TECTONIC FINANCI(US:TECTP)2023-05-15 18:01Financial Performance - Net income available to common shareholders increased by $429,000, or 11.0%, to $4.3 million for the three months ended March 31, 2023, compared to $3.9 million for the same period in 2022[166]. - Earnings per diluted common share were $0.59 for the three months ended March 31, 2023, compared to $0.53 for the same period in 2022[166]. - The increase in net interest income was a primary driver for the increase in net income available to common shareholders[166]. - The Company experienced a decrease in the provision for credit losses, which contributed to the overall increase in net income[166]. - Total non-interest income for the three months ended March 31, 2023 increased by $742,000, or 7.5%, to $10,701,000 compared to $9,959,000 in the prior year[186]. Assets and Equity - Total assets increased by $19.0 million, or 3.1%, to $631.5 million as of March 31, 2023, from $612.5 million as of December 31, 2022[169]. - Shareholders' equity increased by $3.1 million, or 3.2%, to $99.6 million as of March 31, 2023, from $96.5 million as of December 31, 2022[170]. - Average tangible common equity increased to $57.8 million for the three months ended March 31, 2023, compared to $46.1 million for the same period in 2022[169]. Credit Losses and Allowances - The Company recorded an increase of $1.4 million to the allowance for credit losses for loans upon adopting the current expected credit loss (CECL) methodology[165]. - Provision for credit losses for the three months ended March 31, 2023 was $78,000, a decrease of 76.1% compared to $327,000 for the same period in the prior year[184]. - The total allowance for credit losses on loans increased by $1.4 million to $5.873 million as of March 31, 2023, compared to $4.153 million as of December 31, 2022, following the adoption of the CECL methodology[240]. Interest Income and Expenses - Net interest income increased by $376,000, or 5.8%, from $6.6 million for the three months ended March 31, 2022, to $7.0 million for the same period in 2023[176]. - The average yield on interest-earning assets increased by 141 basis points from 5.68% in Q1 2022 to 7.09% in Q1 2023[177]. - The average interest rate paid on interest-bearing liabilities increased by 269 basis points from 0.92% in Q1 2022 to 3.61% in Q1 2023[178]. - The average cost of funds for total deposits was 3.43% for the three months ended March 31, 2023, compared to 0.74% for the same period in 2022[244]. Deposits and Loans - Total deposits rose by $15.4 million, or 3.12%, to $508.4 million as of March 31, 2023, from $493.0 million as of December 31, 2022[244]. - The average volume of interest-bearing deposits increased by $59.3 million, or 16.7%, from $355.9 million in Q1 2022 to $415.2 million in Q1 2023[178]. - As of March 31, 2023, total loans increased by $4.9 million to $455.2 million compared to $450.3 million at December 31, 2022[224]. Non-Interest Income and Expenses - Total non-interest expense for the three months ended March 31, 2023 increased by $709,000, or 6.5%, to $11,668,000 compared to $10,959,000 in the prior year[193]. - Salaries and employee benefits increased by $407,000, or 5.5%, to $7,863,000 for the three months ended March 31, 2023, driven by increases in salaries and related payroll expenses[194]. - Service fees and other income increased by $1,000,000, or 45.1%, to $3,216,000 for the three months ended March 31, 2023, due to increases in pension administration fees and other income[191]. Capital Ratios - As of March 31, 2023, the company's CET1 and Total Capital ratios were 15.6% and 21.2%, respectively, indicating a robust capital position[171]. - Common Equity Tier 1 Capital to Risk Weighted Assets ratio increased to 15.63% as of March 31, 2023, compared to 14.80% as of December 31, 2022[253]. - Total Capital to Risk Weighted Assets ratio improved to 21.21% as of March 31, 2023, from 20.21% as of December 31, 2022[253]. Market Conditions and Risks - A simulated increase of 200 basis points in interest rates is projected to increase net interest income by 12.20% over a 12-month horizon[272]. - Inflation generally increases the costs of funds and operating overhead, affecting the performance of financial institutions more significantly than general inflation levels[273]. - The Company believes it has adequate liquidity to meet obligations, but potential economic downturns could restrict funding sources[260].