JSB Financial Inc. (OTCPK: JFWV) reported net income of $671 thousand for the quarter ended March 31, 2024, representing a decrease of $214 thousand or 24.2% when compared to $885 thousand for first quarter of 2023. Basic and diluted earnings per common share were $2.61 and $3.21 for the first quarter of 2024 and 2023, respectively. Annualized return on average assets and average equity for March 31, 2024 was 0.53% and 10.75%, respectively, and 0.76% and 15.37%, respectively, for March 31, 2023.

“Through the first quarter, we are pleased to demonstrated stabilization in our net interest margin and an improved book value per share of $97.40 compared to $86.24 one year ago,” said President and Chief Executive Officer, Cindy Kitner. “Our operational performance has remained stable, and we are proud to have increased deposits by $32.0 million and loans by $18.3 million. We remain confident in the credit quality of our loan portfolio. Our growth through the first quarter is a testament to our team and their commitment to building long-lasting relationships with our customers throughout the communities we serve.”

Net Interest Income

For the first quarter of 2024, net interest income totaled $3.2 million, representing an increase of $42 thousand, or 1.3%, from $3.1 million for the first quarter of 2023. Interest and fees on loans increased year-over-year as the Company continued to organically grow the loan portfolio, which was primarily led by commercial real estate. This activity contributed to the improved loan yields over the prior year due to the higher interest rates as well as the continued repricing of the Company’s variable rate loan portfolio. Interest and fees on loans totaled $4.7 million and $3.5 million for the first quarter of 2024 and 2023, respectively.

Total interest expense was $2.3 million for the first quarter of 2024, representing an increase of $1.1 million when compared to $1.2 million for the first quarter 2023. The increase in total interest expense was driven by higher costs of interest-bearing deposits, a shift in the deposit mix in favor of higher cost customer deposits and an increase in borrowings.

Net interest margin decreased slightly to 2.65% for the first quarter of 2024, a decline of six basis points from December 31, 2023 and 23 basis points from March 31, 2023. This decline from year-end and prior year is primarily due to higher funding costs for deposits and borrowed funds.

Balance Sheet

Total assets were $531.2 million as of March 31, 2024, an increase of $30.6 million, or 6.1%, from $500.6 million as of December 31, 2023. Year-over-year total assets increased $38.3 million, or 7.8%, from $492.9 million as of March 31, 2023.

Loans, net of the allowance for credit losses, reached a record level of $366.3 million as of March 31, 2024, an increase of $18.3 million, or 5.3%, from $347.9 million as of December 31, 2023. Year-over-year net loans grew $52.0 million, or 16.6%, from $314.2 million as of March 31, 2023.

Deposits totaled $458.1 million as of March 31, 2024, an increase of $32.0 million, or 7.5%, from $426.1 million as of December 31, 2023. Noninterest bearing deposits represent 25.9% of total deposits as of March 31, 2024, which is down from 26.4% as of December 31, 2023. Year-over-year total deposits increased $41.4 million, or 9.9%, from $416.7 million as of March 31, 2023. The current rate environment has contributed to greater competition for deposits with additional deposit rate specials being offered to attract new funds. The Company has experienced an increase in consumer certificates of deposit specifically related to these specials. The Company leveraged brokered deposits in the first quarter of 2024, which also attributed to the increase in deposits compared to December 31, 2023 and March 31, 2023.

Total borrowings decreased $2.0 million since December 31, 2023 and $5.4 million from March 31, 2023. The Company maintains on and off-balance sheet liquidity through cash and cash equivalents, unpledged securities at fair value, FHLB and Federal Reserve borrowing capacities and unsecured correspondent bank lines of credit. In total, on and off-balance sheet liquidity sources exceeded $226.4 million as of March 31, 2024. FHLB borrowings totaled $16.1 million and borrowings through the Bank Term Funding Program (BTFP) totaled $28.0 million as of March 31, 2024.

