SEGMENT REPORTING

12 Months Ended

Sep. 30, 2020

SEGMENT REPORTING

SEGMENT REPORTING

(29)       SEGMENT REPORTING

The Company’s operations include three primary segments: core banking, SBA lending, and mortgage banking. The core banking segment originates residential, commercial and consumer loans and attracts deposits from its customer base. Net interest income from loans and investments funded by deposits and borrowings is the primary revenue for the core banking segment. The SBA lending segment originates loans guaranteed by the SBA, subsequently selling the guaranteed portion to outside investors. Net gains on sales of loans and net interest income are the primary sources of revenue for the SBA lending segment. The mortgage banking segment originates residential mortgage loans and sells them in the secondary market. Net gains on the sales of loans, income from derivative financial instruments and net interest income are the primary sources of revenue for the mortgage banking segment.

The core banking segment is comprised primarily of the Bank and First Savings Investments, Inc., while the SBA lending segment’s revenues are comprised primarily of net interest income and gains on the sales of SBA loans generated by Q2. The mortgage banking segment operates as a separate division of the Bank and began operations in April 2018 and was not recognized as a separate operating segment until the year ended September 30, 2019.

The following segment financial information has been derived from the internal financial statements of the Company which are used by management to monitor and manage financial performance. The accounting policies of the three segments are the same as those of the Company. The amounts reflected in the “Other” column in the tables below represent combined balances of the Company and the Captive, and are the primary differences between the sum of the segment amounts and consolidated totals, along with amounts to eliminate transactions between segments.

	Core		SBA		Mortage				Consolidated
(In thousands)	Banking		Lending		Banking		Other		Totals
Year Ended September 30, 2020:
Net interest income (loss)	$	39,408	$	5,911	$	5,276	$	(1,204)	$	49,391
Provision for loan losses		4,636		3,326		—		—		7,962
Net interest income (loss) after provision		34,772		2,585		5,276		(1,204)		41,429
Net gains on sales of loans, SBA		—		5,673		—		—		5,673
Mortgage banking income		8		—		117,844		—		117,852
Noninterest income		5,905		6,751		118,465		—		131,121
Noninterest expense (income)		29,772		7,853		88,573		(390)		125,808
Income (loss) before taxes		10,905		1,483		35,168		(814)		46,742
Income tax expense (benefit)		2,265		189		10,793		(586)		12,661
Segment profit (loss)		8,640		1,294		24,375		(228)		34,081
Noncash items:
Depreciation and amortization		1,558		51		181		68		1,858
Segment assets at September 30, 2020		1,459,467		283,994		293,973		(272,809)		1,764,625

(29 – continued)

	Core		SBA		Mortgage				Consolidated
(In thousands)	Banking		Lending		Banking		Other		Totals
Year Ended September 30, 2019:
Net interest income (loss)	$	36,524	$	4,145	$	636	$	(1,216)	$	40,089
Provision (credit) for loan losses		(242)		1,705		—		—		1,463
Net interest income (loss) after provision		36,766		2,440		636		(1,216)		38,626
Net gains on sales of loans, SBA		—		4,569		—		—		4,569
Mortgage banking income		33		—		32,974		—		33,007
Noninterest income		5,650		5,182		33,022		—		43,854
Noninterest expense		28,852		5,953		27,760		(175)		62,390
Income (loss) before taxes		13,564		1,669		5,898		(1,041)		20,090
Income tax expense (benefit)		2,143		213		1,475		(736)		3,095
Segment profit (loss)		11,421		1,456		4,423		(305)		16,995
Noncash items:
Depreciation and amortization		1,467		49		100		68		1,684
Segment assets at September 30, 2019		1,124,526		84,661		88,645		(75,253)		1,222,579

	Core		SBA		Mortgage				Consolidated
(In thousands)	Banking		Lending		Banking		Other		Totals
Year Ended September 30, 2018:
Net interest income (loss)	$	32,436	$	3,012	$	376	$	(2)	$	35,822
Provision (credit) for loan losses		(69)		1,422		—		—		1,353
Net interest income (loss) after provision		32,505		1,590		376		(2)		34,469
Net gains on sales of loans, SBA		—		5,493		—		—		5,493
Mortgage banking income		587		—		1,731		—		2,318
Noninterest income		5,752		5,812		1,731		—		13,295
Noninterest expense		25,622		4,434		2,872		78		33,006
Income (loss) before taxes		12,635		2,968		(765)		(80)		14,758
Income tax expense (benefit)		2,615		424		(214)		(403)		2,422
Segment profit (loss)		10,020		2,544		(551)		323		12,336
Noncash items:
Depreciation and amortization		1,309		50		14		—		1,373
Segment assets at September 30, 2018		1,014,301		66,970		10,834		(57,699)		1,034,406