Integrated Financial Holdings, Inc. Second Quarter 2022 Financial Results

Rhea-AI Summary

Integrated Financial Holdings, Inc. (IFHI) reported its Q2 2022 financial results, showcasing a net income drop to $1.4 million or $0.63 per diluted share, down from $4.6 million or $2.07 per diluted share in Q2 2021. Year-to-date net income was $5 million, down from $8.5 million in 2021. Net interest income increased 25% to $5.1 million, driven by a rise in loan yields. The Company’s total assets decreased slightly to $435.5 million, while nonperforming assets decreased to 1.07%. Additionally, a merger agreement with MVB Financial Corp. was announced on August 12, 2022.

Positive

• Net interest income for Q2 2022 increased 25% to $5.1 million.
• Total shareholders’ equity attributable to IFHI increased by $3.9 million or 4%.
• Nonperforming assets to total assets ratio improved to 1.07%.

Negative

• Net income for Q2 2022 decreased significantly to $1.4 million, down 70% year-over-year.
• Noninterest income dropped by 46% to $6.7 million, largely due to decreased loan servicing revenue.
• Provision for loan losses increased to $640,000 for the six-month period compared to $672,000 in the prior year.

RALEIGH, N.C., Aug. 12, 2022 (GLOBE NEWSWIRE) -- Integrated Financial Holdings, Inc. (OTCQX: IFHI) (the “Company” or “IFHI”), the financial holding company for West Town Bank & Trust (“the Bank”), released its financial results for the three months and six months ended June 30, 2022. Highlights from the 2022 second quarter and year-to-date results include the following:

• Second quarter net income of $1.4 million or $0.63 per diluted share, compared to second quarter 2021 net income of $4.6 million or $2.07 per diluted share. Year-to-date net income was $5.0 million or $2.22 per diluted share compared to $8.5 million or $3.82 per diluted share in the prior year.
• Net interest income of $5.1 million for the second quarter of 2022, compared to $4.1 million for the same period in 2021. For the year, net interest income was $10.4 million compared to $7.9 million for the same six-month period in 2021.
• Return on average assets of 1.29% and 2.29% for the three and six-month periods ending June 30, 2022 compared to 4.39% and 4.20%, respectively for the same periods in 2021.
• Return on average tangible common equity (a non-GAAP financial measure) of 7.91% and 14.08% for the three and six-month periods ending June 30, 2022 compared to 29.84% and 28.61%, respectively for the same periods in 2021.

BALANCE SHEET
On June 30, 2022, the Company’s total assets were $435.5 million, net loans held for investment were $259.9 million, loans held for sale (“HFS”) were $59.6 million, total deposits were $333.6 million and total shareholders’ equity attributable to IFHI was $92.5 million. Compared with December 31, 2021, total assets decreased $17.5 million or 4%, net loans held for investment increased $5.8 million or 2%, HFS loans increased $31.7 million or 114%, total deposits decreased $14.5 million or 4%, and total shareholders’ equity attributable to IFHI increased $3.9 million or 4%. The cash side of the balance sheet continued to decrease as the Company continued to redeploy cash into higher yielding loans. The Bank has continued to see strong growth in HFS loans primarily as a result of a strong loan pipeline for the Government Guaranteed Lending (“GGL”) type loans. At $59.6 million in volume, HFS loans at June 30, 2022 represent significant potential future GGL revenues as those loans are sold in the market and the associated premiums are recognized. Noninterest bearing deposits declined $30.8 million since the prior year-end, in part, as a result of some ongoing merger and acquisition activity in one of the targeted industries that the Company banks.   The increase in total shareholders’ equity since year-end 2021 was primarily a result of net income posted for the six-month period ended June 30, 2022.

CAPITAL LEVELS
At June 30, 2022, the regulatory capital ratios of West Town Bank & Trust exceeded the minimum thresholds established for well-capitalized banks under applicable banking regulations.

