Kish Bancorp, Inc. Reports Net Income of $3.2 Million in the Second Quarter of 2024 and $6.2 Million in the First Six Months of 2024

Rhea-AI Summary

Kish Bancorp (OTCQX: KISB) reported net income of $3.2 million ($1.06 per share) for Q2 2024 and $6.2 million ($2.12 per share) for H1 2024. Key highlights include:

• Total assets increased 13.2% YoY to $1.6 billion
• Net loans grew 18.3% YoY to $1.3 billion
• Deposits increased 16.4% YoY to $1.3 billion
• Q2 net interest income up 11.1% YoY
• Q2 net interest margin expanded to 3.29%
• ROE of 10.54% and ROA of 0.79% in Q2
• Tangible book value per share up 8.7% YoY to $32.32

The bank maintains strong capital ratios and credit quality, with a $0.37 quarterly dividend declared.

Positive

• Net income of $3.2 million in Q2 2024, consistent with Q2 2023
• Total assets increased 13.2% YoY to $1.6 billion
• Net loans grew 18.3% YoY to $1.3 billion
• Deposits increased 16.4% YoY to $1.3 billion
• Q2 net interest income up 11.1% YoY
• Q2 net interest margin expanded to 3.29% from 3.18% in Q1
• Tangible book value per share up 8.7% YoY to $32.32
• Strong credit quality with nonperforming loans at 0.05% of total loans
• Maintained quarterly dividend of $0.37 per share

Negative

• Provision for credit losses increased to $467,000 in Q2 2024 from $149,000 in Q2 2023
• Efficiency ratio increased to 73.3% in Q2 2024 from 71.1% in Q2 2023
• YTD net income decreased to $6.2 million from $6.5 million in H1 2023
• YTD EPS decreased to $2.12 from $2.47 in H1 2023
• ROE decreased to 10.54% in Q2 2024 from 13.06% in Q2 2023
• ROA decreased to 0.79% in Q2 2024 from 0.92% in Q2 2023

STATE COLLEGE, Pa.--(BUSINESS WIRE)-- Kish Bancorp, Inc. (OTCQX: KISB), (“Kish” or the “Company”) parent company of Kish Bank, reported net income of $3.2 million, or $1.06 per share for the second quarter of 2024, compared to $3.1 million, or $1.06 per share for the first quarter of 2024, and $3.2 million, or $1.24 per share for the second quarter of 2023. For the first six months of 2024, net income was $6.2 million, or $2.12 per share, compared to $6.5 million, or $2.47 per share, for the six-month period in 2023. All results are unaudited.

Results for the second quarter of 2024 included a $467,000 provision for credit losses, compared to a $113,000 provision for credit losses in the first quarter of 2024, and a $149,000 provision for credit losses in the second quarter of 2023. The increase in the provision for credit losses during the current quarter was due to adjustments dictated by the Company’s CECL accounting model based on the expansion in its commercial loan portfolio, and not due to any deterioration in loan quality, which remains at extraordinarily strong levels.

“We started out the first half of the year strong, with robust loan growth, solid asset quality metrics, and diversified noninterest income streams contributing to year-to-date earnings,” stated William P. Hayes, Executive Chairman. “As the high interest rate environment continues and deposit competition remains fierce, we are encouraged that our earning assets yield continues to increase, up 62 basis points compared to the second quarter a year ago, reaching a high of 6.09% for the second quarter. The growth in earning assets at a sustained spread to our funding costs should quickly reduce and eventually eliminate the initial earnings per share dilution created by our successful common stock issuance of $10.0 million, which we raised primarily in the second half of 2023. That is supported by the 9.1% expansion in net interest income year to date, which is largely keeping pace with the growth in assets. The resulting relative stability in our net interest margin is an affirmation of our effective balance sheet management strategies that include timely capital expansion to support sustained growth in earning assets, eventually driving higher earnings per share back to our historic rates of expansion.”

