Financial Performance - BV Financial, Inc. reported net income of $2.1 million or $0.21 per diluted share for Q1 2025, a decrease from $2.6 million or $0.24 per diluted share in Q1 2024[2]. - Net income for Q1 2025 was $2,099,000, down 18.43% from $2,574,000 in Q1 2024[26]. - Basic earnings per share decreased to $0.21 in Q1 2025 from $0.24 in Q1 2024, a decline of 12.50%[26]. Asset and Loan Growth - Total assets increased by $10.1 million, or 1.11%, to $921.9 million at March 31, 2025, primarily due to a $12.0 million increase in loans receivable[5]. - Net loans increased by $12.0 million, or 1.65%, to $741.3 million at March 31, 2025, driven by growth in commercial and industrial loans[6]. - The average balance of loans increased to $739,666,000 in Q1 2025, up from $708,367,000 in Q1 2024, reflecting a growth of 4.66%[28]. - Total assets grew to $915,713,000 in Q1 2025, compared to $883,368,000 in Q1 2024, an increase of 3.65%[28]. Deposits and Equity - Total deposits rose by $6.4 million, or 0.98%, to $657.9 million at March 31, 2025, with noninterest-bearing deposits increasing by $6.5 million, or 5.0%[11]. - Stockholders' equity increased by $2.6 million, or 1.3%, to $198.1 million at March 31, 2025, mainly due to net income[12]. Interest and Noninterest Income - Total interest income for Q1 2025 was $11,881,000, an increase of 7.97% from $11,004,000 in Q1 2024[26]. - Net interest income after provision for credit losses was $8,346,000, compared to $7,945,000 in the same period last year, reflecting a 5.04% increase[26]. - Noninterest income decreased to $530,000 in Q1 2025 from $578,000 in Q1 2024, a decline of 8.30%[26]. Expenses and Credit Losses - Noninterest expense increased to $6.2 million in Q1 2025, up from $4.9 million in Q1 2024, primarily due to a 44.6% rise in compensation and benefits expenses[16]. - Total noninterest expense rose to $6,178,000, up 25.54% from $4,923,000 in Q1 2024[26]. - The provision for credit losses was $297,000 in Q1 2025, compared to $18,000 in Q1 2024, reflecting a more cautious approach to credit risk[6]. - The allowance for credit losses on loans increased to $9,190,000 from $8,871,000 year-over-year[30]. Asset Quality and Tax Rate - Non-performing assets totaled $5.0 million at March 31, 2025, an increase from $4.2 million at December 31, 2024, indicating a slight deterioration in asset quality[13]. - The effective tax rate decreased to 22.2% in Q1 2025 from 28.5% in Q1 2024, attributed to an accrual adjustment made in the current quarter[17]. Interest Margin - The net interest margin improved to 4.12% in Q1 2025 from 3.91% in Q1 2024, indicating better efficiency in earning interest[14]. - The net interest margin improved to 4.12% in Q1 2025 from 3.91% in Q1 2024[28].