	"Well Capitalized" Minimum	Basel III Fully Phased-In	West Town Bank & Trust
Tier 1 common equity ratio	6.50%	7.00%	15.52%
Tier 1 risk-based capital ratio	8.00%	8.50%	15.52%
Total risk-based capital ratio	10.00%	10.50%	16.78%
Tier 1 leverage ratio	5.00%	4.00%	12.19%

The Company’s book value per common share increased from $38.32 as of June 30, 2021, to $41.15 at June 30, 2022. The Company’s tangible book value per common share (a non-GAAP financial measure) increased from $29.29 as of June 30, 2021, to $32.62 at June 30, 2022, primarily as a result of the net income of the Company.

ASSET QUALITY
The Company’s nonperforming assets to total assets ratio decreased from 1.65% at December 31, 2021, to 1.07% at June 30, 2022, as management continued to aggressively work to reduce its special assets portfolio. Nonaccrual loans at June 30, 2022 decreased $2.2 million or 32% as compared to December 31, 2021. Neither Patriarch, LLC, a subsidiary of the Company formed to expedite the liquidation and recovery of certain Bank asset, nor the Bank held any foreclosed assets as of June 30, 2022.  

The Company recorded $460,000 and $640,000 in provision for loan losses during the three and six-months periods ending June 30, 2022, respectively, as compared to provisions of $50,000 and $672,000 for the same periods in 2021 as the loan portfolio increased for those periods. The Company recorded $279,000 in net recoveries during the second quarter of 2022 compared to $24,000 in charge-offs for the same period in 2021. Management continues to make progress in improving overall asset quality. Set forth in the table below is certain asset quality information as of the dates indicated:

(Dollars in thousands)	6/30/22			3/31/22			12/31/21			9/30/21			6/30/21
Nonaccrual loans	$	4,656		$	6,558		$	6,848		$	7,575		$	5,765
Foreclosed assets		-			-			618			618			618
90 days past due and still accruing		-			-			-			-			447
Total nonperforming assets	$	4,656		$	6,558		$	7,466		$	8,193		$	6,830
Net charge-offs	$	(279	)	$	105		$	1,038		$	325		$	24
Annualized net charge-offs to total average portfolio loans		-0.43	%		0.16	%		1.65	%		0.50	%		0.03	%
Ratio of total nonperforming assets to total assets		1.07	%		1.52	%		1.65	%		1.84	%		1.55	%
Ratio of total nonperforming loans to total loans, net of allowance		1.79	%		2.56	%		2.70	%		2.99	%		2.40	%
Ratio of total allowance for loan losses to total loans		2.39	%		2.14	%		2.14	%		2.24	%		2.13	%

NET INTEREST INCOME AND MARGIN
Net interest income for the three months ended June 30, 2022, increased $1.0 million or 25% in comparison to the second quarter of 2021 as loan yields increased year over year from 6.43% to 6.90%. The increase in yield from the prior year resulted from a change in loan mix and also reflecting the impact of 150 basis points of rate increases by the Federal Open Market Committee (“FOMC”) since the beginning of 2022 in response to current economic conditions. Overall cost of funds decreased from 0.82% in the second quarter of 2021 to 0.64% for the same period in 2022, however the Company expects to see an upward trend in its costs of funds as average retail certificate of deposit (“CD”) rates trend up and new CDs are originated at a higher market rate. Net interest margin increased from 4.63% during the three months ended June 30, 2021, to 5.51% for the same period in 2022. The increase in margin was also driven by the increase in loan yield as a result of the FOMC actions.

Net interest income for the six months ended June 30, 2022, increased $2.4 million or 31% in comparison to the same period of 2021 as loan yields increased year over year from 6.34% to 7.30% as a result of the FOMC rate increases during the period and the recapture of interest on several large nonaccrual loans in the first quarter of 2022 as previously reported.

