Central Plains Bancshares(US:CPBI)2025-02-11 21:30Financial Position - Total assets increased by $21.0 million, or 4.5%, to $484.3 million at December 31, 2024, from $463.3 million at March 31, 2024, primarily due to a $24.6 million, or 6.6%, increase in net loans [110]. - Cash and cash equivalents decreased by $4.9 million, or 42.0%, to $6.6 million at December 31, 2024, from $11.5 million at March 31, 2024, mainly due to increased loan funding and construction of new branch locations [111]. - Loans increased by $24.7 million, or 6.5%, to $404.9 million at December 31, 2024, driven by a significant increase in agriculture loans, which rose by $24.4 million, or 123.9% [113]. - Total deposits rose by $19.2 million, or 5.1%, to $394.3 million at December 31, 2024, primarily due to higher balances in time deposits and money market accounts [115]. - Stockholders' equity increased by $3.0 million, or 3.8%, to $81.3 million at December 31, 2024, driven by net income of $2.8 million and a decrease in unrealized losses on securities [118]. - Premises and equipment increased by $4.4 million, or 75.1%, to $10.3 million at December 31, 2024, due to the construction of two new branch offices [114]. - The company had no outstanding borrowings at December 31, 2024, and March 31, 2024, utilizing increased deposits to fund operations [117]. Income and Expenses - For the three months ended December 31, 2024, net income was $951,000, a slight increase from $937,000 for the same period in 2023 [126]. - Interest and dividend income rose by $805,000, or 14.8%, to $6.2 million for the three months ended December 31, 2024, compared to $5.4 million in 2023 [127]. - Interest income on loans increased by $756,000, or 15.5%, to $5.6 million for the three months ended December 31, 2024, driven by a 7.8% increase in the average balance of loans [128]. - Interest expense increased by $421,000, or 24.9%, to $2.1 million for the three months ended December 31, 2024, due to higher costs of interest-bearing liabilities [133]. - For the nine months ended December 31, 2024, net income was $2.8 million, a decrease from $2.9 million for the same period in 2023 [126]. - Interest income on loans for the nine months ended December 31, 2024, increased by $2.8 million, or 19.9%, to $16.6 million compared to $13.8 million in 2023 [131]. - Interest expense on deposits increased by $1.5 million, or 32.4%, to $6.1 million for the nine months ended December 31, 2024, compared to $4.6 million for the same period in 2023 [136]. - Non-interest income decreased by $326,000, or 14.7%, to $1.9 million for the nine months ended December 31, 2024, from $2.2 million for the same period in 2023 [145]. - Non-interest expense increased by $1.4 million, or 15.5%, to $10.5 million for the nine months ended December 31, 2024, compared to $9.1 million for the same period in 2023 [149]. - Provision for credit losses decreased to $56,000 for the nine months ended December 31, 2024, from $99,000 for the same period in 2023 [142]. Interest Rates and Margins - The yield on loans increased by 38 basis points to 5.70% for the three months ended December 31, 2024, up from 5.32% in 2023 [128]. - The interest rate spread increased by four basis points to 2.71% for the nine months ended December 31, 2024, compared to 2.67% for the same period in 2023 [140]. - The net interest margin increased by 20 basis points to 3.53% for the nine months ended December 31, 2024, compared to 3.33% for the same period in 2023 [140]. - Interest income on securities increased by $365,000, or 29.7%, to $1.6 million for the nine months ended December 31, 2024, driven by a 74 basis point increase in the average yield [132]. Cash Flow and Liquidity - For the nine months ended December 31, 2024, net cash provided by operating activities amounted to $2.4 million, while net cash used in investing activities was $26.0 million, primarily due to a net increase in loans of $24.7 million [169]. - Cash flows from financing activities for the nine months ended December 31, 2024, amounted to $18.8 million, primarily due to an increase in deposits of $19.2 million [169]. - The net decrease in cash and cash equivalents for the nine months ended December 31, 2024, was $4.8 million, compared to a net decrease of $4.9 million for the same period in 2023 [169][170]. Risk Management - The company does not anticipate entering into hedging activities in the future, focusing instead on managing interest rate risk through asset/liability management strategies [154]. - As of December 31, 2024, a 200 basis point increase in market interest rates would result in a 0.75% decrease in MVE, while a 200 basis point decrease would lead to a 14.73% decrease in MVE [163]. - The methodologies used in measuring interest rate risk have inherent shortcomings, as they assume constant asset and liability compositions and uniform interest rate changes across the yield curve [164]. - The Association has the ability to participate in the Federal Reserve Board's Bank Term Funding Program if needed, enhancing liquidity options [166]. Loan Portfolio - The Association's commercial real estate loans generally have terms and amortization periods up to 20 years, with loan-to-value ratios limited to 75% of the purchase price or appraised value [172]. - The debt service coverage ratio for commercial real estate loans is generally at least 1.20x, indicating a strong ability to cover debt obligations [173]. - The primary impact of inflation on operations is reflected in increased operating costs, with interest rates having a more significant impact on performance than inflation [171].