Integrated Financial Holdings, Inc. Third Quarter 2023 Financial Results

Rhea-AI Summary

Integrated Financial Holdings, Inc. (IFHI) released its financial results for Q3 2023. Net income for the quarter was $2.4 million compared to a net loss of $7.5 million in Q3 2022. Year-to-date net income was $8.3 million compared to a net loss of $2.6 million in the prior year. Net interest income was $5.6 million for Q3 2023. Return on average assets was 1.97% for the quarter. Efficiency ratio improved to 69.6% in Q3 2023 compared to 189.7% in Q3 2022. Total assets increased by $51.3 million or 11% since December 31, 2022.

Positive

• IFHI reported positive financial results for Q3 2023, with net income of $2.4 million compared to a net loss of $7.5 million in Q3 2022. Year-to-date net income was $8.3 million compared to a net loss of $2.6 million in the prior year. Net interest income was $5.6 million for Q3 2023. Return on average assets was 1.97% for the quarter. Efficiency ratio improved to 69.6% in Q3 2023 compared to 189.7% in Q3 2022. Total assets increased by $51.3 million or 11% since December 31, 2022.

Negative

• None.

RALEIGH, N.C., Oct. 26, 2023 (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 and nine months ended September 30, 2023. Highlights from the 2023 third quarter results include the following:

• Third quarter net income of $2.4 million, or $1.06 per diluted share compared to a third quarter 2022 net loss of $7.5 million, or $(3.45) per diluted share. Year-to-date net income of $8.3 million or $3.69 per diluted share compared to a net loss of $2.6 million or $(1.18) per diluted share in the prior year.
• Net interest income of $5.6 million for the third quarter of 2023, compared to $5.7 million for the same period in 2022. For the year, net interest income was $16.8 million compared to $16.0 million for the same nine-month period in 2022.
• Return on average assets of 1.97% and 2.36% for the three and nine-month periods ending September 30, 2023, compared to -6.97% and -0.79% for the same periods in 2022.
• Return on average tangible common equity (a non-GAAP financial measure) of 12.38% and 15.26% for the three and nine-month periods ending September 30, 2023, compared to -43.36% and -4.86% for the same periods in 2022.

The third quarter of 2023 showed positive results from a continued effort to improve efficiency as the Company continues to streamline operations and reduce overhead costs. The efficiency ratio in the third quarter of 2023 was 69.6% compared to 189.7% for the same period in 2022. It should be noted that the 2022 third quarter was materially impacted by a $10.0 million litigation expense, which was disclosed in detail in the Company’s second quarter 2022 earnings release. Excluding the $10.0 million litigation expense in 2022, third quarter 2023 noninterest expenses were still an improvement of $3.5 million period over period. Total noninterest expense was down $16.9 million or 41% from 2022 to 2023 resulting in an efficiency ratio of 66.5% for the nine months ended September 30, 2023, compared to 106.4% for the same period in 2022. Excluding the 2022 litigation expense, noninterest expenses for the nine-month period ended September 30, 2022 would have been $30.9 million and the efficiency ratio would have been 80.4% for an improvement in 2023 of $6.9 million or 22%.

In reflecting on the third quarter of the year, Marc McConnell, Chairman, President, and CEO of IFHI, stated: “We are excited by our strong earnings in the third quarter which are primarily attributable to the continually improving efficiency of our operations and the consistent performance of strategic growth initiatives. Quarter to quarter, our efficiency ratio continues to improve as recurring expenses decrease and recurring non-interest income remains steady. The approximately 2% return on average assets and the consistency of these trends is even more encouraging within the context of this year’s turbulent economic environment, particularly for government-guaranteed financing as interest rates fluctuate. Our ability to steadfastly improve earnings performance in light of external challenges reinforces confidence in this year’s strategic plan to right-size the company. With the end of the year approaching, we remain focused on maintaining a sustainable trajectory for continued growth while increasing shareholder value in the new year and beyond.”