	Three Months Ended											Year-To-Date
(Dollars in thousands)	6/30/22		3/31/22		12/31/21		9/30/21		6/30/21			6/30/22		6/30/21
Average balances:
Loans	$	319,115	$	294,502	$	277,510	$	272,994	$	292,166		$	306,809	$	290,433
Available-for-sale securities		21,879		21,088		20,367		19,393		17,969			21,484		28,668
Other interest-bearing balances		33,328		56,359		86,261		93,682		46,545			44,844		41,263
Total interest-earning assets		374,322		371,949		384,138		386,069		356,680			373,137		360,364
Total assets		438,732		437,402		442,139		446,822		418,741			438,067		409,258
Noninterest-bearing deposits		85,042		98,546		104,472		103,708		85,918			91,794		83,272
Interest-bearing liabilities:
Interest-bearing deposits		244,363		235,092		237,847		240,957		235,013			239,727		231,870
Borrowings		8,626		6,306		5,272		5,196		5,187			7,466		4,593
Total interest-bearing liabilities		252,989		241,398		243,119		246,153		240,200			247,193		236,463
Common shareholders' equity		90,721		90,441		86,549		85,683		81,584			90,581		80,112
Tangible common equity (1)		71,437		70,939		66,877		65,843		61,587			71,188		60,047
Interest income/expense:
Loans	$	5,491	$	5,623	$	4,571	$	4,759	$	4,686		$	11,114	$	9,128
Available-for-sale securities		104		89		77		75		66			193		116
Interest-bearing balances and other		89		42		53		67		33			131		68
Total interest income		5,684		5,754		4,701		4,901		4,785			11,438		9,312
Deposits		523		522		566		645		665			1,045		1,369
Borrowings		15		9		1		-		-			24		-
Total interest expense		538		531		567		645		665			1,069		1,369
Net interest income	$	5,146	$	5,223	$	4,134	$	4,256	$	4,120		$	10,369	$	7,943
(1) See reconciliation of non-GAAP financial measures.

	Three Months Ended											Year-To-Date
	6/30/22		3/31/22		12/31/21		9/30/21		6/30/21			6/30/22		6/30/21
Average yields and costs:
Loans	6.90	%	7.74	%	6.53	%	6.92	%	6.43	%		7.30	%	6.34	%
Available-for-sale securities	1.90	%	1.69	%	1.51	%	1.55	%	1.47	%		1.80	%	0.81	%
Interest-bearing balances and other	1.07	%	0.30	%	0.24	%	0.28	%	0.28	%		0.59	%	0.33	%
Total interest-earning assets	6.09	%	6.27	%	4.86	%	5.04	%	5.38	%		6.18	%	5.21	%
Interest-bearing deposits	0.86	%	0.90	%	0.94	%	1.06	%	1.13	%		0.88	%	1.19	%
Borrowings	0.70	%	0.58	%	0.08	%	0.00	%	0.00	%		0.65	%	0.00	%
Total interest-bearing liabilities	0.85	%	0.89	%	0.93	%	1.04	%	1.11	%		0.87	%	1.17	%
Cost of funds	0.64	%	0.63	%	0.65	%	0.73	%	0.82	%		0.64	%	0.86	%
Net interest margin	5.51	%	5.69	%	4.27	%	4.37	%	4.63	%		5.60	%	4.44	%

NONINTEREST INCOME
Noninterest income for the three months ended June 30, 2022, was $6.7 million, a decrease of $5.8 million or 46% as compared to the three months ended June 30, 2021. Specific items to note include:

• Windsor Advantage, LLC (“Windsor”), a subsidiary of the Company which offers an SBA and USDA loan servicing platform, had processing and servicing revenue totaling $2.4 million, a decrease of $3.4 million or 59% as compared to the $5.8 million in income earned during the same prior-year period. The decrease is entirely attributable to $3.5 million in PPP fee related income realized in the second quarter of 2021 compared to no such income in the same period in 2022.
• Mortgage revenue totaled $1.1 million, a decrease of $707,000 or 40% as compared to the second quarter of 2021. Mortgage originations have continued to decline due to rising interest rates. To that effect, mortgage loans originated to sell to the secondary market decreased from $51.0 million in the second quarter 2021 to $37.7 million in the second quarter 2022.   The decrease in both the core mortgage revenue and origination volume can be attributable to the nationwide slowdown in refinancing volume with housing supplies continuing to be an issue along with the impact of a nationwide increase of almost 20% for the median price of a new home and a doubling of long-term mortgage rates year-over-year.  
• Government Guaranteed Lending (“GGL”) revenue was $2.8 million in the second quarter of 2022, a decrease of $1.0 million or 27% in comparison to the $3.8 million of revenues for the same period in 2021. However, the loans held for sale portfolio, representing future premium income, significantly increased quarter over quarter and year-over-year. GGL related HFS loans were $52.4 million as of June 30, 2022, compared to $25.4 million at December 31, 2021 and $4.5 million at June 30, 2021.
• Other noninterest income was $290,000 in the second quarter of 2022 compared to income of $908,000 in the same period in 2021. The decrease is mostly attributable to a $383,000 decrease in deferred PPP fees recognized in 2021.

