CLARKSVILLE, Ind., Jan. 29, 2019 (GLOBE NEWSWIRE) — First Savings Financial Group, Inc. (NASDAQ: FSFG – news) (the “Company”), the holding company for First Savings Bank (the “Bank”), today reported net income of $2.9 million, or $1.24 per diluted share, for the quarter ended December 31, 2018 compared to net income of $3.4 million, or $1.44 per diluted share, for the quarter ended December 31, 2017.  Net income for the quarter ended December 31, 2018 was negatively impacted by interest expense of $245,000, net of taxes, related to the Company’s issuance of $20.0 million of subordinated debt in September 2018, which amounted to $0.10 per diluted share for the quarter.    

Net interest income increased $1.5 million, or 18.9%, to $9.6 million for the quarter ended December 31, 2018 as compared to the same quarter in 2017.  The improved net interest income performance is due to a $2.4 million increase in interest income, which was partially offset by an $852,000 increase in interest expense. Interest income increased due to an increase in the average balance of interest-earning assets of $130.5 million, from $859.3 million for 2017 to $989.8 million for 2018, and an increase in the weighted average tax-equivalent yield, from 4.52% for 2017 to 4.88% for 2018.  Interest expense increased due to an increase in the average balance of interest-bearing liabilities of $67.8 million, from $709.3 million for 2017 to $777.1 million for 2018, and an increase in the average cost of interest-bearing liabilities, from 0.77% for 2017 to 1.15% for 2018.  Increases for the 2018 quarter related to subordinated debt included interest expense of $322,000, including amortization of debt issuance costs, and $19.7 million in the average balance of interest-bearing liabilities, including debt issuance costs.  The increase in the average cost of interest-bearing liabilities for the 2018 quarter was due primarily to the subordinated debt’s average cost of 6.55%, including amortization of debt issuance costs.  Additional details are included in the “Summarized Consolidated Average Balance Sheets” table at the end of this release. 

The Company recognized $315,000 in provision for loan losses for the quarter ended December 31, 2018, compared to $462,000 of provision for loan losses recognized in the same quarter in 2017.  Nonperforming loans, which consist of nonaccrual loans and loans over 90 days past due and still accruing interest, increased $335,000, from $4.3 million at September 30, 2018 to $4.6 million at December 31, 2018. The Company recognized net charge-offs of $18,000 for the quarter ended December 31, 2018 compared to $43,000 for the same quarter in 2017.

Noninterest income increased $2.9 million for the quarter ended December 31, 2018 as compared to the same quarter in 2017.  The increase was due primarily to an increase in mortgage banking income of $3.2 million, which was partially offset by a decrease in the net gain on sale of loans guaranteed by the U.S. Small Business Administration (“SBA”) of $575,000.  The increase in mortgage banking income is due to production from the secondary-market residential mortgage lending segment that commenced operations in April 2018.  The Bank’s SBA lending activities are performed under Q2 Business Capital, LLC (“Q2”), which specializes in the origination and servicing of SBA loans and of which the Bank owns 51% with the option to purchase the minority interest in September 2020.  Despite the 51% ownership by the Bank, gross revenues and expenses related to Q2 are reported in the consolidated income statements and the net income attributable to noncontrolling interests is then subtracted to arrive at net income attributable to the Company.  Additional details regarding the financial performance of the mortgage banking and SBA lending segments are included in the “Segmented Income Statement Information” table at the end of this release. 

Noninterest expense increased $5.0 million for the quarter ended December 31, 2018 as compared to the same quarter in 2017.  The increase was due primarily to increases in compensation and benefits, occupancy and equipment, and other operating expenses of $3.2 million, $583,000 and $677,000, respectively.  The increase in compensation and benefits expense is attributable to the addition of new employees to support the growth of the Company, including its mortgage banking and SBA lending activities, and normal salary and benefits adjustments.  The increase in occupancy and equipment expense is primarily attributable to increases in lease and rental, depreciation and equipment, and software licensing expenses that are primarily related to the new mortgage banking activities.  The increase in other operating expenses is primarily due to increases in loan expense related to the mortgage banking activities and insurance reserves and claims related to the Company’s captive insurance subsidiary.    

The Company recognized income tax expense of $522,000 for the quarter ended December 31, 2018, for an effective tax rate of 14.4%, as compared to income tax expense of $622,000, for an effective tax rate of 15.1%, for the same quarter in 2017. 

