3 unchanged sentences
Consolidated Statements of Financial Condition
−Removed: June 30, 2024 and December 31, 2023
+Added: September 30, 2024 and December 31, 2023
(Amounts in thousands, except share and per share data)
+Added: September 30,
Cash and due from banks
3 unchanged sentences
Securities available for sale
−Removed: Securities held to maturity (fair values of $ 21,253 at June 30, 2024 and $ 23,400 at December 31, 2023)
−Removed: Loans receivable, net of allowance for credit losses of $ 2,975 at June 30, 2024 and $ 3,096 at December 31, 2023
+Added: Securities held to maturity (fair values of $ 20,974 at September 30, 2024 and $ 23,400 at December 31, 2023)
+Added: Loans receivable, net of allowance for credit losses of $ 3,174 at September 30, 2024 and $ 3,096 at December 31, 2023
Net investment in direct financing leases
12 unchanged sentences
Advances from Federal Home Loan Bank (FHLB)
+Added: Financial derivative
Accrued expenses and other liabilities
2 unchanged sentences
Preferred stock, $ 0.01 par value, 1,000,000 shares authorized, none issued and outstanding
−Removed: Common stock, $ 0.01 par value, 19,000,000 shares authorized, 3,371,117 issued and 3,155,675 outstanding at June 30, 2024 and 3,350,268 issued and 3,175,426 outstanding at December 31, 2023
+Added: Common stock, $ 0.01 par value, 19,000,000 shares authorized, 3,380,329 issued and 3,135,556 outstanding at September 30, 2024 and 3,350,268 issued and 3,175,426 outstanding at December 31, 2023
Additional paid in capital
2 unchanged sentences
Unearned Employee Stock Ownership Program (ESOP) shares, at cost
−Removed: Treasury stock, at cost ( 215,442 shares at June 30, 2024 and 174,842 shares at December 31, 2023)
+Added: Treasury stock, at cost ( 244,773 shares at September 30, 2024 and 174,842 shares at December 31, 2023)
Total shareholders' equity
3 unchanged sentences
Consolidated Statements of Operations (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
Interest Income
19 unchanged sentences
Net loss on sale of loans
−Removed: Net loss on sale of other real estate owned
+Added: Net gain (loss) on sale of other real estate owned
Net loss on sale of premises and equipment
21 unchanged sentences
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
Net Income (Loss)
2 unchanged sentences
Net changes in fair value of available for sale securities, before tax
−Removed: Reclassification adjustment for realized loss on sale of investment securities included in net loss, before tax
+Added: Reclassification adjustment for realized loss on sale of investment securities included in net income (loss), before tax
Net changes in fair value of available for sale securities hedged, before tax
7 unchanged sentences
Consolidated Statements of Shareholders’ Equity (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
1 unchanged sentence
Shareholders'
−Removed: Three Months Ended June 30, 2024 and 2023
−Removed: Balance at April 1, 2024
+Added: Three Months Ended September 30, 2024 and 2023
+Added: Balance at July 1, 2024
Stock based compensation expense
3 unchanged sentences
Treasury stock purchased, 29,331 shares
−Removed: Balance at June 30, 2024
−Removed: Balance at April 1, 2023
+Added: Balance at September 30, 2024
+Added: Balance at July 1, 2023
Stock based compensation expense
3 unchanged sentences
Treasury stock purchased, 77,150 shares
−Removed: Balance at June 30, 2023
+Added: Balance at September 30, 2023
Comprehensive
Shareholders'
−Removed: Six Months Ended June 30, 2024 and 2023
+Added: Nine Months Ended September 30, 2024 and 2023
Balance at January 1, 2024
4 unchanged sentences
Treasury stock purchased, 69,931 shares
−Removed: Balance at June 30, 2024
+Added: Balance at September 30, 2024
Balance at January 1, 2023
7 unchanged sentences
Treasury stock purchased, 127,417 shares
−Removed: Balance at June 30, 2023
+Added: Balance at September 30, 2023
See Notes to Consolidated Financial Statements
2 unchanged sentences
Consolidated Statements of Cash Flows (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
Operating Activities
7 unchanged sentences
Loss on disposal of fixed assets
−Removed: Loss on sale of other real estate owned
Appreciation on bank-owned life insurance
ESOP compensation expense for allocated shares
+Added: Loss (gain) on other real estate owned
Stock-based compensation
Deferred income tax benefit
−Removed: Loss on fair value adjustment of fair value hedges
+Added: (Gain) loss on fair value adjustment of fair value hedges
Net change in
29 unchanged sentences
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
9 unchanged sentences
Interim Financial Statements
−Removed: The interim unaudited consolidated financial statements as of June 30, 2024, and for the three and six months ended June 30, 2024 and 2023, are unaudited and reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented.
