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Mid-Southern Bancorp, Inc. (MSVB)·Q4 2022 Earnings Summary

Executive Summary

  • Q4 2022 EPS was $0.14 on net income of $0.38M, essentially flat YoY ($0.13) but down sequentially from Q3 ($0.19) as funding costs rose and efficiency deteriorated; noninterest expense included losses on asset disposals that pressured results .
  • Net interest margin (GAAP) compressed sequentially to 2.95% (from 2.99% in Q3 and 3.20% in Q2) as the average cost of interest-bearing liabilities jumped to 0.98% vs 0.57% in Q3, offsetting higher asset yields .
  • Credit quality remained strong: NPLs declined to $0.73M (0.5% of loans) with allowance coverage of 231% and net recoveries in the quarter; no foreclosed real estate .
  • Book value per share fell YoY to $11.55 on AOCI losses from AFS securities, but BVPS ex-AOCI rose to $15.30; management continued buybacks (154,486 shares in 2022) and raised the quarterly dividend to $0.06 in Q4 .
  • No formal guidance or earnings call transcript was available in our document set; focus near‑term remains on funding cost management, NIM stabilization, and disciplined loan growth (notably in the Louisville LPO) .

What Went Well and What Went Wrong

What Went Well

  • Credit quality: NPLs decreased to $732k (0.5% of loans); allowance coverage increased to 231.1% with net recoveries of $39k in Q4 and no foreclosed real estate .
  • Loan growth and market expansion: Management highlighted 17.8% loan growth for 2022 and positive contributions from the Louisville Loan Production Office, supporting the strategic plan .
  • Capital strength: Bank remained well-capitalized with a 15.4% CBLR at year‑end; dividend per share increased to $0.06 in Q4 (vs $0.04 in Q4’21), signaling capital return capacity .

What Went Wrong

  • Margin pressure from funding costs: Average cost of interest‑bearing liabilities rose to 0.98% in Q4 from 0.57% in Q3, compressing spread and NIM sequentially (spread to 2.72% from 2.85%; NIM to 2.95% from 2.99%) .
  • Efficiency deterioration: Efficiency ratio worsened to 83.5% from 72.6% in Q3, driven partly by higher data processing and other expenses, plus losses on disposals of premises/equipment ($74k) and real estate held for sale ($37k) .
  • Book value hit by AOCI: BVPS fell to $11.55 (from $15.42 at 12/31/21) on unrealized losses in AFS securities; equity declined to $33.32M, despite BVPS ex-AOCI at $15.30 .

Financial Results

Income statement and profitability (quarterly)

MetricQ4 2021Q2 2022Q3 2022Q4 2022
Total interest income ($000s)$1,939 $2,153 $2,294 $2,487
Total interest expense ($000s)$150 $173 $294 $501
Net interest income ($000s)$1,789 $1,980 $2,000 $1,986
Provision for loan losses ($000s)$(120) $50 $85 $—
Noninterest income ($000s)$320 $364 $295 $304
Noninterest expense ($000s)$1,841 $1,744 $1,667 $1,912
Pretax income ($000s)$388 $550 $543 $378
Net income ($000s)$377 $526 $512 $376
Diluted EPS ($)$0.13 $0.19 $0.19 $0.14
Net interest margin (GAAP, %)2.91% 3.20% 2.99% 2.95%
Interest rate spread (GAAP, %)2.83% 3.11% 2.85% 2.72%
Efficiency ratio (%)87.3% 74.4% 72.6% 83.5%

Notes: Q4 2022 noninterest expense included a $74k loss on disposal of premises/equipment and a $37k loss on real estate held for sale .