Comparison of Financial Condition at December 31, 2018 and September 30, 2018

Total assets increased $39.6 million, from $1.03 billion at September 30, 2018 to $1.07 billion at December 31, 2018.  Net loans increased $29.8 million due primarily to continued growth in the commercial real estate and SBA loan portfolios.  Total deposits increased $21.0 million due to a $19.6 million increase in interest-bearing deposit accounts and a $1.4 million increase in noninterest-bearing deposit accounts.  Borrowings from the Federal Home Loan Bank increased $17.0 million.     
                       
Common stockholders’ equity increased $4.2 million, from $98.8 million at September 30, 2018 to $103.0 million at December 31, 2018, due primarily to retained net income of $2.6 million and net unrealized gains of $1.4 million on the available for sale securities portfolio.  At December 31, 2018 and September 30, 2018, the Company and Bank were considered “well-capitalized” under applicable regulatory capital guidelines.

First Savings Bank has sixteen offices in the Indiana communities of Clarksville, Jeffersonville, Charlestown, Sellersburg, New Albany, Georgetown, Corydon, Lanesville, Elizabeth, English, Leavenworth, Marengo, Salem, Odon and Montgomery.  Access to First Savings Bank accounts, including online banking and electronic bill payments, is available anywhere with Internet access through the Bank’s website at www.fsbbank.net.

