TC Bancshares(TCBC) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents the unaudited consolidated financial statements for Q1 2024, detailing financial position and performance Consolidated Financial Statements Total assets grew to $474.7 million by March 31, 2024, while Q1 2024 net income significantly decreased to $22,237 Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Total Assets | $474,675,674 | $466,583,269 | | Net loans | $376,515,513 | $372,063,090 | | Investment securities available-for-sale | $49,124,679 | $42,964,495 | | Liabilities & Equity | | | | Total deposits | $380,287,600 | $369,868,794 | | Total liabilities | $396,836,296 | $386,948,848 | | Total stockholders' equity | $77,839,378 | $79,634,421 | Consolidated Statements of Operations Highlights (Unaudited) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net interest income | $3,389,459 | $3,617,025 | | Provision for Credit Losses | $30,000 | $18,000 | | Total other income | $238,686 | $331,778 | | Total other expense | $3,573,257 | $3,477,892 | | Net Income | $22,237 | $332,029 | | Diluted Earnings per share | $0.01 | $0.07 | Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,372,326 | $4,663,060 | | Net cash (used in) provided by investing activities | $(10,814,919) | $601,764 | | Net cash provided by (used in) financing activities | $8,234,327 | $(4,177,964) | | Net Change in Cash and Cash Equivalents | $(1,208,266) | $1,086,860 | Note 1 – General: Basis of Presentation This note outlines the company's operations and accounting policies, highlighting the CECL adoption's $302,504 impact - TC Bancshares, Inc. is the holding company for TC Federal Bank, which operates four branches in Georgia and Florida. Its primary business is originating single-family residential and commercial real estate loans, funded by deposits[20] - The company adopted the CECL accounting standard (ASC 326) on January 1, 2023, using a modified retrospective approach. This resulted in a net reduction of retained earnings by $302,504, reflecting an increase in credit-related reserves for loans and unfunded commitments[23][24] - The company qualifies as an "emerging growth company" and has elected to use the extended transition period for adopting new accounting standards[37] Note 3 - Loans and Allowance for Credit Losses This note details the $382.5 million loan portfolio, primarily real estate, and the $4.9 million ACL Loan Portfolio Composition | Loan Category | March 31, 2024 (Millions) | December 31, 2023 (Millions) | | :--- | :--- | :--- | | Residential Real Estate | $148.1M (38.7%) | $148.5M (39.3%) | | Commercial Real Estate | $131.7M (34.4%) | $123.6M (32.7%) | | Construction and Land Development | $51.7M (13.5%) | $55.5M (14.7%) | | Commercial and Industrial | $18.3M (4.8%) | $16.9M (4.5%) | | Other | $14.3M (3.7%) | $14.4M (3.8%) | | Total Loans | $382.5M | $378.1M | - The Allowance for Credit Losses (ACL) was $4,889,067 as of March 31, 2024, compared to $4,836,878 at year-end 2023. A provision of $30,000 was recorded for the quarter[59] - Total nonaccrual loans were $1.22 million at March 31, 2024, a slight decrease from $1.29 million at December 31, 2023[67] Note 6 - Regulatory Matters The Bank met all regulatory capital requirements as of March 31, 2024, and was categorized as "well capitalized" - As of March 31, 2024, the Bank was categorized as "well capitalized" by the FDIC[96] Bank Capital Ratios as of March 31, 2024 | Ratio | Actual (%) | Required for Adequacy (%) | Required to be Well Capitalized (%) | | :--- | :--- | :--- | :--- | | Common Equity Tier 1 to Risk Weighted Assets | 19.31% | 4.50% | 6.50% | | Tier 1 Capital to Risk- Weighted Assets | 19.31% | 6.00% | 8.00% | | Total Capital to Risk- Weighted Assets | 20.57% | 8.00% | 10.00% | | Tier 1 Capital to Average Assets | 14.56% | 4.00% | 5.00% | Note 8 – Shareholders' Equity and Earnings Per Share This note details changes in shareholders' equity and EPS, noting the repurchase of 140,519 shares and $0.01 EPS - During the three months ended March 31, 2024, the Company repurchased and retired 140,519 shares of its common stock at an average price of $13.96 per share[112] Earnings Per Share Calculation (Q1 2024 vs Q1 2023) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income | $22,237 | $332,029 | | Weighted Average Shares Outstanding (Basic) | 4,361,088 | 4,974,200 | | Earnings per common share (Basic & Diluted) | $0.01 | $0.07 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes Q1 2024 financial condition and operating results, highlighting a significant net income decrease due to margin compression Comparison of Financial Condition (March 31, 2024 vs. December 31, 2023) Total assets increased by $8.1 million to $474.7 million, driven by loan and investment growth, funded by deposits Key Balance Sheet Changes | Account | Change from Dec 31, 2023 (Millions) | Key Drivers | | :--- | :--- | :--- | | Total Assets | +$8.1M | Loan growth and investment purchases | | Total Loans | +$4.5M | Growth in commercial real estate and commercial/industrial loans | | Total Deposits | +$10.4M | Growth in savings, money market, and demand accounts, offset by a decrease in CDs | | Shareholders' Equity | -$1.8M | $2.0M in share repurchases | Comparison of Operating Results (Q1 2024 vs. Q1 2023) Q1 2024 net income decreased to $22,000, primarily due to net interest margin compression and increased non-interest expenses - Net income fell to $22,000 in Q1 2024 from $332,000 in Q1 2023[167] - Net interest income decreased by 6.3% to $3.4 million due to margin compression. The net interest margin fell to 3.00% from 3.50% year-over-year[171][172] - Non-interest expense increased by 2.7% to $3.6 million, mainly due to higher occupancy and data processing costs associated with two new branches opened in mid-2023[178] Liquidity and Capital Resources The company maintains strong liquidity and significant borrowing capacity, with the Bank remaining "well capitalized" for regulatory purposes - Primary sources of funds are deposits, loan and security payments, and proceeds from loan sales[186] - At March 31, 2024, the company had access to $97.6 million in borrowing capacity from the FHLB, $28.5 million in unsecured federal funds lines, and $26.5 million from the Federal Reserve Bank[186] - The Bank was classified as "well capitalized" with a total risk-based capital ratio of 20.57% at March 31, 2024[188] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide this market risk disclosure - This disclosure is not applicable to smaller reporting companies[192] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal controls - The Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were effective as of the end of the period[193] - No changes in internal control over financial reporting occurred during Q1 2024 that materially affected, or are reasonably likely to materially affect, the company's internal controls[194] PART II. OTHER INFORMATION Legal Proceedings There were no legal proceedings reported during the period - None[197] Risk Factors No material changes to risk factors previously disclosed in the 2023 Annual Report on Form 10-K were reported - There have been no material changes to the risk factors previously disclosed in the 2023 Annual Report on Form 10-K[198] Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's Q1 2024 common stock repurchase activity, totaling 140,519 shares at an average price of $13.96 Share Repurchases in Q1 2024 | Period | Total Shares Repurchased | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | January 2024 | 105,819 | $14.01 | | February 2024 | 34,700 | $13.80 | | March 2024 | - | - | | Total | 140,519 | $13.96 | - As of March 31, 2024, 227,481 shares may yet be repurchased under the current plan, which is effective through June 2024[200] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[201] Mine Safety Disclosures This item is not applicable to the company - Not applicable[202] Other Information The company reports no other information for this item - None[203] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO/CFO certifications and iXBRL financial statements - Filed exhibits include CEO and CFO certifications (Exhibits 31.1, 31.2, 32) and financial data in iXBRL format (Exhibit 101)[206]