Integrated Financial Holdings, Inc. Third Quarter 2022 Financial Results

Rhea-AI Summary

Integrated Financial Holdings, Inc. (OTCQX: IFHI) reported a net loss of $7.5 million for Q3 2022, or $3.31 per diluted share, compared to a net income of $2.9 million in Q3 2021. The loss was significantly impacted by a $10 million litigation expense. Year-to-date, IFHI posted a net loss of $2.6 million versus $11.4 million in net income during the same period last year. Despite these losses, net interest income increased by 33% to $5.7 million for Q3, reflecting growth in government-guaranteed loan closings exceeding $100 million. The company's total assets were $437.4 million as of September 30, 2022, down 3% from year-end 2021.

Positive

• Net interest income rose 33% to $5.7 million in Q3 2022.
• Government-guaranteed loan closings exceeded $100 million in Q3.
• The pipeline for loans surpassed $500 million, primarily in renewable energy projects.

Negative

• Q3 2022 net loss of $7.5 million, significant drop from $2.9 million net income in Q3 2021.
• Total assets decreased by 3% since December 31, 2021.
• Noninterest income fell by 41% to $5.4 million in Q3 2022 compared to the same period in 2021.

RALEIGH, N.C., Oct. 28, 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 nine months ended September 30, 2022. Highlights from the 2022 third quarter and year-to-date results include the following:

• Third quarter net loss of $7.5 million or $3.31 per diluted share, compared to third quarter 2021 net income of $2.9 million or $1.32 per diluted share. The 2022 third quarter was materially impacted by a $10.0 million litigation expense, as previously disclosed in the Company’s second quarter earnings release. Year-to-date net loss was $2.6 million or ($1.14) per diluted share compared to $11.4 million in net income or $5.15 per diluted share in the prior year.
• Net interest income of $5.7 million for the third quarter of 2022, compared to $4.3 million for the same period in 2021. For the year, net interest income was $16.0 million compared to $12.2 million for the same nine-month period in 2021.
• Return on average assets of (6.97)% and (0.79)% for the three and nine-month periods ending September 30, 2022 compared to 2.61% and 3.63%, respectively for the same periods in 2021.
• Return on average tangible common equity (a non-GAAP financial measure) of (43.36)% and (4.86)% for the three and nine-month periods ending September 30, 2022 compared to 17.70% and 24.71%, respectively for the same periods in 2021.

Eric Bergevin, President and CEO of the Company said, “The settlement expense associated with our decision to resolve the RESPA Litigation obviously impacted our 2022 third quarter and year-to-date results. However, putting aside this extraordinary expense item, we saw a lot of positive momentum in our core government-guaranteed lending business segment.  We saw all-time highs for government-guaranteed loan closings, exceeding $100 million for the quarter and seeing the pipeline bump over $500 million, mostly focused on renewable energy projects.  Renewable energy projects have been, and we expect will continue to be, a focus of ours going forward.  In that regard, we are excited about some of the opportunities we anticipate from our pending merger with MVB Financial Corp. that was announced during the third quarter.  Due to the size of some of these renewable energy projects, we expect that the larger balance sheet offered by our proposed strategic partnership with MVB would allow us to retain a larger portion of the economic benefits from these projects, rather than participating out portions of the loans.  As we look ahead to year-end, we are focused on strategic initiatives that we expect will bring renewed focus on our core strength of government-guaranteed lending, enhancing our pipeline and being accretive to long-term earnings.  We have already begun, and will continue to take prudent cost-savings measures, as we respond to reduced activity in our historical mortgage operations in light of the interest-rate environment and look to maximize shareholder value with respect to some of our non-core business lines.”

BALANCE SHEET
On September 30, 2022, the Company’s total assets were $437.4 million, net loans held for investment were $288.7 million, loans held for sale (“HFS”) were $28.4 million, total deposits were $325.1 million and total shareholders’ equity attributable to IFHI was $84.3 million. Compared with December 31, 2021, total assets decreased $15.5 million or 3%, net loans held for investment increased $34.6 million or 14%, HFS loans increased $519,000 or 2%, total deposits decreased $23.0 million or 7%, and total shareholders’ equity attributable to IFHI decreased $4.3 million or 5%. Cash and cash equivalents increased slightly from the prior quarter but have decreased since year end as the Company has redeployed cash into higher yielding loans. The Bank has continued to see strong growth in loans held for investment primarily as a result of the retained portion of the loan pipeline for the Government Guaranteed Lending (“GGL”) type loans. At $28.4 million in volume, HFS loans at September 30, 2022 represents significant potential future GGL revenues as those loans are sold in the market and the associated premiums are recognized. Noninterest bearing deposits increased $22.7 million from the prior quarter but are down $8.0 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 decrease in total shareholders’ equity since year-end 2021 was primarily a result of the net loss posted for the nine-month period ended September 30, 2022.

