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Kish Bancorp, Inc. Reports Net Income of $4.2 Million in the Third Quarter of 2024 and $10.4 Million in the First Nine Months of 2024

Kish Bancorp, Inc. (OTCQX: KISB) (“Kish” or the “Company”), parent company of Kish Bank, reported net income of $4.2 million, or $1.41 per share, for the third quarter of 2024, compared to $3.2 million, or $1.06 per share, for the second quarter of 2024, and $3.5 million, or $1.32 per share, for the third quarter of 2023. For the first nine months of 2024, net income was $10.4 million, or $3.53 per share, compared to $10.0 million, or $3.79 per share, for the nine-month period in 2023. All results are unaudited.

Results for the third quarter of 2024 included a $665,000 provision for credit losses, compared to a $467,000 provision for credit losses in the second quarter of 2024, and a $51,000 provision for credit losses in the third 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 supporting the expansion in its commercial loan portfolio, and not due to any deterioration in loan quality, which remains at extraordinarily strong levels.

“We continued our upward momentum into the third quarter, producing strong net income, double-digit loan and deposit growth, an annualized return on average assets of 1.01% and an annualized return on average equity of 13.89%,” stated William P. Hayes, Executive Chairman. “Our earning assets yield continued to increase, increasing 54 basis points compared to the third quarter a year ago and reaching a high of 6.19% for the third quarter. The growth in earning assets at a sustained spread to our funding costs is already reducing 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. We will continue to focus on growing our core deposit franchise by expanding into new markets, capturing market share in our existing markets, diversifying our revenue streams and obtaining operational leverage through enhanced technology systems. We are well positioned to continue our steady growth during the remainder of the year and into 2025.”

Third Quarter 2024 Financial Highlights:

  • Total assets increased $190.7 million, or 12.9%, to $1.7 billion at September 30, 2024, compared to $1.5 billion a year ago.
  • Total deposits increased $172.2 million year over year, or 15.3%, as Kish Bank continued to attract new client relationships.
  • Net loans grew by $213.2 million, or 18.5%, year over year to $1.4 billion.
  • Third quarter net interest income, before provision, increased $1.9 million, or 18.0%, compared to the third quarter a year ago.
  • Noninterest income increased $449 thousand, or 13.8%, compared to the year ago quarter.
  • Third quarter net interest margin expanded eight basis points from the third quarter a year ago to 3.30%.
  • Continued strong third quarter ROE of 13.89% and ROA of 1.01%.
  • Tangible book value per share increased 11.3% to $34.04, compared to $30.58 a year ago.
  • Paid a $0.37 per share quarterly cash dividend on July 31, 2024, to shareholders of record as of July 15, 2024.
  • At September 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 9.95% and a Total risk-based capital ratio of 10.66%.

Balance Sheet

“Loan growth had another robust quarter, with total loans outstanding up by $214.8 million, or 18.6%, year over year, led by strong loan demand across several loan categories,” said Gregory T. Hayes, President and CEO. “Year-over-year loan growth was driven by increases in construction loans of $60.7 million, or 42.8%, and multifamily loans of $42.9 million, or 26.7%. Also noteworthy, Kish continues to have negligible exposure to loans in nonowner-occupied commercial office space categories.”

Total assets ended the quarter at $1.7 billion, an increase of $190.7 million, or 12.9%, compared to $1.5 billion as of September 30, 2023. Investment securities decreased to $183.1 million, a decrease of $3.0 million from the same period in 2023. Average earning assets increased to $1.5 billion in the third quarter of 2024, compared to $1.3 billion in the third quarter of 2023. The average yield on interest-earning assets was 6.19% in the third quarter of 2024, up 54 basis points from 5.65% in the third quarter a year ago.

Total deposits grew by $172.3 million year over year to $1.3 billion, an increase of 15.3% from $1.1 billion a year ago. At September 30, 2024, noninterest-bearing demand deposit accounts decreased 3.6% compared to a year ago, while interest-bearing deposits increased 19.0% compared to a year ago. Brokered deposits decreased $30.0 million during the third quarter compared to the preceding quarter to $108.2 million at September 30, 2024. The cost of total deposits was 2.77% in the third quarter of 2024, compared to 2.14% in the third quarter of 2023.