Loan Portfolio - As of December 31, 2024, commercial real estate loans totaled $411.3 million, representing 55.8% of the total loan portfolio[186]. - The non-owner occupied commercial loan portfolio amounted to $328.7 million, or 44.6% of the total loan portfolio[186]. - At December 31, 2024, $241.7 million, or 32.8% of the loan portfolio, was secured by one- to four-family real estate loans[188]. - Total loans increased to $737.76 million as of December 31, 2024, up from $704.80 million in 2023, representing a growth of 4.65%[428]. - Real estate loans accounted for 94.20% of total loans in 2024, slightly down from 94.30% in 2023[428]. - Commercial investor loans rose to $328.68 million, making up 44.56% of real estate loans, compared to 40.76% in 2023[428]. - The total real estate loans reached $694,892,000 in 2024, up from $664,564,000 in 2023, indicating a year-over-year increase of about 4.56%[446]. - Total one to four family owner-occupied loans amounted to $141,867 thousand, with a pass rate of 24,477 thousand[439]. - Total one to four family non-owner occupied loans reached $99,824 thousand, with a pass rate of 5,483 thousand[439]. - Total commercial owner-occupied loans were $82,614 thousand, with a pass rate of 4,433 thousand[439]. - Total commercial investor loans stood at $328,680 thousand, with a pass rate of 41,332 thousand[439]. - Total construction and land loans amounted to $30,578 thousand, with a pass rate of 26,399 thousand[439]. - Total farm loans reached $11,329 thousand, with a pass rate of 315 thousand[439]. - Total marine and other consumer loans were $16,772 thousand, with a pass rate of 2,236 thousand[439]. - Total guaranteed by U.S. Government loans amounted to $2,902 thousand, with a pass rate of 20 thousand[439]. - Total commercial loans reached $23,194 thousand, with a pass rate of 5,847 thousand[439]. - Total loans as of December 31, 2024, amounted to $737,760 thousand, with pass loans at $730,323 thousand, representing a slight increase from $704,802 thousand in 2023[440]. - The total number of loans classified as substandard decreased from $18,991 thousand in 2023 to $7,437 thousand in 2024, reflecting a reduction of approximately 61%[440]. - The company maintained a strong pass loan ratio, with pass loans constituting approximately 99.0% of total loans as of December 31, 2024[440]. Credit Quality - At December 31, 2024, the allowance for credit losses was 1.15% of total loans and 212.55% of non-performing loans[193]. - A significant portion of loans originated by the investment real estate group are secured by collateral located outside of Maryland, which may lead to additional provisions or charge-offs[190]. - The company faces risks related to economic conditions, including potential increases in non-performing loans due to adverse local economic factors[199]. - The allowance for credit losses decreased to $8.52 million in 2024 from $8.55 million in 2023, indicating a slight improvement in credit quality[435]. - The company recorded a recovery of provision for credit losses of $347,000 in 2024, compared to a provision of $203,000 in the previous year[437]. - One to four family owner-occupied loans saw an increase in allowance for credit losses to $1.86 million in 2024 from $1.73 million in 2023[435]. - Non-accrual loans totaled $4,010,000 as of December 31, 2024, compared to $10,554,000 in 2023, reflecting a significant reduction of approximately 62%[448]. - The total past due loans (30-89 days) amounted to $6,489,000 in 2024, compared to $14,019,000 in 2023, indicating a decrease of about 53.76%[448]. - The company’s allowance for credit losses on held-to-maturity debt securities decreased from $6,000 in 2023 to $4,000 in 2024, indicating improved credit quality[427]. Financial Performance - Net income for the year ended December 31, 2024, was $11,723 thousand, a decrease of 14.5% compared to $13,707 thousand in 2023[353]. - Total interest income rose to $46,682 thousand in 2024, an increase of 7.2% from $43,419 thousand in 2023[353]. - Net interest income after provision for credit losses was $35,390 thousand for 2024, up from $34,274 thousand in 2023, reflecting a growth of 3.3%[353]. - Noninterest expense increased to $21,498 thousand in 2024, up from $19,409 thousand in 2023, indicating a rise of 10.7%[353]. - Basic earnings per share decreased to $1.10 in 2024 from $1.47 in 2023, a decline of 25.2%[353]. - Retained earnings increased to $109,495 thousand as of December 31, 2024, compared to $97,772 thousand in 2023, reflecting a growth of 12%[358]. - Other comprehensive income for 2024 was $337 thousand, down from $383 thousand