Kish Bancorp, Inc. (OTCQX: KISB), (“Kish” or the “Company”)
parent company of Kish Bank, reported net income of $3.2 million,
or $1.06 per share for the second quarter of 2024, compared to $3.1
million, or $1.06 per share for the first quarter of 2024, and $3.2
million, or $1.24 per share for the second quarter of 2023. For the
first six months of 2024, net income was $6.2 million, or $2.12 per
share, compared to $6.5 million, or $2.47 per share, for the
six-month period in 2023. All results are unaudited.
Results for the second quarter of 2024 included a $467,000
provision for credit losses, compared to a $113,000 provision for
credit losses in the first quarter of 2024, and a $149,000
provision for credit losses in the second quarter of 2023. The
increase in the provision for credit losses during the current
quarter was due to adjustments dictated by the Company’s CECL
accounting model based on the expansion in its commercial loan
portfolio, and not due to any deterioration in loan quality, which
remains at extraordinarily strong levels.
“We started out the first half of the year strong, with robust
loan growth, solid asset quality metrics, and diversified
noninterest income streams contributing to year-to-date earnings,”
stated William P. Hayes, Executive Chairman. “As the high interest
rate environment continues and deposit competition remains fierce,
we are encouraged that our earning assets yield continues to
increase, up 62 basis points compared to the second quarter a year
ago, reaching a high of 6.09% for the second quarter. The growth in
earning assets at a sustained spread to our funding costs should
quickly reduce and eventually eliminate the initial earnings per
share dilution created by our successful common stock issuance of
$10.0 million, which we raised primarily in the second half of
2023. That is supported by the 9.1% expansion in net interest
income year to date, which is largely keeping pace with the growth
in assets. The resulting relative stability in our net interest
margin is an affirmation of our effective balance sheet management
strategies that include timely capital expansion to support
sustained growth in earning assets, eventually driving higher
earnings per share back to our historic rates of expansion.”
Second Quarter 2024 Financial Highlights:
- Total assets increased $187.8 million, or 13.2%, to $1.6
billion at June 30, 2024, compared to $1.4 billion a year ago.
- Total deposits increased $178.6 million year over year, or
16.4%, as Kish Bank continued to attract new client
relationships.
- Net loans grew by $202.9 million, or 18.3%, year over year to
$1.3 billion.
- Second quarter net interest income, before provision, increased
$1.2 million, or 11.1%, compared to the second quarter a year
ago.
- Noninterest income increased $81 thousand, or 3.2%, compared to
the year ago quarter.
- Second quarter net interest margin expanded 11 basis points
from the linked quarter to 3.29%.
- Continued strong second quarter ROE of 10.54% and ROA of
0.79%.
- Tangible book value per share increased 8.7% to $32.32,
compared to $29.73 a year ago.
- Paid a $0.37 per share quarterly cash dividend on April 30,
2024, to shareholders of record as of April 15, 2024.
- At June 30, 2024, Kish Bank continued to exceed regulatory
well-capitalized requirements with a Tier 1 leverage ratio of
9.00%, a Tier 1 capital ratio of 9.90% and a Total risk-based
capital ratio of 10.59%.
Balance Sheet
“Loan growth was robust during the quarter, with total loans
outstanding up by $203.8 million, or 18.3%, year over year,
highlighting our strong, broad-based loan demand from across all of
our markets,” said Gregory T. Hayes, President and CEO. “Leading
the growth was increases in the multifamily loan portfolio. Also
noteworthy, Kish has negligible exposure to loans in
nonowner-occupied commercial office space categories.”
Total assets ended the quarter at $1.6 billion, an increase of
$187.8 million, or 13.2%, compared to $1.4 billion as of June 30,
2023. Investment securities decreased to $183.6 million, a decrease
of $9.8 million from the same period in 2023. Average earning
assets increased to $1.5 billion in the second quarter of 2024,
compared to $1.3 billion in the second quarter of 2023. The average
yield on interest-earning assets was 6.09% in the second quarter of
2024, up 62 basis points from 5.47% in the second quarter a year
ago.