“Kish is always looking for new and innovative ways to reach our customers and expand our deposit franchise,” said President and CEO Hayes. “Since this spring, we have opened our newest transformative banking solution, ATM + Live Banker, at eight locations in Centre, Blair, Huntingdon, and Juniata Counties, with more forthcoming. ATM + Live Banker is a new, convenient banking solution that allows customers to perform full-service transactions from the drive-up ATM while accessing live, local Kish bankers for assistance via video. While other banks are closing branches and eliminating access to people, we are expanding access to our people. We are redefining community banking and technology that connects our customers to what they value most: live, local experts who they know and trust.”

Stockholders’ equity increased 23.5% to $104.3 million at September 30, 2024, compared to $84.5 million a year earlier. At September 30, 2024, the Company’s tangible book value increased 11.3% to $34.04 per share compared to $30.58 at September 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 9.95% and a Total capital ratio of 10.66% at September 30, 2024.

Operating Results

In the third quarter of 2024, Kish generated a return on average common equity of 13.89% and a return on average assets of 1.01%, compared to 11.61% and 0.84%, respectively, in the third quarter a year ago. Year-to-date, the return on average common equity was 11.77% and return on average assets was 0.87%, compared to 13.36% and 0.95%, respectively, in the same period in 2023.

Net interest income, before the provision for credit losses, increased 18.0% to $12.8 million in the third quarter of 2024, compared to $10.8 million in the third quarter a year ago. In the first nine months of the year, net interest income before the provision for credit losses increased $3.9 million, or 12.1% 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 3.30% in the third quarter of 2024, compared to 3.29% in the preceding quarter and 3.22% in the third quarter of 2023. In the first nine months of the year, the net interest margin was 3.26%, compared to 3.35% in the year-ago period.

Primarily due to adjustments dictated by the Company’s CECL accounting model and robust loan growth, the Company recorded a $665 thousand provision for credit losses in the third quarter of 2024. This compared to a $467 thousand provision for credit losses in the second quarter of 2024, and a $51,000 provision for credit losses in the third quarter of 2023. The increase in the provision during the current quarter was not reflective of credit quality, which remains pristine.

Third quarter noninterest income increased 13.8% to $3.7 million, compared to $3.2 million in the third quarter a year ago. Noninterest income for the nine-month period increased by 8.7% compared to the same period in 2023, which is attributable in part to strong results from Kish’s Wealth Management division of $2.5 million, a 23.3% increase over the nine month period in 2023, as well as an improvement in the value of the equity portfolio of $461 thousand. Gains on the sale of residential mortgage loans also increased during the quarter and for the year-to-date period. These gains were offset to some extent by lower interest rate swap fees, which were impacted by the current level of market interest rates.

Noninterest expense increased $922 thousand, or 9.4%, to $10.7 million in the third quarter of 2024, compared to $9.8 million in the third quarter of 2023. For the first nine months of the year, noninterest expense increased $3.0 million, or 10.4%, to $31.7 million, compared to $28.7 million in the same period in 2023. Team expansion remains the primary driver of higher salary expense, coupled with inflationary pressures on compensation expense. The increase in operating expenses also reflects the Company’s strategic investment in technology enhancements and the training and education of its employees; all crucial fundamentals in supporting and expanding customer relationships. 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 third quarter of 2024 was 67.9%, compared to 73.3% for the preceding quarter and 69.9% for the third quarter of 2023. Year-to-date, the efficiency ratio was 71.7% compared to 70.6% 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 third quarter of 2024, the Company recorded $896 thousand in state and federal income tax expense for an effective tax rate of 17.7%, compared to $717 thousand, or 17.0%, in the third quarter a year ago. In the first nine months of 2024, the Company recorded $2.1 million in state and federal income tax expense for an effective rate of 17.0%, compared to $2.0 million, or 16.3%, in the year ago period.

Credit Quality

The allowance for credit losses represented 1549.9% of nonperforming loans at September 30, 2024, compared to 1444.1% a year earlier. Nonperforming loans were $680 thousand, or 0.05% of total loans, at September 30, 2024, compared to $606 thousand, or 0.05% of total loans, a year earlier.

