# EDGAR Filing Document

**Accession Number:** 0001435508
**File Stem:** 0001410578-23-000089
**Filing Date:** 2023-2
**Character Count:** 202195
**Document Hash:** 99a45c2639e6466b1eaca89ea1318c4e
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001410578-23-000089.hdr.sgml**: 20230209

**ACCESSION NUMBER**: 0001410578-23-000089

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 96

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230209

**DATE AS OF CHANGE**: 20230209

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** First Savings Financial Group, Inc.
- **CENTRAL INDEX KEY:** 0001435508
- **STANDARD INDUSTRIAL CLASSIFICATION:** SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035]
- **IRS NUMBER:** 371567871
- **STATE OF INCORPORATION:** IN
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-34155
- **FILM NUMBER:** 23605775

**BUSINESS ADDRESS:**
- **STREET 1:** 702 NORTH SHORE DRIVE
- **STREET 2:** SUITE 300
- **CITY:** JEFFERSONVILLE
- **STATE:** IN
- **ZIP:** 47130
- **BUSINESS PHONE:** 812-283-0724

**MAIL ADDRESS:**
- **STREET 1:** 702 NORTH SHORE DRIVE
- **STREET 2:** SUITE 300
- **CITY:** JEFFERSONVILLE
- **STATE:** IN
- **ZIP:** 47130

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** First Savings Financial Group Inc
- **DATE OF NAME CHANGE:** 20080519

?xml version='1.0' encoding='UTF-8'?

[**Table of Contents**](#TOC)

------

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, DC 20549**

**FORM 10-Q**

(Mark One)

**☒** **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** 

For the quarterly period ended December 31, 2022

OR

**☐** **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the transition period from &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Commission File No. 1-34155

**First Savings Financial Group, Inc.**

(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **Indiana** | **37-1567871** |
| (State or other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification Number) |

---

**702 North Shore Drive, Suite 300, Jeffersonville, Indiana 47130** 

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code **1-812-283-0724**

(Former name, former address and former fiscal year, if changed since last report)

Securities Registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| Common stock, $0.01 par value per share | FSFG | The NASDAQ Stock Market, LLC |
| (Title of each class) | (Trading Symbol) | (Name of each exchange on which registered) |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | |
|:---|:---|
| Large Accelerated Filer ☐ | Accelerated Filer ☒ |
| Non-accelerated Filer ☐ | Smaller Reporting Company ☒ |
| Emerging Growth Company ☐ |  |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant's common stock as of February 2, 2023 was 6,917,921.

------

[**Table of Contents**](#TOC)

#### FIRST SAVINGS FINANCIAL GROUP, INC.

#### INDEX

---

| | | |
|:---|:---|:---|
| [**Part I**](#PARTIFINANCIALINFORMATION_495144) | [**Financial Information**](#PARTIFINANCIALINFORMATION_495144) | **Page** |
|  | **Item 1. Financial Statements** |  |
|  | &nbsp;&nbsp;&nbsp;[Condensed Consolidated Balance Sheets as of December 31, 2022 and September 30, 2022 (unaudited)](#CONSOLIDATEDBALANCESHEETS_935325) | 3 |
|  | &nbsp;&nbsp;&nbsp;[Condensed Consolidated Statements of Income for the three months ended December 31, 2022 and 2021 (unaudited)](#CONSOLIDATEDSTATEMENTSOFINCOME_60017) | 4 |
|  | &nbsp;&nbsp;&nbsp;[Condensed Consolidated Statements of Comprehensive Income for the three months ended December 31, 2022 and 2021 (unaudited)](#CONSOLIDATEDSTATEMENTSOFCOMPREHENSIVEINC) | 5 |
|  | &nbsp;&nbsp;&nbsp;[Condensed Consolidated Statements of Changes in Stockholders' Equity for the three months ended December 31, 2022 and 2021 (unaudited)](#CONSOLIDATEDSTATEMENTSOFCHANGESINSTOCKHO) | 6 |
|  | &nbsp;&nbsp;&nbsp;[Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 2022 and 2021 (unaudited)](#CONSOLIDATEDSTATEMENTSOFCASHFLOWS_951803) | 7 |
|  | &nbsp;&nbsp;&nbsp;[Notes to Condensed Consolidated Financial Statements (unaudited)](#a1PresentationofInterimInformation_94213) | 8-50 |
|  | [**Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations**](#SafeHarborStatementforForwardLookingStat) | 51-55 |
|  | [**Item 3. Quantitative and Qualitative Disclosures About Market Risk**](#QualitativeAspectsofMarketRisk_609127) | 56-57 |
|  | [**Item 4. Controls and Procedures**](#PARTIITEM4_109123) | 58 |
| [**Part II**](#PARTII_153568) | [**Other Information**](#PARTII_153568) |  |
|  | [**Item 1. Legal Proceedings**](#Item1LegalProceedings_26840) | 60 |
|  | [**Item 1A. Risk Factors**](#Item1ARiskFactors_819192) | 60 |
|  | [**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds**](#Item2UnregisteredSalesofEquitySecurities) | 60 |
|  | [**Item 3. Defaults Upon Senior Securities**](#Item3DefaultsuponSeniorSecurities_637772) | 60 |
|  | [**Item 4. Mine Safety Disclosures**](#Item4MineSafetyDisclosures_614113) | 60 |
|  | [**Item 5. Other Information**](#Item5OtherInformation_909165) | 61 |
|  | [**Item 6. Exhibits**](#Item6Exhibits_558544) | 61 |
| [**Signatures**](#SIGNATURES_528536) |  | 62 |

---

[**Table of Contents**](#TOC)

#### PART I - FINANCIAL INFORMATION

#### FIRST SAVINGS FINANCIAL GROUP, INC.

#### CONDENSED CONSOLIDATED BALANCE SHEETS
*(Unaudited)*

---

| | | |
|:---|:---|:---|
|  | **December 31,**  | **September 30,**  |
| *(In thousands, except share and per share data)* | **2022** | **2022** |
| **ASSETS** |  |  |
| &nbsp;&nbsp;&nbsp;Cash and due from banks | $25226 | $18312 |
| &nbsp;&nbsp;&nbsp;Interest-bearing deposits with banks | 13052 | 23353 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cash and cash equivalents | 38278 | 41665 |
| &nbsp;&nbsp;&nbsp;Interest-bearing time deposits | 1854 | 1613 |
| &nbsp;&nbsp;&nbsp;Securities available for sale, at fair value | 329163 | 316517 |
| &nbsp;&nbsp;&nbsp;Securities held to maturity | 1520 | 1558 |
| &nbsp;&nbsp;&nbsp;Loans held for sale, residential mortgage, at fair value | 20675 | 38579 |
| &nbsp;&nbsp;&nbsp;Loans held for sale, Small Business Administration | 23606 | 21883 |
| &nbsp;&nbsp;&nbsp;Loans, net of allowance for loan losses of $16,080 at December 31, 2022 and $15,360 at September 30, 2022 | 1582940 | 1474544 |
| &nbsp;&nbsp;&nbsp;Federal Reserve Bank and Federal Home Loan Bank stock, at cost | 21564 | 20004 |
| &nbsp;&nbsp;&nbsp;Premises and equipment, net | 27297 | 27100 |
| &nbsp;&nbsp;&nbsp;Other real estate owned, held for sale | 203 | 203 |
| &nbsp;&nbsp;&nbsp;Accrued interest receivable: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans | 6346 | 5379 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Securities | 4090 | 2953 |
| &nbsp;&nbsp;&nbsp;Cash surrender value of life insurance | 45370 | 45145 |
| &nbsp;&nbsp;&nbsp;Goodwill | 9848 | 9848 |
| &nbsp;&nbsp;&nbsp;Core deposit intangibles | 721 | 775 |
| &nbsp;&nbsp;&nbsp;Residential mortgage loan servicing rights, at fair value | 62165 | 63263 |
| &nbsp;&nbsp;&nbsp;Nonresidential mortgage loan servicing rights | 132 | 141 |
| &nbsp;&nbsp;&nbsp;SBA loan servicing rights | 3301 | 3790 |
| &nbsp;&nbsp;&nbsp;Other assets | 17846 | 18765 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Assets** | $2196919 | $2093725 |
| **LIABILITIES** |  |  |
| &nbsp;&nbsp;&nbsp;Deposits: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Noninterest-bearing | $315390 | $340172 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest-bearing | 1222451 | 1175662 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deposits | 1537841 | 1515834 |
| &nbsp;&nbsp;&nbsp;Federal Home Loan Bank borrowings | 377643 | 307303 |
| &nbsp;&nbsp;&nbsp;Other borrowings | 95458 | 88206 |
| &nbsp;&nbsp;&nbsp;Accrued interest payable | 1984 | 1302 |
| &nbsp;&nbsp;&nbsp;Advance payments by borrowers for taxes and insurance | 695 | 1207 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other liabilities | 23154 | 28308 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Liabilities | 2036775 | 1942160 |
| **STOCKHOLDERS' EQUITY** |  |  |
| &nbsp;&nbsp;&nbsp;Preferred stock of $.01 par value per share; authorized 1,000,000 shares; none issued |  |  |
| &nbsp;&nbsp;&nbsp;Common stock of $.01 par value per share;authorized 20,000,000 shares; issued 7,779,271 shares (7,757,271 at September 30, 2022); outstanding 6,917,921 shares (6,970,631 shares at September 30, 2022) | 78 | 78 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 27347 | 26770 |
| &nbsp;&nbsp;&nbsp; Retained earnings - substantially restricted | 163890 | 161927 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (19000) | (27079) |
| &nbsp;&nbsp;&nbsp;Unearned stock compensation | (1361) | (969) |
| &nbsp;&nbsp;&nbsp;Less treasury stock, at cost - 861,350 shares (786,640 shares at September 30, 2022) | (10810) | (9162) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Stockholders' Equity | 160144 | 151565 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Liabilities and Stockholders' Equity | $2196919 | $2093725 |

---

\*All share amounts have been adjusted to reflect the three-for-one stock split effective September 15, 2021.

See notes to condensed consolidated financial statements.

[**Table of Contents**](#TOC)

#### PART I - FINANCIAL INFORMATION

#### FIRST SAVINGS FINANCIAL GROUP, INC.

#### CONDENSED CONSOLIDATED STATEMENTS OF INCOME
*(Unaudited)*

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |
|  | **December 31,**  | **December 31,**  |
| *(In thousands, except share and per share data)* | **2022** | **2021** |
| **INTEREST INCOME** |  |  |
| &nbsp;&nbsp;&nbsp;Loans, including fees | $20185 | $14002 |
| &nbsp;&nbsp;&nbsp;Securities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxable | 955 | 405 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax-exempt | 1979 | 1192 |
| &nbsp;&nbsp;&nbsp;Dividend income | 220 | 149 |
| &nbsp;&nbsp;&nbsp;Interest-bearing deposits with banks | 144 | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest income | 23483 | 15762 |
| **INTEREST EXPENSE** |  |  |
| &nbsp;&nbsp;&nbsp;Deposits | 4158 | 811 |
| &nbsp;&nbsp;&nbsp;Federal Home Loan Bank borrowings | 1919 | 730 |
| &nbsp;&nbsp;&nbsp;Other borrowings | 1145 | 318 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest expense | 7222 | 1859 |
| &nbsp;&nbsp;&nbsp;Net interest income | 16261 | 13903 |
| &nbsp;&nbsp;&nbsp;Provision for loan losses | 984 | 526 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income after provision for loan losses | 15277 | 13377 |
| **NONINTEREST INCOME** |  |  |
| &nbsp;&nbsp;&nbsp;Service charges on deposit accounts | 558 | 434 |
| &nbsp;&nbsp;&nbsp;ATM and interchange fees | 739 | 679 |
| &nbsp;&nbsp;&nbsp;Net unrealized gain on equity securities | 14 | 16 |
| &nbsp;&nbsp;&nbsp;Other than temporary impairment loss on securities | (28) |  |
| &nbsp;&nbsp;&nbsp;Net gain on sales of loans, Small Business Administration | 775 | 1636 |
| &nbsp;&nbsp;&nbsp;Net gain on sales of loans, single tenant net lease |  | 162 |
| &nbsp;&nbsp;&nbsp;Mortgage banking income | 2496 | 12744 |
| &nbsp;&nbsp;&nbsp;Increase in cash surrender value of life insurance | 225 | 254 |
| &nbsp;&nbsp;&nbsp;Commission income | 128 | 188 |
| &nbsp;&nbsp;&nbsp;Real estate lease income  | 117 | 148 |
| &nbsp;&nbsp;&nbsp;Income from tax credit investment |  | 10 |
| &nbsp;&nbsp;&nbsp;Other income | 164 | 320 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total noninterest income | 5188 | 16591 |
| **NONINTEREST EXPENSE** |  |  |
| &nbsp;&nbsp;&nbsp;Compensation and benefits | 10685 | 17291 |
| &nbsp;&nbsp;&nbsp;Occupancy and equipment | 1860 | 2113 |
| &nbsp;&nbsp;&nbsp;Data processing | 777 | 633 |
| &nbsp;&nbsp;&nbsp;Advertising | 418 | 792 |
| &nbsp;&nbsp;&nbsp;Professional fees | 793 | 1189 |
| &nbsp;&nbsp;&nbsp;FDIC insurance premiums | 308 | 115 |
| &nbsp;&nbsp;&nbsp;Other operating expenses | 2670 | 2719 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total noninterest expense | 17511 | 24852 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income before income taxes | 2954 | 5116 |
| &nbsp;&nbsp;&nbsp;Income tax expense | 83 | 811 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net Income** | $2871 | $4305 |
| Net income per share: |  |  |
| &nbsp;&nbsp;&nbsp;Basic | $0.42 | $0.60 |
| &nbsp;&nbsp;&nbsp;Diluted | $0.41 | $0.60 |
| Weighted average shares outstanding: |  |  |
| &nbsp;&nbsp;&nbsp;Basic | 6915909 | 7116790 |
| &nbsp;&nbsp;&nbsp;Diluted | 6972055 | 7207210 |
| Dividends per share | $0.13 | $0.12 |

---

\* All share and per share amounts have been adjusted to reflect the three-for-one stock split effective September 15, 2021.

See notes to condensed consolidated financial statements.

[**Table of Contents**](#TOC)

#### PART I - FINANCIAL INFORMATION

#### FIRST SAVINGS FINANCIAL GROUP, INC.

#### CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
*(Unaudited)*

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |
|  | **December 31,**  | **December 31,**  |
| *(In thousands)* | **2022** | **2021** |
| **Net Income** | $2871 | $4305 |
| **OTHER COMPREHENSIVE INCOME, NET OF TAX** |  |  |
| &nbsp;&nbsp;Unrealized gains on securities available for sale: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized holding gains arising during the period | 10199 | 404 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax expense  | (2142) | (85) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net of tax amount | 8057 | 319 |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: reclassification adjustment for other-than-temporary impairment loss on securities included in net income | 28 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax benefit | (6) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net of tax amount | 22 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Other Comprehensive Income** | 8079 | 319 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Comprehensive Income** | $**10950** | $**4624** |

---

See notes to condensed consolidated financial statements.

[**Table of Contents**](#TOC)

#### PART I - FINANCIAL INFORMATION

#### FIRST SAVINGS FINANCIAL GROUP, INC.

#### CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
*(Unaudited)*

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | **Accumulated** |  |  |  |
|  |  |  |  | **Other** | **Unearned** |  |  |
|  | **Common** | **Additional** | **Retained** | **Comprehensive** | **Stock** | **Treasury** |  |
| *(In thousands, except share and per share data)* | **Stock** | **Paid-in Capital** | **Earnings** | **Income/(Loss)** | **Compensation** | **Stock** | **Total** |
| Balances at October 1, 2021 | $78 | $25721 | $150185 | $8900 | $(138) | $(4369) | $180377 |
| &nbsp;&nbsp;&nbsp;Net income |  |  | 4305 |  |  |  | 4305 |
| &nbsp;&nbsp;&nbsp;Other comprehensive income |  |  |  | 319 |  |  | 319 |
| &nbsp;&nbsp;&nbsp;Common stock dividends - $0.12 per share |  |  | (860) |  |  |  | (860) |
| &nbsp;&nbsp;&nbsp;Restricted stock grants - 45,750 shares |  | 1222 |  |  | (1222) |  |  |
| &nbsp;&nbsp;&nbsp;Stock compensation expense |  | 52 |  |  | 75 |  | 127 |
| &nbsp;&nbsp;&nbsp;Purchase of 1,812 treasury shares |  |  |  |  |  | (48) | (48) |
| Balances at December 31, 2021 | $78 | $26995 | $153630 | $9219 | $(1285) | $(4417) | $184220 |
| Balances at October 1, 2022 | $78 | $26770 | $161927 | $(27079) | $(969) | $(9162) | $151565 |
| &nbsp;&nbsp;&nbsp;Net income |  |  | 2871 |  |  |  | 2871 |
| &nbsp;&nbsp;&nbsp;Other comprehensive income |  |  |  | 8079 |  |  | 8079 |
| &nbsp;&nbsp;&nbsp;Common stock dividends - $0.13 per share |  |  | (908) |  |  |  | (908) |
| &nbsp;&nbsp;&nbsp;Restricted stock grants - 22,000 shares |  | 495 |  |  | (495) |  |  |
| &nbsp;&nbsp;&nbsp;Stock compensation expense |  | 82 |  |  | 103 |  | 185 |
| &nbsp;&nbsp;&nbsp;Purchase of 74,710 treasury shares |  |  |  |  |  | (1648) | (1648) |
| Balances at December 31, 2022 | $78 | $27347 | $163890 | $(19000) | $(1361) | $(10810) | $160144 |

---

\* All share and per share amounts have been adjusted to reflect the three-for-one stock split effective September 15, 2021.

See notes to condensed consolidated financial statements.

