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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

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 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)
 

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

%

 

Contacts

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

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