Infinity Bank Announces Third Quarter 2020 Financial Results

SANTA ANA, CA / ACCESSWIRE / November 4, 2020 / Infinity Bank (OTCQB:INFT) (the "Bank") announced financial results as of September 30, 2020.

Financial Highlights for the third quarter of 2020:

Total loans increased by $21 million
Total deposits increased by $10 million
The net loss for the quarter decreased 18% from the prior quarter
Net income (before provisions for loan and lease losses) totaled $74 thousand for the quarter

Loans

Total loans increased by $21 million, or 18.3% to $136.1 million for the quarter ended September 30, 2020 compared to the second quarter of 2020 and by $62.2 million, or 84.3% compared to December 31, 2019. During the third quarter of 2020, the Bank increased new loan commitments by $23.3 million of which 53% were commercial loans. Also included in the loan portfolio is $28 million of loans funded in the second quarter under the Paycheck Protection Program ("PPP") that were authorized under the CARES Act. The Bank increased its loan to deposit ratio to 89.1% as of September 30, 2020 from 80.6% and 56.7% as of June 30, 2020 and September 30, 2019, respectively. PPP Loans are guaranteed by the U.S. Government and, therefore, do not require an allowance for loan and lease losses ("ALLL") to be allocated to them. As a result, while the Bank maintained an ALLL ratio of 1.25% on non-PPP loans, the overall ratio of ALLL to total loans remained at 1.0%.

Deposits

Total deposits were $152.7 million, an increase of $10 million, or 7.0% for the quarter ended September 30, 2020 compared to June 30, 2020. Noninterest-bearing demand accounts decreased by $1.5 million, or 2.4% for the quarter ended September 30, 2020 compared to June 30, 2020. Interest-bearing deposits increased by $11.6 million, or 20.0% compared to the quarter ended, June 30, 2020. As a result of the PPP loan program, during the second quarter the Bank experienced deposit growth in the form of both loan proceeds deposited into the Bank and the addition of several key relationships.

The cost of total deposits for the quarter ended September 30, 2020 was 39 basis points, a decrease of 3 basis points compared to quarter ended June 30, 2020 and a decrease of 15 basis points when compared to the same time last year.

Net-Interest Income

Net-interest income totaled $1.6 million an increase of $366 thousand, or 30.4% for the quarter ended September 30, 2020 from previous quarter ended June 30, 2020. Net-interest income grew by $673 thousand, or 74.9% when compared to the same period last year. The Bank's primary source of revenue was driven by interest income from loans. The Bank's net interest margin increased by 34 basis points at the end of the quarter ended September 30, 2020 from the previous linked quarter and a decrease of 39 basis points compared to the same period in 2019. The increase in the net interest margin during the third quarter of 2020 was driven by the increase in loans outstanding which are higher yielding than other assets, such as cash or investments. The decrease in the net interest margin when compared to the prior year was primarily driven by the substantial lowering of a key rate by the Federal Reserve's Open Market Committee ("FOMC"). In particular, the FOMC lowered the target federal funds rates by 150 basis points during March of this year. That decrease continues to have a direct impact on the Bank's net interest margin as many of our loans are tied to rate indices that are directly or indirectly based on the target federal funds rate set by the FOMC.

Non-Interest Income

At September 30, 2020, total non-interest income totaled $51 thousand, a decrease of $2 thousand, or 3.8% from previous quarter ended June 30, 2020. Non-interest income decreased $81 thousand, or 61.4% when compared to this same period last year.

Non-Interest Expense

The Bank's total non-interest expense increased by $281 thousand, or 22.2% for the quarter ended September 30, 2020 versus the previous quarter ended June 30, 2020. Non-interest expense increased $394 thousand, or 34.1% when compared to the comparable period ended September 30, 2019. The increase in non-interest expense from the second quarter of 2020 compared to the third quarter of 2020 was primarily driven by an increase in employee expense. This increase was driven by incentives paid and onetime charges related to internal restructuring.

Net Income

The Bank recorded a net loss of $165 thousand ($0.05 per share), a decrease of 18% for the quarter ended September 30, 2020 versus a net loss of $201 thousand ($0.06 per share) and a net loss of $298 thousand ($0.09 per share) compared to the quarter ended, June 30, 2020 and quarter ended, September 30, 2019, respectively. The Bank continues to inch closer to profitability. The total of non-cash transactions related to the ALLL and employee stock options was $315 thousand for the third quarter and $265 thousand for the second quarter of 2020. If these were not included, the Bank would have a net income of $150 thousand and $64 thousand for the quarters ended September 30, 2020 and June 30, 2020, respectively.