in 2023, a decrease of 12%[355]. - Total stockholders' equity decreased to $195,499 thousand in 2024 from $199,065 thousand in 2023, a decline of 1.8%[350]. - Net cash provided by operating activities increased to $16,063,000 in 2024, compared to $15,194,000 in 2023, reflecting a growth of 5.7%[361]. - The company reported a net cash used in investing activities of $32,497,000 in 2024, slightly improved from $35,173,000 in 2023[361]. - The company’s cash and cash equivalents at the end of the period were $70,500,000, down from $73,742,000 in 2023, marking a decrease of 4.5%[361]. - Interest paid increased to $11,342,000 in 2024 from $9,190,000 in 2023, representing a rise of 23.4%[361]. Regulatory and Economic Environment - The company is vulnerable to a downturn in the local economy and real estate markets, particularly in Baltimore City and surrounding counties[192]. - Inflation has remained elevated through 2024, impacting the cost of goods and services and potentially affecting borrowers' ability to repay loans[202]. - Changes in interest rates could reduce profits and asset values, with the company being asset sensitive, which may affect net interest margins in a falling rate environment[195]. - The fiscal and monetary policies of the federal government could adversely affect the Company's financial condition and results of operations[214]. - The Company is subject to extensive regulation, which may increase operational costs and limit business opportunities[212]. - Federal regulations establish minimum capital requirements, including a common equity Tier 1 capital ratio of 4.5% and a total capital ratio of 8%[217]. - The Company faces intense competition in the banking sector, which may limit growth and profitability[225]. Cybersecurity and Operational Risks - Operational risks include reliance on technology, with potential vulnerabilities to security breaches and system failures[226]. - The company continues to face heightened risks related to cyber-attacks and information security breaches due to evolving threats and an expanded geographic footprint[228]. - The Board of Directors actively monitors cybersecurity risk tolerance and receives annual training and reports on cybersecurity issues[230]. - The company has outsourced critical operations to third-party service providers, which exposes it to risks if these vendors fail to perform as per contractual agreements[232]. Capital and Stockholder Information - The Company had $15.0 million of outstanding advances from the Federal Home Loan Bank and $50.0 million in brokered deposits as of December 31, 2024[207]. - Significant deposit withdrawals could materially reduce liquidity, potentially requiring the Company to replace such deposits with higher-cost borrowings[208]. - The Company issued $35.0 million in Fixed-to-Floating Rate Subordinated Notes due 2030, with a fixed interest rate of 4.875% for the first five years[465]. - The Company recognized $667,000 in compensation expense related to stock options granted during the year ended December 31, 2024, compared to $0 in 2023[478]. - The intrinsic value of stock options outstanding as of December 31, 2024, was $2,879,696, reflecting a significant increase from $474,677 in 2023[478]. - The Company granted 343,562 shares of restricted stock in 2024, resulting in a compensation expense of $986,000, compared to $255,000 for 18,784 shares in 2023[480]. - The accrued liabilities for executive retirement agreements were $2.2 million in 2024, slightly down from $2.3 million in 2023[473]. - As of December 31, 2024, the future compensation expense associated with restricted stock was $4.2 million, compared to $151,150 as of December 31, 2023[481].

Financial Performance - Net income for the year ended December 31, 2024, was $11.7 million, or $1.10 per diluted share, a decrease from $13.7 million, or $1.47 per diluted share for 2023[1] - Adjusted net income for the year remained stable at $12.9 million for both 2024 and 2023, while for the fourth quarter, it decreased to $2.7 million from $3.0 million[2] - Noninterest income for the year fell to $2.5 million from $3.8 million in 2023, impacted by the absence of significant gains from asset sales[17] - Noninterest expense for the year increased to $21.5 million, up from $19.4 million in 2023, with compensation and benefits rising by 14.3% due to salary increases and equity awards[19] - The company reported a net income (GAAP) of $11,723 thousand for the year ended December 31, 2024, down from $13,707 thousand in 2023, a decrease of 14.5%[37] - Non-GAAP adjusted net income for the year ended December 31, 2024, was $12,956 