Mid-Southern Bancorp, Inc. (the “Company”) (NASDAQ: MSVB), the
holding company for Mid-Southern Savings Bank, FSB (the “Bank”),
reported net income for the first quarter ended March 31, 2022
of $467,000 or $0.17 per diluted share compared to $378,000 or
$0.13 per diluted share for the same period in 2021.
Income Statement Review
Net interest income after provision for loan
losses increased $38,000, or 2.2%, for the quarter ended
March 31, 2022 to $1.7 million as compared to the quarter
ended March 31, 2021. Total interest income increased $18,000,
or 1.0%, when comparing the two periods, due to an increase in the
average balance of interest-earning assets partially offset by a
decrease in the yield earned on interest-earning assets. The
average balance of interest-earning assets increased to
$250.9 million for the quarter ended March 31, 2022 from
$228.8 million for the quarter ended March 31, 2021, due
primarily to increases in loans receivable, investment securities
and interest-bearing deposits with banks. The average tax
equivalent yield on interest-earning assets decreased to 3.17% for
the quarter ended March 31, 2022 from 3.43% for the quarter
ended March 31, 2021, due primarily to a decrease in market
interest rates. Total interest expense decreased $20,000, or 11.8%,
when comparing the two periods due to a decrease in the average
cost of interest-bearing liabilities, partially offset by an
increase in the average balance of interest-bearing liabilities.
The average cost of interest-bearing liabilities decreased to 0.32%
for the quarter ended March 31, 2022 from 0.42% for the same
period in 2021. The average balance of interest-bearing liabilities
increased to $184.8 million for the quarter ended
March 31, 2022 from $163.0 million for the same period in
2021, due primarily to an increase in savings and interest-bearing
demand deposit accounts, partially offset by a decrease in time
deposits. As a result of the changes in interest-earning assets and
interest-bearing liabilities, the interest rate spread decreased to
2.85% from 3.01% and the net interest margin decreased to 2.93%
from 3.13% for the quarters ended March 31, 2022 and 2021,
respectively.
Noninterest income increased $11,000, or 4.0%,
for the quarter ended March 31, 2022 as compared to the same
period in 2021, due primarily to increases of $31,000 and $7,000 in
deposit account service charges and ATM and debit card fee income,
respectively, partially offset by a reduction in brokered loans
fees of $25,000.
Noninterest expense decreased $57,000, or 3.6%,
for the quarter ended March 31, 2022 as compared to the same
period in 2021. The decrease was due primarily to decreases in
compensation and benefits of $64,000, directors’ compensation of
$19,000 and professional fees of $11,000, partially offset by
higher data processing expenses of $23,000 and occupancy and
equipment expenses of $9,000.
The Company recorded an income tax expense of
$34,000 for the quarter ended March 31, 2022, compared to an
income tax expense of $17,000 for the same period in 2021 resulting
from an increase in our effective tax rate to 6.8% for 2022
compared to 4.3% for 2021.
Balance Sheet Review
Total assets as of March 31, 2022 were
$261.5 million compared to $254.3 million at
December 31, 2021. The increase in total assets was primarily
due to increases in investment securities of $10.1 million,
net loans of $4.7 million and other assets of
$2.1 million, partially offset by a decrease in cash and cash
equivalents of $9.6 million. Investment securities increased
due primarily to $23.1 million in purchases of available for
sale investment securities, partially offset by $5.0 million
in scheduled principal payments, calls and maturities of
mortgage-backed and tax-exempt securities and a $7.8 million
unrealized loss on available for sale securities. The increase in
net loans was due primarily to increases of $4.2 million in
commercial real estate loans and $1.6 million in one-to-four
family residential loans, partially offset by a decrease of
$367,000 in multifamily residential loans and a decrease of
$319,000 in residential construction loans. The increase in other
assets was due primarily to a $2.0 million increase in net deferred
tax assets, largely attributable to the tax effect on the
unrealized loss on available for sale securities. Total
liabilities, comprised mostly of deposits, increased
$12.8 million to $220.5 million as of March 31,
2022. The increase was due primarily to a $10.2 million
increase in interest-bearing deposits and a $2.6 million
increase in noninterest-bearing deposits.
Credit Quality
Non-performing loans decreased to $594,000 at
March 31, 2022 compared to $753,000 at December 31, 2021,
or 0.5% and 0.6% of total loans, respectively. At March 31,
2022, $101,000 or 17.0% of non-performing loans were current on
their loan payments. At March 31, 2022, non-performing
troubled debt restructured loans totaled $97,000. There was no
foreclosed real estate owned at either March 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 quarters ended March 31, 2022 and 2021. The
Company recognized net charge-offs of $1,000 for the quarter ended
March 31, 2022 compared to net recoveries of $1,000 for the
same period in 2021. The allowance for loan losses totaled
$1.5 million at both March 31, 2022 and December 31,
2021, representing 1.2% of total loans at both March 31, 2022
and December 31, 2021, respectively. The allowance for loan
losses represented 256.2% of non-performing loans at March 31,
2022, compared to 202.3% at December 31, 2021.
