Financial Performance - The Company reported net income of $153,000 for the three-month period ended March 31, 2025, compared to $3,000 for the same period in 2024, primarily due to a $315,000 decrease in the provision for credit loss allowance [104]. - Comprehensive income for the first quarter of 2025 totaled $1.4 million, compared to a comprehensive loss of $0.9 million for the same period in 2024, reflecting a $2.3 million increase [124]. - The income tax benefit for the three-month period ended March 31, 2025, was $29,000, a decrease of $203,000 or 87.5% compared to $232,000 in 2024, primarily due to a $353,000 increase in pre-tax income [123]. Assets and Liabilities - Total assets decreased to $358.0 million on March 31, 2025, a decrease of $1.0 million from December 31, 2024, while total deposits increased by $8.1 million, or 2.6% [105]. - Total assets decreased to $358.0 million at March 31, 2025, from $359.0 million at December 31, 2024, a decrease of $1.0 million or 0.3% [125]. - Loans, net increased to $204.7 million at March 31, 2025, an increase of $2.3 million or 1.1% from $202.4 million at December 31, 2024 [125]. - Total deposits increased to $317.3 million as of March 31, 2025, an increase of $8.1 million or 2.6% from $309.2 million at December 31, 2024 [130]. - As of March 31, 2025, the Bank's cash and cash equivalents totaled $23.7 million, an increase of $0.8 million, or 3.2% from $24.5 million at December 31, 2024 [154]. Credit Losses and Allowance - The Company's allowance for credit losses was $2.69 million as of March 31, 2025, compared to $2.84 million at December 31, 2024, a decrease of $150,000 or 5.3% [105]. - The provision for credit loss allowance on loans decreased to $146,000 for the three-month period ended March 31, 2025, from $169,000 for the same period in 2024, reflecting a decrease of 13.6% [120]. - The Bank's allowance for credit losses is based on estimates and assumptions about future events, which may differ from actual results [165]. - The adoption of ASC 326 has significantly changed the methodology for estimating the Allowance for Credit Losses (ACL) from an "incurred loss" approach to an "expected loss" approach known as current expected credit loss (CECL) [166]. - The CECL methodology requires an estimate of credit losses expected over the life of an exposure, which is influenced by historical loss experience, current conditions, and reasonable forecasts [167]. - Management's determination of the ACL is a critical accounting estimate that relies on credit risk assessments, historical loss rates, and forecasts affecting collectability [169]. - The impact of CECL on the ACL will be influenced by the loan portfolio's composition and prevailing economic conditions, potentially leading to greater volatility in reported earnings [170]. Interest Income and Expenses - Net interest income for the three-month period ended March 31, 2025, was $2.56 million, a decrease of $8,000 or 0.3% from the same period in 2024 [112]. - Total interest income for the first quarter of 2025 increased by $224,000, or 6.6%, compared to the same period in 2024, driven by a $494,000 increase in interest and fees on loans [113]. - Interest expense for the first quarter of 2025 increased by $233,000, or 28.0%, from $833,000 for the same period in 2024 to $1.1 million [114]. - Net interest margin for the three-month period ended March 31, 2025, was 2.92%, an increase of 0.06% from 2.86% for the same period in 2024 [115]. - Average total loan balances increased by $30.0 million to $205.9 million for the three-month period ended March 31, 2025, compared to $175.9 million for the same period in 2024 [117]. Noninterest Income and Expenses - Noninterest income decreased to $205,000 for the three-month period ended March 31, 2025, down $24,000 or 10.5% from $229,000 in 2024, primarily due to decreases in other fees and commissions [121]. - Noninterest expenses decreased to $2.79 million for the three-month period ended March 31, 2025, a decrease of $71,000 or 2.5% from $2.86 million in 2024, mainly due to a $498,000 decrease in the provision for losses on unfunded commitments [122]. Capital and Ratios - The Company's stockholders' equity increased by $1.4 million, or 7.7% during the three-month period ended March 31, 2025 [156]. - The Bank's Tier 1 leverage ratio was 9.71%, and the total risk-based capital ratio was 16.60% as of March 31, 2025, indicating full compliance with capital adequacy guidelines [162]. Internal Controls and Compliance - The Company identified material weaknesses in internal controls over financial reporting, particularly regarding the validation of CECL model inputs and reliance on third-party data [175]. - Despite the identified weaknesses, the Company's consolidated financial statements are fairly stated in accordance with generally accepted accounting principles [176]. - Management has initiated a remediation plan to enhance internal controls and validate third-party data [177]. - The Company has implemented system-based controls requiring secondary review and approval of journal entries to address previously reported material weaknesses [180]. - There have been no changes to the Company's internal control over financial reporting that materially affect its effectiveness since the beginning of the first quarter of 2025 [182]. Litigation and Risk - Management does not anticipate that ongoing litigation will have a material effect on the Company's financial condition or operating results [183].
Glen Burnie Bancorp(GLBZ) - 2025 Q1 - Quarterly Report