CAPITAL LEVELS
At September 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	%	12.12	%
Tier 1 risk-based capital ratio	8.00	%	8.50	%	12.12	%
Total risk-based capital ratio	10.00	%	10.50	%	13.38	%
Tier 1 leverage ratio	5.00	%	4.00	%	10.91	%

As a result of the loss driven by the litigation settlement, the Company’s book value per common share decreased from $39.74 as of September 30, 2021, to $37.29 at September 30, 2022. The Company’s tangible book value per common share (a non-GAAP financial measure) also decreased from $30.76 as of September 30, 2021, to $28.88 at September 30, 2022, primarily as a result of the net loss of the Company.

ASSET QUALITY
The Company’s nonperforming assets to total assets ratio decreased from 1.65% at December 31, 2021, to 1.05% at September 30, 2022, as management continued to aggressively work to reduce its special assets portfolio. Nonaccrual loans at September 30, 2022 decreased $2.2 million or 33% as compared to December 31, 2021. The Bank held no foreclosed assets as of September 30, 2022.

The Company recorded $320,000 and $960,000 in provision for loan losses during the three and nine-months periods ending September 30, 2022, respectively, as compared to provisions of $500,000 and $1,172,000 for the same periods in 2021 as the size of the loan portfolio increased for those periods. The Company recorded $29,000 in net recoveries during the third quarter of 2022 compared to $325,000 in net charge-offs for the same period in 2021. Management continues to believe it is making 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)	9/30/22			6/30/22			3/31/22			12/31/21			9/30/21
Nonaccrual loans	$	4,612		$	4,656		$	6,558		$	6,848		$	7,575
Foreclosed assets		-			-			-			618			618
90 days past due and still accruing		-			-			-			-			-
Total nonperforming assets	$	4,612		$	4,656		$	6,558		$	7,466		$	8,193
Net charge-offs	$	(29	)	$	(279	)	$	105		$	1,038		$	325
Annualized net charge-offs (rececoveries) to total
average portfolio loans		-0.04	%		-0.43	%		0.16	%		1.65	%		0.50	%
Ratio of total nonperforming assets to total assets		1.05	%		1.07	%		1.52	%		1.65	%		1.84	%
Ratio of total nonperforming loans to total loans, net
of allowance		1.60	%		1.79	%		2.56	%		2.70	%		2.99	%
Ratio of total allowance for loan losses to total loans		2.27	%		2.39	%		2.14	%		2.14	%		2.24	%

NET INTEREST INCOME AND MARGIN
Net interest income for the three months ended September 30, 2022, increased $1.4 million or 33% in comparison to the third quarter of 2021 as loan yields increased year over year from 6.92% to 7.55%. The increase in yield from the prior year resulted from a change in loan mix while also reflecting the impact of 300 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 0.73% in the third quarter of 2021 to 0.66% 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 4.37% during the three months ended September 30, 2021, to 6.22% for the same period in 2022. The increase in margin was also driven by the increase in loan yield resulting from the FOMC actions.

Net interest income for the nine months ended September 30, 2022, increased $3.8 million or 31% in comparison to the same period of 2021 as loan yields increased year over year from 6.52% to 7.39% primarily as a result of the FOMC rate increases during the period.

