Eagle Financial Bancorp : Announces Second Quarter 2022 Results

Eagle Financial Bancorp, Inc. Announces Second Quarter 2022 Results

CINCINNATI - August 4, 2022, Eagle Financial Bancorp, Inc. (OTCQB: EFBI) (the "Company"), the holding company for EAGLE.bank, today announced that its Board of Directors declared a cash dividend of $0.07 per common share. The dividend will be paid on or about August 31, 2022, to stockholders of record as of the close of business on August 15, 2022.

The Company announced net income of $130 thousand, or $0.10 per common share on 1.2 million weighted-average shares outstanding for the quarter ended June 30, 2022, as compared to $124 thousand, or $0.09 per common share on 1.4 million weighted-average shares outstanding for the quarter ended June 30, 2021. The increase was largely the result of a $317 thousand increase in gain on sale of foreclosed real estate, a $252 thousand decrease in compensation and benefits, and a $175 thousand increase in net interest income, offset by a $527 thousand decrease in net gain on loan sales, a $109 thousand increase in provision for loan losses, a $49 thousand increase in foreclosed real estate impairment and expenses, net, a $24 thousand increase in legal and professional expense, and a $37 thousand increase in other operating expenses.

Net income for the six months ended June 30, 2022 decreased $382 thousand to $177 thousand, or $0.14 per common share as compared to $559 thousand, or $0.39 per common share for the six months ended June 30, 2021. The reduction was largely driven by a $954 thousand decrease in total non-interest income, and a $57 thousand increase in provision for loan loss, offset by a $434 thousand decrease in total non-interest expense, a $91 thousand decrease in total interest expense, and a $112 thousand decrease in provision for income taxes.

The increase in net interest income for the three months ended June 30, 2022 was largely driven by an increase in the weighted average yield on total interest earning assets to 3.17% for the quarter ended June 30, 2022 from 2.95% for the comparable 2021 period. This increase was primarily the result of a 103 basis point increase in the yield on interest earning deposits from 0.11% to 1.14%, and a 16 basis point decrease in the cost of interest bearing liabilities from 0.52% to 0.36% for the quarter ended June 30, 2022 as compared to the quarter ended June 30, 2021.

FINANCIAL HIGHLIGHTS

• Net income of $130 thousand for the three months ended June 30, 2022 compared to $124 thousand for the comparable period in 2021, representing an increase of $6 thousand, or 4.8%.
• Net income of $177 thousand for the six months ended June 30, 2022 compared to $559 thousand for the comparable period in 2021, representing a decrease of $382 thousand, or 68.3%.
• Net income before taxes of $170 thousand for the quarter ended June 30, 2022 compared to $163 thousand for the comparable period in 2021, representing an increase of $7 thousand, or 4.3%.
• Net income before taxes of $225 thousand for the six months ended June 30, 2022 compared to $719 thousand for the comparable period in 2021, representing a decrease of $494 thousand, or 68.7%
• Non-interestincome of $1.5 million for the six months ended June 30, 2022 compared to $2.4 million for the comparable period in 2021, representing a decrease of $900 thousand, or 39.6%.
• Capital ratios of 14.3%, 15.4% and 16.2% for the Tier 1 Leverage ratio, Tier 1 Risked Based Capital ratio and Total Risked Based Capital ratio, respectively, at June 30, 2022.

Comparison of Financial Condition at June 30, 2022 and December 31, 2021

Total assets were $168.3 million at June 30, 2022, a decrease of $6.5 million, or 3.7%, from the total assets of $174.8 million at December 31, 2021. The decrease was primarily due to a decrease in cash and cash equivalents of $31.0 million, offset by an increase in loans, net of allowance for loan losses, of $8.5 million, an increase in U.S. treasury securities of $10.0 million, and an increase in interest-bearing time deposits in other banks of $5.2 million.

Net loans totaled $119.1 million at June 30, 2022, as compared to $110.5 million at December 31, 2021, an increase of $8.5 million or 7.7%. During the six months ended June 30, 2022, we originated $66.3 million of loans, $46.4 million of which were one- to four-family residential real estate loans, and sold $26.1 million of loans in the secondary market. During the six months ended June 30, 2022, one- to four-family residential real estate loans increased $3.6 million, or 5.5%, to $67.8 million, multi- family loans decreased $213 thousand, or 18.5%, to $937 thousand, commercial real estate loans and land loans increased $2.5 million, or 11.0%, to $25.4 million, construction loans increased $5.5 million, or 34.9%, to $21.2 million, home equity and other consumer loans increased $1.1 million, or 19.3% to $6.8 million, and commercial loans increased $1.2 million, or 14.4% to $9.7 million. Management continues to emphasize the origination of high quality loans for retention in the loan portfolio.

