TECTONIC FINANCI(US:TECTP)2024-11-14 19:01Financial Performance - Net income available to common shareholders increased by $416,000, or 11.0%, to $4.2 million for Q3 2024 compared to Q3 2023[161] - Earnings per diluted common share were $0.58 for Q3 2024, up from $0.52 in Q3 2023[161] - For the nine months ended September 30, 2024, net income available to common shareholders decreased by $1.1 million, or 10.4%, to $9.6 million compared to the same period in 2023[161] - Annual return on average assets for Q3 2024 was 2.29%, down from 2.62% in Q3 2023[162] - Annual return on average equity for Q3 2024 was 16.89%, compared to 16.22% for the same period in the prior year[162] - The increase in net income for Q3 2024 was primarily due to a $1.8 million increase in net interest income and a $1.1 million increase in non-interest income[161] Credit Losses and Provisions - The provision for credit losses increased by $644,000 for Q3 2024 compared to Q3 2023[161] - The company adopted the current expected credit loss (CECL) methodology, resulting in a $1.4 million increase to the allowance for credit losses for loans[160] - The company recognized a cumulative effect reduction to retained earnings totaling $1.3 million upon adopting the CECL methodology[160] - Provision for credit losses for loans was $467,000 in Q3 2024, compared to a reversal of $(38,000) in Q3 2023, indicating a shift in credit quality assessment[187] - The allowance for credit losses increased to $(8,282,000) in Q3 2024 from $(6,150,000) in Q3 2023, reflecting a proactive approach to potential credit risks[180] - The company anticipates future provisions for credit losses may be necessary due to uncertain economic conditions influenced by elevated interest rates and inflationary pressures[185] Assets and Liabilities - Total assets increased by $170.2 million, or 25.1%, to $847.5 million as of September 30, 2024, from $677.3 million as of December 31, 2023[164] - Total loans increased by $119.7 million to $620.8 million as of September 30, 2024, compared to $501.1 million at December 31, 2023[229] - Total deposits increased by $159.2 million, or 30.2%, to $686.1 million as of September 30, 2024, compared to $526.9 million as of December 31, 2023[246] - The allowance for credit losses increased to $8.736 million as of September 30, 2024, from $6.308 million at December 31, 2023[243] - The ratio of allowance for loans to end of period loans was 1.41% as of September 30, 2024, compared to 1.25% at December 31, 2023[243] Income and Revenue - Total consolidated revenue for the nine months ended September 30, 2024 was $55,725,000, compared to $50,692,000 for the same period last year[211] - Revenue for the Banking segment was $9,344,000 for the three months ended September 30, 2024, compared to $7,292,000 for the same period last year[211] - Non-interest income for the three months ended September 30, 2024 increased by $808,000, or 8.3%, compared to the same period last year, driven by advisory income growth of $718,000[219] Interest Income and Expenses - Net interest income increased by $1.8 million, or 27.5%, from $6.6 million for the three months ended September 30, 2023, to $8.4 million for the same period in 2024[170] - Net interest margin for the three months ended September 30, 2024, was 4.25%, a decrease of 18 basis points from 4.43% for the same period in 2023[170] - Interest expense for the nine months ended September 30, 2024 increased by $99,000, attributed solely to rising interest rates on subordinated debt[221] Non-Interest Income and Expenses - Total non-interest income rose to $11,176,000 in Q3 2024, a 10.4% increase compared to $10,125,000 in Q3 2023[189] - Total non-interest expense increased by $1.8 million, or 16.2%, for the three months ended September 30, 2024, and by $4.2 million, or 12.0%, for the nine months ended September 30, 2024, compared to the same periods in the prior year[198] - Salaries and employee benefits increased by $1.3 million, or 16.9%, for the three months ended September 30, 2024, and by $3.3 million, or 14.3%, for the nine months ended September 30, 2024, compared to the same periods in the prior year[199] Market and Economic Conditions - The company manages interest rate risk primarily through its Asset Liability Committee, which formulates strategies based on interest rate risk levels and considers the impact on earnings and capital[269] - Inflation generally increases the costs of funds and operating overhead, significantly affecting the performance of the financial institution compared to industrial companies[274] - The impact of inflation and rising market interest rates may adversely affect liquidity, earnings, and shareholders' equity[274] Capital and Equity - Shareholders' equity rose by $5.9 million, or 5.5%, to $112.8 million as of September 30, 2024, driven by net income of $10.9 million[251] - The Company met all capital adequacy requirements as of September 30, 2024, with Tier 1 Capital to Average Assets ratio at 11.48%[254]