[**Table of Contents**](#TOC)

#### PART I - FINANCIAL INFORMATION

#### FIRST SAVINGS FINANCIAL GROUP, INC.

#### CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
*(Unaudited)*

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |
|  | **December 31,** | **December 31,** |
| *(In thousands)* | **2022** | **2021** |
| **CASH FLOWS FROM OPERATING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;Net income | $2871 | $4305 |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to net cash provided by (used in) operating activities:  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for loan losses | 984 | 526 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 633 | 606 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of premiums and accretion of discounts on securities, net | 184 | 233 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization and accretion of fair value adjustments on loans, net | (374) | (408) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans originated for sale | (90390) | (561427) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds on sales of loans | 107337 | 610090 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized and unrealized gain on loans held for sale | (419) | (2224) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capitalization of loan servicing rights | (340) | (4850) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net change in value of loan servicing rights | 1936 | (311) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than temporary impairment loss on securities | 28 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase in cash surrender value of life insurance | (225) | (254) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net gain on equity securities | (14) | (16) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income from tax credit investment |  | (10) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | (1532) | 1261 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock compensation expense | 185 | 127 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase in accrued interest receivable | (2104) | (594) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase (decrease) in accrued interest payable | 682 | (7) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in other assets and liabilities, net | (2683) | (6282) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net Cash Provided by Operating Activities** | 16759 | 40765 |
| **CASH FLOWS FROM INVESTING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;Investment in interest-bearing time deposits | (490) |  |
| &nbsp;&nbsp;&nbsp;Proceeds from maturities of interest-bearing time deposits | 245 | 245 |
| &nbsp;&nbsp;&nbsp;Purchase of securities available for sale | (6073) | (15720) |
| &nbsp;&nbsp;&nbsp;Proceeds from maturities of securities available for sale | 1923 | 2022 |
| &nbsp;&nbsp;&nbsp;Proceeds from maturities of securities held to maturity | 35 | 30 |
| &nbsp;&nbsp;&nbsp;Principal collected on securities available for sale | 1525 | 1435 |
| &nbsp;&nbsp;&nbsp;Net increase in loans  | (109441) | (67075) |
| &nbsp;&nbsp;&nbsp;Proceeds from redemption of Federal Reserve Bank and Federal Home Loan Bank stock | 15 |  |
| &nbsp;&nbsp;&nbsp;Purchase of Federal Reserve Bank and Federal Home Loan Bank stock | (1575) |  |
| &nbsp;&nbsp;&nbsp;Proceeds from life insurance |  | 575 |
| &nbsp;&nbsp;&nbsp;Purchase of premises and equipment | (719) | (71) |
| &nbsp;&nbsp;&nbsp;Investment in partnership interests | (2035) | (240) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net Cash Used In Investing Activities** | (116590) | (78799) |
| **CASH FLOWS FROM FINANCING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;Net increase in deposits | 22007 | 39455 |
| &nbsp;&nbsp;&nbsp;Net increase in Federal Home Loan Bank line of credit | 5340 | 8377 |
| &nbsp;&nbsp;&nbsp;Proceeds from Federal Home Loan Bank advances | 1570000 | 75000 |
| &nbsp;&nbsp;&nbsp;Repayment of Federal Home Loan Bank advances | (1505000) | (75000) |
| &nbsp;&nbsp;&nbsp;Net increase in other borrowings | 7195 |  |
| &nbsp;&nbsp;&nbsp;Net decrease in advance payments by borrowers for taxes and insurance | (512) | (871) |
| &nbsp;&nbsp;&nbsp;Taxes paid on stock award shares for employees | (30) | (48) |
| &nbsp;&nbsp;&nbsp;Purchase of treasury shares | (1648) |  |
| &nbsp;&nbsp;&nbsp;Dividends paid on common stock | (908) | (1715) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net Cash Provided By Financing Activities** | 96444 | 45198 |
| **Net Increase (Decrease) in Cash and Cash Equivalents** | (3387) | 7164 |
| Cash and cash equivalents at beginning of period | 41665 | 33428 |
| **Cash and Cash Equivalents at End of Period** | $38278 | $40592 |

---

See notes to condensed consolidated financial statements.

[**Table of Contents**](#TOC)

**FIRST SAVINGS FINANCIAL GROUP, INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

*(Unaudited)*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. **Presentation of Interim Information** 

First Savings Financial Group, Inc. (the "Company") is a financial holding company and the parent of First Savings Bank (the "Bank") and First Savings Insurance Risk Management, Inc. (the "Captive").

The Bank, which is a wholly-owned Indiana-chartered commercial bank subsidiary of the Company, provides a variety of banking services to individuals and business customers through 16 locations in southern Indiana. The Bank attracts deposits primarily from the general public and uses those funds, along with other borrowings, primarily to originate commercial mortgage, residential mortgage, construction, commercial business and consumer loans, and to a lesser extent, to invest in mortgage-backed securities, municipal bonds and other investment securities. The Bank has three wholly-owned subsidiaries: Q2 Business Captial, LLC("Q2"), an Indiana limited liability company that specializes in the origination and servicing of U.S. Small Business Administration ("SBA") loans, First Savings Investments, Inc., a Nevada corporation that manages a securities portfolio, and Southern Indiana Financial Corporation, which is currently inactive.

The Captive, which is a wholly-owned insurance subsidiary of the Company, is a Nevada corporation that provides property and casualty insurance to the Company, the Bank and the Bank's active subsidiaries. In addition, the Captive provides reinsurance to 11 other third-party insurance captives for which insurance may not be currently available or economically feasible in the insurance marketplace.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments considered necessary to present fairly the financial position as of December 31, 2022, the results of operations for the three- month periods ended December 31, 2022 and 2021, and the cash flows for the three-month periods ended December 31, 2022 and 2021. All of these adjustments are of a normal, recurring nature. Such adjustments are the only adjustments included in the unaudited condensed consolidated financial statements. Interim results are not necessarily indicative of results for a full year.

The unaudited condensed consolidated financial statements and notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial statements, conform to general practices within the banking industry and are presented as permitted by the instructions to Form 10-Q. Accordingly, they do not contain certain information included in the Company's audited consolidated financial statements and related notes for the year ended September 30, 2022 included in the Company's Annual Report on Form 10-K/A.

The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

**Loans and Allowance for Loan Losses**

*Loans Held for Investment*

Loans are stated at unpaid principal balances, less net deferred loan fees and the allowance for loan losses. Loan origination and commitment fees, as well as certain direct costs of underwriting and closing loans, are deferred and amortized as a yield adjustment to interest income over the lives of the related loans using the interest method. Amortization of deferred loan fees is discontinued when a loan is placed on nonaccrual status.

*Nonaccrual Loans*

The recognition of income on a loan is discontinued and previously accrued interest is reversed when interest or principal payments become 90 days past due unless, in the opinion of management, the outstanding interest remains collectible. Past due status is determined based on contractual terms. Generally, by applying the cash receipts method, interest income on nonaccrual loans is subsequently recognized only as received until the loan is returned to accrual status.

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#### FIRST SAVINGS FINANCIAL GROUP, INC.
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The cash receipts method is used when the likelihood of further loss on the loan is remote. Otherwise, the Company applies the cost recovery method and applies all payments as a reduction of the unpaid principal balance until the loan qualifies for return to accrual status. Interest income on impaired loans is recognized using the cost recovery method, unless the likelihood of further loss is considered remote.

A loan is restored to accrual status when all principal and interest payments are brought current and the borrower has demonstrated the ability to make future payments of principal and interest as scheduled, which generally requires that the borrower demonstrate a period of performance of at least six consecutive months.

*Loan Charge-Offs*

For portfolio segments other than consumer loans, the Company's practice is to charge-off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower's failure to meet repayment terms, the borrower's deteriorating or deteriorated financial condition, depreciation of the underlying collateral, the loan's classification as a loss by regulatory examiners, or for other reasons. A partial charge-off is recorded on a loan when the uncollectibility of a portion of the loan has been confirmed, such as when a loan is discharged in bankruptcy, the collateral is liquidated, a loan is restructured at a reduced principal balance, or other identifiable events that lead management to determine the full principal balance of the loan will not be repaid. A specific reserve is recognized as a component of the allowance for estimated losses on loans individually evaluated for impairment. Partial charge-offs of loans are included in the Company's historical loss experience used to estimate the general component of the allowance for loan losses as discussed below.

Consumer loans not secured by real estate are typically charged off at 90 days past due, or earlier if deemed uncollectible, unless the loans are in the process of collection. Overdrafts are charged off after 45 days past due. Charge-offs are typically recorded on loans secured by real estate when the property is foreclosed upon when the carrying value of the loan exceeds the property's fair value, less estimated costs to sell.

*Allowance for Loan Losses*

The allowance for loan losses reflects management's judgment of probable incurred loan losses at the balance sheet date. Additions to the allowance for loan losses are made by the provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The Company evaluates the allowance for loan losses on a quarterly basis based upon management's periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of specific and general components. The specific component relates to loans that are individually evaluated for impairment. A specific reserve is established when the underlying discounted collateral value (or present value of estimated future cash flows) of the impaired loan is lower than the carrying value of that loan.

The general component covers loans not considered to be impaired. Such loans are pooled by segment and losses are modeled using annualized historical loss experience adjusted for qualitative factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent 60-month period with the exception of the SBA loan portfolio which uses lookback periods of 24 to 48 months.

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The Company's historical loss experience is then adjusted for qualitative factors that are reviewed on a quarterly basis based on the risks present for each portfolio segment. Management considers changes and trends in the following qualitative loss factors: levels of and trends in delinquencies and impaired loans; trends in the volume and term of new loan originations; national and local economic trends and conditions; changes in lending policies, procedures and practices; changes in the experience and ability of lending management and other staff; changes in the quality and depth of the Company's loan review system; trends in collateral valuation in the Company's lending area; the existence and effect of any concentrations of credit and other factors as determined by management including peer data and the economic uncertainties surrounding the coronavirus ("COVID-19") pandemic. Each qualitative factor is evaluated and a qualitative factor adjustment is applied to the actual historical loss factors in determining the adjusted loss factors used in management's allowance for loan losses adequacy calculation.

At December 31, 2022, the Company's allowance for loan losses totaled $16.1 million, of which $14.1 million related to qualitative factor adjustments. At September 30, 2022, the Company's allowance for loan losses totaled $15.4 million, of which $13.4 million related to qualitative factor adjustments.

Management exercises significant judgment in evaluating the relevant historical loss experience and the qualitative factors. Management also monitors the differences between estimated and actual incurred loan losses for loans considered impaired in order to evaluate the effectiveness of the estimation process and make any changes in the methodology as necessary.

The following portfolio segments are considered in the allowance for loan loss analysis: residential real estate, commercial real estate (including single tenant net lease and loans originated through SBA programs), multi-family residential real estate, construction, land and land development, commercial business (including loans originated through SBA programs) and consumer.

Residential real estate loans (including first-lien home equity lines of credit) primarily consist of loans to individuals for the purchase or refinance of their primary residence, with a small portion of the segment secured by non-owner-occupied residential investment properties. The risks associated with residential real estate loans are closely correlated to the local housing market and general economic conditions, as repayment of the loans is primarily dependent on the borrower's or tenant's personal cash flow and employment status.

Commercial real estate loans include the single tenant net lease loans and loans originated through SBA programs in addition to the Company's core commercial loans, and are comprised of loans secured by various types of collateral including office buildings, warehouses, retail space and mixed use buildings located in the Company's primary lending area and in other states. Risks related to commercial real estate lending are related to the market value of the property taken as collateral, the underlying cash flows and general economic conditions. Repayment of these loans is generally dependent on the ability of the borrower to attract tenants at lease rates that provide for adequate debt service and can be impacted by general economic conditions, which impact vacancy rates. The Company generally obtains loan guarantees from financially capable parties for commercial real estate loans.

Multi-family residential real estate loans primarily consist of loans secured by apartment buildings and other multi-tenant developments generally located in the Company's primary lending area. Repayment of these loans is primarily dependent on the borrower's ability to attract tenants and collect rents that provide for adequate debt service. The risks associated with these loans are closely correlated to the local housing market and general economic conditions.

Construction loans consist of single-family residential properties, multi-family properties and commercial projects, and include both owner-occupied and speculative investment properties. Risks inherent in construction lending are related to the market value of the property held as collateral, the cost and timing of constructing or improving a property, the borrower's ability to use funds generated by a project to service a loan until a project is completed, movements in interest rates and the real estate market during the construction phase, and the ability of the borrower to obtain permanent financing.

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Land and land development loans primarily consist of loans secured by farmland and vacant land held for long-term investment or development. The risks associated with land and land development loans are related to the market value of the property taken as collateral and the underlying cash flows for loans secured by farmland, and general economic conditions.

Commercial business loans include loans originated through SBA programs and lines of credit to businesses, term loans and letters of credit secured by business assets such as equipment, accounts receivable, inventory, or other assets excluding real estate and are generally made to finance capital expenditures or fund operations. Commercial loans contain risks related to the value of the collateral securing the loan and the repayment is primarily dependent upon the financial success and viability of the borrower. As with commercial real estate loans, the Company generally obtains loan guarantees from financially capable parties for commercial business loans. In addition, in an effort to support our communities during the pandemic, the Company participated in the Paycheck Protection Program ("PPP") and the majority of the Company's SBA clients applied for participation in the SBA's PPP loan program. All PPP loans are 100% guaranteed by the SBA.

Consumer loans consist primarily of home equity lines of credit and other loans secured by junior liens on the borrower's personal residence, home improvement loans, automobile and truck loans, boat loans, mobile home loans, loans secured by savings deposits and other personal loans. The risks associated with these loans are related to the local housing market and local economic conditions including the unemployment level.

There were no significant changes to the Company's accounting policies or methodology used to estimate the allowance for loan losses during the three-month period ended December 31, 2022.

*Impaired Loans*

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Values for collateral dependent loans are generally based on appraisals obtained from independent licensed real estate appraisers, with adjustments applied for estimated costs to sell the property, estimated costs to complete unfinished or repair damaged property, and other known defects. New appraisals are generally obtained for all significant properties when a loan is identified as impaired. Generally, a property is considered significant if the value of the property is estimated to exceed $250,000. Subsequent appraisals are obtained as needed or if management believes there has been a significant change in the market value of a collateral property securing an impaired loan. In instances where it is not deemed necessary to obtain a new appraisal, management would base its impairment and allowance for loan loss analysis on the original appraisal with adjustments for current conditions based on management's assessment of market factors and management's inspection of the property.

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*Troubled Debt Restructurings*

The modification of a loan is considered to be a troubled debt restructuring ("TDR") if the debtor is experiencing financial difficulties and the Company grants a concession to the debtor that it would not otherwise consider. By granting the concession, the Company expects to obtain more cash or other value from the debtor, or to increase the probability of receipt, than would be expected by not granting the concession. The concession may include, but is not limited to, reduction of the stated interest rate of the loan, reduction of accrued interest, extension of the maturity date or reduction of the face amount of the debt. A concession will be granted when, as a result of the restructuring, the Company does not expect to collect all amounts due, including interest at the original stated rate. A concession may also be granted if the debtor is not able to access funds elsewhere at a market rate for debt with similar risk characteristics as the restructured debt. The Company's determination of whether a loan modification is a TDR considers the individual facts and circumstances surrounding each modification.

A TDR can involve a loan remaining on nonaccrual, moving to nonaccrual or continuing on accrual status, depending on the individual facts and circumstances of the borrower. Generally, a nonaccrual loan that is restructured in a TDR remains on nonaccrual status for a period of at least six months following the restructuring in order to ensure that the borrower performs in accordance with the restructured terms, including consistent and timely payments of at least six consecutive months according to the restructured terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. **Investment Securities** 

U.S. agency bonds and notes, agency mortgage-backed securities and agency collateralized mortgage obligations ("CMO") include treasury notes issued by the U.S. government; securities issued by the Government National Mortgage Association ("GNMA"), a U.S. government agency; and securities issued by the Federal National Mortgage Association ("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC") and the Federal Home Loan Bank ("FHLB"), which are U.S. government sponsored enterprises. The Company holds municipal bonds issued by municipal governments within the U.S. The Company also holds pass-through asset-backed securities guaranteed by the SBA representing participating interests in pools of long term debentures issued by state and local development companies certified by the SBA. Privately issued CMO and asset-backed securities ("ABS") are complex securities issued by non-government special purpose entities that are collateralized by residential mortgage loans and residential home equity loans.

Investment securities have been classified according to management's intent.

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*Securities Available for Sale and Held to Maturity*

The amortized cost of securities available for sale and held to maturity and their approximate fair values are as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | <br>**Amortized**<br>**Cost** | **Gross**<br>**Unrealized**<br>**Gain** | **Gross**<br>**Unrealized**<br>**Losses** | <br>**Fair**<br>**Value** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| **December 31, 2022:** |  |  |  |  |
| &nbsp;&nbsp;Securities available for sale: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. Treasury bills and notes | $31327 | $— | $3419 | $27908 |
| &nbsp;&nbsp;&nbsp;&nbsp;Agency mortgage-backed | 30139 | 3 | 2981 | 27161 |
| &nbsp;&nbsp;&nbsp;&nbsp;Agency CMO | 14924 |  | 1004 | 13920 |
| &nbsp;&nbsp;&nbsp;&nbsp;Privately-issued CMO | 457 | 3 | 31 | 429 |
| &nbsp;&nbsp;&nbsp;&nbsp;Privately-issued ABS | 519 | 16 | 8 | 527 |
| &nbsp;&nbsp;&nbsp;&nbsp;SBA certificates | 12094 |  | 306 | 11788 |
| &nbsp;&nbsp;&nbsp;&nbsp;Municipal bonds | 263754 | 917 | 17241 | 247430 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total securities available for sale | $353214 | $939 | $24990 | $329163 |
| &nbsp;&nbsp;Securities held to maturity: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Agency mortgage-backed | $42 | $— | $— | $42 |
| &nbsp;&nbsp;&nbsp;&nbsp;Municipal bonds | 1478 | 28 |  | 1506 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total securities held to maturity | $1520 | $28 | $— | $1548 |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | <br>**Amortized**<br>**Cost** | **Gross**<br>**Unrealized**<br>**Gain** | **Gross**<br>**Unrealized**<br>**Losses** | <br>**Fair**<br>**Value** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| **September 30, 2022:** |  |  |  |  |
| &nbsp;&nbsp;Securities available for sale: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. Treasury bills and notes | $30809 | $— | $3514 | $27295 |
| &nbsp;&nbsp;&nbsp;&nbsp;Agency mortgage-backed | 30786 | 3 | 3289 | 27500 |
| &nbsp;&nbsp;&nbsp;&nbsp;Agency CMO | 15562 |  | 741 | 14821 |
| &nbsp;&nbsp;&nbsp;&nbsp;Privately-issued CMO | 495 | 4 | 29 | 470 |
| &nbsp;&nbsp;&nbsp;&nbsp;Privately-issued ABS | 561 | 16 | 8 | 569 |
| &nbsp;&nbsp;&nbsp;&nbsp;SBA certificates | 12255 | 1 | 244 | 12012 |
| &nbsp;&nbsp;&nbsp;&nbsp;Municipal bonds | 260326 | 167 | 26643 | 233850 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total securities available for sale | $350794 | $191 | $34468 | $316517 |
| &nbsp;&nbsp;Securities held to maturity: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Agency mortgage-backed | $45 | $— | $— | $45 |
| &nbsp;&nbsp;&nbsp;&nbsp;Municipal bonds | 1513 | 35 |  | 1548 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total securities held to maturity | $1558 | $35 | $— | $1593 |

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The amortized cost and fair value of investment securities as of December 31, 2022 by contractual maturity are shown below. CMO, ABS, SBA certificates, and mortgage-backed securities which do not have a single maturity date are shown separately.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Available for Sale** | **Available for Sale** | **Held to Maturity** | **Held to Maturity** |
|  | **Amortized**<br>**Cost** | **Fair**<br>**Value** | **Amortized**<br>**Cost** | **Fair**<br>**Value** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| Due within one year | $11725 | $11694 | $249 | $252 |
| Due after one year through five years | 23467 | 23408 | 755 | 769 |
| Due after five years through ten years  | 70249 | 66736 | 474 | 485 |
| Due after ten years | 189640 | 173500 |  |  |
| CMO | 15381 | 14349 |  |  |
| ABS | 519 | 527 |  |  |
| SBA certificates | 12094 | 11788 |  |  |
| Mortgage-backed securities | 30139 | 27161 | 42 | 42 |
|  | $353214 | $329163 | $1520 | $1548 |

