Management’s Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding Texas Community Bancshares, Inc.’s (the “Company”) consolidated financial condition at June 30, 2025 and consolidated results of operations for the three and six months ended June 30, 2025 and 2024.
+Added: Management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding Texas Community Bancshares, Inc.’s (the “Company”) consolidated financial condition at September 30, 2025 and consolidated results of operations for the three and nine months ended September 30, 2025 and 2024.
It should be read in conjunction with the unaudited consolidated financial statements and the related notes appearing in Part I, Item 1, of this Quarterly Report on Form 10-Q and with the audited consolidated financial statements, and notes, contained in the Annual Report on Form 10-K for the year ended December 31, 2024.
76 unchanged sentences
Penalties related to unrecognized tax benefits are classified as income tax expense.
−Removed: Comparison of Financial Condition at June 30, 2025 and December 31, 2024
+Added: Comparison of Financial Condition at September 30, 2025 and December 31, 2024
Total Assets.
−Removed: Total assets were $444.1 million at June 30, 2025, an increase of $625,000, or 0.1%, from $443.5 million at December 31, 2024.
−Removed: The increase was due primarily to an increase of $313,000 in net loans and leases and an increase of $7.6 million in interest bearing deposits in banks partially offset by a decrease of $2.0 million in cash and cash equivalents and a decrease in securities of $3.8 million, or 3.9%, to $93.5 million at June 30, 2025 from $97.3 million at December 31, 2024, a decrease in restricted investments carried at cost of $908,000, or 21.4%, to $3.3 million at June 30, 2025 and a decrease in foreclosed assets of $52,000, or 10.8%, to $428,000 at June 30, 2025 from $480,000 at December 31, 2024.
+Added: Total assets were $439.5 million at September 30, 2025, a decrease of $4.0 million, or 0.9%, from $443.5 million at December 31, 2024.
+Added: The decrease was due primarily to a decrease of $8.8 million in net loans and leases offset by an increase of $8.8 million in other real estate owned, and a decrease of $8.4 million in interest bearing deposits in banks, a decrease of $1.1 million in cash and cash equivalents and a decrease in restricted investments carried at cost of $789,000 partially offset by an increase in securities of $7.7 million.
Cash and Cash Equivalents.
−Removed: Cash and cash equivalents decreased $2.0 million, or 15.0%, to $11.3 million (which includes fed funds sold of $6.4 million) at June 30, 2025 from $13.3 million (which includes fed funds sold of $9.3 million) at December 31, 2024.
−Removed: This decrease was primarily the result of $1.3 million in Company stock being repurchased, cash dividends paid to shareholders of $242,000 and an increase in net loans and leases of $313,000.
+Added: Cash and cash equivalents decreased $1.1 million, or 8.3%, to $12.2 million (which includes fed funds sold of $7.1 million) at September 30, 2025 from $13.3 million (which includes fed funds sold of $9.3 million) at December 31, 2024.
+Added: This decrease was primarily the result of a decrease of $1.1 million in FHLB advances.
Interest Bearing Deposits in Banks.
−Removed: Interest bearing deposits in banks increased $7.6 million, or 78.4%, to $17.3 million at June 30, 2025, compared to $9.7 million at December 31, 2024.
−Removed: The increase was primarily the result of a decrease in securities of $3.8 million and an increase in deposits of $3.4 million.
+Added: Interest bearing deposits in banks decreased $8.4 million, or 86.6%, to $1.3 million at September 30, 2025, compared to $9.7 million at December 31, 2024.
+Added: The decrease was primarily the result of an increase in securities of $7.7 million and a decrease in deposits of $1.7 million partially offset by a $789,000 decrease in restricted investments carried at cost due to the Federal Home Loan Bank repurchasing a portion of its stock.
Securities Available for Sale.
−Removed: Securities available for sale decreased by $2.0 million, or 2.7%, to $73.2 million at June 30, 2025 from $75.2 million at December 31, 2024.
−Removed: During the six months ended June 30, 2025, there were purchases of securities of $4.2 million offset by paydowns of $7.0 million.
−Removed: Accumulated other comprehensive loss decreased by $608,000, or 12.8%, to $4.2 million, net of tax, from $4.8 million, net of tax, due primarily to changes in market interest rates and the termination of a derivative instrument.
−Removed: Gross unrealized losses on the AFS portfolio consisting of 78 securities decreased from $6.5 million, or 7.9% of the portfolio’s amortized cost of $81.6 million at December 31, 2024, to $5.3 million, or 6.7%, of the amortized cost of $78.5 million at June 30, 2025.
+Added: Securities available for sale increased by $10.7 million, or 14.2%, to $85.9 million at September 30, 2025 from $75.2 million at December 31, 2024.
+Added: During the nine months ended September 30, 2025, there were purchases of securities of $21.2 million offset by net paydowns of $12.5 million.
+Added: Accumulated other comprehensive loss decreased by $1.5 million, or 31.3%, to $3.3 million, net of tax, from $4.8 million, net of tax, due primarily to changes in market interest rates and the termination of a derivative instrument.
+Added: Gross unrealized losses on the AFS portfolio consisting of 87 securities decreased from $6.5 million, or 7.9% of the portfolio’s amortized cost of $81.6 million at December 31, 2024, to $4.1 million, or 4.6%, of the amortized cost of $90.0 million at September 30, 2025.
These unrealized losses are due to increases in market interest rates.
−Removed: At June 30, 2025, the AFS portfolio was comprised of 11.8% residential mortgage backed securities, 60.1% collateralized mortgage obligations, 18.2% state and municipal securities and 9.9% corporate bonds.
+Added: At September 30, 2025, the AFS portfolio was comprised of 16.7% residential mortgage backed securities, 56.4% collateralized mortgage obligations, 15.8% state and municipal securities and 11.1% corporate bonds.
Securities Held to Maturity.
−Removed: Securities held to maturity decreased by $1.8 million, or 8.1%, to $20.3 million at June 30, 2025 from $22.1 million at December 31, 2024.
+Added: Securities held to maturity decreased by $3.0 million, or 13.6%, to $19.1 million at September 30, 2025 from $22.1 million at December 31, 2024.
This decrease is due to paydowns of $3.0 million.
−Removed: The HTM portfolio had 69 securities with gross unrealized losses of $2.0 million, or 9.8%, of the amortized cost of $20.3 million at June 30, 2025 compared to $2.6 million, or 11.6%, of the amortized cost of $22.1 million at December 31, 2024.
+Added: The HTM portfolio had 67 securities with gross unrealized losses of $1.7 million, or 8.9%, of the amortized cost of $19.1 million at September 30, 2025 compared to $2.6 million, or 11.6%, of the amortized cost of $22.1 million at December 31, 2024.
These unrealized losses are due to increases in market interest rates.
−Removed: At June 30, 2025, the HTM portfolio was comprised of 86.6% residential mortgage backed securities, 7.7% state and municipal securities and 5.7% U.S government and agency bonds.
+Added: At September 30, 2025, the HTM portfolio was comprised of 88.1% residential mortgage backed securities, 6.3% state and municipal securities and 5.6% U.S government and agency bonds.
Loans and Leases Receivable, Net.
−Removed: Net loans and leases receivable increased $313,000, or 0.1%, to $294.0 million at June 30, 2025 from $293.7 million at December 31, 2024.
−Removed: The increase in loans was primarily due to $33.7 million in loan originations and $2.8 million in loans repurchased from the 2024 loan sale partially offset by payoffs and contractual repayments.
+Added: Net loans and leases receivable decreased $8.8 million, or 3.0%, to $284.9 million at September 30, 2025 from $293.7 million at December 31, 2024.
+Added: The decrease in loans was primarily due to three loans totaling $9.0 million that were on nonaccrual in the prior quarter being moved to real estate owned.
+Added: There were new loan originations of $39.9 million and $2.8 million in loans repurchased from the 2024 loan sale partially offset by payoffs and contractual repayments.
The loan and lease portfolio totaled $288.2 million and was comprised of $265.3 million, or 92.1%, real estate loans, $5.5 million, or 1.9%, commercial and industrial loans, $13.0 million, or 4.5%, municipal loans and $4.4 million, or 1.5%, consumer loans and other loans.
Real estate loans include $140.2 million, or 48.6%, 1-4 family residential loans, $11.2 million, or 3.9%, multi-family loans, $55.2 million, or 19.2%, commercial real estate (CRE) loans, $16.6 million, or 5.8%, 1-4 family construction loans, $32.3 million, or 11.2%, other construction and development loans and $9.9 million, or 3.4%, farmland loans.
−Removed: Total loans include interim construction loans of $31.1 million, or 76.1%, of the completed project balance of $40.9 million which includes $15.4 million in single-family residence loans, including $5.6 million in speculative construction loans to builders, $1.7 million in subdivision construction, $12.0 million in multi-family construction loans and $11.8 million in CRE loans.
−Removed: The total construction loan portfolio consisted of 52 loans with completed project balances of $40.9 million at June 30, 2025 compared to 55 loans totaling $42.5 million at December 31, 2024.