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

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

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

Contact
Tony A. Schoen, CPA
Chief Financial Officer
812-283-0724

FIRST SAVINGS FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
	Three Months Ended
	December 31,
OPERATING DATA:		2018				2017
(In thousands, except share and per share data)
Total interest income	$	11,801			$	9,426
Total interest expense		2,225				1,373
Net interest income		9,576				8,053
Provision for loan losses		315				462
Net interest income after provision for loan losses		9,261				7,591
Total noninterest income		5,781				2,906
Total noninterest expense		11,416				6,382
Income before income taxes		3,626				4,115
Income tax expense		522				622
Net income		3,104				3,493
Less:  Net income attributable to noncontrolling interest		173				87
Net income attributable to the Company	$	2,931			$	3,406
Net income per share, basic	$	1.28			$	1.53
Weighted average shares outstanding, basic		2,284,665				2,228,256
Net income per share, diluted	$	1.24			$	1.44
Weighted average shares outstanding, diluted		2,371,480				2,358,935
	December 31,				September 30,				Increase
FINANCIAL CONDITION DATA:		2018				2018			(Decrease)
(In thousands, except per share data)
Total assets	$	1,073,989			$	1,034,406			$	39,583
Cash and cash equivalents		36,344				42,274				(5,930	)
Investment securities		188,830				186,980				1,850
Loans held for sale		37,952				32,125				5,827
Gross loans		743,681				713,594				30,087
Allowance for loan losses		9,620				9,323				297
Interest earning assets		998,850				963,581				35,269
Goodwill		9,848				9,848				–
Core deposit intangibles		1,601				1,727				(126	)
Noninterest-bearing deposits		169,062				167,705				1,357
Interest-bearing deposits		663,011				643,407				19,604
FHLB borrowings		107,019				90,000				17,019
Total liabilities		969,428				934,161				35,267
Stockholders’ equity, net of noncontrolling interests		102,968				98,813				4,155
Book value per share	$	44.68			$	43.11			$	1.57
Tangible book value per share (1)		39.72				38.06				1.65
Non-performing assets:
Nonaccrual loans	$	4,551			$	4,182			$	369
Accruing loans past due 90 days		57				91				(34	)
Total non-performing loans		4,608				4,273				335
Foreclosed real estate		232				103				129
Troubled debt restructurings classified as performing loans		8,855				9,145				–  290
Other nonperforming assets		–				–				–
Total non-performing assets	$	13,695			$	13,521			$	174
Asset quality ratios:
Allowance for loan losses as a percent of
total gross loans		1.29	%			1.31	%			-0.01	%
Allowance for loan losses as a percent of
nonperforming loans		208.77	%			218.18	%			-9.42	%
Nonperforming loans as a percent of total gross loans		0.62	%			0.60	%			0.02	%
Nonperforming assets as a percent of total assets		1.28	%			1.31	%			-0.03	%
(1) See reconciliation of GAAP and non-GAAP financial measures for additional information relating to calculation of this item.
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES:
The following non-GAAP financial measures used by the Company provide information useful to investors in understanding the Company’s
performance.  The Company believes the financial measures presented below are important because of their widespread use by investors as a means to
evaluate capital adequacy and earnings.  The following table summarizes the non-GAAP financial measures derived from amounts reported in the
Company’s consolidated financial statements and reconciles those non-GAAP financial measures with the comparable GAAP financial measures.
	Three Months Ended
	December 31,
Net Income		2018				2017
(In thousands)
Net income attributable to the Company (Non-GAAP)	$	2,931			$	3,367
Less:  Merger-related expenses, net of tax effect		–				(83	)
Less:  Effect of adjustment to deferred taxes due to tax law change		–				122
Net income attributable to the Company (GAAP)	$	2,931			$	3,406
	Three Months Ended
	December 31,
Net Income per Share, Diluted		2018				2017
Net income per share, diluted (non-GAAP)	$	1.24			$	1.43
Less:  Merger-related expenses, net of tax effect		–				(0.04	)
Less:  Effect of adjustment to deferred taxes due to tax law change		–				0.05
Net income per share, diluted (GAAP)	$	1.24			$	1.44
	Three Months Ended
	December 31,
Efficiency Ratio		2018				2017
(In thousands)
Noninterest expense (GAAP)	$	11,416			$	6,382
Net interest income (GAAP)		9,576				8,053
Noninterest income (GAAP)		5,781				2,906
Efficiency ratio (GAAP)		74.34	%			58.24	%
Noninterest expense (GAAP)	$	11,416			$	6,382
Less:  Merger-related expenses		–				(110	)
Noninterest expense (Non-GAAP)		11,416				6,272
Net interest income (GAAP)		9,576				8,053
Noninterest income (GAAP)		5,781				2,906
Efficiency ratio (excluding nonrecurring items) (Non-GAAP)		74.34	%			57.23	%
	December 31,				September 30,
Tangible Book Value Per Share:		2018				2018
(In thousands, except share and per share data)
Stockholders’ equity (GAAP)	$	102,968			$	98,813
Less:  goodwill and core deposit intangibles		(11,449	)			(11,575	)
Tangible equity (Non-GAAP)		91,519				87,238
