Executive Summary

Q2 2023 diluted EPS was $0.14, up sequentially from $0.13 in Q1 2023 but down from $0.19 in Q2 2022 as funding cost inflation compressed spreads despite loan yield tailwinds . Net interest margin (tax-equivalent) improved q/q to 3.03% from 2.93% but remained below 3.20% a year ago .
Funding pressure remained the key headwind: the average cost of interest-bearing liabilities rose to 1.36% vs 0.35% in Q2 2022, and interest expense increased to $687K vs $173K (+297% YoY), while interest income rose to $2.60M (+21% YoY) .
Credit quality and capital stayed solid: non-performing loans were 0.6% of loans with a small provision recapture of $16K; the allowance covered 255% of NPLs, and the Bank’s CBLR was 15.6% .
Operating efficiency remained elevated (82.3% vs 74.4% last year) driven by higher data processing and other expenses; sequentially efficiency improved slightly vs Q1 (83.3%) .
No formal guidance or earnings call transcript was provided in the Q2 release; near-term stock narrative hinges on the trajectory of deposit betas, pace of asset re-pricing, and expense control .

What Went Well and What Went Wrong

What Went Well

Sequential margin stabilization: net interest margin (tax-equivalent) rose to 3.03% from 2.93% in Q1 as asset yields continued to improve, partially offsetting higher funding costs .
Credit metrics remained benign with a $16K provision recapture, NPLs at 0.6% of loans, and ACL at 1.6% with 255% NPL coverage .
Capital remained robust with a 15.6% CBLR and book value per share improving to $11.81 at quarter-end .

What Went Wrong

Spread compression: average cost of interest-bearing liabilities rose to 1.36% (from 0.35% YoY), compressing net interest rate spread to 2.70% (TEB) vs 3.11% in Q2 2022 .
Expense pressure: efficiency ratio was 82.3% (vs 74.4% YoY), with higher data processing (+$103K), stockholders’ meeting (+$61K), and other line items partially offset by lower compensation/benefits .
YoY earnings decline: net income of $400K and diluted EPS $0.14 fell from $526K and $0.19 in Q2 2022 as higher interest expense outpaced growth in interest income .

Financial Results

P&L and Margins (oldest → newest)

Metric	Q2 2022	Q1 2023	Q2 2023
Total Interest Income ($000)	2,153	2,483	2,604
Total Interest Expense ($000)	173	623	687
Net Interest Income ($000)	1,980	1,860	1,917
Noninterest Income ($000)	364	244	308
Noninterest Expense ($000)	1,744	1,749	1,832
Net Income ($000)	526	340	400
Diluted EPS ($)	0.19	0.13	0.14
NIM (TEB, %)	3.20%	2.93%	3.03%
Net Interest Spread (TEB, %)	3.11%	2.64%	2.70%
Efficiency Ratio (%)	74.4%	83.3%	82.3%

Notes: TEB = tax-equivalent basis as defined in the Company’s non-GAAP disclosures .

Segment Breakdown

Not applicable; MSVB reports as a single community bank without segment disclosures in the press release –.

Key Balance Sheet & Performance KPIs (period-end unless noted; oldest → newest)

KPI	12/31/2022	3/31/2023	6/30/2023
Loans, Net ($000)	144,379	147,198	147,555
Deposits ($000)	206,064	205,637	202,918
Total Assets ($000)	269,218	266,368	266,266
ROAA (Annualized, %)	0.71%	0.51%	0.60%
ROAE (Annualized, %)	5.07%	4.03%	4.64%
NPLs / Total Loans (%)	0.5%	0.4%	0.6%
ACL / Loans (%)	1.2%	1.6%	1.6%
CBLR (%)	15.4%	15.3%	15.6%
Book Value/Share ($)	11.55	12.11	11.81
Dividends/Share (Quarter, $)	0.06	0.06	0.06

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
—	—	—	The Q2 2023 earnings release did not include formal quantitative guidance –.	—

Earnings Call Themes & Trends

No Q2 2023 earnings call transcript was available in the document set; themes below synthesize disclosures from Q4 2022, Q1 2023, and Q2 2023 earnings releases.

