Financial Performance - For the six months ended June 30, 2024, net income was $7.8 million, or $0.75 per diluted share, compared to $6.9 million, or $0.66 per diluted share for the same period in 2023[203]. - Net interest income for the six months ended June 30, 2024, was $23.5 million, a decrease from $24.5 million for the same period in 2023[215]. - Non-interest income decreased by $1.0 million in the second quarter of 2024, primarily due to lower gains on loan sales and higher losses on securities[201]. - Non-interest expenses increased by $0.5 million in the second quarter of 2024, primarily due to higher compensation expenses and inflationary increases[201]. - The effective tax rate decreased to 3.4% in the second quarter of 2024, down from the previous year, due to a tax exemption on income from Wisconsin commercial and agricultural loans[202]. Credit Losses - The total benefit for credit losses was $1.525 million for the second quarter of 2024, compared to a provision of $0.45 million for the same quarter in 2023[200]. - The negative provision for credit losses for the six months ended June 30, 2024, was $2.325 million, compared to a provision of $0.5 million for the same period in 2023[205]. - Total benefit for credit losses in Q2 2024 was $1.525 million, compared to a provision of $0.45 million in Q2 2023, driven by loan portfolio decreases and credit quality improvements[227]. - For the six months ended June 30, 2024, the total benefit for credit losses was $2.325 million, compared to a provision of $0.5 million for the same period in 2023, reflecting similar factors[228]. Interest Income and Expenses - Net interest income for the second quarter of 2024 decreased by $0.1 million to $11.6 million compared to the same period in 2023[199][214]. - The cost of interest-bearing liabilities increased from 2.31% for the six months ended June 30, 2023, to 3.14% for the same period in 2024[204]. - The net interest margin for the six months ended June 30, 2024, was 2.75%, down from 2.88% in the prior year[216]. - The average yield on loans for the six months ended June 30, 2024, was 5.57%, compared to 5.01% in 2023[220]. - The interest rate spread for the six months ended June 30, 2024, was 2.14%, down from 2.45% in the previous year[220]. Asset and Liability Management - The average interest-earning assets for the six months ended June 30, 2024, totaled $1.72 billion, generating interest income of $45.1 million, compared to $1.71 billion and $40.5 million in 2023[220]. - The average interest-bearing liabilities for the six months ended June 30, 2024, were $1.39 billion, with interest expense of $21.7 million[220]. - The average interest-earning assets to average interest-bearing liabilities ratio improved to 1.24 for the six months ended June 30, 2024, from 1.23 in 2023[220]. - The company has adopted asset and liability management policies to align maturities and re-pricing terms of interest-earning assets and liabilities[297]. Loan Performance - Total loans outstanding decreased by $32.2 million to $1.43 billion as of June 30, 2024, from $1.46 billion at December 31, 2023[247]. - The average outstanding loan balance was $1,439,535 thousand for the three months ended June 30, 2024, compared to $1,458,558 thousand for the three months ended December 31, 2023, indicating a decline of about 1.3%[256]. - Total recoveries of loans previously charged off were $16 thousand for the three months ended June 30, 2024, compared to $270 thousand for the three months ended December 31, 2023[256]. - The ACL for Consumer Installment loans at the end of the period was $244 thousand, down from $275 thousand at December 31, 2023[257]. - The ACL for Commercial/Agricultural Real Estate loans decreased to $17,033 thousand as of June 30, 2024, from $18,784 thousand at December 31, 2023[257]. Deposits and Liquidity - Total deposits increased to $1.26 billion for the six months ended June 30, 2024, from $1.16 billion in the same period last year[220]. - Total deposits decreased by $7.9 million to $1.52 billion during the quarter ended June 30, 2024, with a notable decrease in seasonal public deposits by $19.5 million[272]. - Brokered deposits increased by $12.8 million, largely due to new brokered CDs of $40 million replacing $30 million of maturing brokered CDs[272]. - The liquidity ratio remained flat at 11.4% as of June 30, 2024, compared to December 31, 2023[285]. - The company has an unused borrowing capacity of approximately $416.1 million under the FHLB borrowing arrangement as of June 30, 2024[281]. Capital and Equity - Stockholders' equity increased to $176.0 million at June 30, 2024, from $173.3 million at December 31, 2023, driven by net income of $7.8 million[283]. - The company's Tier 1 capital ratio was 13.7% as of June 30, 2024, exceeding the required minimum of 6.0%[293]. - Total capital to risk-weighted assets was 15.0% as of June 30, 2024, above the required minimum of 8.0%[293]. - The company is categorized as "Well Capitalized" under Prompt Corrective Action provisions as of June 30, 2024[293]. Market Risks - Interest rate risk is identified as the most significant market risk affecting the company's operations[295]. - Projected change in net interest income at +300 basis points is estimated to be a decrease of 10% as of June 30, 2024[302]. - The company focuses on originating shorter-term secured loans and variable rate loans to manage interest rate risk[298].
Citizens munity Bancorp(CZWI) - 2024 Q2 - Quarterly Report