Second Quarter 2024 Financial Highlights:

• Total assets increased $187.8 million, or 13.2%, to $1.6 billion at June 30, 2024, compared to $1.4 billion a year ago.
• Total deposits increased $178.6 million year over year, or 16.4%, as Kish Bank continued to attract new client relationships.
• Net loans grew by $202.9 million, or 18.3%, year over year to $1.3 billion.
• Second quarter net interest income, before provision, increased $1.2 million, or 11.1%, compared to the second quarter a year ago.
• Noninterest income increased $81 thousand, or 3.2%, compared to the year ago quarter.
• Second quarter net interest margin expanded 11 basis points from the linked quarter to 3.29%.
• Continued strong second quarter ROE of 10.54% and ROA of 0.79%.
• Tangible book value per share increased 8.7% to $32.32, compared to $29.73 a year ago.
• Paid a $0.37 per share quarterly cash dividend on April 30, 2024, to shareholders of record as of April 15, 2024.
• At June 30, 2024, Kish Bank continued to exceed regulatory well-capitalized requirements with a Tier 1 leverage ratio of 9.00%, a Tier 1 capital ratio of 9.90% and a Total risk-based capital ratio of 10.59%.

Balance Sheet

“Loan growth was robust during the quarter, with total loans outstanding up by $203.8 million, or 18.3%, year over year, highlighting our strong, broad-based loan demand from across all of our markets,” said Gregory T. Hayes, President and CEO. “Leading the growth was increases in the multifamily loan portfolio. Also noteworthy, Kish has negligible exposure to loans in nonowner-occupied commercial office space categories.”

Total assets ended the quarter at $1.6 billion, an increase of $187.8 million, or 13.2%, compared to $1.4 billion as of June 30, 2023. Investment securities decreased to $183.6 million, a decrease of $9.8 million from the same period in 2023. Average earning assets increased to $1.5 billion in the second quarter of 2024, compared to $1.3 billion in the second quarter of 2023. The average yield on interest-earning assets was 6.09% in the second quarter of 2024, up 62 basis points from 5.47% in the second quarter a year ago.

Total deposits grew by $178.6 million year over year to $1.3 billion, an increase of 16.4% from $1.1 billion a year ago. At June 30, 2024, noninterest-bearing demand deposit accounts increased 6.5% compared to a year ago, while interest-bearing deposits increased 18.2% compared to a year ago. Brokered deposits increased $40.1 million during the second quarter compared to the preceding quarter to $118.0 million at June 30, 2024. The cost of total deposits was 2.69% in the second quarter of 2024, compared to 1.77% in the second quarter of 2023.

“The opening of Kish Bank’s first Altoona branch in July 2023 contributed to an acceleration in retail and commercial deposit expansion during its first year of operation, with branch deposits at $32.6 million as of June 30, 2024. Also contributing to deposit growth was an increase in brokered deposits, as we utilize the flexibility of brokered funding at lower than FHLB funding rates to support loan growth,” said President and CEO Hayes.

Stockholders’ equity increased 25.8% to $99.0 million at June 30, 2024, compared to $78.7 million a year earlier. At June 30, 2024, the Company’s tangible book value increased 8.7% to $32.32 per share compared to $29.73 at June 30, 2023.

Kish Bank continues to maintain capital levels in excess of the requirements to be categorized as “well-capitalized” with a Tier 1 leverage ratio of 9.00%, a Tier 1 capital ratio of 9.90% and a Total capital ratio of 10.59% at June 30, 2023.

Operating Results

In the second quarter of 2024, Kish generated a return on average common equity of 10.54% and a return on average assets of 0.79%, compared to 13.06% and 0.92%, respectively, in the second quarter a year ago. Year-to-date, the return on average common equity was 10.68% and return on average assets was 0.79%, compared to 13.38% and 0.95%, respectively, in the same period in 2023.

Net interest income, before the provision for credit losses, increased 11.1% to $12.1 million in the second quarter of 2024, compared to $10.9 million in the second quarter a year ago. In the first six months of the year, net interest income before the provision for credit losses increased $2.0 million, or 9.1% year over year, indicating a strong and well-balanced net interest margin. The resulting relative stability in the net interest margin and managing of interest rate risk is due to effective balance sheet management strategies, including Kish’s balance sheet hedging program, which creates additional balance sheet flexibility.

