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First Central Savings Bank Reports Record Calendar Fourth Quarter 2021 Results Highlighted by Record Operating and Cash Earnings, Excellent Balance Sheet Growth, Strong Net Interest Margin, and Exceptional Asset Quality

·18-min read

Performance Highlights

  • Operating and Cash Earnings: Net income for the quarter ended December 31, 2021 was a record $3.2 million or $0.30 per share, compared to a net loss of $568 thousand or ($0.05) per share recorded in the prior year quarter ended December 31, 2020. Cash earnings for the quarter ended December 31, 2021 were a record $4.8 million, or $0.46 per share, an increase of $3.3 million, or 219.0%, from $1.5 million, or $0.15 per share, for the prior year quarter. Net income for the twelve months ended December 31, 2021 was $8.7 million or $0.82 per share, compared to $1.5 million or $0.14 per share recorded in the prior year twelve months ended December 31, 2020, representing a 501.4% increase in year to date net income year-over-year.

  • Record Financial Performance Metrics: Return on average assets and average stockholders’ equity were 1.77% and 18.16% for the quarter ended December 31, 2021.

  • Balance Sheet Growth: Assets totaled $763.8 million at December 31, 2021, up $56.3 million, or 8.0%, from September 30, 2021 and up $77.1 million, or 11.2%, from December 31, 2020 primarily due to loan growth.

  • Continued Capital Strength: The Bank’s Tier 1 capital ratio was 9.53% and the Total Risk based capital ratio was 14.05% at December 31, 2021, each above the regulatory minimum for a well-capitalized institution.

  • Loan Growth: At December 31, 2021, total loans outstanding was $645.6 million or 84.5% of total assets, up $62.6 million, or 10.74%, from September 30, 2021.

  • Net Interest Income Growth: The Bank recorded net interest income of $7.4 million for the quarter ended December 31, 2021, an increase of $1.7 million, or 28.9%, from the quarter ended December 31, 2020 and an increase of $928 thousand, or 14.3%, on a linked quarter basis.

  • Growth of Mortgage Banking Division: During 2021, the mortgage banking division has originated $310.1 million in non-conforming residential loans which are held in portfolio or sold to the secondary market.

  • Gain on sale of loans: The Bank recorded gain on sales of loans of $2.7 million for the quarter ended December 31, 2021, an increase of $2.6 million, or 3,267.1%, from the quarter ended December 31, 2020 and an increase of $1.2 million, or 87.5%, on a linked quarter basis.

  • Excellent Asset Quality: At December 31, 2021, the Bank’s asset quality was pristine and ranked at the top of its peer group with 0.10% non-performing loans to total loans.

  • Strong Net Interest Margin and Spread: The Bank’s net interest margin and spread for the current quarter was strong at 4.14% and 4.10%, respectively.

GLEN COVE, N.Y., Jan. 18, 2022 (GLOBE NEWSWIRE) -- Joseph Pistilli, Chairman of the Board, of First Central Savings Bank (“FCSB”, “the Bank”) today reported significant performance achievements for the quarter ended December 31, 2021, highlighted by the Bank’s record operating and cash earnings, continued momentum in year-over-year loan growth, excellent asset quality, and record net income.

Strong Operating Earnings Momentum on both Cash and GAAP Basis

The Bank’s cash earnings were strong at $4.8 million, or $0.46 per share, for the quarter ended December 31, 2021, which represents an increase of $3.3 million, or 219.0% from the quarter ended December 31, 2020. On a GAAP basis, net income for the quarter ended December 31, 2021 was $3.2 million, or $0.30 per share, compared with a net loss of $568 thousand, or ($0.05) per share, for the quarter ended December 31, 2020. Due to the significant deferred tax asset recognized, the Bank is not required to pay federal income taxes until the Bank fully utilizes the remaining net operating loss carryforward. As such, significantly all the federal income tax expense on the income statement is considered a non-cash expense.

