TECTONIC FINANCI(TECTP) - 2025 Q1 - Quarterly Report

Financial Performance - Net income available to common shareholders increased by $1.2 million, or 44.4%, to $3.9 million for the three months ended March 31, 2025, compared to $2.7 million for the same period in 2024[163]. - Earnings per diluted common share were $0.57 for the three months ended March 31, 2025, up from $0.37 for the same period in 2024[163]. - Annual return on average assets was 2.01% for the three months ended March 31, 2025, compared to 1.67% for the same period in the prior year[163]. - Annual return on average tangible common equity increased to 22.39% for the three months ended March 31, 2025, from 15.81% for the same period in 2024[165]. - Net interest income increased by $1.9 million, contributing to the overall increase in net income[163]. - Non-interest income rose by $2.4 million for the three months ended March 31, 2025, compared to the same period in 2024[163]. Assets and Liabilities - Total assets increased by $47.1 million, or 5.5%, to $910.5 million as of March 31, 2025, from $863.4 million as of December 31, 2024[165]. - Average volume of interest-earning assets rose by $169.6 million, or 24.5%, from $691.4 million in Q1 2024 to $861.0 million in Q1 2025, driven by a $190.3 million, or 35.2%, increase in average loans[172]. - Average volume of interest-bearing liabilities increased by $157.9 million, or 28.7%, from $550.8 million in Q1 2024 to $708.7 million in Q1 2025, including a $179.2 million, or 34.7%, increase in interest-bearing deposits[175]. - As of March 31, 2025, total loans increased by $34.4 million to $703.8 million compared to $669.4 million at December 31, 2024[220]. - As of March 31, 2025, total deposits increased by $41.7 million, or 5.9%, to $752.8 million compared to $711.1 million as of December 31, 2024[238]. Credit Quality - The provision for credit losses decreased by $62,000, partially offsetting the increase in non-interest expenses[163]. - Provision for credit losses totaled $855,000 in Q1 2025, reflecting an increase in loan volume and required specific reserves, compared to $917,000 in Q1 2024[181]. - The allowance for credit losses is calculated based on historical credit loss experience and current conditions, with adjustments for portfolio-specific risk characteristics[226]. - The allowance for credit losses at the end of the period was $9,136,000, reflecting a decrease from $9,183,000 at the beginning of the period[235]. - Non-performing assets totaled $20.358 million, representing 2.89% of total loans as of March 31, 2025, compared to $15.938 million or 2.38% at December 31, 2024[225]. Income and Expenses - Total non-interest expense for the three months ended March 31, 2025 increased by $2.5 million, or 19.7%, compared to the same period in the prior year, attributed to various expense categories including salaries and employee benefits[191]. - Salaries and employee benefits for the three months ended March 31, 2025 increased by $1.7 million, or 19.7%, compared to the same period in the prior year, with significant increases in bonuses and commissions[192]. - Professional fees for the three months ended March 31, 2025 increased by $140,000, or 32.3%, driven by increases in legal and consulting fees across segments[196]. - Income tax expense for the three months ended March 31, 2025 was approximately $1.2 million, compared to $848,000 for the same period in the prior year, with an effective tax rate of 21.6%[199]. Market and Economic Conditions - The Company believes it has adequate liquidity to meet obligations, but potential economic downturns could restrict funding sources and increase costs[255]. - Interest rate risk is a primary market risk for the Company, with management employing simulation models to assess the impact of interest rate changes on net interest income[262]. - Inflation generally increases costs and may adversely affect liquidity, earnings, and shareholders' equity, impacting the financial institution's performance more significantly than for industrial companies[265]. Capital Adequacy - The Company met all capital adequacy requirements as of March 31, 2025, and December 31, 2024[245]. - As of March 31, 2025, Tectonic Financial, Inc. reported a Tier 1 Capital to Average Assets ratio of 10.34%, down from 11.32% as of December 31, 2024[248]. - Common Equity Tier 1 Capital to Risk Weighted Assets was 12.63% as of March 31, 2025, compared to 13.37% at the end of 2024[248].