thousand, slightly up from $12,897 thousand in 2023, indicating stable operational performance[37] Asset and Liability Management - Total assets increased by $26.5 million, or 3.00%, to $911.8 million at December 31, 2024, primarily due to a $33.0 million increase in net loans[4] - Total assets as of December 31, 2024, were $890,458 thousand, a marginal increase from $887,232 thousand in 2023[32] - The company’s total liabilities decreased to $687,334 thousand in 2024 from $749,260 thousand in 2023, showing improved financial leverage[32] Loan and Deposit Growth - Net loans receivable rose by $33.0 million, or 4.74%, to $729.2 million at December 31, 2024, driven by increases in various loan categories[6] - Total deposits increased by $17.4 million, or 2.74%, to $651.5 million at December 31, 2024, with interest-bearing deposits rising by $36.3 million, or 7.5%[9] - Total deposits increased to $651,491 thousand in 2024, up from $634,120 thousand in 2023, an increase of 2.8%[26] Interest Income and Margin - Net interest income for the year was $35.2 million, an increase from $34.2 million in 2023, with a net interest margin of 4.27% compared to 4.23%[15] - Total interest income for the year ended December 31, 2024, was $46,682 thousand, up 7.2% from $43,419 thousand in 2023[28] - The net interest margin improved to 4.27% in 2024 from 4.23% in 2023, indicating a positive trend in interest income generation[32] - The average yield on loans increased to 5.81% in 2024 from 5.52% in 2023, reflecting better pricing on loan products[32] Credit Quality and Risk Management - Non-performing assets decreased to $4.2 million at December 31, 2024, down from $10.7 million a year earlier, reflecting improved asset quality[12] - The allowance for credit losses on loans at the end of 2024 was $8,522 thousand, up from $8,001 thousand at the beginning of the year, reflecting a proactive approach to credit risk management[34] - The provision for credit losses was $604 thousand for the three months ended December 31, 2024, compared to $435 thousand in 2023, indicating a rise of 38.8%[28] - The total provision for credit losses for the year was $604 thousand, compared to a recovery of $203 thousand in 2023, indicating a shift in credit quality outlook[34]

Financial Position - Total assets increased by $7.4 million, or 0.8%, to $892.7 million at September 30, 2024, from $885.3 million at December 31, 2023[155] - Total liabilities decreased by $3.2 million, or 0.5%, to $683.0 million at September 30, 2024, primarily due to a decrease in borrowings[155] - Stockholders' equity increased by $10.6 million, or 5.4%, to $209.7 million at September 30, 2024, primarily due to net income of $9.8 million[155] - Total assets as of September 30, 2023, amounted to $891,397, compared to $932,111 in the previous period[158] - Total liabilities were reported at $683,806, while equity stood at $207,591[158] Cash and Deposits - Cash and cash equivalents rose by $20.3 million, or 27.7%, to $93.8 million at September 30, 2024, primarily due to decreases in loans and other non-interest earning assets[155] - Total deposits increased by $193,000, or 0.03%, to $634.3 million at September 30, 2024, with interest-bearing deposits rising by $2.9 million, or 0.6%[155] - Municipal deposits totaled $57.7 million, representing 9.1% of total deposits as of September 30, 2024[169] - Uninsured deposits amounted to $204.6 million, or 30.1% of total deposits, with $51.6 million secured using pledged collateral or letters of credit[169] - The company had $10.0 million in brokered deposits as of September 30, 2024, compared to no brokered deposits at September 30, 2023[169] Loans and Credit - Loans receivable decreased by $11.6 million, or 1.6%, to $693.2 million at September 30, 2024, with significant decreases in one- to four-family real estate loans and owner-occupied commercial real estate loans[155] - The allowance for credit losses decreased by $553,000 to $8.0 million at September 30, 2024, resulting in a ratio of allowance for credit losses to total loans of 1.15%[155] - The ratio of allowance for credit losses to non-performing loans was 201.60% at September 30, 2024, compared to 81.05% at December 31, 2023[155] - The allowance for credit losses was $8.0 million at September 30, 2024, representing 1.15% of total loans, unchanged from the previous year[167] - Non-performing assets decreased to $4.1 million at September 30, 2024, down from $10.7 million at December 31, 2023[168] Income and Expenses - Net interest income for the period was $9,303, reflecting an increase compared to $8,877 in the previous period[158] - Net