Loan Portfolio - As of December 31, 2024, commercial real estate loans totaled $411.3 million, representing 55.8% of the total loan portfolio[186]. - The non-owner occupied commercial loan portfolio amounted to $328.7 million, or 44.6% of the total loan portfolio[186]. - At December 31, 2024, $241.7 million, or 32.8% of the loan portfolio, was secured by one- to four-family real estate loans[188]. - Total loans increased to $737.76 million as of December 31, 2024, up from $704.80 million in 2023, representing a growth of 4.65%[428]. - Real estate loans accounted for 94.20% of total loans in 2024, slightly down from 94.30% in 2023[428]. - Commercial investor loans rose to $328.68 million, making up 44.56% of real estate loans, compared to 40.76% in 2023[428]. - The total real estate loans reached $694,892,000 in 2024, up from $664,564,000 in 2023, indicating a year-over-year increase of about 4.56%[446]. - Total one to four family owner-occupied loans amounted to $141,867 thousand, with a pass rate of 24,477 thousand[439]. - Total one to four family non-owner occupied loans reached $99,824 thousand, with a pass rate of 5,483 thousand[439]. - Total commercial owner-occupied loans were $82,614 thousand, with a pass rate of 4,433 thousand[439]. - Total commercial investor loans stood at $328,680 thousand, with a pass rate of 41,332 thousand[439]. - Total construction and land loans amounted to $30,578 thousand, with a pass rate of 26,399 thousand[439]. - Total farm loans reached $11,329 thousand, with a pass rate of 315 thousand[439]. - Total marine and other consumer loans were $16,772 thousand, with a pass rate of 2,236 thousand[439]. - Total guaranteed by U.S. Government loans amounted to $2,902 thousand, with a pass rate of 20 thousand[439]. - Total commercial loans reached $23,194 thousand, with a pass rate of 5,847 thousand[439]. - Total loans as of December 31, 2024, amounted to $737,760 thousand, with pass loans at $730,323 thousand, representing a slight increase from $704,802 thousand in 2023[440]. - The total number of loans classified as substandard decreased from $18,991 thousand in 2023 to $7,437 thousand in 2024, reflecting a reduction of approximately 61%[440]. - The company maintained a strong pass loan ratio, with pass loans constituting approximately 99.0% of total loans as of December 31, 2024[440]. Credit Quality - At December 31, 2024, the allowance for credit losses was 1.15% of total loans and 212.55% of non-performing loans[193]. - A significant portion of loans originated by the investment real estate group are secured by collateral located outside of Maryland, which may lead to additional provisions or charge-offs[190]. - The company faces risks related to economic conditions, including potential increases in non-performing loans due to adverse local economic factors[199]. - The allowance for credit losses decreased to $8.52 million in 2024 from $8.55 million in 2023, indicating a slight improvement in credit quality[435]. - The company recorded a recovery of provision for credit losses of $347,000 in 2024, compared to a provision of $203,000 in the previous year[437]. - One to four family owner-occupied loans saw an increase in allowance for credit losses to $1.86 million in 2024 from $1.73 million in 2023[435]. - Non-accrual loans totaled $4,010,000 as of December 31, 2024, compared to $10,554,000 in 2023, reflecting a significant reduction of approximately 62%[448]. - The total past due loans (30-89 days) amounted to $6,489,000 in 2024, compared to $14,019,000 in 2023, indicating a decrease of about 53.76%[448]. - The company’s allowance for credit losses on held-to-maturity debt securities decreased from $6,000 in 2023 to $4,000 in 2024, indicating improved credit quality[427]. Financial Performance - Net income for the year ended December 31, 2024, was $11,723 thousand, a decrease of 14.5% compared to $13,707 thousand in 2023[353]. - Total interest income rose to $46,682 thousand in 2024, an increase of 7.2% from $43,419 thousand in 2023[353]. - Net interest income after provision for credit losses was $35,390 thousand for 2024, up from $34,274 thousand in 2023, reflecting a growth of 3.3%[353]. - Noninterest expense increased to $21,498 thousand in 2024, up from $19,409 thousand in 2023, indicating a rise of 10.7%[353]. - Basic earnings per share decreased to $1.10 in 2024 from $1.47 in 2023, a decline of 25.2%[353]. - Retained earnings increased to $109,495 thousand as of December 31, 2024, compared to $97,772 thousand in 2023, reflecting a growth of 12%[358]. - Other comprehensive income for 2024 was $337 thousand, down from $383 thousand in 2023, a decrease of 12%[355]. - Total stockholders' equity decreased to $195,499 thousand in 2024 from $199,065 thousand in 2023, a decline of 1.8%[350]. - Net cash provided by operating activities increased to $16,063,000 in 2024, compared to $15,194,000 in 2023, reflecting a growth of 5.7%[361]. - The company reported a net cash used in investing activities of $32,497,000 in 2024, slightly improved from $35,173,000 in 2023[361]. - The company’s cash and cash equivalents at the end of the period were $70,500,000, down from $73,742,000 in 2023, marking a decrease of 4.5%[361]. - Interest paid increased to $11,342,000 in 2024 from $9,190,000 in 2023, representing a rise of 23.4%[361]. Regulatory and Economic Environment - The company is vulnerable to a downturn in the local economy and real estate markets, particularly in Baltimore City and surrounding counties[192]. - Inflation has remained elevated through 2024, impacting the cost of goods and services and potentially affecting borrowers' ability to repay loans[202]. - Changes in interest rates could reduce profits and asset values, with the company being asset sensitive, which may affect net interest margins in a falling rate environment[195]. - The fiscal and monetary policies of the federal government could adversely affect the Company's financial condition and results of operations[214]. - The Company is subject to extensive regulation, which may increase operational costs and limit business opportunities[212]. - Federal regulations establish minimum capital requirements, including a common equity Tier 1 capital ratio of 4.5% and a total capital ratio of 8%[217]. - The Company faces intense competition in the banking sector, which may limit growth and profitability[225]. Cybersecurity and Operational Risks - Operational risks include reliance on technology, with potential vulnerabilities to security breaches and system failures[226]. - The company continues to face heightened risks related to cyber-attacks and information security breaches due to evolving threats and an expanded geographic footprint[228]. - The Board of Directors actively monitors cybersecurity risk tolerance and receives annual training and reports on cybersecurity issues[230]. - The company has outsourced critical operations to third-party service providers, which exposes it to risks if these vendors fail to perform as per contractual agreements[232]. Capital and Stockholder Information - The Company had $15.0 million of outstanding advances from the Federal Home Loan Bank and $50.0 million in brokered deposits as of December 31, 2024[207]. - Significant deposit withdrawals could materially reduce liquidity, potentially requiring the Company to replace such deposits with higher-cost borrowings[208]. - The Company issued $35.0 million in Fixed-to-Floating Rate Subordinated Notes due 2030, with a fixed interest rate of 4.875% for the first five years[465]. - The Company recognized $667,000 in compensation expense related to stock options granted during the year ended December 31, 2024, compared to $0 in 2023[478]. - The intrinsic value of stock options outstanding as of December 31, 2024, was $2,879,696, reflecting a significant increase from $474,677 in 2023[478]. - The Company granted 343,562 shares of restricted stock in 2024, resulting in a compensation expense of $986,000, compared to $255,000 for 18,784 shares in 2023[480]. - The accrued liabilities for executive retirement agreements were $2.2 million in 2024, slightly down from $2.3 million in 2023[473]. - As of December 31, 2024, the future compensation expense associated with restricted stock was $4.2 million, compared to $151,150 as of December 31, 2023[481].
BV Financial(BVFL) - 2024 Q4 - Annual Report