10-Q 1 v312421_10q.htm FORM 10-Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

(Mark One)

 

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2012

 

OR

 

¨  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to                     

 

Commission File No. 1-34155

 

First Savings Financial Group, Inc.

(Exact name of registrant as specified in its charter)

 

Indiana   37-1567871
(State or other jurisdiction of
incorporation or organization)		   (I.R.S. Employer
Identification Number)

 

501 East Lewis & Clark Parkway, Indiana 47129

(Address of principal executive offices) (Zip Code)

 

Registrant's telephone number, including area code 1-812-283-0724

  Not applicable  
  Former name, former address and former fiscal year, if changed since last report)  

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x   No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x  No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

(Check one): Large Accelerated Filer ¨ Accelerated Filer ¨
     
  Non-accelerated Filer ¨ Smaller Reporting Company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨  No x

 

The number of shares outstanding of the registrant’s common stock as of April 30, 2012 was 2,364,107.

 

 
 

 

FIRST SAVINGS FINANCIAL GROUP, INC.

 

INDEX

       
Part I Financial Information   Page
       
  Item 1.  Financial Statements    
       
  Consolidated Balance Sheets as of March 31, 2012 and September 30, 2011 (unaudited)   3
       
  Consolidated Statements of Income for the three months and six months ended March 31, 2012 and 2011 (unaudited)   4
       
  Consolidated Statements of Comprehensive Income for the three months and six months ended March 31, 2012 and 2011 (unaudited)   5
       
  Consolidated Statement of Changes in Stockholders’ Equity for the six months ended March 31, 2012 (unaudited)   6
       
  Consolidated Statements of Cash Flows for the six months ended March 31, 2012 and 2011 (unaudited)   7
       
  Notes to Consolidated Financial Statements (unaudited)   8-38
       
  Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations   39-50
       
  Item 3.  Quantitative and Qualitative Disclosures About Market Risk   51-52
       
  Item 4. Controls and Procedures   53
       
Part II Other Information    
       
  Item 1.  Legal Proceedings   54
       
  Item 1A.  Risk Factors   54
       
  Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds   55
       
  Item 3.  Defaults Upon Senior Securities   55
       
  Item 4.  Mine Safety Disclosures   55
       
  Item 5.  Other Information   55
       
  Item 6.  Exhibits   56
       
Signatures     57

 

-2-
 

 

PART I - FINANCIAL INFORMATION

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

   March 31,   September 30, 
(In thousands, except share and per share data)  2012   2011 
         
ASSETS          
Cash and due from banks  $12,440   $18,099 
Interest-bearing deposits with banks   5,891    9,104 
Total cash and cash equivalents   18,331    27,203 
           
Securities available for sale, at fair value   125,189    108,577 
Securities held to maturity   8,742    9,506 
           
Loans held for sale   121    - 
Loans, net   353,690    354,432 
           
Federal Home Loan Bank stock, at cost   4,900    4,400 
Real estate development and construction   3,251    - 
Premises and equipment   10,342    10,444 
Foreclosed real estate   1,024    1,028 
Accrued interest receivable:          
Loans   1,303    1,382 
Securities   909    816 
Cash surrender value of life insurance   8,697    8,548 
Goodwill   5,940    5,940 
Core deposit intangible   2,007    2,154 
Other assets   1,803    2,656 
           
Total Assets  $546,249   $537,086 
           
LIABILITIES          
Deposits:          
Noninterest-bearing  $38,794   $33,426 
Interest-bearing   370,912    354,200 
Total deposits   409,706    387,626 
           
Repurchase agreements   1,325    16,403 
Borrowings from Federal Home Loan Bank   53,100    53,137 
Accrued interest payable   276    399 
Advance payments by borrowers for taxes and insurance   315    330 
Accrued expenses and other liabilities   2,579    2,590 
Total Liabilities   467,301    460,485 
           
STOCKHOLDERS' EQUITY          
Preferred stock of $.01 par value per share Authorized 982,880 shares; none issued   -    - 
Senior Non-Cumulative Perpetual Preferred Stock, Series A, $.01 par value; Authorized 17,120 shares; issued 17,120 shares; aggregate liquidation preference of $17,120   -    - 
Common stock of $.01 par value per share Authorized 20,000,000 shares; issued 2,542,042 shares   25    25 
Additional paid-in capital   41,854    41,729 
Retained earnings - substantially restricted   37,590    35,801 
Accumulated other comprehensive income   3,677    3,354 
Unearned ESOP shares   (1,271)   (1,343)
Unearned stock compensation   (812)   (942)
Less treasury stock, at cost - 177,935 shares (172,333 shares at September 30, 2011)   (2,115)   (2,023)
Total Stockholders' Equity   78,948    76,601 
           
Total Liabilities and Stockholders' Equity  $546,249   $537,086 

 

See notes to consolidated financial statements.

 

-3-
 

 

PART I - FINANCIAL INFORMATION

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

   Three Months Ended   Six Months Ended 
   March 31,   March 31, 
(In thousands, except per share data)  2012   2011   2012   2011 
                 
INTEREST INCOME                    
Loans, including fees  $4,961   $5,079   $10,134   $10,333 
Securities:                    
Taxable   921    1,107    1,802    2,153 
Tax-exempt   273    185    545    354 
Dividend income   42    30    72    58 
Interest-bearing deposits with banks   2    4    6    7 
Total interest income   6,199    6,405    12,559    12,905 
                     
INTEREST EXPENSE                    
Deposits   856    986    1,767    2,047 
Repurchase agreements   2    77    62    157 
Borrowings from Federal Home Loan Bank   265    273    536    555 
Total interest expense   1,123    1,336    2,365    2,759 
                     