+Added: The interim unaudited consolidated financial statements as of September 30, 2024, and for the three and nine months ended September 30, 2024 and 2023, are unaudited and reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented.
Such adjustments are the only adjustments contained in these unaudited consolidated financial statements.
These unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission, and therefore certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been omitted.
−Removed: The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be achieved for the remainder of the year ending December 31, 2024, or any other period.
+Added: The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be achieved for the year ending December 31, 2024, or any other period.
Certain prior period data presented in the consolidated financial statements has been reclassified to conform with the current period presentation.
2 unchanged sentences
Principles of Consolidation
−Removed: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include Broadstreet Bank, SSB and its wholly-owned subsidiary Mineola Financial Service Corporation, which is not actively being utilized.
+Added: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include Broadstreet Bank, SSB and its wholly-owned subsidiary Mineola Financial Service Corporation, which is inactive.
All significant intercompany transactions and balances have been eliminated in consolidation.
1 unchanged sentence
In preparing consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and reported amounts of revenues and expenses during the reporting period.
−Removed: Actual results could differ
+Added: Actual results could differ from those estimates.
+Added: Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses.
Texas Community Bancshares, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
−Removed: from those estimates.
−Removed: Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses.
Loans Held for Sale
5 unchanged sentences
Subsequent Events
−Removed: On July 31, 2024, the Company permanently closed the Loan Production office in Canton, Texas, resulting in premises and equipment dispositions of approximately $4.
+Added: After the period ended September 30, 2024, the Company sold $ 5,500 in securities for a gain of $ 40 .
+Added: The Company also prepaid $ 10,000 in FHLB advances incurring a prepayment penalty of $ 17 as well as a payoff of a $ 3,000 FHLB advance that had matured.
Note 2 – Earnings Per Share
−Removed: Basic earnings per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period, including allocated and committed to be released ESOP shares and restricted stock awards granted on August 31, 2022, February 28, 2023, and February 28, 2024, during the applicable period.
+Added: Basic earnings per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period, including allocated and committed to be released ESOP shares and restricted stock awards granted on August 31, 2022, February 28, 2023, February 28, 2024, and August 30, 2024, during the applicable period.
Diluted earnings per share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method.
2 unchanged sentences
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
1 unchanged sentence
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
Net Income (Loss)
8 unchanged sentences
Nonvested restricted stock awards for 64,888 and 115,964 shares of common stock were not considered in computing diluted earnings per share for 2024 and 2023, respectively, because they were antidilutive.
−Removed: Stock options for 225,430 and 289,932 shares of common stock were not considered in computing diluted earnings per share for 2024 and 2023 because they were nonvested.
−Removed: Stock options for 46,258 shares of common stock have vested, however, were not considered in computing diluted earnings per share for 2024, because they were antidilutive.
+Added: Nonvested stock options for 158,974 and 270,386 shares of common stock and vested stock options for 64,176 and 19,546 shares of common stock were not considered in computing diluted earnings per share for 2024 and 2023, respectively, because they were antidilutive.
Texas Community Bancshares, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
1 unchanged sentence
The amortized cost and fair value of securities, with gross unrealized gains and losses, follows:
−Removed: June 30, 2024
+Added: September 30, 2024
Available for Sale
25 unchanged sentences
Total securities held to maturity
−Removed: During the three and six months ended June 30, 2024, the Company had no sales of available for sale securities or held to maturity securities.