Noninterest income for the six months ended June 30, 2022, was $17.1 million compared to $27.1 million for the same period in 2021, a decrease of $10.1 million or 37%. The decrease is primarily due to a decrease of $10.0 million in loan processing and servicing revenue driven by the decrease in PPP-related revenue during the period.

NONINTEREST EXPENSE
Noninterest expense for the second quarter of 2022 was $9.6 million, a decrease of $979,000 or 9%, from $10.6 million for the second quarter of 2021. Contributing to the year-over-year decrease was software expenses, which decreased due to Windsor fully expensing the PPP platform in 2021. Software expenses were $426,000, a decrease of $1.1 million or 72% in the second quarter of 2022 compared to the same period in 2021 as a result of no additional costs related to the processing of PPP loans during the second quarter of 2022. Compensation increased $275,000 from $6.0 million to $6.3 million due to additional costs for new hires in 2022. The decreases in most of the noninterest expense categories, including special assets, data processing, software, communications, and other operating expenses are primarily related to management’s overall effort to grow profitability.

Noninterest expense for the six months ended June 30, 2022, was $20.0 million compared to $23.3 million for the same period in 2021, a decrease of $3.3 million or 14%. The decrease is primarily due to a decrease of $4.1 million in software expenses associated with the PPP platform slightly offset by other expense increases.

SUBSEQUENT EVENTS

Entry into Merger Agreement with MVB Financial Corp. On August 12, 2022, it was publicly announced that the Company had entered into a definitive merger agreement with MVB Financial Corp. (“MVB”), the holding company for MVB Bank, Inc., a West Virginia state-chartered bank. Under the terms of the merger agreement, which is an all-stock transaction, the Company would be merged with and into MVB, with MVB as the surviving corporation in the proposed merger. Readers are strongly encouraged to read the full merger announcement release (the “Merger Release”), which is available under the Investor Relations section of the Company’s website (https://ifhinc.com) and contains additional detail on the proposed strategic combination with MVB. Readers are also directed to the end of this press release and the section entitled “Additional Information on the Merger and Where to Find it.”

RESPA Class Action Litigation. On February 19, 2019, a group of plaintiffs filed a putative class action lawsuit against West Town Bank & Trust alleging that they were subject to an illegal kickback and price fixing scheme designed and executed by All Star Title, Inc. for the referral of settlement services. The case is styled Joseph and Karen Somerville, III, et al. v. West Town Bank & Trust, a/k/a West Town Savings Bank, Case No. 1.19-CV-00490, pending in the United States District Court for the District of Maryland (such case, the “RESPA Litigation”). Based on this alleged conduct, plaintiffs accused the Bank of violating Section 8(a) of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2607; Section 1 of the Sherman Act, 15 U.S.C. § 1; and Section 1962 of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962. These claims were asserted on a class basis, and the plaintiffs sought to represent other similar borrowers of the Bank whose loans were closed or settled by All Star Title, Inc. The plaintiffs seek to recover three times the charges they paid for settlement services in addition to actual damages trebled and attorneys’ fees and costs.

On May 28, 2019, the Bank moved to dismiss the putative class action complaint for failure to state a claim upon which relief can be granted. On November 19, 2019, the court granted in part and denied in part the Bank’s motion. The court dismissed the plaintiffs’ claim for price-fixing under Section 1 of the Sherman Act but allowed the plaintiffs’ RESPA Section 8 and RICO claims to survive dismissal and proceed with discovery.   On February 4, 2021, the court certified a class comprised of borrowers who obtained a loan originated or brokered by the Bank for which All Star Title, Inc. provided a settlement service between January 1, 2010 and December 31, 2015. The court also certified two subclasses: a RICO subclass and a RESPA subclass. West Town Bank & Trust sought permission to appeal the certification order and permission was denied by the United States Court of Appeals for the Fourth Circuit on March 29, 2021. Notice of the pending litigation and certification of the class was mailed to the members of the class on December 10, 2021. As of June 30, 2022, the parties were still engaged in discovery, and no trial date had been scheduled.  