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Information pertaining to investment securities with gross unrealized losses at December 31, 2022 and September 30, 2022, aggregated by investment category and the length of time that individual securities have been in a continuous loss position, follows:

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| | | | |
|:---|:---|:---|:---|
|  | **Number of**<br>**Investment**<br>**Positions** | <br>**Fair**<br>**Value** | **Gross**<br>**Unrealized**<br>**Losses** |
|  | *(Dollars in thousands)* | *(Dollars in thousands)* | *(Dollars in thousands)* |
| **December 31, 2022:** |  |  |  |
| &nbsp;&nbsp;Securities available for sale: |  |  |  |
| Continuous loss position less than twelve months: |  |  |  |
| &nbsp;&nbsp;U.S. Treasury bills and notes | 8 | $27668 | $3419 |
| &nbsp;&nbsp;Agency mortgage-backed | 12 | 23650 | 2236 |
| &nbsp;&nbsp;Agency CMO | 11 | 11709 | 626 |
| &nbsp;&nbsp;Privately-issued CMO | 1 | 405 | 31 |
| &nbsp;&nbsp;SBA certificates | 2 | 10749 | 285 |
| &nbsp;&nbsp;Municipal bonds | 201 | 159011 | 15620 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total less than twelve months | 235 | 233192 | 22217 |
| Continuous loss position more than twelve months: |  |  |  |
| &nbsp;&nbsp;Agency mortgage-backed | 1 | 3056 | 745 |
| &nbsp;&nbsp;Agency CMO | 4 | 2211 | 378 |
| &nbsp;&nbsp;Privately-issued ABS | 1 | 262 | 8 |
| &nbsp;&nbsp;SBA certificates | 2 | 1039 | 21 |
| &nbsp;&nbsp;Municipal bonds | 9 | 6830 | 1621 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total more than twelve months | 17 | 13398 | 2773 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total securities available for sale | 252 | $246590 | $24990 |
| **September 30, 2022:** |  |  |  |
| &nbsp;&nbsp;Securities available for sale: |  |  |  |
| Continuous loss position less than twelve months: |  |  |  |
| &nbsp;&nbsp;U.S. Treasury bills and notes | 7 | $27295 | $3514 |
| &nbsp;&nbsp;Agency mortgage-backed | 14 | 24987 | 2749 |
| &nbsp;&nbsp;Agency CMO | 12 | 8896 | 551 |
| &nbsp;&nbsp;Privately-issued CMO | 2 | 424 | 20 |
| &nbsp;&nbsp;SBA certificates | 1 | 10775 | 225 |
| &nbsp;&nbsp;Municipal bonds | 259 | 193002 | 24922 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total less than twelve months | 295 | 265379 | 31981 |
| Continuous loss position more than twelve months: |  |  |  |
| &nbsp;&nbsp;Agency mortgage-backed | 1 | 2169 | 540 |
| &nbsp;&nbsp;Agency CMO | 2 | 1199 | 190 |
| &nbsp;&nbsp;Privately-issued CMO | 1 | 19 | 9 |
| &nbsp;&nbsp;Privately-issued ABS | 1 | 283 | 8 |
| &nbsp;&nbsp;SBA certificates | 2 | 1202 | 19 |
| &nbsp;&nbsp;Municipal bonds | 7 | 6263 | 1721 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total more than twelve months | 14 | 11135 | 2487 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total securities available for sale | 309 | $276514 | $34468 |

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At December 31, 2022 and September 30, 2021, the Company did not have any securities held to maturity with an unrealized loss.

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

The total available for sale debt securities in loss positions at December 31, 2022, which consisted of U.S. Treasury bills and notes, agency mortgage-backed securities, agency CMOs, privately-issued CMOs, privately-issued ABS, municipal bonds and SBA certificates, had a fair value as a percentage of amortized cost of 90.0%. The municipal securities are issued by municipal governments, and are generally secured by municipal project revenues or general obligations of the municipality.

The Company evaluates the existence of a potential credit loss component related to the decline in fair value of the privately issued CMO and ABS portfolios each quarter using an independent third party analysis. At December 31, 2022, the Company held four privately-issued CMO and ABS securities, acquired in a 2009 bank merger, with an aggregate amortized cost of $345,000 and fair value of $341,000 that have been downgraded to a substandard regulatory classification due to the security's credit quality rating by various rating agencies.

At December 31, 2022, five privately-issued CMO securities and one privately-issued ABS were in a loss position, and had depreciated approximately 5.52% from the Company's carrying value and were collateralized by residential mortgage loans. These securities had a total fair value of $667,000 and a total unrealized loss of $39,000 at December 31, 2022. Based on the independent third party analysis of the expected cash flows, management determined that $28,000 of other-than-temporary impairment was required to be recognized on the privately issued CMO and ABS portfolios at December 31, 2022. While the Company does not anticipate additional credit-related impairment losses at December 31, 2022, additional deterioration in market and economic conditions may have an adverse impact on the credit quality of the portfolio, and therefore, require a credit related impairment charge in the future.

The unrealized losses on U.S. Treasury bills and notes, agency mortgage-backed securities, agency CMOs, SBA certificates and municipal bonds relate principally to current interest rates for similar types of securities. In analyzing an issuer's financial condition, management considers whether the securities are issued by the federal government, its agencies, or other governments, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer's financial condition. As management has the ability to hold debt securities to maturity, or for the foreseeable future if classified as available for sale, no declines are deemed to be other-than-temporary.

During the three-month periods ended December 31, 2022 and 2021, the Company did not realize any gross gains or losses on sales of available for sale securities.

At December 31, 2022 and September 30, 2022, available for sale debt securities with a total fair value of $57.6 million and $58.6 million, respectively, were pledged to secure FHLB borrowings.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. **Loans and Allowance for Loan Losses** 

Loans at December 31, 2022 and September 30, 2022 consisted of the following:

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| | | |
|:---|:---|:---|
|  | | **September 30,**  |
|  | **December 31,** <br>**2022** | **2022** |
|  | *(In thousands)* | *(In thousands)* |
| Real estate mortgage: |  |  |
| &nbsp;&nbsp;1-4 family residential | $413015 | $368211 |
| &nbsp;&nbsp;Commercial | 178770 | 169861 |
| &nbsp;&nbsp;Single tenant net lease | 733134 | 674567 |
| &nbsp;&nbsp;SBA (1) | 52917 | 59379 |
| &nbsp;&nbsp;Multifamily residential | 32489 | 32411 |
| &nbsp;&nbsp;Residential construction | 21224 | 18261 |
| &nbsp;&nbsp;Commercial construction | 4612 | 5938 |
| &nbsp;&nbsp;Land and land development | 11054 | 11880 |
| Commercial business | 92025 | 90010 |
| SBA commercial business (1)(2) | 20353 | 20282 |
| Consumer | 38367 | 38052 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total loans | 1597960 | 1488852 |
| Deferred loan origination fees and costs, net (3) | 1060 | 1052 |
| &nbsp;&nbsp;Allowance for loan losses | (16080) | (15360) |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans, net | $1582940 | $1474544 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Includes discounts on SBA loans of $4.1 million and $4.3 million at December 31, 2022 and September 30, 2022, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Includes $591,000 and $650,000 of loans originated under the SBA's Paycheck Protection Program ("PPP") at December 31, 2022 and September 30, 2022, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Includes $10,000 and $11,000 of net deferred loan fees related to PPP loans as of December 31, 2022 and September 30, 2022, respectively.

During the three-month period ended December 31, 2022, there were no significant changes in the Company's lending activities or the methodology used to estimate the allowance for loan losses as disclosed in the Company's Annual Report on Form 10-K/A for the year ended September 30, 2022.

At December 31, 2022 and September 30, 2022, the Company did not own any residential real estate properties where physical possession has been obtained. At December 31, 2022 and September 30, 2022, the recorded investment in consumer mortgage loans collateralized by residential real estate properties in the process of foreclosure was $206,000 and $204,000, respectively.

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The following table provides the components of the recorded investment in loans as of December 31, 2022:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Principal** | **Accrued** | **Net Deferred** | **Recorded** |
|  | **Loan** | **Interest** | **Loan Origination**  | **Investment** |
| Recorded Investment in Loans: | **Balance** | **Receivable** | **Fees and Costs** | **in Loans** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| Residential real estate | $413015 | $2035 | $143 | $415193 |
| Commercial real estate | 178770 | 572 | (328) | 179014 |
| Single tenant net lease | 733134 | 2188 | 108 | 735430 |
| SBA commercial real estate  | 52917 | 672 | 1048 | 54637 |
| Multifamily | 32489 | 64 | (39) | 32514 |
| Residential construction | 21224 | 45 | (89) | 21180 |
| Commercial construction | 4612 | 12 | (28) | 4596 |
| Land and land development | 11054 | 24 | (11) | 11067 |
| Commercial business | 92025 | 374 | 30 | 92429 |
| SBA commercial business | 20353 | 212 | 246 | 20811 |
| Consumer | 38367 | 148 | (20) | 38495 |
|  | $1597960 | $6346 | $1060 | $1605366 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Individually**  | **Collectively**  | **Recorded** |
|  | **Evaluated for** | **Evaluated for** | **Investment in** |
| Recorded Investment in Loans as Evaluated for Impairment: | **Impairment** | **Impairment** | **Loans** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| Residential real estate | $2967 | $412226 | $415193 |
| Commercial real estate | 881 | 178133 | 179014 |
| Single tenant net lease |  | 735430 | 735430 |
| SBA commercial real estate | 7445 | 47192 | 54637 |
| Multifamily | 346 | 32168 | 32514 |
| Residential construction |  | 21180 | 21180 |
| Commercial construction |  | 4596 | 4596 |
| Land and land development |  | 11067 | 11067 |
| Commercial business | 904 | 91525 | 92429 |
| SBA commercial business | 1249 | 19562 | 20811 |
| Consumer | 311 | 38184 | 38495 |
|  | $14103 | $1591263 | $1605366 |

---

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

The following table provides the components of the recorded investment in loans as of September 30, 2022:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | **Net Deferred** |  |
|  |  | **Accrued** | **Loan**  | **Recorded** |
|  | **Principal Loan** | **Interest** | **Origination**  | **Investment** |
| Recorded Investment in Loans: | **Balance** | **Receivable** | **Fees and Costs** | **in Loans** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| Residential real estate | $368211 | $1701 | $136 | $370048 |
| Commercial real estate | 169861 | 533 | (304) | 170090 |
| Single tenant net lease | 674567 | 1979 | 47 | 676593 |
| SBA commercial real estate  | 59379 | 486 | 1108 | 60973 |
| Multifamily | 32411 | 62 | (40) | 32433 |
| Residential construction | 18261 | 27 | (89) | 18199 |
| Commercial construction | 5938 | 11 | (25) | 5924 |
| Land and land development | 11880 | 18 | (26) | 11872 |
| Commercial business | 90010 | 278 | 48 | 90336 |
| SBA commercial business | 20282 | 163 | 218 | 20663 |
| Consumer | 38052 | 121 | (21) | 38152 |
|  | $1488852 | $5379 | $1052 | $1495283 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Individually**  | **Collectively**  | **Recorded** |
|  | **Evaluated for** | **Evaluated for** | **Investment in** |
| Recorded Investment in Loans as Evaluated for Impairment: | **Impairment** | **Impairment** | **Loans** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| Residential real estate | $2248 | $367800 | $370048 |
| Commercial real estate | 907 | 169183 | 170090 |
| Single tenant net lease |  | 676593 | 676593 |
| SBA commercial real estate | 7725 | 53248 | 60973 |
| Multifamily | 354 | 32079 | 32433 |
| Residential construction |  | 18199 | 18199 |
| Commercial construction |  | 5924 | 5924 |
| Land and land development |  | 11872 | 11872 |
| Commercial business | 1007 | 89329 | 90336 |
| SBA commercial business | 1091 | 19572 | 20663 |
| Consumer | 238 | 37914 | 38152 |
|  | $13570 | $1481713 | $1495283 |

---

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

The following table presents the balance in the allowance for loan losses by portfolio segment and based on impairment method as of December 31, 2022 and September 30, 2022:

---

| | | | |
|:---|:---|:---|:---|
|  | **Individually**<br>**Evaluated for**<br>**Impairment** | **Collectively**<br>**Evaluated for**<br>**Impairment** | <br>**Ending**<br>**Balance** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| **December 31, 2022:** |  |  |  |
| Residential real estate | $— | $3100 | $3100 |
| Commercial real estate |  | 1751 | 1751 |
| Single tenant net lease |  | 3804 | 3804 |
| SBA commercial real estate | 83 | 2315 | 2398 |
| Multifamily |  | 252 | 252 |
| Residential construction |  | 367 | 367 |
| Commercial construction |  | 83 | 83 |
| Land and land development |  | 200 | 200 |
| Commercial business | 28 | 1227 | 1255 |
| SBA commercial business | 714 | 1624 | 2338 |
| Consumer |  | 532 | 532 |
|  | $825 | $15255 | $16080 |
| **September 30, 2022:** |  |  |  |
| Residential real estate | $— | $2716 | $2716 |
| Commercial real estate |  | 1590 | 1590 |
| Single tenant net lease |  | 3838 | 3838 |
| SBA commercial real estate | 290 | 2288 | 2578 |
| Multifamily |  | 251 | 251 |
| Residential construction |  | 305 | 305 |
| Commercial construction |  | 107 | 107 |
| Land and land development |  | 212 | 212 |
| Commercial business |  | 1193 | 1193 |
| SBA commercial business | 674 | 1448 | 2122 |
| Consumer |  | 448 | 448 |
|  | $964 | $14396 | $15360 |

---

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended December 31, 2022 and 2021:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  | **Beginning Balance** | **Provisions (Credits)** | **Charge-Offs** | **Recoveries** | **Ending Balance** |
|  |  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| **December 31, 2022:** |  |  |  |  |  |  |
| Residential real estate |  | $2716 | $382 | $— | $2 | $3100 |
| Commercial real estate |  | 1590 | 161 |  |  | 1751 |
| Single tenant net lease |  | 3838 | (34) |  |  | 3804 |
| SBA commercial real estate |  | 2578 | (106) | (74) |  | 2398 |
| Multifamily |  | 251 | 1 |  |  | 252 |
| Residential construction |  | 305 | 62 |  |  | 367 |
| Commercial construction |  | 107 | (24) |  |  | 83 |
| Land and land development |  | 212 | (12) |  |  | 200 |
| Commercial business |  | 1193 | 32 |  | 30 | 1255 |
| SBA commercial business |  | 2122 | 390 | (190) | 16 | 2338 |
| Consumer |  | 448 | 132 | (65) | 17 | 532 |
|  |  | $15360 | $984 | $(329) | $65 | $16080 |
| **December 31, 2021:** |  |  |  |  |  |  |
| Residential real estate |  | $1438 | $(82) | $(23) | $3 | $1336 |
| Commercial real estate |  | 2806 | (295) |  |  | 2511 |
| Single tenant net lease |  | 2422 | 345 |  |  | 2767 |
| SBA commercial real estate |  | 3475 | 267 | (20) |  | 3722 |
| Multifamily |  | 518 | (77) |  |  | 441 |
| Residential construction |  | 191 | 18 |  |  | 209 |
| Commercial construction |  | 63 | 17 |  |  | 80 |
| Land and land development |  | 235 | (14) |  |  | 221 |
| Commercial business |  | 1284 | (44) |  |  | 1240 |
| SBA commercial business |  | 1346 | 401 |  | 22 | 1769 |
| Consumer |  | 523 | (10) | (38) | 9 | 484 |
|  |  | $14301 | $526 | $(81) | $34 | $14780 |

---

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

The following table presents impaired loans individually evaluated for impairment as of December 31, 2022 and for the three months ended December 31, 2022 and 2021. The Company did not recognize any interest income on impaired loans using the cash receipts method during the three-month periods ended December 31, 2022 and 2021.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **At December 31, 2022** | **At December 31, 2022** | **At December 31, 2022** | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** |
|  | | | | **2022** | **2022** | **2021** | **2021** |
|  | <br>**Recorded**<br>**Investment** | <br>**Unpaid**<br>**Principal**<br>**Balance** | <br>**Related**<br>**Allowance** | **Average**<br>**Recorded**<br>**Investment** | **Interest**<br>**Income**<br>**Recognized** | **Average**<br>**Recorded**<br>**Investment** | **Interest**<br>**Income**<br>**Recognized** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| Loans with no related allowance recorded: |  |  |  |  |  |  |  |
| Residential real estate | $2967 | $3257 | $— | $2891 | $15 | $3444 | $16 |
| Commercial real estate | 881 | 959 |  | 971 | 7 | 1079 | 7 |
| Single tenant net lease |  |  |  |  |  |  |  |
| SBA commercial real estate | 6881 | 8115 |  | 7033 |  | 8102 |  |
| Multifamily | 346 | 389 |  | 393 | 5 | 428 |  |
| Residential construction |  |  |  |  |  |  |  |
| Commercial construction |  |  |  |  |  |  |  |
| Land and land development |  |  |  |  |  |  |  |
| Commercial business | 856 | 946 |  | 1068 | 12 | 1511 | 2 |
| SBA commercial business | 293 | 982 |  | 757 |  | 502 |  |
| Consumer | 88 | 72 |  | 77 |  | 87 |  |
|  | $12312 | $14720 | $— | $13190 | $39 | $15153 | $25 |
| Loans with an allowance recorded: |  |  |  |  |  |  |  |
| Residential real estate | $— | $— | $— | $— | $— | $253 | $— |
| Commercial real estate |  |  |  |  |  |  |  |
| Single tenant net lease |  |  |  |  |  |  |  |
| SBA commercial real estate | 564 | 587 | 83 | 1665 |  | 1025 |  |
| Multifamily |  |  |  |  |  |  |  |
| Residential construction |  |  |  |  |  |  |  |
| Commercial construction |  |  |  |  |  |  |  |
| Land and land development |  |  |  |  |  |  |  |
| Commercial business | 48 | 135 | 28 | 67 |  |  |  |
| SBA commercial business | 956 | 1214 | 714 | 1267 |  | 219 |  |
| Consumer | 223 | 223 |  | 184 |  | 138 |  |
|  | $1791 | $2159 | $825 | $3183 | $— | $1635 | $— |
| Total: |  |  |  |  |  |  |  |
| Residential real estate | $2967 | $3257 | $— | $2891 | $15 | $3697 | $16 |
| Commercial real estate | 881 | 959 |  | 971 | 7 | 1079 | 7 |
| Single tenant net lease |  |  |  |  |  |  |  |
| SBA commercial real estate | 7445 | 8702 | 83 | 8698 |  | 9127 |  |
| Multifamily | 346 | 389 |  | 393 | 5 | 428 |  |
| Residential construction |  |  |  |  |  |  |  |
| Commercial construction |  |  |  |  |  |  |  |
| Land and land development |  |  |  |  |  |  |  |
| Commercial business | 904 | 1081 | 28 | 1135 | 12 | 1511 | 2 |
| SBA commercial business | 1249 | 2196 | 714 | 2024 |  | 721 |  |
| Consumer | 311 | 295 |  | 261 |  | 225 |  |
|  | $14103 | $16879 | $825 | $16373 | $39 | $16788 | $25 |

---

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

The following table presents impaired loans individually evaluated for impairment as of September 30, 2022.