−Removed: At June 30, 2025, commercial real estate loans consisted of $24.8 million owner occupied and $32.7 million non-owner occupied real estate.
−Removed: At June 30, 2025, commercial real estate loans primarily include loans collateralized by self-storage facilities ($16.1 million), gas stations with convenience stores ($10.4 million), commercial rental properties ($7.5 million), churches ($4.5 million), rural water district assets ($3.8 million), restaurants ($3.0 million), and metal building manufacturer assets ($2.0 million).
+Added: Total loans include interim construction loans of $25.5 million, or 75.7%, of the completed project balance of $33.7 million which includes $9.7 million in single-family residence loans, including $5.6 million in speculative construction loans to builders, $600,000 in subdivision construction, $6.0 million in multi-family construction loans and $9.2 million in CRE loans.
+Added: The total construction loan portfolio consisted of 48 loans with completed project balances of $33.7 million at September 30, 2025 compared to 55 loans totaling $42.5 million at December 31, 2024.
+Added: At September 30, 2025, commercial real estate loans consisted of $25.2 million owner occupied and $30.0 million non-owner occupied real estate.
+Added: At September 30, 2025, commercial real estate loans primarily included loans collateralized by self-storage facilities ($16.1 million), gas stations with convenience stores ($9.5 million), commercial rental properties ($7.4 million), churches ($4.4 million), rural water district assets ($3.8 million), restaurants ($3.2 million), and metal building manufacturer assets ($2.0 million).
The maximum loan-to-value ratio of our commercial real estate loans is generally 80%.
Generally, we require the debt service coverage ratio to be at least 1.2x.
−Removed: The significant majority of our commercial real estate loans are appraised by outside independent appraisers approved by the board of directors.
+Added: The significant majority of our commercial real estate loans are appraised by outside independent appraisers approved by the
+Added: board of directors.
Personal guarantees are generally obtained from the principals of commercial real estate borrowers.
We consider a number of factors in originating commercial real estate loans.
−Removed: We evaluate the qualifications and financial conditions of
−Removed: the borrower, including credit history, profitability and expertise, as well as the value and condition of the property securing the loan.
+Added: We evaluate the qualifications and financial conditions of the borrower, including credit history, profitability and expertise, as well as the value and condition of the property securing the loan.
When evaluating the qualifications of the borrower, we consider the financial resources of the borrower, the borrower’s experience in owning or managing similar property, debt service capabilities, global cash flows of the borrower and other guarantors, and the borrower’s payment history with us and other financial institutions.
−Removed: Deposits increased $3.4 million, or 1.0%, to $339.2 million at June 30, 2025 from $335.8 million at December 31, 2024.
−Removed: Core deposits (defined as all deposits other than certificates of deposit) decreased $6.0 million, or 2.9%, to $199.9 million at June 30, 2025 from $205.9 million at December 31, 2024.
−Removed: Certificates of deposit increased $9.4 million, or 7.2%, to $139.3 million at June 30, 2025 from $129.9 million at December 31, 2024.
−Removed: At June 30, 2025, there were $22.0 million in brokered deposits and $1.4 million in listed deposits.
−Removed: The year-to-date average cost of interest-bearing deposits decreased 13 basis points, or 5.0%, to 2.46% at June 30, 2025 compared to 2.59% at December 31, 2024.
−Removed: At June 30, 2025, there were 197 accounts with balances in excess of the $250,000 FDIC insurance limit with an aggregate balance of $97.8 million, or 28.8% of deposits.
+Added: Other Real Estate Owned.
+Added: Other real estate owned increased $8.8 million, or 1,837.5%, to $9.3 million at September 30, 2025 from $480,000 at December 31, 2024.
+Added: At December 31, 2024, there were two properties in other real estate owned that were properties the bank had purchased for expansion and in 2024 decided to sell.
+Added: One of these properties was sold in 2025 and one remains at a value of $167,000 at September 30, 2025.
+Added: Four additional properties were added to other real estate owned.
+Added: One of these was sold at a gain and three remain at September 30, 2025 including a residential development property in Dallas, Texas with a carrying value of $1.3 million, a commercial development property in North Richland Hills, Texas with a carrying value of $2.1 million, and a multi-family property in our primary service area with a carrying value of $5.7 million.
+Added: We are actively marketing all four other real estate owned properties.
+Added: Deposits decreased $1.6 million, or 0.5%, to $334.2 million at September 30, 2025 from $335.8 million at December 31, 2024.
+Added: Core deposits (defined as all deposits other than certificates of deposit) decreased $11.7 million, or 5.7%, to $194.2 million at September 30, 2025 from $205.9 million at December 31, 2024.
+Added: Certificates of deposit increased $10.0 million, or 7.7%, to $139.9 million at September 30, 2025 from $129.9 million at December 31, 2024.
+Added: At September 30, 2025, there were $22.0 million in brokered deposits and $2.7 million in listed deposits.
+Added: The year-to-date average cost of interest-bearing deposits decreased 12 basis points, or 4.7%, to 2.47% at September 30, 2025 compared to 2.59% at December 31, 2024.
+Added: At September 30, 2025, there were 197 accounts with balances in excess of the $250,000 FDIC insurance limit with an aggregate balance of $92.9 million, or 27.8% of deposits.
The amount that was over the FDIC insurance limit was $43.6 million, or 13.0%, that was potentially uninsured, including certificates of deposit of $14.1 million, money market accounts of $9.5 million and $20.1 million in checking and savings accounts.
Advances from Federal Home Loan Bank.
−Removed: Advances from Federal Home Loan Bank decreased by $642,000, or 1.3%, to $49.2 million at June 30, 2025 from $49.9 million at December 31, 2024 due to contractual principal payments on amortizing advances.
−Removed: There are $3.4 million in advances that will mature in 2025.
−Removed: There are no current plans to renew the advances.
+Added: Advances from Federal Home Loan Bank decreased by $1.1 million, or 2.2%, to $48.8 million at September 30, 2025 from $49.9 million at December 31, 2024 due to contractual principal payments on amortizing advances.
+Added: There is one short-term advance for $3.0 million that will mature in 2025.
Total Shareholders’ Equity.
−Removed: Total shareholders’ equity increased $761,000, or 1.5%, to $52.9 million at June 30, 2025 from $52.1 million at December 31, 2024.
−Removed: This increase was primarily due to net income of $1.3 million for the six months ended June 30, 2025.
−Removed: The Company had additional increases in equity of $305,000 from vesting of equity awards granted under the 2022 Equity Plan and an increase of $110,000 from the accrual of ESOP commitments for the six months ended June 30, 2025 partially offset by a decrease of $1.3 million from the repurchase of 84,500 shares of its common stock and quarterly dividends paid totaling $242,000.
−Removed: At June 30, 2025, there was a decrease in the accumulated other comprehensive loss of $608,000, net of tax, due to changes in market interest rates and the termination of the derivative.
−Removed: At June 30, 2025, Broadstreet Bank opted to use the community bank leverage ratio framework (Tier 1 capital to average assets) for regulatory capital purposes.
+Added: Total shareholders’ equity increased $1.4 million, or 2.7%, to $53.5 million at September 30, 2025 from $52.1 million at December 31, 2024.
+Added: This increase was primarily due to net income of $2.0 million for the nine months ended September 30, 2025.
+Added: The Company had additional increases in equity of $456,000 from vesting of equity awards granted under the 2022 Equity Plan and an increase of $166,000 from the accrual of ESOP commitments for the nine months ended September 30, 2025 partially offset by a decrease of $2.3 million from the repurchase of 146,500 shares of its common stock and quarterly dividends paid totaling $360,000.
+Added: At September 30, 2025, there was a decrease in the accumulated other comprehensive loss of $1.5 million, net of tax, due to changes in market interest rates and the termination of a derivative instrument.
+Added: At September 30, 2025, Broadstreet Bank opted to use the community bank leverage ratio framework (Tier 1 capital to average assets) for regulatory capital purposes.
A community bank leverage ratio of at least 9.0% is required to be considered “well capitalized” under regulatory requirements.
−Removed: At June 30, 2025, Broadstreet Bank was well capitalized and had a ratio of 11.32%.
+Added: At September 30, 2025, Broadstreet Bank was well capitalized and had a ratio of 11.53%.
Average Balance Sheets
3 unchanged sentences
Nonaccrual loans are only included in the computation of average balances.
−Removed: Average yields for loans include loan fees of $120,000 and $115,000 for the three months ended June 30, 2025 and 2024, respectively.
+Added: Average yields for loans include loan fees of $80,000 and $175,000 for the three months ended September 30, 2025 and 2024, respectively.
We have not recorded deferred loan fees, as we have determined them to be immaterial.
−Removed: For the Three Months Ended June 30,
+Added: For the Three Months Ended September 30,
(Dollars in thousands)
29 unchanged sentences
(3) Net interest margin represents annualized net interest income divided by average total interest earning assets.
