Mid-Southern Bancorp, Inc. (the “Company”) (NASDAQ: MSVB), the
holding company for Mid-Southern Savings Bank, FSB (the “Bank”),
reported net income for the fourth quarter ended December 31,
2022 of $376,000 or $0.14 per diluted share compared to $377,000 or
$0.13 per diluted share for the same period in 2021. For the year
ended December 31, 2022, the Company reported net income of
$1.9 million or $0.69 per diluted share compared to
$1.6 million or $0.55 per diluted share for the same period in
2021.
Alex Babey, President and Chief Executive
Officer of the Company, stated, “We are very pleased to report our
earnings for 2022, with earnings per diluted share growing 25.5%
over 2021 results. Our expansion into the Louisville Market through
our Loan Production Office continues to produce positive results as
evidenced by loans growing 17.8% over 2021 levels. We believe that
we continue to meet the objectives in our strategic plan and look
forward to continuing our efforts to build shareholder value
through our continued commitment to our customers, communities and
employees.”
Income Statement Review
Net interest income after provision for loan
losses increased $77,000, or 4.0%, for the quarter ended
December 31, 2022 to $2.0 million as compared to the
quarter ended December 31, 2021. Total interest income
increased $548,000, or 28.3%, when comparing the two periods, due
to increases in the average balances and yields of interest-earning
assets. The average balance of interest-earning assets increased to
$269.1 million for the quarter ended December 31, 2022
from $245.7 million for the quarter ended December 31,
2021, due primarily to increases in loans receivable and investment
securities, partially offset by lower interest-bearing deposits
with banks. The average yield on interest-earning assets and
tax-equivalent yield on interest-earning assets(1) increased to
3.70% and 3.87%, respectively, for the quarter ended
December 31, 2022 from 3.16% and 3.32%, respectively, for the
quarter ended December 31, 2021, due primarily to higher
yields from loans and investment securities. Total interest expense
increased $351,000, or 234.0%, when comparing the two periods due
to an increase in the average balance of interest-bearing
liabilities and in the average cost of interest-bearing
liabilities. The average balance of interest-bearing liabilities
increased to $205.5 million for the quarter ended
December 31, 2022 from $180.9 million for the same period
in 2021, due primarily to increases in deposit accounts and FHLB
borrowings. The average cost of interest-bearing liabilities
increased to 0.98% for the quarter ended December 31, 2022
from 0.33% for the same period in 2021. As a result of the changes
in interest-earning assets and interest-bearing liabilities, the
net interest rate spread and net interest rate spread on a
tax-equivalent basis(1) decreased to 2.72% and 2.89%, respectively
for the quarter ended December 31, 2022 from 2.83% and 2.99%,
respectively, for the quarter ended December 31, 2021. The net
interest margin and net interest margin on a tax-equivalent
basis(1) increased to 2.95% and 3.12%, respectively, for the
quarter ended December 31, 2022 from 2.91% and 3.08%,
respectively, for the quarter ended December 31, 2021.
Net interest income after provision for loan
losses increased $513,000, or 7.3%, for the year ended
December 31, 2022 to $7.6 million as compared to
$7.1 million for the year ended December 31, 2021. Total
interest income increased $1.2 million, or 16.3%, when
comparing the two periods, due to increases in the average balances
and yields of interest-earning assets. The average balance of
interest-earning assets increased to $262.6 million for the
year ended December 31, 2022 from $237.7 million for the
year ended December 31, 2021, due primarily to increases in loans
receivable and investment securities, partially offset by lower
interest-bearing deposits with banks. The average yield on
interest-earning assets and the average tax-equivalent yield on
interest-earning assets(1) increased to 3.36% and 3.53%,
respectively, for the year ended December 31, 2022 from 3.19%
and 3.36%, respectively, for the year ended December 31, 2021,
due primarily to a shift in the investment asset mix. Total
interest expense increased $467,000, or 71.7%, when comparing the
two periods due to increases in both the average cost and balance
of interest-bearing liabilities. The average cost of
interest-bearing liabilities increased to 0.56% for the year ended
December 31, 2022 from 0.38% for the same period in 2021. The
average balance of interest-bearing liabilities increased to
$197.9 million for the year ended December 31, 2022 from
$172.7 million for the same period in 2021, due primarily to
an increase in total deposit accounts and higher FHLB borrowings.