---

| | | | |
|:---|:---|:---|:---|
|  | <br>**Recorded**<br>**Investment** | **Unpaid**<br>**Principal**<br>**Balance** | <br>**Related**<br>**Allowance** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| Loans with no related allowance recorded: |  |  |  |
| Residential real estate | $2248 | $2524 | $— |
| Commercial real estate | 907 | 982 |  |
| Single tenant net lease |  |  |  |
| SBA commercial real estate | 5337 | 5952 |  |
| Multifamily | 354 | 398 |  |
| Residential construction |  |  |  |
| Commercial construction |  |  |  |
| Land and land development |  |  |  |
| Commercial business | 1007 | 1189 |  |
| SBA commercial business | 221 | 532 |  |
| Consumer | 93 | 81 |  |
|  | $10167 | $11658 | $— |
| Loans with an allowance recorded: |  |  |  |
| Residential real estate | $— | $— | $— |
| Commercial real estate |  |  |  |
| Single tenant net lease |  |  |  |
| SBA commercial real estate | 2388 | 2919 | 290 |
| Multifamily |  |  |  |
| Residential construction |  |  |  |
| Commercial construction |  |  |  |
| Land and land development |  |  |  |
| Commercial business |  |  |  |
| SBA commercial business | 870 | 1349 | 674 |
| Consumer | 145 | 145 |  |
|  | $3403 | $4413 | $964 |
| Total: |  |  |  |
| Residential real estate | $2248 | $2524 | $— |
| Commercial real estate | 907 | 982 |  |
| Single tenant net lease |  |  |  |
| SBA commercial real estate | 7725 | 8871 | 290 |
| Multifamily | 354 | 398 |  |
| Residential construction |  |  |  |
| Commercial construction |  |  |  |
| Land and land development |  |  |  |
| Commercial business | 1007 | 1189 |  |
| SBA commercial business | 1091 | 1881 | 674 |
| Consumer | 238 | 226 |  |
|  | $13570 | $16071 | $964 |

---

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

Nonperforming loans consist of nonaccrual loans and loans over 90 days past due and still accruing interest. The following table presents the recorded investment in nonperforming loans at December 31, 2022 and September 30, 2022:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **At December 31, 2022** | **At December 31, 2022** | **At December 31, 2022** | **At September 30, 2022** | **At September 30, 2022** | **At September 30, 2022** |
|  | <br>**Nonaccrual**<br>**Loans** | **Loans 90+**<br>**Days**<br>**Past Due**<br>**Still Accruing** | <br>**Total**<br>**Nonperforming**<br>**Loans** | <br><br>**Nonaccrual**<br>**Loans** | **Loans 90+**<br>**Days**<br>**Past Due**<br>**Still Accruing** | <br>**Total**<br>**Nonperforming**<br>**Loans** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| Residential real estate | $1946 | $— | $1946 | $1213 | $— | $1213 |
| Commercial real estate | 498 |  | 498 | 516 |  | 516 |
| Single tenant net lease |  |  |  |  |  |  |
| SBA commercial real estate | 7445 |  | 7445 | 7725 |  | 7725 |
| Multifamily |  |  |  |  |  |  |
| Residential construction |  |  |  |  |  |  |
| Commercial construction |  |  |  |  |  |  |
| Land and land development |  |  |  |  |  |  |
| Commercial business | 74 |  | 74 | 73 |  | 73 |
| SBA commercial business | 1249 |  | 1249 | 1091 |  | 1091 |
| Consumer | 311 |  | 311 | 238 |  | 238 |
| &nbsp;&nbsp;Total | $11523 | $— | $11523 | $10856 | $— | $10856 |

---

The following table presents the aging of the recorded investment in past due loans at December 31, 2022:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **30-59 Days**<br>**Past Due** | **60-89 Days**<br>**Past Due** | **90+ Days**<br>**Past Due** | **Total**<br>**Past Due** | <br>**Current** | **Total**<br>**Loans** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| Residential real estate | $1508 | $229 | $715 | $2452 | $412741 | $415193 |
| Commercial real estate | 259 |  | 498 | 757 | 178257 | 179014 |
| Single tenant net lease |  |  |  |  | 735430 | 735430 |
| SBA commercial real estate | 262 | 6 | 3172 | 3440 | 51197 | 54637 |
| Multifamily |  |  |  |  | 32514 | 32514 |
| Residential construction |  |  |  |  | 21180 | 21180 |
| Commercial construction |  |  |  |  | 4596 | 4596 |
| Land and land development |  |  |  |  | 11067 | 11067 |
| Commercial business | 65 |  | 47 | 112 | 92317 | 92429 |
| SBA commercial business |  |  | 805 | 805 | 20006 | 20811 |
| Consumer | 3 |  | 54 | 57 | 38438 | 38495 |
| &nbsp;&nbsp;Total | $2097 | $235 | $5291 | $7623 | $1597743 | $1605366 |

---

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

The following table presents the aging of the recorded investment in past due loans at September 30, 2022:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **30-59 Days**<br>**Past Due** | **60-89 Days**<br>**Past Due** | **90+ Days**<br>**Past Due** | **Total**<br>**Past Due** | <br>**Current** | **Total**<br>**Loans** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| Residential real estate | $1169 | $53 | $204 | $1426 | $368622 | $370048 |
| Commercial real estate |  |  | 516 | 516 | 169574 | 170090 |
| Single tenant net lease |  |  |  |  | 676593 | 676593 |
| SBA commercial real estate |  |  | 3370 | 3370 | 57603 | 60973 |
| Multifamily |  |  |  |  | 32433 | 32433 |
| Residential construction |  |  |  |  | 18199 | 18199 |
| Commercial construction |  |  |  |  | 5924 | 5924 |
| Land and land development |  |  |  |  | 11872 | 11872 |
| Commercial business |  |  | 73 | 73 | 90263 | 90336 |
| SBA commercial business | 231 |  | 237 | 468 | 20195 | 20663 |
| Consumer | 95 |  | 58 | 153 | 37999 | 38152 |
| &nbsp;&nbsp;Total | $1495 | $53 | $4458 | $6006 | $1489277 | $1495283 |

---

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, public information, historical payment experience, credit documentation, and current economic conditions and trends, among other factors. The Company classifies loans based on credit risk at least quarterly. The Company uses the following regulatory definitions for risk ratings:

*Special Mention:* Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company's credit position at some future date.

*Substandard:* Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

*Doubtful:* Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

*Loss:* Loans classified as loss are considered uncollectible and of such little value that their continuance on the Company's books as an asset is not warranted.

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. The following table presents the recorded investment in loans by risk category as of December 31, 2022:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **December 31, 2022:** | <br>**Pass** | **Special**<br>**Mention** | <br>**Substandard** | <br>**Doubtful** | <br>**Loss** | <br>**Total** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| Residential real estate | $413063 | $— | $1955 | $175 | $— | $415193 |
| Commercial real estate | 178306 |  | 708 |  |  | 179014 |
| Single tenant net lease | 735430 |  |  |  |  | 735430 |
| SBA commercial real estate | 46070 | 1123 | 5805 | 1639 |  | 54637 |
| Multifamily | 32514 |  |  |  |  | 32514 |
| Residential construction | 21180 |  |  |  |  | 21180 |
| Commercial construction | 4596 |  |  |  |  | 4596 |
| Land and land development | 11067 |  |  |  |  | 11067 |
| Commercial business | 92217 | 125 | 87 |  |  | 92429 |
| SBA commercial business | 17248 | 850 | 2669 | 44 |  | 20811 |
| Consumer | 38406 |  | 89 |  |  | 38495 |
| Total | $1590097 | $2098 | $11313 | $1858 | $— | $1605366 |

---

The following table presents the recorded investment in loans by risk category as of September 30, 2022:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **September 30, 2022:** | <br>**Pass** | **Special**<br>**Mention** | <br>**Substandard** | <br>**Doubtful** | <br>**Loss** | <br>**Total** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| Residential real estate | $368377 | $— | $1501 | $170 | $— | $370048 |
| Commercial real estate | 169363 |  | 727 |  |  | 170090 |
| Single tenant net lease | 676593 |  |  |  |  | 676593 |
| SBA commercial real estate | 51053 | 1143 | 7112 | 1665 |  | 60973 |
| Multifamily | 32433 |  |  |  |  | 32433 |
| Residential construction | 18199 |  |  |  |  | 18199 |
| Commercial construction | 5924 |  |  |  |  | 5924 |
| Land and land development | 11872 |  |  |  |  | 11872 |
| Commercial business | 90001 | 250 | 85 |  |  | 90336 |
| SBA commercial business | 17583 | 284 | 2755 | 41 |  | 20663 |
| Consumer | 38059 |  | 93 |  |  | 38152 |
| Total | $1479457 | $1677 | $12273 | $1876 | $— | $1495283 |

---

*Troubled Debt Restructurings*

Modification of a loan is considered to be a troubled debt restructuring ("TDR") if the debtor is experiencing financial difficulties and the Company grants a concession to the debtor that it would not otherwise consider. By granting the concession, the Company expects to obtain more cash or other value from the debtor, or to increase the probability of receipt, than would be expected by not granting the concession. The concession may include, but is not limited to, reduction of the stated interest rate of the loan, reduction of accrued interest, extension of the maturity date or reduction of the face amount or maturity amount of the debt. A concession will be granted when, as a result of the restructuring, the Company does not expect to collect all amounts due, including interest at the original stated rate. A concession may also be granted if the debtor is not able to access funds elsewhere at a market rate for debt with similar risk characteristics as the restructured debt. The Company's determination of whether a loan modification is a TDR considers the individual facts and circumstances surrounding each modification.

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

Loans modified in a TDR may be retained on accrual status if the borrower has maintained a period of performance in which the borrower's lending relationship was not greater than ninety days delinquent at the time of restructuring and the Company determines the future collection of principal and interest is reasonably assured. Loans modified in a TDR that are placed on nonaccrual status at the time of restructuring will continue on nonaccrual status until the Company determines the future collection of principal and interest is reasonably assured, which generally requires that the borrower demonstrate a period of performance according to the restructured terms of at least six consecutive months. TDRs on nonaccrual status are evaluated individually for purposes of calculating an allowance for loan losses while performing TDRs are evaluated collectively.

The following table summarizes the Company's recorded investment in TDRs at December 31, 2022 and September 30, 2022. There was $125,000 of specific reserve included in the allowance for loan losses related to TDRs at December 31, 2022. There was $161,000 of specific reserve included in the allowance for loan losses related to TDRs at September 30, 2022.

---

| | | | |
|:---|:---|:---|:---|
|  | **Accruing** | **Nonaccrual** | **Total** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| **December 31, 2022:** |  |  |  |
| &nbsp;&nbsp;Residential real estate | $1021 | $— | $1021 |
| &nbsp;&nbsp;Commercial real estate | 383 | 420 | 803 |
| &nbsp;&nbsp;SBA commercial real estate |  | 1604 | 1604 |
| &nbsp;&nbsp;Multifamily | 346 |  | 346 |
| &nbsp;&nbsp;Commercial business | 830 |  | 830 |
| &nbsp;&nbsp;SBA commercial business |  | 262 | 262 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $2580 | $2286 | $4866 |
| **September 30, 2022:** |  |  |  |
| &nbsp;&nbsp;Residential real estate | $1035 | $— | $1035 |
| &nbsp;&nbsp;Commercial real estate | 391 | 430 | 821 |
| &nbsp;&nbsp;SBA commercial real estate |  | 1627 | 1627 |
| &nbsp;&nbsp;Multifamily | 354 |  | 354 |
| &nbsp;&nbsp;Commercial business | 934 |  | 934 |
| &nbsp;&nbsp; SBA commercial business |  | 273 | 273 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $2714 | $2330 | $5044 |

---

There were no TDRs that were restructured during the three- months ended December 31, 2022 and 2021.

At December 31, 2022 and September 30, 2022, the Company had committed to lend $1,000 to customers with outstanding loans classified as TDRs.

There were principal charge-offs totaling $3,000 as a result of loans previously designated as TDRs during the three-month period ended December 31, 2022. There were no principal charge-offs recorded as a result of TDRs during the three-month periods ended December 31, 2021. In the event that a TDR subsequently defaults, the Company evaluates the restructuring for possible impairment. As a result, the related allowance for loan losses may be increased or charge-offs may be taken to reduce the carrying amount of the loan.

During the three -month periods ended December 31, 2022 and 2021, the Company did not have any TDRs that were modified within the previous twelve months and for which there was a payment default.

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

*SBA Loan Servicing Rights*

The Company originates loans to commercial customers under the SBA 7(a) program and other programs, and sells the guaranteed portion of the SBA loans with servicing rights retained. Loan servicing rights on originated SBA loans that have been sold are initially recorded at fair value. Capitalized SBA servicing rights are then amortized in proportion to and over the period of estimated net servicing income. Impairment of SBA servicing rights is assessed using the present value of estimated future cash flows.

The aggregate fair value of SBA loan servicing rights approximates its carrying value. A valuation model employed by an independent third party calculates the present value of future cash flows and is used to estimate fair value at the date of sale and on a quarterly basis for impairment analysis purposes. Management periodically compares the valuation model inputs and results to published industry data in order to validate the model results and assumptions. Key assumptions used to estimate the fair value of the SBA loan servicing rights include the discount rate and prepayment speed assumptions. For purposes of impairment, risk characteristics such as interest rate, loan type, term and investor type are used to stratify the SBA loan servicing rights. Impairment is recognized through a valuation allowance to the extent that fair value is less than the carrying amount. Changes in the valuation allowance are reported in other noninterest income in the consolidated statements of income.

The unpaid principal balance of SBA loans serviced for others was $237.9 million, $238.9 million and $250.5 million at December 31, 2022, September 30, 2022 and December 31, 2021, respectively. Contractually specified late fees and ancillary fees earned on SBA loans were $21,000 and $20,000 for the three-month periods ended December 31, 2022 and 2021, respectively. Net servicing income (contractually specified servicing fees offset by direct servicing expenses) related to SBA loans was $553,000 and $627,000 for the three-month periods ended December 31, 2022 and 2021, respectively. Net servicing income and costs related to SBA loans are included in other noninterest income in the consolidated statements of income.

An analysis of SBA loan servicing rights for the three-month periods ended December 31, 2022 and 2021 is as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
|  | *(In thousands)* | *(In thousands)* |
| Balance, beginning of period | $3790 | $4447 |
| Servicing rights capitalized | 198 | 346 |
| Amortization | (195) | (288) |
| Direct write-offs | (141) | (35) |
| Change in valuation allowance | (351) | (41) |
| Balance, end of period | $3301 | $4429 |

---

There was a valuation allowance of $530,000 and $179,000 related to SBA loan servicing rights at December 31, 2022 and September 30, 2022, respectively.

*Mortgage Servicing Rights ("MSRs")*

The Company originates residential mortgage loans for sale in the secondary market and retains servicing for certain of these loans when they are sold. MSRs retained for originated loans that have been sold are accounted for at fair value. The fair value of MSRs are determined using the present value of estimated expected net servicing income using assumptions about expected mortgage loan prepayment rates, discount rate, servicing costs, and other economic factors, which are determined based on current market conditions. Changes in these underlying assumptions could cause the fair value of MSRs to change significantly in the future. Changes in fair value of MSRs are recorded in mortgage banking income in the accompanying consolidated statements of income. MSRs are subject to changes in value from, among other things, changes in interest rates, prepayments of the underlying loans and changes in the credit quality of the underlying loans.

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**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

A valuation model employed by an independent third party calculates the present value of future cash flows and is used to value the MSRs on a monthly basis. Management periodically compares the valuation model inputs and results to published industry data in order to validate the model results and assumptions. Key assumptions, which are significant unobservable inputs, used to estimate the fair value of the MSRs at December 31, 2022 and September 30, 2022 were as follows:

---

| | | |
|:---|:---|:---|
| <br>**Assumption** | **Range of Assumption**<br>**(Weighted Average)**<br>**December 31, 2022** | **Range of Assumption**<br>**(Weighted Average)**<br>**September 30, 2022** |
| Discount rate | 9.50% to 14.50% (9.52%) | 9.50% to 14.50% (9.51%) |
| Prepayment rate | 3.75% to 85.80% (6.69%) | 6.01% to 74.89% (6.63%) |

---

The unpaid principal balance of residential mortgage loans serviced for others was $4.82 billion and $4.88 billion at December 31, 2022 and September 30, 2022, respectively. Custodial escrow balances maintained in connection with the foregoing loan servicing and other liabilities were $28.8 million and $46.0 million at December 31, 2022 and September 30, 2022, respectively. Contractually specified servicing fees (net of direct servicing expenses), late fees and other ancillary fees related to residential mortgage loans serviced for others were $2.4 million and $2.1 million for the three-month periods ended December 31, 2022 and 2021, respectively. Contractually specified servicing fees are included in mortgage banking income in the consolidated statements of income.

Changes in the carrying value of MSRs accounted for at fair value for the three-month periods ended December 31, 2022 and 2021 were as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
|  | *(In thousands)* | *(In thousands)* |
| Fair value, beginning of period | $63263 | $49579 |
| Servicing rights capitalized | 142 | 4504 |
| Changes in fair value related to: |  |  |
| Loan repayments | (1023) | (2492) |
| Change in valuation model inputs or assumptions | (217) | 3167 |
| Balance, end of period | $62165 | $54758 |

---

*Nonresidential MSRs*

The Company also periodically sells single tenant net lease loans with servicing rights retained. Loan servicing rights on these nonresidential mortgage loans are initially recorded at fair value and are then amortized in proportion to and over the period of estimated net servicing income. Impairment of nonresidential MSRs is assessed using the present value of estimated future cash flows. The aggregate fair value of nonresidential MSRs approximates its carrying value. A valuation model employed by management calculates the present value of future cash flows and is used to estimate fair value at the date of sale and on a quarterly basis for impairment analysis purposes. Management periodically compares the valuation model inputs and results to published industry data in order to validate the model results and assumptions. Key assumptions used to estimate the fair value of the nonresidential MSRs include the discount rate and prepayment speed assumptions. Impairment is recognized through a valuation allowance to the extent that fair value is less than the carrying amount. Changes in the valuation allowance are reported in other noninterest income in the consolidated statements of income.

The unpaid principal balance of nonresidential mortgage loans serviced for others was $44.0 million and $44.6 million at December 31, 2022 and September 30, 2022, respectively. Contractually specified servicing fees, late fees and other ancillary fees related to nonresidential mortgage loans serviced for others were $9,000 and $11,000 for the three-month periods ended December 31, 2022. Contractually specified servicing fees on nonresidential mortgage loans serviced for others are included in other noninterest income in the consolidated statements of income.

