Workflow
MetroCity Bankshares(MCBS) - 2024 Q4 - Annual Report
MCBSMetroCity Bankshares(MCBS)2025-03-10 17:13

Interest Rate Risk Management - The company has identified interest rate risk as its primary source of market risk, which arises from changes in market interest rates affecting earnings and asset values [390]. - As of December 31, 2024, a +200 basis point increase in interest rates is projected to decrease net interest income by 0.20% over 12 months and 7.00% over 24 months [400]. - The Economic Value of Equity (EVE) is projected to decrease by 26.30% with a +400 basis point shock as of December 31, 2024 [400]. - The company utilizes income simulations and EVE simulations to measure and manage interest rate risk, assessing potential earnings impacts over a two-year horizon [396]. - The asset liability committee (ALCO) focuses on ensuring a stable and increasing flow of net interest income through balance sheet management [393]. - The company’s interest rate risk measurement is reported to the ALCO at least quarterly, including assessments of any policy limit breaches [395]. - The Company utilizes interest rate swap and cap agreements as part of its asset/liability management strategy to manage interest rate risk [485]. - The notional amount for interest rate swaps designated as cash flow hedges remained at 800,000forbothyearsendedDecember31,2024,and2023,withaweighted−averagepayrateof2.28800,000 for both years ended December 31, 2024, and 2023, with a weighted-average pay rate of 2.28% and a weighted-average receive rate of 5.15% in 2024 [571]. - Net interest income from interest rate swaps increased significantly to 20,863,000 in 2024 from 5,246,000in2023,reflectingasubstantialgrowthof2985,246,000 in 2023, reflecting a substantial growth of 298% [571]. Financial Performance - Net income for 2024 was 64,504 thousand, up 25% from 51,613thousandin2023[422].−Totalassetsincreasedto51,613 thousand in 2023 [422]. - Total assets increased to 3,594,045 thousand in 2024 from 3,502,823thousandin2023,representingagrowthof2.63,502,823 thousand in 2023, representing a growth of 2.6% [420]. - Total interest income rose to 212,913 thousand in 2024, a 10.4% increase compared to 192,827thousandin2023[422].−Noninterestincomeincreasedto192,827 thousand in 2023 [422]. - Noninterest income increased to 23,063 thousand in 2024, up 26.7% from 18,204thousandin2023[422].−Earningspershare(EPS)for2024was18,204 thousand in 2023 [422]. - Earnings per share (EPS) for 2024 was 2.55, an increase from 2.05in2023[422].−Shareholders′equitygrewto2.05 in 2023 [422]. - Shareholders' equity grew to 421,353 thousand in 2024, up from 381,517thousandin2023,reflectinga10.5381,517 thousand in 2023, reflecting a 10.5% increase [420]. - The comprehensive income for 2024 was 57,473 thousand, compared to 53,784thousandin2023,indicatingagrowthof6.353,784 thousand in 2023, indicating a growth of 6.3% [424]. - The total provision for income taxes for the year ended December 31, 2024, was 22,810,000, representing an increase of 12% from 20,359,000in2023[572].−Thefederalstatutorytaxrateremainedconsistentat21.020,359,000 in 2023 [572]. - The federal statutory tax rate remained consistent at 21.0% for the years ended December 31, 2024, 2023, and 2022, with the total provision for income taxes as a percentage of income increasing to 26.1% in 2024 from 28.3% in 2023 [572]. Credit Losses and Allowances - The company employs regression analysis of peer data to estimate expected credit losses for its loan segments, incorporating economic projections from third parties [414]. - The allowance for credit losses (ACL) on loans is estimated at each balance sheet date and deducted from the loans' amortized cost basis [457]. - The Company uses the discounted cash flow (DCF) method to estimate expected credit losses for each loan segment, adjusting for prepayment speed and probability of default [468]. - The Company has identified several loan pools for measuring expected credit losses, including construction and development, commercial real estate, and single-family residential mortgages [463][464][466]. - The Company recorded a provision for credit losses of 516,000 in 2024, compared to a benefit of (15,000)in2023[430].−Theallowanceforcreditlossesincreasedto(15,000) in 2023 [430]. - The allowance for credit losses increased to 18,744 as of December 31, 2024, compared to 18,112in2023,indicatingariseof3.4818,112 in 2023, indicating a rise of 3.48% [526]. - The total allowance for credit losses allocated to collateral-dependent loans was 748,000 as of December 31, 2024, up from 282,000in2023[532].−TheCompanydoesnotanticipateanycreditlossimpairmentonsecuritiesavailableforsale,withnopaymentdefaultsexpectedasofDecember31,2024[521].LoansandDeposits−TotalloansasofDecember31,2024,amountedto282,000 in 2023 [532]. - The Company does not anticipate any credit loss impairment on securities available for sale, with no payment defaults expected as of December 31, 2024 [521]. Loans and Deposits - Total loans as of December 31, 2024, amounted to 3,165,316, an increase from 3,150,961in2023,reflectingagrowthofapproximately0.373,150,961 in 2023, reflecting a growth of approximately 0.37% [526]. - The Company’s residential real estate loans totaled 2,303,234 as of December 31, 2024, a slight decrease from 2,350,299in2023[526].−Totaldepositsslightlyincreasedto2,350,299 in 2023 [526]. - Total deposits slightly increased to 2,736,798 thousand in 2024 from 2,730,936thousandin2023[420].−TheunpaidprincipalbalancesofservicedSBAandUSDAloansdecreasedto2,730,936 thousand in 2023 [420]. - The unpaid principal balances of serviced SBA and USDA loans decreased to 479.7 million in 2024 from 508.0millionin2023,adeclineof5.0508.0 million in 2023, a decline of 5.0% [555]. - The outstanding principal of residential mortgage loans serviced for others rose to 527.0 million in 2024, up from 443.1millionin2023,anincreaseof19.0443.1 million in 2023, an increase of 19.0% [559]. - Loan modifications for borrowers experiencing financial difficulty totaled 13,425 in 2024, representing 0.43% of total loans [546]. Regulatory Compliance and Accounting Standards - The company has faced risks related to compliance with governmental and regulatory requirements, including the Dodd-Frank Act [19]. - The company has adopted a new accounting standard for credit losses effective January 1, 2023, using a modified retrospective method [406]. - The company adopted ASU 2022-02, eliminating specific reserves for troubled debt restructurings, enhancing disclosure requirements for loan modifications [507]. - The company has evaluated other accounting standards updates issued during 2024 and does not expect them to have a material impact on consolidated financial statements [514]. - The company is currently assessing the impact of the SEC's new climate-related disclosure rules, effective for the fiscal year beginning January 1, 2026 [513]. Stock and Compensation - The company recognized compensation expense for restricted stock of 2.6millionin2024,upfrom2.6 million in 2024, up from 2.4 million in 2023, indicating a 8.3% increase year-over-year [584]. - As of December 31, 2024, the company had 207,865 nonvested shares of restricted stock with a weighted average grant-date fair value of 20.20[584].−Thecompanyhad169,134outstandingstockoptionsasofDecember31,2024,withanaggregateintrinsicvalueof20.20 [584]. - The company had 169,134 outstanding stock options as of December 31, 2024, with an aggregate intrinsic value of 3,256,000 [581]. - The company recognized no compensation expense for stock options during the years ended December 31, 2024, 2023, and 2022, maintaining a consistent approach to stock option accounting [581].