Net interest income   5,076    5,069    10,194    10,146 
Provision for loan losses   270    287    589    639 
                     
Net interest income after provision for loan losses   4,806    4,782    9,605    9,507 
                     
NONINTEREST INCOME                    
Service charges on deposit accounts   274    313    575    674 
Net gain on sales of securities available for sale   -    -    -    68 
Unrealized gain (loss) on derivative contract   (12)   (12)   (20)   33 
Net gain on sales of loans   39    33    73    139 
Increase in cash surrender value of life insurance   72    69    149    149 
Commission income   76    53    135    86 
Other income   205    174    414    335 
Total noninterest income   654    630    1,326    1,484 
                     
NONINTEREST EXPENSE                    
Compensation and benefits   2,183    2,057    4,267    4,257 
Occupancy and equipment   437    453    935    898 
Data processing   321    270    622    555 
Advertising   80    70    359    162 
Professional fees   228    153    410    273 
FDIC insurance premiums   98    149    183    283 
Net loss on foreclosed real estate   83    190    110    232 
Other operating expenses   702    691    1,481    1,411 
Total noninterest expense   4,132    4,033    8,367    8,071 
Income before income taxes   1,328    1,379    2,564    2,920 
Income tax expense   364    409    690    866 
Net Income  $964   $970   $1,874   $2,054 
                     
Preferred stock dividends declared   43    -    85    - 
Net Income Available to Common Shareholders  $921   $970   $1,789   $2,054 
                     
Net income per common share:                    
Basic  $0.43   $0.46   $0.83   $0.96 
Diluted  $0.41   $0.44   $0.81   $0.94 
                     
Weighted average common shares outstanding:                    
Basic   2,156,730    2,127,440    2,155,539    2,142,246 
Diluted   2,222,586    2,185,246    2,217,077    2,183,921 

 

See notes to consolidated financial statements.

 

-4-
 

 

PART I - FINANCIAL INFORMATION

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

   Three Months Ended   Six Months Ended 
   March 31,   March 31, 
(In thousands)  2012   2011   2012   2011 
                 
Net Income  $964   $970   $1,874   $2,054 
                     
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX                    
Unrealized gains (losses) on securities available for sale:                    
Unrealized holding gains (losses) arising during the period   1,055    1,287   $534   $(1,225)
Income tax (expense) benefit   (418)   (510)   (211)   416 
Net of tax amount   637    777    323    (809)
                     
Less: reclassification adjustment for realized gains included in net income   -    -    -    (68)
Income tax expense   -    -    -    23 
Net of tax amount   -    -    -    (45)
                     
Other Comprehensive Income (Loss)   637    777    323    (854)
                     
Comprehensive Income  $1,601   $1,747   $2,197   $1,200 

 

See notes to consolidated financial statements.

 

-5-
 

 

PART I - FINANCIAL INFORMATION

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

 

                   Accumulated   Unearned         
                   Other   Stock         
   Preferred   Common   Additional   Retained   Comprehensive   Compensation   Treasury     
(In thousands, except share and per share data)  Stock   Stock   Paid-in Capital   Earnings   Income   and ESOP   Stock   Total 
                                 
Balances at September 30, 2011  $-   $25   $41,729   $35,801   $3,354   $(2,285)  $(2,023)  $76,601 
                                         
Net income   -    -    -    1,874    -    -    -    1,874 
                                         
Change in unrealized gain on securities available for sale, net of reclassification adjustments and tax effect   -    -    -    -    323    -    -    323 
                                         
Preferred stock dividends declared   -    -    -    (85)   -    -    -    (85)
                                         
Stock compensation expense   -    -    76    -    -    130    -    206 
                                         
Shares released by ESOP trust   -    -    49    -    -    72    -    121 
                                         
Purchase of 5,602 treasury shares   -    -    -    -    -    -    (92)   (92)
                                         
Balances at March 31, 2012  $-   $25   $41,854   $37,590   $3,677   $(2,083)  $(2,115)  $78,948 

 

See notes to consolidated financial statements.

 

-6-
 

 

PART I - FINANCIAL INFORMATION

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Six Months Ended 
   March 31, 
(In thousands)  2012   2011 
         
CASH FLOWS FROM OPERATING ACTIVITIES          
Net income  $1,874   $2,054 
Adjustments to reconcile net income to net cash provided by operating activities:          
Provision for loan losses   589    639 
Depreciation and amortization   503    435 
Amortization of premiums and accretion of discounts on securities, net   218    (83)
Loans originated for sale   (3,455)   (8,296)
Proceeds on sales of loans   3,407    10,181 
Gain on sales of  loans   (73)   (139)
Net realized and unrealized loss on foreclosed real estate   20    183 
Net gain on sales of securities available for sale   -    (68)
Unrealized (gain) loss on derivative contract   20    (33)
Increase in cash surrender value of life insurance   (149)   (149)
Deferred income taxes   64    192 
ESOP and stock compensation expense   327    357 
(Increase) decrease in accrued interest receivable   (14)   12 
Decrease in accrued interest payable   (123)   (8)
Change in other assets and liabilities, net   642    (348)
Net Cash Provided By Operating Activities   3,850    4,929 
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of securities available for sale   (35,864)   (26,377)
Proceeds from sales of securities available for sale   -    3,914 
Proceeds from maturities of securities available for sale   9,118    4,156 
Proceeds from maturities of securities held to maturity   274    - 
Principal collected on mortgage-backed securities   10,943    6,756 
Net decrease in loans   8    1,257 
Purchase of Federal Home Loan Bank stock   (500)   - 
Proceeds from redemption of Federal Home Loan Bank stock   -    121 
Proceeds from sale of foreclosed real estate   104    464 
Investments in real estate development and construction   (3,251)   - 
Purchase of premises and equipment   (254)   (903)
Net Cash Used In Investing Activities   (19,422)   (10,612)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Net increase in deposits   22,080    2,830 
Net decrease in repurchase agreements   (15,078)   (209)
Decrease in Federal Home Loan Bank line of credit   (37)   (1,633)
Proceeds from Federal Home Loan Bank advances   35,000    55,000 
Repayment of Federal Home Loan Bank advances   (35,000)   (52,063)
Net increase (decrease) in advance payments by borrowers for taxes and insurance   (15)   19 
Purchase of treasury stock   (92)   (665)
Dividends paid on preferred stock   (158)   - 
Net Cash Provided By Financing Activities   6,700    3,279 
           