	Three Months Ended																Year-To-Date
(Dollars in thousands)	9/30/22			6/30/22			3/31/22			12/31/21			9/30/21				9/30/22			9/30/21
Average balances:
Loans	$	312,475		$	319,115		$	294,502		$	277,510		$	272,994			$	308,697		$	284,620
Available-for-sale securities		19,096			21,879			21,088			20,367			19,393				20,688			29,576
Other interest-bearing balances		30,378			33,328			56,359			86,261			93,682				40,022			58,736
Total interest-earning assets		361,949			374,322			371,949			384,138			386,069				369,407			372,932
Total assets		428,983			438,732			437,402			442,139			446,822				435,039			421,779
Noninterest-bearing deposits		94,013			85,042			98,546			104,472			103,708				92,534			90,084
Interest-bearing liabilities:
Interest-bearing deposits		233,464			244,363			235,092			237,847			240,957				237,640			234,899
Borrowings		2,174			8,626			6,306			5,272			5,196				5,702			4,794
Total interest-bearing liabilities		235,638			252,989			241,398			243,119			246,153				243,342			239,693
Common shareholders' equity		88,043			90,721			90,441			86,549			85,683				89,735			81,969
Tangible common equity (1)		68,924			71,437			70,939			66,877			65,843				70,433			61,979
Interest income/expense:
Loans	$	5,943		$	5,491		$	5,623		$	4,571		$	4,759			$	17,057		$	13,887
Available-for-sale securities		105			104			89			77			75				298			191
Interest-bearing balances and other		169			89			42			53			67				300			135
Total interest income		6,217			5,684			5,754			4,701			4,901				17,655			14,213
Deposits		532			523			522			566			645				1,577			2,014
Borrowings		13			15			9			1			-				37			-
Total interest expense		545			538			531			567			645				1,614			2,014
Net interest income	$	5,672		$	5,146		$	5,223		$	4,134		$	4,256			$	16,041		$	12,199
(1) See reconciliation of non-GAAP financial measures.

	Three Months Ended											Year-To-Date
	9/30/22		6/30/22		3/31/22		12/31/21		9/30/21			9/30/22		9/30/21
Average yields and costs:
Loans	7.55	%	6.90	%	7.74	%	6.53	%	6.92	%		7.39	%	6.52	%
Available-for-sale securities	2.20	%	1.90	%	1.69	%	1.51	%	1.55	%		1.92	%	0.86	%
Interest-bearing balances and other	2.21	%	1.07	%	0.30	%	0.24	%	0.28	%		1.00	%	0.31	%
Total interest-earning assets	6.81	%	6.09	%	6.27	%	4.86	%	5.04	%		6.39	%	5.10	%
Interest-bearing deposits	0.90	%	0.86	%	0.90	%	0.94	%	1.06	%		0.89	%	1.15	%
Borrowings	2.37	%	0.70	%	0.58	%	0.08	%	0.00	%		0.87	%	0.00	%
Total interest-bearing liabilities	0.92	%	0.85	%	0.89	%	0.93	%	1.04	%		0.89	%	1.12	%
Cost of funds	0.66	%	0.64	%	0.63	%	0.65	%	0.73	%		0.64	%	0.82	%
Net interest margin	6.22	%	5.51	%	5.69	%	4.27	%	4.37	%		5.81	%	4.37	%

NONINTEREST INCOME
Noninterest income for the three months ended September 30, 2022, was $5.4 million, a decrease of $3.7 million or 41% as compared to the three months ended September 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 $2.2 million, a decrease of $3.8 million or 64% as compared to the $6.0 million in income earned during the same prior-year period. The decrease is almost entirely attributable to $3.7 million in PPP fee related income realized in the third quarter of 2021 compared to no such income in the same period in 2022.
• Mortgage revenue totaled $477,000, a decrease of $1.1 million or 69% as compared to the third 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 $33.2 million in the third quarter 2021 to $20.3 million in the third 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 doubling of long-term mortgage rates year-over-year.  
• Government Guaranteed Lending revenue was $2.2 million in the third quarter of 2022, an increase of $1.6 million or 279% in comparison to the $584,000 of revenues for the same period in 2021.
• Other noninterest income was $222,000 in the third quarter of 2022 compared to income of $694,000 in the same period in 2021.

Noninterest income for the nine months ended September 30, 2022, was $22.4 million compared to $36.2 million for the same period in 2021, a decrease of $13.7 million or 38%. The decrease is primarily due to a decrease of $13.8 million in loan processing and servicing revenue driven by the decrease in PPP-related revenue during the period. Mortgage revenues during the period decreased $3.3 million due to a general slowdown in the refinancing market but was offset by an increase in other noninterest income of $3.2 million primarily associated with a gain in the market value of marketable equity securities.

