August 27, 2026
 
For some time, I have been telling you that our Bank was on the verge of profitability from our core operations. I have been as good as my word, as we have now crossed the threshold to core profitability. 

The Bank’s net income for the fiscal fourth quarter ending June 30, 2026 was approximately $99,000, an increase of $96,000 above our net income for the same quarter last year. Similarly, our net income for our most recent fiscal year was approximately $256,000, an increase of $329,000 above the net loss of approximately $73,000 from the prior fiscal year.

This increase in our quarterly net income primarily comes from four factors that have been the foundation of our business model since the Bank opened: (1) low cost of deposits from the quality of our core deposits, (2) expense control, (3) income from our loan portfolio, and (4) excellent asset quality.

Our cost of deposits in the month ending June 30, 2026 was 0.84% compared to our cost of deposits of 1.09% in the month ending June 30, 2025. This low cost of deposits was driven primarily by the amount of our noninterest-bearing deposits, which averaged 54% of our total deposit composition in June 2026.

As we promised you from the beginning, we have kept a close eye on our operating expenses. Comparing the quarter ending June 30, 2026 to the same quarter in 2025, our operating expenses only increased $24,500, of which $9,600 (39%) related to unavoidable increases in our information technology expense. On an annual basis, our noninterest expense for this fiscal year was only $38,000 (1.2%) higher than our noninterest expense of $3,072,000 in the prior fiscal year.

Income from our loan portfolio was also a key piece of the Bank’s improved profitability during this quarter. Our loan portfolio generated income of $632,000 in the quarter ending June 30, 2026, which was an increase of $92,000 (17%) from the quarter ending June 30, 2025. 

Finally, once again, our excellent asset quality prevented any charge-offs in our loan portfolio during the past fiscal year.  On June 30, 2026, we had no loans past due, no nonaccrual loans, and no foreclosed property on our books.

Turning now to our franchise value, you recall my discussion of the Economic Value of Equity ("EVE") in previous President's Reports.  EVE is a calculation of the approximate value of a bank's assets and liabilities on a particular date based on the prevailing interest rates on that date. Banks generally use projected changes in EVEs under various interest rate scenarios as one measurement of interest rate risk. In addition, however, EVE also provides a rough estimate of a bank's franchise value on the date of its calculation.

On June 30, 2026, our EVE was $29,602,000 based on the amounts of our assets and liabilities and the prevailing interest rates on that date. Noting that we had an unusually high level of noninterest bearing deposits on that date, our EVE still shows that we are continuing to build franchise value for our shareholders over and above our tangible equity because of the types and amounts of our loans and deposits.

Looking to the future, we are continuing our search for a business development executive working outside of banking in a sophisticated business development corporate environment. We have concluded that it will significantly enhance our business development efforts and related growth to bring in a true business development executive unburdened by the poor business development habits and practices that are common to community banking. We have already conducted some interviews of candidates for this position. It is very exciting for us to learn about the discipline and productivity that these executives bring to business development. We hope to add a strong business development executive to our team in the near future.

We are approaching our next fiscal year with ever increasing confidence in our Bank's future. We sincerely appreciate your support and the banking relationships that we have with many of you.
 
Sincerely,
 
Michael S. Ives
President and Chief Executive Officer



 
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
 
The above letter from the CEO of Integrity Bank for Business (the “Bank”) may contain “forward looking statements” regarding future events and future results of the Bank. Forward-looking statements can be identified by words such as “anticipates,” “estimates,” “intends,” “plans,” “believes,” “projects,” “will,” “expects,” “may,” and similar references to future periods. Forward-looking statements are neither historical facts nor assurances of future performance, but are based only on the Bank’s current beliefs, expectations, and assumptions regarding the future of its business, plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and outside of the Bank’s control. The Bank’s actual results and financial condition may differ materially from those indicated in forward-looking statements, and therefore you should not rely on forward-looking statements. Any forward-looking statement made by the Bank is based only on information available to the Bank as of the date on which it is made, and the Bank has no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise.


Balance Sheet 06/30/26

Income Statement for 4th Quarter FY2026