−Removed: Comparison of the Operating Results for the Three months ended June 30, 2025 and June 30, 2024
−Removed: The Company had net income of $678,000 for the three months ended June 30, 2025, compared to net income of $348,000 for the three months ended June 30, 2024, an increase of $330,000, or 94.8%.
−Removed: The increase was primarily due to a $186,000, or 47.3%, increase in noninterest income, a $81,000, or 2.7%, decrease in noninterest expense and a $166,000 decrease in the provision for credit losses partially offset by a $94,000 increase in income tax expense.
−Removed: Net interest income remained flat.
+Added: Comparison of the Operating Results for the Three Months Ended September 30, 2025 and September 30, 2024
+Added: The Company had net income of $680,000 for the three months ended September 30, 2025, compared to net income of $515,000 for the three months ended September 30, 2024, an increase of $165,000, or 32.0%.
+Added: The increase was primarily due to a $64,000, or 2.0%, increase in net interest income, and a $597,000, or 112.6%, increase in noninterest income from $530,000 for the three months ended September 30, 2024 to $1.1 million for the three months ended September 30, 2025.
+Added: This was partially offset by an increase of $224,000, or 85.2%, in the provision for credit loss from $263,000 for the three months ended September 30, 2024 to $487,000 for the three months ended September 30, 2025, and an increase of $274,000, or 9.5%, in noninterest expense from $2.9 million for the three months ended September 30, 2024 to $3.2 million for the three months ended September 30, 2025.
Interest Income.
−Removed: Interest income decreased $207,000 or 3.6%, to $5.5 million for the three months ended June 30, 2024 from $5.7 million for the three months ended June 30, 2024.
−Removed: This decrease included $217,000 in accrued interest being removed from interest income due to three loans from two delinquent loan relationships totaling $9.0 million being put on nonaccrual.
−Removed: Average interest earning assets decreased by $17.7 million, or 4.1%, from 427.9 million for the three months ended June 30, 2024 to $410.2 million for the three months ended June 30, 2025 primarily from $19.0 million more in interest bearing account balances in 2024 resulting primarily from the loans sale in the first quarter of 2024.
−Removed: Interest income on loans increased $470,000, or 12.4%, to $4.3 million for the three months ended June 30, 2025 from $3.8 million for the three months ended June 30, 2024.
−Removed: This increase resulted primarily from an increase in average loan balances of $24.1 million, or 8.7%, from $276.1 million for the three months ended June 30, 2024 to $300.2 million for the three months ended June 30, 2025, with an increase in loan yield of 18 basis points, or 3.3%, to 5.69% for the three months ended June 30, 2025 from 5.51% for the three months ended June 30, 2024.
−Removed: The increase in loan volume was due primarily to loan growth and average loans being low in 2024 due to the loan sale in the first quarter.
−Removed: Loan interest income would have been $217,000 more without the reversal of accrued interest on the previously mentioned three loans totaling $9.0 million being placed on nonaccrual.
−Removed: Interest income on securities decreased $248,000, or 20.0%, from $1.2 million for the three months ended June 30, 2024 to $992,000 for the three months ended June 30, 2025.
−Removed: This decrease resulted from a decrease in the average balance of securities of $20.8 million, or 17.9%, from $116.3 million for the three months ended June 30, 2024 to $95.5 million for the three months ended June 30, 2025.
−Removed: The decrease in the portfolio was due primarily to contractual paydowns.
−Removed: The average yield on securities decreased by nine basis points.
−Removed: Interest income on restricted investments, which includes primarily Federal Home Loan Bank (FHLB) and TIB Bank stock dividends, decreased $10,000, or 18.5%, from $54,000 for the three months ended June 30, 2024 to $44,000 for the three months ended June 30, 2024.
−Removed: This decrease resulted from a decrease in the average balance of these investments of $890,000 or 24.8%, from $3.6 million for the three months ended June 30, 2024 to $2.7 million for the three months ended June 30, 2025.
−Removed: This decrease was due to the FHLB repurchasing $1.1 million in stock related to the decrease in outstanding advances.
−Removed: There was an increase of 53 basis points, or 8.7%, in average yield from 6.07% for the three months ended June 30, 2024 to 6.60% for the three months ended June 30, 2025.
−Removed: The increase in yield was due primarily to advances with rates significantly lower than the overall borrowing base being paid off.
−Removed: Interest income on interest bearing deposits in banks decreased $110,000, or 49.5%, from $222,000 for the three months ended June 30, 2024 to $112,000 for the three months ended June 30, 2025.
−Removed: This decrease resulted primarily from a decrease in average interest-bearing deposits of $6.1 million, or 37.7%, from $16.2 million for the three months ended June 30, 2024 to $10.1 million for the three months ended June 30, 2025 and a decrease in average yield of 105 basis points, or 19.1%, from 5.49% for the three months ended June 30, 2024 to 4.44% for the three months ended June 30, 2025.
−Removed: Fed funds interest decreased $184,000, or 77.0%, from $239,000 for the three months ended June 30, 2024 to $55,000 for the three months ended June 30, 2025.
−Removed: This decrease resulted primarily from a decrease in average fed funds balances of $12.9 million, or 72.1%, from $17.9 million for the three months ended June 30, 2024 to $5.0 million for the three months ended June 30, 2025 and a decrease in average yield of 96 basis points, or 18.1%, from 5.33% for the three months ended June 30, 2024 to 4.37% for the three months ended June 30, 2025.
−Removed: These decreases were primarily due to the Company maintaining higher account balances due to receiving cash from the loan sale during the three months ended June 30, 2024 in addition to decreases in fed funds rates and other market interest rates.
−Removed: Interest income from the fair value hedge was $125,000 for the three months ended June 30, 2024.
−Removed: The financial derivative was terminated on January 15, 2025, so there is no related interest income after the first quarter of 2025.
+Added: Interest income decreased $138,000 or 2.4%, to $5.6 million for the three months ended September 30, 2025 from $5.7 million for the three months ended September 30, 2024.
+Added: This was primarily the result of decreased interest income on federal funds sold due to a decrease in the average balance and decreased yields and a decrease in interest income on financial derivatives following the termination of derivative contracts in the first quarter of 2025 partially offset by an increase in interest income on loans due to increased yields and an increase in the average loan balance.
+Added: Average interest earning assets decreased by $8.3 million, or 2.0%, from $415.9 million for the three months ended September 30, 2024 to $407.6 million for the three months ended September 30, 2025 primarily from a decrease in federal funds sold of $15.0 million, a decrease in securities of $5.1 million, a decrease in interest bearing deposits in banks of $4.2 million partially offset by an increase in loans of $17.3 million.
+Added: The yield on average interest earning assets decreased two basis points, or 0.4%, from 5.48% for the three months ended September 30, 2024 to 5.46% for the three months ended September 30, 2025.
+Added: Interest income on loans increased $291,000, or 7.2%, to $4.3 million for the three months ended September 30, 2025 from $4.0 million for the three months ended September 30, 2024.
+Added: This increase resulted primarily from an increase in average loan balances of $17.3 million, or 6.2%, from $279.0 million for the three months ended September 30, 2024 to $296.3 million for the three months ended September 30, 2025, with an increase in loan yield of five basis points, or 0.9%, to 5.85% for the three months ended September 30, 2025 from 5.80% for the three months ended September 30, 2024.
+Added: The increase in loan volume was due primarily to loan growth and average loans being lower in the prior year following the sale of loans in the first quarter of 2024.
+Added: Interest income on securities increased $30,000, or 2.8%.
+Added: This increase was due primarily to a 31 basis point increase in yield on the securities portfolio from 3.95% for the three months ended September 30, 2024 to 4.26% for the three months ended September 30, 2025 due primarily to purchases of higher yielding securities.
+Added: The average securities balance decreased $5.1 million, from $108.4 million for the three months ended September 30, 2024 to $103.3 million for the three months ended September 30, 2025 due primarily to contractual paydowns and maturities.
+Added: Interest income on restricted investments, which includes stock dividends from the Federal Home Loan Bank (FHLB) and our primary correspondent bank, decreased $20,000, or 36.4%, from $55,000 for the three months ended September 30, 2024 to $35,000 for the three months ended September 30, 2025.
+Added: This decrease resulted primarily from a decrease in the average balance of these investments of $901,000, or 25.0%, from $3.6 million for the three months ended September 30, 2024 to $2.7 million for the three months ended September 30, 2025 primarily due to the FHLB repurchasing $1.1 million in excess stock following a reduction in outstanding advances and a decrease of 92 basis points, or 15.1%, in the average yield from 6.09% for the three months ended September 30, 2024 to 5.17% for the three months ended September 30, 2025 due primarily to a reduction in the dividend rate paid by FHLB.
+Added: Interest income on interest bearing deposits in banks decreased $79,000, or 63.2%, from $125,000 for the three months ended September 30, 2024 to $46,000 for the three months ended September 30, 2025.
