Financial Performance - As of December 31, 2022, the total gross outstanding loans amounted to $1.416 billion, with $1.125 billion in commercial/agricultural real estate loans, $164.8 million in C&I/agricultural operating loans, $108.7 million in residential mortgage loans, and $17.4 million in consumer installment loans [29]. - Total deposits as of December 31, 2022, were $1.425 billion, including interest-bearing deposits of $1.140 billion and non-interest-bearing deposits of $0.285 billion [32]. - The Bank's net interest income is projected to change by (1)% in the event of a -100 basis points rate shock over the next 12 months [265]. Regulatory Environment - The company is subject to various regulations, including the Sarbanes-Oxley Act, which mandates periodic assessments of internal controls over financial reporting [41]. - The company is classified as a "smaller reporting company," allowing for simplified disclosures, and is currently a "non-accelerated filer" under SEC regulations [40]. - The Dodd-Frank Act has increased the regulatory burden and compliance costs for the company, affecting its lending and investment activities [43]. - The maximum per depositor FDIC insurance amount increased from $100,000 to $250,000 under the Dodd-Frank Act [63]. - The Bank is subject to various federal and state laws designed to protect borrowers and promote lending [70]. Capital and Funding - The capital conservation buffer requires a CET1 capital amount equal to 2.5% of risk-weighted assets, effectively increasing the minimum CET1 capital ratio to 7.0% [46]. - The Bank targets maintaining capital ratios that exceed minimum requirements consistent with its risk profile [62]. - The company has access to additional funding sources through borrowings, including FHLB borrowings and lines of credit with the Federal Reserve Bank [33]. - The Bank had $7.7 million in Federal Home Loan Bank stock as of December 31, 2022, in compliance with membership requirements [66]. Market Competition - The company faces competitive pressures in its lending markets, which could adversely impact the credit quality of its existing loan portfolio and its ability to originate high-quality loans in the future [28]. - The company competes with other financial institutions primarily based on interest rates, personalized services, and the quality of financial services offered [34]. Interest Rate Risk - The Bank's interest rate risk is its most significant market risk, influenced by changes in market interest rates and economic conditions [258]. - As of December 31, 2022, the estimated change in Economic Value of Equity (EVE) for a +300 basis points rate shock was 0% [264]. - As of December 31, 2022, a +300 basis points (bp) rate shock would result in a decrease of 3% in performance, compared to a decrease of 11% as of December 31, 2021 [267]. - A +200 bp rate shock would lead to a 2% decrease in performance in 2022, down from a 7% decrease in 2021 [267]. - A +100 bp rate shock would result in a 1% decrease in performance for 2022, compared to a 4% decrease in 2021 [267]. - A -100 bp rate shock would yield a 1% increase in performance for 2022, while there was no change in 2021 [267]. - A -200 bp rate shock would lead to a 2% increase in performance for 2022, with no data available for 2021 [267]. - The analysis assumes an immediate and parallel shift in the yield curve across all maturities [267]. - The assumptions for measuring interest rate risk include interest rates, loan prepayment rates, and deposit decay rates [268]. - Actual values may differ from projections if market conditions vary from the assumptions used [268]. - The computations do not account for any potential actions the company may take in response to interest rate changes [268]. - The table provided may not be indicative of future results [267]. Workforce - The Bank had 210 full-time employees and 236 total employees as of March 7, 2023 [74]. Asset Management - The company maintains a portfolio of investments primarily consisting of mortgage-backed securities, corporate asset-backed securities, U.S. Government sponsored agency securities, corporate debt securities, and trust preferred securities [30]. - The Bank's CRA rating was "Satisfactory" as of its most recent regulatory examination [69]. Economic Conditions - The ALCO meets regularly to review economic conditions and interest rate outlook, ensuring alignment with liquidity and profitability goals [260].
Citizens munity Bancorp(CZWI) - 2022 Q4 - Annual Report