Total deposits grew by $178.6 million year over year to $1.3
billion, an increase of 16.4% from $1.1 billion a year ago. At June
30, 2024, noninterest-bearing demand deposit accounts increased
6.5% compared to a year ago, while interest-bearing deposits
increased 18.2% compared to a year ago. Brokered deposits increased
$40.1 million during the second quarter compared to the preceding
quarter to $118.0 million at June 30, 2024. The cost of total
deposits was 2.69% in the second quarter of 2024, compared to 1.77%
in the second quarter of 2023.
“The opening of Kish Bank’s first Altoona branch in July 2023
contributed to an acceleration in retail and commercial deposit
expansion during its first year of operation, with branch deposits
at $32.6 million as of June 30, 2024. Also contributing to deposit
growth was an increase in brokered deposits, as we utilize the
flexibility of brokered funding at lower than FHLB funding rates to
support loan growth,” said President and CEO Hayes.
Stockholders’ equity increased 25.8% to $99.0 million at June
30, 2024, compared to $78.7 million a year earlier. At June 30,
2024, the Company’s tangible book value increased 8.7% to $32.32
per share compared to $29.73 at June 30, 2023.
Kish Bank continues to maintain capital levels in excess of the
requirements to be categorized as “well-capitalized” with a Tier 1
leverage ratio of 9.00%, a Tier 1 capital ratio of 9.90% and a
Total capital ratio of 10.59% at June 30, 2023.
Operating Results
In the second quarter of 2024, Kish generated a return on
average common equity of 10.54% and a return on average assets of
0.79%, compared to 13.06% and 0.92%, respectively, in the second
quarter a year ago. Year-to-date, the return on average common
equity was 10.68% and return on average assets was 0.79%, compared
to 13.38% and 0.95%, respectively, in the same period in 2023.
Net interest income, before the provision for credit losses,
increased 11.1% to $12.1 million in the second quarter of 2024,
compared to $10.9 million in the second quarter a year ago. In the
first six months of the year, net interest income before the
provision for credit losses increased $2.0 million, or 9.1% year
over year, indicating a strong and well-balanced net interest
margin. The resulting relative stability in the net interest margin
and managing of interest rate risk is due to effective balance
sheet management strategies, including Kish’s balance sheet hedging
program, which creates additional balance sheet flexibility.
The Company’s net interest margin was 3.29% in the second
quarter of 2024, compared to 3.18% in the preceding quarter and
3.36% in the second quarter of 2023. In the first six months of the
year, the net interest margin was 3.23%, compared to 3.42% in the
year-ago period.
Largely due to adjustments dictated by the Company’s CECL
accounting model and robust loan growth, the Company recorded a
$467 thousand provision for credit losses in the second quarter of
2024. This compared to a $113 thousand provision for credit losses
in the first quarter of 2024, and a $149,000 provision for credit
losses in the second quarter of 2023. The increase in the provision
during the current quarter was not reflective of credit quality,
which remains pristine.
Second quarter noninterest income increased 3.3% to $2.6
million, compared to $2.5 million in the second quarter a year ago.
Noninterest income for the six-month period increased by 5.5%
compared to the same period in 2023, which is attributable in part
to strong results from Kish’s Wealth Management division of $1.6
million, a 22.7% increase over the six month period in 2023, as
well as an improvement in the value of the equity portfolio of $145
thousand. These gains were offset to some extent by lower interest
rate swap fees, which were impacted by the current high level of
market interest rates. Gains on the sale of residential mortgage
loans also continue to be depressed due to higher mortgage interest
rates.
Noninterest expense increased $1.0 million, or 10.6%, to $10.4
million in the second quarter of 2024, compared to $9.4 million in
the second quarter of 2023. For the first six months of the year,
noninterest expense increased $2.1 million, or 10.9%, to $21.0
million, compared to $18.9 million in the same period in 2023. The
increase in operating expenses for the second quarter and the
six-month period reflect the Company’s strategic investment in
technology enhancements and the training and education of its
employees; all crucial fundamentals in supporting rapidly expanding
customer relationships. Team additions, partially driven by the
expansion into Blair County, remain the primary driver of higher
salary expense, although inflationary pressures also added to the
increase in compensation expense. The data processing expense
increase was attributable to a year over year recategorization of
selected technology expenditures from other expense to data
processing expense. Also notable was the increase in FDIC premiums
associated with the rapid growth in insured deposits. All other
expense categories were well-controlled when compared to the prior
year.
