Financial Performance - Net interest income for Q2 2020 was $12.3 million, up from $10.1 million in Q2 2019, reflecting growth from the F&M acquisition and organic loan growth [215]. - For the six months ended June 30, 2020, net interest income was $25.0 million, compared to $20.1 million for the same period in 2019 [215]. - Net interest income for the three months ended June 30, 2020, was $12,303, compared to $10,083 for the same period in 2019, representing a year-over-year increase of 21.8% [220]. - The net interest income for the six months ended June 30, 2020, was $24,974, up from $20,145 in 2019, reflecting a 24.0% increase [223]. Net Interest Margin - The net interest margin for Q2 2020 was 3.34%, slightly up from 3.30% in Q2 2019, driven by increased accretion of purchased credit impaired discounts [215]. - The net interest margin for the six months ended June 30, 2020, was 3.48%, compared to 3.36% for the same period in 2019 [216]. - The company’s net interest margin for the six-month period, after adjustments, was 3.23%, compared to 3.28% for the same period in 2019 [216]. - The interest rate spread increased to 3.16% for the three months ended June 30, 2020, compared to 3.05% in 2019, while the net interest margin improved to 3.34% from 3.30% [220]. Loan and Deposit Growth - The company originated $137 million in SBA PPP loans during Q2 2020, contributing 4 basis points to the net interest margin [215]. - Total deposits for the six months ended June 30, 2020, were $1,037,658, with interest expense of $5,787, compared to $876,893 and $5,519 in 2019, marking a 18.3% increase in deposits [223]. - Deposits increased by $76.5 million to $1.272 billion at June 30, 2020, from $1.196 billion at December 31, 2019, driven by growth in retail and commercial non-maturity deposits [285]. - Total loans outstanding increased by $103.8 million to $1.28 billion as of June 30, 2020, from $1.18 billion at December 31, 2019 [257]. Allowance for Loan Losses - The allowance for loan losses is based on ongoing assessments of estimated probable incurred losses in the loan portfolio [202]. - The allowance for loan losses increased to $13.4 million at June 30, 2020, representing 1.04% of loans receivable, up from $10.3 million or 0.88% at December 31, 2019 [263]. - The provision for loan losses for the three months ended June 30, 2020, was $1,750, with $1,250 attributed to COVID-19 related impacts, indicating proactive measures in response to economic conditions [232]. - The ratio of ALL to total loans was 1.04% at June 30, 2020, up from 0.88% at December 31, 2019 [276]. Non-Interest Income and Expenses - Non-interest income for the three months ended June 30, 2020, decreased by 4.30% to $5,013 million compared to $5,238 million in the same period of 2019 [238]. - Total non-interest expense increased by 21.33% to $11,392 million for the three months ended June 30, 2020, compared to $9,389 million in the same period of 2019 [246]. - Compensation and related benefits rose by 28.32% to $5,908 million for the three months ended June 30, 2020, compared to $4,604 million in the prior year [246]. - Gain on sale of loans surged by 217.28% to $1,818 million for the three months ended June 30, 2020, compared to $573 million in the same period of 2019 [238]. Asset Quality - Nonperforming assets decreased by $4.2 million to $17.4 million at June 30, 2020, from $21.6 million at December 31, 2019 [274]. - Total nonaccrual loans amounted to $14.8 million at June 30, 2020, down from $19.1 million at March 31, 2020 [276]. - The total nonperforming loans (NPLs) were $16.7 million at June 30, 2020, down from $20.2 million at the same time last year [276]. - Impaired loans totaled $51.7 million at June 30, 2020, down from $63.2 million at December 31, 2019, with 343 impaired loans identified [262]. Capital and Liquidity - Total stockholders' equity increased to $152.8 million at June 30, 2020, from $150.6 million at December 31, 2019, largely due to net income of $5.7 million [293]. - The company was categorized as "Well Capitalized" under Prompt Corrective Action Provisions as of June 30, 2020 [306]. - The Tier 1 capital to risk-weighted assets ratio was 12.9% as of June 30, 2020, above the required 6.0% [303]. - The company reported a Tier 1 leverage ratio of 9.9% as of June 30, 2020, exceeding the minimum requirement of 4.0% [303]. Risk Management - The company’s interest rate risk is significant, with net interest income projected to change by 1% with a 300 basis point increase in interest rates as of June 30, 2020 [313]. - The company adopted asset and liability management policies to align maturities and re-pricing terms of interest-earning assets and interest-bearing liabilities [310]. - The company plans to manage funding needs by utilizing core deposits and brokered certificates of deposits to extend terms and lock in fixed interest rates [310].
Citizens munity Bancorp(CZWI) - 2020 Q2 - Quarterly Report