First Savings Financial Group, Inc. (FSFG): BCG Matrix [Dec-2025 Updated]

You're looking at First Savings Financial Group, Inc.'s (FSFG) portfolio right before the First Merchants merger, and the picture is definitely mixed. We've mapped out where the real growth engine is-the Stars in SBA Lending-against the stable, yet mature, Cash Cows driving $65.3 million in Net Interest Income for FY2025. But, you also need to see the structural drags from the legacy loan book, which is nearly 49.3% of assets, and the big question mark hanging over the new HELOC strategy, especially with the deal on the table. Let's break down exactly which units are the clear Stars, the reliable Cash Cows, the anchors you need to divest (Dogs), or the high-risk bets (Question Marks) right now.

Background of First Savings Financial Group, Inc. (FSFG)

First Savings Financial Group, Inc. (FSFG), which is the holding company for First Savings Bank, serves individuals and business customers across 16 locations in southern Indiana. As you know, the Bank primarily attracts deposits from the public and uses those funds, along with borrowings, to originate commercial mortgage, residential mortgage, construction, commercial business, and consumer loans. The Bank also maintains investments in mortgage-backed securities, municipal bonds, and other investment securities. Furthermore, FSFG has wholly-owned subsidiaries, including Q2 Business Capital, LLC, which specializes in SBA lending activities.

Looking at the performance leading up to late 2025, the company showed significant operational strength. For the fiscal year ended September 30, 2025, First Savings Financial Group, Inc. reported annual revenue of $84.16 million and an Earnings Per Share (EPS) of $0.82 for the fourth quarter, beating analyst expectations. Honestly, the margin performance has been a standout story; the net profit margin surged to 27.1% in the latest reported period, more than double the 12.7% seen the prior year, which really sets FSFG apart from many regional bank peers.

On the balance sheet side as of June 30, 2025, total assets for First Savings Financial Group, Inc. stood at $2.416 billion, with gross loans reaching $1.916 billion. You'll also note that management took action to optimize capital structure, executing a redemption of $20.0 million of high-cost subordinated notes. Around the time of the Q4 2025 report in late October, shares were trading near $29.82, and the company had a trailing Price-to-Earnings Ratio of 9.39x.

First Savings Financial Group, Inc. (FSFG) - BCG Matrix: Stars

You're looking at the business units that are currently driving the most excitement and demanding the most capital for First Savings Financial Group, Inc. (FSFG). In the BCG framework, these are the Stars-the high market share players in high-growth markets. For FSFG, the SBA Lending segment clearly fits this profile right now, consuming cash to fuel its expansion while simultaneously leading the market.

The narrative for the SBA Lending segment in fiscal year 2025 is one of a clear inflection point. You see this when you track the quarterly results. After reporting a segment net loss of $0.14M in Q1 FY2025 (quarter ended December 31, 2024), the segment turned around, posting its first profitable quarter in Q2 FY2025 (ended March 31, 2025). Critically, management confirmed the SBA Lending segment posted its third consecutive profitable quarter in Q4 FY2025. This sustained profitability, following a period of losses, signals that the investment in this high-growth area is starting to pay off, which is exactly what you want to see from a Star.

The execution on monetizing these assets is strong, which is why this unit is a Star and not a Question Mark. The focus here is on the sales execution, which generates immediate noninterest income. For the full fiscal year ended September 30, 2025, the results show a significant lift:

This $1.2 million increase in net gain on sale of SBA loans for the full year 2025 demonstrates high-return execution on the assets originated in this growing niche. To be fair, the segment still carries risks, as evidenced by net charge-offs related to unguaranteed portions of SBA loans totaling $454,000 for the full year 2025. Still, the overall trend is positive.

The reason this segment is classified as a Star is its positioning in a market that is growing faster than FSFG's traditional footprint. While direct comparative growth rates are proprietary, the strategic emphasis on this area suggests it is the high-growth engine. This specialized national lending niche is where FSFG is placing bets for future growth, contrasting with the more mature core regional market. The pipeline activity supports this view of continued high market growth potential.