The efficiency ratio for the second quarter of 2024 was 73.3%,
compared to 74.2% for the preceding quarter and 71.1% for the
second quarter of 2023. Year-to-date, the efficiency ratio was
73.8% compared to 70.9% in the year ago period. The efficiency
ratio includes the Company’s non-banking units which operate at
higher expense levels than Kish Bank.
In the second quarter of 2024, the Company recorded $646
thousand in state and federal income tax expense for an effective
tax rate of 17.0%, compared to $611 thousand, or 16.0%, in the
second quarter a year ago. In the first six months of 2024, the
Company recorded $1.2 million in state and federal income tax
expense for an effective rate of 16.5%, compared to $1.2 million,
or 15.9% in the year ago period.
Credit Quality
The allowance for credit losses represented 1535.7% of
nonperforming loans at June 30, 2024, compared to 1338.6% a year
earlier. Nonperforming loans were $641 thousand, or 0.05% of total
loans, at June 30, 2024, compared to $650 thousand, or 0.06% of
total loans, a year earlier.
Net loan charge-offs totaled $5 thousand in the second quarter
of 2024, compared to net loan charge-offs of $2 thousand in the
second quarter a year ago. The allowance for credit losses was $8.1
million, or 0.75% of total loans, at June 30, 2024, compared $7.2
million, or 0.78% of total loans, a year ago.
Dividend
On July 1, the Board of Directors declared a quarterly dividend
in the amount of $0.37 per share, payable July 31, 2024, to
shareholders of record as of July 15, 2024, which was unchanged
from the prior quarter. The current dividend represents an
annualized yield of 4.93% based on recent market prices. Kish has
paid uninterrupted dividends since 1987, with a dividend increase
every year for the prior eight consecutive years.
About Kish Bancorp, Inc.
Kish Bancorp, Inc. is a diversified financial services
corporation headquartered in Belleville, PA with executive offices
in State College and an Innovation Center in Reedsville. Kish Bank,
a subsidiary of Kish Bancorp, Inc., operates 18 offices and
financial centers serving Centre, Mifflin, Huntingdon, Blair, and
Juniata counties, and northeastern Ohio. In addition to Kish Bank,
other business units include: Kish Insurance, an independent
property and casualty insurance agency; Kish Financial Solutions,
which offers trust, fiduciary, and wealth management advisory
services; Kish Benefits Consulting, which provides employee
benefits consulting services; and Kish Travel, a full-service
travel agency. KISB is the OTCQX stock ticker symbol for Kish
Bancorp, Inc. For additional information, please visit
ir.kishbancorp.com or otcmarkets.com/stock/KISB.
In June of 2024, Kish Bancorp, Inc. was ranked 38th on American
Banker Magazine’s list of Top 100 Publicly Traded Community Banks
and Thrifts based on three-year average return on equity as of
December 31, 2023. The rankings are derived from all publicly
traded banks and thrifts in the U.S. with less than $2 billion in
assets.
Forward Looking Statements
Certain statements regarding Kish Bancorp, Inc. set forth in
this document and any related materials, as well as in related oral
and written presentations, contain forward-looking information and
speak only as of the date of such statement. You can identify these
statements by the fact that they use words such as “will,”
“anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,”
“believe,” “target,” “forecast” and other words and terms of
similar meaning in connection with any discussion of future
operating or financial performance or business plans and prospects.
This forward-looking information is subject to numerous material
risks, uncertainties and assumptions, certain of which are beyond
the control of Kish Bancorp, including the impact of general
economic conditions, industry conditions, competition from other
industry participants, the effect of federal, state and local
regulation on financial institutions, market volatility and ability
to access sufficient capital from internal and external sources.
Readers are cautioned that the material assumptions used in the
preparation of such information, although considered reasonable at
the time of preparation, may prove to be imprecise and actual
results, performance or achievement could differ materially from
those expressed in, or implied by, this forward-looking information
and, accordingly, no assurance can be given that any of the events
anticipated by the forward-looking information will transpire or
occur, or if any of them do so, what benefits that Kish Bancorp
will derive therefrom. Kish Bancorp disclaims any intention or
obligation to update or revise any forward-looking information,
whether, because of new information, future events or otherwise,
except as required by applicable securities laws.