interest income for Q3 2024 was $9.3 million, up from $8.9 million in Q3 2023, with a net interest margin increase to 4.49% from 4.07%[167] - Interest income increased by $435,000, or 3.7%, to $12.1 million in Q3 2024, driven by a $759,000 increase in loan interest income, which rose by 7.8%[165] - Non-interest income for Q3 2024 totaled $696,000, down from $882,000 in Q3 2023, primarily due to a lack of gains from asset sales[168] - Non-interest expense increased to $5.5 million in Q3 2024 from $5.0 million in Q3 2023, with compensation and benefits rising by 10.9%[168] Asset Management - Securities available for sale increased by $4.4 million, or 12.6%, to $39.2 million at September 30, 2024, due to purchases for local government deposits[155] - The average yield on securities available-for-sale was 3.72%, with total securities held at $34,569[162] - Total interest-earning assets for the three months ended September 30, 2023, were $822,630, with an average yield of 5.86%[158] - Total interest-earning assets decreased by $407,000, or 1.4%, to $2.422 billion in Q3 2024 compared to $2.829 billion in Q3 2023[164] Regulatory Compliance - The company exceeded all regulatory capital requirements and was categorized as well capitalized as of September 30, 2024[169] - The company performed its 2024 goodwill impairment qualitative assessment and determined that goodwill was not considered impaired[153]

Financial Position - Total assets increased by $11.9 million, or 1.4%, to $897.2 million at June 30, 2024, from $885.3 million at December 31, 2023[148] - Total liabilities increased by $5.5 million, or 0.8%, to $691.7 million at June 30, 2024, primarily due to a $6.2 million increase in deposits[151] - Stockholders' equity increased by $6.4 million, or 3.2%, to $205.5 million at June 30, 2024, primarily due to net income of $7.0 million[152] - Total assets rose to $891,857 thousand in 2024, up from $876,605 thousand in 2023, marking a growth of 1.4%[154] - Equity increased to $202,853 thousand in 2024, compared to $102,366 thousand in 2023, indicating significant growth in shareholder value[154] Cash and Deposits - Cash and cash equivalents rose by $16.9 million, or 22.9%, to $90.6 million at June 30, 2024, primarily due to increased deposits and lower loan originations[148] - Total deposits increased by $6.2 million, or 1.0%, to $640.3 million at June 30, 2024, with interest-bearing deposits rising by $7.2 million, or 1.5%[152] - The company replaced $10.0 million in retail certificates of deposit with brokered deposits at a lower cost during the first quarter of 2024[152] - The company had $10.0 million in brokered deposits at June 30, 2024, compared to none at June 30, 2023[178] - The company had $57.4 million in municipal deposits at June 30, 2024, representing 9.0% of total deposits[178] - Uninsured deposits totaled $198.3 million, or 29.0% of total deposits, with $50.6 million secured using pledged collateral or letters of credit issued by FHLB[178] Loans and Credit Quality - Loans receivable decreased by $2.4 million, or 0.34%, to $702.4 million at June 30, 2024, with significant decreases in one- to four-family real estate loans and owner-occupied commercial real estate loans[149] - The allowance for credit losses remained relatively unchanged at $8.5 million, with a ratio of allowance for credit losses to total loans at 1.22% at June 30, 2024, compared to 1.16% at June 30, 2023[150] - Non-performing assets decreased to $8.4 million at June 30, 2024, down from $10.9 million at December 31, 2023, reflecting improved asset quality[175] Income and Expenses - Net income for the three months ended June 30, 2024 was $3.4 million, or $0.32 per diluted share, a decrease from $3.9 million, or $0.49 per diluted share, for the same period in 2023[162] - Interest income increased by $1.1 million, or 10.2%, to $11.6 million for the three months ended June 30, 2024, primarily due to increases in interest income on loans and cash equivalents[163] - Interest income on loans rose by $850,000, or 9.1%, to $10.2 million for the three months ended June 30, 2024, driven by a 3.9% increase in the average balance of loans[163] - Interest expense increased by $406,000, or 17.7%, to $2.7 million for the three months ended June 30, 2024, mainly due to a $976,000 increase in interest expense on deposits[165] - Non-interest income totaled $596,000 for the three months ended June 30, 2024, a significant decrease from $1.4 million for the same period in 2023 due to the absence of gains from the sale of foreclosed real estate[170] - Non-interest expense increased to $4.9 million for the three months