As a result of the changes in interest-earning assets and
interest-bearing liabilities, the net interest rate spread and net
interest rate spread on a tax-equivalent basis(1) were 2.80% and
2.97%, respectively, for the year ended December 31, 2022 from
2.81% and 2.98%, respectively, for the year ended December 31,
2021. The net interest margin and net interest margin on a
tax-equivalent basis(1) increased to 2.93% and 3.10%, respectively,
for the year ended December 31, 2022 from 2.92% and 3.09%,
respectively, for the year ended December 31, 2021.
Noninterest income decreased $16,000, or 5.0%,
for the quarter ended December 31, 2022 as compared to the same
period in 2021, due primarily to a reduction in brokered loan fees
of $37,000, partially offset by increases of $18,000 in deposit
account service charges.
Noninterest income increased $28,000, or 2.3%,
for the year ended December 31, 2022 as compared to the same period
in 2021, due primarily to increases of $82,000 and $21,000 in
deposit account service charges and ATM and debit card fee income,
respectively, and a $36,000 gain on life insurance, partially
offset by a reduction in brokered loans fees of $110,000.
Noninterest expense increased $71,000, or 3.9%,
for the quarter ended December 31, 2022 as compared to the
same period in 2021. The increase was due primarily to increases in
data processing expenses of $91,000, occupancy and equipment
expenses of $20,000, other expenses of $29,000, a $74,000 loss on
the disposal of premises and equipment and a $37,000 loss on the
disposal of real estate held for sale, partially offset by lower
compensation and benefits of $146,000 and marketing and business
development expenses of $21,000.
Noninterest expense increased $244,000, or 3.7%,
for the year ended December 31, 2022 as compared to the same
period in 2021. The increase was due primarily to increases in data
processing expenses of $122,000, occupancy and equipment expenses
of $52,000, marketing and business development expenses of $37,000,
$19,000 in professional fees, $16,000 in other expenses, a $91,000
loss on the disposal of premises and equipment and a $37,000 loss
on the disposal of real estate held for sale, partially offset by
lower compensation and benefits of $137,000 and stockholders’
meeting expenses of $12,000.
The Company recorded an income tax expense of
$2,000 for the quarter ended December 31, 2022, compared to an
income tax expense of $11,000 for the same period in 2021. Income
tax expense for the year ended December 31, 2022 was $91,000
compared to an expense of $67,000 for the same period in 2021
resulting from an increase in our effective tax rate to 4.6% for
2022 compared to 4.0% for 2021. The increase in the effective tax
rate is primarily due to an increase in pre-tax income generated
from core banking activities.
_______________(1) Refer to “Non-GAAP Financial
Measures” below and to “Reconciliation of Non-GAAP Financial
Measures” at the end of this Earnings Release for more information
and for a reconciliation of this non-GAAP financial measure to the
nearest GAAP financial measure.
Balance Sheet Review
Total assets as of December 31, 2022 were
$269.2 million compared to $254.3 million at
December 31, 2021. The increase in total assets was primarily
due to increases in net loans of $21.8 million, other assets
of $4.5 million and Federal Home Loan Bank stock of
$1.0 million, partially offset by decreases in cash and cash
equivalents of $10.7 million and investment securities of
$1.9 million. The increase in net loans was due primarily to
increases of $11.9 million in commercial real estate loans,
$5.9 million in commercial business loans and
$5.1 million in commercial real estate construction loans. The
increase in other assets was due primarily to a $4.2 million
increase in net deferred tax assets, largely attributable to the
tax effect on the unrealized loss on available for sale securities.
Investment securities decreased due primarily to a
$17.2 million unrealized loss on available for sale securities
and $10.3 million in scheduled principal payments, calls and
maturities of mortgage-backed and tax-exempt securities, partially
offset by $26.0 million in purchases of available for sale
investment securities. Total liabilities, comprised mostly of
deposits, increased $28.2 million to $235.9 million as of
December 31, 2022. The increase was due primarily to a
$19.0 million increase in FHLB borrowings and a
$9.6 million increase in interest-bearing deposits, partially
offset by a $370,000 decrease in noninterest-bearing deposits.