NONINTEREST EXPENSE
Noninterest expense for the third quarter of 2022 was $20.9 million, an increase of $12.0 million or 134%, from $8.9 million for the third quarter of 2021.   This change was primarily due to the recognition of a $10.0 million expense during the 2022 third quarter associated with a litigation reserve for a class action lawsuit against the Bank (the “RESPA Litigation”), as previously detailed in the Company’s second quarter earnings release. 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 and court approval. The plaintiffs, plaintiffs’ counsel, and the Bank subsequently executed a definitive settlement agreement dated as of September 7, 2022, for the aggregate sum of $10.0 million. On October 12, 2022, the court issued an order granting preliminary approval of the class action settlement, as reflected in the settlement agreement, and scheduled the final fairness hearing on the settlement for January 18, 2023.

Also contributing to the year-over-year increase in noninterest expense was an increase in compensation expense, which increased from $5.5 million in the third quarter of 2021 to $6.9 million during the same period in 2022. This $1.4 million increase was due to the additional cost of new hires and overall increases in payroll for existing employees. Additionally, the Company incurred $561,000 of merger-related expenses associated with the Company’s proposed merger with MVB Financial Corp. Finally, loan and special asset expenses, which change significantly period over period, increased $836,000 between the third quarter of 2022 and the same period in 2021.   These increases were partially offset by decreases to several expense categories. Software expenses were $460,000, a decrease of $382,000 or 45% in the third quarter of 2022 compared to the same period in 2021. The expense in 2021 included additional costs related to the processing of PPP loans during the period. The decreases in the other noninterest expense categories, including professional services and advertising are primarily related to management’s overall effort to grow profitability.

Noninterest expense for the nine months ended September 30, 2022, was $40.9 million compared to $32.2 million for the same period in 2021, an increase of $8.7 million or 27%.   The primary difference period over period was the $10.0 million litigation expense discussed above.   

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. The proposed merger is subject to required shareholder and regulatory approvals and the satisfaction of various closing conditions. 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.”

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 service provider that offers community banks and credit unions with a comprehensive outsourced U.S. Small Business Association (“SBA”) 7(a) and U.S. Department of Agriculture (“USDA”) lending platform. 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.

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 or the Company’s planned merger with MVB; 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, including our planned merger with MVB, on our ability to retain key employees; the possibility that the proposed merger with MVB will not close when expected or at all because required regulatory, shareholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all; the possibility that the anticipated benefits of the proposed merger with MVB will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where the Company and MVB do business; 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, whether due to the court not finally approving the settlement agreement or otherwise; and the impact of competition from traditional or new sources, including non-bank financial service providers, such as Fintechs. 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
(In thousands, unaudited)				9/30/22			6/30/22			3/31/22			12/31/21			9/30/21
Assets
Cash and due from banks				$	6,272		$	4,700		$	3,900		$	3,803		$	4,452
Interest-bearing deposits					25,011			21,981			28,876			79,910			83,327
	Total cash and cash equivalents				31,283			26,681			32,776			83,713			87,779
Interest-bearing time deposits					1,249			1,499			1,746			1,746			1,996
Available-for-sale securities					17,460			19,038			20,386			20,659			19,341
Marketable equity securities					17,982			17,982			18,000			12,000			12,000
Loans held for sale					28,399			59,592			51,095			27,880			20,610
Loans held for investment					295,416			266,259			262,281			259,625			259,206
	Allowance for loan and lease losses				(6,710	)		(6,361	)		(5,622	)		(5,547	)		(5,810	)
		Loans held for investment, net			288,706			259,898			256,659			254,078			253,396
Premises and equipment, net					4,264			4,238			4,235			4,106			4,127
Foreclosed assets					-			-			-			618			618
Loan servicing assets					3,979			4,178			4,014			3,993			3,830
Bank-owned life insurance					5,330			5,304			5,271			5,246			5,220
Accrued interest receivable					2,485			2,139			1,886			1,373			1,508
Goodwill					13,161			13,161			13,161			13,161			13,161
Other intangible assets, net					5,848			6,014			6,180			6,400			6,569
Other assets					17,293			15,764			15,218			18,001			13,954
			Total assets	$	437,439		$	435,488		$	430,627		$	452,974		$	444,109
Liabilities and Shareholders' Equity
Liabilities
Deposits:
	Noninterest-bearing			$	106,272		$	83,544		$	92,499		$	114,313		$	98,940
	Interest-bearing				218,835			250,026			233,953			233,842			241,959
		Total deposits			325,107			333,570			326,452			348,155			340,899
Borrowings					5,000			-			5,000			7,500			5,000
Accrued interest payable					370			308			325			326			372
Other liabilities					23,557			9,939			8,320			9,212			11,130
	Total liabilities				354,034			343,817			340,097			365,193			357,401
Shareholders' equity:
Common stock, voting					2,239			2,227			2,213			2,176			2,176
Common stock, non-voting					22			22			22			22			22
Additional paid in capital					24,674			24,498			24,013			23,664			23,515
Retained earnings					60,248			67,781			66,372			62,810			61,534
Accumulated other comprehensive income (loss)					(2,866	)		(1,985	)		(1,296	)		(99	)		65
	Total IFH, Inc. shareholders' equity				84,317			92,543			91,324			88,573			87,312
Noncontrolling interest					(912	)		(872	)		(794	)		(792	)		(604	)
	Total shareholders' equity				83,405			91,671			90,530			87,781			86,708
			Total liabilities and shareholders' equity	$	437,439		$	435,488		$	430,627		$	452,974		$	444,109

