Texas munity Bancshares(TCBS) - 2024 Q4 - Annual Report

Financial Performance - Net interest income increased to $12,550 thousand in 2024, up from $11,064 thousand in 2023, representing a growth of about 13.4%[220] - For the year ended December 31, 2024, net interest income increased by $1.5 million, or 13.4%, to $12.55 million compared to $11.06 million in 2023[242] - Interest income rose by $3.5 million, or 18.4%, to $22.5 million for the year ended December 31, 2024, driven by increased interest income on loans[248] - Interest income on net loans and leases increased by $3.1 million, or 24.0%, to $15.9 million for the year ended December 31, 2024[250] - Interest income from interest-bearing deposits in banks increased by $271,000, or 60.0%, to $723,000 for the year ended December 31, 2024[252] - Interest expense increased by $2.0 million, or 25.3%, to $9.9 million for the year ended December 31, 2024, primarily due to a 42 basis points increase in the average yield on interest-bearing liabilities[254] - Net interest income rose by $1.5 million, or 13.5%, to $12.6 million for the year ended December 31, 2024, driven by a 3.8% increase in interest-earning assets[256] Asset Quality - The total nonperforming assets to total assets ratio was 0.62% in 2024, up from 0.30% in 2023, indicating a deterioration in asset quality[213] - Nonperforming loans as a percentage of total loans increased to 0.76% in 2024 from 0.41% in 2023, reflecting a decline in asset quality[221] - Provision for credit losses decreased to $158 thousand in 2024 from $356 thousand in 2023, a reduction of approximately 55.6%[220] - Provision for credit losses decreased by $198,000, or 55.6%, to $158,000 for the year ended December 31, 2024, reflecting significant loan growth in 2023[257] - The allowance for credit losses to total loans and leases was 1.09% as of December 31, 2024[289] Deposits and Loans - Total deposits increased to $335,828 thousand in 2024, compared to $317,241 thousand in 2023, reflecting a growth of about 5.0%[220] - Core deposits totaled $205.9 million, or 61.3% of total deposits, as of December 31, 2024, compared to $198.5 million, or 62.6% in 2023, indicating a slight decrease in the proportion of core deposits[213] - Net loans and leases receivable increased by $13.8 million, or 4.9%, to $293.7 million, driven by an increase in commercial real estate loans and construction loans[231] - Commercial real estate loans rose to $56.1 million, or 19.0% of total loans, compared to $41.8 million, or 14.8% in 2023, indicating a significant increase in focus on this segment[210] - Construction and land loans increased to $54.1 million, or 18.4% of total loans, up from $37.5 million, or 13.3% in 2023, showing a strategic shift towards diversification[210] - Deposits increased by $18.6 million, or 5.9%, to $335.8 million, with brokered deposits rising by $10.0 million, or 83.4%[236] Expenses and Losses - Noninterest expense increased to $12,270 thousand in 2024 from $11,997 thousand in 2023, reflecting a rise of approximately 2.3%[220] - Noninterest income decreased by $2.3 million, or 641.0%, resulting in a loss of $1.9 million for the year ended December 31, 2024, primarily due to a $3.8 million loss on the sale of loans[259] - Noninterest expense increased by $273,000, or 2.3%, to $12.3 million for the year ended December 31, 2024, mainly due to higher occupancy and equipment costs[260] - Salary and employee benefit expenses decreased by $229,000, or 3.2%, to $6.8 million for the year ended December 31, 2024, despite increases in equity award expenses[261] - The net loss for the year ended December 31, 2024, was $1.3 million, an increase of $572,000, or 78.0%, compared to a net loss of $733,000 in 2023[247] Capital and Liquidity - Total assets decreased to $443,457 thousand in 2024 from $452,044 thousand in 2023, a decline of approximately 1.3%[220] - Total shareholders' equity decreased by $1.6 million, or 3.0%, to $52.1 million, primarily due to a net loss of $1.3 million for the year[238] - The efficiency ratio worsened to 115.24% in 2024 from 105.09% in 2023, indicating increased noninterest expenses relative to income[221] - At December 31, 2024, Broadstreet Bank's community bank leverage ratio was 10.84%, exceeding the required 9.0% to be considered "well capitalized" under regulatory requirements[239] - At December 31, 2024, Broadstreet Bank exceeded all regulatory capital requirements and was categorized as well-capitalized[290] - The company has a Federal Home Loan Bank borrowing capacity of $102.4 million and $18 million in credit lines with two correspondent banks[293] Securities and Investments - The total gross unrealized losses on the securities portfolio amounted to $9.0 million, or 8.7% of the $103.7 million portfolio, and 18.8% of capital[286] - The net unrealized loss on AFS securities and derivatives combined was $4.8 million, or 9.9% of capital[288] - The company anticipates $42.7 million in incoming cash flow from the securities portfolio over the next 24 months, with $22.4 million expected in 2025 and $20.3 million in 2026[286] - The company entered into interest rate swap agreements with a total notional amount of $25 million to hedge risks associated with fixed-rate AFS securities[287] Interest Rate Sensitivity - In the event of a 200 basis point increase in interest rates, net interest income would increase by 7.50%[270] - In the event of a 200 basis point decrease in interest rates, net economic value (EVE) would decrease by 8.65%[275] Other Financial Metrics - The average cost of deposits increased by 42 basis points, or 17.4%, to 2.83% at December 31, 2024, compared to 2.41% at December 31, 2023[236] - The average yield on interest-earning assets increased by 66 basis points, or 14.0%, from 4.68% in 2023 to 5.34% in 2024[248] - The average balance of the loan portfolio increased by $14.7 million, or 5.5%, from $268.2 million in 2023 to $282.9 million in 2024[250] - The average balance of securities decreased by $12.6 million, or 10.2%, from $123.5 million in 2023 to $110.9 million in 2024[249] - Dividends on restricted investments increased by $62,000, or 39.0%, to $221,000 for the year ended December 31, 2024[251]