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 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.

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