Financial Performance - For the three months ended September 30, 2024, net interest income decreased by $0.8 million compared to the same period in 2023, primarily due to higher deposit costs and customer account shifts to higher-cost certificates [225]. - Net income for the three months ended September 30, 2024, was $3.3 million, or $0.32 per diluted share, compared to $2.5 million, or $0.24 per diluted share for the same period in 2023 [230]. - Non-interest income increased by $0.4 million in the third quarter of 2024, mainly due to a $0.5 million higher gain on the sale of loans [227]. - For the nine months ended September 30, 2024, net interest income decreased by $1.8 million, with interest-bearing liabilities costs rising from 2.46% in 2023 to 3.18% in 2024 [231][232]. - Non-interest income for the nine months ended September 30, 2024, increased by $0.3 million, driven by higher gains on loan sales and service charges [234]. - Non-interest expense for the nine months ended September 30, 2024, increased by $1.6 million, largely due to higher compensation expenses related to merit increases and incentive costs [235]. Credit Losses - The total benefit for credit losses for the third quarter of 2024 was $0.4 million, compared to a negative provision of $0.3 million for the same quarter in 2023 [226]. - The total benefit for credit losses for the nine months ended September 30, 2024, was $2.725 million, compared to a provision of $0.175 million for the same period in 2023 [233]. - The company continues to monitor non-performing loan relationships and will adjust the allowance for credit losses as necessary based on changing conditions [261]. - The allowance for credit losses (ACL) on loans at the end of the period is $21,000 thousand, down from $21,178 thousand at the beginning of the period [297]. - Nonperforming assets rose to $17.1 million as of September 30, 2024, compared to $15.4 million at December 31, 2023, primarily due to one agricultural real estate loan moving to nonaccrual status [305]. - Total nonperforming loans (NPLs) were $15.6 million at September 30, 2024, up from $13.6 million at December 31, 2023 [304]. Interest Income and Margin - Net interest income for the three months ended September 30, 2024, was $11.3 million, a decrease from $12.1 million for the same period in 2023 [245]. - The net interest margin for the three-month period ended September 30, 2024, decreased to 2.63%, compared to 2.79% for the same period in 2023 [245]. - For the nine months ended September 30, 2024, net interest income was $34.8 million, down from $36.6 million for the same period in 2023 [246]. - The net interest margin for the nine-month period ended September 30, 2024, was 2.71%, compared to 2.85% for the same period in 2023 [248]. - The interest rate spread for the three months ended September 30, 2024, was 1.99% compared to 2.26% for the same period in 2023 [249]. - The interest rate spread for the nine months ended September 30, 2024, was 2.09%, down from 2.38% for the same period in 2023 [250]. Tax and Regulatory - Provision for income taxes decreased to $0.9 million in the third quarter of 2024, down from $2.5 million in the same quarter of 2023, primarily due to a decrease in the effective tax rate [228]. - The effective tax rate decrease in 2024 is attributed to a Wisconsin state budget change providing tax exemptions on income from certain loans [273]. - The company reported a nine-month total of $3.0 million in income taxes compared to $4.9 million in the same period last year [273]. - Total capital to risk-weighted assets ratio was 15.0% as of September 30, 2024, exceeding the "Well Capitalized" threshold of 8.0% [341]. - Tier 1 capital to risk-weighted assets ratio was 13.8% as of September 30, 2024, above the required minimum of 6.0% [341]. Assets and Liabilities - Cash and cash equivalents decreased by $0.5 million to $36.6 million as of September 30, 2024, from $37.1 million at December 31, 2023 [274]. - Total loans outstanding decreased by $36.0 million to $1.42 billion as of September 30, 2024, from $1.46 billion at December 31, 2023 [282]. - The loan portfolio composition shows real estate loans at $730.5 million (51.3%) as of September 30, 2024, down from $750.5 million (51.4%) at December 31, 2023 [282]. - Total deposits increased by $1.1 million to $1.52 billion as of September 30, 2024, with consumer deposits rising by $22.1 million [313]. - The composition of the deposit portfolio was 56% consumer, 28% commercial, 12% public, and 4% brokered deposits as of September 30, 2024 [314]. Shareholder and Equity - Stockholders' equity increased to $180.1 million as of September 30, 2024, from $173.3 million at December 31, 2023, driven by net income of $11.0 million and unrealized gains of $3.5 million [329]. - The company repurchased 223 thousand shares in Q3 2024 at an average price of $12.91 per share, totaling 382 thousand shares repurchased in the nine-month period at an average price of $12.32 per share [330]. Interest Rate Risk - Interest rate risk is the most significant market risk for the company, influenced by changes in market interest rates and economic conditions [343]. - The projected change in net interest income at +300 basis points is a decrease of 11% at September 30, 2024, compared to a decrease of 13% at December 31, 2023 [351]. - The overall interest rate sensitivity is assessed through net interest income shock analysis over the next 12 months [350]. - The company acknowledges that actual values may differ from projections if market conditions vary from the assumptions used [352].
Citizens munity Bancorp(CZWI) - 2024 Q3 - Quarterly Report