Net Decrease in Cash and Cash Equivalents   (8,872)   (2,404)
           
Cash and cash equivalents at beginning of period   27,203    11,278 
           
Cash and Cash Equivalents at End of Period  $18,331   $8,874 

 

See notes to consolidated financial statements.

 

-7-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1.Presentation of Interim Information

 

First Savings Financial Group, Inc. (the “Company”) is the thrift holding company of First Savings Bank, F.S.B. (the “Bank”), a wholly-owned subsidiary. The Bank is a federally-chartered savings bank which provides a variety of banking services to individuals and business customers through twelve locations in southern Indiana. The Bank attracts deposits primarily from the general public and uses those funds, along with other borrowings, primarily to originate residential mortgage, commercial mortgage, construction, commercial business and consumer loans, and to a lesser extent, to invest in mortgage-backed securities and other securities.

 

The Bank has three-wholly owned subsidiaries: First Savings Investments, Inc., a Nevada corporation that manages a securities portfolio, FFCC, Inc., which is an Indiana corporation that participates in commercial real estate development and leasing, and Southern Indiana Financial Corporation, which is currently inactive.

 

In the opinion of management, the unaudited consolidated financial statements include all adjustments considered necessary to present fairly the financial position as of March 31, 2012, the results of operations for the three- and six-month periods ended March 31, 2012 and 2011, and the cash flows for the six-month periods ended March 31, 2012 and 2011. All of these adjustments are of a normal, recurring nature. Such adjustments are the only adjustments included in the unaudited consolidated financial statements. Interim results are not necessarily indicative of results for a full year.

 

The accompanying unaudited consolidated financial statements and notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements, conform to general practices within the banking industry and are presented as permitted by the instructions to Form 10-Q. Accordingly, they do not contain certain information included in the Company’s audited consolidated financial statements and related notes for the year ended September 30, 2011 included in the Form 10-K.

 

The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

 

-8-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

2.Investment Securities

 

Agency bonds and notes, agency mortgage-backed securities and agency collateralized mortgage obligations (“CMO”) include securities issued by the Government National Mortgage Association (“GNMA”), a U.S. government agency, and the Federal National Mortgage Association (“FNMA”), the Federal Home Loan Mortgage Corporation (“FHLMC”) and the Federal Home Loan Bank (“FHLB”), which are U.S. government-sponsored enterprises. Privately-issued CMO are complex securities issued by non-government special-purpose entities that are collateralized by residential mortgage loans and residential home equity loans.

 

Investment securities have been classified according to management’s intent. The amortized cost of securities and their fair values are as follows:

 

       Gross   Gross     
   Amortized   Unrealized   Unrealized   Fair 
   Cost   Gains   Losses   Value 
   (In thousands) 
March 31, 2012:                    
Securities available for sale:                    
                     
Agency bonds and notes  $19,824   $79   $147   $19,756 
Agency mortgage-backed   21,724    551    7    22,268 
Agency CMO   22,462    327    15    22,774 
Privately-issued CMO   10,092    1,936    109    11,919 
Municipal   45,197    3,331    130    48,398 
Subtotal – debt securities   119,299    6,224    408    125,115 
                     
Equity securities   -    74    -    74 
                     
Total securities available for sale  $119,299   $6,298   $408   $125,189 
                     
Securities held to maturity:                    
                     
Agency mortgage-backed  $1,867   $142   $-   $2,009 
Municipal   6,875    371    -    7,246 
                     
Total securities held to maturity  $8,742   $513   $-   $9,255 

 

-9-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

       Gross   Gross     
   Amortized   Unrealized   Unrealized   Fair 
   Cost   Gains   Losses   Value 
   (In thousands) 
September 30, 2011:                    
Securities available for sale:                    
                     
Agency bonds and notes  $12,762   $104   $-   $12,866 
Agency mortgage-backed   17,719    590    -    18,309 
Agency CMO   25,368    330    7    25,691 
Privately-issued CMO   10,037    1,535    176    11,396 
Municipal   37,344    2,915    -    40,259 
Subtotal – debt securities   103,230    5,474    183    108,521 
                     
Equity securities   -    56    -    56 
                     
Total securities available for sale  $103,230   $5,530   $183   $108,577 
                     
Securities held to maturity:                    
                     
Agency mortgage-backed  $2,337   $184   $-   $2,521 
Municipal   7,169    -    -    7,169 
                     
Total securities held to maturity  $9,506   $184   $-   $9,690 

 

The amortized cost and fair value of investment securities as of March 31, 2012 by contractual maturity are shown below. Expected maturities of mortgage-backed securities and CMO may differ from contractual maturities because the mortgages underlying the obligations may be prepaid without penalty.