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**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

An analysis of nonresidential MSRs for the three-month periods ended December 31, 2022 and 2021 is as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
|  | *(In thousands)* | *(In thousands)* |
| Balance, beginning of period | $141 | $— |
| Servicing rights capitalized |  |  |
| Amortization | (9) |  |
| Direct write-offs |  |  |
| Change in valuation allowance |  |  |
| Balance, end of period | $132 | $— |

---

There was no valuation allowance related to nonresidential MSRs at December 31, 2022 and September 30, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. **Deposits** 

Deposits at December 31, 2022 and September 30, 2022 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**  | **September 30,**  |
|  | **2022** | **2022** |
|  | *(In thousands)* | *(In thousands)* |
| Noninterest-bearing demand deposits | $315390 | $340172 |
| NOW accounts | 345597 | 343296 |
| Money market accounts | 243443 | 238219 |
| Savings accounts | 170732 | 171779 |
| Retail time deposits | 136515 | 129864 |
| Brokered & reciprocal time deposits | 326164 | 292504 |
| Total | $1537841 | $1515834 |

---

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**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. **Supplemental Disclosure for Net Income Per Share** 

Net income per share information is presented below for the three -month periods ended December 31, 2022 and 2021. All share and per share amounts have been adjusted to reflect the three-for-one stock split effective September 15, 2021.

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |
|  | **December 31,**  | **December 31,**  |
| *(In thousands, except share and per share data)* | **2022** | **2021** |
| Basic: |  |  |
| &nbsp;&nbsp;Earnings: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income attributable to First Savings Financial Group, Inc. available to common shareholders | $2871 | $4305 |
| &nbsp;&nbsp;Shares: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Weighted average common shares outstanding, basic | 6915909 | 7116790 |
| &nbsp;&nbsp;Net income per common share, basic | $0.42 | $0.60 |
| Diluted: |  |  |
| &nbsp;&nbsp;Earnings: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income attributable to First Savings Financial Group, Inc. available to common shareholders | $2871 | $4305 |
| &nbsp;&nbsp;Shares: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Weighted average common shares outstanding, basic | 6915909 | 7116790 |
| &nbsp;&nbsp;&nbsp;&nbsp;Add: Dilutive effect of outstanding options | 53229 | 81177 |
| &nbsp;&nbsp;&nbsp;&nbsp;Add: Dilutive effect of restricted stock | 2917 | 9243 |
| &nbsp;&nbsp;&nbsp;&nbsp;Weighted average common shares outstanding, as adjusted | 6972055 | 7207210 |
| Net income per common share, diluted | $0.41 | $0.60 |

---

Nonvested restricted stock shares are not considered as outstanding for purposes of computing weighted average common shares outstanding.

Stock options for 275,889 and 137,250 shares of common stock were excluded from the calculation of diluted net income per common share for the three -month periods ended December 31, 2022 and 2021, respectively, because their effect was antidilutive. There were no antidilutive restricted stock awards excluded from the calculation of diluted net income per share for the three -month periods ended December 31, 2022 and 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. **Supplemental Disclosures of Cash Flow Information** 

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  |
|  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** |
|  | *(In thousands)* | *(In thousands)* |
| Cash payments for: |  |  |
| &nbsp;&nbsp;Interest | $6540 | $1866 |
| &nbsp;&nbsp;Income taxes (net of refunds received) | (117) | (5) |

---

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**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. **Fair Value Measurements and Disclosures about Fair Value of Financial Instruments** 

FASB Accounting Standards Codification ("ASC") Topic 820*, Fair Value Measurements,* provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under FASB ASC Topic 820 are described as follows:

Level 1: Inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets. A quoted market price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available.

---

| | |
|:---|:---|
| Level 2: | Inputs to the valuation methodology include quoted market prices for similar assets or liabilities in active markets; quoted market prices for identical or similar assets or liabilities in markets that are not active; or inputs that are derived principally from or can be corroborated by observable market data by correlation or other means. |

---

---

| | |
|:---|:---|
| Level 3: | Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Level 3 assets and liabilities include financial instruments whose value is determined using discounted cash flow methodologies, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |

---

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**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. The tables below present the balances of financial assets and liabilities measured at fair value on a recurring and nonrecurring basis as of December 31, 2022 and September 30, 2022.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Carrying Value** | **Carrying Value** | **Carrying Value** | **Carrying Value** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| **December 31, 2022:** |  |  |  |  |
| ***Assets Measured – Recurring Basis:*** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Securities available for sale: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. Treasury bills and notes | $— | $27908 | $— | $27908 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Agency mortgage-backed |  | 27161 |  | 27161 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Agency CMO |  | 13920 |  | 13920 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Privately-issued CMO |  | 429 |  | 429 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Privately-issued ABS |  | 527 |  | 527 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SBA certificates |  | 11788 |  | 11788 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipal |  | 247430 |  | 247430 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total securities available for sale | $— | $329163 | $— | $329163 |
| &nbsp;&nbsp;&nbsp;Residential mortgage loans held for sale | $— | $20675 | $— | $20675 |
| &nbsp;&nbsp;&nbsp;Derivative assets (included in other assets) | $— | $79 | $377 | $456 |
| &nbsp;&nbsp;&nbsp;Equity securities (included in other assets) | $117 | $— | $— | $117 |
| &nbsp;&nbsp;&nbsp;Residential mortgage servicing rights | $— | $— | $62165 | $62165 |
| ***Liabilities Measured – Recurring Basis:*** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Derivative liabilities (included in other liabilities) | $— | $95 | $15 | $110 |
| ***Assets Measured – Nonrecurring Basis:*** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Collateral dependent loans: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Residential real estate | $— | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SBA commercial real estate |  |  | 2576 | 2576 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Multifamily |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial business |  |  | 20 | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SBA commercial business |  |  | 389 | 389 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumer |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total impaired loans | $— | $— | $2985 | $2985 |
| &nbsp;&nbsp;&nbsp;SBA loan servicing rights | $— | $— | $3301 | $3301 |

---

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Carrying Value** | **Carrying Value** | **Carrying Value** | **Carrying Value** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| **September 30, 2022:** |  |  |  |  |
| ***Assets Measured – Recurring Basis*** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Securities available for sale: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. Treasury bills and notes | $— | $27295 | $— | $27295 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Agency mortgage-backed |  | 27500 |  | 27500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Agency CMO |  | 14821 |  | 14821 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Privately-issued CMO |  | 470 |  | 470 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Privately-issued ABS |  | 569 |  | 569 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SBA certificates |  | 12012 |  | 12012 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Municipal bonds |  | 233850 |  | 233850 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total securities available for sale | $— | $316517 | $— | $316517 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Residential mortgage loans held for sale | $— | $38579 | $— | $38579 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative assets (included in other assets) | $— | $872 | $158 | $1030 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity securities (included in other assets) | $103 | $— | $— | $103 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Residential mortgage servicing rights  | $— | $— | $63263 | $63263 |
| ***Liabilities Measured – Recurring Basis*** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Derivative liabilities (included in other liabilities) | $— | $31 | $396 | $427 |
| ***Assets Measured – Nonrecurring Basis*** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Collateral dependent loans: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Residential real estate | $— | $— | $— | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SBA commercial real estate |  |  | 2574 | 2574 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Multifamily |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial business |  |  | 46 | 46 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SBA commercial business |  |  | 290 | 290 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumer |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total impaired loans | $— | $— | $2910 | $2910 |
| &nbsp;&nbsp;&nbsp;SBA loan servicing rights | $— | $— | $3790 | $3790 |

---

Fair value is based upon quoted market prices where available. If quoted market prices are not available, fair value is based on internally developed models or obtained from third parties that primarily use, as inputs, observable market-based parameters or a matrix pricing model that employs the Bond Market Association's standard calculations for cash flow and price/yield analysis and observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value, or at the lower of cost or fair value. These adjustments may include unobservable parameters. Any such valuation adjustments have been applied consistently over time.

The Company's valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company's valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. There have been no changes in the valuation techniques and related inputs used for assets measured at fair value on a recurring and nonrecurring basis during the three-month period ended December 31, 2022.

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

***Securities Available for Sale and Equity Securities.*** Securities classified as available for sale and equity securities are reported at fair value on a recurring basis. These securities are classified as Level 1 of the valuation hierarchy where quoted market prices from reputable third-party brokers are available in an active market. If quoted market prices are not available, the Company obtains fair value measurements from an independent pricing service. These securities are reported using Level 2 inputs and the fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, U.S. government and agency yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the security's terms and conditions, among other factors. For securities where quoted market prices, market prices of similar securities or prices from an independent third party pricing service are not available, fair values are calculated using discounted cash flows or other market indicators and are classified within Level 3 of the fair value hierarchy. Changes in fair value of equity securities are reported in noninterest income. Changes in fair value of securities available for sale are recorded in other comprehensive income, net of income tax effect.

***Residential Mortgage Loans Held for Sale***. The Company has elected to record its residential mortgage loans held for sale at fair value in accordance with FASB ASC 825-10. The fair value of residential mortgage loans held for sale is based on specific prices of the underlying contracts for sale to investors or current secondary market prices for loans with similar characteristics, and is classified as Level 2 in the fair value hierarchy.

***SBA and Single Tenant Net Lease Loans Held for Sale***. SBA and single tenant net lease loans held for sale are carried at the lower of cost or market value. At September 30, 2022, the fair value of SBA loans held for sale was obtained from an independent third party pricing firm based on specific prices of the underlying contracts for sale to investors or current secondary market prices for loans with similar characteristics, and was classified as Level 2 in the fair value hierarchy. The fair value of SBA loans held for sale reflects management's estimate based on the weighted average price of SBA loans sold to investors during the current quarter, and is classified as Level 3 in the fair value hierarchy. At December 31, 2022, the fair value of single tenant net lease loans held for sale is estimated to approximate carrying value and is classified as Level 3 in the fair value hierarchy. At December 31, 2022 and September 30, 2022, the Company did not have any SBA or single tenant net lease loans held for sale measured at fair value on a nonrecurring basis.

***Derivative Financial Instruments***. Derivative financial instruments consist of mortgage banking interest rate lock commitments and forward mortgage loan sale commitments. The fair value of forward mortgage loan sale commitments is obtained from an independent third party and is based on the gain or loss that would occur if the Company were to pair-off the sales transaction with the investor. The fair value of forward mortgage loan sale commitments is classified as Level 2 in the fair value hierarchy.

The fair value of interest rate lock commitments is also obtained from an independent third party and is based on investor prices for the underlying loans or current secondary market prices for loans with similar characteristics, less estimated costs to originate the loans and adjusted for the anticipated funding probability (pull-through rate). The fair value of interest rate lock commitments is classified as Level 3 in the fair value hierarchy.

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

The table below presents a reconciliation of derivative assets and liabilities (interest rate lock commitments) measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three -month periods ended December 31, 2022 and 2021:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |
|  | **December 31,**  | **December 31,**  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(In thousands)* | **2022** | **2021** |
| Beginning balance | $(238) | $1567 |
| Unrealized gains recognized in earnings, net of settlements | 600 | 173 |
| Ending balance | $362 | $1740 |

---

The realized and unrealized gains recognized in earnings in the table above are included in mortgage banking income on the accompanying consolidated statements of income. Gains recognized in earnings for the three-month periods ended December 31, 2022 and 2021 attributable to Level 3 derivative assets and liabilities held at the balance sheet date were $361,000 and $1.7 million, respectively.

The table below presents information about significant unobservable inputs (Level 3) used in the valuation of derivative financial instruments measured at fair value on a recurring basis as of December 31, 2022 and September 30, 2022.

---

| | | | |
|:---|:---|:---|:---|
| <br>**Financial Instrument** | <br>**Significant**<br>**Unobservable**<br>**Inputs** | **Range of Inputs**<br>**(Weighted Average)**<br>**December 31,**<br>**2022** | **Range of Inputs**<br>**(Weighted Average)**<br>**September 30,**<br>**2022** |
| Interest rate lock commitments  | Pull-through rate | 31% - 100% (68%) | 50% - 100% (78%) |
|  | Direct costs to close | 0.00% - 5.10% (0.50%) | 0.00% - 4.00% (0.70%) |

---

***Residential Mortgage Servicing Rights*.** The current market for residential MSRs is not sufficiently liquid to provide participants with quoted market prices. Therefore, the Company uses a discounted cash flow valuation model from an independent third party to determine the fair value of residential MSRs. The discounted cash flow model approach consists of projecting expected servicing cash flows and calculating the present value. The key assumptions used in the valuation of residential MSRs include mortgage prepayment speeds, discount rates and loan servicing costs. Due to the nature of the valuation inputs, residential MSRs are classified within Level 3 of the valuation hierarchy. A reconciliation of residential MSRs measured at fair value on a recurring basis using significant unobservable inputs (Level 3) and a summary of the significant unobservable inputs used in the residential MSR valuations is presented in Note 3. Changes in the fair value of residential MSRs are included in mortgage banking income in the accompanying consolidated statements of income.

***Collateral Dependent Loans***. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly. In accordance with accounting standards, only impaired loans for which an allowance for loan loss has been established or a partial charge-off recorded require classification in the fair value hierarchy.

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

The fair value of impaired loans is based on the fair value of the underlying collateral less estimated costs to sell. Collateral may be real estate and/or business assets, including equipment, inventory and/or accounts receivable. The fair value of the collateral is generally determined based on real estate appraisals or other independent evaluations by qualified professionals, adjusted for estimated costs to sell the property, costs to complete or repair the property and other factors to reflect management's estimate of the fair value of the collateral given the current market conditions and the condition of the collateral. The fair value of impaired loans is classified as Level 3 in the fair value hierarchy. At December 31, 2022 and September 30, 2022, the significant unobservable inputs used in the fair value measurement of impaired loans included discounts due to marketability from appraised value ranging from 0.0% to 100.0%, for both periods, and estimated costs to sell the collateral ranging from 0.0% to 10.0% for both periods. During the three -month periods ended December 31, 2022, the Company recognized provisions for loan losses on impaired loans of $200,000 and $691,000, respectively.

***SBA and Nonresidential Loan Servicing Rights***. SBA loan servicing rights represent the value associated with servicing SBA loans that have been sold. The fair value of SBA loan servicing rights is determined on a quarterly basis by an independent third party valuation model using market-based discount rate and prepayment assumptions, and is classified as Level 3 in the fair value hierarchy. At December 31, 2022, the significant unobservable inputs used in the fair value measurement of SBA loan servicing rights measured at fair value included discount rates ranging from 14.65% to 25.00% with a weighted average of 17.89% and prepayment speed assumptions ranging from 6.70% to 29.59% with a weighted average rate of 14.69%. At September 30, 2022, the significant unobservable inputs used in the fair value measurement of SBA loan servicing rights measured at fair value included discount rates ranging from 6.90% to 25.00% with a weighted average of 12.71% and prepayment speed assumptions ranging from 7.08% to 29.26% with a weighted average rate of 15.27%. Impairment of the SBA loan servicing rights is recognized on a quarterly basis through a valuation allowance to the extent that fair value is less than the carrying amount. The Company recognized impairment charges of $351,000 and $41,000 on SBA loan servicing rights for the three-month periods ended December 31, 2022 and 2021, respectively.

Nonresidential mortgage loan servicing rights represent the value associated with servicing single tenant net lease loans that have been sold. The fair value of nonresidential mortgage loan servicing rights is determined by management on a quarterly basis using a discounted cash flow model, and is classified as Level 3 in the fair value hierarchy. At December 31, 2022 and September 30, 2022, the Company did not have any nonresidential mortgage loan servicing rights measured at fair value on a nonrecurring basis. The Company did not recognize any impairment charges on nonresidential mortgage loan servicing rights for the three-month periods ended December 31, 2022 and 2021.

***Other Real Estate Owned***. Other real estate owned held for sale is reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly. The fair value of other real estate owned is classified as Level 3 in the fair value hierarchy.

Other real estate owned is reported at fair value, less estimated costs to dispose of the property. The fair values are determined by real estate appraisals, which are then generally discounted by management in order to reflect management's estimate of the fair value of the property given current market conditions and the condition of the property. At December 31, 2022 and September 30, 2022, the Company did not have any other real estate owned measured at fair value on a nonrecurring basis. The Company did not recognize any charges to write down other real estate owned to fair value for the three -month periods ended December 31, 2022 and 2021.

There were no transfers into or out of the Company's Level 3 financial assets of the fair value hierarchy for the three -month period ended December 31, 2022.

***Financial Instruments Recorded Using Fair Value Option.*** Under FASB ASC 825-10, the Company may elect to report most financial instruments and certain other items at fair value on an instrument-by-instrument basis, with changes in fair value reported in income. The election is made at the acquisition date of an eligible financial asset or financial liability, and may not be revoked once made.

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

The Company has elected the fair value option for substantially all of its residential mortgage loans held for sale. These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loans and in accordance with the Company's policy on loans held for investment. None of these loans were 90 days or more past due, nor were any on nonaccrual status, as of December 31, 2022 and September 30, 2022.

The table below presents the difference between the aggregate fair value and the aggregate remaining principal balance for residential mortgage loans held for sale for which the fair value option had been elected as of December 31, 2022 and September 30, 2022.