During July 2022 following the close of the June 30, 2022 fiscal quarter, and precipitated, in part, by its ongoing strategic discussions with MVB, the Company initiated informal settlement discussions with plaintiffs’ counsel in the RESPA Litigation. Litigation such as the foregoing is time consuming, often takes years to resolve and can complicate a company’s strategic initiatives. On August 10, 2022, the Bank agreed to settle the RESPA Litigation for an aggregate sum of $10.0 million, subject to execution of a definitive settlement agreement with plaintiffs and court approval of the settlement. Accordingly, during the third quarter of 2022, the Company established a $10.0 million liability and expense for estimated settlement costs associated with the RESPA Litigation.

ABOUT INTEGRATED FINANCIAL HOLDINGS, INC.
Integrated Financial Holdings, Inc. is a financial holding company based in Raleigh, North Carolina. The Company is the holding company for West Town Bank & Trust, an Illinois state-chartered bank. West Town Bank & Trust provides banking services through its full-service office located in the greater Chicago area. The Company is also the parent company of: Windsor Advantage, LLC, a loan servicing company; West Town Insurance Agency, Inc., an insurance agency; Patriarch, LLC, a real estate management company; and SBA Loan Documentation Services, LLC, a loan documentation origination company. The Company is registered with and supervised by the Federal Reserve. West Town Bank & Trust’s primary regulators are the Illinois Department of Financial and Professional Regulation and the FDIC. The Bank also has an investment in West Town Payments, LLC. Due to the nature of the investment, West Town Payments, LLC is considered a variable interest entity, and as a result, is consolidated for accounting purposes.

For more information, visit https://ifhinc.com/.

Important Note Regarding Forward-Looking Statements
This release contains certain forward-looking statements with respect to the financial condition, results of operations, and business of the Company, as well as regarding the announced merger with MVB. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of the Company and on the information available to management at the time this release was prepared. These statements can be identified by the use of words such as "expect," "anticipate," "estimate," "believe," variations of these words, and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause a difference include, among others: changes in the national and local economies or market conditions; changes in interest rates, deposit flows, loan demand, and asset quality, including real estate and other collateral values; changes in Small Business Administration rules, regulations, or loan products, including the section 7(a) program; changes in other government guaranteed loan programs or our ability to participate in such programs; changes in tax law, including the impact of such changes on our tax assets and liabilities; future governmental shutdowns that may impact revenues associated with our lending and other operations that are dependent on government guaranteed loan programs; changes in banking regulations and accounting principles, policies, or guidelines; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with the Company’s acquisition and divesture activities; the failure of our strategic investments or acquisitions to perform as anticipated and the impact of any impairments to our intangible assets, such as goodwill; the impact of our strategic initiatives on our ability to retain key employees; adverse results (including judgments, costs, fines, reputational harm, financial settlements and/or other negative effects) from current or future litigation, regulatory proceedings, investigations, or similar matters, or developments related thereto; that costs or estimated liabilities and expenses associated with the RESPA Litigation may be greater than currently estimated or that a definitive settlement agreement with plaintiffs is not reached or court approved; the impact of competition from traditional or new sources, including non-bank financial service providers, such as Fintechs; and, with respect to the Company’s announced merger with MVB, those factors detailed in the “Forward Looking Statements” section of the Merger Release, which are incorporated herein by this reference. These, and other factors that may emerge, could cause decisions and actual results to differ materially from current expectations. The Company assumes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.        

Additional Information on the Merger and Where to Find It

In connection with the proposed merger, MVB will file a registration statement on Form S-4 with the U.S. Securities and Exchange Commission (“SEC”). The registration statement will include a joint proxy statement of MVB and IFHI, which also constitutes a prospectus of MVB, that will be sent to IFHI’s and MVB’s shareholders seeking certain approvals related to the proposed transaction.