−Removed: During the three months ended June 30, 2023, the Company had no sales of available for sale or held to maturity securities.
−Removed: During the six months ended June 30, 2023, the Company had sales of available for sale securities of $ 17,027 with a loss of $ 1,687 .
−Removed: At June 30, 2024 and December 31, 2023, securities with a fair value of $ 16,168 and $ 14,152 , respectively, were pledged to secure public deposits and for other purposes required or permitted by law.
+Added: During the three and nine months ended September 30, 2024, the Company had sales of available for sale securities of $ 5,499 with a loss of $ 1 and no sales of held to maturity securities.
+Added: During the three months ended September 30, 2023, the Company had no sales of available for sale or held to maturity securities.
+Added: During the nine months ended September 30, 2023, the Company had sales of available for sale securities of $ 17,027 with a loss of $ 1,687 .
+Added: At September 30, 2024 and December 31, 2023, securities with a fair value of $ 16,583 and $ 14,152 , respectively, were pledged to secure public deposits and for other purposes required or permitted by law.
Texas Community Bancshares, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
−Removed: The amortized cost and fair value of debt securities by contractual maturity at June 30, 2024, follows:
+Added: The amortized cost and fair value of debt securities by contractual maturity at September 30, 2024, follows:
Available for Sale
7 unchanged sentences
The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:
−Removed: June 30, 2024
+Added: September 30, 2024
Less than 12 months
15 unchanged sentences
Government and agency (1,0)
−Removed: At June 30, 2024 and December 31, 2023, the Company had investment securities with approximately $ 9,453 and $ 9,593 , respectively, in unrealized losses, which have been in continuous loss positions for more than twelve months.
−Removed: The Company’s assessments indicated that the cause of the market depreciation was primarily the change in market interest rates and not the issuers’ financial condition or downgrades by rating agencies.
+Added: At September 30, 2024 and December 31, 2023, the Company had investment securities with approximately $ 7,144 and $ 9,593 , respectively, in unrealized losses, which have been in continuous loss positions for more than twelve months.
+Added: The Company’s assessments indicated that the cause of the unrealized losses was primarily the change in market interest rates and not the issuers’ financial condition or downgrades by rating agencies.
In addition, approximately 11.8 % of the principal balance from the Company’s investment portfolio will mature and be repaid to the Company within five years or less.
3 unchanged sentences
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
1 unchanged sentence
The Company monitors credit quality of debt securities held-to-maturity through the use of nationally recognized credit ratings.
−Removed: The Company monitors credit rating on a continual basis.
−Removed: The following table summarizes bond ratings for the Company’s held-to-maturity portfolio, based upon amortized cost, issued by state and political subdivisions and other securities as of June 30, 2024 and December 31, 2023:
−Removed: June 30, 2024
+Added: The Company monitors credit ratings on a continual basis.
+Added: The following table summarizes bond ratings for the Company’s held-to-maturity portfolio, based upon amortized cost, issued by state and political subdivisions and other securities as of September 30, 2024 and December 31, 2023:
+Added: September 30, 2024
mortgage-backed
3 unchanged sentences
U.S Government
−Removed: As of June 30, 2024 and December 31, 2023, there were no securities held to maturity on nonaccrual status or past due.
+Added: As of September 30, 2024 and December 31, 2023, there were no securities held to maturity on nonaccrual status or past due.
Mortgage-backed Securities and Collateralized Mortgage Obligations
4 unchanged sentences
Because the decline in fair value is attributable to changes in market interest rates and prepayment speeds and not credit quality, and because the Company does not intend to sell the investments before recovery of their amortized cost bases, which may be maturity.
−Removed: The unrealized losses on the Company’s investment in mortgage-backed securities have not been recognized into income and no allowance for credit losses was established at June 30, 2024 or December 31, 2023.