The Company’s net interest margin was 3.29% in the second quarter of 2024, compared to 3.18% in the preceding quarter and 3.36% in the second quarter of 2023. In the first six months of the year, the net interest margin was 3.23%, compared to 3.42% in the year-ago period.

Largely due to adjustments dictated by the Company’s CECL accounting model and robust loan growth, the Company recorded a $467 thousand provision for credit losses in the second quarter of 2024. This compared to a $113 thousand provision for credit losses in the first quarter of 2024, and a $149,000 provision for credit losses in the second quarter of 2023. The increase in the provision during the current quarter was not reflective of credit quality, which remains pristine.

Second quarter noninterest income increased 3.3% to $2.6 million, compared to $2.5 million in the second quarter a year ago. Noninterest income for the six-month period increased by 5.5% compared to the same period in 2023, which is attributable in part to strong results from Kish’s Wealth Management division of $1.6 million, a 22.7% increase over the six month period in 2023, as well as an improvement in the value of the equity portfolio of $145 thousand. These gains were offset to some extent by lower interest rate swap fees, which were impacted by the current high level of market interest rates. Gains on the sale of residential mortgage loans also continue to be depressed due to higher mortgage interest rates.

Noninterest expense increased $1.0 million, or 10.6%, to $10.4 million in the second quarter of 2024, compared to $9.4 million in the second quarter of 2023. For the first six months of the year, noninterest expense increased $2.1 million, or 10.9%, to $21.0 million, compared to $18.9 million in the same period in 2023. The increase in operating expenses for the second quarter and the six-month period reflect the Company’s strategic investment in technology enhancements and the training and education of its employees; all crucial fundamentals in supporting rapidly expanding customer relationships. Team additions, partially driven by the expansion into Blair County, remain the primary driver of higher salary expense, although inflationary pressures also added to the increase in compensation expense. The data processing expense increase was attributable to a year over year recategorization of selected technology expenditures from other expense to data processing expense. Also notable was the increase in FDIC premiums associated with the rapid growth in insured deposits. All other expense categories were well-controlled when compared to the prior year.

The efficiency ratio for the second quarter of 2024 was 73.3%, compared to 74.2% for the preceding quarter and 71.1% for the second quarter of 2023. Year-to-date, the efficiency ratio was 73.8% compared to 70.9% in the year ago period. The efficiency ratio includes the Company’s non-banking units which operate at higher expense levels than Kish Bank.

In the second quarter of 2024, the Company recorded $646 thousand in state and federal income tax expense for an effective tax rate of 17.0%, compared to $611 thousand, or 16.0%, in the second quarter a year ago. In the first six months of 2024, the Company recorded $1.2 million in state and federal income tax expense for an effective rate of 16.5%, compared to $1.2 million, or 15.9% in the year ago period.

Credit Quality

The allowance for credit losses represented 1535.7% of nonperforming loans at June 30, 2024, compared to 1338.6% a year earlier. Nonperforming loans were $641 thousand, or 0.05% of total loans, at June 30, 2024, compared to $650 thousand, or 0.06% of total loans, a year earlier.

Net loan charge-offs totaled $5 thousand in the second quarter of 2024, compared to net loan charge-offs of $2 thousand in the second quarter a year ago. The allowance for credit losses was $8.1 million, or 0.75% of total loans, at June 30, 2024, compared $7.2 million, or 0.78% of total loans, a year ago.

Dividend

On July 1, the Board of Directors declared a quarterly dividend in the amount of $0.37 per share, payable July 31, 2024, to shareholders of record as of July 15, 2024, which was unchanged from the prior quarter. The current dividend represents an annualized yield of 4.93% based on recent market prices. Kish has paid uninterrupted dividends since 1987, with a dividend increase every year for the prior eight consecutive years.

About Kish Bancorp, Inc.

