Financial Performance - Net interest income for Q2 2021 was $12.8 million, compared to $12.3 million in Q2 2020, reflecting a year-over-year increase of 4.1%[215] - For the six months ended June 30, 2021, net interest income was $25.6 million, up from $25.0 million for the same period in 2020, indicating a growth of 2.4%[215] - Net interest income for the six months ended June 30, 2021, was $25,595 thousand, compared to $24,974 thousand for the same period in 2020, reflecting a 2.5% increase[225] - Non-interest income for the three months ended June 30, 2021, was $3.793 million, a decrease of 24.34% from $5.013 million in the same period of 2020; for the six months, it was $7.969 million, down 7.51% from $8.616 million[238] Interest Margin and Rates - The net interest margin for Q2 2021 was 3.22%, a decrease from 3.34% in Q2 2020, primarily due to higher cash balances and lower yields on loans[216] - The net interest margin for the first half of 2021 was 3.26%, down from 3.48% in the same period of 2020, attributed to lower accretion from purchased credit impaired loans and Federal Reserve rate cuts[217] - The net interest margin decreased to 3.22% in Q2 2021 from 3.34% in Q2 2020, indicating a decline in profitability from interest-earning assets[221] - The average yield on loans was 4.72% in Q2 2021, compared to 4.66% in Q2 2020, showing a slight improvement in loan profitability[221] - The interest rate spread narrowed to 3.06% in Q2 2021 from 3.16% in Q2 2020, indicating tighter margins[221] Loan Portfolio and Allowance for Loan Losses - The company’s allowance for loan losses is based on ongoing assessments of probable incurred losses, considering factors such as historical loss experience and economic conditions[202] - The company’s financial condition as of June 30, 2021, reflects ongoing evaluations of its loan portfolio and adherence to regulatory guidance regarding loan loss allowances[202] - The allowance for loan losses was $16.8 million as of June 30, 2021, compared to $17.0 million at December 31, 2020[260] - The company identified impaired loans totaling $38.9 million as of June 30, 2021, a decrease from $43.4 million at December 31, 2020[264] - Total provision for loan losses for the three and six months ended June 30, 2021, was $0, compared to $1.75 million and $3.75 million for the same periods in 2020, reflecting improvements in nonperforming assets and lower loan charge-offs[234] Deposits and Funding - Total deposits rose to $1,118,950 thousand in Q2 2021, up from $1,052,638 thousand in Q2 2020, marking a 6.3% increase[221] - Total deposits increased by $76.0 million to $1.371 billion at June 30, 2021, from $1.295 billion at December 31, 2020[284] - The Bank's on-balance sheet liquidity ratio was 22.8% as of June 30, 2021, with approximately $110.5 million of certificate of deposit accounts maturing in 2021 at a weighted average cost of approximately 1.0%[300] - The company has approximately $144.7 million available under its borrowing arrangement with the Federal Home Loan Bank, an increase from $118.4 million at December 31, 2020[303] Asset Quality and Nonperforming Loans - Total nonperforming assets (NPAs) decreased by $2.7 million to $8.8 million at June 30, 2021, primarily due to reductions in acquired non-performing loans[273] - The total number of nonperforming loans (NPLs) was 8,617 as of June 30, 2021, down from 11,333 at December 31, 2020[271] - Nonperforming assets decreased to $8.8 million or 0.51% of total assets at June 30, 2021, compared to $11.5 million or 0.70% at December 31, 2020[276] - Nonaccrual loans decreased to $8.075 million at June 30, 2021, down from $8.678 million at March 31, 2021, reflecting a reduction in troubled debt restructurings[275] Capital and Equity - Total stockholders' equity increased to $164.0 million as of June 30, 2021, from $160.6 million at December 31, 2020, driven by a net income of $10.2 million and an unrealized gain of $0.57 million on available-for-sale securities[298] - The Bank's Tier 1 capital to risk-weighted assets ratio was 13.5% as of June 30, 2021, exceeding the required minimum of 6.0%[309] - The Bank's total capital to risk-weighted assets ratio was 14.7% as of June 30, 2021, consistent with the "Well Capitalized" designation under regulatory provisions[309] Economic and Interest Rate Risk Management - The Asset and Liability Management Committee (ALCO) regularly reviews economic conditions and interest rate outlook to manage interest rate risk exposure limits[315] - Strategies to manage interest rate risk include originating shorter-term loans and variable rate loans, as well as selling longer-term fixed-rate loans in the secondary market[315] - The overall interest rate sensitivity is assessed through net interest income shock analysis over the next 12 months[318] - The projected change in net interest income over a one-year horizon at +300 basis points was a decrease of 4% as of June 30, 2021, compared to an increase of 3% at December 31, 2020[318]
Citizens munity Bancorp(CZWI) - 2021 Q2 - Quarterly Report