Deposits decreased by $2.3 million, or 1.6%, to $139.2 million at June 30, 2022 from $141.5 million at December 31, 2021. Our core deposits, which are all deposits other than certificates of deposit, increased $2.1 million, or 2.1%, to $100.7 million at June 30, 2022 from $98.6 million at December 31, 2021. Certificates of deposit decreased $4.3 million, or 10.0%, to $38.6 million at June 30, 2022 from $42.9 million at December 31, 2021. During the six months ended June 30, 2022, management continued its strategy of pursuing growth in demand accounts and other lower cost core deposits. Management intends to continue its efforts to increase core deposits, with a special emphasis on growth in consumer and business demand deposits.

Shareholders' equity decreased $3.6 million, or 12.0%, to $26.5 million at June 30, 2022 from $30.1 million at December 31, 2021. The decrease resulted from the repurchase of common stock of $3.8 million, offset by net income of $177 thousand during the six months ended June 30, 2022.

EAGLE FINANCIAL BANCORP, INC.

STATEMENTS OF CONDITION

June 30, 2022 and March 31, 2022 (Unaudited)

December 31, 2021 (Audited)

(In Thousands)

ASSETS	6/30/2022			3/31/2022				12/31/2021
Cash and cash equivalents	$	9,960			$	33,254			$	41,007
Interest-bearing time deposits in other banks		8,144				3,984			2,988
Hold-to-maturity securities		10,043				----					----
Loans held for sale		5,106				1,854			2,809
Loans		120,269				114,966				111,746
Less: allowance for loan losses		(1,216)			(1,199)			(1,199)
Loans, net		119,053				113,767				110,547
Premises and equipment, net		4,006			3,974			3,999
Other assets		12,029		13,512		13,499
Total Assets	$	168,341		$	170,345		$	174,849
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing	$	9,491			$	7,894				$	9,361
Interest bearing		129,755				132,954				132,166
Total Deposits		139,246				140,848				141,527
Other Liabilities		2,586				2,948					3,209
Total Liabilities
	141,832					143,796				144,736
Total Shareholders' Equity		26,509					26,549					30,113
Total Liabilities and Shareholders' Equity	$	168,341				$	170,345		$	174,849

Comparison of Operating Results for the Three Months Ended June 30, 2022 and June 30, 2021

General. Our net income for the three months ended June 30, 2022 was $130 thousand, compared to a net income of $124 thousand for the three months ended June 30, 2021, an increase of $6 thousand, or 4.8%. The increase was the result of a $317 thousand increase in gain on sale of foreclosed real estate, a $252 thousand decrease in compensation and benefits, and a $175 thousand increase in net interest income, offset by a $527 thousand decrease in net gain on loan sales, a $109 thousand increase in provision for loan losses, a $49 thousand increase in foreclosed real estate impairment and expenses, net, a $24 thousand increase in legal and professional expense, and a $37 thousand increase in other operating expenses.

Interest Income. Interest income increased $134 thousand, or 12.4%, to $1.2 million for the three months ended June 30, 2022 from $1.1 million for the three months ended June 30, 2021. The average balance of loans increased $10.3 million, or 9.6% to $117.3 million at June 30, 2022 from $107.0 million at June 30, 2021, while the average yield on loans decreased by 21 basis points to 3.80% for the three months ended June 30, 2022 from 4.01% for the three months ended June 30, 2021. The average balance of interest earning deposits and investment securities decreased $3.3 million for the three months ended June 30, 2022,

or 8.4%, from the average balance for the three months ended June 30, 2021, while the average yield on interest earning deposits and investment securities increased by 103 basis points to 1.14% for the three months ended June 30, 2022 from 0.11% for the three months ended June 30, 2021.

Interest Expense. Total interest expense decreased $41 thousand, or 25.3%, to $121 thousand for the three months ended June 30, 2022 from $162 thousand for the three months ended June 30, 2021. This decrease is primarily the result of interest expense on deposits. The average balance of deposits for the three months ended June 30, 2022 increased by $8.0 million, or 6.4% from the average balance for the three months ended June 30, 2021, while the average cost of deposits decreased by 16 basis points to 0.36% for the three months ended June 30, 2022 from 0.52% for the three months ended June 30, 2021. There has been no interest expense on FHLB advances in 2022.