Joseph Pistilli, Chairman of the Board noted, “In calendar year 2021, First Central continued to build shareholder value by delivering continued earnings momentum and solid loan growth. In the past year, we have increased net income by $7.3 million to a record $8.7 million. We achieved loan growth of 9.7% and deposit growth of 7.6%. We continue to enhance shareholder value with an increase in our book value from $6.02 per share at December 31, 2020 to $6.80 per share at December 31, 2021, an increase of $0.78 or 13.0%. I am extremely proud of the management team and Board of Directors that we have assembled at the Bank and the expertise they bring in growing the franchise value for our shareholders.”

Paul Hagan, President and Chief Operating Officer, reflected on the Bank’s results, “Calendar year 2021 was a spectacular year as evidenced by our core earnings momentum. Management executed on its growth strategy that brought record net interest income, record loan sale income and record net income for the December 2021 quarter. Additionally, the growth of our non-interest-bearing deposits has contributed to the increase in net interest income. As of December 2021, our non-interest-bearing deposit accounts represent 21.2% of the Bank’s deposit base compared to 13.4% as of December 2020. Further, as we remain steadfastly selective in our loan underwriting, our growth story continues to be highlighted by industry leading asset quality. As we have grown the balance sheet, we have maintained strong expense control as indicated by our efficiency ratio of 54.97%. Our ability to prudently control expenses while continuing to deliver robust growth is indicative of management’s commitment to creating shareholder value.”

Balance Sheet Growth

Total assets for the quarter ended December 31, 2021 increased by $56.3 million to $763.8 million as the Bank continued to originate non-conforming loans and sell them on the secondary market. On a year-over-year basis, total assets grew by $77.1 million, or 11.2%, driven by the Bank’s robust loan originations offset by non-conforming loan sales. As of December 31, 2021, the Bank has been able to generate a non-conforming loan pipeline of $155.8 million. Total loan portfolio growth at December 31, 2021 increased by $56.9 million, or 9.7%, from the loan balance as of December 31, 2020.

Funding for asset growth during the quarter was primarily derived from deposits and borrowings from the Federal Home Loan Bank, (“FHLB”). On a year-over-year basis, total deposits grew by $44.9 million, or 7.5%, as the Bank continues to grow deposits through their retail branches. The Bank has had incredible success in growing the non-interest-bearing deposits through non-conforming loan originations and the retail branches. As of December 31, 2021, total non-interest-bearing deposits were $136.3 million or 21.2% of total deposits compared to $80.4 million or 13.4% of total deposits as of December 31, 2020.

In addition to deposit growth, the Bank has used short term borrowings from the FHLB to fund loan growth during the quarter. This has been an effective low-cost funding strategy for the Bank. Due to the increase in loan sale volume, during the second half of 2021, the Bank has used proceeds from the loan sales to repay the short-term borrowings. This allows the Bank to continually fund loans at low costs while growing the retail deposit base to support our asset growth. Total borrowings for the quarter ended December 31, 2021 increased to $45 million.

The Bank’s overall average cost of funds was 0.53% for the quarter ended December 31, 2021, a decrease of ten basis points from 0.63% for the quarter ended September 30, 2021. Management expects that further cost of funds decreases will be limited in the future due to expected increases in short term interest rates.

Management continues to be pro-active in securing longer-term certificates of deposit in the current rising interest rate environment to better position the interest-rate-risk profile of the Bank in anticipation of higher rates in the upcoming years. While this strategy of securing current longer-term funding at current rates is more costly than shorter-term funding, management believes it will better protect and enhance future earnings during the anticipated rising interest rate cycle in the years ahead.

Loan Portfolio and Asset Quality

For the twelve-month period ended December 31, 2021, the Bank’s loan portfolio grew by $56.9 million, or 9.7%, with the growth concentrated primarily in non-conforming residential loans. Management continues to employ a strategy of concentrating its loan growth in these products, which provides the Bank with traditionally safe credit quality at acceptable credit spreads, greater liquidity and an enhanced interest-rate-risk profile. Over the past twelve months, originations of the non-conforming product amounted to $310.1 million. At December 31, 2021, the entire non-conforming loan portfolio amounted to $266.6 million, with an average loan balance of $620 thousand and a weighted average loan-to-value ratio of 57.2%.