BALANCE SHEET
On September 30, 2023, the Company’s total assets were $499.2 million, net loans held for investment were $340.7 million, loans held for sale (“HFS”) were $37.9 million, total deposits were $392.4 million and total shareholders’ equity attributable to IFHI was $96.4 million. Compared with December 31, 2022, total assets increased $51.3 million or 11%, net loans held for investment increased $46.7 million or 16%, HFS loans increased $3.6 million or 10%, total deposits increased $79.2 million or 25%, and total shareholders’ equity attributable to IFHI increased $8.9 million or 10%. Cash and cash equivalents decreased $218,000 or 1% since the prior year-end. The Bank has continued to see growth in loans held for investment primarily as a result of activity in the Government Guaranteed Lending (“GGL”) type loans. Noninterest bearing deposits have decreased by $21.4 million or 23% since December 31, 2022, resulting largely from the Company’s decision to discontinue banking two industries the Company had previously targeted. The increase in total shareholders’ equity since December 31, 2022, was primarily associated with earnings. The market value of the available-for-sale investment portfolio has decreased by $674,000 since year end as a result of changing rate expectations with the accumulated other comprehensive loss component of equity related to the change in market pricing at $2.3 million at December 31, 2022 and $3.0 million at September 30, 2023. The Company does not have any investments in its portfolio treated as held-to-maturity being carried at cost.

CAPITAL AND LIQUIDITY STRENGTH
At September 30, 2023, 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	%	13.29	%
Tier 1 risk-based capital ratio	8.00	%	8.50	%	13.29	%
Total risk-based capital ratio	10.00	%	10.50	%	14.50	%
Tier 1 leverage ratio	5.00	%	4.00	%	11.98	%

Primarily as a result of net income, the Company’s book value per common share increased from $38.69 as of December 31, 2022, to $41.98 at September 30, 2023. The Company’s tangible book value per common share (a non-GAAP financial measure) also increased from $30.36 as of December 31, 2022, to $33.99 at September 30, 2023, primarily as a result of net income.

Total deposits increased by $79.2 million since December 31, 2022 and by $67.3 million over the past twelve months. The Bank funds its loan growth primarily with a blend of customer deposits and wholesale funding and has a wide variety of customers and industries in its portfolio. The Bank also offers services that provide FDIC coverage for its customers in excess of the $250,000 limit. As of September 30, 2023, the average deposit account size was $100,000, and uninsured deposits excluding those required for debt service were $41.8 million or roughly 11% of total deposits.

The Bank’s primary on-balance sheet liquidity consists of cash and cash equivalents along with unpledged available for sale investment securities, which totaled $49.9 million as of September 30, 2023. Additionally, the Bank maintains fully collateralized credit facilities with the Federal Home Loan Bank of Chicago (“FHLB”) and the Federal Reserve. As of September 30, 2023, the FHLB credit facility had an available borrowing capacity of $53.6 million with no outstanding balance. The Federal Reserve had an available borrowing capacity of $51,000 with no outstanding balance. In addition, the Bank had $18.5 million in additional borrowing capacity with other financial institutions. In aggregate, total primary on-balance sheet liquidity and total available borrowing capacity was 292% of the amount of uninsured deposits (excluding those required for debt service) as of September 30, 2023.

Additionally, the Bank’s business model includes the origination and sale of GGL loans, a process which occurs each month and can be accelerated or slowed down based on the Bank’s current funding needs. At September 30, 2023, the Bank had $37.9 million in loans available for sale, which could generate additional liquidity as needed.

ASSET QUALITY
The Company’s nonperforming assets to total assets ratio increased from 1.04% at December 31, 2022, to 2.87% at September 30, 2023. Nonaccrual loans at September 30, 2023 increased $9.3 million or 205% as compared to December 31, 2022. The increase was primarily related to one relationship for $7.4 million secured by a property with a value of approximately $12.0 million. We believe there is strong secondary support of the guarantors, and the Bank has not reserved against the loan given the estimated value of the collateral securing the loan. The Bank held $101,000 in foreclosed assets as of September 30, 2023 and December 31, 2022.