Capital

At September 30, 2020, the Bank remained well-capitalized under the regulatory capital ratio guidelines with a tier 1 risk-based capital ratio of 15.7%, a total risk-based capital ratio of 16.5%, and a tier 1 leverage ratio of 13.3%.

ABOUT INFINITY BANK

Infinity Bank is a community bank that commenced operations in February, 2018. The Bank is focused on serving the banking needs of commercial businesses, professional service entities, their owners, employees and families. The Bank offers a broad selection of depository products and services as well as business loan and commercial real estate financing products uniquely designed for each client. For more information about Infinity Bank and its services, please visit the website at www.goinfinitybank.com.

Contact Information:

Bala Balkrishna Victor Guerrero
CEO President, COO & CFO
Phone: (657) 223-1000 Phone: (657) 223-1000
Bala@goinfinitybank.com Victor@goinfinitybank.com

This news release contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements may be identified by use of words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "likely," "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and similar terms and phrases, including references to assumptions. Forward-looking statements are based upon various assumptions and analyses made by the Bank considering management's experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guaranteeing of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Bank's control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Accordingly, you should not place undue reliance on such statements. Factors that could affect the Bank's results include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Bank's control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the business of the Bank; unanticipated or significant increases in loan losses; changes in accounting principles, policies or guidelines may cause the Bank's financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Bank's financial condition or results of operations; general economic conditions, either nationally or locally in some or all areas in which the Bank conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Bank currently anticipates; legislation or regulatory changes may adversely affect the Bank's business; technological changes may be more difficult or expensive than the Bank anticipates; there may be failures or breaches of information technology security systems; success or consummation of new business initiatives may be more difficult or expensive than the Bank anticipates; or litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Bank anticipates.

 
INFINITY BANK
UNAUDITED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
 

 
September 30,
2020
 
 
June 30,
2020
 
 
December 31,
2019
 

ASSETS:

Cash and due from banks

 
$
27,952
 
 
$
42,136
 
 
$
13,476
 

Securities available for sale

 
 
24,350
 
 
 
21,130
 
 
 
27,788
 

Total Loans

 
 
136,074
 
 
 
115,036
 
 
 
73,840
 

Allowance for loan and lease losses

 
 
(1,387
)
 
 
(1,148
)
 
 
(923
)

Net Loans

 
 
134,687
 
 
 
113,888
 
 
 
72,917
 

Premises and equipment, net

 
 
1,662
 
 
 
1,754
 
 
 
1,960
 

Other assets

 
 
1,319
 
 
 
1,100
 
 
 
491
 

TOTAL ASSETS

 
$
189,970
 
 
$
180,008
 
 
$
116,632
 

LIABILITIES

Deposits:

Non-interest bearing

 
$
63,258
 
 
$
64,800
 
 
$
43,451
 

Interest bearing

 
 
69,393
 
 
 
57,820
 
 
 
45,567
 

Time certificates of deposit

 
 
20,037
 
 
 
20,037
 
 
 
–
 

Total deposits

 
 
152,688
 
 
 
142,657
 
 
 
89,018
 

Other liabilities

 
 
11,768
 
 
 
11,801
 
 
 
1,835
 

TOTAL LIABILITIES

 
 
164,456
 
 
 
154,458
 
 
 
90,853
 

Stockholders' Equity:

Common stock

 
 
32,881
 
 
 
32,806
 
 
 
32,652
 

Accumulated deficit

 
 
(6,866
)
 
 
(6,866
)
 
 
(4,934
)

Net income (loss)

 
 
(548
)
 
 
(383
)
 
 
(1,932
)

Accumulated other comprehensive gain

 
 
47
 
 
 
(7
)
 
 
(7
)

TOTAL STOCKHOLDERS' EQUITY

 
 
25,514
 
 
 
25,550
 
 
 
25,779
 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 
$
189,970
 
 
$
180,008
 
 
$
116,632
 

 
INFINITY BANK
UNAUDITED STATEMENTS OF OPERATIONS
(Dollars in thousands except share and per share amounts)
 

 
For the Three
Months Ended
 
 
For the Nine
Months Ended
 

 
September 30,
2020
 
 
June 30,
2020
 
 
September 30,
2019
 
 
September 30,
2020
 
 
September 30,
2019
 

Interest Income:

Loans

 
$
1,688
 
 
$
1,307
 
 
$
651
 
 
$
4,154
 
 
$
1,377
 

Investment securities

 
 
29
 
 
 
19
 
 
 
159
 
 
 
142
 
 
 
393
 

Other short-term investments

 
 
17
 
 
 
25
 
 
 
187
 
 
 
102
 
 
 
696
 

Total interest income

 
 
1,734
 
 
 
1,351
 
 
 
997
 
 
 
4,398
 
 
 
2,466
 

Interest expense:

Deposits

 
 