Net loan recoveries totaled $30 thousand in the third quarter of 2024. There were zero net loan charge-offs in the third quarter a year ago. The allowance for credit losses was $8.7 million, or 0.77% of total loans, at September 30, 2024, compared $7.2 million, or 0.76% of total loans, a year ago.

Dividend

On October 1, the Board of Directors declared a quarterly dividend in the amount of $0.39 per share, payable October 31, 2024, to shareholders of record as of October 15, 2024, which was a $0.02 per share, or 5%, increase from the prior quarter. Growth and sustained profitability support the expanding cash dividend, which has been increased for the ninth consecutive year. The current dividend represents an annualized yield of 5.21% based on recent market prices.

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 19 locations 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 38th 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)
 

Sep. 30, 2024

Jun. 30, 2024

Sep. 30, 2023

ASSETS
Cash and due from banks

$

16,172

 

$

10,894

 

$

11,803

 

Interest-bearing deposits with other institutions

 

5,400

 

 

4,390

 

 

23,537

 

Cash and cash equivalents

 

21,572

 

 

15,284

 

 

35,340

 

 
Certificates of deposit on other financial institutions

 

-

 

 

245

 

 

245

 

Investment securities available for sale

 

169,473

 

 

170,363

 

 

172,624

 

Equity securities

 

2,594

 

 

2,395

 

 

2,454

 

Investment securities held to maturity

 

11,001

 

 

10,889

 

 

11,005

 

Loans held for sale

 

2,566

 

 

2,066

 

 

811

 

 
Loans

 

1,372,000

 

 

1,319,175

 

 

1,157,205

 

Less allowance for credit losses

 

8,715

 

 

8,086

 

 

7,167

 

Net Loans

 

1,363,285

 

 

1,311,089

 

 

1,150,038

 

 
Premises and equipment

 

27,557

 

 

27,103

 

 

27,712

 

Goodwill

 

3,561

 

 

3,561

 

 

3,561

 

Regulatory stock

 

8,361

 

 

7,034

 

 

9,494

 

Bank-owned life insurance

 

24,846

 

 

24,661

 

 

24,127

 

Accrued interest and other assets

 

29,979

 

 

37,161

 

 

36,720

 

TOTAL ASSETS

$

1,664,795

 

$

1,611,851

 

$

1,474,131

 

 
LIABILITIES
Noninterest-bearing deposits

 

175,998

 

 

181,883

 

 

182,581

 

Interest-bearing deposits

 

1,120,486

 

 

1,088,087

 

 

941,655

 

Total Deposits

 

1,296,484

 

 

1,269,970

 

 

1,124,236

 

 
Borrowings

 

233,308

 

 

203,812

 

 

222,008

 

Accrued interest and other liabilities

 

30,665

 

 

39,096

 

 

43,397

 

TOTAL LIABILITIES

 

1,560,457

 

 

1,512,878

 

 

1,389,641

 

 
STOCKHOLDERS' EQUITY
Common stock, $0.50 per value; 8,000,000 shares authorized, 3,022,127, 3,022,127 and 2,885,941 issued

 

1,511

 

 

1,511

 

 

1,443

 

Additional paid-in capital

 

14,158

 

 

14,101

 

 

9,812

 

Retained earnings

 

104,016

 

 

100,941

 

 

94,459

 

Accumulated other comprehensive income

 

(12,093

)

 

(14,071

)

 

(18,028

)

Treasury stock, at cost (56,900, 60,137 and 56,900 shares)

 

(3,254

)

 

(3,509

)

 

(3,196

)

TOTAL STOCKHOLDERS' EQUITY

 

104,338

 

 

98,973

 

 

84,490

 

 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

1,664,795

 

$

1,611,851

 

$

1,474,131

 

CONSOLIDATED STATEMENT OF INCOME
(Unaudited; in thousands)
Three Months Ended Nine Months Ended

Sep. 30, 2024

Jun. 30, 2024

Sep. 30, 2023

Sep. 30, 2024

Sep. 30, 2023

INTEREST AND DIVIDEND INCOME
Interest and fees on loans:
Taxable

$

22,099

$

20,574

 

$

17,208

 

$

62,194

$

47,134

 

Exempt from federal income tax

 

277

 

 

263

 

 

194

 

 

796

 

 

583

 

Investment securities
Taxable

 

