TECTONIC FINANCI(TECTP) - 2024 Q2 - Quarterly Report

Financial Performance - Net income available to common shareholders increased by $125,000, or 4.7%, to $2.76 million for Q2 2024 compared to Q2 2023[162] - Earnings per diluted common share were $0.38 for Q2 2024, up from $0.36 in Q2 2023[162] - For the six months ended June 30, 2024, net income available to common shareholders decreased by $1.5 million, or 22.0%, to $5.43 million compared to the same period in 2023[162] - The increase in net income for Q2 2024 was primarily due to a $1.0 million increase in net interest income and a $1.3 million increase in non-interest income[162] - Non-interest income for Q2 2024 totaled $10.74 million, a rise of $1.31 million or 13.9% from $9.43 million in Q2 2023[189] Asset and Equity Growth - Total assets increased by $99.8 million, or 14.7%, to $777.1 million as of June 30, 2024, from $677.3 million as of December 31, 2023[165] - Shareholders' equity increased by $3.5 million, or 3.3%, to $110.4 million as of June 30, 2024, from $106.9 million as of December 31, 2023[166] - Total assets increased to $788.15 million in Q2 2024, up from $620.34 million in Q2 2023, representing a growth of 27.0%[181] Interest Income and Margin - Net interest income increased by $1.0 million, or 14.8%, from $6.8 million for the three months ended June 30, 2023, to $7.8 million for the three months ended June 30, 2024[171] - Net interest margin for the three months ended June 30, 2024, was 4.22%, a decrease of 51 basis points from 4.73% for the same period in 2023[171] - The average yield on interest-earning assets increased by 62 basis points from 7.80% for the three months ended June 30, 2023, to 8.42% for the three months ended June 30, 2024[173] Credit Losses and Provisions - The provision for credit losses increased by $969,000 for Q2 2024 compared to the previous year[162] - The provision for credit losses for loans was $1.62 million in Q2 2024, compared to $0.72 million in Q2 2023, indicating a significant increase of 126.5%[187] - The allowance for credit losses increased by $1.4 million following the adoption of the CECL methodology, totaling $8,276,000 as of June 30, 2024, compared to $6,308,000 at the end of 2023[242] Non-Interest Expenses - Non-interest expense increased by $1.2 million for Q2 2024 compared to the same period in 2023[162] - Total non-interest expense for the three and six months ended June 30, 2024, increased by $1.2 million, or 10.3%, and $2.3 million, or 9.9%, respectively, compared to the same periods in the prior year[198] - Salaries and employee benefits for the three and six months ended June 30, 2024, increased by $1.3 million, or 16.4%, and $2.0 million, or 13.1%, respectively, compared to the same periods in the prior year[199] Deposits and Liabilities - Total deposits rose by $92.2 million, or 17.5%, to $619.1 million as of June 30, 2024, up from $526.9 million as of December 31, 2023[246] - The average cost of funds for total deposits increased to 4.59% for the six months ended June 30, 2024, compared to 2.98% for the same period in 2023[246] - The average volume of interest-bearing liabilities increased by $171.8 million, or 40.7%, from $422.7 million for the three months ended June 30, 2023, to $594.5 million for the three months ended June 30, 2024[174] Market and Economic Factors - Inflation increases the costs of funds and operating overhead, impacting financial performance more significantly than general inflation levels[275] - Increases in market interest rates by the Federal Reserve may decrease the market value of investments and loans held[275] - The financial institution's assets and liabilities are primarily monetary, making them more sensitive to interest rate changes[275]