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.comVictor@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.

SOURCE: Infinity Bank Santa Ana California

SOURCE: Infinity Bank Santa Ana California