 

   Available for Sale   Held to Maturity 
   Amortized   Fair   Amortized   Fair 
   Cost   Value   Cost   Value 
   (In thousands) 
                 
Due within one year  $250   $253   $581   $599 
Due after one year through five years   3,099    3,170    2,528    2,633 
Due after five years through ten years   6,372    6,787    2,180    2,334 
Due after ten years   55,300    57,944    1,586    1,680 
    65,021    68,154    6,875    7,246 
                     
Equity securities   -    74    -    - 
CMO   32,554    34,693    -    - 
Mortgage-backed securities   21,724    22,268    1,867    2,009 
                     
   $119,299   $125,189   $8,742   $9,255 

 

-10-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Information pertaining to available for sale securities with gross unrealized losses at March 31, 2012, aggregated by investment category and the length of time that individual securities have been in a continuous loss position, follows:

 

   Number   Gross     
   of Investment   Fair   Unrealized 
   Positions   Value   Losses 
   (Dollars in thousands) 
Securities available for sale:               
                
Continuous loss position less than twelve months:               
Agency bonds and notes   6   $11,926   $147 
Agency mortgage-backed   1    1,240    7 
Agency CMO   4    2,299    15 
Privately-issued CMO   2    158    1 
Municipal bonds   5    3,597    130 
                
Total less than twelve months   18    19,220    300 
                
Continuous loss position more than twelve months:               
Privately-issued CMO   5    863    108 
                
Total more than twelve months   5    863    108 
                
Total securities available for sale   23   $20,083   $408 

 

At March 31, 2012, the Company did not have any securities held to maturity with an unrealized loss.

 

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

 

The total available for sale debt securities in loss positions at March 31, 2012 have depreciated approximately 1.99% from the Company’s amortized cost basis and are fixed and variable rate securities with a weighted-average yield of 2.31% and a weighted-average coupon rate of 2.42% at March 31, 2012.

 

U.S. government agency debt securities, including mortgage-backed securities and collateralized mortgage obligation securities, and municipal bonds in loss positions at March 31, 2012 had depreciated approximately 1.55% from the Company’s amortized cost basis as of March 31, 2012. All of the agency and municipal securities are issued by U.S. government agencies, U.S. government-sponsored enterprises and municipal governments, and are generally secured by first mortgage loans and municipal project revenues.

 

-11-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The unrealized losses on agency and municipal securities relate principally to current interest rates for similar types of securities. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government, its agencies, or other governments, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. As management has the ability to hold debt securities to maturity, or for the foreseeable future if classified as available for sale, no declines are deemed to be other-than-temporary.

 

At March 31, 2012, the five privately-issued CMO securities in loss positions more than 12 months had depreciated approximately 11.12% from the Company’s carrying value and include securities collateralized by residential mortgage loans and residential home equity loans. Five of these securities with fair values totaling $917,000 and unrealized losses of $83,000 at March 31, 2012 were rated below investment grade by a nationally recognized statistical rating organization.

 

The Company evaluates the existence of a potential credit loss component related to the decline in fair value of the privately-issued CMO portfolio each quarter using an independent third party analysis. At March 31, 2012, the Company held twenty privately-issued CMO securities acquired in a 2009 bank acquisition with an aggregate carrying value of $6.1 million and fair value of $7.3 million that have been downgraded to a substandard regulatory classification due to a downgrade of the security’s credit quality rating by various rating agencies. Based on the independent third party analysis of the expected cash flows, management has determined that the declines in value for these securities are temporary and, as a result, no other-than-temporary impairment has been recognized on the privately-issued CMO portfolio. While the Company did not recognize a credit-related impairment loss at March 31, 2012, additional deterioration in market and economic conditions may have an adverse impact on the credit quality in the future and therefore, require a credit-related impairment charge.

 

The Company realized gross gains on sales of available for sale municipal securities of $68,000 for the six months ended March 31, 2011.

 

-12-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

3.Loans and Allowance for Loan Losses

 

Loans at March 31, 2012 and September 30, 2011 consisted of the following:

 

   March 31,   September 30, 
   2012   2011 
   (In thousands) 
Real estate mortgage:          
1-4 family residential  $167,150   $169,353 
Multi-family residential   24,426    24,909 
Commercial   80,500    73,513 
Residential construction   9,052    8,002 
Commercial construction   4,147    4,144 
Land and land development   12,820    12,947 
Commercial business loans   37,007    40,628 
Consumer:          
Home equity loans   14,287    15,210 
Auto loans   8,577    9,827 
Other consumer loans   3,747    4,514 
Gross loans   361,713    363,047 
           
Deferred loan origination fees and costs, net   481    558 
Undisbursed portion of loans in process   (3,581)   (4,501)
Allowance for loan losses   (4,923)   (4,672)
           
Loans, net  $353,690   $354,432 

 

During the six-month period ended March 31, 2012, there was no significant change in the Company’s lending activities or methodology used to estimate the allowance for loan losses as disclosed in the Company’s Annual Report on Form 10-K for the year ended September 30, 2011.

 

-13-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The following table provides the components of the recorded investment in loans for each portfolio class as of March 31, 2012:

 

   Residential
Real Estate		   Commercial
Real Estate		   Multifamily   Construction   Land & Land
Development		   Commercial
Business		   Consumer   Total 
   (In thousands) 
                                 
Recorded Investment in Loans:                                        
Principal loan balance  $167,150   $80,500   $24,426   $9,618   $12,820   $37,007   $26,611   $358,132 
                                         
Accrued interest receivable   630    276    77    24    41    159    96    1,303 
                                         
Net deferred loan origination fees and costs   560    (64)   (3)   (6)   (7)   (24)   25    481 
                                         
Recorded investment in loans  $168,340   $80,712   $24,500   $9,636   $12,854   $37,142   $26,732   $359,916 
                                         
                                         
Recorded Investment in Loans as Evaluated for Impairment:                                        
Individually evaluated for impairment  $2,043   $1,682   $-   $174   $340   $98   $215   $4,552 
                                         
Collectively evaluated for impairment   165,561    78,834    24,500    9,462    12,514    37,044    26,478    354,393 
                                         