+Added: This decrease is due primarily to a decrease in average interest-bearing deposits of $4.2 million, or 50.6%, from $8.3 million for the three months ended September 30, 2024 to $4.1 million for the three months ended September 30, 2025 and a decrease in average yield of 153 basis points, or 25.3%, from 6.04% for the three months ended September 30, 2024 to 4.51% for the three months ended September 30, 2025.
+Added: Fed funds interest decreased $225,000, or 82.1%, from $274,000 for the three months ended September 30, 2024 to $49,000 for the three months ended September 30, 2025.
+Added: This decrease resulted primarily from a decrease in average fed funds balances of $15.0 million, or 77.3%, from $19.4 million for the
+Added: three months ended September 30, 2024 to $4.4 million for the three months ended September 30, 2025 and a decrease in average yield of 120 basis points, or 21.3%, from 5.65% for the three months ended September 30, 2024 to 4.45% for the three months ended September 30, 2025.
+Added: These decreases were primarily due to the Company maintaining higher account balances due to receiving cash from the loan sale in the first half of 2024 in addition to decreases in fed funds rates and other market interest rates.
+Added: Interest income from the fair value hedge was $135,000 for the three months ended September 30, 2024.
+Added: A financial derivative was terminated on January 15, 2025, so there is no related interest income after the first quarter of 2025.
+Added: The gain on the asset at the time of termination is amortized over the remaining life of those securities.
Interest Expense.
−Removed: Total interest expense decreased $198,000, or 7.9%, to $2.3 million for the three months ended June 30, 2025 from $2.5 million for the three months ended June 30, 2024 primarily due to an decrease in average interest-bearing liabilities of $19.8 million, or 5.5%, to $340.3 million for the three months ended June 30, 2025 from $360.1 million for the three months ended June 30, 2024 and a decrease in the average cost of interest-bearing liabilities of seven basis points, or 2.6%, from 2.77% for the three months ended June 30, 2024 to 2.70% for the three months ended June 30, 2025, primarily due the reduction in FHLB advance balances and changes in deposit pricing.
−Removed: Interest expense on deposit accounts decreased $16,000, or 0.9%, to $1.8 million for the three months ended June 30, 2025, with a decrease in the average deposit cost of eight basis points, or 3.1%, from 2.55% for the three months ended June 30, 2024 to 2.47% for the three months ended June 30, 2025 and an increase in average interest-bearing deposits of $6.0 million, or 2.1% from $284.8 million for the three months ended June 30, 2024 to $290.8 million for the three months ended June 30, 2025, with the largest increases being in higher cost certificates of deposit which includes an additional $10.0 million in brokered deposits.
−Removed: Interest expense on Federal Home Loan Bank advances decreased $182,000, or 26.6%, to $501,000 for the three months ended June 30, 2025 from $683,000 for the three months ended June 30, 2024.
−Removed: This decrease was due primarily to a decrease in the average balance of FHLB advances of $25.3 million, or 33.9%, to $49.3 million for the three months ended June 30, 2025 from $74.6 million for the three months ended June 30, 2024.
−Removed: The increase in average yield of 40 basis points, or 10.8%, is primarily due to paying off maturing advances with significantly lower rates than the weighted average cost of all FHLB borrowings.
+Added: Total interest expense decreased $202,000, or 8.1%, to $2.3 million for the three months ended September 30, 2025 from $2.5 million for the three months ended September 30, 2024 primarily due to a decrease in average interest-bearing liabilities of $13.1 million, or 3.8%, to $335.4 million for the three months ended September 30, 2025 from $348.5 million for the three months ended September 30, 2024 and a decrease in the average cost of interest-bearing liabilities of 13 basis points, or 4.5%, from 2.86% for the three months ended September 30, 2024 to 2.73% for the three months ended September 30, 2025, primarily due the reduction in rates on interest bearing deposits.
+Added: Interest expense on deposit accounts decreased $62,000, or 3.4%, to $1.8 million, with a decrease in the average deposit cost of 14 basis points, or 5.3%, from 2.63% for the three months ended September 30, 2024 to 2.49% for the three months ended September 30, 2025 partially offset by an increase in average interest-bearing deposits of $5.7 million, or 2.0% from $280.7 million for the three months ended September 30, 2024 to $286.4 million for the three months ended September 30, 2025, with the increase being in certificates of deposit which included an additional $10.0 million in brokered deposits.
+Added: Interest expense on Federal Home Loan Bank advances decreased $139,000, or 21.6%, to $504,000 for the three months ended September 30, 2025 from $643,000 for the three months ended September 30, 2024.
+Added: This decrease was due primarily to a decrease in the average balance of FHLB advances of $18.1 million, or 27.0%, to $48.9 million for the three months ended September 30, 2025 from $67.0 million for the three months ended September 30, 2024.
+Added: The increase in average cost of 28 basis points, or 7.4%, is primarily due to maturities and paydowns of advances with lower rates than the weighted average cost of all FHLB borrowings.
Net Interest Income.
−Removed: Net interest income remained flat at $3.2 million for the three months ended June 30, 2025.
−Removed: Net interest margin increased 11 basis points, or 3.7%, to 3.09% for the three months ended June 30, 2025 from 2.98% for the three months ended June 30, 2024.
−Removed: The increase in net interest margin was primarily due to a reduction in FHLB advances and balance sheet restructurings, which included the loan sale in 2024, allowing us to place the funds in higher yielding assets and increase the rate of repricing interest-earning assets to better align with the rate of repricing interest-bearing liabilities.
−Removed: The average yield on interest-earning assets increased by three basis points, or 0.5%, to 5.34% for the three months ended June 30, 2025 and the average yield on interest bearing liabilities decreased by seven basis points, or 2.6%, to 2.70% for the three months ended June 30, 2025.
+Added: Net interest income increased $64,000, or 2.0%, to $3.3 million for the three months ended September 30, 2025 from $3.2 million for the three months ended September 30, 2024 due primarily to an increase in net interest margin of 13 basis points, or 4.1%, to 3.22% for the three months ended September 30, 2025 from 3.09% for the three months ended September 30, 2024.
+Added: The increase in net interest margin is due primarily to the purchase of higher yielding securities, a decrease in rates paid on interest bearing deposit accounts, an increase in loan balances and a decrease in FHLB advances.
+Added: Net interest earning assets increased $4.7 million, or 6.9%, to $72.1 million for the three months ended September 30, 2025 from $67.5 million for the three months ended September 30, 2024.
Provision for Credit Losses.
−Removed: Based on management’s analysis of the adequacy of the allowance for credit losses, the provision for credit losses decreased $166,000, or 133.9%, to a reversal of provision of $42,000 for the three months ended June 30, 2025 from a provision for credit losses of $124,000 for the three months ended June 30, 2024, primarily due to an adjustment to the allowance related to $9.0 million in loans being moved from the general reserve loan pool to being individually reviewed and not requiring a specific reserve and a reduction in unfunded commitments.
−Removed: The allowance for credit losses was 1.09% of total loans at June 30, 2025.
+Added: Based on management’s analysis of the adequacy of the allowance for credit losses, the provision for credit losses increased $224,000, or 85.2%, to $487,000 for the three months ended September 30, 2025 from $263,000 for the three months ended September 30, 2024, primarily due to a $453,000 charge to the allowance related to a foreclosed multi-family property in the third quarter of 2025.
+Added: Excluding this charge, the provision for credit losses would have decreased $229,000 due to a lower end of period loan balance due primarily to moving loans to other real estate owned.
+Added: The allowance for credit losses was 1.13% of total loans at September 30, 2025.
Noninterest Income.
−Removed: Noninterest income increased $186,000, or 47.3%, to $579,000 for the three months ended June 30, 2025 from $393,000 for the three months ended June 30, 2024, primarily due to an additional loss of $69,000 on the final piece of the loan sale and a write-down of $78,000 on bank property being held as other real estate owned being marked to fair value in the three months ended June 30, 2024.
−Removed: In the three months ended June 30, 2025 there was a $73,000 gain on an equity investment held at the holding company and a $29,000 increase in net appreciation of bank-owned life insurance due to a change in insurance carriers.
−Removed: The equity investment at the holding company is included in restricted investments carried at cost on the balance sheet and is an investment in a fintech fund.
−Removed: These items were partially offset by a decrease in net service charges and fees of $61,000, or 11.7%, primarily due to a decrease of $59,000 in fee income from wholesale loans sold of $85,000 for the three months ended June 30, 2024 to $26,000 for the three months ended June 30, 2025 due primarily to decreases in housing demand related to market rates.
+Added: Noninterest income increased $597,000, or 112.6%, to $1.1 million for the three months ended September 30, 2025 from $530,000 for the three months ended September 30, 2024.
+Added: This increase was due primarily to a net gain of $530,000 recognized on foreclosed properties moved into other real estate owned being written up to fair value, less estimated cost to sell, and $72,000 in rental income primarily from a foreclosed multi-family property which became other real estate owned in the three months ended September 30, 2025.
Noninterest Expense.