Credit Quality
Non-performing loans decreased to $732,000 at
December 31, 2022 compared to $753,000 at December 31, 2021,
or 0.5% and 0.6% of total loans at December 31, 2022 and
December 31, 2021, respectively. At December 31, 2022,
$382,000 or 52.1% of non-performing loans were current on their
loan payments. At December 31, 2022, non-performing troubled debt
restructured loans totaled $85,000. There was no foreclosed real
estate owned at either December 31, 2022 or December 31,
2021.
Based on management’s analysis of the allowance
for loan losses, the Company did not record a provision for loan
losses for the quarter ended December 31, 2022 compared to a
recapture for loan losses of $120,000 for the same period in 2021.
The Company recognized net recoveries of $39,000 for the quarter
ended December 31, 2022 compared to net charge-offs of $8,000 for
the same period in 2021.
The Company recorded a provision for loan losses
of $135,000 for the year ended December 31, 2022 compared to a
recapture of the provision for loan losses of $120,000 for the same
period in 2021. The Company recognized net recoveries of $34,000
for the year ended December 31, 2022 compared to net recoveries of
$54,000 for the same period in 2021. The allowance for loan losses
totaled $1.7 million at December 31, 2022 and
$1.5 million at December 31, 2021, representing 1.2% of
total loans at both December 31, 2022 and December 31, 2021.
The allowance for loan losses represented 231.1% of non-performing
loans at December 31, 2022, compared to 202.3% at December 31,
2021.
Capital
The Bank elected to use the Community Bank
Leverage Ratio (“CBLR”) effective January 1, 2020. Effective
January 1, 2022, a bank or savings institution electing to use
the CBLR will generally be considered well-capitalized and to have
met the risk-based and leverage capital requirements of the capital
regulations if it has a leverage ratio greater than 9.0%, an
increase from the 8.5% or higher ratio requirement for fiscal year
2021. To be eligible to elect to use the CBLR, the bank or savings
institution also must have total consolidated assets of less than
$10 billion, off-balance sheet exposures of 25.0% or less of
its total consolidated assets, and trading assets and trading
liabilities of 5.0% or less of its total consolidated assets, all
as of the end of the most recent quarter.
At December 31, 2022, the Bank was
considered well-capitalized under applicable federal regulatory
capital guidelines with a CBLR of 15.4%.
The Company’s stockholders’ equity decreased to
$33.3 million at December 31, 2022, from $46.5 million at
December 31, 2021. The decrease was due primarily to a
decrease in the accumulated other comprehensive income of
$12.9 million related to unrealized losses on
available-for-sale securities and the repurchase of 154,486 shares
of our common stock at a total cost of $2.2 million, partially
offset by net income of $1.9 million, net of dividends of
$492,000. At December 31, 2022, a total of 173,097 shares
remain authorized for future purchases under the current stock
repurchase plan.
Non-GAAP Financial Measures
The Company’s accounting and reporting policies
conform to generally accepted accounting principles (“GAAP”) in the
United States and prevailing practices in the banking industry.
However, certain non-GAAP measures are used by management to
supplement the evaluation of the Company’s performance. Whenever a
non-GAAP financial measure is presented, the differences between
the non-GAAP financial measure and the most directly comparable
financial measure in accordance with GAAP are presented and
reconciled. The following non-GAAP financial measures presented are
defined below.
Net interest income (tax-equivalent basis),
yield on interest-earning assets (tax-equivalent basis), net
interest spread (tax-equivalent basis) and net interest margin
(tax-equivalent basis). These measures include the effects of
taxable-equivalent adjustments using a federal income tax rate
effective during the relevant year to increase tax-exempt interest
income to a tax-equivalent basis. Interest income earned on certain
assets is completely or partially exempt from federal income tax.