---

| | | | |
|:---|:---|:---|:---|
|  |  | **Aggregate** |  |
|  | **Aggregate** | **Principal** |  |
|  | **Fair Value** | **Balance** |  |
|  | **December 31,** | **December 31,** |  |
| *(In thousands)* | **2022** | **2022** | **Difference** |
| Residential mortgage loans held for sale | $20675 | $20196 | $479 |

---

---

| | | | |
|:---|:---|:---|:---|
|  |  | **Aggregate** |  |
|  | **Aggregate** | **Principal** |  |
|  | **Fair Value** | **Balance** |  |
|  | **September 30,** | **September 30,** |  |
| *(In thousands)* | **2022** | **2022** | **Difference** |
| Residential mortgage loans held for sale | $38579 | $38517 | $62 |

---

The table below presents gains and losses and interest included in earnings related to financial assets measured at fair value under the fair value option for the three- month periods ended December 31, 2022 and 2021:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |
|  | **December 31,**  | **December 31,**  |
| *(In thousands)* | **2022** | **2021** |
| Gains – included in mortgage banking income | $668 | $1623 |
| Interest income | 428 | 994 |
|  | $1096 | $2617 |

---

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

GAAP requires disclosure of fair value information about financial instruments for interim reporting periods, whether or not recognized in the consolidated balance sheet. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The carrying amounts and estimated fair values of the Company's financial instruments are as follows.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Fair Value Measurements Using:** | **Fair Value Measurements Using:** | **Fair Value Measurements Using:** |
|  | **Carrying**<br>**Amount** | **Level 1** | **Level 2** | **Level 3** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| **December 31, 2022:** |  |  |  |  |
| Financial assets: |  |  |  |  |
| &nbsp;&nbsp;Cash and due from banks | $25226 | $25226 | $— | $— |
| &nbsp;&nbsp;Interest-bearing deposits with banks | 13052 | 13052 |  |  |
| &nbsp;&nbsp;Interest-bearing time deposits | 1854 |  | 1854 |  |
| &nbsp;&nbsp;Securities available for sale | 329163 |  | 329163 |  |
| &nbsp;&nbsp;Securities held to maturity | 1520 |  | 1548 |  |
| &nbsp;&nbsp;Residential mortgage loans held for sale | 20675 |  | 20675 |  |
| &nbsp;&nbsp;Single tenant net lease loans held for sale |  |  |  |  |
| &nbsp;&nbsp;SBA loans held for sale | 23606 |  |  | 25603 |
| &nbsp;&nbsp;Loans, net | 1582940 |  |  | 1489154 |
| &nbsp;&nbsp;FRB and FHLB stock | 21564 | N/A | N/A | N/A |
| &nbsp;&nbsp;Accrued interest receivable | 10436 |  | 10436 |  |
| &nbsp;&nbsp;Residential mortgage loan servicing rights | 62165 |  |  | 62165 |
| &nbsp;&nbsp;Nonresidential mortgage loan servicing rights | 132 |  |  | 132 |
| &nbsp;&nbsp;SBA loan servicing rights | 3301 |  |  | 3301 |
| &nbsp;&nbsp;Derivative assets (included in other assets) | 456 |  | 79 | 377 |
| &nbsp;&nbsp;Equity securities (included in other assets) | 117 | 117 |  |  |
| Financial liabilities: |  |  |  |  |
| &nbsp;&nbsp;Deposits | 1537841 |  |  | 1533129 |
| &nbsp;&nbsp;Borrowings from FHLB | 377643 |  | 372776 |  |
| &nbsp;&nbsp;Subordinated note | 50274 |  | 48819 |  |
| &nbsp;&nbsp;Other borrowings | 45184 |  | 45184 |  |
| &nbsp;&nbsp;Accrued interest payable | 1984 |  | 1984 |  |
| &nbsp;&nbsp;Advance payments by borrowers for taxes and insurance | 695 |  | 695 |  |
| &nbsp;&nbsp;Derivative liabilities (included in other liabilities) | 110 |  | 95 | 15 |

---

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Fair Value Measurements Using:** | **Fair Value Measurements Using:** | **Fair Value Measurements Using:** |
|  | **Carrying**<br>**Amount** | **Level 1** | **Level 2** | **Level 3** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| **September 30, 2022:** |  |  |  |  |
| Financial assets: |  |  |  |  |
| &nbsp;&nbsp;Cash and due from banks | $18312 | $18312 | $— | $— |
| &nbsp;&nbsp;Interest-bearing deposits with banks | 23353 | 23353 |  |  |
| &nbsp;&nbsp;Interest-bearing time deposits | 1613 |  | 1613 |  |
| &nbsp;&nbsp;Securities available for sale | 316517 |  | 316517 |  |
| &nbsp;&nbsp;Securities held to maturity | 1558 |  | 1593 |  |
| &nbsp;&nbsp;Residential mortgage loans held for sale | 38579 |  | 38579 |  |
| &nbsp;&nbsp;SBA loans held for sale | 21883 |  | 24010 |  |
| &nbsp;&nbsp;Loans, net | 1474544 |  |  | 1402222 |
| &nbsp;&nbsp;FRB and FHLB stock | 20004 | N/A | N/A | N/A |
| &nbsp;&nbsp;Accrued interest receivable | 8332 |  | 8332 |  |
| &nbsp;&nbsp;SBA loan servicing rights | 3790 |  |  | 3790 |
| &nbsp;&nbsp;Residential mortgage loan servicing rights | 63263 |  |  | 63263 |
| &nbsp;&nbsp;Nonresidential mortgage loan servicing rights | 141 |  |  | 141 |
| &nbsp;&nbsp;SBA loan servicing rights | 3790 |  |  | 3789 |
| &nbsp;&nbsp;Derivative assets (included in other assets) | 1030 |  | 872 | 158 |
| &nbsp;&nbsp;Equity securities (included in other assets) | 103 | 103 |  |  |
| Financial liabilities: |  |  |  |  |
| &nbsp;&nbsp;Deposits | 1515834 |  |  | 1510792 |
| &nbsp;&nbsp;Borrowings from FHLB | 307303 |  | 302090 |  |
| &nbsp;&nbsp;Subordinated note | 50217 |  | 48685 |  |
| &nbsp;&nbsp;Other borrowings | 37989 |  |  | 37989 |
| &nbsp;&nbsp;Accrued interest payable | 1302 |  | 1302 |  |
| &nbsp;&nbsp;Advance payments by borrowers for taxes and insurance | 1207 |  | 1207 |  |
| &nbsp;&nbsp;Derivative liabilities (included in other liabilities) | 427 |  | 31 | 396 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. **Employee Stock Ownership Plan** 

On October 6, 2008, the Company established a leveraged employee stock ownership plan ("ESOP") covering substantially all employees. The ESOP trust acquired 203,363 shares of Company common stock at a cost of $10.00 per share financed by a term loan with the Company. The ESOP loan was repaid in full during the quarter ended December 31, 2015 and all shares have been allocated to participants in the plan; therefore, no compensation expense was recognized for the three- month periods ended December 31, 2022 and 2021. The ESOP trust held 306,202 shares of Company common stock at December 31, 2022 and September 30, 2022.

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**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. **Stock Based Compensation Plans** 

The Company maintains three equity incentive plans under which stock options and restricted stock have been or may be granted, the 2010 Equity Incentive Plan ("2010 Plan"), approved by the Company's shareholders in February 2010, the 2016 Equity Incentive Plan ("2016 Plan"), approved by the Company's shareholders in February 2016, and the 2021 Equity Incentive Plan ("2021 Plan") approved by the Company's shareholders in February 2021. The aggregate number of shares of the Company's common stock available for issuance under the 2016 Plan may not exceed 264,000 shares, consisting of 198,000 stock options and 66,000 shares of restricted stock. The aggregate number of shares of the Company's common stock available for issuance under the 2021 Plan may not exceed 356,058 shares, consisting of 267,043 stock options and 89,015 shares of restricted stock. At December 31, 2022, there were no remaining shares of the Company's common stock available for issuance under the 2010 Plan. At December 31, 2022, 4,560 shares of the Company's common stock were available for issuance under the 2016 Plan, of which 1,500 shares were available for restricted stock and 3,060 shares were available for stock options. At December 31, 2022, 85,058 shares of the Company's common stock were available for issuance under the 2021 Plan, of which 21,265 shares were available for restricted stock and 63,793 shares were available for stock options. The Company generally issues new shares under the 2016 and 2021 Plans from its authorized but unissued shares. The Company accounts for any forfeitures as they occur, and any previously recognized compensation cost for an award is reversed in the period the award is forfeited.

*Stock Options*

Under the plans, the Company may grant both non-statutory and incentive stock options that may not have a term exceeding ten years. In the case of incentive stock options, the aggregate fair value (determined at the time the incentive stock options are granted) which are first exercisable during any calendar year shall not exceed $100,000. Exercise prices may not be less than the fair market value of the underlying stock at the date of the grant. The terms of the plans also include provisions whereby all unearned options and restricted shares become immediately exercisable and fully vested upon a change in control.

Stock options granted generally vest ratably over five years and are exercisable in whole or in part for a period up to ten years from the date of the grant. Compensation expense is measured based on the fair market value of the options at the grant date and is recognized ratably over the period during which the shares are earned (the vesting period). The fair market value of stock options granted is estimated at the date of grant using a binomial option pricing model. Expected volatilities are based on historical volatility of the Company's stock. The expected term of options granted represents the period of time that options are expected to be outstanding. The risk free rate for the expected life of the options is based on the U.S. Treasury yield curve in effect at the grant date.

The fair value of options granted during the three-month period ended December 31, 2022 was determined using the following assumptions:

---

| | |
|:---|:---|
| Expected dividend yield | 2.32% |
| Risk-free interest rate | 1.55% |
| Expected volatility | 27.0% |
| Expected life of options | 7.1 years |
| Weighted average fair value at grant date | $7.03 |

---

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**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

A summary of stock option activity as of December 31, 2022, and changes during the three-month period then ended is presented below.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | <br>**Number of** <br>**Shares** | <br>**Weighted**<br>**Average**<br>**Exercise Price** | **Weighted**<br>**Average**<br>**Remaining**<br>**Contractual**<br>**Term**<br>**(Years)** | <br>**Aggregate**<br>**Intrinsic**<br>**Value** |
|  | *(Dollars in thousands, except per share data)* | *(Dollars in thousands, except per share data)* | *(Dollars in thousands, except per share data)* | *(Dollars in thousands, except per share data)* |
| Outstanding at beginning of period | 351369 | $20.57 |  |  |
| Granted | 66000 | 22.49 |  |  |
| Exercised |  |  |  |  |
| Forfeited or expired |  |  |  |  |
| Outstanding at end of period | 417369 | $20.87 | 7.0 | $867 |
| Vested and expected to vest | 417369 | $20.87 | 7.0 | $867 |
| Exercisable at end of period | 223830 | $17.77 | 5.4 | $866 |

---

There were no stock options exercised during the three-month periods ended December 31, 2022 and 2021. The Company recognized compensation expense related to stock options of $82,000 and $52,000 for the three-month periods ended December 31, 2022, respectively. At December 31, 2022, there was $1.2 million of unrecognized compensation expense related to nonvested stock options. The compensation expense is expected to be recognized over a weighted average period of 4.20 years. There was no cash received or tax benefit from the exercise of stock options during the three-month periods ended December 31, 2022 and 2021.

*Restricted Stock*

The vesting period of restricted stock granted under the plans is generally five years beginning one year after the date of grant of the awards. Compensation expense is measured based on the fair market value of the restricted stock at the grant date and is recognized ratably over the vesting period. Compensation expense related to restricted stock recognized for the three-month periods ended December 31, 2022 and 2021 was $103,000 and $75,000, respectively.

A summary of the Company's nonvested restricted shares activity as of December 31, 2022 and changes during the three-month period then ended is presented below.

---

| | | |
|:---|:---|:---|
|  | <br>**Number**<br>**of**<br>**Shares** | **Weighted**<br>**Average**<br>**Grant Date**<br>**Fair Value** |
| Nonvested at October 1, 2022 | 51324 | $26.07 |
| Granted | 22000 | $22.49 |
| Vested  | (16408) | $25.68 |
| Forfeited |  | $— |
| Nonvested at December 31, 2022 | 56916 | $24.80 |

---

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**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

There were 16,408 restricted shares vested during the three-month period ended December 31, 2022 with a total fair value of $369,000. There were 12,225 restricted shares that vested during the three-month period ended December 31, 2021 with a total fair value of $327,000. At December 31, 2022, there was $1.4 million of unrecognized compensation expense related to nonvested restricted shares. The compensation expense is expected to be recognized over a weighted average period of 4.14 years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. **Derivative Financial Instruments** 

The Company enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (i.e., rate lock commitment). The Company also enters into forward mortgage loan commitments to sell loans to various investors to protect itself against exposure to various factors and to reduce sensitivity to interest rate movements. Both the interest rate lock commitments and the related forward mortgage loan sales contracts are considered derivatives and are recorded on the accompanying consolidated balance sheets at fair value in accordance with FASB ASC 815, *Derivatives and Hedging*, with changes in fair value recorded in mortgage banking income in the accompanying consolidated statements of income. All such derivatives are considered stand-alone derivatives and have not been formally designated as hedges by management.

Certain financial instruments, including derivatives, may be eligible for offset in the balance sheet when the "right of setoff" exists or when the instruments are subject to an enforceable master netting agreement, which includes the right of the non-defaulting party or non-affected party to offset recognized amounts, including collateral posted with the counterparty, to determine a net receivable or net payable upon early termination of the agreement. Certain of the Company's derivative instruments are subject to master netting agreements. However, the Company has not elected to offset such financial instruments in the consolidated balance sheets. The Company may be required to post margin collateral to derivative counterparties based on agreements with the dealers. At December 31, 2022 and September 30, 2022, the Company had cash collateral posted with certain derivative counterparties of $1.5 million and $2.4 million, respectively, against its derivative obligations. Cash collateral related to derivative contracts is recorded in interest-bearing deposits with banks or other assets in the consolidated balance sheets.

The tables below provide information on the Company's derivative financial instruments as of December 31, 2022 and September 30, 2022.

---

| | | | |
|:---|:---|:---|:---|
|  | **Notional** | **Asset** | **Liability** |
|  | **Amount** | **Derivatives** | **Derivatives** |
| *(In thousands)* | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| Interest rate lock commitments  | $42369 | $377 | $15 |
| Forward mortgage loan sale contracts | 26500 | 79 | 95 |
|  | $68869 | $456 | $110 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Notional** | **Asset** | **Liability** |
|  | **Amount** | **Derivatives** | **Derivatives** |
|  | **September 30,**  | **September 30,**  | **September 30,**  |
| *(In thousands)* | **2022** | **2022** | **2022** |
| Interest rate lock commitments  | $48952 | $158 | $396 |
| Forward mortgage loan sale contracts | 60000 | 872 | 31 |
|  | $108952 | $1030 | $427 |

---

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

Income (loss) related to derivative financial instruments included in mortgage banking income in the accompanying consolidated statements of income for the three- month periods ended December 31, 2022 and 2021 is as follows:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |
|  | **December 31,**  | **December 31,**  |
| *(In thousands)* | **2022** | **2021** |
| Interest rate lock commitments  | $599 | $173 |
| Forward mortgage loan sale contracts | (545) | 695 |
|  | $54 | $868 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. **Regulatory Capital** 

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total, Tier 1 and common equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and Tier 1 capital (as defined) to average assets (as defined). The final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks ("Basel III rules") became effective for the Bank on January 1, 2015, with full compliance with all of the requirements being phased in over a multi-year schedule through 2019. Under the Basel III rules, the Bank must hold a conservation buffer above the adequately capitalized risk-based capital ratios disclosed in the table below. The capital conservation buffer was phased in from 0.0% for 2015 to 2.5% by 2019. The capital conservation buffer was 2.50% for 2022 and 2021. The Bank met all capital adequacy requirements to which it was subject as of December 31, 2022 and September 30, 2022.

As of December 31, 2022, the most recent notification from the Federal Reserve Bank categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed the Bank's category.

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

The Company's and Bank's actual capital amounts and ratios are also presented in the table. The Company is not subject to the Federal Reserve Bank's consolidated capital requirements because it has less than $3 billion in total consolidated assets. However, management has elected to disclose the Company's capital amounts and ratios in addition to the Bank's required disclosures in the table below. No amount was deducted from capital for interest-rate risk at either date.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  | **To Be Well** | **To Be Well** | **Minimum** | **Minimum** |
|  |  |  | **Minimum**  | **Minimum**  | **Capitalized Under** | **Capitalized Under** |
|  |  |  | **For Capital** | **For Capital** | **Prompt Corrective** | **Prompt Corrective** |
|  | **Actual** | **Actual** | **Adequacy Purposes:** | **Adequacy Purposes:** | **Action Provisions:** | **Action Provisions:** |
|  | **Amount** | **Ratio** | **Amount** | **Ratio** | **Amount** | **Ratio** |
|  | *(Dollars in thousands)* | *(Dollars in thousands)* | *(Dollars in thousands)* | *(Dollars in thousands)* | *(Dollars in thousands)* | *(Dollars in thousands)* |
| **As of December 31, 2022:** |  |  |  |  |  |  |
| Total capital (to risk-weighted assets): |  |  |  |  |  |  |
| &nbsp;&nbsp;Consolidated | $227650 | 12.01% | $151625 | 8.00% | N/A | N/A |
| &nbsp;&nbsp;Bank | 215966 | 11.41 | 151418 | 8.00 | $189273 | 10.00% |
| Tier 1 capital (to risk-weighted assets): |  |  |  |  |  |  |
| &nbsp;&nbsp;Consolidated | $161296 | 8.51% | $113719 | 6.00% | N/A | N/A |
| &nbsp;&nbsp;Bank | 199886 | 10.56 | 113564 | 6.00 | $151418 | 8.00% |
| Common equity tier 1 capital (to risk-weighted assets): |  |  |  |  |  |  |
| &nbsp;&nbsp;Consolidated | $161296 | 8.51% | $85289 | 4.50% | N/A | N/A |
| &nbsp;&nbsp;Bank | 199886 | 10.56 | 85173 | 4.50 | $123027 | 6.50% |
| Tier 1 capital (to average adjusted total assets): |  |  |  |  |  |  |
| &nbsp;&nbsp;Consolidated | $161296 | 7.55% | $85455 | 4.00% | N/A | N/A |
| &nbsp;&nbsp;Bank | 199886 | 9.35 | 85505 | 4.00 | $106881 | 5.00% |
| **As of September 30, 2022 (As Restated):** |  |  |  |  |  |  |
| Total capital (to risk-weighted assets): |  |  |  |  |  |  |
| &nbsp;&nbsp;Consolidated | $224895 | 12.33% | $145973 | 8.00% | N/A | N/A |
| &nbsp;&nbsp;Bank | 208280 | 11.44 | 145713 | 8.00 | $182141 | 10.00% |
| Tier 1 capital (to risk-weighted assets): |  |  |  |  |  |  |
| &nbsp;&nbsp;Consolidated | $159318 | 8.73% | $109480 | 6.00% | N/A | N/A |
| &nbsp;&nbsp;Bank | 192920 | 10.59 | 109285 | 6.00 | $145713 | 8.00% |
| Common equity tier 1 capital (to risk-weighted assets): |  |  |  |  |  |  |
| &nbsp;&nbsp;Consolidated | $159318 | 8.73% | $82110 | 4.50% | N/A | N/A |
| &nbsp;&nbsp;Bank | 192920 | 10.59 | 81963 | 4.50 | $118392 | 6.50% |
| Tier 1 capital (to average adjusted total assets): |  |  |  |  |  |  |
| &nbsp;&nbsp;Consolidated | $159318 | 7.96% | $80031 | 4.00% | N/A | N/A |
| &nbsp;&nbsp;Bank | 192920 | 9.58 | 80555 | 4.00 | $100693 | 5.00% |

---

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. **Recent Accounting Pronouncements** 

The following are summaries of recently issued or adopted accounting pronouncements that impact the accounting and reporting practices of the Company:

In June 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-13, *Financial Instruments – Credit Losses (Topic 326)*. The update commonly referred to as the current expected credit loss methodology ("CECL") replaces the incurred loss methodology for recognizing credit losses under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Under the new guidance, an entity will measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The expected loss model will apply to loans and leases, unfunded lending commitments, held-to-maturity debt securities and other debt instruments measured at amortized cost. The impairment model for available-for-sale debt securities will require the recognition of credit losses through a valuation allowance when fair value is less than amortized cost, regardless of whether the impairment is considered to be other-than-temporary. For the Company, the amendments in the update were originally effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently assessing the impact the guidance will have upon adoption. Management expects to recognize a one-time cumulative-effect adjustment to the allowance for loan losses through retained earnings as of the beginning of the first reporting period in which the new standard is effective; however, the magnitude of the adjustment is unknown. In planning for the implementation of ASU 2016-13, management is currently evaluating software solutions, data requirements and loss methodologies.

In March 2022, the FASB issued ASU No. 2022-02, *Financial Instruments – Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures.* The ASU eliminates the current accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity must apply the loan refinancing and restructuring guidance to determine whether a modification results in a new loan or a continuation of an existing loan. For public business entities, the ASU also requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases. For entities that have not yet adopted the amendments in ASU No. 2016-13, the effective dates for the amendments in the ASU are the same as the effective dates in ASU No. 2016-13. The amendments should generally be applied prospectively, although for the transition method related to the recognition and measurement of TDRs an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. The Company is currently assessing the impact of the guidance, but its adoption is not expected to have a material impact on the Company's consolidated financial position or results of operations.

In June 2022, the FASB issued ASU No. 2022-03, *Fair Value Measurements (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions*. The ASU clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. It also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. For public business entities, the ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted and the amendments in the ASU should be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. The adoption of the ASU is not expected to have a material impact on the Company's consolidated financial position or results of operations.