Acquired with deteriorated credit quality   736    196    -    -    -    -    39    971 
                                         
Ending balance  $168,340   $80,712   $24,500   $9,636   $12,854   $37,142   $26,732   $359,916 

 

-14-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

The following table provides the components of the recorded investment in loans for each portfolio class as of September 30, 2011:

 

   Residential
Real Estate		   Commercial
Real Estate		   Multifamily   Construction   Land & Land
Development		   Commercial
Business		   Consumer   Total 
   (In thousands) 
                                 
Recorded Investment in Loans:                                        
Principal loan balance  $169,353   $73,513   $24,909   $7,645   $12,947   $40,628   $29,551   $358,546 
                                         
Accrued interest receivable   622    335    84    18    59    148    116    1,382 
                                         
Net deferred loan origination fees and costs   619    (34)   (3)   (6)   (6)   (44)   32    558 
                                         
Recorded investment in loans  $170,594   $73,814   $24,990   $7,657   $13,000   $40,732   $29,699   $360,486 
                                         
                                         
Recorded Investment in Loans as Evaluated for Impairment:                                        
Individually evaluated for impairment  $3,758   $1,133   $-   $174   $340   $2   $215   $5,622 
                                         
Collectively evaluated for impairment   166,427    72,100    24,990    7,483    12,660    40,730    29,444    353,834 
                                         
Acquired with deteriorated credit quality   769    581    -    -    -    -    40    1,390 
                                         
Ending balance  $170,954   $73,814   $24,990   $7,657   $13,000   $40,732   $29,699   $360,846 

 

-15-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

An analysis of the allowance for loan losses as of March 31, 2012 is as follows:

 

   Residential
Real Estate		   Commercial
Real Estate		   Multifamily   Construction   Land & Land
Development		   Commercial
Business		   Consumer   Total 
   (In thousands)     
Ending Allowance Balance Attributable to Loans:                                        
Individually evaluated for impairment  $60   $70   $-   $-   $-   $-   $11   $141 
                                         
Collectively evaluated for impairment   919    1,542    647    64    33    1,379    198    4,782 
                                         
Acquired with deteriorated credit quality   -    -    -    -    -    -    -    - 
                                         
Ending balance  $979   $1,612   $647   $64   $33   $1,379   $209   $4,923 

 

An analysis of the allowance for loan losses as of September 30, 2011 is as follows:

 

   Residential
Real Estate		   Commercial
Real Estate		   Multifamily   Construction   Land & Land
Development		   Commercial
Business		   Consumer   Total 
   (In thousands)     
Ending Allowance Balance Attributable to Loans:                                        
Individually evaluated for impairment  $84   $70   $-   $-   $-   $-   $31   $185 
                                         
Collectively evaluated for impairment   749    1,244    604    56    53    1,525    256    4,487 
                                         
Acquired with deteriorated credit quality   -    -    -    -    -    -    -    - 
                                         
Ending balance  $833   $1,314   $604   $56   $53   $1,525   $287   $4,672 

 

-16-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

An analysis of the changes in the allowance for loan losses for the three months ended March 31, 2012 is as follows:

 

   Residential
Real Estate		   Commercial
Real Estate		   Multifamily   Construction   Land & Land
Development		   Commercial
Business		   Consumer   Total 
   (In thousands)     
Changes in Allowance for Loan Losses:                                        
Beginning balance  $932   $1,418   $593   $56   $30   $1,427   $247   $4,703 
Provisions   56    208    54    8    3    (48)   (11)   270 
Charge-offs   (104)   (14)   -    -    -    -    (40)   (158)
Recoveries   95    -    -    -    -    -    13    108 
                                         
Ending balance  $979   $1,612   $647   $64   $33   $1,379   $209   $4,923 

 

An analysis of the changes in the allowance for loan losses for the six months ended March 31, 2012 is as follows:

 

   Residential
Real Estate		   Commercial
Real Estate		   Multifamily   Construction   Land & Land
Development		   Commercial
Business		   Consumer   Total 
   (In thousands)     
Changes in Allowance for Loan Losses:                                        
Beginning balance  $833   $1,314   $604   $56   $53   $1,525   $287   $4,672 
Provisions   330    312    43    8    (20)   (147)   63    589 
Charge-offs   (290)   (14)   -    -    -    -    (167)   (471)
Recoveries   106    -    -    -    -    1    26    133 
                                         
Ending balance  $979   $1,612   $647   $64   $33   $1,379   $209   $4,923 

 

-17-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

An analysis of the changes in the allowance for loan losses for the three months ended March 31, 2011 is as follows:

 

   Residential
Real Estate		   Commercial
Real Estate		   Multifamily   Construction   Land & Land
Development		   Commercial
Business		   Consumer   Total 
   (In thousands)     
Changes in Allowance for Loan Losses:                                        
Beginning balance  $1,203   $896   $550   $133   $29   $787   $361   $3,959 
Provisions   44    (16)   4    12    8    223    12    287 
Charge-offs   (24)   -    -    -    -    (53)   (42)   (119)
Recoveries   13    -    -    -    -    4    13    30 
                                         
Ending balance  $1,236   $880   $554   $145   $37   $961   $344   $4,157 

 

An analysis of the changes in the allowance for loan losses for the six months ended March 31, 2011 is as follows:

 

   Residential
Real Estate		   Commercial
Real Estate		   Multifamily   Construction   Land & Land
Development		   Commercial
Business		   Consumer   Total 
   (In thousands)     
Changes in Allowance for Loan Losses:                                        
Beginning balance  $1,242   $600   $369   $218   $62   $891   $429   $3,811 
Provisions   218    285    185    (65)   (25)   62    (21)   639 
Charge-offs   (237)   (5)   -    (8)   -    (53)   (94)   (397)
Recoveries   13    -    -    -    -    61    30    104 
                                         
Ending balance  $1,236   $880   $554   $145   $37   $961   $344   $4,157 

 

-18-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The following table presents impaired loans individually evaluated for impairment as of March 31, 2012 and for the three and six months ended March 31, 2012 and 2011. The Company did not recognize any interest income on impaired loans for the three and six months ended March 31, 2012 and 2011.

