Financial Position - Total assets increased by $43.0 million, or 9.0%, to $523.8 million at September 30, 2024, compared to $480.8 million at December 31, 2023[156] - Cash and cash equivalents rose by $14.8 million, or 76.6%, to $34.1 million at September 30, 2024, primarily due to cash received from the initial public offering[157] - Investment securities available-for-sale increased by $25.9 million, or 38.1%, to $93.8 million at September 30, 2024[158] - Loans receivable, net, increased by $2.7 million, or 0.7%, to $367.7 million at September 30, 2024, with loan originations totaling $26.9 million[159] - Total stockholders' equity increased by $50.1 million, or 64.4%, to $127.9 million at September 30, 2024, driven by the sale of stock in the initial public offering totaling $53.2 million[161] - Deposits decreased by $5.9 million, or 1.5%, to $384.1 million at September 30, 2024, with significant changes in various account types[160] Credit Losses and Internal Controls - The allowance for credit losses decreased by $1.1 million due to an evolving economic outlook and adjustments in peer group loss rates[155] - The company identified material weaknesses in internal control over financial reporting related to the allowance for credit losses as of September 30, 2024[150] - The company plans to remediate identified weaknesses by enhancing control procedures and independent reviews[152] - The company adopted the Current Expected Credit Loss (CECL) methodology effective January 1, 2023, impacting the allowance for credit losses[149] - The allowance for credit losses on loans represented 0.46% of total loans at September 30, 2024, down from 0.76% at September 30, 2023[176] - Total non-performing loans increased to $647,000 at September 30, 2024, compared to $0 at September 30, 2023[178] Income and Expenses - Net income for the three months ended September 30, 2024, was a loss of $788,000, a decrease of $827,000, or 2,120.5%, compared to a net income of $39,000 for the same period in 2023[168] - Interest and dividend income increased by $1.0 million, or 25.0%, to $5.2 million for the three months ended September 30, 2024, compared to $4.2 million for the same period in 2023[170] - Net interest income increased by $530,000, or 22.5%, to $2.9 million for the three months ended September 30, 2024, compared to $2.4 million for the same period in 2023[175] - Noninterest income totaled $252,000 for the three months ended September 30, 2024, an increase of $3,000, or 1.2%, from $249,000 for the same period in 2023[179] - Noninterest expense increased by $1.6 million, or 59.9%, to $4.2 million for the three months ended September 30, 2024, compared to $2.7 million for the same period in 2023[180] - Net income (loss) for the nine months ended September 30, 2024, was ($1.2) million, a decrease of $1.9 million, or 299.8%, compared to $619,000 for the same period in 2023[182] - Interest and dividend income increased by $2.0 million, or 16.1%, to $14.1 million for the nine months ended September 30, 2024[183] - Net interest income decreased by $602,000, or 7.7%, to $7.2 million for the nine months ended September 30, 2024[188] - Noninterest expense increased by $1.9 million, or 24.2%, to $9.8 million for the nine months ended September 30, 2024[195] Interest Rate Risk Management - The company maintains a high liquidity level and aims to grow core deposit accounts as part of its interest rate risk management strategy[208] - The board of directors evaluates interest rate risk and establishes policies for managing it during regular meetings[207] - The company does not engage in hedging activities and does not anticipate entering into such transactions in the future[209] - The methodologies used for measuring interest rate risk have inherent shortcomings, as they rely on assumptions that may not reflect actual market conditions[218] - Changes in market interest rates can affect the fair values of the company's loans, deposits, and borrowings, which may not be captured in EVE and net interest income calculations[219] Future Commitments and Economic Value - As of September 30, 2024, the company had $23.6 million in outstanding commitments to originate loans, including $8.4 million for construction loans and $13.4 million in unused home equity lines of credit[206] - The company expects a substantial portion of the $215.2 million in maturing certificates of deposit to be renewed, but may raise interest rates on deposits if retention is low[206] - The estimated economic value of equity (EVE) would decrease by 28.48% with a 200 basis point increase in market interest rates, and increase by 20.27% with a 200 basis point decrease[213] - The company’s net interest income would decrease by 16.31% with a 200 basis point increase in market interest rates, and increase by 2.52% with a 200 basis point decrease[217] - The EVE as a percentage of assets was 23.16% at the level interest rate scenario[212]
Fifth District Bancorp, Inc.(FDSB) - 2024 Q3 - Quarterly Report