−Removed: Noninterest expense decreased $81,000, or 2.7%, to $3.0 million for the three months ended June 30, 2025 from $3.1 million for the three months ended June 30, 2024 primarily due to a decrease in salary and employee benefit expenses of $75,000, or 4.6%, due primarily to reduced benefit costs related to executive officers and directors of $30,000, including a one-time $26,000 decrease in 2025 to reverse accrued equity awards forfeited.
−Removed: Salary and employee benefit expenses were $1.6 million for the three months ended June 30, 2025.
−Removed: Director fees decreased $8,000, or 10.1%, to $71,000 for the three months ended June 30, 2025 due to a reduction in the number of directors from 12 to 10 in May 2024 and technology expenses decreased $113,000, or 59.8%, due to card processing project implementation fees in the three months ended June 30, 2024.
−Removed: These decreases were partially offset by increases in other expenses of $120,000, or 21.3%, primarily due to increased auditing expenses of $51,000, or 46.4%, from $110,000 for the three months ended June 30, 2024 to $161,000 for the three months ended June 30, 2025 due to contracting with a new internal audit firm to perform work regularly throughout the year and additional expenses on the external audit for December 31, 2024.
−Removed: Marketing expense increased $47,000, or 188.0%, to $72,000 for the three months ended June 30, 2025 due to hiring a marketing firm in 2025 and significantly increasing our presence through media outlets we weren’t currently utilizing, including television and other streaming services, We also had an expense of $28,000 that offset part of the gain on the equity investment held at the holding company.
+Added: Noninterest expense increased $274,000, or 9.5%, to $3.2 million for the three months ended September 30, 2025 from $2.9 million for the three months ended September 30, 2024 primarily due to an
+Added: increase in other expenses of $236,000, or 42.8%, from $551,000 for the three months ended September 2024 to $787,000 for the three months ended September 30, 2025.
+Added: This includes expenses of $164,000 related to foreclosed properties held in other real estate owned, including utilities, maintenance, insurance, legal fees and real estate taxes.
+Added: Other expenses also includes increases in audit and accounting expense of $28,000, and increases in marketing expense of $34,000 due to hiring a marketing firm and significantly increasing our media presence through new outlets including television and streaming services.
+Added: Occupancy and equipment expenses increased $43,000, or 16.5%, from $261,000 for the three months ended September 30, 2024 to $304,000 for the three months ended September 30, 2025 due primarily to higher property taxes due to normal increases and higher values due to new buildings and expenses related to the lease of new administrative offices.
+Added: These increases were partially offset a decrease in salary and employee benefit expenses of $69,000, or 4.2%, due primarily to reduced benefit costs related to executive officers and directors and a reduction of $18,000 in director fees due to a reduction in board size.
+Added: Salary and employee benefit expenses were $1.6 million for the three months ended September 30, 2025.
Income Tax Expense.
−Removed: Income tax expense increased by $94,000, or 188.0%, to $144,000 for the three months ended June 30, 2025 from $50,000 for the three months ended June 30, 2024, due primarily to an increase in net income before taxes of $424,000 from $398,000 for the three months ended June 30, 2024 to $822,000 for the three months ended June 30, 2025.
−Removed: The effective tax rate was 17.52% and 12.56% for the three months ended June 30, 2025 and 2024, respectively.
−Removed: The increase in effective tax rate was primarily due to taxable income increasing at a faster rate than nontaxable income.
+Added: Income tax expense decreased by $2,000, or 2.3%, to $86,000 for the three months ended September 30, 2025 from $88,000 for the three months ended September 30, 2024.
+Added: Net income before taxes increased $163,000 from $603,000 for the three months ended September 30, 2024 to $766,000 for the three months ended September 30, 2025 and the effective tax rate was 11.2% and 14.6% for the three months ended September 30, 2025 and 2024, respectively.
+Added: The decrease in effective tax rate was primarily due to tax-exempt income increasing at a faster rate than taxable income.
Average Balance Sheets
3 unchanged sentences
Nonaccrual loans are only included in the computation of average balances.
−Removed: Average yields for loans include loan fees of $240,000 and $200,000 for the six months ended June 30, 2025 and 2024, respectively.
+Added: Average yields for loans include loan fees of $321,000 and $375,000 for the nine months ended September 30, 2025 and 2024, respectively.
We have not recorded deferred loan fees, as we have determined them to be immaterial.
−Removed: For the Six Months Ended June 30,
+Added: For the Nine Months Ended September 30,
(Dollars in thousands)
29 unchanged sentences
(3) Net interest margin represents annualized net interest income divided by average total interest earning assets.
−Removed: Comparison of the Operating Results for the Six months ended June 30, 2025 and June 30, 2024
−Removed: The Company had net income of $1.3 million for the six months ended June 30, 2025, compared to a net loss of $2.3 million for the six months ended June 30, 2024, an increase of $3.6 million, or 156.5%.
+Added: Comparison of the Operating Results for the Nine Months Ended September 30, 2025 and September 30, 2024
+Added: The Company had net income of $2.0 million for the nine months ended September 30, 2025, compared to a net loss of $1.8 million for the nine months ended September 30, 2024, an increase of $3.8 million, or 211.1%.
In the first quarter of 2024, the Company made a strategic loan sale at a loss of $3.8 million in order to rebalance the portfolio and demolished a branch office building after constructing a new one resulting in combined nonrecurring deductions from noninterest income of $4.1 million.
−Removed: The increase in net income before tax excluding these two nonrecurring items in 2024 was $433,000 primarily due to an increase in net interest income of $356,000, a decrease in noninterest expenses of $224,000, and an increase of $77,000 in noninterest income.
−Removed: This is partially offset by a $224,000 increase in the provision for credit losses primarily from a large decrease in 2024 related to the sale of loans.
Interest Income.
−Removed: Interest income for the six months ended June 30, 2025 was $11.1 million, which is unchanged from the six months ended June 30, 2024.
−Removed: Interest on loans increased by $1.2 million following the loan sale and strategic restructuring into higher yielding loans in the first quarter of 2024, and there was an increase in the average loan balance.
−Removed: However, this was offset by decreases in interest from lower balances on securities, fed funds, deposits in banks, and the financial derivative which was terminated at the beginning of the year.
−Removed: Average interest earning assets decreased by $15.7 million, or 3.7%, from $426.4 million for the six months ended June 30, 2024 to $410.7 million for the six months ended June 30, 2025 but was offset primarily by an increase in the yield on average interest earning assets of 20 basis points, or 3.9%, from 5.21% for the six months ended June 30, 2024 to 5.41% for the six months ended June 30, 2025.
−Removed: Interest income on loans increased $1.2 million, or 16.0%, to $8.7 million for the six months ended June 30, 2025 from $7.5 million for the six months ended June 30, 2024.
−Removed: This increase resulted primarily from an increase in average loans of $21.1 million, or 7.6%, from $278.7 million for the six months ended June 30, 2024 to $299.8 million for the six months ended June 30, 2025 and an increase in average loan yield of 39 basis points, or 7.3%, to 5.78% for the six months ended June 30, 2025 from 5.39% for the six months ended June 30, 2024.
−Removed: The increase in loan yield was due primarily to the diversification of the loan portfolio resulting in a reduction of lower yielding residential loans and an increase in higher yielding commercial real estate loans.
−Removed: Interest income on loans would have been $217,000 more had there not been a reversal of accrued interest in the second quarter of 2025 due to two loan relationships totaling $9.0 million being placed on nonaccrual.
−Removed: Interest income on securities decreased $436,000, or 17.5%, from $2.5 million for the six months ended June 30, 2024 to $2.0 million for the six months ended June 30, 2025.
−Removed: This decrease resulted from a decrease in the average balance of securities of $21.9 million, or 18.6%, from $117.7 million for the six months ended June 30, 2024 to $95.8 million for the six months ended June 30, 2025, partially offset by an increase of five basis points, or 1.2%, in average yield from 4.17% for the six months ended June 30, 2024 to 4.22% for the six months ended June 30, 2025.
−Removed: The yield increase is reflective of the purchase of higher yielding securities in 2024 and 2025.
−Removed: Interest income on restricted investments, which includes primarily Federal Home Loan Bank (FHLB) and TIB Bank stock dividends, decreased $15,000, or 13.8%, from $109,000 for the six months ended June 30, 2024 to $94,000 for the six months ended June 30, 2025.
−Removed: This decrease resulted from a decrease in the average balance of restricted investments of $385,000, or 10.9%, from $3.5 million for the six months ended June 30, 2024 to $3.1 million for the six months ended June 30, 2025, and also from a decrease in the average yield of these investments of 19 basis points, or 3.1%, from 6.17% for the six months ended June 30, 2024 to 5.98% for the six months ended June 30, 2025.
+Added: Interest income for the nine months ended September 30, 2025 was $16.7 million, which decreased $129,000, or 0.8%, from $16.8 million for the nine months ended September 30, 2024.