Topic	Previous Mentions (Q4 2022 and Q1 2023)	Current Period (Q2 2023)	Trend
Funding costs & NIM	NIM (TEB) 3.12% in Q4; noted rising cost of funds into YE22 . Q1 NIM (TEB) 2.93% as average cost rose to 1.21% .	NIM (TEB) 3.03%; average cost up to 1.36%; spread down YoY to 2.70% .	Slight q/q improvement in NIM; sustained YoY pressure.
Liquidity actions	Initiatives not specifically detailed in Q4; focus on growth and capital . Q1 drew $25M from BTFP at 4.37% for 1 year .	Borrowings decreased $0.8M q/q; deposits modestly lower .	Stable; reliance on market funding moderated slightly.
Loan growth mix	2022 loans +17.8% YoY; Louisville LPO expansion emphasized . Q1 net loans +$2.8M q/q .	Net loans +$3.2M YTD; growth in CRE, multifamily, and CRE construction; declines in C&I and resi .	Continued shift toward CRE/multifamily.
Expense trajectory	YE22 expenses up; data processing a driver . Q1 data processing +$93K; other line items higher .	Q2 data processing +$103K; stockholder meeting +$61K; efficiency 82.3% .	Elevated opex; slight efficiency improvement q/q.
Credit quality	YE22 NPLs 0.5%; strong coverage . Q1 NPLs 0.4%; ACL/loans 1.6% .	NPLs 0.6%; provision recapture $16K; coverage 255% .	Still benign; slight uptick in NPLs.
Capital & capital return	CBLR 15.4%; dividends $0.06/quarter . Q1 CBLR 15.3%; dividends $0.06 .	CBLR 15.6%; dividends $0.06; 173,097 shares authorized for repurchase, no buybacks in Q2 .	Strong capital; consistent dividend.

Management Commentary

Strategy and growth: “Our expansion into the Louisville Market through our Loan Production Office continues to produce positive results as evidenced by loans growing 17.8% over 2021 levels.” — Alexander G. Babey, President & CEO (Q4 2022 release) .
Q2 2023 release emphasized operating drivers rather than including direct quotes; management highlighted higher asset yields, rising funding costs, and expense items (data processing, stockholder meeting) as key factors in quarterly results .
Credit and capital: Management underscored benign credit with a $16K recapture, robust coverage, and continued use of the CBLR with 15.6% at quarter-end .

Q&A Highlights

No earnings call transcript was available for Q2 2023; therefore, no Q&A highlights or clarifications were provided in the documents reviewed –.

Estimates Context

Wall Street consensus estimates from S&P Global for Q2 2023 were not available at the time of query (no values retrieved). In the absence of formal consensus, we benchmarked performance versus prior year and prior quarter from company filings.
Where estimates are not shown in the tables, it reflects unavailability from S&P Global at query time.

Key Takeaways for Investors

Margin dynamics are the swing factor: sequential NIM (TEB) improvement to 3.03% suggests early stabilization, but YoY compression persists given higher deposit/borrowing costs (avg. cost 1.36% vs 0.35% YoY) .
Earnings cadence: EPS rose to $0.14 from $0.13 q/q but remains below $0.19 YoY as elevated funding costs and opex offset higher asset yields .
Cost discipline needed: efficiency ratio remains >80%; data processing and one-off stockholder meeting drove opex; sustained control could be a near-term lever .
Credit stable and well-reserved: modest NPL uptick to 0.6% with 255% coverage; small provision recapture underscores benign losses .
Capital provides flexibility: CBLR 15.6% and steady dividend ($0.06) support capital returns while growth continues in CRE/multifamily .
Liquidity positioning improved slightly: borrowings down $0.8M q/q after BTFP use in Q1; deposit base slightly lower; funding mix warrants continued monitoring .
Near-term stock drivers: investor focus likely on deposit betas, pace of asset repricing, and expense trajectory given lack of formal guidance and absence of an earnings call .

Mid-Southern Bancorp, Inc. (MSVB)·Q2 2023 Earnings Summary