Net Interest Income. Net interest income increased $175 thousand, or 19.0%, to $1.1 million for the three months ended June 30, 2022, compared to $922 thousand for the three months ended June 30, 2021. The increase reflected an increase in total interest and dividend income of $134 thousand, and a decrease in total interest expense of $41 thousand. Our net interest margin increased to 2.85% for the three months ended June 30, 2022 from 2.51% for the three months ended June 30, 2021. Our net interest rate spread increased to 2.81% for the three months ended June 30, 2022 from 2.42% for the three months ended June 30, 2021. The interest rate spread and net interest margin were impacted by the rising interest rate environment during the three months ended June 30, 2022.

Provision for Loan Losses. We recorded a $109 thousand provision for loan loss for the three months ended June 30, 2022, compared to $0 for the three months ended June 30, 2021. The allowance for loan losses was $1.2 million, or 0.90% of total loans, at June 30, 2022, compared to $1.2 million, or 0.98% of total loans, at December 31, 2021. Total nonperforming loans were $1.3 million at June 30, 2022, compared to $649 thousand at December 31, 2021. Classified loans decreased to $3.1 million at June 30, 2022, compared to $3.6 million at December 31, 2021. Total loans past due 30 days or more were $552 thousand and $386 thousand at June 30, 2022 and December 31, 2021, respectively. Net charge-off totaled $92 thousand, and $0 for the three months ended June 30, 2022 and June 30, 2021.

Non-InterestIncome. Non-interest income decreased $240 thousand, or 23.4%, to $787 thousand for the three months ended June 30, 2022 from $1.0 million for the three months ended June 30, 2021. The decrease was primarily due to a $527 thousand decrease in the net gain on sale of loans during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021, offset by a $317 thousand gain on sale of foreclosed real estate during the three months ended June 30, 2022.

Non-InterestExpense. Non-interest expense decreased $181 thousand, or 10.1%, to $1.6 million for the three months ended June 30, 2022, compared to $1.8 million for the three months ended June 30, 2021. The decrease was primarily the result of a decrease in compensation and employee benefits of $252 thousand, offset by an increase in foreclosed real estate expenses, net of $49 thousand, and an increase in legal and professional expenses of $24 thousand during the three months ended June 30, 2022.

Federal Income Taxes. Federal income taxes increased to $40 thousand for the three months ended June 30, 2022, compared to an income tax expense of $39 thousand for the three months ended June 30, 2021.

Comparison of Operating Results for the Six Months Ended June 30, 2022 and June 30, 2021

General. Our net income for the six months ended June 30, 2022 decreased $382 thousand to $177 thousand, compared to $559 thousand for the six months ended June 30, 2021. The reduction was largely driven by a $954 thousand decrease in total non- interest income, and a $57 thousand increase in provision for loan loss, offset by a $434 thousand decrease in total non-interest expense, a $91 thousand decrease in total interest expense, and a $112 thousand decrease in provision for income taxes.

Interest Income. Interest income decreased $8 thousand, or 0.3%, to $2.3 million for the six months ended June 30, 2022 from $2.3 million for the six months ended June 30, 2022. This decrease was attributable to a $117 thousand decrease in interest income on loans receivable, offset by an increase in interest income on other interest-earning deposits of $58 thousand, an increase in FHLB stock dividends of $29 thousand, and an increase in interest income on U.S. treasury securities of $22 thousand. The average balance of loans during the six months ended June 30, 2022 decreased by $6.0 million, or 5.5%, from the average balance for the six months ended June 30, 2021, and the average yield on loans decreased by 42 basis points to 3.79% for the six months ended June 30, 2022 from 4.21% for the six months ended June 30, 2021. The average balance of interest earning deposits and investment securities increased $4.4 million, while the average yield on those deposits and investment securities increased by 55 basis points to 0.68% for the six months ended June 30, 2022 from 0.13% for the six months ended June 30, 2021.

Interest Expense. Total interest expense decreased $91 thousand, or 26.7%, to $249 thousand for the six months ended June 30, 2022 from $340 thousand for the six months ended June 30, 2021, due primarily to a decrease in interest expense on deposits. The average balance of deposits during the six months ended June 30, 2022 increased by $8.7 million, or 7.1% from the average balance for the six months ended June 30, 2021, while the average cost of deposits decreased by 17 basis points to 0.38% for the six months ended June 30, 2022 from 0.55% for the six months ended June 30, 2021.