The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. INVESTORS AND SECURITY HOLDERS OF IFHI AND MVB AND THEIR RESPECTIVE AFFILIATES ARE URGED TO READ, WHEN AVAILABLE, THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS TO BE INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT IFHI, MVB AND THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain a free copy of the registration statement, including the joint proxy statement/prospectus, as well as other relevant documents filed by MVB with the SEC containing information about IFHI and MVB, without charge, at the SEC’s website (http://www.sec.gov). In addition, copies of documents filed with the SEC by MVB will be made available free of charge in the “Investor Relations” section of MVB’s website, https://www.mvbbanking.com, under the heading “SEC Filings;” and investors may obtain free copies of the joint proxy statement/prospectus (when available) by contacting Integrated Financial Holdings, Inc., Attn: Eric J. Bergevin, 8450 Falls of Neuse Road, Suite 202, Raleigh, NC 27615, telephone: (252) 482-4400.

Participants in Solicitation

IFHI, MVB, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction under the rules of the SEC. Information regarding MVB’s directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on April 7, 2022, and certain other documents filed by MVB with the SEC. Other information regarding the participants in the solicitation of proxies in respect of the proposed transaction and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC. Free copies of these documents, when available, may be obtained as described in the preceding paragraph.

Consolidated Balance Sheets
				Ending Balance
(Dollars in thousands, unaudited)				6/30/22			3/31/22			12/31/21			9/30/21			6/30/21
Assets
Cash and due from banks				$	4,700		$	3,900		$	3,803		$	4,452		$	3,537
Interest-bearing deposits					21,981			28,876			79,910			83,327			76,957
	Total cash and cash equivalents				26,681			32,776			83,713			87,779			80,494
Interest-bearing time deposits					1,499			1,746			1,746			1,996			2,746
Available-for-sale securities					19,038			20,386			20,659			19,341			18,928
Marketable equity securities					17,982			18,000			12,000			12,000			12,000
Loans held for sale					59,592			51,095			27,880			20,610			14,621
Loans held for investment					266,259			262,281			259,625			259,206			264,402
	Allowance for loan and lease losses				(6,361	)		(5,622	)		(5,547	)		(5,810	)		(5,635	)
		Loans held for investment, net			259,898			256,659			254,078			253,396			258,767
Premises and equipment, net					4,238			4,235			4,106			4,127			4,599
Foreclosed assets					-			-			618			618			618
Loan servicing assets					4,178			4,014			3,993			3,830			3,936
Bank-owned life insurance					5,304			5,271			5,246			5,220			5,193
Accrued interest receivable					2,139			1,886			1,373			1,508			1,672
Goodwill					13,161			13,161			13,161			13,161			13,161
Other intangible assets, net					6,014			6,180			6,400			6,569			6,737
Other assets					15,764			15,218			18,001			13,954			16,803
			Total assets	$	435,488		$	430,627		$	452,974		$	444,109		$	440,275
Liabilities and Shareholders' Equity
Liabilities
Deposits:
	Noninterest-bearing			$	83,544		$	92,499		$	114,313		$	98,940		$	98,797
	Interest-bearing				250,026			233,953			233,842			241,959			238,598
		Total deposits			333,570			326,452			348,155			340,899			337,395
Borrowings					-			5,000			7,500			5,000			5,000
Accrued interest payable					308			325			326			372			388
Other liabilities					9,939			8,320			9,212			11,130			13,490
	Total liabilities				343,817			340,097			365,193			357,401			356,273
Shareholders' equity:
Common stock, voting					2,227			2,213			2,176			2,176			2,183
Common stock, non-voting					22			22			22			22			22
Additional paid in capital					24,498			24,013			23,664			23,515			23,545
Retained earnings					67,781			66,372			62,810			61,534			58,597
Accumulated other comprehensive income (loss)					(1,985	)		(1,296	)		(99	)		65			105
	Total IFH, Inc. shareholders' equity				92,543			91,324			88,573			87,312			84,452
Noncontrolling interest					(872	)		(794	)		(792	)		(604	)		(450	)
	Total shareholders' equity				91,671			90,530			87,781			86,708			84,002
			Total liabilities and shareholders' equity	$	435,488		$	430,627		$	452,974		$	444,109		$	440,275