 

   At March 31, 2012   Three Months Ended March 31,   Six Months Ended March 31, 
   Recorded
Investment		   Unpaid
Principal
Balance		   Related
Allowance		   2012
Average
Recorded
Investment		   2011
Average
Recorded
Investment		   2012
Average
Recorded
Investment		   2011
Average
Recorded
Investment		 
   (In thousands) 
Loans with no related allowance recorded:                                   
Residential real estate  $1,893   $2,254   $-   $2,706   $2,533   $2,999   $2,475 
Commercial real estate   1,444    1,461    -    1,121    1,196    1,047    1,187 
Multifamily   -    -    -    -    16    -    11 
Construction   174    174    -    174    548    174    572 
Land and land development   340    346    -    340    397    340    265 
Commercial business   98    98    -    49    154    33    217 
Consumer   116    118    -    87    235    102    247 
                                    
   $4,065   $4,451   $-   $4,477   $5,079   $4,695   $4,974 
                                    
Loans with an allowance recorded:                                   
Residential real estate  $150   $151   $60   $149   $345   $158   $552 
Commercial real estate   238    235    70    238    486    237    324 
Multifamily   -    -    -    -    -    -    - 
Construction   -    -    -    -    140    -    140 
Land and land development   -    -    -    -    -    -    - 
Commercial business   -    -    -    -    -    -    - 
Consumer   99    99    11    90    98    87    97 
                                    
   $487   $485   $141   $477   $1,069   $482   $1,113 
                                    
Total:                                   
Residential real estate  $2,043   $2,405   $60   $2,855   $2,878   $3,157   $3,027 
Commercial real estate   1,682    1,696    70    1,359    1,682    1,284    1,511 
Multifamily   -    -    -    -    16    -    11 
Construction   174    174    -    174    688    174    712 
Land and land development   340    346    -    340    397    340    265 
Commercial business   98    98    -    49    154    33    217 
Consumer   215    217    11    177    333    189    344 
                                    
   $4,552   $4,936   $141   $4,954   $6,148   $5,177   $6,087 

 

-19-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The following table presents impaired loans individually evaluated for impairment as of September 30, 2011.

 

   Recorded
Investment		   Unpaid
Principal
Balance		   Related
Allowance		 
   (In thousands) 
 
Loans with no related allowance recorded:
Residential real estate  $3,584   $3,953   $- 
Commercial real estate   898    899    - 
Multifamily   -    -    - 
Construction   174    174    - 
Land and land development   340    346    - 
Commercial business   2    2    - 
Consumer   134    136    - 
                
   $5,132   $5,510   $- 
                
Loans with an allowance recorded:
Residential real estate  $174   $175   $84 
Commercial real estate   235    235    70 
Multifamily   -    -    - 
Construction   -    -    - 
Land and land development   -    -    - 
Commercial business   -    -    - 
Consumer   81    81    31 
                
   $490   $491   $185 
                
Total:     
Residential real estate  $3,758   $4,128   $84 
Commercial real estate   1,133    1,134    70 
Multifamily   -    -    - 
Construction   174    174    - 
Land and land development   340    346    - 
Commercial business   2    2    - 
Consumer   215    217    31 
                
   $5,622   $6,001   $185 

 

-20-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Nonperforming loans consists of nonaccrual loans and loans over 90 days past due and still accruing interest. The following table presents the recorded investment in nonperforming loans by class of loans at March 31, 2012:

 

   Nonaccrual
Loans		   Loans 90+
Days
Past Due
Still Accruing		   Total
Nonperforming
Loans		 
   (In thousands) 
             
Residential real estate  $2,043   $270   $2,313 
Commercial real estate   1,682    -    1,682 
Multifamily   -    -    - 
Construction   174    -    174 
Land and land development   340    -    340 
Commercial business   98    397    495 
Consumer   215    5    220 
                
Total  $4,552   $672   $5,224 

 

The following table presents the recorded investment in nonperforming loans by class of loans at September 30, 2011:

 

   Nonaccrual
Loans		   Loans 90+
Days
Past Due
Still Accruing		   Total
Nonperforming
Loans		 
   (In thousands) 
             
Residential real estate  $3,758   $603   $4,361 
Commercial real estate   1,133    949    2,082 
Multifamily   -    -    - 
Construction   174    -    174 
Land and land development   340    -    340 
Commercial business   2    99    101 
Consumer   215    61    276 
                
Total  $5,622   $1,712   $7,334 

 

-21-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The following table presents the aging of the recorded investment in past due loans at March 31, 2012 by class of loans:

 

   30-59
Days
Past Due		   60-89
Days
Past Due		   90 +
Days
Past Due		   Total
Past Due		   Current   Total
Loans		 
   (In thousands) 
                         
Residential real estate  $3,140   $1,909   $1,848   $6,897   $161,443   $168,340 
Commercial real estate   547    6    1,609    2,162    78,550    80,712 
Multifamily   45    -    -    45    24,455    24,500 
Construction   -    -    174    174    9,462    9,636 
Land and land development   60    -    340    400    12,454    12,854 
Commercial business   135    27    495    657    36,485    37,142 
Consumer   442    54    122    618    26,114    26,732 
                               
Total  $4,369   $1,996   $4,588   $10,953   $348,963   $359,916 

 