As such, these tax-exempt instruments typically yield lower returns
than taxable investments. Net interest income (tax-equivalent
basis) is a non-GAAP measure that adjusts for the tax-favored
status of net interest income from certain loans and investments
and is not permitted under GAAP in the consolidated statements of
income. We believe this measure to be the preferred industry
measurement of net interest income, and that it enhances
comparability of net interest income arising from taxable and
tax-exempt sources. The most directly comparable financial measure
calculated in accordance with GAAP is net interest income. Yield on
interest-earning assets (tax-equivalent basis) is the ratio of
interest income earned from interest-earning assets, adjusted on a
tax-equivalent basis, and average interest-earning assets. The
yield for investment securities is based on amortized cost and does
not give effect to changes in fair value that are reflected in
Accumulated Other Comprehensive Income / Loss (“AOCI”). The most
directly comparable financial measure in accordance with GAAP is
yield on interest-earning assets. Net interest spread
(tax-equivalent basis) is the difference in the average yield on
average earning assets on a tax-equivalent basis and the average
rate paid on average interest-bearing liabilities. The most
directly comparable financial measure calculated in accordance with
GAAP is net interest spread. Net interest margin (tax-equivalent
basis) is the ratio of net interest income (tax-equivalent basis)
to average earning assets. The most directly comparable financial
measure in accordance with GAAP is net interest margin.
Book value per share excluding Accumulated Other
Comprehensive Income / Loss. We calculate book value per share
excluding AOCI as total stockholders’ equity at the end of the
relevant period, less AOCI, divided by the outstanding number of
our common shares at the end of each period. The most directly
comparable GAAP financial measure is book value per share. We
provide the book value per share excluding AOCI in addition to
those defined by banking regulators because we believe it is
important to evaluate the balance sheet both before and after the
effects of unrealized amounts associated with mark-to-market
adjustments on available-for-sale investment securities.
Tangible book value per share. Tangible book
value per share is a non-GAAP financial measure. We calculate
tangible book value per share as total stockholders’ equity at the
end of the relevant period, less goodwill and other intangible
assets, divided by the outstanding number of our common shares at
the end of each period. The most directly comparable GAAP financial
measure is book value per share. We had no goodwill or other
intangible assets as of any of the dates indicated. As a result,
tangible book value per share is the same as book value per share
as of each of the dates indicated. We provide the tangible book
value per share in addition to those defined by banking regulators
because of its widespread use by investors as a means to evaluate
capital adequacy.
These non-GAAP financial measures should not be
considered alternatives to GAAP-basis financial statements, and
other bank holding companies may define these non-GAAP measures or
similar measures differently.
Refer to “Reconciliation of Non-GAAP Financial
Measures” below.
About Mid-Southern Bancorp, Inc.
Mid-Southern Savings Bank, FSB is a federally
chartered savings bank headquartered in Salem, Indiana,
approximately 40 miles northwest of Louisville, Kentucky. The
Bank conducts business from its main office in Salem and through
its branch offices located in Mitchell and Orleans, Indiana and
loan production offices located in New Albany, Indiana and
Louisville, Kentucky.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains certain
forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Such forward-looking statements
may be identified by reference to a future period or periods, or by
the use of forward-looking terminology, such as “estimate,”
“project,” “believe,” “intend,” “anticipate,” “plan,” “seek,”
“expect,” “will,” “may,” “continue,” or similar terms or variations
on those terms, or the negative of those terms. Forward-looking
statements, by their nature, are subject to risks and
uncertainties. Certain factors that could cause actual results to
differ materially from expected results include the effect of the
COVID-19 pandemic; changes to the real estate and economic
environment, particularly in the market areas in which the Bank
operates; increased competitive pressures; changes in the interest
rate environment; general economic conditions or conditions within
the securities markets; and legislative and regulatory changes
affecting financial institutions, including regulatory compliance
costs and capital requirements that could adversely affect the
business in which the Company and the Bank are engaged; and other
factors described in the Company’s latest Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q and other
filings with the Securities and Exchange Commission that are
available on our website at mid-southern.com and on the SEC’s
website at www.sec.gov.
The factors listed above could materially affect
the Company’s financial performance and could cause the Company’s
actual results for future periods to differ materially from any
opinions or statements expressed with respect to future periods in
any current statements.
Except as required by applicable law, the
Company does not undertake and specifically declines any obligation
to publicly release the result of any revisions which may be made
to any forward-looking statements to reflect events or
circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events. When considering
forward-looking statements, you should keep in mind these risks and
uncertainties. You should not place undue reliance on any
forward-looking statement, which speaks only as of the date
made.