Consolidated Statements of Income
(Dollars in thousands except per	Three Months Ended																Year-To-Date
share data; unaudited)	6/30/22			3/31/22			12/31/21			9/30/21			6/30/21				6/30/22			6/30/21
Interest income
Loans	$	5,491		$	5,623		$	4,571		$	4,759		$	4,686			$	11,114		$	9,128
Available-for-sale securities and other		193			131			130			142			99				324			184
Total interest income		5,684			5,754			4,701			4,901			4,785				11,438			9,312
Interest expense
Interest on deposits		523			522			566			645			665				1,045			1,369
Interest on borrowings		15			9			1			-			-				24			-
Total interest expense		538			531			567			645			665				1,069			1,369
Net interest income		5,146			5,223			4,134			4,256			4,120				10,369			7,943
Provision for loan losses		460			180			775			500			50				640			672
Noninterest income
Loan processing and servicing
revenue		2,373			2,207			2,863			5,951			5,765				4,580			14,603
Mortgage		1,066			173			1,090			1,537			1,773				1,239			3,479
Government guaranteed lending		2,767			1,124			2,216			584			3,812				3,891			5,137
SBA documentation preparation fees		128			144			167			149			241				272			675
Service charges on deposits		118			104			85			77			49				222			81
Bank-owned life insurance		33			25			25			27			32				58			57
Other noninterest income (loss)		290			6,509			(1,473	)		694			908				6,799			3,104
Total noninterest income		6,775			10,286			4,973			9,019			12,580				17,061			27,136
Noninterest expense
Compensation		6,271			7,061			6,178			5,462			5,996				13,332			12,012
Occupancy and equipment		254			344			254			324			300				598			603
Loan and special asset expenses		491			638			483			133			634				1,129			1,636
Professional services		491			551			845			732			560				1,042			1,240
Data processing		271			249			267			196			215				520			436
Software		426			425			830			842			1,524				851			4,915
Communications		97			83			99			100			90				180			197
Advertising		321			214			453			474			393				535			502
Amortization of intangibles		170			170			170			170			172				340			358
Other operating expenses		846			631			754			505			733				1,477			1,377
Total noninterest expense		9,638			10,366			10,333			8,938			10,617				20,004			23,276
Income (loss) before income taxes		1,823			4,963			(2,001	)		3,837			6,033				6,786			11,131
Income tax expense (benefit)		492			1,403			(3,090	)		1,055			1,606				1,895			2,902
Net income		1,331			3,560			1,089			2,782			4,427				4,891			8,229
Noncontrolling interest		(78	)		(2	)		(187	)		(155	)		(155	)			(80	)		(289	)
Net income attributable
to IFH, Inc.	$	1,409		$	3,562		$	1,276		$	2,937		$	4,582			$	4,971		$	8,518
Basic earnings per common share	$	0.65		$	1.65		$	0.60		$	1.37		$	2.14			$	2.29		$	3.93
Diluted earnings per common share	$	0.63		$	1.59		$	0.57		$	1.32		$	2.07			$	2.22		$	3.82
Weighted average common shares
outstanding		2,175			2,159			2,140			2,144			2,147				2,167			2,166
Diluted average common shares
outstanding		2,244			2,242			2,234			2,219			2,219				2,243			2,229