163
 
 
 
146
 
 
 
99
 
 
 
436
 
 
 
270
 

Borrowed funds

 
 
–
 
 
 
–
 
 
 
–
 
 
 
–
 
 
 
–
 

Total interest expense

 
 
163
 
 
 
146
 
 
 
99
 
 
 
436
 
 
 
270
 

Net interest income

 
 
1,571
 
 
 
1,205
 
 
 
898
 
 
 
3,962
 
 
 
2,196
 

Provision for loan and lease losses

 
 
239
 
 
 
192
 
 
 
174
 
 
 
464
 
 
 
407
 

Net interest income after provision for loan and lease losses

 
 
1,332
 
 
 
1,013
 
 
 
724
 
 
 
3,498
 
 
 
1,789
 

Non-interest income:

Service charges and other fees

 
 
26
 
 
 
20
 
 
 
16
 
 
 
69
 
 
 
36
 

Other income

 
 
25
 
 
 
31
 
 
 
19
 
 
 
80
 
 
 
45
 

Gain (loss) on securities

 
 
–
 
 
 
2
 
 
 
97
 
 
 
9
 
 
 
97
 

Total non-interest income

 
 
51
 
 
 
53
 
 
 
132
 
 
 
158
 
 
 
178
 

Non-interest expense:

Salaries and employee benefits

 
 
1,076
 
 
 
825
 
 
 
768
 
 
 
2,873
 
 
 
2,356
 

Occupancy

 
 
86
 
 
 
91
 
 
 
82
 
 
 
268
 
 
 
241
 

Furniture, fixture & equipment

 
 
43
 
 
 
51
 
 
 
41
 
 
 
136
 
 
 
127
 

Data processing

 
 
88
 
 
 
77
 
 
 
60
 
 
 
235
 
 
 
166
 

Professional & legal

 
 
107
 
 
 
72
 
 
 
65
 
 
 
261
 
 
 
241
 

Marketing

 
 
18
 
 
 
14
 
 
 
12
 
 
 
38
 
 
 
35
 

Other expense

 
 
130
 
 
 
137
 
 
 
126
 
 
 
393
 
 
 
327
 

Total non-interest expense

 
 
1,548
 
 
 
1,267
 
 
 
1,154
 
 
 
4,204
 
 
 
3,493
 

Income (loss) before taxes

 
 
(165
)
 
 
(201
)
 
 
(298
)
 
 
(548
)
 
 
(1,526
)

Income tax expense

 
 
–
 
 
 
–
 
 
 
–
 
 
 
–
 
 
 
–
 

Net Income (Loss)

 
$
(165
)
 
$
(201
)
 
$
(298
)
 
$
(548
)
 
$
(1,526
)

Earnings (loss) per share ("EPS"): Basic

 
$
(0.05
)
 
$
(0.06
)
 
$
(0.09
)
 
$
(0.17
)
 
$
(0.46
)

Common shares outstanding

 
 
3,312,858
 
 
 
3,306,429
 
 
 
3,306,429
 
 
 
3,312,858
 
 
 
3,306,429
 

SOURCE: Infinity Bank Santa Ana California

 
INFINITY BANK
UNAUDITED FINANCIAL HIGHLIGHTS
 

 
At and For the Three
Months Ended
 
 
At and For the Nine Months Ended
 

 
September 30,
2020
 
 
June 30,
2020
 
 
September 30,
2019
 
 
September 30,
2020
 
 
September 30,
2019
 

Performance Ratios

(Based upon Reported Net Income):

Net interest margin

 
 
3.32
%
 
 
2.98
%
 
 
3.71
%
 
 
3.42
%
 
 
3.41
%

Cost of funds

 
 
0.39
%
 
 
0.42
%
 
 
0.54
%
 
 
0.44
%
 
 
0.58
%

Loan to deposit ratio

 
 
89.12
%
 
 
80.64
%
 
 
56.73
%
 
 
89.12
%
 
 
56.73
%

Asset Quality Summary:

Allowance for loan loss/Total loans

 
 
1.02
%
 
 
1.00
%
 
 
1.25
%
 
 
1.02
%
 
 
1.25
%

Capital Ratios:

Tier 1 risk-based capital ratio

 
 
15.67
%
 
 
18.77
%
 
 
40.30
%
 
 
15.67
%
 
 
40.30
%

Total risk-based capital ratio

 
 
16.52
%
 
 
19.62
%
 
 
41.20
%
 
 
16.52
%
 
 
41.20
%

Tier 1 leverage ratio

 
 
13.28
%
 
 
15.37
%
 
 
26.26
%
 
 
13.28
%
 
 
26.26
%

SOURCE: Infinity Bank Santa Ana California

ReleaseID: 614627