Consolidated Balance Sheet (Unaudited; in thousands)
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
ASSETS Cash and due from banks
$
10,894
$
9,769
$
12,874
Interest-bearing deposits with other institutions
4,390
8,737
11,071
Cash and cash equivalents
15,284
18,506
23,945
Certificates of deposit on other financial institutions
245
245
245
Investment securities available for sale
170,363
171,744
179,919
Equity securities
2,395
2,452
2,506
Investment securities held to maturity
10,889
11,003
11,007
Loans held for sale
2,066
168
1,625
Loans
1,319,175
1,255,393
1,115,335
Less allowance for credit losses
8,086
7,580
7,157
Net Loans
1,311,089
1,247,813
1,108,178
Premises and equipment
27,103
27,118
27,022
Goodwill
3,561
3,561
3,561
Regulatory stock
7,034
9,631
9,368
Bank-owned life insurance
24,661
24,480
23,965
Accrued interest and other assets
37,161
32,870
32,719
TOTAL ASSETS
$
1,611,851
$
1,549,591
$
1,424,060
LIABILITIES Noninterest-bearing deposits
181,883
174,500
170,857
Interest-bearing deposits
1,088,087
1,017,586
920,520
Total Deposits
1,269,970
1,192,086
1,091,377
Short-term borrowings
168,000
185,619
169,400
Other borrowings
35,812
36,492
48,127
Accrued interest and other liabilities
39,096
38,629
36,485
TOTAL LIABILITIES
1,512,878
1,452,826
1,345,389
STOCKHOLDERS' EQUITY Common stock, $0.50 per value;
8,000,000 shares authorized, 3,022,127, 3,015,877 and 2,697,000
issued
1,511
1,508
1,349
Additional paid-in capital
14,101
13,905
3,856
Retained earnings
100,941
98,888
91,941
Accumulated other comprehensive income
(14,071
)
(13,988
)
(15,094
)
Treasury stock, at cost (60,137, 78,376 and 56,210 shares)
(3,509
)
(3,548
)
(3,381
)
TOTAL STOCKHOLDERS' EQUITY
98,973
96,765
78,671
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
1,611,851
$
1,549,591
$
1,424,060
CONSOLIDATED STATEMENT OF INCOME (Unaudited; in thousands)
Three Months Ended Six Months Ended
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
INTEREST AND DIVIDEND INCOME Interest and fees on loans: Taxable
$
20,574
$
19,521
$
15,735
$
40,095
$
29,926
Exempt from federal income tax
263
256
194
519
389
Investment securities Taxable
1,238
1,266
1,349
2,504
2,573
Exempt from federal income tax
59
53
51
112
105
Interest-bearing deposits with other institutions
80
89
105
169
235
Other dividend income
222
252
292
474
502
TOTAL INTEREST AND DIVIDEND INCOME
22,436
21,437
17,726
43,873
33,730
INTEREST EXPENSE Deposits
8,318
7,381
4,683
15,699
8,387
Short-term borrowings
1,995
2,448
1,764
4,442
3,101
Other borrowings
48
201
412
250
722
TOTAL INTEREST EXPENSE
10,361
10,030
6,859
20,391
12,210
NET INTEREST INCOME
12,075
11,407
10,867
23,482
21,520
Provision for credit losses
467
113
149
580
85
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
11,608
11,294
10,718
22,902
21,435
NONINTEREST INCOME Service fees on deposit accounts
620
583
591
1,203
1,159
Equity securities (losses) gains, net
(57
)
(149
)
(28
)
(206
)
(351
)
Gain on sale of loans, net
108
74
96
182
164
Earnings on Bank-owned life insurance
179
176
155
355
313
Insurance commissions
675
934
687
1,609
1,611
Travel agency commissions
60
19
68
79
113
Wealth management
612
940
499
1,552
1,233
Benefits consulting
179
145
150
324
319
Other
225
201
302
426
676
TOTAL NONINTEREST INCOME
2,601
2,923
2,520
5,524
5,237