+Added: Interest on loans increased by $1.5 million following the loan sale and strategic restructuring into higher yielding loans in the first quarter of 2024, and an increase in the average loan balance of $19.8 million.
+Added: However, this was offset by decreases in interest on securities, fed funds and deposits in banks due primarily to lower average balances, and interest income on the financial derivative which was terminated at the beginning of 2025.
+Added: Average interest earning assets decreased by $13.3 million, or 3.1%, from $422.9 million for the nine months ended September 30, 2024 to $409.6 million for the nine months ended September 30, 2025 but was partially offset by an increase in the yield on average interest earning assets of 13 basis points, or 2.5%, from 5.30% for the nine months ended September 30, 2024 to 5.43% for the nine months ended September 30, 2025.
+Added: Interest income on loans increased $1.5 million, or 12.6%, to $13.0 million for the nine months ended September 30, 2025 from $11.5 million for the nine months ended September 30, 2024.
+Added: This increase resulted primarily from an increase in average loans of $19.8 million, or 7.1%, from $278.8 million for the nine months ended September 30, 2024 to $298.6 million for the nine months ended September 30, 2025 and an increase in average loan yield of 29 basis points, or 5.2%, to 5.81% for the nine months ended September 30, 2025 from 5.52% for the nine months ended September 30, 2024.
+Added: The increase in loan yield was due primarily to the diversification of the loan portfolio resulting in a reduction of lower yielding residential loans and an increase in higher yielding commercial loans.
+Added: Interest income on loans would have been $217,000 more had there not been a reversal of accrued interest on two loan relationships totaling $9.0 million being placed on nonaccrual in the second quarter then subsequently moved to other real estate owned in the third quarter of 2025.
+Added: Interest income on securities decreased $406,000, or 11.5%, from $3.5 million for the nine months ended September 30, 2024 to $3.1 million for the nine months ended September 30, 2025.
+Added: This decrease resulted from a decrease in the average balance of securities of $16.3 million, or 14.2%, from $114.6 million for the nine months ended September 30, 2024 to $98.3 million for the nine months ended September 30, 2025, partially offset by an increase of 13 basis points, or 3.1%, in the average yield from 4.10% for the nine months ended September 30, 2024 to 4.23% for the nine months ended September 30, 2025.
+Added: The yield increase is reflective of the purchase of higher yielding securities over the last year.
+Added: Interest income on restricted investments, which includes primarily Federal Home Loan Bank (FHLB) and TIB Bank stock dividends, decreased $35,000, or 21.3%, from $164,000 for the nine months ended September 30, 2024 to $129,000 for the nine months ended September 30, 2025.
+Added: This decrease resulted from a decrease in the average balance of restricted investments of $559,000, or 15.7%, from $3.6 million for the nine months ended September 30, 2024 to $3.0 million for the nine months ended September 30, 2025, and also from a decrease in the average yield of these investments of 41 basis points, or 6.7%, from 6.15% for the nine months ended September 30, 2024 to 5.74% for the nine months ended September 30, 2025.
The decrease in dividends was due primarily to $1.1 million in stock being repurchased in March 2025 by the FHLB due to the decrease in FHLB advances.
−Removed: Interest income on interest bearing deposits in banks decreased $262,000, or 54.8%, from $478,000 for the six months ended June 30, 2024 to $216,000 for the six months ended June 30, 2025.
−Removed: This decrease resulted primarily from a decrease in average interest-bearing deposits of $7.7 million, or 44.0%, from $17.5 million for the six months ended June 30, 2024 to $9.8 million for the six months ended June 30, 2025 and a decrease in average yield of 103 basis points, or 18.9%, from 5.46% for the six months ended June 30, 2024 to 4.43% for the six months ended June 30, 2025.
−Removed: The decrease in yields on deposits in banks and fed funds is reflective of the decrease in fed funds rates and other market
−Removed: interest rates.
−Removed: During the six months ended June 30, 2024, the Company maintained higher account balances due to receiving cash from the loan sale.
−Removed: Interest income from the fair value hedge decreased $250,000 due to the termination of the swap agreement from interest income of $240,000 for the six months ended June 30, 2024 to an expense of $10,000 for the six months ended June 30, 2025.
−Removed: The Company terminated the interest rate swap agreements on January 15, 2025, and the $463,000 unrealized gain in the value of the asset was locked in at the time of sale and will be amortized to interest income over the remaining life of the hedged securities.
+Added: Interest income on interest bearing deposits in banks decreased $341,000, or 56.6%, from $603,000 for the nine months ended September 30, 2024 to $262,000 for the nine months ended September 30, 2025.
+Added: This decrease resulted primarily from a decrease in average interest-bearing deposits of $6.6 million, or 45.8%, from $14.4 million for the nine months ended September 30, 2024 to $7.8 million for the nine months ended September 30, 2025 and a decrease in average yield of 112 basis points, or 20.1%, from 5.58% for the nine months ended September 30, 2024 to 4.46% for the nine months ended September 30, 2025.
+Added: Interest income on federal funds sold decreased $414,000, or 71.4%, from $580,000 for the nine months ended September 30, 2024 to $166,000 for the nine months ended September 30, 2025.
+Added: This decrease was due to a decrease in average federal funds balances of $9.1 million, or 64.5%, from $14.1 million for the nine months ended September 30, 2024 to $5.0 million for the nine months ended September 30, 2025 and a decrease in average yield of 106 basis points, or 19.4%, from 5.47% for the nine months ended September 30, 2024 to 4.41% for the nine months ended September 30, 2025.
+Added: The decrease in yields on deposits in banks and federal funds is reflective of the decrease in fed funds rates and other market interest rates.
+Added: During the nine months ended September 30, 2024, the Company maintained higher account balances due to receiving cash from the loan sale.
+Added: Interest income from the fair value hedge decreased $385,000 from $375,000 for the nine months ended September 30, 2024 to interest expense of $10,000 for the nine months ended September 30, 2025 due to the termination of a financial derivative.
+Added: The Company terminated the interest rate swap agreements on January 15, 2025, at a gain of $463,000, which will be recognized in income over the remaining life of the underlying hedged securities.
Interest Expense.
−Removed: Total interest expense decreased $347,000, or 7.0%, to $4.6 million for the six months ended June 30, 2025 from $5.0 million for the six months ended June 30, 2024 primarily due to a decrease in average interest-bearing liabilities of $13.7 million, or 3.9%, to $342.0 million for the six months ended June 30, 2025 from $355.7 million for the six months ended June 30, 2024 and a decrease in the average cost of interest-bearing liabilities of nine basis points, or 3.3%, from 2.78% for the six months ended June 30, 2024 to 2.69% for the six months ended June 30, 2025, primarily due to a decrease of $26.1 million in average FHLB advances.
−Removed: Interest expense on deposit accounts increased $26,000, or 0.7%, to $3.6 million for the six months ended June 30, 2025, due to an increase in average interest-bearing deposits of $12.8 million, or 4.6%, from $279.4 million for the six months ended June 30, 2024 to $292.2 million for the six months ended June 30, 2025, partially offset by a decrease in the average interest-bearing deposit cost of 10 basis points, or 3.9%, from 2.56% for the six months ended June 30, 2024 to 2.46% for the six months ended June 30, 2025 with the decrease in average cost being primarily in money market accounts, interest-bearing demand accounts and certificates of deposit.
−Removed: Interest expense on Federal Home Loan Bank advances decreased $375,000, or 27.2%, to $1.0 million for the six months ended June 30, 2025 from $1.4 million for the six months ended June 30, 2024.
−Removed: This decrease was due primarily to the decrease in the average balance of Federal Home Loan Bank advances of $26.1 million, or 34.5%, to $49.5 million for the six months ended June 30, 2025 from $75.6 million for the six months ended June 30, 2024.
−Removed: The average yield on advances increased 41 basis points, or 11.2%, from 3.65% for the six months ended June 30, 2024 to 4.06% for the six months ended June 30, 2025 due to the maturity of advances with rates significantly lower than the weighted average cost of all FHLB borrowings.
+Added: Total interest expense decreased $549,000, or 7.4%, to $6.9 million for the nine months ended September 30, 2025 from $7.4 million for the nine months ended September 30, 2024 primarily due to a decrease in average interest-bearing liabilities of $13.5 million, or 3.8%, to $339.8 million for the nine months ended September 30, 2025 from $353.3 million for the nine months ended September 30, 2024 and a decrease in the average cost of interest-bearing liabilities of 11 basis points, or 3.9%, from 2.81% for the nine months ended September 30, 2024 to 2.70% for the nine months ended September 30, 2025, primarily due to a decrease of $23.4 million in average FHLB advances.
+Added: Interest expense on deposit accounts decreased $36,000, or 0.7%, to $5.4 million for the nine months ended September 30, 2025, due to a decrease in the average interest-bearing deposit cost of 11 basis points, or 4.2%, from 2.58% for the nine months ended September 30, 2024 to 2.47% for the nine months ended September 30, 2025 with the decrease in average cost being primarily in money market accounts and certificates of deposit.