−Removed: Government and agency
+Added: The unrealized losses on the Company’s investment in mortgage-backed securities have not been recognized into income and no allowance for credit losses was established at September 30, 2024 or December 31, 2023.
+Added: Government and Agency Securities
The unrealized losses on the Company’s investments in U.S.
4 unchanged sentences
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
1 unchanged sentence
Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost bases of the Company’s investments.
−Removed: Therefore, an allowance for credit losses is deemed unnecessary at June 30, 2024 and December 31, 2023.
+Added: Therefore, an allowance for credit losses is deemed unnecessary at September 30, 2024 and December 31, 2023.
Municipal Securities and Corporate Bonds
2 unchanged sentences
Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost bases of the Company’s investments.
−Removed: Therefore, an allowance for credit losses is deemed unnecessary at June 30, 2024 and December 31, 2023.
+Added: Therefore, an allowance for credit losses is deemed unnecessary at September 30, 2024 and December 31, 2023.
Note 4 - Loans and Allowance for Credit Losses
A summary of the balances of loans and leases follows:
+Added: September 30,
Construction and land
6 unchanged sentences
Loans and leases, net
−Removed: Direct financing leases of $ 1,340 and $ 36 are included in consumer and other loans at June 30, 2024 and December 31, 2023, respectively.
+Added: Direct financing leases of $ 1,330 and $ 36 are included in consumer and other loans at September 30, 2024 and December 31, 2023, respectively.
Texas Community Bancshares, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
−Removed: The following tables set forth information regarding the activity in the allowance for credit losses for the three and six months ended June 30, 2024 and June 30, 2023:
−Removed: June 30, 2024
+Added: The following tables set forth information regarding the activity in the allowance for credit losses for the three and nine months ended September 30, 2024 and September 30, 2023:
+Added: September 30, 2024
Allowance for credit losses:
3 unchanged sentences
Three months ended
−Removed: Beginning balance, April 1, 2024
+Added: Beginning balance, July 1, 2024
Provision (credit) for credit losses
Loans charged-off
−Removed: Balance, June 30, 2024
−Removed: Six months ended
+Added: Balance, September 30, 2024
+Added: Nine months ended
Balance, January 1, 2024
1 unchanged sentence
Loans charged-off
−Removed: Balance, June 30, 2024
−Removed: Balance, June 30, 2024 allocated to loans and leases individually evaluated
−Removed: Balance, June 30, 2024 allocated to loans and leases collectively evaluated
+Added: Balance, September 30, 2024
+Added: Balance, September 30, 2024 allocated to loans and leases individually evaluated
+Added: Balance, September 30, 2024 allocated to loans and leases collectively evaluated
Loans and leases receivable:
−Removed: Balance, June 30, 2024 loans and leases individually evaluated
−Removed: Balance, June 30, 2024 loans and leases collectively evaluated
−Removed: Balance, June 30, 2024
+Added: Balance, September 30, 2024 loans and leases individually evaluated
+Added: Balance, September 30, 2024 loans and leases collectively evaluated
+Added: Balance, September 30, 2024
Texas Community Bancshares, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
−Removed: June 30, 2023
+Added: September 30, 2023
Allowance for credit losses:
3 unchanged sentences
Three months ended
−Removed: Beginning balance, April 1, 2023
+Added: Beginning balance, July 1, 2023
Provision for credit losses
Loans charged-off
−Removed: Balance, June 30, 2023
−Removed: Six months ended
+Added: Balance, September 30, 2023
+Added: Nine months ended
Beginning balance prior to adoption of ASC 326
2 unchanged sentences
Loans charged-off
−Removed: Balance, June 30, 2023
+Added: Balance, September 30, 2023
December 31, 2023
10 unchanged sentences
The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days and still accruing as of June 30, 2024 and December 31, 2023:
−Removed: June 30, 2024
+Added: September 30, 2024
with Allowance
8 unchanged sentences
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
5 unchanged sentences
Commercial real estate
+Added: Municipalities
Consumer and other
−Removed: The Company did not recognize any interest income on nonaccrual loans during the periods ended June 30, 2024 or June 30, 2023.