During the third quarters of 2023 and 2022, the Company recorded provisions for credit losses of $50,000 and $320,000, respectively. The Company recorded $43,000 in net recoveries during the third quarter of 2023 compared to $29,000 in net recoveries for the same period in 2022. Set forth in the table below is certain asset quality information as of the dates indicated:

(Dollars in thousands)	9/30/23			6/30/23			3/31/23			12/31/22			9/30/22
Nonaccrual loans	$	13,887		$	5,586		$	4,485		$	4,552		$	4,612
Foreclosed assets		101			315			315			101			-
90 days past due and still accruing		320			476			-			-			-
Total nonperforming assets	$	14,308		$	6,377		$	4,800		$	4,653		$	4,612
Net charge-offs (recoveries)	$	(43	)	$	86		$	376		$	(149	)	$	(29	)
Annualized net charge-offs (recoveries) to total
average portfolio loans		-0.05	%		0.11	%		0.49	%		-0.20	%		-0.04	%
Ratio of total nonperforming assets to total assets		2.87	%		1.32	%		1.03	%		1.04	%		1.05	%
Ratio of total nonperforming loans to total loans, net
of allowance		4.17	%		1.90	%		1.43	%		1.55	%		1.60	%
Ratio of total allowance for credit losses to total loans (1)		1.77	%		1.87	%		1.88	%		2.23	%		2.27	%
(1) Does not include the Company's reserve for unfunded commitments

NET INTEREST INCOME AND MARGIN
Net interest income for the three months ended September 30, 2023, decreased $57,000 or 1% in comparison to the third quarter of 2022 primarily as a result of an increase in cost of funds outpacing the positive impact of growth in average loans outstanding between the two periods. Loan yields increased from 7.55% in the third quarter of 2022 to 8.36% for the same period in 2023. The increase in yield from the prior year reflected the impact of 225 basis points of rate increases by the Federal Open Market Committee (“FOMC”) during that 12-month period in response to current economic conditions, as well as a change in loan mix. Overall cost of funds increased from 0.66% in the third quarter of 2022 to 2.86% for the same period in 2023 as average retail certificate of deposit (“CD”) rates trended up and new CDs were originated at higher market rates. Net interest margin declined from 6.62% during the three months ended September 30, 2022, to 5.32% for the same period in 2023; however, the impact of that decrease was lessened by a period-over-period increase in average earning assets of $57.1 million.

For the nine months ended September 30, net interest income increased from $16.0 million in 2022 to $16.8 million in 2023. The increase of $764,000 or 5% was due to an increase in average loan volume slightly offset by a decrease in net interest margin. Average loans increased from $308.7 million for the nine months ended September 30, 2022 to $358.9 million for the same period in 2023. Net interest margin during those same periods decreased from 5.81% in 2022 to 5.54% in 2023.

	Three Months Ended											Year-To-Date
(Dollars in thousands)	9/30/23		6/30/23		3/31/23		12/31/22		9/30/22			9/30/23		9/30/22
Average balances:
Loans	$	373,847	$	357,272	$	345,651	$	331,508	$	312,475		$	358,923	$	308,697
Available-for-sale securities		18,609		18,208		17,691		17,446		19,096			18,169		20,688
Other interest-bearing balances		26,670		29,445		28,998		20,367		30,378			28,371		40,022
Total interest-earning assets		419,126		404,925		392,340		369,321		361,949			405,463		369,407
Total assets		484,190		472,169		460,412		436,695		428,983			472,257		435,039
Noninterest-bearing deposits		80,390		78,676		98,555		113,851		94,013			85,874		92,534
Interest-bearing liabilities:
Interest-bearing deposits		300,109		288,972		251,281		212,069		233,464			280,120		237,640
Borrowings		761		4,505		10,222		8,913		2,174			5,163		5,702
Total interest-bearing liabilities		300,870		293,477		261,503		220,982		235,638			285,283		243,342
Common shareholders' equity		95,362		91,281		88,574		84,831		88,043			91,739		89,735
Tangible common equity (1)		76,907		72,661		69,788		65,879		68,924			73,119		70,433
Interest income/expense:
Loans	$	7,877	$	7,511	$	6,997	$	6,422	$	5,943		$	22,385	$	17,057
Available-for-sale securities		146		133		120		64		105			399		298
Interest-bearing balances and other		345		392		319		257		169			1,056		300
Total interest income		8,368		8,036		7,436		6,743		6,217			23,840		17,655
Deposits		2,743		2,445		1,696		735		532			6,884		1,577
Borrowings		10		56		85		93		13			151		37
Total interest expense		2,753		2,501		1,781		828		545			7,035		1,614
Net interest income	$	5,615	$	5,535	$	5,655	$	5,915	$	5,672		$	16,805	$	16,041
(1) See reconciliation of non-GAAP financial measures.