Consolidated Statements of Income
(In thousands except per	Three Months Ended																Year-To-Date
share data; unaudited)	9/30/22			6/30/22			3/31/22			12/31/21			9/30/21				9/30/22			9/30/21
Interest income
Loans	$	5,943		$	5,491		$	5,623		$	4,571		$	4,759			$	17,057		$	13,887
Available-for-sale securities and other		274			193			131			130			142				598			326
Total interest income		6,217			5,684			5,754			4,701			4,901				17,655			14,213
Interest expense
Interest on deposits		532			523			522			566			645				1,577			2,014
Interest on borrowings		13			15			9			1			-				37			-
Total interest expense		545			538			531			567			645				1,614			2,014
Net interest income		5,672			5,146			5,223			4,134			4,256				16,041			12,199
Provision for loan losses		320			460			180			775			500				960			1,172
Noninterest income
Loan processing and servicing revenue		2,163			2,373			2,207			2,863			5,951				6,743			20,554
Mortgage		477			1,066			173			1,090			1,537				1,716			5,016
Government guaranteed lending		2,213			2,767			1,124			2,216			584				6,104			5,721
SBA documentation preparation fees		78			128			144			167			149				350			824
Service charges on deposits		182			118			104			85			77				404			158
Bank-owned life insurance		27			33			25			25			27				85			84
Other noninterest income (loss)		222			290			6,509			(1,473	)		694				7,021			3,798
Total noninterest income		5,362			6,775			10,286			4,973			9,019				22,423			36,155
Noninterest expense
Compensation		6,880			6,271			7,061			6,178			5,462				20,212			17,474
Occupancy and equipment		402			254			344			254			324				1,000			927
Loan and special asset expenses		969			491			638			483			133				2,098			1,769
Professional services		207			491			551			845			732				1,249			1,972
Data processing		263			271			249			267			196				783			632
Software		460			426			425			830			842				1,311			5,757
Communications		86			97			83			99			100				266			297
Advertising		252			321			214			453			474				787			976
Amortization of intangibles		170			170			170			170			170				510			528
Merger related expenses		561			-			-			-			-				561			-
Other operating expenses		10,683			846			631			754			505				12,160			1,882
Total noninterest expense		20,933			9,638			10,366			10,333			8,938				40,937			32,214
Income (loss) before income taxes		(10,219	)		1,823			4,963			(2,001	)		3,837				(3,433	)		14,968
Income tax expense (benefit)		(2,646	)		492			1,403			(3,090	)		1,055				(751	)		3,957
Net income (loss)		(7,573	)		1,331			3,560			1,089			2,782				(2,682	)		11,011
Noncontrolling interest		(40	)		(78	)		(2	)		(187	)		(155	)			(120	)		(444	)
Net income (loss) attributable to IFH, Inc.	$	(7,533	)	$	1,409		$	3,562		$	1,276		$	2,937			$	(2,562	)	$	11,455
Basic earnings (loss) per common share	$	(3.45	)	$	0.65		$	1.65		$	0.60		$	1.37			$	(1.18	)	$	5.31
Diluted earnings (loss) per common share	$	(3.31	)	$	0.63		$	1.59		$	0.57		$	1.32			$	(1.14	)	$	5.15
Weighted average common shares outstanding		2,185			2,175			2,159			2,140			2,144				2,273			2,158
Diluted average common shares outstanding		2,173			2,244			2,242			2,234			2,219				2,254			2,226