−Removed: The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of June 30, 2024 and December 31, 2023:
−Removed: June 30, 2024
+Added: The Company did not recognize any interest income on nonaccrual loans during the periods ended June 30, 2024 or September 30, 2023.
+Added: The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of September 30, 2024 and December 31, 2023:
+Added: September 30, 2024
Construction and land
1 unchanged sentence
Commercial real estate
+Added: Consumer and other
December 31, 2023
1 unchanged sentence
Commercial real estate
−Removed: The Company had $ 1,445 and $ 1,157 in collateral-dependent loans at June 30, 2024 and December 31, 2023, respectively.
Texas Community Bancshares, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
+Added: The Company had $ 2,200 and $ 1,157 in collateral-dependent loans at September 30, 2024 and December 31, 2023, respectively.
Internal Risk Categories
22 unchanged sentences
Credit exposure becomes more likely in such credits and a serious evaluation of the secondary support to the credit is performed.
−Removed: Credits rated doubtful are those in which full collection of principal appears highly questionable, and which some degree of loss is anticipated, even though the ultimate amount of loss may not yet be certain and/or other factors exist which could affect collection of debt.
−Removed: Based upon available information, positive action by the Company is
Texas Community Bancshares, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
−Removed: required to avert or minimize loss.
+Added: Credits rated doubtful are those in which full collection of principal appears highly questionable, and which some degree of loss is anticipated, even though the ultimate amount of loss may not yet be certain and/or other factors exist which could affect collection of debt.
+Added: Based upon available information, positive action by the Company is required to avert or minimize loss.
Credits with this classification have often become collateral dependent and any shortage in collateral or other likely loss amount is recorded as a specific valuation allowance.
5 unchanged sentences
The Company evaluates the loan risk grading system definitions and allowance for credit loss methodology on an ongoing basis.
−Removed: No significant changes in methodology were made during the period ended June 30, 2024.
−Removed: Certain loan segments were reclassified during the period ended June 30, 2024.
+Added: No significant changes in methodology were made during the three and nine months ended September 30, 2024.
+Added: Certain loan segments were reclassified during the period ended September 30, 2024.
Each loan segment is made up of loan categories with similar risk characteristics.
6 unchanged sentences
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
−Removed: Based on the most recent analysis performed, the risk category of loans by class of loans and gross chargeoffs as of June 30, 2024 and December 31, 2023 are as follows:
−Removed: June 30, 2024
+Added: Based on the most recent analysis performed, the risk category of loans by class of loans and gross chargeoffs as of September 30, 2024 and December 31, 2023 are as follows:
+Added: September 30, 2024
Term Loans Amortized Cost Basis by Origination Year
4 unchanged sentences
Special mention
+Added: Current period gross charge-offs
Commercial real estate
2 unchanged sentences
Special mention
+Added: Current period gross charge-offs
Municipalities
6 unchanged sentences
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
18 unchanged sentences
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
1 unchanged sentence
The Company also evaluates credit quality based on the aging status of the loan, which is subsequently presented.
−Removed: The following table presents the amortized cost of performing and non-performing loans as of June 30, 2024 and December 31, 2023:
−Removed: June 30, 2024
+Added: The following table presents the amortized cost of performing and non-performing loans as of September 30, 2024 and December 31, 2023:
+Added: September 30, 2024
Term Loans Amortized Cost Basis by Origination Year
15 unchanged sentences
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
17 unchanged sentences
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
−Removed: The following is an aging analysis for loans as of June 30, 2024 and December 31, 2023:
−Removed: June 30, 2024
+Added: The following is an aging analysis for loans as of September 30, 2024 and December 31, 2023:
+Added: September 30, 2024
Construction and land
9 unchanged sentences
Consumer and other
−Removed: All interest accrued but not collected for loans that are placed on nonaccrual or charged‐off is reversed against interest income.
−Removed: The interest on these loans is accounted for on the cash‐basis or cost‐recovery method, until qualifying for return to accrual.
