TECTONIC FINANCI(TECTP) - 2025 Q3 - Quarterly Report

Financial Performance - Net income available to common shareholders increased by $805,000, or 19.2%, to $5.0 million for Q3 2025 compared to $4.2 million for Q3 2024[173] - Earnings per diluted common share were $0.73 for Q3 2025, up from $0.58 for Q3 2024[173] - For the nine months ended September 30, 2025, net income available to common shareholders increased by $3.1 million, or 32.3%, to $12.7 million compared to $9.6 million for the same period in 2024[173] - Annual return on average assets for Q3 2025 was 2.10%, compared to 2.29% for the same period in the prior year[174] - Annual return on average equity for Q3 2025 was 18.74%, compared to 16.89% for the same period in the prior year[174] Income and Expenses - The increase in net interest income for Q3 2025 was $2.7 million, contributing significantly to the rise in net income[173] - Non-interest income increased by $810,000 for Q3 2025 compared to Q3 2024[173] - The provision for credit losses increased by $1.4 million for Q3 2025 compared to the same period in 2024[173] - Total non-interest expense for the three months ended September 30, 2025, increased by $731,000, or 5.5%, and for the nine months, it increased by $4.5 million, or 11.6%[209] - Salaries and employee benefits for the three months ended September 30, 2025, increased by $295,000, or 3.3%, and for the nine months, they increased by $2.6 million, or 9.7%[210] Assets and Liabilities - Total assets increased by $200.5 million, or 23.2%, to $1.1 billion as of September 30, 2025, from $863.4 million as of December 31, 2024[176] - Shareholders' equity rose by $5.8 million, or 5.1%, to $119.2 million as of September 30, 2025, from $113.4 million as of December 31, 2024[177] - Total liabilities increased to $923,041,000 in September 2025, up from $712,953,000 in September 2024, representing a growth of 29.4%[193] - Total deposits increased by $200.8 million, or 28.2%, to $911.9 million as of September 30, 2025, compared to $711.1 million as of December 31, 2024[263] Interest Income and Margin - Net interest income for the nine months ended September 30, 2025, increased by $6.9 million, or 29.7%, from $23.3 million for the nine months ended September 30, 2024, to $30.2 million[188] - Net interest margin for the three months ended September 30, 2025, was 4.39%, an increase of 14 basis points from 4.25% for the same period in 2024[182] - The average yield on interest-earning assets decreased by 26 basis points from 8.42% for the nine months ended September 30, 2024, to 8.16% for the same period in 2025[190] - The average cost of interest-bearing liabilities decreased by 70 basis points from 5.27% for the nine months ended September 30, 2024, to 4.57% for the same period in 2025[191] Credit Losses - Provision for credit losses for loans was $1,863,000 for the three months ended September 30, 2025, compared to $467,000 in 2024, reflecting an increase of 298.5%[198] - The provision for credit losses for the nine months ended September 30, 2025 totaled $4.7 million, compared to $3.2 million for the same period in the prior year[230] - The allowance for credit losses increased to $10,764,000 in September 2025 from $8,282,000 in September 2024, indicating a rise of 17.9%[193] Loan Portfolio - Average loans increased by $193.4 million, or 32.8%, for the nine months ended September 30, 2025, compared to the same period in 2024[189] - As of September 30, 2025, total loans increased by $110.5 million to $779.9 million, compared to $669.4 million at December 31, 2024[245] - SBA loans comprised 65.1% of total loans at September 30, 2025, totaling $507.8 million, up from 61.5% at December 31, 2024[245] - Non-performing assets totaled $35.7 million, representing 4.57% of total loans as of September 30, 2025, compared to $15.9 million or 2.38% at December 31, 2024[250] Taxation - Income tax expense for the three and nine months ended September 30, 2025, was approximately $1.6 million and $4.1 million, respectively, with effective income tax rates of 22.2% and 22.4%[223] - The effective tax rate for the three and nine months ended September 30, 2025, was higher than the prior year, which was 16.7% and 19.5%, respectively[223] Capital Adequacy - The Company met all capital adequacy requirements as of September 30, 2025, and was classified as "well-capitalized" under applicable regulations[268] - The Total Capital to Risk Weighted Assets ratio for Tectonic Financial, Inc. was 17.24% as of September 30, 2025, compared to 17.65% on December 31, 2024[270] - The Common Equity Tier 1 ratio to Risk Weighted Assets for Tectonic Financial, Inc. was 13.18% as of September 30, 2025, slightly decreasing from 13.37% on December 31, 2024[270] Liquidity and Risk Management - The Company’s liquidity management is influenced by factors such as expected deposit flows and market interest rates, with a focus on maintaining public confidence[272] - Management believes the Company has adequate liquidity to meet obligations, but potential economic downturns could restrict funding sources[278] - Interest rate risk is a primary market risk for the Company, with strategies in place to manage exposure and minimize potential economic losses[280]