000 was related to unguaranteed portions of SBA loans. Nonperforming loans, which consist of nonaccrual loans and loans over 90 days past due and still accruing interest, increased $3.0 million from $13.9 million at September 30, 2023 to $16.9 million at September 30, 2024.

Noninterest income decreased $12.8 million for the year ended September 30, 2024 as compared to the prior year. The decrease was due primarily to a $14.1 million decrease in mortgage banking income due to the cessation of national mortgage banking operations in the quarter ended December 31, 2023.

Noninterest expense decreased $23.2 million for the year ended September 30, 2024 as compared to the prior year. The decrease was due primarily to decreases in compensation and benefits, data processing expense and other operating expenses of $12.0 million, $2.2 million and $7.8 million, respectively. The decrease in compensation and benefits expense was due primarily to a reduction in staffing related to the cessation of national mortgage banking operations in the quarter ended December 31, 2023. The decrease in data processing expense was due primarily to expenses recognized in the prior year related to the implementation of the new core operating system in August 2023. The decrease in other operating expense was due primarily to a $1.9 decrease in net loss on captive insurance operations due to the dissolution of the captive insurance company in September 2023; a decrease in loss contingency accrual for SBA-guaranteed loans of $754,000 in 2024 compared to an increase of $1.5 million in 2023; a decrease in the loss contingency accrual for restitution to mortgage borrowers of $283,000 in 2024 compared to an increase of $609,000 in 2023; and a decrease of $853,000 in loan expense for 2024 as compared to 2023 due primarily to lower mortgage loan originations related to the cessation of national mortgage banking operations in the quarter ended December 31, 2023.

The Company recognized income tax expense of $1.0 million for the year ended September 30, 2024 compared to tax expense of $10,000 for the prior year. The increase is primarily due to higher taxable income in the 2024 period. The effective tax rate for 2024 was 7.0%, which was an increase from the effective tax rate of 0.1% in 2023. The effective tax rate is well below the statutory tax rate primarily due to the recognition of investment tax credits related to solar projects in both the 2024 and 2023 periods.

Results of Operations for the Three Months Ended September 30, 2024 and 2023

The Company reported net income of $3.7 million, or $0.53 per diluted share, for the three months ended September 30, 2024, compared to a net loss of $747,000, or $0.11 per diluted share, for the three months ended September 30, 2023. The core banking segment reported net income of $4.1 million, or $0.60 per diluted share, for the three months ended September 30, 2024, compared to $2.3 million, or $0.33 per diluted share, for the three months ended September 30, 2023.

Net interest income decreased $459,000, or 3.0%, to $15.1 million for the three months ended September 30, 2024 as compared to the same period in 2023. The tax equivalent net interest margin was 2.72% for the three months ended September 30, 2024 as compared to 3.03% for the same period in 2023. The decrease in net interest income was due to a $4.5 million increase in interest expense, partially offset by a $4.1 million increase in interest income. A table of average balance sheets, including average asset yields and average liability costs, is included at the end of this release.

The Company recognized a provision for credit losses for loans of $1.8 million, a credit for unfunded lending commitments of $262,000, and a credit for credit losses for securities of $86,000 for the three months ended September 30, 2024, compared to a provision for loan losses of $815,000 only for the same period in 2023. The provision for credit losses for loans increased primarily due to loan growth and the effects of adopting the Current Expected Credit Loss (CECL) methodology during the year ended September 30, 2024. The Company recognized net charge-offs totaling $304,000 during the 2024 period, of which $120,000 was related to unguaranteed portions of SBA loans, compared to net charge-offs of $753,000 during the 2023 period, of which $609,000 was related to unguaranteed portions of SBA loans.

Noninterest income decreased $2.6 million for the three months ended September 30, 2024 as compared to the same period in 2023. The decrease was due primarily to a $3.0 million decrease in mortgage banking income due to the cessation of national mortgage banking operations in the quarter ended December 31, 2023.