MID-SOUTHERN BANCORP,
INC.CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)(Dollars in thousands, except per share information)
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, |
|
December 31, |
OPERATING
DATA |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income |
$ |
2,487 |
|
|
$ |
1,939 |
|
|
$ |
8,817 |
|
|
$ |
7,582 |
|
Total interest expense |
|
501 |
|
|
|
150 |
|
|
|
1,118 |
|
|
|
651 |
|
Net interest income |
|
1,986 |
|
|
|
1,789 |
|
|
|
7,699 |
|
|
|
6,931 |
|
Provision (recapture) for loan losses |
|
— |
|
|
|
(120 |
) |
|
|
135 |
|
|
|
(120 |
) |
Net interest income after provision for loan losses |
|
1,986 |
|
|
|
1,909 |
|
|
|
7,564 |
|
|
|
7,051 |
|
Total non-interest income |
|
304 |
|
|
|
320 |
|
|
|
1,248 |
|
|
|
1,220 |
|
Total non-interest expense |
|
1,912 |
|
|
|
1,841 |
|
|
|
6,840 |
|
|
|
6,596 |
|
Income before income taxes |
|
378 |
|
|
|
388 |
|
|
|
1,972 |
|
|
|
1,675 |
|
Income tax expense |
|
2 |
|
|
|
11 |
|
|
|
91 |
|
|
|
67 |
|
Net income |
$ |
376 |
|
|
$ |
377 |
|
|
$ |
1,881 |
|
|
$ |
1,608 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.14 |
|
|
$ |
0.13 |
|
|
$ |
0.69 |
|
|
$ |
0.55 |
|
Diluted |
$ |
0.14 |
|
|
$ |
0.13 |
|
|
$ |
0.69 |
|
|
$ |
0.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
2,692,105 |
|
|
|
2,817,379 |
|
|
|
2,725,980 |
|
|
|
2,906,728 |
|
Diluted |
|
2,697,890 |
|
|
|
2,829,082 |
|
|
|
2,730,739 |
|
|
|
2,916,661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
BALANCE SHEET
INFORMATION |
2022 |
|
2021 |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
5,684 |
|
|
$ |
16,379 |
|
Investment securities |
|
105,368 |
|
|
|
107,314 |
|
Loans, net |
|
144,379 |
|
|
|
122,568 |
|
Interest-earning assets |
|
257,922 |
|
|
|
247,184 |
|
Total assets |
|
269,218 |
|
|
|
254,260 |
|
Deposits |
|
206,064 |
|
|
|
196,884 |
|
Borrowings |
|
29,000 |
|
|
|
10,000 |
|
Stockholders' equity |
|
33,322 |
|
|
|
46,529 |
|
|
|
|
|
|
|
|
|
Common stock shares outstanding |
|
2,885,039 |
|
|
|
3,016,653 |
|
|
|
|
|
|
|
|
|
Book value per share (1) |
|
11.55 |
|
|
|
15.42 |
|
Book value per share excluding AOCI (2) |
|
15.30 |
|
|
|
14.73 |
|
Tangible book value per share (3) |
|
11.55 |
|
|
|
15.42 |
|
Non-performing assets: |
|
|
|
|
|
|
|
Nonaccrual loans |
|
732 |
|
|
|
753 |
|
Accruing loans past due 90 days or more |
|
— |
|
|
|
— |
|
Foreclosed real estate |
|
— |
|
|
|
— |
|
Troubled debt restructurings on accrual status |
|
700 |
|
|
|
786 |
|
|
|
|
|
|
|
|
|
OTHER FINANCIAL DATA
|
Three Months Ended |
|
Twelve
Months Ended |
|
December 31, |
|
December 31, |
Performance
ratios: |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per share |
$ |
0.06 |
|
|
$ |
0.04 |
|
|
$ |
0.18 |
|
|
$ |
0.13 |
|
Return on average assets (annualized) |
|
0.57 |
% |
|
|
0.59 |
% |
|
|
0.71 |
% |
|
|
0.65 |
% |
Return on average stockholders' equity (annualized) |
|
4.82 |
% |
|
|
3.27 |
% |
|
|
5.07 |
% |
|
|
3.36 |
% |
Net interest margin (tax-equivalent basis) (4) |
|
3.12 |
% |
|
|
3.08 |
% |
|
|
3.10 |
% |
|
|
3.09 |
% |
Interest rate spread (tax-equivalent basis) (4) |
|
2.89 |
% |
|
|
2.99 |
% |
|
|
2.97 |
% |
|
|
2.98 |
% |
Efficiency ratio |
|
83.5 |
% |
|
|
87.3 |
% |
|
|
76.5 |
% |
|
|
80.9 |
% |
Average interest-earning assets to average interest-bearing
liabilities |
|
131.0 |
% |
|
|
135.8 |
% |
|
|
132.7 |
% |
|
|
137.7 |
% |
Average stockholders' equity to average assets |
|
11.8 |
% |
|
|
18.1 |
% |
|
|
14.1 |
% |
|
|
19.3 |
% |
Stockholders' equity to total assets at end of period |
|
|
|
|
|
|
|
|
|
12.4 |
% |
|
|
18.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
