TECTONIC FINANCI(TECTP) - 2024 Q4 - Annual Report

Financial Performance - Net income available to common shareholders decreased by $1.6 million, or 11.6%, to $12.1 million for the year ended December 31, 2024, compared to $13.7 million for 2023[353]. - Annual return on average assets was 1.75% for 2024, compared to 2.38% for 2023[353]. - Annual return on average equity was 12.66% for 2024, compared to 15.04% for 2023[353]. - The Company’s consolidated net income for the year ended December 31, 2024, was $13.9 million, compared to $13.4 million in 2023[393]. - Income before taxes for the year ended December 31, 2024, decreased by $3.2 million, or 26.6%, compared to 2023, primarily due to a $4.1 million increase in non-interest expense and a $3.6 million increase in the provision for credit losses[395]. Assets and Liabilities - Total assets grew by $186.1 million, or 27.5%, to $863.4 million as of December 31, 2024, from $677.3 million as of December 31, 2023[356]. - The average volume of interest-earning assets increased by $159.8 million, or 26.8%, from $597.1 million for the year ended December 31, 2023, to $756.9 million for the year ended December 31, 2024[363]. - The average volume of interest-bearing liabilities increased by $170.4 million, or 39.2%, from $435.0 million in 2023 to $605.4 million in 2024[365]. - Total loans increased by $168.3 million, or 33.6%, to $669.4 million at December 31, 2024, compared to $501.1 million at December 31, 2023[410]. - Total deposits increased by $184.3 million, or 35.0%, to $711.1 million as of December 31, 2024, from $526.9 million as of December 31, 2023[442]. Income and Expenses - Net interest income increased by $4.7 million, or 17.2%, from $27.4 million for the year ended December 31, 2023, to $32.0 million for the year ended December 31, 2024[362]. - Non-interest income for 2024 increased by $5.3 million, or 13.2%, totaling $45.1 million compared to $39.8 million in 2023[373]. - Total non-interest expense for the year ended December 31, 2024, increased by $7.1 million, or 15.2%, compared to 2023, totaling $53.9 million[382]. - Salaries and employee benefits for the year ended December 31, 2024, increased by $5.7 million, or 18.3%, totaling $37.0 million, driven by increases in commissions and bonuses[383]. - Non-interest expense for the year ended December 31, 2024, increased by $4.1 million, or 23.4%, mainly due to increased salaries and employee benefits related to the expansion of SBA lending and Integra factoring[399]. Credit Losses and Provisions - The company adopted the current expected credit loss (CECL) methodology, resulting in an increase of $1.4 million to the allowance for credit losses for loans[352]. - Provision for credit losses increased to $4.8 million in 2024 from $1.3 million in 2023, reflecting changes in loan volume and economic outlook[371]. - The provision for credit losses for the year ended December 31, 2024, was $4,583 thousand, an increase from $1,333 thousand in 2023[439]. - Non-accrual loans totaled $15,908 thousand, or 2.38% of total loans as of December 31, 2024, compared to $2,423 thousand, or 0.48% in 2023[429]. Interest Income and Rates - Total interest income for the year ended December 31, 2024, was $63.6 million, compared to $46.5 million in 2023, reflecting a significant increase[393]. - The average interest rate paid on interest-bearing liabilities rose by 83 basis points from 4.39% in 2023 to 5.22% in 2024[365]. - The average cost of funds for total deposits was 4.58% for the year ended December 31, 2024, compared to 3.46% in 2023[442]. Equity and Capital - Shareholders' equity increased by $6.5 million, or 6.1%, to $113.4 million as of December 31, 2024, from $106.9 million as of December 31, 2023[356]. - The Company met all capital adequacy requirements as of December 31, 2024, with the Bank qualifying as "well capitalized" under Basel III regulations[449]. - Tier 1 Capital to Average Assets ratio was 11.32% as of December 31, 2024, down from 13.97% as of December 31, 2023[451]. Loan Portfolio - SBA loans comprise 61.5% of total loans at $411.9 million as of December 31, 2024, up from 53.7% at $268.9 million in 2023[410]. - The loan portfolio included $76.2 million in loans to the dental industry, approximately 11.4% of total funded loans, down from $78.2 million, or 15.6% in 2023[423]. - The company has established guidelines for underwriting criteria including collateral coverage ratios and global debt service coverage ratios[422]. Interest Rate Sensitivity - The company conducts annual stress tests to measure the impact of market interest rate changes on net interest income[468]. - A simulated change in net interest income over a 12-month horizon shows an 8.99% increase with a +200 basis points change in interest rates[469]. - The Asset Liability Committee regularly reviews the sensitivity of assets and liabilities to interest rate changes[466].