NONINTEREST EXPENSE Salaries and employee benefits
6,162
6,431
5,600
12,593
11,289
Occupancy and equipment
1,025
1,007
947
2,032
1,884
Data processing
1,157
1,137
993
2,294
1,949
Professional fees
207
150
153
357
356
Advertising
115
116
154
231
305
Federal deposit insurance
341
292
208
633
403
Other
1,410
1,414
1,360
2,825
2,724
TOTAL NONINTEREST EXPENSE
10,417
10,547
9,415
20,965
18,910
INCOME BEFORE INCOME TAXES
3,792
3,670
3,823
7,461
7,762
Income taxes
646
585
611
1,231
1,235
NET INCOME
$
3,146
$
3,085
$
3,212
$
6,230
$
6,527
ADDITIONAL FINANCIAL INFORMATION (Dollars and shares in
thousands except per share amounts)(Unaudited) Three Months Ended
Six Months Ended
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
PERFORMANCE MEASURES AND RATIOS Return on average common
equity
10.54
%
10.84
%
13.06
%
10.68
%
13.38
%
Return on average assets
0.79
%
0.80
%
0.92
%
0.79
%
0.95
%
Efficiency ratio
73.32
%
74.19
%
71.12
%
73.75
%
70.90
%
Net interest margin
3.29
%
3.18
%
3.36
%
3.23
%
3.42
%
Three Months Ended Six Months Ended
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
AVERAGE BALANCES Average assets
$
1,578,036
$
1,538,898
$
1,389,321
$
1,558,467
$
1,362,588
Average earning assets
1,477,644
1,443,705
1,295,840
1,460,675
1,268,564
Average total loans
1,288,486
1,245,749
1,085,807
1,267,117
1,062,424
Average deposits
1,243,367
1,165,442
1,060,893
1,204,405
1,054,002
Average common equity
107,134
105,932
87,862
105,412
87,176
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
EQUITY ANALYSIS Total common equity
$
110,281
$
107,977
$
91,347
Common stock outstanding
3,022,127
3,015,877
2,697,000
Book value per share
$
33.75
$
33.30
$
29.80
Tangible book value per share
$
32.32
$
31.85
$
29.73
ASSET QUALITY Nonaccrual loans
$
599
$
567
$
487
Loans 90 days past due and still accruing
42
103
163
Total nonperforming loans
$
641
$
670
$
650
Other real estate owned and other repossessed assets
-
-
-
Total nonperforming assets
$
641
$
670
$
650
Nonperforming loans/portfolio loans
0.05
%
0.05
%
0.06
%
Nonperforming assets/assets
0.04
%
0.04
%
0.05
%
Allowance for credit losses
$
8,086
$
7,580
$
7,157
Plus: Reserve for undisbursed loan commitments
1,758
1,801
1,544
Total allowance for credit losses
$
9,844
$
9,381
$
8,701
Allowance for credit losses/portfolio loans
0.75
%
0.75
%
0.78
%
Allowance for credit losses/nonperforming loans
1535.73
%
1400.15
%
1338.62
%
Net loan (recoveries) charge-offs for the quarter
$
5
$
20
$
2
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
KISH BANK Tier 1 leverage ratio
9.00
%
8.96
%
8.75
%
Tier 1 capital ratio
9.90
%
10.00
%
10.04
%
Total capital ratio
10.59
%
10.68
%
10.76
%
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
INTEREST SPREAD ANALYSIS Yield on total loans
6.52
%
6.40
%
5.90
%
Yield on investments
2.88
%
2.84
%
2.84
%
Yield on interest earning deposits
8.65
%
8.08
%
8.90
%
Yield on earning assets
6.09
%
5.96
%
5.47
%
Cost of interest-bearing deposits
3.13
%
2.97
%
2.13
%
Cost of total deposits
2.69
%
2.55
%
1.77
%
Cost of borrowings
4.17
%
4.42
%
4.02
%
Cost of interest-bearing liabilities
3.29
%
3.25
%
2.51
%
Cost of funds
2.89
%
2.87
%
2.15
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240718041756/en/
Mark J. Cvrkel, EVP, Treasurer and Chief Financial Officer,
814-325-7346