Net Interest Income. Net interest income increased $83 thousand, or 4.2%, to $2.1 million for the six months ended June 30, 2022, compared to $2.0 million for the six months ended June 30, 2021. The increase reflected a decrease in total interest and dividend income of $8 thousand, and a decrease in total interest expense of $91 thousand. Our net interest margin decreased to 2.69% for the six months ended June 30, 2022 from 2.77% for the six months ended June 30, 2021. Our net interest rate spread decreased to 2.63% for the six months ended June 30, 2022 from 2.69% for the six months ended June 30, 2021. The interest rate spread and net interest margin were impacted by the increasing interest rate environment in the six months ended June 30, 2022.

Provision for Loan Losses. We recorded a $109 thousand provision for loan losses for the six months ended June 30, 2022, as compared to $52 thousand for the six months ended June 30, 2021. The allowance for loan losses was $1.2 million, or 0.90% of total loans, at June 30, 2022, compared to $1.2 million, or 0.98% of total loans, at December 31, 2021. Total nonperforming loans were $1.3 million at June 30, 2022, compared to $649 thousand at December 31, 2021. Classified loans decreased to $3.1 million at June 30, 2022, compared to $3.6 million at December 31, 2021. Classified loans decreased to $3.1 million at June 30, 2022, compared to $3.6 million at December 31, 2021. Total loans past due 30 days or more were $552 thousand and $386 thousand at June 30, 2022 and December 31, 2021, respectively. Net charge-offs totaled $92 thousand for the six months ended June 30, 2021, compared to $240 thousand of net loan charge-offs for the six months ended June 30, 2021.

Non-InterestIncome. Non-interest income decreased $954 thousand, or 39.6%, to $1.5 million for the six months ended June 30, 2022 from $2.4 million for the six months ended June 30, 2021. The decrease was primarily due to a decrease in the net gain on sale of loans of $1.3 million, offset by an increase in the gain on sale of foreclosed real estate of $312 thousand, and a $40 thousand increase in other service charges and fees during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

Non-InterestExpense. Non-interest expense decreased $434 thousand, or 12.0%, to $3.2 million for the six months ended June 30, 2022, compared to $3.6 million for the six months ended June 30, 2021. The decrease was primarily the result of a decrease in compensation and employee benefits of $408 thousand, and a $61 thousand decrease in data processing expenses during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

Federal Income Taxes. Federal income taxes decreased by $112 thousand to an income tax expense of $48 thousand for the six months ended June 30, 2022, compared to an income tax expense of $160 thousand for the six months ended June 30, 2021. The decrease in income tax expense for the six months ended June 30, 2022 was a direct result of the decrease in non-interest income, and the decrease in non-interest expenses for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021, and the resulting decrease in income before income taxes.

EAGLE FINANCIAL BANCORP, INC.

STATEMENTS OF INCOME

Three and Six Months Ended June 30, 2022 and 2021 (Unaudited) (In Thousands, except share and per share data)

	Three Months	Three Months	Six Months	Six Months
			Ended					Ended			Ended			Ended
	6/30/2022	6/30/2021	6/30/2022	6/30/2021
Total interest income	$	1,218	$	1,084	$	2,318	$	2,326
Total interest expense			121						162				249				340
Net interest income			1,097					922				2,069			1,986
Provision for loan losses			109						----				109				52
Net interest income after
provision for loan loss			988						922				1,960			1,934
Total non-interest income			787						1,027			1,453			2,407
Compensation and benefits			981						1,233			2,105			2,513
Occupancy and equipment			100						100				175				201
Data processing			81						131				178				239
Legal and professional fees			109						85				179				207
FDIC Premium Expense			11						9				23					18
Other operating expenses			323						228				528				444
Total non-interest expense			1,605					1,786			3,188			3,622
Net Income Before Taxes			170						163				225				719
Provision for income taxes			40						39				48					160
Net Income		$	130			$		124			$	177			$	559
Basic and Diluted Earnings per Share	$	0.10	$		0.09	$	0.14	$	0.39
Weighted-average shares outstanding
Basic			1,238,184		1,399,524		1,272,706	1,399,084
Diluted			1,247,090			1,399,524		1,279,830	1,399,084

EAGLE FINANCIAL BANCORP, INC.

OTHER FINANCIAL INFORMATION

(In Thousands) (Unaudited)

	6/30/2022		3/31/2022		12/31/21
Asset Quality
Allowance for Loan Losses	$	1,216	$	1,199	$	1,199
Nonperforming Loans/Total Loans		0.94%		0.48%		0.54%
Nonperforming Assets/Total Assets		0.77%		1.40%		1.40%
ALLL / Nonperforming Loans		95.82%		204.61%		181.94%
ALLL / Loans, Gross		0.90%		0.97%		0.98%