As of March 31, 2024 stockholders’ equity was $25.1 million, representing an increase of $121 thousand from $25.0 million at December 31, 2023. As of March 31, 2024, book value per share improved to $97.40 from $96.93 per share at December 31, 2023. Year-over-year stockholders’ equity increased $1.3 million, or 5.5%, from $23.8 million as of March 31, 2023. The regulatory capital ratios remain in excess of applicable regulatory requirements for well-capitalized institutions. The Tier 1 capital ratio decreased to 7.52% from 7.65% at December 31, 2023 and 8.08% at March 31, 2023. The ratio of Common Equity Tier 1 capital and Tier 1 capital to risk weighted assets was 11.43%, 12.40% and 13.53% at March 31, 2024, December 31, 2023 and March 31, 2023, respectively. The total risk-based capital ratio was 12.64%, 13.65% and 14.78% at March 31, 2024, December 31, 2023 and March 31, 2023 respectively. The decline in the regulatory capital ratios reflects the impact of organic loan growth and the increase in total assets through the first three months of 2024. Management maintains regular monitoring of capital planning strategies to support and maintain adequate capital levels.

Asset Quality

As of March 31, 2024, the credit quality of the loan portfolio remained strong with nonaccrual loans totaling $49 thousand, or 0.01% of total loans, compared to $51 thousand at December 31, 2023 and $60 thousand at March 31, 2023. As of March 31, 2024, total past due loans increased to $1.2 million, or 0.32% of total loans, compared to $385 thousand, or 0.11%, of total loans at December 31, 2023 and $144 thousand, or 0.05% of total loans, as of March 31, 2023. There were no net charge offs for the first quarter of 2024, compared to net charge offs of $1 thousand for the same period in 2023.

As of March 31, 2024, the allowance for credit losses was $4.0 million, or 1.07% of total loans, compared to $3.8 million, or 1.08% as of December 31, 2023 and $3.6 million, or 1.14% as of March 31, 2023.

The provision for credit losses totaled $120 thousand for the first quarter of 2024. The Company recorded a $158 thousand provision for credit losses on loans and a recovery of provision for credit losses on unfunded commitments of $38 thousand. For the first three months of 2023, total provision for credit losses was $18 thousand, which comprised of a $68 thousand provision for credit losses on loans and a $50 thousand recovery of credit losses on unfunded commitments.

First Quarter Highlights Compared to Fourth Quarter of 2023

Net income for the first quarter of 2024 totaled $671 thousand, a decrease of $33 thousand, or 4.66%, from net income of $704 thousand for the fourth quarter of 2023. During the first quarter, net interest income increased by $47 thousand, or 1.5%, from the fourth quarter of 2023. The increase in net interest income was in part driven by continued growth in loans and rising yields on earning assets. These changes were offset by an increase in interest expense due to the higher cost of interest bearing deposits and a continued shift in the deposit mix resulting in higher interest bearing balances.

Provision for credit losses totaled $120 thousand, representing a $50 thousand decrease during the first quarter, when compared to provision for loan losses of $170 thousand for the fourth quarter of 2023. The provision for credit losses increased due to the growth of the loan portfolio. The increase in the provision for credit losses was funded by the recovery of credit losses on unfunded commitments.

When comparing March 31, 2024 to December 31, 2023, total assets increased $30.6 million, or 6.1%, loans, net of the allowance for credit losses, increased by $18.3 million, or 5.3%, and total deposits increased $32.1 million, or 7.5%.

About JSB Financial Inc.

JSB Financial Inc. (OTC Pink: JFWV) is the holding company for Jefferson Security Bank, an independent community bank operating six banking offices located in Berkeley County and Jefferson County, West Virginia and Washington County, Maryland. Founded in 1869, Jefferson Security Bank serves individuals, businesses, municipalities and community organizations through a comprehensive suite of banking services delivered by an exceptional team who put customers first. Jefferson Security Bank has received industry recognition as a Top 200 Community Bank by American Banker magazine four years in a row. Operating for over 155 years, Jefferson Security Bank is the oldest, independent, locally owned and managed bank in West Virginia. Visit www.JSB.bank for more information.

This press release may contain forward-looking statements, as defined by federal securities laws, which may involve significant risks and uncertainties. The statements are based on estimates and assumptions made by management in conjunction with other factors deemed appropriate under the circumstances. Actual results could differ materially from current projections.

Offices:

105 East Washington Street, Shepherdstown, WV (304-876-9000)

7994 Martinsburg Pike, Shepherdstown, WV (304-876-2800)

873 East Washington Street, Suite 100, Charles Town, WV (304-725-9752)

277 Mineral Drive, Suite 1, Inwood, WV (304-229-6000)

1861 Edwin Miller Boulevard, Martinsburg, WV (304-264-0900)

103 West Main Street, Sharpsburg, MD (301-432-3900)

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