As a result of the Bank’s robust non-conforming loan generation capabilities, the Bank has been able to generate additional income by strategically originating and selling its non-conforming loans to other financial institutions at premiums. As of December 31, 2021, the Bank has $155.7 million within the non-conforming pipeline with a weighted average interest rate of 4.78%. Due to the strong pipeline, the Bank expects that it will continue to originate for its own portfolio and others, which will result in a continued increase in interest income while also realizing gains on sale of loans. For the three months ended December 31, 2021, the Bank earned $2.7 million in premiums on loans sold net of FASB 91 fees and costs.

The Bank’s asset quality ratios are pristine and class leading among its peer group of community banks. At December 31, 2021, the loan portfolio had non-performing loans of $577 thousand or 0.10% of total loans and 0.08% of total assets. During the quarter ended December 31, 2021, the Bank recorded a provision of $600 thousand to account for the $44.1 million increase of loans receivable. The total allowance for loan losses at December 31, 2021 was $6.5 million and as a percent of loan receivable was 1.08% for the most recent quarter end.

Strong Net Interest Margin

The Bank’s net interest margin remained strong for the quarter ended December 31, 2021 at 4.14% due to the continued origination of non-conforming loans at above market rates, prepayment penalties and loan fees of $234 thousand, and continued decrease in the Bank’s cost of funds.

Opportunities for First Central Savings Bank

The Bank’s executive team and Board remain focused on enhancing shareholder value through prudent growth, tight expense control and further business opportunities. The Bank’s Board of Directors continues to make significant investments of their own capital into First Central Savings Bank which represents approximately 85% of shares outstanding. The Bank concluded its most recent capital raise in September 2021 which allowed the Bank to continue its growth strategy. In addition, the Bank was granted regulatory approval to open a new branch location in Lynbrook New York. Management expects the Lynbrook branch to open in the second quarter of 2022.

Our mobile banking product allows customers to perform various banking functions including remote check deposits, “Zelle” money transfers, obtaining deposit account balances and transferring funds between accounts using their mobile phones. The continued implementation of application based mobile banking software products enables the Bank to better compete with much larger financial institutions in the marketplace by offering the latest banking technology solutions. The Bank also expects to upgrade our core banking system in early 2022 which will enhance our customer experience.

About First Central Savings Bank

With assets of $763.8 million at December 31, 2021, First Central Savings Bank is a locally owned and operated community savings bank, focusing on highly personalized and efficient services and products responsive to local needs. Management and the Board of Directors are comprised of a select group of successful local businessmen who are committed to the success of the Bank by knowing and understanding the metro-New York area’s financial needs and opportunities. Backed by state-of-the-art technology, First Central offers a full range of modern financial services. First Central employs a complete suite of consumer and commercial banking products and services, including multi-family and commercial mortgages, ADC and bridge loans, residential loans, middle market business loans and lines of credit. First Central also offers customers 24-hour ATM service with no fees attached, free checking with interest, mobile banking, the most advanced technologies in internet banking for our consumer and business customers, safe deposit boxes and much more. The Bank continues to roll out mobile banking software products as well as our “Zelle” money transfer product to our customers. First Central Savings Bank maintains its corporate offices in Glen Cove, New York with an additional eight branches throughout Queens New York.

First Central Savings Bank is a member of the Federal Deposit Insurance Corporation and is an Equal Housing/Equal Opportunity Lender. For further information, call 516-399-6010 or visit the Bank’s state-of-the-art website at www.myfcsb.com.

Forward-Looking Statements

This release may contain certain "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and may be identified by the use of such words as "may," "believe," "expect," "anticipate," "should," "plan," "estimate," "predict," "continue," and "potential" or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of First Central Savings Bank. Any or all of the forward-looking statements in this release and in any other public statements made by First Central Savings Bank may turn out to be incorrect. They can be affected by inaccurate assumptions First Central Savings Bank might make or by known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. First Central Savings Bank does not intend to update any of the forward-looking statements after the date of this release or to conform these statements to actual events.