Kish Bancorp, Inc. is a diversified financial services corporation headquartered in Belleville, PA with executive offices in State College and an Innovation Center in Reedsville. Kish Bank, a subsidiary of Kish Bancorp, Inc., operates 18 offices and financial centers serving Centre, Mifflin, Huntingdon, Blair, and Juniata counties, and northeastern Ohio. In addition to Kish Bank, other business units include: Kish Insurance, an independent property and casualty insurance agency; Kish Financial Solutions, which offers trust, fiduciary, and wealth management advisory services; Kish Benefits Consulting, which provides employee benefits consulting services; and Kish Travel, a full-service travel agency. KISB is the OTCQX stock ticker symbol for Kish Bancorp, Inc. For additional information, please visit ir.kishbancorp.com or otcmarkets.com/stock/KISB.

In June of 2024, Kish Bancorp, Inc. was ranked 38^th on American Banker Magazine’s list of Top 100 Publicly Traded Community Banks and Thrifts based on three-year average return on equity as of December 31, 2023. The rankings are derived from all publicly traded banks and thrifts in the U.S. with less than $2 billion in assets.

Forward Looking Statements

Certain statements regarding Kish Bancorp, Inc. set forth in this document and any related materials, as well as in related oral and written presentations, contain forward-looking information and speak only as of the date of such statement. You can identify these statements by the fact that they use words such as “will,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “forecast” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans and prospects. This forward-looking information is subject to numerous material risks, uncertainties and assumptions, certain of which are beyond the control of Kish Bancorp, including the impact of general economic conditions, industry conditions, competition from other industry participants, the effect of federal, state and local regulation on financial institutions, market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the material assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and actual results, performance or achievement could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that Kish Bancorp will derive therefrom. Kish Bancorp disclaims any intention or obligation to update or revise any forward-looking information, whether, because of new information, future events or otherwise, except as required by applicable securities laws.

Consolidated Balance Sheet
(Unaudited; in thousands)
		Jun. 30, 2024				Mar. 31, 2024				Jun. 30, 2023
ASSETS
Cash and due from banks		$	10,894			$	9,769			$	12,874
Interest-bearing deposits with other institutions			4,390				8,737				11,071
Cash and cash equivalents			15,284				18,506				23,945
Certificates of deposit on other financial institutions			245				245				245
Investment securities available for sale			170,363				171,744				179,919
Equity securities			2,395				2,452				2,506
Investment securities held to maturity			10,889				11,003				11,007
Loans held for sale			2,066				168				1,625
Loans			1,319,175				1,255,393				1,115,335
Less allowance for credit losses			8,086				7,580				7,157
Net Loans			1,311,089				1,247,813				1,108,178
Premises and equipment			27,103				27,118				27,022
Goodwill			3,561				3,561				3,561
Regulatory stock			7,034				9,631				9,368
Bank-owned life insurance			24,661				24,480				23,965
Accrued interest and other assets			37,161				32,870				32,719
TOTAL ASSETS		$	1,611,851			$	1,549,591			$	1,424,060
LIABILITIES
Noninterest-bearing deposits			181,883				174,500				170,857
Interest-bearing deposits			1,088,087				1,017,586				920,520
Total Deposits			1,269,970				1,192,086				1,091,377
Short-term borrowings			168,000				185,619				169,400
Other borrowings			35,812				36,492				48,127
Accrued interest and other liabilities			39,096				38,629				36,485
TOTAL LIABILITIES			1,512,878				1,452,826				1,345,389
STOCKHOLDERS' EQUITY
Common stock, $0.50 per value; 8,000,000 shares authorized, 3,022,127, 3,015,877 and 2,697,000 issued			1,511				1,508				1,349
Additional paid-in capital			14,101				13,905				3,856
Retained earnings			100,941				98,888				91,941
Accumulated other comprehensive income			(14,071	)			(13,988	)			(15,094	)
Treasury stock, at cost (60,137, 78,376 and 56,210 shares)			(3,509	)			(3,548	)			(3,381	)
TOTAL STOCKHOLDERS' EQUITY			98,973				96,765				78,671
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY		$	1,611,851			$	1,549,591			$	1,424,060