The Company has determined that all other recently issued accounting pronouncements will not have a material impact on the Company's consolidated financial statements or do not apply to its operations.

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**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. **Segment Reporting** 

The Company's operations include three primary segments: core banking, SBA lending, and mortgage banking. The core banking segment originates residential, commercial and consumer loans and attracts deposits from its customer base. Net interest income from loans and investments that are funded by deposits and borrowings is the primary revenue for the core banking segment. The SBA lending segment originates loans guaranteed by the SBA, subsequently selling the guaranteed portion to outside investors. Net gains on sales of loans, net servicing income and net interest income are the primary sources of revenue for the SBA lending segment. The mortgage banking segment originates residential mortgage loans and sells them in the secondary market. Net gains on the sales of loans, net servicing income, income from derivative financial instruments and net interest income are the primary sources of revenue for the mortgage banking segment.

The core banking segment is comprised primarily by the Bank and First Savings Investments, Inc., while the SBA lending segment's revenues are comprised primarily of net interest income and gains on the sales of SBA loans generated by Q2. The mortgage banking segment operates as a separate division of the Bank.

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

The following segment financial information has been derived from the internal financial statements of the Company which are used by management to monitor and manage financial performance. The accounting policies of the three segments are the same as those of the Company. The amounts reflected in the "Other" column in the tables below represent combined balances of the Company and the Captive, and are the primary differences between the sum of the segment amounts and consolidated totals, along with amounts to eliminate transactions between segments.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Core**<br>**Banking** | **SBA**<br>**Lending** | **Mortgage**<br>**Banking** | **Consolidated**<br>**Totals** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| **Three Months Ended December 31, 2022:** |  |  |  |  |
| Net interest income | $15008 | $995 | $258 | $16261 |
| Provision for loan losses | 701 | 283 |  | 984 |
| Net interest income after provision | 14307 | 712 | 258 | 15277 |
| Net gains on sales of loans, SBA |  | 775 |  | 775 |
| Mortgage banking income | (10) |  | 2506 | 2496 |
| Noninterest income | 1928 | 754 | 2506 | 5188 |
| Noninterest expense | 9797 | 1924 | 5790 | 17511 |
| Income (loss) before taxes | 6438 | (458) | (3026) | 2954 |
| Income tax expense (benefit) | 996 | (107) | (756) | 83 |
| Segment profit (loss) | 5492 | (351) | (2270) | 2871 |
| Non-cash items: |  |  |  |  |
| &nbsp;&nbsp;Depreciation and amortization | 601 | 5 | 27 | 633 |
| Segment assets at December 31, 2022 | 2005780 | 100304 | 90835 | 2196919 |
|  | **Core** | **SBA** | **Mortgage** | **Consolidated** |
|  | **Banking** | **Lending** | **Banking** | **Totals** |
|  | *(In thousands)* | *(In thousands)* | *(In thousands)* | *(In thousands)* |
| **Three Months Ended December 31, 2021:** |  |  |  |  |
| Net interest income | $11495 | $1875 | $533 | $13903 |
| Provision (credit) for loan losses | (144) | 670 | **—** | 526 |
| Net interest income after provision | 11639 | 1205 | 533 | 13377 |
| Net gains on sales of loans, SBA | **—** | 1636 | **—** | 1636 |
| Mortgage banking income | (4) | **—** | 12748 | 12744 |
| Noninterest income  | 1942 | 1901 | 12748 | 16591 |
| Noninterest expense | 9582 | 2236 | 13134 | 24852 |
| Income before taxes | 4099 | 870 | 147 | 5116 |
| Income tax expense | 500 | 265 | 46 | 811 |
| Segment profit | 3599 | 605 | 101 | 4305 |
| Non-cash items: |  |  |  |  |
| &nbsp;&nbsp;Depreciation and amortization | 550 | 8 | 48 | 606 |
| Segment assets at December 31, 2021 | 1421680 | 157481 | 185428 | 1764589 |

---

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**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. **Revenue from Contracts with Customers** 

Substantially all of the Company's revenue from contracts with customers within the scope of FASB ASC 606 is included in the core banking segment and is recognized within noninterest income. The following table presents the Company's sources of noninterest income for the three- month periods ended December 31, 2022 and 2021:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |
|  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** |
|  | *(In thousands)*  | *(In thousands)*  |
| Service charges on deposit accounts | $558 | $434 |
| ATM and interchange fees | 739 | 679 |
| Investment advisory income | 128 | 188 |
| Other | 25 | 24 |
| &nbsp;&nbsp;Revenue from contracts with customers subject to ASC 606 | 1450 | 1325 |
| Gain on sale of SBA loans | 775 | 1636 |
| Mortgage banking income | 2496 | 12744 |
| Increase in cash value of life insurance | 225 | 254 |
| Real estate lease income | 117 | 148 |
| Other | 125 | 484 |
| &nbsp;&nbsp;Other noninterest income | 3738 | 15266 |
| &nbsp;&nbsp;Total noninterest income | $5188 | $16591 |

---

A description of the Company's revenue streams accounted for under FASB ASC 606 follows:

***Service Charges on Deposit Accounts***: The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as wire fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer's request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs.

***ATM and Interchange Fees***: The Company earns ATM usage fees and interchange fees from debit cardholder transactions conducted through a payment network. ATM fees are recognized when the transaction occurs. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. The costs of related loyalty rewards programs are netted against interchange income as a direct cost of the revenue generating activity.

***Investment Advisory Income***: The Company earns trust, insurance commissions, brokerage commissions and annuities income from its contracts with customers to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as the Company provides the contracted services and are generally assessed based on the market value of assets under management. Fees that are transaction based, including trade execution services, are recognized when the transaction is executed. Other related fees, which are based on a fixed fee schedule, are recognized when the services are rendered.

***Other Income***: Other income from contracts with customers includes check cashing and cashier's check fees, safe deposit box fees and cash advance fees. This revenue is recognized at the time the transaction is executed or over the period the Company satisfies the performance obligation.

[**Table of Contents**](#TOC)

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED**

*(Unaudited)*

**15.** **Mortgage Banking Income**

The components of mortgage banking income for the three-month periods ended December 31, 2022 and 2021 were as follows:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
|  | *(In thousands)* | *(In thousands)* |
| Origination and sale of mortgage loans (1) | $732 | $4655 |
| Mortgage brokerage income | 43 | 331 |
| Net change in fair value of loans held for sale and interest rate lock commitments | 1267 | (222) |
| Realized and unrealized gains (losses) from forward sales commitments | (545) | 695 |
| Capitalized residential mortgage loan servicing rights | 142 | 4504 |
| Net change in fair value of residential mortgage loan servicing rights | (1240) | 675 |
| Provisions for loan repurchases and indemnifications | (328) | (14) |
| Net loan servicing income | 2425 | 2120 |
| &nbsp;&nbsp;Total mortgage banking income | $2496 | $12744 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Includes origination fees and realized gains and losses on the sale of mortgage loans in the secondary market.

**16.** **Loss Contingency**

The Bank received notice of a class action lawsuit on March 23, 2021 regarding its policy and practice of assessing customer fees related to items presented on accounts with insufficient funds (NSF items). The Company has reached a verbal settlement agreement with the claimant, and the Company has accrued a loss contingency for this pending settlement at December 31, 2022, the amount of which had an immaterial effect on the condensed consolidated financial statements.

[**Table of Contents**](#TOC)

**FIRST SAVINGS FINANCIAL GROUP, INC.**

**PART I - ITEM 2**

**MANAGEMENT'S DISCUSSION AND**

**ANALYSIS OF FINANCIAL CONDITION AND**

**RESULTS OF OPERATIONS**

#### Safe Harbor Statement for Forward-Looking Statements
This report may contain forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts; rather they are statements based on the Company's current expectations regarding its business strategies and their intended results and its future performance. Forward-looking statements are preceded by terms such as "expects," "believes," "anticipates," "intends" and similar expressions.

Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties could cause or contribute to the Company's actual results, performance and achievements being materially different from those expressed or implied by the forward-looking statements. Factors that may cause or contribute to these differences include, without limitation, the scope, duration and severity of the COVID-19 pandemic and its effects on our business and operations, our customers, including their ability to make timely payments on loans, our service providers, and on the economy and financial markets, general economic conditions, including the effects of inflation, changes in market interest rates and changes in monetary and fiscal policies of the federal government; legislative and regulatory changes; the quality and composition of the loan and investment securities portfolio; loan demand; deposit flows; competition; and changes in accounting principles and guidelines. Additional factors that may affect our results are discussed herein and in our Annual Report on Form 10-K/A for the year ended September 30, 2022 under "Part II, Item 1A. Risk Factors." These factors should be considered in evaluating the forward-looking statements and undue reliance should not be placed on such statements. Except as required by applicable law or regulation, the Company assumes no obligation and disclaims any obligation to update any forward-looking statements.

**Critical Accounting Policies; Critical Accounting Estimates**

During the three-month period ended December 31, 2022, there was no significant change in the Company's critical accounting policies or the application of critical accounting policies as disclosed in the Company's Annual Report on Form 10-K/A for the year ended September 30, 2022.

**Comparison of Financial Condition at December 31, 2022 and September 30, 2022**

***Cash and Cash Equivalents.*** Cash and cash equivalents decreased $3.4 million from $41.7 million at September 30, 2022 to $38.3 million at December 31, 2022.

***Loans.*** Net loans receivable increased $108.4 million, from $1.47 billion at September 30, 2022 to $1.58 billion at December 31, 2022, primarily due to growth in residential mortgage loans and single tenant net lease commercial real estate loans which increased by $44.8 million and $58.6 million, respectively.

***Loans Held for Sale.*** Loans held for sale decreased $16.2 million, from $60.5 million at September 30, 2022 to $44.3 million at December 31, 2022, due to a decrease in residential mortgage loans held for sale of $17.9 million, partially offset by an increase in SBA loans held for sale of $1.7 million. The decreases in residential mortgage loans held for sale were due to loan sales outpacing originations during the period.

***Securities Available for Sale.*** Securities available for sale increased $12.7 million, from $316.5 million at September 30, 2022 to $329.2 million at December 31, 2022, due to purchases of $6.1 million and increases in fair value of $10.2 million, partially offset by calls and maturities of $1.9 million, principal repayments of $1.5 million.

***Securities Held to Maturity.*** Investment securities held to maturity decreased $38,000 from $1.6 million at September 30, 2022 to $1.5 million at December 31, 2022, due primarily to calls and maturities during the period.

[**Table of Contents**](#TOC)

**FIRST SAVINGS FINANCIAL GROUP, INC.**

**PART I - ITEM 2**

**MANAGEMENT'S DISCUSSION AND**

**ANALYSIS OF FINANCIAL CONDITION AND**

**RESULTS OF OPERATIONS**

***Mortgage Servicing Rights.*** Residential mortgage loan servicing rights decreased $1.1 million, from $63.3 million at September 30, 2022 to $62.2 million at December 31, 2022, primarily due to loan repayments and a $217,000 decrease in the fair value, partially offset by capitalized servicing rights of $142,000.

***Deposits.*** Total deposits increased $22.0 million, from $1.52 billion at September 30, 2022 to $1.54 billion at December 31, 2022, primarily due to a $33.7 million increase in brokered deposits, partially offset by a $24.8 million decrease in non-interest bearing deposits during the period.

***FHLB Borrowings.*** Borrowings from the FHLB increased $70.3 million, from $307.3 million at September 30, 2022 to $377.6 million at December 31, 2022. The increase in borrowings was primarily used to fund loan growth during the period.

***Equity.*** Stockholders' equity attributable to the Company increased $8.5 million from $151.6 million at September 30, 2022 to $160.1 million at December 31, 2022, due primarily to an increase in accumulated other comprehensive income of $8.1 million and retained net income of $2.0 million.

**Results of Operations for the Three Months Ended December 31, 2022 and 2021**

***Overview.*** The Company reported net income of $2.9 million, or $0.41 per diluted share, for the three-month period ended December 31, 2022 compared to net income of $4.3 million, or $0.60 per diluted share, for the three-month period ended December 31, 2021.

***Net Interest Income.*** Net interest income increased $2.4 million, or 17.0%, for the three-month period ended December 31, 2022 as compared to the same period in 2021. Average interest-earning assets increased $449.5 million and average interest-bearing liabilities increased $415.1 million when comparing the two periods. The tax-equivalent net interest margin was 3.41% for 2022 compared to 3.73% for 2021.

Total interest income increased $7.7 million, or 49.0%, when comparing the two periods due primarily to an increase in the average balance of interest-earning assets of $449.5 million, from $1.53 billion for 2021 to $1.98 billion for 2022, and an increase in the average tax equivalent yield on interest-earning assets from 4.22% for 2021 to 4.87% for 2022. The increase in the average balance of interest-earning assets was due to increases in the average balance of investment securities and total loans of $152.3 million and $310.2 million, respectively.

Total interest expense increased $5.4 million, or 282.3%, due to an increase in the average balance of interest-bearing liabilities of $415.1 million, from $1.20 billion for 2021 to $1.61 billion for 2022, and an increase in the average cost of interest-bearing liabilities from 0.62% for 2021 to 1.79% for 2022. The increase in the average cost of interest-bearing liabilities for 2022 was due primarily to higher rates paid for brokered deposits and money market accounts during the period.

[**Table of Contents**](#TOC)

**FIRST SAVINGS FINANCIAL GROUP, INC.**

**PART I - ITEM 2**

**MANAGEMENT'S DISCUSSION AND**

**ANALYSIS OF FINANCIAL CONDITION AND**

**RESULTS OF OPERATIONS**

***Average Balance Sheets.*** The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting annualized average yields and costs for the three-month periods ended December 31, 2022 and 2021. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. Average balances presented are daily averages. Nonaccrual loans are included in average balances only. Loan fees are included in interest income on loans and are not material. Tax exempt income on loans and investment securities have been adjusted to a tax equivalent basis using a federal marginal tax rate of 21%.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** |
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | <br>**Average**<br>**Balance** | **Interest**<br>**and**<br>**Dividends** | <br>**Yield/**<br>**Cost** | <br>**Average**<br>**Balance** | **Interest**<br>**and**<br>**Dividends** | <br>**Yield/**<br>**Cost** |
|  | *(Dollars in thousands)* | *(Dollars in thousands)* | *(Dollars in thousands)* | *(Dollars in thousands)* | *(Dollars in thousands)* | *(Dollars in thousands)* |
| Assets: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest-bearing deposits with banks | $19379 | $144 | 2.97% | $33065 | $14 | 0.17% |
| &nbsp;&nbsp;&nbsp;Loans, excluding PPP loans | 1582538 | 20219 | 5.11 | 1221879 | 13424 | 4.39 |
| &nbsp;&nbsp;&nbsp;PPP loans | 644 | 3 | 1.86 | 51178 | 595 | 4.65 |
| &nbsp;&nbsp;&nbsp;Investment securities - taxable | 111936 | 955 | 3.41 | 47717 | 405 | 3.40 |
| &nbsp;&nbsp;&nbsp;Investment securities - nontaxable | 241504 | 2505 | 4.15 | 153452 | 1509 | 3.93 |
| &nbsp;&nbsp;&nbsp;FRB and FHLB stock | 20063 | 220 | 4.39 | 19258 | 149 | 3.09 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest-earning assets | 1976064 | 24046 | 4.87 | 1526549 | 16096 | 4.22 |
| &nbsp;&nbsp;&nbsp;Noninterest-earning assets | 144887 |  |  | 180532 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $2120951 |  |  | $1707081 |  |  |
| Liabilities and equity: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;NOW accounts | $349363 | $423 | 0.48% | $321506 | $316 | 0.39% |
| &nbsp;&nbsp;&nbsp;Money market deposit accounts | 235188 | 795 | 1.35 | 226084 | 212 | 0.38 |
| &nbsp;&nbsp;&nbsp;Savings accounts | 171583 | 27 | 0.06 | 163928 | 26 | 0.06 |
| &nbsp;&nbsp;&nbsp;Time deposits | 457285 | 2913 | 2.55 | 201779 | 257 | 0.51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest-bearing deposits | 1213419 | 4158 | 1.37 | 913297 | 811 | 0.36 |
| &nbsp;&nbsp;&nbsp;FHLB borrowings | 311146 | 1919 | 2.47 | 264617 | 730 | 1.10 |
| &nbsp;&nbsp;&nbsp;Subordinated debt and other borrowings | 88304 | 1145 | 5.19 | 19870 | 318 | 6.40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest-bearing liabilities | 1612869 | 7222 | 1.79 | 1197784 | 1859 | 0.62 |
| &nbsp;&nbsp;&nbsp;Noninterest-bearing deposits | 328208 |  |  | 290454 |  |  |
| &nbsp;&nbsp;&nbsp;Other noninterest-bearing liabilities | 26844 |  |  | 36604 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 1967921 |  |  | 1524842 |  |  |
| &nbsp;&nbsp;&nbsp;Total stockholders' equity | 153030 |  |  | 182239 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and equity | $2120951 |  |  | $1707081 |  |  |
| &nbsp;&nbsp;&nbsp;Net interest income (taxable equivalent basis) |  | 16824 |  |  | 14237 |  |
| &nbsp;&nbsp;&nbsp;Less: taxable equivalent adjustment |  | (563) |  |  | (334) |  |
| &nbsp;&nbsp;&nbsp;Net interest income |  | $16261 |  |  | $13903 |  |
| &nbsp;&nbsp;&nbsp;Interest rate spread (taxable equivalent basis) |  |  | 3.08% |  |  | 3.60% |
| &nbsp;&nbsp;&nbsp;Net interest margin (taxable equivalent basis) |  |  | 3.41% |  |  | 3.73% |
| &nbsp;&nbsp;&nbsp;Net interest margin, excluding PPP and PPPLF (taxable equivalent basis) |  |  | 3.41% |  |  | 3.70% |
| &nbsp;&nbsp;&nbsp;Average interest-earning assets to average interest-bearing liabilities |  |  | 122.52% |  |  | 127.45% |

---

***Rate/Volume Analysis.*** The following table sets forth the effects of changing rates and volumes on our net interest income on a tax equivalent basis for the three-month periods ended December 31, 2022 and 2021. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume

[**Table of Contents**](#TOC)

**FIRST SAVINGS FINANCIAL GROUP, INC.**

**PART I - ITEM 2**

**MANAGEMENT'S DISCUSSION AND**

**ANALYSIS OF FINANCIAL CONDITION AND**

**RESULTS OF OPERATIONS**

(changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. Changes attributable to changes in both rate and volume have been allocated proportionally based on the absolute dollar amounts of change in each.