1,229

 

 

1,238

 

 

1,308

 

 

3,733

 

 

3,881

 

Exempt from federal income tax

 

58

 

 

59

 

 

49

 

 

170

 

 

154

 

Interest-bearing deposits with other institutions

 

62

 

 

80

 

 

99

 

 

231

 

 

334

 

Other dividend income

 

224

 

 

222

 

 

198

 

 

698

 

 

700

 

TOTAL INTEREST AND DIVIDEND INCOME

 

23,949

 

 

22,436

 

 

19,056

 

 

67,822

 

 

52,786

 

 
INTEREST EXPENSE
Deposits

 

8,849

 

 

8,318

 

 

5,876

 

 

24,548

 

 

14,263

 

Borrowings

 

2,346

 

 

2,043

 

 

2,367

 

 

7,038

 

 

6,190

 

TOTAL INTEREST EXPENSE

 

11,195

 

 

10,361

 

 

8,243

 

 

31,586

 

 

20,453

 

 
NET INTEREST INCOME

 

12,754

 

 

12,075

 

 

10,813

 

 

36,236

 

 

32,333

 

Provision for credit losses

 

665

 

 

467

 

 

51

 

 

1,245

 

 

136

 

NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES

 

12,089

 

 

11,608

 

 

10,762

 

 

34,991

 

 

32,197

 

 
NONINTEREST INCOME
Service fees on deposit accounts

 

652

 

 

620

 

 

585

 

 

1,855

 

 

1,744

 

Equity securities (losses) gains, net

 

263

 

 

(57

)

 

(53

)

 

57

 

 

(404

)

Gain on sale of loans, net

 

135

 

 

108

 

 

91

 

 

317

 

 

255

 

Earnings on Bank-owned life insurance

 

183

 

 

179

 

 

161

 

 

538

 

 

474

 

Insurance commissions

 

810

 

 

675

 

 

791

 

 

2,419

 

 

2,402

 

Travel agency commissions

 

33

 

 

60

 

 

107

 

 

112

 

 

220

 

Wealth management

 

949

 

 

612

 

 

795

 

 

2,501

 

 

2,028

 

Benefits consulting

 

161

 

 

179

 

 

159

 

 

485

 

 

478

 

Other

 

509

 

 

225

 

 

610

 

 

935

 

 

1,286

 

TOTAL NONINTEREST INCOME

 

3,695

 

 

2,601

 

 

3,246

 

 

9,219

 

 

8,483

 

 
NONINTEREST EXPENSE
Salaries and employee benefits

 

6,435

 

 

6,162

 

 

5,752

 

 

19,028

 

 

17,041

 

Occupancy and equipment

 

1,030

 

 

1,025

 

 

1,019

 

 

3,062

 

 

2,903

 

Data processing

 

1,234

 

 

1,157

 

 

1,129

 

 

3,528

 

 

3,078

 

Professional fees

 

175

 

 

207

 

 

199

 

 

532

 

 

555

 

Advertising

 

123

 

 

115

 

 

154

 

 

354

 

 

459

 

Federal deposit insurance

 

319

 

 

341

 

 

234

 

 

952

 

 

637

 

Other

 

1,402

 

 

1,410

 

 

1,309

 

 

4,227

 

 

4,033

 

TOTAL NONINTEREST EXPENSE

 

10,718

 

 

10,417

 

 

9,796

 

 

31,683

 

 

28,706

 

 
INCOME BEFORE INCOME TAXES

 

5,066

 

 

3,792

 

 

4,212

 

 

12,527

 

 

11,974

 

Income taxes

 

896

 

 

646

 

 

717

 

 

2,127

 

 

1,952

 

NET INCOME

$

4,170

 

$

3,146

 

$

3,495

 

$

10,400

 

$

10,022

 

ADDITIONAL FINANCIAL INFORMATION
(Dollars and shares in thousands except per share amounts)(Unaudited)
Three Months Ended Nine Months Ended

Sep. 30, 2024

Jun. 30, 2024

Sep. 30, 2023

Sep. 30, 2024

Sep. 30, 2023

PERFORMANCE MEASURES AND RATIOS
Return on average common equity

 

13.89

%

 

10.54

%

 

11.61

%

 

11.77

%

 