Shares outstanding		2,304,310				2,292,021
Tangible book value per share (Non-GAAP)	$	39.72			$	38.06
Book value per share (GAAP)	$	44.68			$	43.11
SUMMARIZED FINANCIAL INFORMATION:
	As of
	December 31,				September 30,				June 30,				March 31,				December 31,
Summarized Consolidated Balance Sheets		2018				2018				2018				2018				2017
(In thousands, except share data)
Total cash and cash equivalents	$	36,344			$	42,274			$	38,002			$	39,030			$	39,031
Total investment securities		188,830				186,980				210,758				198,206				185,977
Total loans, net of allowance for loan losses		734,061				704,271				693,858				682,441				616,993
Total assets		1,073,989				1,034,406				1,035,346				1,008,554				930,152
Total deposits		832,073				811,112				834,754				758,787				675,449
Total borrowings from the Federal Home Loan Bank		107,019				90,000				90,000				144,223				150,000
Total Company Stockholders’ Equity		102,968				98,813				97,640				95,164				95,320
Noncontrolling interests in subsidiary		1,593				1,432				1,229				663				87
Total Equity		104,561				100,245				98,869				95,827				95,407
Outstanding common shares		2,304,310				2,292,021				2,292,021				2,279,021				2,251,539
	Three Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,
Summarized Consolidated Statements of Income		2018				2018				2018				2018				2017
(In thousands, except per share data)
Total interest income	$	11,801			$	11,381			$	11,206			$	10,146			$	9,426
Total interest expense		2,225				1,842				1,699				1,423				1,373
Net interest income		9,576				9,539				9,507				8,723				8,053
Provision for loan losses		315				254				266				371				462
Net interest income after provision for loan losses		9,261				9,285				9,241				8,352				7,591
Total noninterest income		5,781				4,568				3,254				2,567				2,906
Total noninterest expense		11,416				10,143				8,122				8,359				6,382
Income before income taxes		3,626				3,710				4,373				2,560				4,115
Income tax expense		522				766				696				338				622
Net income		3,104				2,944				3,677				2,222				3,493
Less: net income attributable to noncontrolling interests		173				200				571				576				87
Net Income Attributable to the Company	$	2,931			$	2,744			$	3,106			$	1,646			$	3,406
Basic Earnings Per Share	$	1.28			$	1.20			$	1.37			$	0.73			$	1.53
Weighted Average Shares Outstanding – Basic		2,284,665				2,277,709				2,274,951				2,251,425				2,228,256
Diluted Earnings Per Share	$	1.24			$	1.15			$	1.31			$	0.69			$	1.44
Weighted Average Shares Outstanding – Diluted		2,371,480				2,379,520				2,378,839				2,370,260				2,358,935
	Three Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,
Consolidated Performance Ratios (annualized)		2018				2018				2018				2018				2017
Return on average assets		1.11	%			1.06	%			1.21	%			0.68	%			1.49	%
Return on average equity		11.82	%			11.16	%			13.02	%			6.83	%			14.58	%
Return on average common stockholders’ equity		11.82	%			11.16	%			13.02	%			6.83	%			14.58	%
Net interest margin (tax equivalent)		3.98	%			4.04	%			4.05	%			3.97	%			3.88	%
Efficiency ratio		74.34	%			71.90	%			63.65	%			74.04	%			58.24	%
	As of or for the Three Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,
Consolidated Asset Quality Ratios		2018				2018				2018				2018				2017
Nonperforming loans as a percentage of total loans		0.62	%			0.60	%			0.50	%			0.41	%			0.47	%
Nonperforming assets as a percentage of total assets		1.28	%			1.31	%			1.25	%			1.24	%			1.38	%
Allowance for loan losses as a percentage of total loans		1.29	%			1.31	%			1.28	%			1.28	%			1.36	%
Allowance for loan losses as a percentage of nonperforming loans		208.77	%			218.18	%			255.12	%			309.39	%			286.47	%
Net charge-offs (recoveries) to average outstanding loans		0.00	%			-0.01	%			0.01	%			0.00	%			0.01	%
SUMMARIZED FINANCIAL INFORMATION (CONTINUED):
	Three Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,
Segmented Income Statement Information		2018				2018				2018				2018				2017
(In thousands, except per share data)
Noninterest income – Core Banking	$	1,380			$	1,735			$	1,508			$	947			$	1,287
Noninterest income – SBA Lending (Q2)		1,137				875				1,697				1,620				1,619
Noninterest income – Mortgage Banking		3,264				1,958				49				–				–
Total noninterest income	$	5,781			$	4,568			$	3,254			$	2,567			$	2,906
Noninterest expense – Core Banking	$	6,586			$	6,771			$	6,333			$	7,288			$	5,310
Noninterest expense – SBA Lending (Q2)		1,362				1,162				1,127				1,071				1,072
Noninterest expense – Mortgage Banking		3,468				2,210				662				–				–
Total noninterest expense	$	11,416			$	10,143			$	8,122			$	8,359			$	6,382
Income before income taxes – Core Banking	$	3,324			$	3,453			$	3,820			$	1,385			$	3,897
Income before income taxes – SBA Lending (Q2)		352				409				1,166				1,175				218
Income (loss) before income taxes – Mortgage Banking		(50	)			(152	)			(613	)			–				–
Total income before income taxes	$	3,626			$	3,710			$	4,373			$	2,560			$	4,115
Income tax expense – Core Banking	$	490			$	750			$	702			$	167			$	590
Income tax expense – SBA Lending (Q2)		45				59				169				171				32
Income tax expense (benefit) – Mortgage Banking		(13	)			(43	)			(175	)			–				–