Here's what the current status of the SBA segment tells us about its Star characteristics:

• High Growth Market: Management focus for fiscal 2025 included increased SBA lending volume.
• Strong Execution: Q4 FY2025 saw solid originations and sales in the segment.
• Asset Quality Indicator: Loans held for sale, Small Business Administration, totaled $24,844 (in thousands) as of March 31, 2025.
• Profitability Milestone: Achieved the third consecutive profitable quarter by Q4 FY2025.

If First Savings Financial Group, Inc. can maintain this market share leadership as the high-growth phase of the national SBA market eventually slows, you can expect this unit to transition into a Cash Cow, providing steady, reliable cash flow to fund other areas of the business. For now, the strategy is clear: invest in Stars.

First Savings Financial Group, Inc. (FSFG) - BCG Matrix: Cash Cows

You're looking at the engine room of First Savings Financial Group, Inc. (FSFG)'s business, the segment that generates the steady, reliable cash flow needed to fund everything else. In the BCG framework, this is the classic Cash Cow: a high market share position in a market that isn't seeing explosive growth anymore. For FSFG, the Core Banking segment fits this description perfectly, acting as the primary source of internal funding.

This segment is definitely the majority revenue driver. For the nine months ended June 30, 2025, the Core Banking segment reported net income of $14.4 million (non-GAAP measure). That's solid, predictable profitability derived from established customer relationships and core lending/deposit activities. Because the market is mature, you don't need massive promotional spending to defend share; you focus on efficiency, which is what we see in the improving margins.

The overall financial health supporting this Cash Cow status is clear when you look at the full fiscal year 2025 results. Net Interest Income (NII) increased by $7.2 million, representing a 12.5% jump, reaching a total of $65.3 million for the fiscal year ended September 30, 2025. This growth, driven by both higher interest income and lower interest expense, shows the business is effectively managing its balance sheet in a steady environment. Also, the tax equivalent Net Interest Margin (NIM) improved to 2.94% in FY2025, which is a strong signal of profitability in what is generally considered a mature banking market.

Here's a quick look at the core performance metrics that define this segment as a Cash Cow:

The stability of this cash generation is underpinned by the deposit base. You want low-cost funding to feed your lending machine, and FSFG has that. The stable customer deposit base increased by $118.2 million since September 2024. This low-cost funding allows the company to maintain those healthy margins without needing heavy investment in attracting new, expensive funding sources.

The key takeaways supporting the Cash Cow designation are:

• Core Banking net income of $14.4 million (non-GAAP) for 9M 2025.
• NII reached $65.3 million in FY2025, up 12.5%.
• NIM of 2.94% shows strong profitability.
• Deposit base grew by $118.2 million since September 2024.
• Investments here should focus on efficiency, not expansion.

Companies are defintely advised to 'milk' these gains passively while investing just enough into infrastructure-like process improvements-to keep that cash flow high and costs low. Finance: draft the capital allocation plan for FY2026 focusing on efficiency gains in Core Banking by next Wednesday.

First Savings Financial Group, Inc. (FSFG) - BCG Matrix: Dogs

You're looking at the units within First Savings Financial Group, Inc. (FSFG) that are stuck in low-growth markets and have low market share. Honestly, these are the businesses you want to avoid or, at the very least, minimize exposure to. Expensive turn-around plans for these assets rarely pay off, so the focus here is on divestiture or managed decline.

These Dogs-units with low market share and low growth rates-typically break even, meaning they neither generate nor consume significant cash, but they are cash traps because capital is tied up with almost no return. For First Savings Financial Group, Inc. (FSFG), several structural elements fit this profile, often related to legacy assets or areas facing structural headwinds.

Legacy Asset Exposure and Interest Rate Risk

• Legacy fixed-rate loan portfolio, representing approximately 49.3% of the total loan portfolio at September 30, 2024, exposes the company to interest rate risk.
• This concentration in older, fixed-rate assets means yields don't adjust quickly when funding costs rise, pressuring the net interest margin until yields catch up.