	Three Months Ended											Year-To-Date
	9/30/23		6/30/23		3/31/23		12/31/22		9/30/22			9/30/23		9/30/22
Average yields and costs:
Loans	8.36	%	8.43	%	8.21	%	7.69	%	7.55	%		8.34	%	7.39	%
Available-for-sale securities	3.14	%	2.92	%	2.71	%	1.47	%	2.20	%		2.93	%	1.92	%
Interest-bearing balances and other	5.13	%	5.34	%	4.46	%	5.01	%	2.21	%		4.98	%	1.00	%
Total interest-earning assets	7.92	%	7.96	%	7.69	%	7.24	%	6.81	%		7.86	%	6.39	%
Interest-bearing deposits	3.63	%	3.39	%	2.74	%	1.38	%	0.90	%		3.29	%	0.89	%
Borrowings	5.21	%	4.99	%	3.37	%	4.14	%	2.37	%		3.91	%	0.87	%
Total interest-bearing liabilities	3.63	%	3.42	%	2.76	%	1.49	%	0.92	%		3.30	%	0.89	%
Cost of funds	2.86	%	2.70	%	2.01	%	0.98	%	0.66	%		2.53	%	0.64	%
Net interest margin	5.32	%	5.48	%	5.85	%	6.35	%	6.22	%		5.54	%	5.81	%

NONINTEREST INCOME
Noninterest income for the three months ended September 30, 2023, was $5.1 million compared to $5.4 million for the same period in 2022. The decrease is primarily attributable to a lack of mortgage revenues in 2023 as the Company discontinued its mortgage operations in the fourth quarter of 2022 and a decrease in government guaranteed lending revenue quarter-over-quarter. Offsetting these decreases was an increase in the income of Windsor Advantage, LLC (“Windsor”), a subsidiary of the Company.

Specific items to note with respect to the most recently completed quarter include:

• Windsor, which offers an SBA and USDA loan servicing platform, had processing and servicing revenue totaling $2.8 million, an increase of $616,000 or 28% as compared to the $2.2 million in income earned during the same prior-year period.
• Mortgage revenue totaled $477,000 for the third quarter of 2022 compared to $0 in 2023. Due to the nationwide slowdown in refinancing volume and the impact of a doubling of long-term mortgage rates year-over-year, the Company had phased out its mortgage operations by the fourth quarter of 2022.
• Government Guaranteed Lending revenue was $2.0 million in the third quarter of 2023, a decrease of $260,000 or 12% in comparison to the $2.2 million of revenues for the same period in 2022.
  

On a year-to-date basis, noninterest income has decreased $3.0 million or 13%. The decrease is primarily the result of the difference in each period’s mark-to-market income adjustment on the Company’s equity investment in Dogwood State Bank due to successful capital raises for Dogwood in the first quarter of both years. The capital raises helped to establish new market values. The prior year’s first quarter had a positive mark-to-market of $6.0 million compared to $2.0 million for the current year.

NONINTEREST EXPENSE
Noninterest expense for the third quarter of 2023 was $7.4 million, a decrease of $13.6 million or 65%, from $21.0 million for the third quarter of 2022. This change was primarily due to a decrease of $10.0 million or 94% in other operating expenses as a result of the $10.0 million litigation expense recorded in the third quarter of 2022. In addition to that decrease, every other noninterest expense category except professional services was down between the third quarter of 2022 and the same period in 2023 as the Company continues its efforts to decrease its overhead expenses in light of the changing economic environment. Most notably, compensation expense decreased $2.5 million or 36% going from $6.9 million in the third quarter of 2022 down to $4.4 million for the same period in 2023. Compensation expense has decreased in four consecutive quarters.