CONSOLIDATED STATEMENT OF INCOME
(Unaudited; in thousands)
		Three Months Ended													Six Months Ended
		Jun. 30, 2024				Mar. 31, 2024				Jun. 30, 2023					Jun. 30, 2024				Jun. 30, 2023
INTEREST AND DIVIDEND INCOME
Interest and fees on loans:
Taxable		$	20,574			$	19,521			$	15,735				$	40,095			$	29,926
Exempt from federal income tax			263				256				194					519				389
Investment securities
Taxable			1,238				1,266				1,349					2,504				2,573
Exempt from federal income tax			59				53				51					112				105
Interest-bearing deposits with other institutions			80				89				105					169				235
Other dividend income			222				252				292					474				502
TOTAL INTEREST AND DIVIDEND INCOME			22,436				21,437				17,726					43,873				33,730
INTEREST EXPENSE
Deposits			8,318				7,381				4,683					15,699				8,387
Short-term borrowings			1,995				2,448				1,764					4,442				3,101
Other borrowings			48				201				412					250				722
TOTAL INTEREST EXPENSE			10,361				10,030				6,859					20,391				12,210
NET INTEREST INCOME			12,075				11,407				10,867					23,482				21,520
Provision for credit losses			467				113				149					580				85
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES			11,608				11,294				10,718					22,902				21,435
NONINTEREST INCOME
Service fees on deposit accounts			620				583				591					1,203				1,159
Equity securities (losses) gains, net			(57	)			(149	)			(28	)				(206	)			(351	)
Gain on sale of loans, net			108				74				96					182				164
Earnings on Bank-owned life insurance			179				176				155					355				313
Insurance commissions			675				934				687					1,609				1,611
Travel agency commissions			60				19				68					79				113
Wealth management			612				940				499					1,552				1,233
Benefits consulting			179				145				150					324				319
Other			225				201				302					426				676
TOTAL NONINTEREST INCOME			2,601				2,923				2,520					5,524				5,237
NONINTEREST EXPENSE
Salaries and employee benefits			6,162				6,431				5,600					12,593				11,289
Occupancy and equipment			1,025				1,007				947					2,032				1,884
Data processing			1,157				1,137				993					2,294				1,949
Professional fees			207				150				153					357				356
Advertising			115				116				154					231				305
Federal deposit insurance			341				292				208					633				403
Other			1,410				1,414				1,360					2,825				2,724
TOTAL NONINTEREST EXPENSE			10,417				10,547				9,415					20,965				18,910
INCOME BEFORE INCOME TAXES			3,792				3,670				3,823					7,461				7,762
Income taxes			646				585				611					1,231				1,235
NET INCOME		$	3,146			$	3,085			$	3,212				$	6,230			$	6,527