+Added: This was partially offset by an increase in average interest-bearing deposits of $10.3 million, or 3.7%, from $279.9 million for the nine months ended September 30, 2024 to $290.2 million for the nine months ended September 30, 2025.
+Added: Interest expense on Federal Home Loan Bank advances decreased $514,000, or 25.4%, to $1.5 million for the nine months ended September 30, 2025 from $2.0 million for the nine months ended September 30, 2024.
+Added: This decrease was due primarily to the decrease in the average balance of Federal Home Loan Bank advances of $23.4 million, or 32.2%, to $49.3 million for the nine months ended September 30, 2025 from $72.7 million for the nine months ended September 30, 2024.
+Added: The average cost of advances increased 37 basis points, or 10.0%, from 3.71% for the nine months ended September 30, 2024 to 4.08% for the nine months ended September 30, 2025 due to the maturity or paydown of advances with rates significantly lower than the weighted average cost of all FHLB borrowings.
Net Interest Income.
−Removed: Net interest income increased $356,000, or 5.8%, to $6.5 million for the six months ended June 30, 2025 from $6.1 million for the six months ended June 30, 2024 due primarily to an increase in net interest margin of 29 basis points, or 10.1%, to 3.17% for the six months ended June 30, 2025 from 2.88% for the six months ended June 30, 2024 partially offset by a decrease in average net interest-earning assets of $2.0 million, or 2.8%, to $68.7 million at June 30, 2025 from $70.7 million at June 30, 2024.
−Removed: The increase in net interest margin was primarily due to balance sheet restructurings, which included the loan sale in 2024, allowing us to place the funds in higher yielding assets and increase the rate of repricing interest-earning assets to better align with the rate of repricing deposits in addition to a more disciplined approach to loan and deposit pricing.
−Removed: The average yield on interest-earning assets increased by 20 basis points, or 3.9%, and the average yield on interest bearing liabilities decreased by nine basis points, or 3.3%.
+Added: Net interest income increased $420,000, or 4.5%, to $9.8 million for the nine months ended September 30, 2025 from $9.4 million for the nine months ended September 30, 2024 due primarily to an increase in net interest margin of 23 basis points, or 7.9%, to 3.18% for the nine months ended September 30, 2025 from 2.95% for the nine months ended September 30, 2024.
+Added: The increase in net interest margin was primarily due to balance sheet restructurings, which included the loan sale in 2024, allowing us to place the funds in higher yielding assets and increase the rate of repricing interest-earning assets to better align with the rate of repricing liabilities in addition to a more disciplined approach to loan and deposit pricing.
+Added: The average yield on interest-earning assets increased by 13 basis points, or 2.5%, and the average cost on interest bearing liabilities decreased by 11 basis points, or 3.9%.
Provision for Credit Losses.
−Removed: Based on management’s analysis of the adequacy of the allowance for credit losses, the provision for credit losses increased $224,000, or 146.4%, to $71,000 for the six months ended June 30, 2025 from a reversal of provision for credit losses of $153,000 for the six months ended June 30, 2024, primarily due to a previous decrease in the allowance related to the sale of residential loans being reversed as new loans are originated and added to the portfolio.
−Removed: Many of the loans added are in the commercial portfolio that carry a higher allowance requirement as well.
−Removed: An increase in average loans and leases of $21.1 million, or 7.96%, from $278.7 million for the six months ended June 30, 2024 to $299.8 million for the six months ended June 30, 2025 also added to the provision required.
−Removed: The allowance for credit losses was 1.09% of total loans at June 30, 2025.
+Added: Based on management’s analysis of the adequacy of the allowance for credit losses, the provision for credit losses increased $448,000, or 407.3%, to $558,000 for the nine months ended September 30, 2025 from $110,000 for the nine months ended September 30, 2024, due primarily to a $453,000 charge to the allowance related to a foreclosed multi-family property in the third quarter of 2025.
+Added: Excluding this charge, the provision for credit loss would have been flat when compared to the prior year.
+Added: The allowance for credit losses was 1.13% of total loans at September 30, 2025.
Noninterest Income.
−Removed: Noninterest income increased $4.2 million, or 131.3%, to $1.0 million for the six months ended June 30, 2025 from a noninterest loss of $3.2 million for the six months ended June 30, 2024, primarily due to nonrecurring losses in 2024 of $4.1 million related to the loan sale and branch construction.
−Removed: Excluding these one-time items, noninterest income would have increased by $77,000 over the same period.
−Removed: This increase is due primarily to a
−Removed: $73,000 gain on an equity investment held at the holding company.
−Removed: In the six months ended June 30, 2025 there was an increase in net appreciation on bank-owned life insurance of $40,000 partially offset by decreases in other service charges and fees of $22,000, and an increase in losses of $13,000 on other real estate owned due to an additional write-down of $54,000 in 2025 on two bank properties that were originally purchased for expansion then listed for sale in 2024.
+Added: Noninterest income increased $4.8 million, or 184.6%, to $2.2 million for the nine months ended September 30, 2025 from a noninterest loss of $2.6 million for the nine months ended September 30, 2024, primarily due to nonrecurring losses in 2024 of $4.1 million related to the loan sale and branch construction.
+Added: these one-time items, noninterest income would have increased by $670,000 over the same period.
+Added: This increase is due primarily to a net $476,000 gain recognized on foreclosed properties held in other real estate owned, a $73,000 gain on an equity investment held at the holding company, an increase in net appreciation on bank-owned life insurance of $39,000, and a $68,000 increase in other income.
+Added: These were partially offset by decreases in deposit service charges and other fees of $28,000.
Noninterest Expense.
−Removed: Noninterest expense decreased $224,000, or 3.7%, to $5.9 million for the six months ended June 30, 2025 from $6.1 million for the six months ended June 30, 2024 primarily due to decreases in technology expense, salaries and employee benefits, and occupancy and equipment expenses.
−Removed: Technology expense decreased $170,000, or 56.1%, to $133,000 for the six months ended June 30, 2025 from $303,000 for the six months ended June 30, 2024 due primarily to card processing fees incurred in the first half of 2024 associated with a “tap” debit card implementation project.
−Removed: Salaries and employee benefits decreased $86,000, or 2.6%, to $3.2 million for the six months ended June 30, 2025 from $3.3 million for the six months ended June 30, 2024 primarily related to higher benefits cost in 2024 related to the CEO transition and executive and director equity awards that were forfeited.
−Removed: Occupancy and equipment expenses decreased $45,000, or 8.1%, from $558,000 for the six months ended June 30, 2024 to $513,000 for the six months ended June 30, 2025 primarily due to higher expenses during 2024 related to opening two new branches.
−Removed: Director fees decreased $20,000 from $162,000 to $142,000 for the six months ended June 30, 2025 compared to 2024 due to a reduction in the number of directors from 14 to 12 in May 2024.
−Removed: The board of directors decreased further in size from 12 to 9 in May 2025.
−Removed: Other expenses increased $97,000 to $1.2 million from $1.1 million, primarily due to increases in audit and accounting fees of $47,000 due to contracting with a new internal audit firm to perform work regularly throughout the year and additional expenses on the external audit for December 31, 2024, marketing fees of $59,000 due to contracting with an outside marketing firm and expanding our reach through additional advertising methods, training expenses of $13,000, FDIC assessments of $16,000 and equity investment expenses of $28,000, partially offset by decreases of $37,000 in other compensation due to a one-time expense, $8,000 in REO expenses, $14,000 in legal fees, and $10,000 in office expenses.
+Added: Noninterest expense increased $50,000, or 0.6%, to $9.1 million for the nine months ended September 30, 2025 from $9.0 million for the nine months ended September 30, 2024.
+Added: This is due primarily to an increase in other expenses of $333,000, or 19.2%, from $1.7 million for the nine months ended September 30, 2024 to $2.1 million for the nine months ended September 30, 2025.
+Added: This includes expenses of $156,000 related to foreclosed properties held in other real estate owned, including utilities, maintenance, insurance, legal fees and real estate taxes.
+Added: Other expenses also included increases in marketing expenses of $93,000, and accounting and auditing expenses of $75,000 due primarily to normal increases in audit fees, and the engagement of consultants to provide an enhanced internal audit process as we grow.
+Added: Increases in other expenses were partially offset by decreases in salaries and employee benefits, technology expense, and director fees.
+Added: Salaries and employee benefits decreased $155,000, or 3.1%, to $4.8 million for the nine months ended September 30, 2025 from $4.9 million for the nine months ended September 30, 2024 primarily related to higher benefits cost in 2024 related to the CEO transition and executive and director equity awards that were forfeited in 2025.
+Added: Technology expense decreased $128,000, or 35.1% from $365,000 for the nine months ended September 30, 2024 to $237,000 for the nine months ended September 30, 2025 due primarily to card processing fees incurred in the first half of 2024 associated with a “tap” debit card implementation project.
Income Tax Expense.
