Financial Performance - Net interest income for the three months ended March 31, 2020, was $12.7 million, an increase from $10.1 million for the same period in 2019, driven by growth from the F&M acquisition and organic loan growth [208]. - The net interest margin for the three-month period ended March 31, 2020, was 3.64%, up from 3.43% for the same period in 2019, primarily due to increased accretion of purchased credit impaired discounts [208]. - Net interest income for Q1 2020 was $12,671 million, up from $10,062 million in Q1 2019, reflecting an increase of 25.9% [212]. - Total non-interest income rose to $3,603 million in Q1 2020, a 54.5% increase from $2,332 million in Q1 2019, largely driven by the F&M acquisition [221]. - Gains on the sale of loans increased by 153.25% to $780 million in Q1 2020 from $308 million in Q1 2019, attributed to higher mortgage activity [221]. - Non-interest expense for Q1 2020 was $10,731 million, an 8.46% increase from $9,894 million in Q1 2019, influenced by the F&M acquisition [230]. - Compensation and benefits expense increased by 15.49% to $5,435 million in Q1 2020 from $4,706 million in Q1 2019, reflecting higher salaries and employee benefit costs [230]. Loan and Asset Management - The company maintains an allowance for loan losses based on ongoing assessments of estimated probable incurred losses in its loan portfolio [196]. - Total provision for loan losses for Q1 2020 was $2,000 million, compared to $1,225 million in Q1 2019, indicating a significant increase due to anticipated economic impacts from COVID-19 [218]. - Total loans outstanding increased by $3.6 million to $1.181 billion as of March 31, 2020, from $1.177 billion at December 31, 2019 [243]. - The total allowance for loan losses was $11.835 million as of March 31, 2020, compared to $10.320 million at December 31, 2019 [245]. - The composition of the loan portfolio included $520.15 million in commercial real estate loans as of March 31, 2020, up from $514.46 million at December 31, 2019 [245]. - Total impaired loans decreased to $56.0 million at March 31, 2020, from $63.2 million at December 31, 2019, reflecting a reduction in classified assets and certain acquired loan decreases [259]. - Nonperforming assets decreased by $2.4 million to $19.2 million, primarily due to decreases in nonaccrual loans acquired in the F&M acquisition [257]. Capital and Liquidity - Total stockholders' equity decreased to $147.9 million at March 31, 2020, from $150.6 million at December 31, 2019, with a book value per share of $13.27 [274]. - The Tier 1 capital ratio was 12.6% as of March 31, 2020, exceeding the required minimum of 6.0% for being considered "Well Capitalized" [279]. - The Company had $208.2 million in unused commitments as of March 31, 2020, down from $246.7 million at December 31, 2019 [278]. - The Bank's on-balance sheet liquidity ratio was 12.2% as of March 31, 2020, with $240.1 million of its $382.3 million (63%) CD portfolio maturing within the next 12 months [275]. - As of March 31, 2020, the Bank had approximately $193.6 million available under its borrowing arrangement with the Federal Home Loan Bank, compared to $203.9 million at December 31, 2019 [276]. Market and Economic Conditions - The company emphasizes the importance of maintaining its reputation and market share amidst competitive pressures and economic conditions [192]. - Interest rate risk is identified as the most significant market risk affecting the company's operations, influenced by changes in market interest rates and economic conditions [284]. - The Asset and Liability Management Committee (ALCO) regularly reviews economic conditions and interest rate outlook to manage interest rate risk and liquidity needs [285]. - The estimated change in Economic Value of Equity (EVE) for a +300 basis points shift in interest rates was a 1% increase as of March 31, 2020 [289]. - For a -100 basis points shift in interest rates, the EVE showed a 12% decrease as of March 31, 2020 [289]. Tax and Regulatory Compliance - The company’s financial statements are prepared in accordance with GAAP, requiring significant estimates and judgments that can materially affect reported amounts [195]. - The assessment of deferred tax assets involves estimates and assumptions that could materially impact the company's consolidated results [204]. - Income tax expense for Q1 2020 was $937 million, up from $322 million in Q1 2019, reflecting similar effective tax rates in both periods [234].
Citizens munity Bancorp(CZWI) - 2020 Q1 - Quarterly Report