Capital
ratios: (5) |
2022 |
|
2021 |
|
|
|
|
|
|
|
|
Community Bank Leverage Ratio |
|
15.4 |
% |
|
|
16.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
December 31, |
|
Asset quality
ratios: |
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Allowance for loan losses as a percent of total loans |
|
1.2 |
% |
|
|
1.2 |
% |
Allowance for loan losses as percent of non-performing loans |
|
231.1 |
% |
|
|
202.3 |
% |
Net charge-offs (recoveries) to average outstanding loans
during the period (annualized) |
|
0.0 |
% |
|
|
0.0 |
% |
Non-performing loans as a percent of total loans |
|
0.5 |
% |
|
|
0.6 |
% |
Non-performing assets as a percent of total assets |
|
0.3 |
% |
|
|
0.3 |
% |
|
|
|
|
|
|
|
|
_______________(1) - We calculate book value per share as total
stockholders’ equity at the end of the relevant period divided by
the outstanding number of our common shares at the end of each
period.
(2) - Book value per share excluding Accumulated
Other Comprehensive Income / Loss (“AOCI”) is a non-GAAP financial
measure. We calculate book value per share excluding AOCI as total
stockholders’ equity at the end of the relevant period, less AOCI,
divided by the outstanding number of our common shares at the end
of each period. The most directly comparable GAAP financial measure
is book value per share. We provide the book value per share
excluding AOCI in addition to those defined by banking regulators
because we believe it is important to evaluate the balance sheet
both before and after the effects of unrealized amounts associated
with mark-to-market adjustments on available-for-sale investment
securities. Refer to “Reconciliation of Non-GAAP Financial
Measures” below.
(3) - Tangible book value per share is a
non-GAAP financial measure. We calculate tangible book value per
share as total stockholders’ equity at the end of the relevant
period, less goodwill and other intangible assets, divided by the
outstanding number of our common shares at the end of each period.
The most directly comparable GAAP financial measure is book value
per share. We had no goodwill or other intangible assets as of any
of the dates indicated. As a result, tangible book value per share
is the same as book value per share as of each of the dates
indicated. We provide the tangible book value per share in addition
to those defined by banking regulators because of its widespread
use by investors as a means to evaluate capital adequacy.
(4) - Net interest margin on a tax-equivalent
basis and interest rate spread on a tax-equivalent basis are
non-GAAP financial measures. We calculate these measures on a
tax-equivalent basis to adjust for the tax-favored status of
interest income from loans and investments and believe these
measures are the preferred industry measurement and enhance
comparability of interest income arising from taxable and
tax-exempt sources. Net interest margin on a tax-equivalent basis
is net interest income on a tax-equivalent basis divided by average
interest-earning assets. The most directly comparable financial
measure calculated in accordance with GAAP is net interest margin.
Net interest spread on a tax-equivalent basis is the difference in
the yield on average interest-earning assets on a tax-equivalent
basis and the average rate paid on average interest-bearing
liabilities. The yield for investment securities is based on
amortized cost and does not give effect to changes in fair value
that are reflected in AOCI. The most directly comparable financial
measure calculated in accordance with GAAP is net interest spread.