---

| | | | |
|:---|:---|:---|:---|
|  | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** |
|  | **Compared to** | **Compared to** | **Compared to** |
|  | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** |
|  | **Increase (Decrease)** | **Increase (Decrease)** | **Increase (Decrease)** |
|  | **Due to** | **Due to** | **Due to** |
|  | **Rate** | **Volume** | **Net** |
|  |  | *(In thousands)* |  |
| Interest income: |  |  |  |
| &nbsp;&nbsp;Interest-bearing deposits with banks | $184 | $(54) | $130 |
| &nbsp;&nbsp;Loans, excluding PPP loans | 2512 | 4283 | 6795 |
| &nbsp;&nbsp;PPP loans | (181) | (411) | (592) |
| &nbsp;&nbsp;Investment securities - taxable | 3 | 547 | 550 |
| &nbsp;&nbsp;Investment securities - nontaxable | 107 | 889 | 996 |
| &nbsp;&nbsp;FRB and FHLB stock | 63 | 8 | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest-earning assets | 2688 | 5262 | 7950 |
| Interest expense: |  |  |  |
| &nbsp;&nbsp;Deposits | 2698 | 649 | 3347 |
| &nbsp;&nbsp;Borrowings from FHLB | 981 | 208 | 1189 |
| &nbsp;&nbsp;Subordinated debt | (164) | 991 | 827 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest-bearing liabilities | 3515 | 1848 | 5363 |
| &nbsp;&nbsp;Net increase (decrease) in net interest income (taxable equivalent basis) | $(827) | $3414 | $2587 |

---

***Provision for Loan Losses.*** The Company recognized a provision for loan losses of $984,000 for the three-month period ended December 31, 2022, primarily due to loan portfolio growth, compared to a provision of $526,000 for the same period in 2021.

The Company recognized net charge-offs of $264,000 for the three-month period ended December 31, 2022 compared to net charge-offs of $47,000 for the same period in 2021.

***Noninterest Income***. Noninterest income decreased $11.4 million for the three-month period ended December 31, 2022 as compared to the same period in 2021. The decrease was due primarily to decreases in mortgage banking income and net gain on sale of SBA loans of $10.2 million and $861,000, respectively. The decrease in mortgage banking income was primarily due to a $3.9 million decrease in production revenue from lower originations for sale, a $4.4 million decrease in capitalized residential mortgage loan servicing rights, a $1.2 million decrease in realized and unrealized hedging gains in 2022 and a $1.2 million decrease in the fair value of the residential mortgage loan servicing rights portfolio in 2022 as compared to a $675,000 increase in fair value recognized in 2021, partially offset by a $1.3 million increase in the fair value of loans held for sale and interest rate lock commitments as compared to a $222,000 decrease in fair value recognized in 2021. Mortgage loans originated for sale were $77.6 million in the three months ended December 31, 2022 as compared to $541.1 million in 2021. The decrease in net gain on sales of SBA loans was due primarily to decreases in production and sales volume from the SBA lending segment, and lower premiums in the secondary market.

***Noninterest Expense.*** Noninterest expense decreased $7.3 million for the three-month period ended December 31, 2022 as compared to the same period in 2021. The decrease was due primarily to a decrease in compensation and benefits of $6.6 million. The decrease in compensation and benefits expense was due primarily to a reduction in staff and incentive compensation for the Company's mortgage banking segment as a result of decreased mortgage banking income.

[**Table of Contents**](#TOC)

**FIRST SAVINGS FINANCIAL GROUP, INC.**

**PART I - ITEM 2**

**MANAGEMENT'S DISCUSSION AND**

**ANALYSIS OF FINANCIAL CONDITION AND**

**RESULTS OF OPERATIONS**

***Income Tax Expense***. The Company recognized an income tax expense of $83,000 for the three-month period ended December 31, 2022 as compared to tax expense of $811,000 for the same period in 2021. The effective tax rate for 2022 was 2.8%, which was a decrease from the effective tax rate of 15.9% for 2021. The decrease was due to recognition of solar tax credits in 2022 and reduction of pre-tax net income in 2022 as compared to 2021.

**Liquidity and Capital Resources**

***Liquidity Management.*** Liquidity is the ability to meet current and future financial obligations of a short-term nature. The Bank's primary sources of funds are customer deposits, proceeds from loan repayments, maturing securities and FHLB borrowings. While loan repayments and maturities are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by market interest rates, general economic conditions and competition. At December 31, 2022, the Bank had cash and cash equivalents of $38.3 million and securities available-for-sale with a fair value of $329.2 million. If the Bank requires funds beyond its ability to generate them internally, it has additional borrowing capacity with the FHLB, borrowing capacity on federal funds purchased lines of credit facilities with other financial institutions and additional collateral eligible for repurchase agreements.

The Bank's primary investing activity is the origination of commercial real estate and one-to-four family mortgage loans and, to a lesser extent, consumer, multi-family, commercial business and residential and commercial real estate construction loans. The Bank also invests in U.S. government agency and sponsored enterprises securities, mortgage-backed securities and collateralized mortgage obligations issued by U.S. government agencies and sponsored enterprises, and municipal bonds.

The Bank must maintain an adequate level of liquidity to ensure the availability of sufficient funds to support loan growth and deposit withdrawals, to satisfy financial commitments and to take advantage of investment opportunities. Historically, the Bank has been able to retain a significant amount of its deposits as they mature. If these maturing deposits do not remain with the Bank, we will be required to seek other sources of funds, including other certificates of deposit and borrowings.

The Company is a separate legal entity from the Bank and must provide for its own liquidity to pay its operating expenses and other financial obligations, to pay any dividends and to repurchase any of its outstanding common stock. The Company's primary source of income is dividends received from the Bank and the Captive. The amount of dividends that the Bank may declare and pay to the Company in any calendar year cannot exceed net income for that year to date plus retained net income (as defined) for the preceding two calendar years. At December 31, 2022, the Company (unconsolidated basis) had liquid assets of $15.4 million.

***Capital Management.*** The Bank is required to maintain specific amounts of capital pursuant to regulatory requirements. As of December 31, 2022, the Bank was in compliance with all regulatory capital requirements that were effective as of such date, with Tier 1 capital (to average total assets), common equity Tier 1 capital (to risk-weighted assets), Tier 1 capital (to risk-weighted assets) and total capital (to risk-weighted assets) ratios of 9.35%, 10.56%, 10.56% and 11.41%, respectively. The regulatory requirements at that date were 5.0%, 6.5%, 8.0% and 10.0%, respectively, in order to be categorized as "well capitalized" under applicable regulatory guidelines. At December 31, 2022, the Bank was considered "well-capitalized" under applicable regulatory guidelines.

#### Off-Balance Sheet Arrangements
In the normal course of operations, the Company engages in a variety of financial transactions that, in accordance with GAAP, are not recorded on the Company's financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are primarily used to manage customers' requests for funding and take the form of loan commitments and letters of credit. A further presentation of the Company's off-balance sheet arrangements is presented in the Company's Annual Report on Form 10-K/A for the year ended September 30, 2022.

For the three-month period ended December 31, 2022, the Company did not engage in any off-balance sheet transactions reasonably likely to have a material effect on the Company's consolidated financial condition, results of operations or cash flows.

[**Table of Contents**](#TOC)

**FIRST SAVINGS FINANCIAL GROUP, INC.**

**PART I – ITEM 3**

**QUANTITATIVE AND QUALITATIVE DISCLOSURES**

**ABOUT MARKET RISK**

**Qualitative Aspects of Market Risk**. Market risk is the risk that the estimated fair value of our assets, liabilities, and derivative financial instruments will decline as a result of changes in interest rates or financial market volatility, or that our net income will be significantly reduced by interest rate changes.

The Company's principal financial objective is to achieve long-term profitability while reducing its exposure to fluctuating market interest rates by operating within acceptable limits established for interest rate risk and maintaining adequate levels of funding and liquidity. The Company has sought to reduce the exposure of its earnings to changes in market interest rates by attempting to manage the mismatch between asset and liability maturities and interest rates. In order to reduce the exposure to interest rate fluctuations, the Company has developed strategies to manage its liquidity, shorten its effective maturities of certain interest-earning assets and decrease the interest rate sensitivity of its asset base. Management has sought to decrease the average maturity of its assets by emphasizing the origination of short-term residential mortgage, commercial mortgage and commercial business loans, which are retained by the Company for its portfolio, and by generally selling all fixed rate residential mortgage loans in the secondary market. The Company relies on retail deposits as its primary source of funds. Management believes the primary use of retail deposits, complimented with a modest allocation of brokered and reciprocal certificates of deposit and FHLB borrowings, reduce the effects of interest rate fluctuations because they generally represent a more stable source of funds.

**Quantitative Aspects of Market Risk**. Potential cash flows, sales, or replacement value of many of our assets and liabilities, especially those that earn or pay interest, are sensitive to changes in the general level of interest rates. This interest rate risk arises primarily from our normal business activities of gathering deposits and extending loans. Many factors affect our exposure to changes in interest rates, such as general economic and financial conditions, customer preferences, historical pricing relationships, and re-pricing characteristics of financial instruments. Our earnings can also be affected by the monetary and fiscal policies of the U.S. Government and its agencies, particularly the Federal Reserve Board. Furthermore, the Company does not engage in hedging activities (other than the use of forward mortgage loan sale contracts in connection with our mortgage banking activities) or purchase high-risk derivative instruments, and also is not subject to foreign currency exchange rate risk or commodity price risk.

An element in our ongoing process is to measure and monitor interest rate risk using a Net Interest Income at Risk simulation to model the interest rate sensitivity of the balance sheet and to quantify the impact of changing interest rates on the Company. The model quantifies the effects of various possible interest rate scenarios on projected net interest income over a one-year horizon. The model assumes a semi-static balance sheet and measures the impact on net interest income relative to a base case scenario of hypothetical changes in interest rates over twelve months and provides no effect given to any steps that management might take to counter the effect of the interest rate movements. The scenarios include prepayment assumptions, changes in the level of interest rates, the shape of the yield curve, and spreads between market interest rates in order to capture the impact from re-pricing, yield curve, option, and basis risks.

[**Table of Contents**](#TOC)

**FIRST SAVINGS FINANCIAL GROUP, INC.**

**PART I - ITEM 3**

**QUANTITATIVE AND QUALITATIVE DISCLOSURES**

**ABOUT MARKET RISK**

Results of our simulation modeling, which assumes an immediate and sustained parallel shift in market interest rates, project that the Company's net interest income could change as follows over a one-year horizon, relative to our base case scenario.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| |  | **At December 31, 2022**  | **At December 31, 2022**  | **At September 30, 2022** | **At September 30, 2022** |
| |  | **One Year Horizon** | **One Year Horizon** | **One Year Horizon** | **One Year Horizon** |
| <br>**Immediate Change**<br>**in the Level**<br>**of Interest Rates** |  | **Dollar**<br>**Change** | **Percent**<br>**Change** | **Dollar**<br>**Change** | **Percent**<br>**Change** |
|  |  | *(Dollars in thousands)* | *(Dollars in thousands)* | *(Dollars in thousands)* | *(Dollars in thousands)* |
| 300bp |  | $(21371) | (38.73)% | $(15503) | (27.12)% |
| 200bp |  | (13475) | (24.42) | (8858) | (15.50) |
| 100bp |  | (6719) | (12.18) | (3224) | (5.64) |
| (100)bp |  | 4620 | 8.37 | 2819 | 4.93 |
| (200)bp |  | 8272 | 14.99 | 5095 | 8.91 |

---

At December 31, 2022, our simulated exposure to an increase in interest rates shows that an immediate and sustained increase in rates of 1.00% will decrease our net interest income by $6.7 million, or 12.18%, over a one year horizon compared to a flat interest rate scenario. Furthermore, rate increases of 2.00% and 3.00% would cause net interest income to decrease by 24.42% and 38.73%, respectively. An immediate and sustained decrease in rates of 1.00% will increase our net interest income by $4.6 million, or 8.37%, over a one year horizon compared to a flat interest rate scenario while a rate decrease of 2.00% would cause our net interest income to increase by 14.99%.

[**Table of Contents**](#TOC)

#### FIRST SAVINGS FINANCIAL GROUP, INC.

#### PART I - ITEM 4

#### CONTROLS AND PROCEDURES

#### Controls and Procedures
**Evaluation of Disclosure Controls and Procedures.** The Company's management, including the Company's principal executive officer and principal financial officer, have evaluated the effectiveness of the Company's "disclosure controls and procedures," as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the "Exchange Act"). Based upon their evaluation, the principal executive officer and principal financial officer have concluded that, due to the identification of material weaknesses in internal control over financial reporting, as further described below, the Company's disclosure controls and procedures were not effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the "SEC") (1) is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and (2) is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934. The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.

The Company's internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

The system of internal control over financial reporting as it relates to the consolidated financial statements is evaluated for effectiveness by management. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Due to the material weaknesses in internal control over financial reporting identified and described below, management has evaluated the effectiveness of the Company's internal control over financial reporting as of December 31, 2022 and has concluded that the Company's internal control over financial reporting was not effective as of that date because of the material weaknesses.

As part of the transition of independent registered public accounting firms, management identified material weaknesses in internal control over financial reporting related to the following:

● Ineffective design and operation of controls over other assets and liabilities. This material weakness occurred due to a failure to design appropriate controls for the evaluation of capitalized professional fees related to the negotiation of a new core processing contract and the accrual of liabilities related to deferred compensation and litigation expenses.

● Ineffective design and operation of controls over participation loan sales. This material weakness occurred due to a failure to design appropriate controls for the review of participation loan sales contracts, and changes to the provisions therein, to ensure the transfers qualify for sales treatment under U.S. GAAP.

[**Table of Contents**](#TOC)

**FIRST SAVINGS FINANCIAL GROUP, INC.**

**PART II**

**OTHER INFORMATION**

During the quarter ending March 31, 2023, management began taking steps to remediate the material weaknesses by evaluating the Company's policies and practices for and resources allocated to the controls over other assets and liabilities, and the review of all changes made to participation loan sales contracts. Management also intends to provide additional training and management oversight related to these areas.

**Changes in Internal Controls.** There have been no changes in our internal controls over financial reporting that occurred during the quarter ended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

[**Table of Contents**](#TOC)

**FIRST SAVINGS FINANCIAL GROUP, INC.**

**PART II**

**OTHER INFORMATION**

#### Item 1. Legal Proceedings
The Company is not a party to any legal proceedings. Periodically, there have been various claims and lawsuits involving the Bank, mainly as a plaintiff, such as claims to enforce liens, condemnation proceedings on properties in which the Bank holds security interests, claims involving the making and servicing of real property loans and other issues incident to the Bank's business. The Bank is not a party to any pending legal proceedings that it believes would have a material adverse effect on its financial condition or results of operations. As previously discussed in Note 17 of the Condensed Consolidated Financial Statements, the Bank received notice of a class action lawsuit on March 23, 2021 regarding its policy and practice of assessment of customer fees related to items presented on accounts with insufficient funds (NSF items).

#### Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K/A for the year ended September 30, 2022 which could materially affect our business, financial condition or future results. There have been no material changes to the risk factors described in our Annual Report on Form 10-K/A. However, these are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or results of operations.

#### Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table presents information regarding the Company's stock repurchase activity during the quarter ended December 31, 2022:

---

| | | | | |
|:---|:---|:---|:---|:---|
| <br>**Period** | <br>**(a)**<br>**Total number of**<br>**shares (or units)**<br>**purchased** | <br>**(b)**<br>**Average price**<br>**paid per share**<br>**(or unit)** | **(c)**<br>**Total number of shares**<br>**(or units) purchased as**<br>**part of publicly**<br>**announced plans or**<br>**programs (1)** | **(d)**<br>**Maximum number (or** <br>**appropriate dollar value) of**<br>**shares (or units) that may yet**<br>**be purchased under the plans**<br>**or programs** |
| October 1, 2022 through October 31, 2022 |  | $— |  | 152258 |
| November 1, 2022 through November 30, 2022 | 1318 | $22.49 | 1318 | 150940 |
| December 1, 2022 through December 31, 2022 | 73392 | $22.05 | 73392 | 77548 |
| Total | 74710 | $22.06 | 74710 | 77548 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) On August 16, 2021, the Company announced that its Board of Directors authorized a stock repurchase program to acquire up to 356,220 shares, or 5.0% of the Company's outstanding common stock. This replaces the previously existing stock repurchase program announced by the Company on November 16, 2012, which had 346,776 (split-adjusted) remaining for repurchase.

#### Item 3. Defaults upon Senior Securities
Not applicable.

#### Item 4. Mine Safety Disclosures
Not applicable.

[**Table of Contents**](#TOC)

**FIRST SAVINGS FINANCIAL GROUP, INC.**

**PART II**

**OTHER INFORMATION**

#### Item 5. Other Information
None.

#### Item 6. Exhibits

---

| | |
|:---|:---|
| 31.1 | [Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer](fsfg-20221231xex31d1.htm) |
| 31.2 | [Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer](fsfg-20221231xex31d2.htm) |
| 32.1 | [Section 1350 Certification of Chief Executive Officer](fsfg-20221231xex32d1.htm) |
| 32.2 | [Section 1350 Certification of Chief Financial Officer](fsfg-20221231xex32d2.htm) |
| 101 | The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2022, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statement of Changes in Stockholders' Equity, (v) the Consolidated Statements of Cash Flows and (vi) related notes |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

[**Table of Contents**](#TOC)

#### SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | FIRST SAVINGS FINANCIAL GROUP, INC. | FIRST SAVINGS FINANCIAL GROUP, INC. |
|  | (Registrant) | (Registrant) |
| **Dated** February 9, 2023 | **BY**: | &nbsp;&nbsp;&nbsp;/s/ Larry W. Myers |
|  |  | &nbsp;&nbsp;&nbsp;Larry W. Myers |
|  |  | &nbsp;&nbsp;&nbsp;President and Chief Executive Officer |
| **Dated** February 9, 2023 | **BY:** | &nbsp;&nbsp;&nbsp;/s/ Anthony A. Schoen |
|  |  | &nbsp;&nbsp;&nbsp;Anthony A. Schoen |
|  |  | &nbsp;&nbsp;&nbsp;Chief Financial Officer |

---

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION**

I, Larry W. Myers, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this quarterly report on Form 10-Q of First Savings Financial Group, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as the end of the period covered by this report based on such evaluation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: | February 9, 2023 | /s/ Larry W. Myers |
|  |  | Larry W. Myers |
|  |  | President and Chief Executive Officer |

---

------

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION**

I, Anthony A. Schoen, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this quarterly report on Form 10-Q of First Savings Financial Group, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as the end of the period covered by this report based on such evaluation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: | February 9, 2023 | /s/ Anthony A. Schoen |
|  |  | Anthony A. Schoen |
|  |  | Chief Financial Officer |

---

------

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report of First Savings Financial Group, Inc. and Subsidiaries (the "Company") on Form 10-Q for the period ended December 31, 2022, as filed with the Securities and Exchange Commission (the "Report"), I, Larry W. Myers, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

---

| | | | |
|:---|:---|:---|:---|
| **DATE:** | February 9, 2023 | **BY:** | /s/ Larry W. Myers |
|  |  |  | Larry W. Myers |
|  |  |  | President and Chief Executive Officer |

---

------

## Exhibit 32.2

**Exhibit 32.2**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report of First Savings Financial Group, Inc. and Subsidiaries (the "Company") on Form 10-Q for the period ended December 31, 2022, as filed with the Securities and Exchange Commission (the "Report"), I, Anthony A. Schoen, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

---

| | | | |
|:---|:---|:---|:---|
| **DATE:** | February 9, 2023 | **BY:** | /s/ Anthony A. Schoen |
|  |  |  | Anthony A. Schoen |
|  |  |  | Chief Financial Officer |

---

------