Noninterest expense decreased $9.0 million for the three months ended September 30, 2024 as compared to the same period in 2023. The decrease was due primarily to decreases in compensation and benefits expense, data processing expense, and other operating expenses of $4.5 million, $1.5 million and $3.5 million, respectively. The decrease in compensation and benefits expense was due primarily to a reduction in staffing related to the cessation of national mortgage banking operations in the quarter ended December 31, 2023. The decrease in data processing expense was due primarily to expenses recognized in the prior year period related to the implementation of the new core operating system in August 2023. The decrease in other operating expense was due primarily to a $978,000 decrease in the net loss on captive insurance operations due to the dissolution of the captive insurance company in September 2023; a decrease in loss contingency accrual for SBA-guaranteed loans of $14,000 in 2024 compared to an increase of $1.0 million in 2023; and a decrease of $270,000 in loan expense for 2024 as compared to 2023 due primarily to lower mortgage loan originations related to the cessation of the national mortgage banking operations in the quarter ended December 31, 2023.

The Company recognized income tax expense of $145,000 for the three months ended September 30, 2024 compared to income tax benefit of $737,000 for the same period in 2023. The increase was primarily due to higher taxable income in the 2024 period.

Comparison of Financial Condition at September 30, 2024 and September 30, 2023

Total assets increased $161.5 million, from $2.29 billion at September 30, 2023 to $2.45 billion at September 30, 2024. Net loans held for investment increased $193.6 million during the year ended September 30, 2024 due primarily to growth in residential real estate, residential construction, and commercial real estate loans. Loans held for sale decreased by $20.1 million from $45.9 million at September 30, 2023 to $25.7 million, primarily due to the winddown of the national mortgage banking operations. Residential mortgage loan servicing rights decreased $59.8 million during the year ended September 30, 2024, due to the sale of the entire residential mortgage loan servicing rights portfolio during the year.

Total liabilities increased $135.4 million due primarily to increases in total deposits of $199.1 million, which included an increase in brokered deposits of $70.8 million, partially offset by a decrease in FHLB borrowings of $61.5 million. As of September 30, 2024, deposits exceeding the FDIC insurance limit of $250,000 per insured account were 30.1% of total deposits and 13.7% of total deposits when excluding public funds insured by the Indiana Public Deposit Insurance Fund.

Common stockholders' equity increased $26.1 million, from $151.0 million at September 30, 2023 to $177.1 million at September 30, 2024, due primarily to a $18.4 million decrease in accumulated other comprehensive loss and an increase in retained net income of $7.0 million. 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. At September 30, 2024 and September 30, 2023, the Bank was considered "well-capitalized” under applicable regulatory capital guidelines.

First Savings Bank is an entrepreneurial community bank headquartered in Jeffersonville, Indiana, which is directly across the Ohio River from Louisville, Kentucky, and operates fifteen depository branches within Southern Indiana. The Bank also has two national lending programs, including single-tenant net lease commercial real estate and SBA lending, with offices located predominately in the Midwest. The Bank is a recognized leader, both in its local communities and nationally for its lending programs. The employees of First Savings Bank strive daily to achieve the organization's vision, We Expect To Be The BEST community BANK, which fuels our success. The Company's common shares trade on The NASDAQ Stock Market under the symbol "FSFG.”

This release may contain forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts; rather, they are statements based on the Company's current expectations regarding its business strategies and their intended results and its future performance. Forward-looking statements are preceded by terms such as "expects," "believes," "anticipates," "intends" and similar expressions.

Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties could cause or contribute to the Company's actual results, performance and achievements to be materially different from those expressed or implied by the forward-looking statements. Factors that may cause or contribute to these differences include, without limitation, changes in general economic conditions; changes in market interest rates; changes in monetary and fiscal policies of the federal government; legislative and regulatory changes; and other factors disclosed periodically in the Company's filings with the Securities and Exchange Commission.

Because of the risks and uncertainties inherent in forward-looking statements, readers are cautioned not to place undue reliance on them, whether included in this report or made elsewhere from time to time by the Company or on its behalf. Except as may be required by applicable law or regulation, the Company assumes no obligation to update any forward-looking statements.

Contact:

Tony A. Schoen, CPA

Chief Financial Officer

812-283-0724