ended June 30, 2024, up from $4.5 million in the same period in 2023, driven by higher compensation and benefits[171] Interest and Margins - Net interest income for the three months ended June 30, 2024, was $8,909 thousand, compared to $8,237 thousand for the same period in 2023, representing an increase of 8.2%[154] - The net interest margin improved to 4.33% in 2024 from 4.19% in 2023, indicating enhanced profitability on interest-earning assets[154] - The company reported a net interest rate spread of 3.61% for the three months ended June 30, 2024, compared to 3.77% in 2023[154] Regulatory Compliance - The bank exceeded all regulatory capital requirements and was categorized as well capitalized as of June 30, 2024[179] - As of June 30, 2024, the company had $162.5 million available under a line of credit with the FHLB of Atlanta, with an additional borrowing availability of $137.5 million[176] Securities - Securities available for sale decreased by $1.9 million, or 5.5%, to $32.9 million at June 30, 2024, due to new purchases not fully replacing maturities[150]

Financial Position - Cash and cash equivalents increased by $16.9 million, or 23.0%, to $90.4 million at June 30, 2024, from $73.5 million at December 31, 2023[1] - Loans receivable decreased by $2.4 million, or 0.3%, to $702.4 million at June 30, 2024, from $704.8 million at December 31, 2023[2] - Total liabilities increased by $5.5 million, or 0.8%, to $691.7 million at June 30, 2024, from $686.2 million at December 31, 2023[4] - Total deposits increased by $6.2 million, or 1.0%, to $640.3 million at June 30, 2024, from $634.1 million at December 31, 2023[5] - Stockholders' equity increased by $6.4 million, or 3.2%, to $205.5 million at June 30, 2024, from $199.1 million at December 31, 2023[6] - Total assets increased by $11.9 million, or 1.4%, to $897.2 million at June 30, 2024, from $885.3 million at December 31, 2023[14] - Total assets reached $891,857 thousand as of June 30, 2024, compared to $876,605 thousand at the end of June 30, 2023, marking a year-over-year increase of 1.4%[28] - Total liabilities decreased to $689,004 thousand as of June 30, 2024, from $774,239 thousand a year earlier, showing a reduction of 11%[28] - The total equity increased to $202,853 thousand as of June 30, 2024, compared to $102,366 thousand a year earlier, reflecting strong capital growth[28] Income and Earnings - Net income for the three months ended June 30, 2024, was $3.4 million, or $0.32 per diluted share, compared to $3.9 million, or $0.49 per diluted share, for the same period in 2023[7] - Net income decreased to $3,399 thousand for the three months ended June 30, 2024, down from $3,899 thousand in the same period in 2023[27] - Basic earnings per share decreased to $0.32 for the three months ended June 30, 2024, compared to $0.49 in the same period last year[27] Interest Income and Expenses - Net interest income for the six months ended June 30, 2024, was $16.9 million, compared to $16.4 million for the same period in 2023[15] - Net interest income increased to $8,909 thousand for the three months ended June 30, 2024, from $8,237 thousand in the same period last year[27] - Total interest income increased to $11,617 thousand for the three months ended June 30, 2024, from $10,539 thousand in the same period last year[27] - Total noninterest expense increased to $4,897 thousand for the three months ended June 30, 2024, from $4,544 thousand in the same period last year[27] - The net interest margin improved to 4.33% for the quarter ended June 30, 2024, compared to 4.19% for the same quarter in 2023, indicating a positive trend in interest income generation[28] - The average yield on loans for the quarter ended June 30, 2024, was 5.79%, up from 5.51% in the same quarter of 2023, reflecting improved loan pricing[28] - The net interest rate spread for the quarter ended June 30, 2024, was 3.61%, compared to 3.77% for the same quarter in 2023, indicating a slight compression in margins[28] Loan Performance - Non-accrual loans decreased by $2.5 million, or 22.0%, to $8.2 million at June 30, 2024, from $10.6 million at December 31, 2023[13] - Non-performing loans as a percentage of total loans rose to 1.17% for the three months ended June 30, 2024, compared to 0.65% in the prior year[25] - Allowance for credit losses as a percentage of total loans was 1.22% for the three months ended June 30, 2024, consistent with the prior year[25] - The allowance for credit losses on loans at the end of June 30, 2024, was $8,547 thousand, slightly down from $8,554 thousand year-to-date[31] - The provision for credit losses for loans was $(25) thousand for the quarter ended June 30, 2024, compared to $(159) thousand year-to-date, indicating a decrease in expected credit losses[31] Noninterest Income - Noninterest income totaled approximately $600,000 for the three months ended June 30, 2024, compared to $1.4 million for the same period in 2023[21] - Total noninterest income for the three months ended June 30, 2024, was $1,370 thousand, compared to $1,174 thousand in the same period last year[27]