Balance sheet and asset quality KPIs

KPIQ4 2021Q2 2022Q3 2022Q4 2022
Loans, net ($000s)$122,568 $138,143 $142,473 $144,379
Deposits ($000s)$196,884 $205,047 $201,815 $206,064
Borrowings ($000s)$10,000 $26,000 $31,000 $29,000
Total assets ($000s)$254,260 $266,454 $264,548 $269,218
Book value per share ($)$15.42 $11.97 $10.74 $11.55
Book value per share ex-AOCI ($)$14.73 $15.08 $15.25 $15.30
ROAA (annualized, %)0.59% 0.80% 0.77% 0.57%
ROAE (annualized, %)3.27% 5.64% 5.87% 4.82%
Community Bank Leverage Ratio (%)16.3% 15.7% 15.4% 15.4%
Nonaccrual loans ($000s)$753 $822 $857 $732
Allowance / NPLs (%)202.3% 191.1% 192.9% 231.1%

Guidance Changes

  • No formal quantitative guidance was provided in the Q4 2022 earnings materials reviewed; the press release contains standard forward-looking statements only .
MetricPeriodPrevious GuidanceCurrent GuidanceChange
————No formal guidance provided

Earnings Call Themes & Trends

Note: No earnings call transcript was available in our document set; themes reflect quarterly earnings releases.

TopicQ2 2022 (Prev-2)Q3 2022 (Prev-1)Q4 2022 (Current)Trend
Loan growth/market expansionLoan growth across CRE, multifamily; Louisville LPO cited as strategic asset Continued loan growth; mix shift toward CRE and construction 2022 loans +17.8% YoY; Louisville LPO continues to contribute Improving volume, consistent execution
Funding costsAvg cost of interest-bearing liabilities 0.35% (qtr) 0.57% (qtr) 0.98% (qtr) Rising sharply
Net interest margin (GAAP)3.20% 2.99% 2.95% Modest compression
Securities/AOCI impactUnrealized AFS losses drove BVPS lower; BVPS ex-AOCI steady AOCI drag continued; BVPS ex-AOCI maintained AOCI remained large; BVPS ex-AOCI $15.30 Persistent AOCI headwind; core capital intact
Capital managementActive buybacks; dividend $0.04 Ongoing buybacks; dividend $0.04 154,486 shares repurchased in 2022; dividend raised to $0.06 Continued returns to shareholders
Credit qualityNPLs 0.6% of loans; no OREO NPLs 0.6% of loans; no OREO NPLs down to 0.5%; coverage 231% Stable/positive

Management Commentary

  • “We are very pleased to report our earnings for 2022, with earnings per diluted share growing 25.5% over 2021 results. 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.” – Alex Babey, President & CEO .
  • Management emphasized non‑GAAP perspective for tax‑equivalent NIM and book value ex‑AOCI to assess core performance and capital, providing reconciliations in the release .

Q&A Highlights

  • No earnings call transcript was found for Q4 2022 in our document set; no Q&A themes to report.

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2022 EPS and revenue was unavailable at the time of analysis due to a daily request limit on the S&P Global data service; as a result, we cannot provide a vs-consensus comparison for this quarter.*

Key Takeaways for Investors

  • Funding costs are the swing factor: average cost of interest-bearing liabilities rose 41 bps sequentially (0.98% vs 0.57%), compressing spread/NIM despite higher asset yields .
  • Core profitability remains intact but sensitive to deposit betas; efficiency ratio deterioration to 83.5% in Q4 underscores the importance of expense discipline near-term .
  • Credit quality is a source of strength with low NPLs (0.5%), strong coverage (231%), and net recoveries; this provides downside protection in a late‑cycle environment .
  • Capital return continues through buybacks and a higher quarterly dividend ($0.06), even as AOCI compresses GAAP book; BVPS ex‑AOCI ($15.30) reflects underlying capital capacity .
  • Growth opportunity persists via the Louisville LPO and commercial lending momentum; sustaining loan growth while stabilizing funding costs is key to re‑expanding margins .
  • Near‑term setup: watch funding mix (deposits vs FHLB), deposit pricing actions, and securities cash flows; any stabilization in liability costs should support NIM and earnings leverage .

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Data sources: Company 8‑K earnings press releases for Q2 2022 (July 25, 2022), Q3 2022 (October 24, 2022), and Q4 2022 (February 21, 2023) – – –.
*Estimates disclaimer: S&P Global consensus values were not retrievable due to data request limits at the time of access. Values would be retrieved from S&P Global when available.