Crossroads Impact Corp (OTCQX: CRSS) (“Crossroads” or the “Company”), a holding company focused on investing in businesses that promote economic vitality and community development, reported financial results for its fiscal second quarter ended April 30, 2022.  

Following a transformational year for the company in 2021, a blossoming partnership with Enhanced Capital Group, the unwinding of PPP at Capital Plus Financial, and growing Rise Line Business Credit acquisition, 2022’s second fiscal quarter was quite eventful. Total revenue from operations was $16.6 million for the quarter ended April 30, 2022, compared to $476.5 million for the prior fiscal year’s quarter ended April 30, 2021. This decrease can be attributed to the reduction in the one-time PPP fee income earned of approximately $461.5 million. 

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Net operating income before taxes and non-controlling interest for 2022 fiscal second quarter was $5.1 million, compared to $150.3 million the prior year. Net earnings per share from operations before taxes and after non-controlling interest for the quarter was $0.83 and was $25.14 for the same period of 2021. 

Management Commentary

At a time of economic uncertainty and surging inflation, now is not the time to forget our obligation to minority and women-owned businesses. At Crossroads, we know these businesses will lead us forward as small businesses always have. It is our privilege to support the businesses at the engine of our economy this quarter and beyond. 

During the second quarter of 2022, we further extended our impact loan portfolio, adding $20M during the quarter and bringing the year-to-date total to $70M, with no delinquencies to date. We continue to see the significance these loans have on recipients’ impact within their communities and beyond. Among our proudest impact loans are bridge loans with Vertical Harvest and 64 Centre Avenue in New Rochelle, New York. In partnership with Enhanced Capital, Crossroads provided Vertical Harvest a bridge loan as the company’s Series A neared its closing. A woman-owned and managed, Wyoming-based business, Vertical Harvest grows local produce in urban areas to address food insecurity and climate change through vertical hydroponic greenhouses. In addition to making an impact on environmental sustainability, Vertical Harvest also employs historically underrepresented populations – namely those with physical and or intellectual disabilities. Crossroads also provided an $8.9 million bridge loan for the environmental remediation of sites located at 64 Center Avenue and 8 Westchester Place in New Rochelle, New York. This project will eliminate environmental contamination in soil and water at the site. The project includes a 16-story tower with 144 apartments of affordable rental housing in a middle-income area with 73.6% minority residents and a 19.5% poverty rate.  

We applaud the modernization of CRA. Between our Texas based CDFI and the national environmental and social lending program at Crossroads, we are well situated to deliver meaningful partnerships to banks to solve their CRA, ESG and community development initiatives while delivering transformative impact to underserved communities.  

Though rising interest rates have cooled the housing market from an inferno to a steady blaze, inventory has not recovered to match demand. As home sale revenue dipped below that of 2021, our mortgage portfolio remained at $133M with a steady performance of 90-day delinquency of 0.94%.  

Our PPP loan portfolio is currently at approximately $1.5B. We continue processing loan forgiveness, which currently sits at 76%. We are confident the remaining loans will also be forgiven. The portfolio generates a net interest margin on 65 BPS and saw a net contribution of $2M for Q2, and $3.8M year-to-date. The outstanding loans will start coming due during June 2022. 

2022 Fiscal Second Quarter Key Performance Indicators (KPIs) 

Highlights for the quarter: 

• PPP loan balance reduced to approximately $1.5B, with 76% of loans forgiven
• Addition of $20M in impact loans on the quarter ($70M year-to-date)
• Impact loans generated $1.5M of income for the quarter ($2.2M for the year)
• Book value per share is $8.69 as currently reported, $11.15 upon the recognition of deferred PPP income

Source: PRNewswire