Financial Position - Total assets increased by $7.2 million, or 0.82%, to $892.5 million at March 31, 2024, from $885.3 million at December 31, 2023[222] - Total liabilities increased by $4.6 million, or 0.7%, to $690.8 million at March 31, 2024, primarily due to an increase in total deposits[227] - Total deposits rose by $5.4 million, or 0.85%, to $639.5 million at March 31, 2024, with interest-bearing deposits increasing by $8.3 million, or 1.7%[228] - Stockholders' equity increased by $2.7 million, or 1.3%, to $201.8 million at March 31, 2024, primarily due to net income[229] - The company's uninsured deposits totaled $190.1 million, representing 27.9% of total deposits[251] - At March 31, 2024, the bank exceeded all regulatory capital requirements and was categorized as well capitalized[252] Loan and Credit Quality - Net loans receivable increased by $3.9 million, or 0.56%, to $708.7 million at March 31, 2024, driven by increases in commercial and industrial loans and investor commercial real estate loans[224] - The allowance for credit losses on loans was $8.5 million at March 31, 2024, slightly down from $8.55 million at December 31, 2023, with a ratio of 1.20% to total loans[225] - The allowance for credit losses to non-performing loans was 79.2% at March 31, 2024, compared to 176.5% at March 31, 2023[225] - Provision for credit losses was $18,000 for the three months ended March 31, 2024, compared to $2,000 for the same period in 2023[245] Income and Expenses - Net income decreased by $541,000, or 17.4%, to $2.6 million for the three months ended March 31, 2024, compared to $3.1 million for the same period in 2023[237] - Interest income increased by $1.3 million, or 13.6%, to $11.0 million for the three months ended March 31, 2024, driven by a $1.0 million increase in interest income on loans[238] - Interest expense increased by $1.5 million, or 104.4%, to $3.0 million for the three months ended March 31, 2024, primarily due to a $1.3 million increase in interest expense on deposits[239] - Net interest income was $8.0 million for the three months ended March 31, 2024, compared to $8.2 million for the same period in 2023[243] - The net interest margin decreased to 3.91% for the three months ended March 31, 2024, down from 4.34% for the same period in 2023[243] - Non-interest income totaled $578,000 for the three months ended March 31, 2024, down from $807,000 in the same period in 2023[246] - For the three months ended March 31, 2024, non-interest expense totaled $4.9 million, an increase of 4.3% from $4.7 million in the same period of 2023[247] Operational Changes - The company replaced $10.0 million in retail certificates of deposits with brokered deposits at a lower cost during the first quarter of 2024[228] - The company had $10 million in brokered deposits as of March 31, 2024, compared to $0 in the same period of 2023[251] - Compensation and benefits expenses rose by 8.7% due to increased staffing and salary levels[247] - Professional fees decreased by 44.0% due to the recovery of previously expensed legal fees[247] - Foreclosed real estate expenses decreased by 96.1% due to the sale of large foreclosed properties in 2023[247] Tax and Liquidity - Income tax expense for the quarter was $1.0 million, with an effective tax rate of 28.5%, compared to $1.2 million and 27.65% in the prior year[248] - As of March 31, 2024, the company had $169.1 million available under a line of credit with the FHLB of Atlanta, with additional borrowing availability of $144.1 million[249] - The company monitors its liquidity position daily and anticipates sufficient funds to meet current funding commitments[251]

Banking crises may seem catastrophic when they hit the news cycle but they have become common in the 21st Century. As significant disruptions to the financial system, these failures are characterized by a loss of banking confidence and decreasing earnings. If left unchecked, these events can have severe consequences for the broader economy and retail investors. Thus investors with holdings in certain banking corporations should look out for finance stocks to sell before the next crisis.The most common failu ...