Loan and special asset related expenses, which tend to fluctuate unexpectedly, also decreased by $305,000 or 31% from $969,000 in the third quarter of 2022 to $664,000 for the same period in 2023.

The result of the decreases in all expense categories was a significant improvement in the efficiency ratio, which decreased from 189.7% during the third quarter of 2022 to 69.6% for the same period in 2023.

On a year-to-date basis, noninterest expenses decreased from $40.9 million for the first nine months of 2022 to $24.1 million for the same period in 2023, a decrease of $16.9 million or 41%. Other operating expenses was the biggest driver in the overall decrease, which declined by $10.6 million period-over-period again reflecting impact of the $10.0 million litigation expense. Compensation expense was the second largest reason for the decrease in total noninterest expenses, declining to $15.4 million in the first nine months of 2023 from $20.2 million in the same period in 2022, a decrease of $4.8 million or 24%.

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. 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; that the value realized upon the sale of any foreclosed assets may be less than anticipated; 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 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; recent adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity, our strategic initiatives, and regulatory response to these developments; 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; 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.

Contact: Steve Crouse, 919-861-8018

Consolidated Balance Sheets

				Ending Balance
(In thousands, unaudited)				9/30/23			6/30/23			3/31/23			12/31/22			9/30/22
Assets
Cash and due from banks				$	5,019		$	3,582		$	6,986		$	7,553		$	6,272
Interest-bearing deposits					28,746			39,258			21,224			26,430			25,011
	Total cash and cash equivalents				33,765			42,840			28,210			33,983			31,283
Interest-bearing time deposits					-			750			999			999			1,249
Available-for-sale securities					17,827			18,977			17,504			17,712			17,460
Marketable equity securities					19,980			19,980			19,980			17,982			17,982
Loans held for sale					37,857			33,232			39,088			34,302			28,399
Loans held for investment					346,842			325,673			319,465			300,764			295,416
	Allowance for credit losses				(6,128	)		(6,086	)		(6,011	)		(6,709	)		(6,710	)
		Loans held for investment, net			340,714			319,587			313,454			294,055			288,706
Premises and equipment, net					3,910			3,960			4,041			4,098			4,264
Foreclosed assets					101			315			315			101			-
Loan servicing assets					3,813			3,717			3,604			3,715			3,979
Bank-owned life insurance					4,663			5,087			5,053			5,357			5,330
Accrued interest receivable					3,664			3,280			3,090			2,997			2,485
Goodwill					13,161			13,161			13,161			13,161			13,161
Other intangible assets, net					5,184			5,350			5,517			5,682			5,848
Other assets					14,570			11,872			13,243			13,719			17,293
			Total assets	$	499,209		$	482,108		$	467,259		$	447,863		$	437,439
Liabilities and Shareholders' Equity
Liabilities
Deposits:
	Noninterest-bearing			$	84,901		$	82,272		$	76,554		$	106,255		$	106,272
	Interest-bearing				307,467			296,805			279,735			206,872			218,835
		Total deposits			392,368			379,077			356,289			313,127			325,107
Borrowings					-			-			10,000			30,000			5,000
Accrued interest payable					1,042			1,014			806			379			370
Other liabilities					9,409			7,655			10,101			17,600			23,557
	Total liabilities				402,819			387,746			377,196			361,106			354,034
Shareholders' equity:
Common stock, voting					2,275			2,231			2,231			2,239			2,239
Common stock, non-voting					22			22			22			22			22
Additional paid in capital					25,503			25,253			25,137			24,916			24,674
Retained earnings					71,565			69,165			65,570			62,611			60,248
Accumulated other comprehensive loss					(2,975	)		(2,309	)		(2,198	)		(2,301	)		(2,866	)
	Total IFH, Inc. shareholders' equity				96,390			94,362			90,762			87,487			84,317
Noncontrolling interest					-			-			(699	)		(730	)		(912	)
	Total shareholders' equity				96,390			94,362			90,063			86,757			83,405
			Total liabilities and shareholders' equity	$	499,209		$	482,108		$	467,259		$	447,863		$	437,439