+Added: All interest accrued but not collected for loans that are placed on nonaccrual status or are charged‐off is reversed against interest income.
+Added: The interest on these loans is accounted for on the cash‐basis or cost‐recovery method, until qualifying for return to accrual status.
Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
−Removed: No interest income was recognized for loans on nonaccrual status for the three and six months ended June 30, 2024 and 2023.
−Removed: The following table presents interest income recognized on loans that are collateral-dependent and individually reviewed for the three and six months ended June 30, 2024 and 2023:
+Added: No interest income was recognized for loans on nonaccrual status for the three and nine months ended September 30, 2024 and 2023.
+Added: The following table presents interest income recognized on loans that are collateral-dependent and individually reviewed for the three and nine months ended September 30, 2024 and 2023:
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
+Added: September 30,
1-4 Residential & multi-family
−Removed: During the three and six months ended June 30, 2024 and 2023, there were no modifications of loans to borrowers in financial difficulty.
+Added: During the three and nine months ended September 30, 2024 and 2023, there were no modifications of loans to borrowers in financial difficulty.
Texas Community Bancshares, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
−Removed: There have been no modifications to borrowers with financial difficulty in the three and six months ended June 30, 2024 and 2023 that subsequently defaulted.
+Added: There have been no modifications to borrowers with financial difficulty in the three and nine months ended September 30, 2024 and 2023 that subsequently defaulted.
The Company has no commitments to loan additional funds to borrowers whose loans have been modified but may on occasion extend financing to these borrowers.
5 unchanged sentences
The Company follows the same credit policies in making commitments as it does for on-balance sheet instruments.
−Removed: At June 30, 2024 and December 31, 2023, the following financial instruments were outstanding whose contract amounts represent credit risk:
+Added: At September 30, 2024 and December 31, 2023, the following financial instruments were outstanding whose contract amounts represent credit risk:
Contract Amount
−Removed: June 30, 2024
+Added: September 30, 2024
December 31, 2023
7 unchanged sentences
The Bank pays no fees for this line of credit and has not drawn upon it.
−Removed: The Bank is party to agreements with its correspondent banks that provide the Bank with lines for up to $ 15,000 federal funds lines of credit to support overnight funding needs.
+Added: The Bank is party to agreements with its correspondent banks that provide the Bank with unsecured lines for up to $ 15,000 federal funds lines of credit to support overnight funding needs.
The Bank pays no fees for these lines of credit and has not drawn upon them.
One line renews annually and the other line is in effect until either party changes the terms of the agreement.
−Removed: At June 30, 2024, the Company had no commitments to purchase securities.
+Added: The Bank is party to an additional agreement on a secured federal funds line of credit of $ 3,000 that is in effect until either party changes or fails to meet the terms of the agreement.
+Added: At September 30, 2024, the Company had no commitments to purchase securities.
The Company has no other off-balance sheet arrangements or transactions with unconsolidated, special purpose entities that would expose the Company to liability that is not reflected on the face of the consolidated financial statements.
2 unchanged sentences
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
1 unchanged sentence
Supplemental disclosure of cash flow information is as follows:
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: September 30,
Supplemental cash flow information:
7 unchanged sentences
Premises and equipment transferred to other real estate owned
−Removed: During the three months ended June 30, 2024, the Company reclassified $2,276 from loans held for sale to loans held for investment due to no longer having plans to sell these loans and instead holding the loans until maturity or payoff.
−Removed: The allowance for credit losses attributable to the loans reclassified was an estimated $21.
Note 7 - Minimum Regulatory Capital Requirements
4 unchanged sentences
The Bank has opted into the Community Bank Leverage Ratio (CBLR) framework, beginning with the Call Report filed for the first quarter of 2020.
−Removed: At June 30, 2024 and December 31, 2023, the Bank’s CBLR ratio was 10.14 % and 10.76 %, respectively, which exceeded all regulatory capital requirements under the CBLR framework, and the Bank was considered to be “well-capitalized.”