−Removed: Income tax expense increased by $908,000, or 138.0%, to $250,000 for the six months ended June 30, 2025 from an income tax benefit of $658,000 for the six months ended June 30, 2024, due to the increase in net income before taxes of $4.6 million from a loss before taxes of $3.0 million for the six months ended June 30, 2024 to income before taxes of $1.6 million for the six months ended June 30, 2025.
−Removed: The effective tax rate was 15.91% and 21.97% for the six months ended June 30, 2025 and 2024, respectively.
+Added: Income tax expense increased by $906,000, or 158.9%, to $336,000 for the nine months ended September 30, 2025 from an income tax benefit of $570,000 for the nine months ended September 30, 2024, due to the increase in net income before taxes of $4.7 million from a loss before taxes of $2.4 million for the nine months ended September 30, 2024 to income before taxes of $2.3 million for the nine months ended September 30, 2025.
+Added: The effective tax rate was 14.4% and 23.8% for the nine months ended September 30, 2025 and 2024, respectively.
The decrease in the effective tax rate was primarily due to nontaxable income increasing at a faster rate than taxable income.
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Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business.
−Removed: The Federal Reserve Bank of Boston provides the Bank with a federal funds line of credit.
Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures.
Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities.
−Removed: We are also able to borrow from the Federal Home Loan Bank of Dallas.
−Removed: At June 30, 2025, we had outstanding advances of $49.2 million from the Federal Home Loan Bank of Dallas.
−Removed: At June 30, 2025, we had unused borrowing capacity of $99.8 million with the Federal Home Loan Bank of Dallas.
−Removed: In addition, at June 30, 2025, we had two unused unsecured lines of credit totaling $8.0 million with correspondent banks.
+Added: The Federal Reserve Bank of Boston provides the Bank with a federal funds line of credit and we are able to borrow from the Federal Home Loan Bank of Dallas.
+Added: At September 30, 2025, we had outstanding advances of $48.8 million from the Federal Home Loan Bank of Dallas.
+Added: At September 30, 2025, we had unused borrowing capacity of $102.5 million with the Federal Home Loan Bank of Dallas.
+Added: In addition, at September 30, 2025, we had two unused unsecured lines of credit totaling $8.0 million with correspondent banks.
While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition.
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cash flows from operating activities, investing activities, and financing activities.
−Removed: For additional information, see the consolidated statements of cash flow for the three and six months ended June 30, 2025 and 2024 included as part of the consolidated financial statements included in this report.
+Added: For additional information, see the consolidated statements of cash flow for the nine months ended September 30, 2025 and 2024 included as part of the consolidated financial statements included in this report.
We are committed to maintaining a strong liquidity position.
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is governed by applicable banking laws and regulations.
−Removed: At June 30, 2025, Texas Community Bancshares, Inc.
+Added: At September 30, 2025, Texas Community Bancshares, Inc.
(on a stand-alone, unconsolidated basis) had liquid assets of $4.6 million.
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We monitor our large depositors and have discussions with them on how to maximize FDIC coverage to the fullest legal extent, which is limited to coverage of $250,000 per insured depositor.
−Removed: At June 30, 2025, there were 197 accounts with balances in excess of the $250,000 FDIC insurance limit totaling $97.8 million, or 28.8% of deposits.
+Added: At September 30, 2025, there were 197 accounts with balances in excess of the $250,000 FDIC insurance limit totaling $92.9 million, or 27.8% of deposits.
The amount that was over $250,000 was $43.6 million, or 13.0%, that was potentially uninsured, including certificates of deposit of $14.1 million and $29.5 million in checking, MMDA and savings accounts.
−Removed: At June 30, 2025, the weighted average life (WAL) of our securities portfolio is 4.7 years.
+Added: At September 30, 2025, the weighted average life (WAL) of our securities portfolio is 5.0 years.
The gross unrealized losses on the AFS securities was $4.1 million, or 4.6% of the $90.0 million AFS portfolio and 7.3% of capital.
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The total gross unrealized losses are $5.8 million, or 5.4% of the $109.1 million securities portfolio and 10.3% of capital, which includes $48.4 million, or 44.4%, that are agency issued and guaranteed by the U.S.
−Removed: These losses are the result of market interest rate increases and we continue to monitor the portfolio for credit and other risks.
+Added: These losses are the result of market interest rate increases and we continue to monitor the portfolio for
+Added: credit and other risks.
The net unrealized loss on AFS securities, and the corresponding other comprehensive loss, was $3.3 million, or 5.7% of capital.
−Removed: Over the next 24 months from June 30, 2025, we expect to realize $43.5 million in cash flow from the securities portfolio with $8.4 million in 2025, $22.5 million in 2026 and $12.5 million in 2027.
+Added: Over the next 24 months from September 30, 2025, we expect to receive $46.8 million in cash flow from the securities portfolio with $6.0 million in 2025, $23.0 million in 2026 and $17.8 million in 2027.
We should receive $19.1 million of that over the next 12 months.
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During 2023, the Bank entered into interest rate swap agreements with a total notional amount of $25 million to hedge the risk of changes in the fair value of fixed rate AFS securities for changes in the SOFR benchmark rate.
−Removed: In the first quarter of 2025, the Bank terminated these swap agreements and recognized a gain of $463,000.
−Removed: This gain reduced the unrealized loss on the underlying securities and will be included in income over their remaining life.
−Removed: Our asset quality remains strong.
−Removed: At June 30, 2025, our allowance for credit losses to loans and leases held for investment was 1.09%.
+Added: In the first quarter of 2025, the Bank terminated these swap agreements at a gain of $463,000, which will be recognized in income over the remaining life of the underlying securities.
+Added: At September 30, 2025, our allowance for credit losses to loans and leases held for investment was 1.13%.
+Added: Concurrent with the foreclosure of one property and the acceptance of deeds in lieu of foreclosure on two properties discussed previously, we have transferred $9.0 million in nonaccrual loans to other real estate owned in the third quarter of 2025.
+Added: These foreclosures were limited to two stressed loan relationships requiring resolution.
+Added: We monitor credit quality in the loan portfolio on an ongoing basis and maintain strong underwriting standards and asset management procedures.
+Added: Our overall asset quality remains strong.
The Company continues to monitor rates and loan demand weekly and aligns pricing accordingly.
1 unchanged sentence
We are increasing our lending in CRE, other commercial lending and loans to municipalities to more strategically balance our loan portfolio.
−Removed: This was a key component of the loan sale strategy resulting in $27.1 million in residential mortgage loans sold in 2024.
−Removed: At June 30, 2025, we do not have any plans to sell additional loans.
−Removed: The following are the various liquidity sources we had available at June 30, 2025 that we could use as needed:
+Added: The following are the various liquidity sources we had available at September 30, 2025 that we could use as needed:
● FHLB borrowing capacity of $102.5 million
6 unchanged sentences
● The ability to sell a portion of BOLI assets
−Removed: At June 30, 2025, Broadstreet Bank exceeded all of its regulatory capital requirements, and was categorized as well-capitalized at that date.
+Added: At September 30, 2025, Broadstreet Bank exceeded all of its regulatory capital requirements, and was categorized as well-capitalized at that date.
Management is not aware of any conditions or events since the most recent notification of well-capitalized status that would change our category.
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The estimated changes presented are within policy guidelines established by the Company’s Board of Directors.
−Removed: At June 30, 2025
+Added: At September 30, 2025
Change in Interest Rates
4 unchanged sentences
(1) Assumes an immediate uniform change in interest rates at all maturities.
−Removed: The table above indicates that at June 30, 2025, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 3.82% increase in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 1.51% decrease in net interest income.
+Added: The table above indicates that at September 30, 2025, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 2.56% increase in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 1.26% decrease in net interest income.
Net Economic Value .
We also compute amounts by which the net present value of our assets and liabilities (net economic value of equity or “EVE”) would change in the event of a range of assumed changes in market interest rates.
−Removed: This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate
−Removed: sensitivity of net portfolio value.
+Added: This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value.
The model estimates the economic value of each type of asset, liability, and off-balance sheet contract under the assumptions that the United States Treasury yield curve increases or decreases instantaneously by 400 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.
1 unchanged sentence
The estimated changes presented are within policy guidelines established by the Company’s Board of Directors.
−Removed: At June 30, 2025
+Added: At September 30, 2025
EVE as a Percentage of
11 unchanged sentences
(4) EVE Ratio represents EVE divided by the present value of assets.
−Removed: The table above indicates that at June 30, 2025, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 0.57% decrease in EVE, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 7.57% decrease in EVE.
+Added: The table above indicates that at September 30, 2025, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 2.37% decrease in EVE, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 5.44% decrease in EVE.
Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements.
2 unchanged sentences
Accordingly, although the tables provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates, and actual results may differ.
−Removed: Interest rate risk calculations also may not reflect the fair values of financial instruments.
−Removed: For example, decreases in market interest rates can increase the fair values of our loans, mortgage servicing rights, deposits and borrowings.
Quantitative and Qualitative Disclosures About Market Risk
1 unchanged sentence
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.