Performance Ratios
		Three Months Ended																Year-To-Date
		6/30/22			3/31/22			12/31/21			9/30/21			6/30/21				6/30/22			6/30/21
PER COMMON SHARE
	Basic earnings per common share	$	0.65		$	1.65		$	0.60		$	1.37		$	2.14			$	2.29		$	3.93
	Diluted earnings per common share		0.63			1.59			0.57			1.32			2.07				2.22			3.82
	Book value per common share		41.15			40.86			40.35			39.74			38.32				41.15			38.32
	Tangible book value per common share (2)		32.62			32.21			31.44			30.76			29.29				32.62			29.29
FINANCIAL RATIOS (ANNUALIZED)
	Return on average assets		1.29	%		3.30	%		1.14	%		2.61	%		4.39	%			2.29	%		4.20	%
	Return on average common shareholders'
	equity		6.23	%		15.97	%		5.85	%		13.60	%		22.53	%			11.07	%		21.44	%
	Return on average tangible common
	equity (2)		7.91	%		20.36	%		7.57	%		17.70	%		29.84	%			14.08	%		28.61	%
	Net interest margin		5.51	%		5.69	%		4.27	%		4.37	%		4.63	%			5.60	%		4.44	%
	Efficiency ratio (1)		80.8	%		66.8	%		113.5	%		67.3	%		63.6	%			72.9	%		66.4	%
	(1) Efficiency ratio is calculated by dividing noninterest expense less transaction-related costs by the sum of net interest income and noninterest income, less gains or losses on sale of securities.
	(2) See reconciliation of non-GAAP measures

Loan Concentrations

The top ten commercial loan concentrations as of June 30, 2022, were as follows:

			% of
			Commercial
(in millions)	Amount		Loans
Solar electric power generation	$	82.9	38	%
Power and communication line and related structures construction		42.3	19	%
Lessors of nonresidential buildings (except miniwarehouses)		16.9	8	%
Hotels (except casino hotels) and motels		9.6	4	%
Other activities related to real estate		9.5	4	%
Lessors of residential buildings and dwellings		5.6	3	%
Other heavy and civil engineering construction		4.4	2	%
Lessors of other real estate property		3.9	2	%
All other amusement and recreation industries		3.0	1	%
Amusement arcades		2.6	1	%
	$	180.7	82	%

Reconciliation of Non-GAAP Measures

(In thousands except book value per share)	6/30/22			3/31/22			12/31/21			9/30/21			6/30/21
Tangible book value per common share
Total IFH, Inc. shareholders' equity	$	92,543		$	91,324		$	88,573		$	87,312		$	84,452
Less: Goodwill		13,161			13,161			13,161			13,161			13,161
Less Other intangible assets, net		6,014			6,180			6,400			6,569			6,737
Total tangible common equity	$	73,368		$	71,983		$	69,012		$	67,582		$	64,554
Ending common shares outstanding		2,249			2,235			2,198			2,204			2,204
Tangible book value per common share	$	32.62		$	32.21		$	31.44		$	30.76		$	29.29
	Three Months Ended																Year-To-Date
(Dollars in thousands)	6/30/22			3/31/22			12/31/21			9/30/21			6/30/21				12/31/21			12/31/20
Return on average tangible common equity
Average IFH, Inc. shareholders' equity	$	90,721		$	90,441		$	86,549		$	85,683		$	81,584			$	90,581		$	80,112
Less: Average goodwill		13,161			13,161			13,161			13,161			13,161				13,161			13,161
Less Average other intangible assets, net		6,123			6,341			6,511			6,679			6,836				6,232			6,904
Average tangible common equity	$	71,437		$	70,939		$	66,877		$	65,843		$	61,587			$	71,188		$	60,047
Net income attributable to IFH, Inc.	$	1,409		$	3,562		$	1,276		$	2,937		$	4,582			$	4,971		$	8,518
Return on average tangible common equity		7.91	%		20.36	%		7.57	%		17.70	%		29.84	%			14.08	%		28.61	%

Contact: Eric Bergevin, 252-482-4400

FAQ

What were Integrated Financial Holdings, Inc.'s Q2 2022 earnings results?

IFHI reported Q2 2022 net income of $1.4 million or $0.63 per diluted share, a significant decline from $4.6 million or $2.07 per diluted share in Q2 2021.

How did IFHI's net interest income perform in Q2 2022?

Net interest income for Q2 2022 was $5.1 million, a 25% increase compared to the same period in 2021.

What impact did the merger agreement with MVB Financial Corp. have on IFHI?

The merger agreement with MVB Financial Corp. was announced on August 12, 2022, indicating strategic growth opportunities for IFHI.

What is IFHI's current asset quality status?

As of June 30, 2022, IFHI's nonperforming assets to total assets ratio improved to 1.07%.