Loan Portfolio and Credit Risk - As of December 31, 2023, 40.8% of the total loan portfolio, amounting to $287.2 million, consisted of loans secured by non-owner occupied commercial real estate[285]. - The company intends to continue increasing originations of commercial real estate loans, which involve credit risks that could adversely affect financial condition[283]. - The company faces risks related to local economic conditions, which could impact borrowers' ability to repay loans and the value of collateral securing loans[291]. - As of December 31, 2023, the allowance for credit losses was 1.21% of total loans and 81.5% of non-performing loans, indicating a potential need for future increases in the allowance due to credit deterioration[318]. - The company had outstanding commitments to extend credit of $49.4 million and $935,000 in letters of credit as of December 31, 2023[636]. Financial Performance and Capital - The company has accumulated other comprehensive losses of $1.95 million related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio as of December 31, 2023[290]. - The aggregate amount of uninsured deposits was $187.5 million as of December 31, 2023, compared to $172.1 million in 2022[296]. - Total deposits decreased by $50.5 million, or 7.4%, to $634.1 million at December 31, 2023, compared to $684.6 million at December 31, 2022[325]. - At December 31, 2023, the Bank had approximately $243.0 million in available liquidity, which is 1.9 times the uninsured and unsecured deposit balance of $129.0 million[326]. - Net cash provided by operating activities was $15.2 million for the year ended December 31, 2023, compared to $9.7 million for the year ended December 31, 2022[634]. - The company is categorized as well capitalized and exceeds all regulatory capital requirements as of December 31, 2023[635]. - The company has a common equity Tier 1 capital ratio requirement of 4.5%, with a capital conservation buffer resulting in a minimum ratio of 7.0%[302]. Business Strategy and Growth - The company’s business strategy includes growth in assets, deposits, and operations, which requires attracting customers from other financial institutions[306]. - The company continually evaluates merger and acquisition opportunities to expand market presence and improve profitability[343]. - The company established an investment real estate group in 2020, with $184.2 million, or 64.1%, of investor commercial real estate loans secured by collateral located outside of Maryland as of December 31, 2023[316]. Risk Management and Operational Challenges - The Enterprise Risk Management Committee oversees the company's overall risk framework and appetite, including strategic, credit, liquidity, and operational risks[311]. - The company has established policies to prevent or limit the impact of system failures and security breaches, although vulnerabilities remain[309]. - The company has faced significant operational risks due to reliance on technology, which may be subject to failures or security breaches[337]. Interest Rates Impact - Rising interest rates positively impacted income as short-term investments repriced immediately while deposit rates increased more slowly[325]. Regulatory Classification - The company is classified as an emerging growth company, allowing it to take advantage of exemptions from various reporting requirements[304].

It is probably fair to say that regional banks rely heavily upon the yield curve or, more specifically the slope of that curve. The slope determines the spread, or difference in rates that banks can charge for loans vs. the rate on deposits they must pay to fuel the lending. This is also known as NIM (Net Interest Margin), in some ways the Gross Margin for banks.The yield curve is a bit of shackle on demand for banking products and can tempt the typically conservative operators of regional banks to venture ...