Investor and Press Contact:
Ray Ciccone, S.V.P. & Chief Financial Officer
Paul Hagan, President & Chief Operating Officer
516-399-6071

First Central Savings Bank

Statements of Condition - (unaudited)

(dollars in thousands)

12/31/2021

9/30/2021

12/31/2020

Assets

Cash and cash equivalents

$

48,714

$

67,047

$

34,447

Investments Available for Sale

45,920

34,472

39,175

Investments Held to Maturity

1,000

1,000

-

Loans held for sale

43,167

24,735

-

Loans receivable

602,415

558,238

588,723

Less: allowance for loan losses

(6,501

)

(6,145

)

(5,346

)

Loans, net

595,914

552,093

583,377

Other assets

29,040

28,089

29,613

Total Assets

$

763,755

$

707,436

$

686,612

Liabilities and Shareholders Equity

Total Deposits

$

640,049

$

631,141

$

595,136

FHLB Advances

45,000

-

25,000

Other Liabilities

6,300

6,735

4,070

Total Liabilities

691,349

637,876

624,206

Total Shareholders' Equity

72,406

69,560

62,406

Total Liabilities and Shareholders' Equity

$

763,755

$

707,436

$

686,612



First Central Savings Bank

Statements of Income - (unaudited)

(dollars in thousands, except per share data)

12 Months

12 Months

Quarter Ended

Quarter Ended

Ended

Ended

12/31/2021

12/31/2020

12/31/2021

12/31/2020

Total Interest income

$

8,285

$

7,397

$

30,519

$

28,543

Total interest expense

869

1,646

4,311

8,172

Net interest income

7,416

5,751

26,208

20,371

Provision for loan losses

600

2,153

1,550

2,928

Net interest income after provision for loan loss

6,816

3,598

24,658

17,443

Net gain on loans sold

2,660

79

5,413

502

Other non-interest income

317

452

900

1,180

Total non-interest income

2,977

531

6,313

1,682

Compensation and benefits

3,317

2,642

11,190

9,323

Occupancy and Equipment

806

646

3,018

2,749

Data processing

382

305

1,475

988

Federal insurance premium

80

151

454

636

Professional fees

360

512

1,360

1,641

Other

767

613

2,472

2,018

Total non-interest income

5,712

4,869

19,969

17,355

Income before income taxes

4,081

(740

)

11,002

1,770

Income tax expense (benefit)

851

(172

)

2,276

319

Net income (loss)

$

3,230

$

(568

)

$

8,726

$

1,451

Basic Earnings (loss) per Share-GAAP basis

$

0.30

$

(0.05

)

$

0.82

$

0.14

Diluted Earnings (loss) per Share-GAAP basis

$

0.30

$

(0.05

)

$

0.82

$

0.14

Supplementary Information:

Net Income (loss)

$

3,230

$

(568

)

$

8,726

$

1,451

Add Back non-cash charges

Provision for loan losses

600

2,153

1,550

2,928

Depreciation expense

173

104

493

338

Provision (Benefit) for federal income taxes

843

(170

)

2,254

316

Cash Net income

$

4,846

$

1,519

$

13,023

$

5,033

Basic Earnings per Share-GAAP basis

$

0.46

$

0.15

$

1.22

$

0.49

Diluted Earnings per Share-GAAP basis

$

0.46

$

0.15

$

1.22

$

0.49


First Central Savings Bank

Statements of Income - (unaudited)

(dollars in thousands, except per share data)