ADDITIONAL FINANCIAL INFORMATION
(Dollars and shares in thousands except per share amounts)(Unaudited)
		Three Months Ended													Six Months Ended
		Jun. 30, 2024				Mar. 31, 2024				Jun. 30, 2023					Jun. 30, 2024				Jun. 30, 2023
PERFORMANCE MEASURES AND RATIOS
Return on average common equity			10.54	%			10.84	%			13.06	%				10.68	%			13.38	%
Return on average assets			0.79	%			0.80	%			0.92	%				0.79	%			0.95	%
Efficiency ratio			73.32	%			74.19	%			71.12	%				73.75	%			70.90	%
Net interest margin			3.29	%			3.18	%			3.36	%				3.23	%			3.42	%
		Three Months Ended													Six Months Ended
		Jun. 30, 2024				Mar. 31, 2024				Jun. 30, 2023					Jun. 30, 2024				Jun. 30, 2023
AVERAGE BALANCES
Average assets		$	1,578,036			$	1,538,898			$	1,389,321				$	1,558,467			$	1,362,588
Average earning assets			1,477,644				1,443,705				1,295,840					1,460,675				1,268,564
Average total loans			1,288,486				1,245,749				1,085,807					1,267,117				1,062,424
Average deposits			1,243,367				1,165,442				1,060,893					1,204,405				1,054,002
Average common equity			107,134				105,932				87,862					105,412				87,176
		Jun. 30, 2024				Mar. 31, 2024				Jun. 30, 2023
EQUITY ANALYSIS
Total common equity		$	110,281			$	107,977			$	91,347
Common stock outstanding			3,022,127				3,015,877				2,697,000
Book value per share		$	33.75			$	33.30			$	29.80
Tangible book value per share		$	32.32			$	31.85			$	29.73
ASSET QUALITY
Nonaccrual loans		$	599			$	567			$	487
Loans 90 days past due and still accruing			42				103				163
Total nonperforming loans		$	641			$	670			$	650
Other real estate owned and other repossessed assets			-				-				-
Total nonperforming assets		$	641			$	670			$	650
Nonperforming loans/portfolio loans			0.05	%			0.05	%			0.06	%
Nonperforming assets/assets			0.04	%			0.04	%			0.05	%
Allowance for credit losses		$	8,086			$	7,580			$	7,157
Plus: Reserve for undisbursed loan commitments			1,758				1,801				1,544
Total allowance for credit losses		$	9,844			$	9,381			$	8,701
Allowance for credit losses/portfolio loans			0.75	%			0.75	%			0.78	%
Allowance for credit losses/nonperforming loans			1535.73	%			1400.15	%			1338.62	%
Net loan (recoveries) charge-offs for the quarter		$	5			$	20			$	2
		Jun. 30, 2024				Mar. 31, 2024				Jun. 30, 2023
KISH BANK
Tier 1 leverage ratio			9.00	%			8.96	%			8.75	%
Tier 1 capital ratio			9.90	%			10.00	%			10.04	%
Total capital ratio			10.59	%			10.68	%			10.76	%
		Jun. 30, 2024				Mar. 31, 2024				Jun. 30, 2023
INTEREST SPREAD ANALYSIS
Yield on total loans			6.52	%			6.40	%			5.90	%
Yield on investments			2.88	%			2.84	%			2.84	%
Yield on interest earning deposits			8.65	%			8.08	%			8.90	%
Yield on earning assets			6.09	%			5.96	%			5.47	%
Cost of interest-bearing deposits			3.13	%			2.97	%			2.13	%
Cost of total deposits			2.69	%			2.55	%			1.77	%
Cost of borrowings			4.17	%			4.42	%			4.02	%
Cost of interest-bearing liabilities			3.29	%			3.25	%			2.51	%
Cost of funds			2.89	%			2.87	%			2.15	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240718041756/en/

Mark J. Cvrkel, EVP, Treasurer and Chief Financial Officer, 814-325-7346

Source: Kish Bancorp, Inc.

FAQ

What was Kish Bancorp's (KISB) net income for Q2 2024?

Kish Bancorp (KISB) reported a net income of $3.2 million, or $1.06 per share, for the second quarter of 2024.

How much did Kish Bancorp's (KISB) total assets grow in Q2 2024 compared to the previous year?

Kish Bancorp's (KISB) total assets increased by $187.8 million, or 13.2%, to $1.6 billion at June 30, 2024, compared to $1.4 billion a year ago.

What was the growth in Kish Bancorp's (KISB) net loans for Q2 2024?

Kish Bancorp's (KISB) net loans grew by $202.9 million, or 18.3%, year over year to $1.3 billion in Q2 2024.

How did Kish Bancorp's (KISB) deposits perform in Q2 2024?

Kish Bancorp's (KISB) total deposits grew by $178.6 million year over year to $1.3 billion, an increase of 16.4% from $1.1 billion a year ago.

What was Kish Bancorp's (KISB) net interest margin in Q2 2024?

Kish Bancorp's (KISB) net interest margin was 3.29% in the second quarter of 2024, compared to 3.18% in the preceding quarter and 3.36% in the second quarter of 2023.