The following table presents the aging of the recorded investment in past due loans at September 30, 2011 by class of loans:

 

   30-59
Days
Past Due		   60-89
Days
Past Due		   90 +
Days
Past Due		   Total
Past Due		   Current   Total
Loans		 
   (In thousands) 
                         
Residential real estate  $4,145   $842   $2,213   $7,200   $163,754   $170,954 
Commercial real estate   216    400    2,003    2,619    71,195    73,814 
Multifamily   -    -    -    -    24,990    24,990 
Construction   -    -    174    174    7,483    7,657 
Land and land development   47    -    341    388    12,612    13,000 
Commercial business   122    932    101    1,155    39,577    40,732 
Consumer   246    274    147    667    29,032    29,699 
                               
Total  $4,776   $2,448   $4,979   $12,203   $348,643   $360,846 

 

-22-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, public information, historical payment experience, credit documentation, and current economic trends, among other factors. The Company classifies loans based on credit risk at least quarterly. The Company uses the following regulatory definitions for risk ratings:

 

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

 

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

 

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

 

Loss: Loans classified as loss are considered uncollectible and of such little value that their continuance on the Company’s books as an asset, without establishment of a specific valuation allowance or charge-off, is not warranted.

 

-23-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. As of March 31, 2012, and based on the most recent analysis performed, the recorded investment in loans by risk category was as follows:

 

 

   Residential
Real Estate		   Commercial
Real Estate		   Multifamily   Construction   Land and Land
Development		   Commercial
Business		   Consumer   Total 
   (In thousands) 
                                 
Pass  $153,894   $74,728   $21,362   $9,462   $12,102   $34,674   $25,964   $332,186 
Special Mention   2,815    2,293    322    -    377    1,508    93    7,408 
Substandard   10,990    3,453    2,816    174    375    960    625    19,393 
Doubtful   641    238    -    -    -    -    50    929 
Loss   -    -    -    -    -    -    -    - 
                                         
Total  $168,340   $80,712   $24,500   $9,636   $12,854   $37,142   $26,732   $359,916 

 

As of September 30, 2011, and based on the most recent analysis performed, the recorded investment in loans by risk category was as follows:

 

   Residential
Real Estate		   Commercial
Real Estate		   Multifamily   Construction   Land and Land
Development		   Commercial
Business		   Consumer   Total 
   (In thousands) 
                                 
Pass  $157,240   $67,572   $22,699   $7,483   $12,223   $37,639   $28,869   $333,725 
Special Mention   2,044    2,296    327    -    402    1,819    74    6,962 
Substandard   10,696    3,711    1,964    174    375    1,272    650    18,842 
Doubtful   974    235    -    -    -    2    106    1,317 
Loss   -    -    -    -    -    -    -    - 
                                         
Total  $170,954   $73,814   $24,990   $7,657   $13,000   $40,732   $29,699   $360,846 

 

-24-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Modification of a loan is considered to be a troubled debt restructuring (“TDR”) if the debtor is experiencing financial difficulties and the Company grants a concession to the debtor that it would not otherwise consider. By granting the concession, the Company expects to obtain more cash or other value from the debtor, or to increase the probability of receipt, than would be expected by not granting the concession. The concession may include, but is not limited to, reduction of the stated interest rate of the loan, reduction of accrued interest, extension of the maturity date or reduction of the face amount or maturity amount of the debt. A concession will be granted when, as a result of the restructuring, the Company does not expect to collect all amounts due, including interest at the original stated rate. A concession may also be granted if the debtor is not able to access funds elsewhere at a market rate for debt with similar risk characteristics as the restructured debt. The Company’s determination of whether a loan modification is a TDR considers the individual facts and circumstances surrounding each modification.

 

Loans modified in a TDR may be retained in accrual status if the borrower has maintained a period of performance in which the borrower’s lending relationship was not greater than ninety days delinquent at the time of restructuring and the Company determines the future collection of principal and interest is reasonably assured. Loans modified in a TDR that are placed on nonaccrual status at the time of restructuring will continue in nonaccrual status until the Company determines the future collection of principal and interest is reasonably assured, which generally requires that the borrower demonstrate a period of performance according to the restructured terms of at least six consecutive months.

 

The following table summarizes the Company’s recorded investment in TDRs by class of loan and accrual status at March 31, 2012 and September 30, 2011. There was no specific reserve included in the allowance for loan losses related to TDRs at March 31, 2012 or September 30 2011.

 

   Accruing   Nonaccrual   Total 
   (In thousands) 
March 31, 2012:               
Residential real estate  $1,914   $-   $1,914 
Commercial real estate   1,310    -    1,310 
Multifamily   2,379    -    2,379 
                
Total  $5,603   $-   $5,603 
                
September 30, 2011:               
Residential real estate  $1,499   $-   $1,499 
Commercial real estate   812    -    812 
                
Total  $2,311   $-   $2,311 

 

-25-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

The following table summarizes information in regard to TDRs that were restructured during the three- and six-month periods ended March 31, 2012:

 

   Number of
Loans		   Pre-
Modification
Principal
Balance		   Post-
Modification
Principal
Balance		 
   (In thousands) 
             
Three Months Ended March 31, 2012:          
Residential real estate   5   $593   $603 
Commercial real estate   1    772    506 
Multifamily   1    1,797    2,313 
                
Total   7   $3,162   $3,422 
                
                
Six Months Ended March 31, 2012:          
Residential real estate   7   $790   $789 
Commercial real estate   1    772    506 
Multifamily   1    1,797    2,313 
                
Total   9   $3,359   $3,608 

 

For the TDRs listed above, the terms of modification included temporary interest-only payment periods, reduction of the state interest rate, extension of the maturity date, and the renewal of matured loans where the debtor was unable to access funds elsewhere at a market interest rate for debt with similar risk characteristics.

