Cullman Bancorp(CULL) - 2023 Q4 - Annual Report

Financial Performance - Net income decreased by $230,000, or 5.5%, to $4.0 million for the year ended December 31, 2023, compared to $4.2 million for 2022[53] - Net income for 2023 was $3.953 million, down from $4.183 million in 2022, representing a decrease of 5.48%[88] - Earnings per share - basic was $0.56 for the year ended December 31, 2023, compared to $0.59 for 2022[56] - Comprehensive income for 2023 was $4.598 million, significantly higher than the $348,000 reported in 2022[88] - Basic earnings per share decreased to $0.56 in 2023 from $0.59 in 2022, a decline of 5.1%[138] Income and Expenses - Interest income increased by $2.9 million, or 17.7%, to $19.4 million for the year ended December 31, 2023, from $16.5 million for 2022[53] - Non-interest income increased by $24,000, or 1.4%, to $1.7 million for the year ended December 31, 2023[64] - Net interest income after provision for credit losses was $14.888 million for the year ended December 31, 2023, compared to $14.726 million for 2022[56] - Interest expense increased to $4.277 million for the year ended December 31, 2023, from $1.365 million for 2022[56] - Total noninterest expense increased to $11,548 million in 2023 from $11,128 million in 2022, an increase of 3.8%[138] Assets and Deposits - Total assets decreased to $411.641 million in 2023 from $423.229 million in 2022, a decline of approximately 2.77%[86] - Total deposits decreased by $23.9 million, or 8.2%, to $269.0 million at December 31, 2023, from $292.9 million at December 31, 2022[59] - Cash and cash equivalents decreased by $23.6 million to $13.0 million at December 31, 2023, from $36.6 million at December 31, 2022[58] - Total deposits decreased to $269.001 million in 2023 from $292.949 million in 2022, a decline of approximately 8.2%[86] Credit Losses and Provisions - Provision for credit losses decreased to $294,000 for the year ended December 31, 2023, from $438,000 for 2022[56] - Provision for credit losses was recorded at $294,000 in 2023, down from $438,000 in 2022, with an allowance for credit losses of $3.3 million at year-end 2023[90] - The ratio of allowance for loan losses to total loans increased to 0.95% in 2023 from 0.85% in 2022[90] - Provision for credit losses on loans decreased to $166 million in 2023 from $438 million in 2022, a reduction of 62.1%[138] Cash Flow - Net cash provided by operating activities was $5.9 million for the year ended December 31, 2023, compared to $5.8 million in 2022, reflecting a slight increase[103] - Net cash used in investing activities was $11.9 million in 2023, a significant decrease from $97.6 million in 2022, indicating reduced investment outflows[103] - Net cash used in financing activities was ($17.6) million in 2023, compared to $66.5 million in 2022, showing a shift towards cash outflows in financing[103] Regulatory and Economic Conditions - As of December 31, 2023, Cullman Savings Bank exceeded all regulatory capital requirements and was categorized as well capitalized[104] - The company expressed concerns about general economic conditions, including recessionary pressures and supply chain disruptions that may exceed expectations[189] - There are uncertainties regarding changes in loan delinquencies, write-offs, and the adequacy of the allowance for credit losses[189] - Regulatory changes affecting financial institutions, including capital requirements and insurance premiums, are a concern for the company[189] Market Risks - Fluctuations in real estate values and market conditions for both residential and commercial properties are noted as potential risks[189] - Changes in inflation and interest rates could reduce margins and yields, impacting mortgage banking revenues and loan originations[189] - The company is aware of potential adverse changes in the securities or secondary mortgage markets that could affect its operations[189] - Competition among financial institutions is a significant factor affecting the company's business strategies[190] Loan Portfolio - The company offers commercial real estate loans secured by first liens on properties, including office buildings and retail spaces, with a focus on credit verification and cash flow analysis[156] - Multi-family real estate loans have a maximum term of 20 years and are generally made in amounts up to 85% of the property's appraised value or purchase price[167] - Commercial business loans are primarily secured by accounts receivable, inventory, and equipment, with fixed interest rates and a focus on the borrower's cash flow for repayment[159] - Consumer loans consist mainly of home equity lines-of-credit, limited to 89.99% of property value for primary residences, with an initial draw period of up to ten years[170] - The company evaluates loans individually when risk characteristics differ, and expected credit losses are based on the fair value of collateral[162] - The company has established underwriting standards for loans, including verification of credit history and financial statements, to minimize risks associated with lending[169]