The most directly comparable financial measures calculated in
accordance with GAAP is net interest margin and interest rate
spread. Refer to “Reconciliation of Non-GAAP Financial Measures”
below.
(5) - Effective January 1, 2020, the Bank
elected to use the CBLR, as provided by the Economic Growth,
Regulatory Relief, and Consumer Protection Act (the “Act”). The Act
contains a number of provisions extending regulatory relief to
banks and savings institutions and their holding companies. A bank
or savings institution that elects to use the CBLR will generally
be considered well-capitalized and to have met the risk-based and
leverage capital requirements of the capital regulations if it has
a leverage ratio greater than 9.0% (adjusted to 8.5% effective
January 1, 2021, returning to 9.0% effective January 1,
2022).
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
|
December 31, |
|
December 31, |
Book value per share
excluding AOCI: |
2022 |
|
2021 |
|
|
|
|
|
|
|
Stockholders' equity |
$ |
33,322 |
|
|
$ |
46,529 |
|
Adjustments: |
|
|
|
|
|
|
Accumulated other comprehensive income (loss) |
|
(10,831 |
) |
|
|
2,096 |
|
Stockholders' equity excluding AOCI |
$ |
44,153 |
|
|
$ |
44,433 |
|
|
|
|
|
|
|
|
Common stock shares outstanding |
|
2,885,039 |
|
|
|
3,016,653 |
|
|
|
|
|
|
|
|
Book value per share |
$ |
11.55 |
|
|
$ |
15.42 |
|
Less: effect of accumulated other comprehensive income (loss) |
|
(3.75 |
) |
|
|
0.69 |
|
Book value per share excluding AOCI |
$ |
15.30 |
|
|
$ |
14.73 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, |
|
December 31, |
Net interest income,
yield on interest-earning assets, net interest spread, net interest
margin (tax-equivalent basis): |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (GAAP) |
$ |
1,986 |
|
|
$ |
1,789 |
|
|
$ |
7,699 |
|
|
$ |
6,931 |
|
Tax-equivalent adjustments: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
1 |
|
|
|
— |
|
|
|
6 |
|
|
|
6 |
|
Tax-exempt investment securities |
|
114 |
|
|
|
103 |
|
|
|
441 |
|
|
|
403 |
|
Net interest income (tax-equivalent basis) |
$ |
2,101 |
|
|
$ |
1,892 |
|
|
$ |
8,146 |
|
|
$ |
7,340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average interest-earning assets (2) |
$ |
269,125 |
|
|
$ |
245,699 |
|
|
$ |
262,584 |
|
|
$ |
237,695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on interest-earning assets (2) |
|
3.70 |
% |
|
|
3.16 |
% |
|
|
3.36 |
% |
|
|
3.19 |
% |
Yield on interest-earning assets (tax-equivalent basis) (2) |
|
3.87 |
% |
|
|
3.32 |
% |
|
|
3.53 |
% |
|
|
3.36 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest spread (2) |
|
2.72 |
% |
|
|
2.83 |
% |
|
|
2.80 |
% |
|
|
2.81 |
% |
Net interest spread (tax-equivalent basis) (2) |
|
2.89 |
% |
|
|
2.99 |
% |
|
|
2.97 |
% |
|
|
2.98 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (2) |
|
2.95 |
% |
|
|
2.91 |
% |
|
|
2.93 |
% |
|
|
2.92 |
% |
Net interest margin (tax-equivalent basis) (2) |
|
3.12 |
% |
|
|
3.08 |
% |
|
|
3.10 |
% |
|
|
3.09 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________(1) - Tax-exempt income has been adjusted to a
tax-equivalent basis using the federal marginal tax rate of 21% for
2022 and 2021.
(2) - Investment securities are based on
amortized cost and do not give effect to changes in fair value that
are reflected in AOCI.
Contact:Alexander G. Babey, President
and Chief Executive OfficerRobert W. DeRossett,
Chief Financial OfficerMid-Southern
Bancorp, Inc.812-883-2639
Mid Southern Bancorp (NASDAQ:MSVB)
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