Quarter Ended

Quarter Ended

Quarter Ended

Quarter Ended

12/31/2021

9/30/2021

6/30/2021

3/31/2021

Total Interest income

$

8,285

$

7,464

$

7,529

$

7,241

Total interest expense

869

976

1,122

1,344

Net interest income

7,416

6,488

6,407

5,897

Provision for loan losses

600

-

250

700

Net interest income after provision for loan loss

6,816

6,488

6,157

5,197

Net gain on loans sold

2,660

1,419

781

553

Other non-interest income

317

270

152

161

Total non-interest income

2,977

1,689

933

714

Compensation and benefits

3,317

2,738

2,652

2,483

Occupancy and Equipment

806

732

714

766

Data processing

382

401

371

321

Federal insurance premium

80

90

130

154

Professional fees

360

414

308

278

Other

767

615

570

520

Total non-interest income

5,712

4,990

4,745

4,522

Income before income taxes

4,081

3,187

2,345

1,389

Income tax expense

851

661

483

281

Net income

$

3,230

$

2,526

$

1,862

$

1,108

Basic Earnings per Share-GAAP basis

$

0.30

$

0.24

$

0.17

$

0.11

Diluted Earnings per Share-GAAP basis

$

0.30

$

0.24

$

0.17

$

0.11

Supplementary Information:

Net Income

$

3,230

$

2,526

$

1,862

$

1,108

Add Back non-cash charges

Provision for loan losses

600

-

250

700

Depreciation expense

173

118

102

100

Provision income taxes

843

655

478

278

Cash Net income

$

4,846

$

3,299

$

2,692

$

2,186

Basic Earnings per Share-GAAP basis

$

0.46

$

0.31

$

0.26

$

0.21

Diluted Earnings per Share-GAAP basis

$

0.46

$

0.31

$

0.26

$

0.21


First Central Savings Bank

Selected Financial Data - (unaudited)

(dollars in thousands, except per share data)

Quarter Ended

Quarter Ended

Quarter Ended

12/31/2021

9/30/2021

6/30/2021

Asset Quality:

Allowance for Loan Losses (1)

$

6,501

$

6,145

$

6,015

Allowance for Loan Losses to Total Loans (1)

1.08

%

1.05

%

1.04

%

Non-Performing Loans

$

577

$

969

$

1,076

Non-Performing Loans/Total Loans

0.10

%

0.17

%

0.18

%

Non-Performing Loans/Total Assets

0.08

%

0.14

%

0.16

%

Allowance for Loan Losses/Non-Performing Loans

1126.75

%

634.15

%

559.18

%

Capital: (dollars in thousands)

Tier 1 Capital

$

69,292

$

65,207

$

62,012

Tier 1 Leverage Ratio

9.53

%

9.51

%

9.21

%

Common Equity Tier 1 Capital Ratio

12.82

%

12.94

%

12.16

%

Tier 1 Risk Based Capital Ratio

12.82

%

12.94

%

12.16

%

Total Risk Based Capital Ratio

14.05

%

14.18

%

13.36

%

Equity Data

Common shares outstanding

10,648,345

10,648,345

10,648,345

Stockholders' equity

$

72,406

$

69,560

$

67,078

Book value per common share

6.80

6.53

6.30

Tangible common equity

72,406

69,560

67,078

Tangible book value per common share

6.80

6.53

6.30

(1) Calculation excludes loans held for sale


First Central Savings Bank

Selected Financial Data - (unaudited)

(dollars in thousands)

Quarter Ended

Quarter Ended

Quarter Ended

12/31/2021

9/30/2021

6/30/2021

Other: (in thousands)

Average Interest-Earning Assets

710,495

669,578

655,871

Average Interest-Bearing Liabilities

520,419

493,731

503,699

Average Deposits and Borrowings

665,965

622,018

610,560

Profitability:

Return on Average Assets

1.77

%

1.46

%

1.10

%

Return on Average Equity

18.16

%

14.72

%

11.34

%

Yield on Average Interest Earning Assets

4.63

%

4.42

%

4.60

%

Cost of Average Interest Bearing Liabilities

0.66

%

0.79

%

0.89

%

Cost of Funds

0.53

%

0.63

%

0.74

%

Net Interest Rate Spread (1)

4.10

%

3.79

%

3.86

%

Net Interest Margin (2)

4.14

%

3.84

%

3.91

%

Non-Interest Expense to Average Assets

0.77

%

0.72

%

0.70

%

Efficiency Ratio

54.97

%

61.03

%

64.63

%

(1) Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities

(2) Net interest margin represents net interest income divided by average interest earning assets



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