Performance Ratios
		Three Months Ended																Year-To-Date
		9/30/22			6/30/22			3/31/22			12/31/21			9/30/21				9/30/22			9/30/21
PER COMMON SHARE
	Basic earnings (loss) per common share	$	(3.45	)	$	0.65		$	1.65		$	0.60		$	1.37			$	(1.18	)	$	5.31
	Diluted earnings (loss) per common share		(3.31	)		0.63			1.59			0.57			1.32				(1.14	)		5.15
	Book value per common share		37.29			41.15			40.86			40.35			39.74				37.29			39.74
	Tangible book value per common share (2)		28.88			32.62			32.21			31.44			30.76				28.88			30.76
FINANCIAL RATIOS (ANNUALIZED)
	Return on average assets		-6.97	%		1.29	%		3.30	%		1.14	%		2.61	%			-0.79	%		3.63	%
	Return on average common shareholders' equity		-33.95	%		6.23	%		15.97	%		5.85	%		13.60	%			-3.82	%		18.68	%
	Return on average tangible common equity (2)		-43.36	%		7.91	%		20.36	%		7.57	%		17.70	%			-4.86	%		24.71	%
	Net interest margin		6.22	%		5.51	%		5.69	%		4.27	%		4.37	%			5.81	%		4.37	%
	Efficiency ratio (1)		189.7	%		80.8	%		66.8	%		113.5	%		67.3	%			106.4	%		66.6	%
	(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 September 30, 2022, were as follows:

				% of
				Commercial
(Dollars in millions)	Amount			Loans
Solar electric power generation	$	69.9		32	%
Power and communication line and related structures construction		47.5		22	%
Lessors of nonresidential buildings (except miniwarehouses)		16.7		8	%
Other activities related to real estate		9.8		4	%
Hotels (except casino hotels) and motels		8.5		4	%
Commercial and Industrial Machinery and Equipment		8.1		4	%
Lessors of residential buildings and dwellings		5.5		3	%
Lessors of other real estate property		5.1		2	%
Other heavy and civil engineering construction		4.3		2	%
All other amusement and recreation industries		3.0		1	%
	$	178.4		82	%

Reconciliation of Non-GAAP Measures

	9/30/22			6/30/22			3/31/22			12/31/21			9/30/21
	(Dolars in thousands except book value per share)
Tangible book value per common share
Total IFH, Inc. shareholders' equity	$	84,317		$	92,543		$	91,324		$	88,573		$	87,312
Less: Goodwill		13,161			13,161			13,161			13,161			13,161
Less Other intangible assets, net		5,848			6,014			6,180			6,400			6,569
Total tangible common equity	$	65,308		$	73,368		$	71,983		$	69,012		$	67,582
Ending common shares outstanding		2,261			2,249			2,235			2,198			2,204
Tangible book value per common share	$	28.88		$	32.62		$	32.21		$	31.44		$	30.76
	Three Months Ended																Year-To-Date
(Dollars in thousands)	9/30/22			6/30/22			3/31/22			12/31/21			9/30/21				9/30/22			9/30/21
Return on average tangible common equity
Average IFH, Inc. shareholders' equity	$	88,043		$	90,721		$	90,441		$	86,549		$	85,683			$	89,735		$	81,969
Less: Average goodwill		13,161			13,161			13,161			13,161			13,161				13,161			13,161
Less Average other intangible assets, net		5,958			6,123			6,341			6,511			6,679				6,141			6,829
Average tangible common equity	$	68,924		$	71,437		$	70,939		$	66,877		$	65,843			$	70,433		$	61,979
Net income (loss) attributable to IFH, Inc.	$	(7,533	)	$	1,409		$	3,562		$	1,276		$	2,937			$	(2,562	)	$	11,455
Return on average tangible common equity		-43.36	%		7.91	%		20.36	%		7.57	%		17.70	%			-4.86	%		24.71	%

Contact: Eric Bergevin, 252-482-4400

FAQ

What were the financial results of Integrated Financial Holdings, Inc. for Q3 2022?

IFHI reported a net loss of $7.5 million in Q3 2022, compared to a net income of $2.9 million in Q3 2021.

How did IFHI's net interest income change in Q3 2022?

Net interest income for IFHI increased by 33% to $5.7 million in Q3 2022.

What impact did the litigation expense have on IFHI's financial results?

The $10 million litigation expense significantly contributed to IFHI's net loss in Q3 2022.

What is the status of IFHI's merger with MVB Financial Corp.?

IFHI has entered into a merger agreement with MVB Financial Corp., which is an all-stock transaction pending shareholder and regulatory approvals.