+Added: At September 30, 2024 and December 31, 2023, the Bank’s CBLR ratio was 10.59 % and 10.76 %, respectively, which exceeded all regulatory capital requirements under the CBLR framework, and the Bank was considered to be “well-capitalized.”
Under the CBLR framework, banks and their bank holding companies that have less than $10 billion in total consolidated assets and meet other qualifying criteria, including a leverage ratio (equal to tier 1 capital divided by average total consolidated assets) of greater than 9%, are eligible to opt into the CBLR framework.
2 unchanged sentences
(i) the generally applicable risk-based and leverage capital requirements of the generally applicable capital rules;
−Removed: (ii) the capital ratio requirements in order to be considered well-capitalized under the prompt corrective action
+Added: (ii) the capital ratio requirements in order to be considered well-capitalized under the prompt corrective action framework;
+Added: (iii) any other applicable capital or leverage requirements.
+Added: Qualifying community banking organizations that elect to be under the CBLR framework generally would be exempt from the current capital framework, including risk-based capital requirements and capital conservation buffer requirements.
Texas Community Bancshares, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
−Removed: (iii) any other applicable capital or leverage requirements.
−Removed: Qualifying community banking organizations that elect to be under the CBLR framework generally would be exempt from the current capital framework, including risk-based capital requirements and capital conservation buffer requirements.
Note 8 - Fair Value Measurements
18 unchanged sentences
● Level 3 Inputs – Significant unobservable inputs that reflect an entity ’ s own assumptions that market participants would use in pricing the assets or liabilities.
+Added: A description of the valuation methodologies used for assets measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.
+Added: There were no changes in valuation techniques during either the nine months ended September 30, 2024 or the year ended December 31, 2023.
+Added: In general, fair value is based upon quoted market prices, where available.
+Added: If such quoted market prices are not available, fair value is based upon internally developed or third-party models that primarily use, as inputs,
Texas Community Bancshares, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
−Removed: A description of the valuation methodologies used for assets measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.
−Removed: There were no changes in valuation techniques during either the six months ended June 30, 2024 or the year ended December 31, 2023.
−Removed: In general, fair value is based upon quoted market prices, where available.
−Removed: If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market- based parameters.
+Added: observable market- based parameters.
Valuation adjustments may be made to ensure that financial instruments are recorded at fair value.
8 unchanged sentences
Third-party valuations are validated by the Company using the Bloomberg Valuation Service’s derivative pricing functions.
−Removed: No significant differences were identified during the validation as of June 30, 2024.
+Added: No significant differences were identified during the validation as of September 30, 2024.
Collateral-dependent Loans – Collateral dependent loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral.
8 unchanged sentences
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same or similar factors above.
−Removed: Loans Held for Sale, at Fair Value – The fair value of a loan held for sale is determined using quoted prices for similar assets, adjusted for specific attributes of that loan (Level 2).
−Removed: The following table summarizes financial assets measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
−Removed: June 30, 2024
+Added: The following table summarizes financial assets measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
+Added: September 30, 2024
Financial assets
4 unchanged sentences
Corporate bonds
−Removed: Derivative instruments
Total financial assets
+Added: Financial liabilities
+Added: Derivative instruments
+Added: Total financial liabilities
December 31, 2023
12 unchanged sentences
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
−Removed: The following table summarizes financial and non-financial assets measured at fair value on a nonrecurring basis as of June 30, 2024 and December 31, 2023, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
−Removed: June 30, 2024
+Added: The following table summarizes financial and non-financial assets measured at fair value on a nonrecurring basis as of September 30, 2024 and December 31, 2023, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
+Added: September 30, 2024
Financial assets
7 unchanged sentences
Other real estate owned
−Removed: During the six months ended June 30, 2024 and 2023, certain collateral-dependent loans were remeasured and reported at fair value through a specific valuation allowance allocation for credit losses based upon the fair value of the underlying collateral.
−Removed: At June 30, 2024, collateral-dependent loans with a carrying value of $ 362 were reduced by specific valuation allowance allocations totaling $ 316 to a reported fair value of $ 46 .
