Texas munity Bancshares(US:TCBS)2024-05-14 20:06Financial Position - Total assets increased by $11.8 million, or 2.6%, to $463.8 million at March 31, 2024, from $452.0 million at December 31, 2023[151]. - Cash and cash equivalents rose by $7.9 million, or 60.3%, to $21.0 million at March 31, 2024, primarily due to a strategic loan sale of $12.4 million[152]. - Interest bearing deposits in banks increased by $16.2 million, or 131.7%, to $28.5 million at March 31, 2024, driven by net purchases of $5.0 million in Qwickrate CDs and an increase in excess cash[153]. - Total deposits increased by $14.6 million, or 4.6%, to $331.8 million at March 31, 2024, with core deposits increasing by $11.3 million, or 5.7%[158]. - The company had outstanding advances of $76.5 million from the Federal Home Loan Bank of Dallas and unused borrowing capacity of $81.2 million[186]. - The Bank's FHLB borrowing capacity is $81.2 million, with an additional $15 million in unused credit lines available[200]. Loan and Lease Activity - The company reported a decrease in net loans and leases of $12.4 million, or 4.4%, from $279.9 million at December 31, 2023, to $267.5 million at March 31, 2024[151]. - Net loans and leases receivable decreased by $12.4 million, or 4.4%, to $267.5 million at March 31, 2024, primarily due to the sale of a block of 54 performing loans[156]. - The company sold 54 performing loans totaling $12.4 million at a loss of $1.5 million as part of a portfolio repositioning strategy[151]. - The Bank is strategically increasing lending in commercial real estate (CRE) and other commercial lending to balance its loan portfolio, with plans to sell $30 million in loans[197]. Credit Losses and Allowance - The allowance for credit losses increased from $1.8 million at December 31, 2022, to $2.8 million upon adoption of the CECL methodology on January 1, 2023[144]. - The company’s total allowance for credit losses was deemed adequate at March 31, 2024, and is reviewed quarterly by the board of directors[145]. - As of March 31, 2024, the allowance for credit losses to loans and leases held for investment was 1.10%, indicating strong asset quality[197]. - Provision for credit losses showed a reversal of $277,000 in Q1 2024, compared to a provision of $90,000 in Q1 2023, resulting in a decrease of $367,000, or 407.8%[178]. Income and Expenses - The company reported a net loss of $2.7 million for the three months ended March 31, 2024, compared to a net loss of $1.0 million for the same period in 2023, a decrease of $1.7 million, or 170.0%[167]. - Noninterest income decreased by $2.4 million, or 200.0%, to a loss of $3.6 million in Q1 2024 from a loss of $1.2 million in Q1 2023, primarily due to losses from loan sales and valuation allowances[179]. - Noninterest expense increased by $433,000, or 16.4%, to $3.1 million in Q1 2024 from $2.6 million in Q1 2023, mainly due to higher salaries, employee benefits, and occupancy costs[182]. Interest Income and Expense - Interest income increased by $1.3 million, or 31.7%, to $5.4 million for the three months ended March 31, 2024, driven by increased yields and average loan balances[168]. - Interest income on loans increased by $929,000, or 33.4%, to $3.7 million for the three months ended March 31, 2024, due to an increase in average loans and loan yield[169]. - Interest income on interest-bearing deposits increased by $207,000, or 422.4%, from $49,000 in Q1 2023 to $256,000 in Q1 2024, driven by a $14.1 million increase in average interest-bearing deposits, or 300.0%[171]. - Total interest expense rose by $941,000, or 62.2%, to $2.4 million in Q1 2024 from $1.5 million in Q1 2023, primarily due to a $38.4 million increase in average interest-earning liabilities[175]. - Net interest income increased by $331,000, or 12.6%, to $3.0 million in Q1 2024 from $2.6 million in Q1 2023, attributed to an increase in interest-earning assets of $32.4 million, or 8.3%[177]. Capital and Regulatory Compliance - The company had a community bank leverage ratio of 10.09% at March 31, 2024, indicating it was well capitalized[162]. - As of March 31, 2024, the Bank is categorized as well-capitalized and exceeds all regulatory capital requirements[198]. - The Bank has implemented strategies to maintain capital levels exceeding well-capitalized status and to grow core deposit accounts[206]. Securities and Market Risk - Securities available for sale decreased by $243,000, or 0.3%, to $93.1 million at March 31, 2024, with net unrealized losses decreasing by $417,000, or 7.5%[154]. - Securities held to maturity decreased by $1.2 million, or 4.6%, to $24.8 million at March 31, 2024[155]. - The weighted average life of the securities portfolio was 5.1 years as of March 31, 2024, with total gross unrealized losses of $9.9 million, or 7.9% of the $125.0 million securities portfolio[193]. - The company expects to realize $43.8 million in cash flow from the securities portfolio over the next 24 months, with $25.4 million expected in the next 12 months[195]. - The Bank entered into interest rate swap agreements with a total notional amount of $25 million to hedge risks associated with fixed rate AFS securities, offsetting an unrealized loss of $442,000[196]. - A 200 basis point increase in interest rates would result in a 5.2% increase in net interest income, while a 200 basis point decrease would lead to a 6.8% decrease[208]. - The estimated net economic value (EVE) of the Bank's assets would decrease by 10.85% in the event of a 200 basis point decrease in interest rates[212]. - The Bank is utilizing a third-party modeling program to evaluate interest rate risk and manage exposure to changes in market interest rates[199].