13.36

%

Return on average assets

 

1.01

%

 

0.79

%

 

0.84

%

 

0.87

%

 

0.95

%

Efficiency ratio

 

67.91

%

 

73.32

%

 

69.93

%

 

71.66

%

 

70.57

%

Net interest margin

 

3.30

%

 

3.29

%

 

3.22

%

 

3.26

%

 

3.35

%

 
Three Months Ended Nine Months Ended

Sep. 30, 2024

Jun. 30, 2024

Sep. 30, 2023

Sep. 30, 2024

Sep. 30, 2023

AVERAGE BALANCES
Average assets

$

1,634,071

 

$

1,578,036

 

$

1,431,116

 

$

1,558,467

 

$

1,362,588

 

Average earning assets

 

1,534,946

 

 

1,477,644

 

 

1,331,334

 

 

1,485,613

 

 

1,289,717

 

Average total loans

 

1,346,713

 

 

1,288,486

 

 

1,131,332

 

 

1,293,843

 

 

1,085,645

 

Average deposits

 

1,271,823

 

 

1,243,367

 

 

1,090,200

 

 

1,227,042

 

 

1,066,201

 

Average common equity

 

112,093

 

 

107,134

 

 

93,070

 

 

109,000

 

 

90,579

 

 

Sep. 30, 2024

Jun. 30, 2024

Sep. 30, 2023

EQUITY ANALYSIS
Total common equity

$

113,680

 

$

110,281

 

$

100,101

 

Common stock outstanding

 

3,022,127

 

 

3,022,127

 

 

2,885,941

 

Book value per share

$

35.46

 

$

33.75

 

$

31.99

 

Tangible book value per share

$

34.04

 

$

32.32

 

$

30.58

 

 
ASSET QUALITY
Nonaccrual loans

$

501

 

$

599

 

$

445

 

Loans 90 days past due and still accruing

 

179

 

 

42

 

 

161

 

Total nonperforming loans

$

680

 

$

641

 

$

606

 

Other real estate owned and other repossessed assets

 

-

 

 

-

 

 

-

 

Total nonperforming assets

$

680

 

$

641

 

$

606

 

nonperforming loans/portfolio loans

 

0.05

%

 

0.05

%

 

0.05

%

nonperforming assets/assets

 

0.04

%

 

0.04

%

 

0.04

%

 
Allowance for credit losses

$

8,715

 

$

8,086

 

$

7,167

 

Plus: Reserve for undisbursed loan commitments

 

1,824

 

 

1,758

 

 

1,584

 

Total allowance for credit losses

$

10,539

 

$

9,844

 

$

8,751

 

Allowance for credit losses/portfolio loans

 

0.77

%

 

0.75

%

 

0.76

%

Allowance for credit losses/nonperforming loans

 

1549.85

%

 

1535.73

%

 

1444.06

%

Net loan (recoveries) charge-offs for the quarter

$

(30

)

$

5

 

$

-

 

 

Sep. 30, 2024

Jun. 30, 2024

Sep. 30, 2023

KISH BANK
Tier 1 leverage ratio

 

9.00

%

 

9.00

%

 

8.88

%

Tier 1 capital ratio

 

9.95

%

 

9.90

%

 

9.95

%

Total capital ratio

 

10.66

%

 

10.59

%

 

10.63

%

 

Sep. 30, 2024

Jun. 30, 2024

Sep. 30, 2023

INTEREST SPREAD ANALYSIS
Yield on total loans

 

6.63

%

 

6.52

%

 

6.12

%

Yield on investments

 

2.82

%

 

2.88

%

 

2.83

%

Yield on interest earning deposits

 

8.53

%

 

8.65

%

 

7.58

%

Yield on earning assets

 

6.19

%

 

6.09

%

 

5.65

%

 
Cost of interest-bearing deposits

 

3.21

%

 

3.13

%

 

2.54

%

Cost of total deposits

 

2.77

%

 

2.69

%

 

2.14

%

Cost of borrowings

 

4.14

%

 

4.17

%

 

4.27

%

Cost of interest-bearing liabilities

 

3.37

%

 

3.29

%

 

2.88

%

Cost of funds

 

2.82

%

 

2.89

%

 

2.77

%

 

Contacts

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

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