Consolidated Statements of Income

(In thousands except per	Three Months Ended														Year-To-Date
share data; unaudited)	9/30/23		6/30/23			3/31/23		12/31/22			9/30/22				9/30/23		9/30/22
Interest income
Loans	$	7,877	$	7,511		$	6,997	$	6,422		$	5,943			$	22,385	$	17,057
Available-for-sale securities and other		491		525			439		321			274				1,455		598
Total interest income		8,368		8,036			7,436		6,743			6,217				23,840		17,655
Interest expense
Interest on deposits		2,743		2,445			1,696		735			532				6,884		1,577
Interest on borrowings		10		56			85		93			13				151		37
Total interest expense		2,753		2,501			1,781		828			545				7,035		1,614
Net interest income		5,615		5,535			5,655		5,915			5,672				16,805		16,041
Provision for credit losses		50		130			565		(150	)		320				745		960
Noninterest income
Loan processing and servicing
revenue		2,779		2,660			2,439		2,849			2,163				7,878		6,743
Mortgage		-		-			-		99			477				-		1,716
Government guaranteed lending		1,953		3,576			904		2,095			2,213				6,433		6,104
SBA documentation preparation fees		-		-			-		2			78				-		350
Service charges on deposits		41		52			133		240			182				226		404
Bank-owned life insurance		128		34			555		26			27				717		85
Change in fair value of marketable
equity securities		-		-			1,998		-			-				1,998		5,994
Other noninterest income		152		1,434			566		549			222				2,152		1,027
Total noninterest income		5,053		7,756			6,595		5,860			5,362				19,404		22,423
Noninterest expense
Compensation		4,403		5,379			5,581		6,168			6,880				15,363		20,212
Occupancy and equipment		314		318			344		303			402				976		1,000
Loan and special asset expenses		664		346			293		57			969				1,303		2,098
Professional services		433		446			448		676			207				1,327		1,249
Data processing		233		247			265		272			263				745		783
Software		446		469			469		467			460				1,384		1,311
Communications		65		68			78		83			86				211		266
Advertising		108		174			248		211			252				530		787
Amortization of intangibles		166		166			166		169			170				498		510
Merger related expenses		-		61			116		192			561				177		561
Other operating expenses		591		486			489		1,236			10,683				1,566		12,160
Total noninterest expense		7,423		8,160			8,497		9,834			20,933				24,080		40,937
Income (loss) before income taxes		3,195		5,001			3,188		2,091			(10,219	)			11,384		(3,433	)
Income tax expense (benefit)		795		1,416			778		(454	)		(2,646	)			2,989		(751	)
Net income (loss)		2,400		3,585			2,410		2,545			(7,573	)			8,395		(2,682	)
Noncontrolling interest		-		(10	)		58		182			(40	)			48		(120	)
Net income (loss) attributable
to IFH, Inc.	$	2,400	$	3,595		$	2,352	$	2,363		$	(7,533	)		$	8,347	$	(2,562	)
Basic earnings (loss) per common share	$	1.08	$	1.62		$	1.06	$	1.08		$	(3.45	)		$	3.76	$	(1.18	)
Diluted earnings (loss) per common share	$	1.06	$	1.60		$	1.04	$	1.04		$	(3.45	)		$	3.69	$	(1.18	)
Weighted average common shares
outstanding		2,224		2,220			2,211		2,194			2,185				2,219		2,273
Diluted average common shares
outstanding		2,265		2,252			2,265		2,267			2,185				2,260		2,273