The impact of rising rates on the balance sheet's investment side is clearly visible in the Accumulated Other Comprehensive Loss (AOCI). You saw this pressure acutely in the first quarter of fiscal 2025.

Accumulated Other Comprehensive Loss (AOCI) worsened by $6.59 million in Q1 FY2025 due to higher long-term rates reducing the fair value of available-for-sale securities. That's a direct hit to book value per share, trimming it by $0.24 quarter-over-quarter in that period.

Asset Quality and Structural Drag

Even with improving trends elsewhere, some assets still reflect lower returns or higher risk profiles, which is typical for a Dog segment. Consider the asset quality metrics:

While the Nonperforming loans as a percentage of total loans ratio improved to 0.67% at March 31, 2025, this level still reflects the presence of some low-return assets that require active management, which consumes resources without driving significant growth.

Furthermore, the overall capital structure presents a structural drag that these low-performing units exacerbate. The company's debt profile requires constant attention:

• Total debt stood at $464.28 million as of Q3 2025.
• This level of debt, coupled with relatively low cash reserves compared to liabilities, means capital is structurally constrained, making it harder to invest aggressively in high-growth Stars or Question Marks.

The need to manage this debt load means that capital tied up in the legacy fixed-rate portfolio or other low-return areas is capital that can't be deployed to maximize shareholder value, which is why divestiture is often the cleanest path for these Dogs.

Finance: draft a sensitivity analysis on the impact of a 50 basis point rate increase on the 49.3% fixed-rate portfolio by Friday.

First Savings Financial Group, Inc. (FSFG) - BCG Matrix: Question Marks

You're looking at the new, high-growth initiatives at First Savings Financial Group, Inc. (FSFG) that are consuming capital while their long-term market position is still being established. These are the classic Question Marks-high potential, but currently low market share and high cash burn.

The strategic shift to an originate for sale model for Home Equity Lines of Credit (HELOCs) fits this quadrant perfectly. This is a new direction designed to generate fee income and free up capital, but it's too early to call it a sustained success.

Here are the key financial markers for these high-potential, high-investment areas as of the end of fiscal year 2025:

• The new HELOC strategy generated a significant $4.0 million net gain on sales for the full fiscal year ended September 30, 2025.
• This gain was partially realized in Q1 FY2025 via a bulk sale that brought in $2.492 million net gain.
• The segment that has seen earlier struggles, the SBA Lending segment, posted a net loss of $0.14 million in Q1 FY2025, illustrating the cash consumption risk in non-core lending areas that require stabilization or heavy investment.

The need for investment is clear, as evidenced by the ongoing need to stabilize parts of the business. For instance, the SBA Lending segment was explicitly loss-making in Q1 FY2025. To be fair, the Mortgage Banking segment's prior national operation was exited, leading to cost discipline that saw noninterest expense fall by $1.10 million year-over-year, which helped overall performance, but the new HELOC model requires capital to build share.

The ultimate decision on heavy investment versus divestiture is complicated by the pending corporate action. The announced definitive merger agreement with First Merchants Corporation values First Savings Financial Group, Inc. at approximately $241.3 million in an all-stock transaction. This pending acquisition, expected to close in Q1 2026, casts uncertainty on the long-term strategic commitment First Savings Financial Group, Inc. can make to these nascent, high-growth units.

Here's a quick look at the financial context surrounding these strategic moves:

The strategy for these Question Marks must align with the integration timeline. You need to decide if the investment required to quickly gain market share in the HELOC space is worth the capital outlay before the system integration is complete in Q2 2026.

• Invest heavily to rapidly grow HELOC market share.
• Hold and stabilize while awaiting merger completion.
• Divest the HELOC origination capability if integration plans don't support it.

If onboarding takes 14+ days, churn risk rises, but here the risk is more about capital allocation before the merger closes.

Finance: draft 13-week cash view by Friday.