Total income tax expense	$	522			$	766			$	696			$	338			$	622
Net income – Core Banking	$	2,834			$	2,703			$	3,118			$	1,218			$	3,307
Net income – SBA Lending (Q2)		307				350				997				1,004				186
Net income (loss) – Mortgage Banking		(37	)			(109	)			(438	)			–				–
Total net income	$	3,104			$	2,944			$	3,677			$	2,222			$	3,493
Net income attributable to the Company – Core Banking	$	2,834			$	2,703			$	3,118			$	1,218			$	3,307
Net income attributable to the Company – SBA Lending (Q2)		134				150				426				428				99
Net income (loss) attributable to the Company – Mortgage Banking		(37	)			(109	)			(438	)			–				–
Total net income attributable to the Company	$	2,931			$	2,744			$	3,106			$	1,646			$	3,406
Basic EPS – Core Banking	$	1.24			$	1.18			$	1.37			$	0.54			$	1.49
Basic EPS – SBA Lending (Q2)		0.06				0.07				0.19				0.19				0.04
Basic EPS – Mortgage Banking		(0.02	)			(0.05	)			(0.19	)			0.00				0.00
Total Basic EPS	$	1.28			$	1.20			$	1.37			$	0.73			$	1.53
Diluted EPS – Core Banking	$	1.20			$	1.14			$	1.31			$	0.51			$	1.40
Diluted EPS – SBA Lending (Q2)		0.06				0.06				0.18				0.18				0.04
Diluted EPS – Mortgage Banking		(0.02	)			(0.05	)			(0.18	)			–				–
Total Diluted EPS	$	1.24			$	1.15			$	1.31			$	0.69			$	1.44
	As of or for the Three Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,
SBA Lending (Q2) Data		2018				2018				2018				2018				2017
(In thousands, except percentage data)
Final funded loans unguaranteed portion held for investment, SBA	$	3,436			$	3,213			$	4,302			$	5,798			$	5,208
Final funded loans guaranteed portion sold, SBA		12,943				12,109				17,631				19,741				18,326
Total final funded loans, SBA	$	16,379			$	15,322			$	21,933			$	25,539			$	23,534
Gross gain on sales of loans, SBA	$	1,203			$	1,246			$	2,025			$	2,148			$	2,159
Weighted average gross gain on sales of loans, SBA		9.29	%			10.29	%			11.49	%			10.88	%			11.78	%
Net gain on sales of loans, SBA (2)	$	964			$	907			$	1,557			$	1,489			$	1,539
Weighted average net gain on sales of loans, SBA		7.45	%			7.49	%			8.83	%			7.54	%			8.40	%
(2) Net of commissions, referral fees and discounts on unguaranteed portions held-for-investment, and inclusive of gains on servicing assets
SUMMARIZED FINANCIAL INFORMATION (CONTINUED):
	Three Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,
Summarized Consolidated Average Balance Sheets		2018				2018				2018				2018				2017
(In thousands)
Interest-earning assets:
Average balances:
Interest-bearing deposits with banks	$	30,271			$	26,716			$	30,967			$	28,318			$	29,463
Loans		763,637				745,078				723,427				683,865				642,130
Investment securities		156,570				157,834				163,610				153,636				144,049
Agency mortgage-backed securities		29,133				37,393				42,624				35,421				35,759
FRB and FHLB stock		10,171				9,621				9,621				9,569				7,934
Total interest-earning assets	$	989,782			$	976,642			$	970,249			$	910,809			$	859,335
Interest income (taxable equivalent basis):
Interest-bearing deposits with banks	$	153			$	138			$	112			$	116			$	71
Loans		9,828				9,349				8,885				8,192				7,702
Investment securities		1,783				1,822				2,123				1,765				1,624
Agency mortgage-backed securities		193				274				297				235				214
FRB and FHLB stock		121				119				107				149				90
Total interest-earning assets	$	12,078			$	11,702			$	11,524			$	10,457			$	9,701
Weighted average yield (tax equivalent basis, annualized):
Interest-bearing deposits with banks		2.02	%			2.07	%			1.45	%			1.64	%			0.96	%
Loans		5.15	%			5.02	%			4.91	%			4.79	%			4.80	%
Investment securities		4.56	%			4.62	%			5.19	%			4.60	%			4.51	%
Agency mortgage-backed securities		2.65	%			2.93	%			2.79	%			2.65	%			2.39	%
FRB and FHLB stock		4.76	%			4.95	%			4.45	%			6.23	%			4.54	%
Total interest-earning assets		4.88	%			4.79	%			4.75	%			4.59	%			4.52	%
Interest-bearing liabilities:
Average balances:
Interest-bearing deposits	$	651,060			$	664,526			$	653,119			$	581,861			$	578,721
Repurchase agreements		1,352				1,351				1,350				1,349				1,348
Borrowings from Federal Home Loan Bank		104,999				99,614				111,036				149,680				129,280
Other borrowings		19,667				2,352				–				–				–
Total interest-bearing liabilities	$	777,078			$	767,843			$	765,505			$	732,890			$	709,349
Interest expense:
Interest-bearing deposits	$	1,424			$	1,389			$	1,222			$	807			$	862
Repurchase agreements		1				1				1				1				1
Borrowings from Federal Home Loan Bank		478				420				476				615				510
Other borrowings		322				33				–				–				–
Total interest-bearing liabilities	$	2,225			$	1,843			$	1,699			$	1,423			$	1,373
Weighted average cost (annualized):
Interest-bearing deposits		0.87	%			0.84	%			0.75	%			0.55	%			0.60	%
Repurchase agreements		0.30	%			0.30	%			0.30	%			0.30	%			0.30	%
Borrowings from Federal Home Loan Bank		1.82	%			1.69	%			1.71	%			1.64	%			1.58	%
Other borrowings		6.55	%			5.61	%			0.00	%			0.00	%			0.00	%
Total interest-bearing liabilities		1.15	%			0.96	%			0.89	%			0.78	%			0.77	%
Interest rate spread		3.73	%			3.83	%			3.86	%			3.81	%			3.75	%
Net interest margin		3.98	%			4.04	%			4.05	%			3.97	%			3.88	%