 

The Company has not committed to lend any additional amounts as of March 31, 2012 and September 30, 2011 to customers with outstanding loans that are classified as TDRs.

 

During the six-month period ended March 31, 2012, the Company had one TDR with a balance of $262,000 that was modified within the previous twelve months for which there was a payment default (defined as more than 90 days past due). The Company recognized a net charge-off of $42,000 for this TDR during the three-month period ended March 31, 2012.

 

 

4.Real Estate Development and Construction

 

On March 22, 2011 the Company acquired a 4.077 acre parcel of land in New Albany, Indiana for $2.97 million. On April 5, 2012, the Bank received approval from the Office of the Comptroller of the Currency (“OCC”) to develop the land for retail purposes through its subsidiary, FFCC. The retail development may include a future branch location, but the Bank has not yet filed an application with the OCC seeking approval to locate a branch on the site. The total cost of the development is expected to be approximately $6.9 million, including the $3.3 million paid as of March 31, 2012. The development costs will be partially funded by a $5 million loan commitment from another financial institution. The loan commitment is for a 10 year term loan with a fixed interest rate of 4% for the first six years of the loan term, then adjusting annually thereafter to the one-year LIBOR rate plus 250 basis points. The development is expected to be completed by December 31, 2013.

 

-26-
 

 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

5.Supplemental Disclosure for Earnings Per Share

 

When presented, basic earnings per share are computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Earnings per share information is presented below for the three-month and six-month periods ended March 31, 2012 and 2011.

 

   Three Months Ended   Six Months Ended 
   March 31,   March 31, 
   2012   2011   2012   2011 
   (Dollars in thousands, except per share data) 
     
Basic:                    
Earnings:                    
Net income  $964   $970   $1,874   $2,054 
Less: Preferred stock dividends declared   (43)   -    (85)   - 
                     
Net income available to common shareholders  $921   $970   $1,789   $2,054 
                     
Shares:                    
Weighted average common shares outstanding   2,156,730    2,127,440    2,155,539    2,142,246 
                     
Net income per common share, basic  $0.43   $0.46   $0.83   $0.96 
                     
Diluted:                    
Earnings:                    
Net income  $964   $970   $1,874   $2,054 
Less: Preferred stock dividends declared   (43)   -    (85)   - 
                     
Net income available to common shareholders  $921   $970   $1,789   $2,054 
                     
Shares:                    
Weighted average common shares outstanding   2,156,730    2,127,440    2,155,539    2,142,246 
Add: Dilutive effect of outstanding options   48,435    39,937    45,759    27,827 
Add: Dilutive effect of restricted stock   17,422    17,869    15,779    13,848 
Weighted average common shares outstanding as adjusted   2,222,586    2,185,246    2,217,077    2,183,921 
                     
Net income per common share, diluted  $0.41   $0.44   $0.81   $0.94 

 

Unearned ESOP and nonvested restricted stock shares are not considered as outstanding for purposes of computing weighted average common shares outstanding.

 

-27-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

6.Supplemental Disclosures of Cash Flow Information

 

   Six Months Ended 
   March 31, 
   2012   2011 
   (In thousands) 
Cash payments for:          
Interest  $2,764   $3,326 
Taxes   199    490 
           
Transfers from loans to foreclosed real estate   787    882 
           
Proceeds from sales of foreclosed real estate financed through loans   647    221 

 

7.Fair Value Measurements and Disclosures about Fair Value of Financial Instruments

 

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements, provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under FASB ASC Topic 820 are described as follows:

 

Level 1:Inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets. A quoted market price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available.

 

Level 2:Inputs to the valuation methodology include quoted market prices for similar assets or liabilities in active markets; inputs to the valuation methodology include quoted market prices for identical or similar assets or liabilities in markets that are not active; or inputs to the valuation methodology that are derived principally from or can be corroborated by observable market data by correlation or other means.

 

Level 3:Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Level 3 assets and liabilities include financial instruments whose value is determined using discounted cash flow methodologies, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

 

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets carried at fair value or the lower of cost or fair value. The table below presents the balances of financial assets measured at fair value on a recurring and nonrecurring basis as of March 31, 2012 and September 30, 2011. The Company had no liabilities measured at fair value as of March 31, 2012 or September 30, 2011.

 

-28-
 

 

FIRST SAVINGS FINANCIAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

   Carrying Value 
   Level 1   Level 2   Level 3   Total 
   (In thousands) 
March 31, 2012:                    
Assets Measured - Recurring Basis:                    
Securities available for sale:                    
Agency bonds and notes  $-   $19,756   $-   $19,756 
Agency mortgage-backed   -    22,268    -    22,268 
Agency CMO   -    22,774    -    22,774 
Privately-issued CMO   -    11,919    -    11,919 
Municipal   -    48,398    -    48,398 
Equity securities   74    -    -    74 
Total securities available for sale  $74   $125,115   $-   $125,189 
                     
Interest rate cap contract  $-   $30   $-   $30 
                     
Assets Measured - Nonrecurring Basis:                    
Impaired loans  $-   $4,411   $-   $4,411 
Loans held for sale   -    121    -    121 
Foreclosed real estate   -    1,024    -    1,024 
                     
September 30, 2011:                    
Assets Measured - Recurring Basis:                    
Securities available for sale:                    
Agency bonds and notes  $-   $12,866   $-   $12,866 
Agency mortgage-backed   -    18,309    -    18,309 
Agency CMO   -    25,691    -    25,691 
Privately-issued CMO   -    11,396    -    11,396 
Municipal   -    40,259    -    40,259 
Equity securities   56    -    -    56 
Total securities available for sale  $56   $108,521   $-   $108,577