Performance Ratios

		Three Months Ended																Year-To-Date
		9/30/23			6/30/23			3/31/23			12/31/22			9/30/22				9/30/23			9/30/22
PER COMMON SHARE
	Basic earnings (loss) per common share	$	1.08		$	1.62		$	1.06		$	1.08		$	(3.45	)		$	3.76		$	(1.18	)
	Diluted earnings (loss) per common share		1.06			1.60			1.04			1.04			(3.45	)			3.69			(1.18	)
	Book value per common share		41.98			41.90			40.28			38.69			37.29				41.98			37.29
	Tangible book value per common share (2)		33.99			33.68			31.99			30.36			28.88				33.99			28.88
FINANCIAL RATIOS (ANNUALIZED)
	Return on average assets		1.97	%		3.05	%		2.07	%		2.15	%		-6.97	%			2.36	%		-0.79	%
	Return on average common shareholders'
	equity		9.98	%		15.80	%		10.77	%		11.05	%		-33.95	%			12.16	%		-3.82	%
	Return on average tangible common
	equity (2)		12.38	%		19.84	%		13.67	%		14.23	%		-43.36	%			15.26	%		-4.86	%
	Net interest margin		5.32	%		5.48	%		5.85	%		6.35	%		6.22	%			5.54	%		5.81	%
	Efficiency ratio (1)		69.6	%		61.4	%		69.4	%		83.5	%		189.7	%			66.5	%		106.4	%
	(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 September 30, 2023, were as follows:

			% of
			Commercial
(Dollars in millions)	Amount		Loans
Solar electric power generation	$	76.6	25	%
Power and communication line and related structures construction		64.0	21	%
Lessors of nonresidential buildings (except miniwarehouses)		15.6	5	%
Support activities for oil and gas		11.4	4	%
Other activities related to real estate		11.2	4	%
Postharvest Crop Activities		8.6	3	%
Lessors of other real estate property		7.6	3	%
Hotels (except casino hotels) and motels		6.7	2	%
Colleges, universities and professional schools		6.5	2	%
Lessors of residential buildings and dwellings		6.2	2	%
	$	214.4	71	%

Reconciliation of Non-GAAP Measures

	9/30/23			6/30/23			3/31/23			12/31/22			9/30/22
	(Dollars in thousands except book value per share)
Tangible book value per common share
Total IFH, Inc. shareholders' equity	$	96,390		$	94,362		$	90,762		$	87,487		$	84,317
Less: Goodwill		13,161			13,161			13,161			13,161			13,161
Less Other intangible assets, net		5,184			5,350			5,517			5,682			5,848
Total tangible common equity	$	78,045		$	75,851		$	72,084		$	68,644		$	65,308
Ending common shares outstanding		2,296			2,252			2,253			2,261			2,261
Tangible book value per common share	$	33.99		$	33.68		$	31.99		$	30.36		$	28.88
	Three Months Ended																Year-To-Date
(Dollars in thousands)	9/30/23			6/30/23			3/31/23			12/31/22			9/30/22				9/30/23			9/30/22
Return on average tangible common equity
Average IFH, Inc. shareholders' equity	$	95,362		$	91,281		$	88,574		$	84,831		$	88,043			$	91,739		$	90,581
Less: Average goodwill		13,161			13,161			13,161			13,161			13,161				13,161			13,161
Less Average other intangible assets, net		5,294			5,459			5,625			5,791			5,958				5,459			6,232
Average tangible common equity	$	76,907		$	72,661		$	69,788		$	65,879		$	68,924			$	73,119		$	71,188
Net income (loss) attributable to IFH, Inc.	$	2,400		$	3,595		$	2,352		$	2,363		$	(7,533	)		$	8,347		$	(2,562	)
Return on average tangible common equity		12.38	%		19.84	%		13.67	%		14.23	%		-43.36	%			15.26	%		-4.81	%

FAQ

What were the net income and net loss for Integrated Financial Holdings, Inc. in Q3 2023 and Q3 2022?

IFHI reported a net income of $2.4 million in Q3 2023 and a net loss of $7.5 million in Q3 2022.

What was the return on average assets for IFHI in Q3 2023?

The return on average assets for IFHI in Q3 2023 was 1.97%.

How did the efficiency ratio of IFHI change between Q3 2023 and Q3 2022?

The efficiency ratio improved from 189.7% in Q3 2022 to 69.6% in Q3 2023.

What was the change in total assets for IFHI since December 31, 2022?

Total assets increased by $51.3 million or 11% since December 31, 2022.