Angled view of the front of the Kish Innovation Center building with Kish sign
State College, Pennsylvania (KISB) – William P. Hayes, Chairman and CEO of Kish Bancorp, Inc., has announced unaudited financial results for the period ending March 31, 2020.
Hayes stated, “In the context of one of the most difficult periods in our nation’s history, our hearts go out to the communities and individuals who are suffering from the impact and stress created by the COVID-19 pandemic. As we communicate first quarter results, we do so with a full acknowledgement of the critical role of the banking system in times of great financial distress.” Hayes added, “As the Kish team strives to respond quickly to the dramatically shifting needs of both businesses and consumers, we are pleased that Kish Bancorp entered this period in a position of strength; we are well capitalized with rising core earnings and strong sources of liquidity sufficient to react quickly to rising demands.”
Hayes continued, “Capital is being prudently but aggressively applied to provide financial relief to our customers and communities through payment deferrals to borrowers where necessary and requested, mortgage refinancing and modifications to reduce payments, and significant funding levels to stressed employers under government-guaranteed programs.” He added, “Working remotely or with strict observance to social distancing, our team has worked long hours to process and submit emergency small business loan applications under the SBA’s Paycheck Protection Program. In just 10 working days, the team has processed and received approval on 426 loans for a total of $63.5 million that we are now in the process of disbursing. These are forgivable loans assuming most funds will go directly to supporting the continuation or re-employment of a business’s employees.” Hayes concluded, “With 160 loan requests still in the pipeline, we will now await further congressional action to provide additional funds to sustain the Paycheck Protection Program,” adding, “I am proud of the entire team for their performance for our clients under these difficult conditions, and confident that the resilience of the people of our region will support a gradual return to normality in the months ahead as this terrible pandemic begins to recede.”
Highlights for the first quarter of 2020 include sustained earnings driven by increases in lending activity, a shift in the deposit mix that was favorable to the Bank’s net interest margin, noninterest income expansion, and extraordinary volumes within the mortgage banking unit.
The Corporation’s total assets ended the period at an all-time high of $953.2 million, an increase of $80.5 million, or 9.22%, compared to total assets of $872.7 million as of March 31, 2019. Total loans outstanding grew year over year by $57.2 million to $713 million, or 8.72%. Loan growth was partially offset by a $2 million decrease in investment securities.
Total deposits grew by $45.3 million to $721.3 million, an increase of 6.71% from $675.9 million a year ago, with a notable expansion in core deposits and reduced reliance on large volume municipal deposits. An increase in borrowings to $143.6 million, compared to $118.9 million as of March 31, 2019, helped to fund loan growth.
Net income for the first quarter of 2020 was $1.35 million, an increase of $20 thousand, or 1.49%, compared to $1.33 million in the first quarter of 2019. The increase includes strong expansion in both net interest income and noninterest income. Net income was negatively impacted by volatility in financial markets, and an increased loan loss provision reflecting the elevated risks inherent in the current economic environment and an expanding loan portfolio. Overall credit quality metrics remain at excellent levels as is reflected in low delinquencies and non-performing loan levels.
Continued growth in loans and core deposits supported the expansion of net interest income before provision to $7.06 million as of March 31, 2020, an increase of $358 thousand, or 5.34%, compared to $6.70 million a year ago. Contributions to the loan loss reserve from earnings equaled $318 thousand in the first quarter of 2020, compared to $240 thousand in the first quarter of 2019.
“I am pleased to note that noninterest income was $2.09 million for the first quarter of 2020, an increase of $283 thousand, or 15.63%, compared to the same period in 2019,” Hayes said. He added that when unrealized gains/losses from equity securities are excluded, noninterest income increased by $656 thousand, or 35.10%, year over year.
Residential mortgage originations resulted in a 136.64% increase in fee income from mortgage loan sales. Fees derived from deposit activities remained steady, while revenues from insurance commissions, benefits consulting, and wealth management activities all showed modest growth from the same period in 2019. “The recently announced acquisition of the Sausman Insurance Agency will close in the second quarter, roughly doubling annualized revenue of Kish Insurance,” said Hayes.
Year over year, noninterest expense increased by $413 thousand, or 10.59%, to $7.27 million as of March 31, 2020, compared to $6.86 million the prior year. In part, the increase reflects non-recurring data processing costs related to Kish’s core processing conversion. A marked decline in data processing expense is projected to follow the core conversion, which is scheduled for the second quarter. All other expense categories were well controlled when compared to the prior year.
The Board of Directors declared a quarterly dividend in the amount of $0.27 per share, payable April 30, 2020, to shareholders of record as of April 15, 2020.
About Kish Bancorp, Inc.
Kish Bancorp, Inc. is a diversified financial services corporation headquartered in Belleville, PA with executive offices in State College. Kish Bank, a subsidiary of Kish Bancorp, Inc., operates sixteen offices and financial centers in Centre, Mifflin, and Huntingdon counties. 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. For additional information, please visit www.kishbank.com. KISB is the OTC stock ticker symbol for Kish Bancorp, Inc.