Capital
Effective January 1, 2022, a bank or
savings institution electing to use the Community Bank Leverage
Ratio (“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. The Bank
elected to use the CBLR effective January 1, 2020.
At March 31, 2022, the Bank was considered
well-capitalized under applicable federal regulatory capital
guidelines with a CBLR of 16.2%.
The Company’s stockholders’ equity decreased to
$41.0 million at March 31, 2022, from $46.5 million
at December 31, 2021. The decrease was due primarily to a
decrease in the accumulated other comprehensive income, net of tax,
of $5.9 million and the repurchase of 16,117 shares of our
common stock at a total cost of $241,000, partially offset by net
income of $467,000. At March 31, 2022, a total of
169,466 shares remain authorized for future purchases under
the current stock repurchase plan.
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, including on the Company’s credit quality and
business operations, as well as its impact on general economic and
financial market conditions and other uncertainties resulting from
the COVID-19 pandemic, such as the extent and duration of the
impact on public health, the U.S. and global economies, and
consumer and corporate customers, including economic activity,
employment levels and market liquidity; 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 |
|
|
March 31, |
OPERATING
DATA |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
Total interest income |
|
$ |
1,883 |
|
$ |
1,865 |
Total interest expense |
|
|
150 |
|
|
170 |
Net interest income |
|
|
1,733 |
|
|
1,695 |
Provision for loan losses |
|
|
— |
|
|
— |
Net interest income after provision for loan losses |
|
|
1,733 |
|
|
1,695 |
Total non-interest income |
|
|
285 |
|
|
274 |
Total non-interest expense |
|
|
1,517 |
|
|
1,574 |
Income before income taxes |
|
|
501 |
|
|
395 |
Income tax expense |
|
|
34 |
|
|
17 |
Net income |
|
$ |
467 |
|
$ |
378 |
|
|
|
|
|
|
|
Net income per share attributable to common shareholders: |
|
|
|
|
|
|
Basic |
|
$ |
0.17 |
|
$ |
0.13 |
Diluted |
|
$ |
0.17 |
|
$ |
0.13 |
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
Basic |
|
|
2,811,781 |
|
|
2,965,780 |
Diluted |
|
|
2,816,467 |
|
|
2,974,417 |
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
BALANCE SHEET
INFORMATION |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
6,741 |
|
$ |
16,379 |
Investment securities |
|
|
117,431 |
|
|
107,314 |
Loans, net |
|
|
127,306 |
|
|
122,568 |
Interest-earning assets |
|
|
252,126 |
|
|
247,184 |
Total assets |
|
|
261,494 |
|
|
254,260 |
Deposits |
|
|
209,658 |
|
|
196,884 |
Borrowings |
|
|
10,000 |
|
|
10,000 |
Stockholders' equity |
|
|
40,950 |
|
|
46,529 |
|
|
|
|
|
|
|
Common stock shares outstanding |
|
|
3,008,255 |
|
|
3,016,653 |
|
|
|
|
|
|
|
Book value per share(1) |
|
|
13.61 |
|
|
15.42 |
Tangible book value per share(2) |
|
|
13.61 |
|
|
15.42 |
Non-performing assets: |
|
|
|
|
|
|
Nonaccrual loans |
|
|
594 |
|
|
753 |
Accruing loans past due 90 days or more |
|
|
— |
|
|
— |
Foreclosed real estate |
|
|
— |
|
|
— |
Troubled debt restructurings on accrual status |
|
|
776 |
|
|
786 |
OTHER FINANCIAL DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
Performance
ratios: |
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
Cash dividends per share |
|
$ |
0.04 |
|
|
$ |
0.03 |
|
Return on average assets (annualized) |
|
|
0.72 |
% |
|
|
0.63 |
% |
Return on average stockholders' equity (annualized) |
|
|
4.13 |
% |
|
|
3.08 |
% |
Net interest margin |
|
|
2.93 |
% |
|
|
3.13 |
% |
Interest rate spread |
|
|
2.85 |
% |
|
|
3.01 |
% |
Efficiency ratio |
|
|
75.2 |
% |
|
|
79.9 |
% |
Average interest-earning assets to average interest-bearing
liabilities |
|
|
135.8 |
% |
|
|
140.4 |
% |
Average stockholders' equity to average assets |
|
|
17.5 |
% |
|
|
20.5 |
% |
Stockholders' equity to total assets at end of period |
|
|
15.7 |
% |
|
|
19.6 |
% |
|
|
March 31, |
|
|
December 31, |
|
Capital
ratios:(3) |
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Community Bank Leverage Ratio |
|
16.2 |
% |
|
16.3 |
% |
|
|
|
|
|
|
|
|
|
March 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 |
|
256.2 |
% |
|
202.3 |
% |
Net charge-offs (recoveries) to average outstandingloans 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 |
|
0.2 |
% |
|
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) - 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.
(3) - 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 8.0% effective
April 1, 2020, then to 8.5% effective January 1, 2021,
returning to 9.0% effective January 1, 2022).
Contact:Alexander G.
Babey, President and Chief Executive OfficerRobert
W. DeRossett, Chief Financial OfficerMid-Southern
Bancorp, Inc.812-883-2639
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