First Savings Financial Group, Inc. (FSFG)·Q1 2025 Earnings Summary

Executive Summary

• Q1 FY2025 delivered a sharp YoY earnings inflection on strategic actions: net income rose to $6.23M and diluted EPS to $0.89, driven by a $2.49M net gain on bulk sale of first‑lien HELOCs, higher net interest income, and a reversal of credit loss provisions; non‑GAAP diluted EPS was $0.62 excluding nonrecurring items .
• Net interest margin improved sequentially to 2.75% from 2.72% in Q4 FY2024 and from 2.69% YoY, as funding costs moderated and loan yields held firm .
• Management outlined a pivot to an originate‑for‑sale HELOC model to enhance noninterest income, reduce the loan‑to‑deposit ratio, and use surplus capital to retire high‑cost subordinated debt and potentially repurchase shares—clear potential stock catalysts as capital redeployment progresses .
• SBA Lending remained a drag (segment loss of $0.14M), offset by strong Core Banking net income of $6.37M; asset quality improved slightly with NPLs down QoQ to $16.57M and stable ACL coverage .
• Board declared a $0.16 quarterly dividend payable March 31, 2025, reinforcing capital return amid strategic repositioning .

What Went Well and What Went Wrong

What Went Well

• Strong core banking profitability: Core Banking segment net income rose to $6.37M (GAAP), with NIM expansion to 2.75% and efficiency ratio improving to 69.29% (94.93% YoY) .
• Strategic bulk sale execution: “Bulk sale of first lien home equity lines of credit” generated a $2.49M net gain and reversed $980k of loan ACL and $129k of unfunded commitment ACL; management plans an originate‑for‑sale HELOC model to enhance noninterest income and free capital for debt redemption/share repurchases .
• Cost discipline post mortgage exit: Noninterest expense fell by $1.10M YoY, with lower compensation (−$487k), occupancy (−$405k), and professional fees (−$385k), improving operating leverage .

What Went Wrong

• SBA Lending remained loss‑making: segment net loss of $0.14M despite solid SBA loan sale gains, reflecting elevated segment expenses and credit cost pressure .
• Deposit dynamics mixed: total deposits fell QoQ by $48.1M as brokered deposits decreased $72.1M; while strategically beneficial for funding mix, near‑term balances tightened .
• AOCI headwinds: accumulated other comprehensive loss worsened by $6.59M QoQ due to higher long‑term rates reducing AFS securities fair value, trimming book value per share to $25.48 (−$0.24 QoQ) .

Financial Results

Segment breakdown (Net income, $USD Millions):

Selected KPIs:

Noninterest income detail (Q1 FY2025):

Guidance Changes

Earnings Call Themes & Trends

Note: No Q1 FY2025 earnings call transcript was available in the document catalog; thematic tracking below reflects management disclosures across recent periods.

Management Commentary

• “We are pleased with the first fiscal quarter, which included a bulk sale of first lien home equity lines of credit and continued improvement in our net interest margin.” — Larry W. Myers, President & CEO .
• “The bulk sale is part of a strategic initiative to transition the first lien home equity line of credit business to an originate for sale model during fiscal 2025… The surplus capital generated… may be used to retire high‑cost subordinated debt and repurchase Company common shares.” .
• “We are optimistic regarding the remainder of fiscal 2025 as we continue to focus on asset quality, select loan growth opportunities, and capital and liquidity management.” .

Q&A Highlights

No Q1 FY2025 earnings call transcript or Q&A was available in the document catalog to extract highlights (earnings‑call‑transcript: none found for FSFG in the period) [ListDocuments result: none].

Estimates Context

• S&P Global (Capital IQ) consensus estimates for Q1 FY2025 were unavailable due to data access limits at the time of request; therefore comparisons to Wall Street consensus cannot be provided at investor‑grade precision. Values intended from S&P Global could not be retrieved; S&P Global consensus data unavailable.
• Media coverage suggested EPS beat and revenue modest miss versus expectations, but we anchor on S&P Global as the default source and thus do not substitute third‑party estimates for formal benchmarking .

Key Takeaways for Investors

• The quarter’s upside was largely transactional and strategic: the HELOC bulk sale and associated reserve reversals plus equity security gains boosted EPS; underlying Core Banking profitability and NIM expansion indicate improving run‑rate earnings power .
• Funding mix is normalizing away from brokered deposits; while total deposits fell QoQ, the shift supports lower funding costs and better interest rate sensitivity longer‑term .
• Management’s originate‑for‑sale HELOC pivot, combined with surplus capital deployment (sub debt redemption and potential buybacks), is a notable shareholder return catalyst; monitor subsequent 8‑Ks for debt retirement timing and repurchase authorizations .
• SBA Lending remains the swing factor—profitability hinges on sales volumes, gain‑on‑sale margins, and expense control; watch segment losses narrowing alongside consistent net gains on SBA loan sales .
• Asset quality is stable with slightly lower NPLs and strong ACL coverage; credit metrics and net charge‑offs remain benign, supporting capital flexibility .
• AOCI sensitivity to long‑term rates remains a headwind to book value; a rates‑down environment could reverse recent AFS fair value pressure and lift tangible book per share .
• Near‑term trading: potential positive reaction tied to capital actions and demonstrated NIM improvement; medium‑term thesis rests on sustained core earnings growth, disciplined funding, and execution of originate‑for‑sale strategy and SBA profitability.