+Added: During the nine months ended September 30, 2024 and 2023, certain collateral-dependent loans were remeasured and reported at fair value through a specific allocation of the allowance for credit losses based upon the fair value of the underlying collateral.
+Added: At September 30, 2024, collateral-dependent loans with a carrying value of $ 1,200 were reduced by specific valuation allowance allocations totaling $ 279 to a reported fair value of $ 921 .
At December 31, 2023, collateral dependent loans with a carrying value of $ 345 were reduced by specific valuation allowance allocations totaling $ 300 to a reported fair value of $ 45 .
The fair value of collateral dependent loans is determined based on collateral valuations utilizing Level 3 valuation inputs.
−Removed: There was a charge to provision for credit losses of $ 16 as a result of valuation allowances moving from the general reserve to specific reserve for the six months ended June 30, 2024.
−Removed: There was no charge to the provision for credit losses as a result of the valuation allowances for the six months ended June 30, 2023.
−Removed: At June 30, 2024, the Company had other real estate owned consisting of two bank properties that were purchased for future expansion, but have now been listed for sale.
−Removed: At December 31, 2023, the Company had one commercial building held as other real estate owned with a carrying value of $ 162 , which was sold at a gain during the six months ended June 30, 2024.
+Added: There was a charge of $ 15 to the provision for credit losses and a transfer of $ 48 from the general reserve to the specific reserve as a result of additional reserve requirements according to the quarterly evaluation conducted on collateral dependent loans for the nine months ended September 30, 2024.
+Added: There was no charge to the provision for credit losses as a result of the valuation allowances for the nine months ended September 30, 2023.
+Added: At September 30, 2024, the Company had other real estate owned consisting of two bank properties that were purchased for future expansion, but have now been listed for sale.
+Added: At December 31, 2023, the Company had one commercial building held as other real estate owned with a carrying value of $ 162 , which was sold at a gain during the nine months ended September 30, 2024.
Texas Community Bancshares, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
3 unchanged sentences
Significant Input
−Removed: June 30, 2024
+Added: September 30, 2024
Collateral-dependent loans
18 unchanged sentences
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
The estimated fair values, and related carrying amounts, of the Company’s financial instruments are as follows:
−Removed: June 30, 2024
+Added: September 30, 2024
Carrying Value
30 unchanged sentences
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
22 unchanged sentences
Dividends on unallocated ESOP shares, if any, are recorded as a reduction of debt and accrued interest.
−Removed: ESOP compensation was $ 47 and $ 93 for the three and six months ended June 30, 2024 and $ 38 and $ 87 for the three and six months ended June 30, 2023.
+Added: ESOP compensation was $ 46 and $ 139 for the three and nine months ended September 30, 2024 and $ 40 and $ 127 for the three and nine months ended September 30, 2023.
Texas Community Bancshares, Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
−Removed: A summary of the ESOP shares as of June 30, 2024 and December 31, 2023 are as follows:
−Removed: June 30, 2024
+Added: A summary of the ESOP shares as of September 30, 2024 and December 31, 2023 are as follows:
+Added: September 30, 2024
December 31, 2023
1 unchanged sentence
Shares committed to be released to participants
−Removed: Shares distributed to retiring participant
+Added: Shares distributed to terminated participants
Unreleased shares
5 unchanged sentences
Securities available for sale – The Company has a swap agreement to hedge the interest rate risk on a portion of its fixed rate securities available for sale.
−Removed: At June 30, 2024 and December 31, 2023, the aggregate notional amount of the related hedged items of the securities available for sale totaled $ 25 million and the fair value of the swaps associated with the derivative related to hedged items was an unrealized gain of $ 637 and $ 119 , respectively.
−Removed: The Company applies hedge accounting in accordance with ASC 815, Derivatives and Hedging , and the fair value hedge and the underlying hedged item, attributable to the risk being hedged, are recorded at fair value with unrealized gains and losses being recorded within other interest income on the Company’s Consolidated Statements of Operations.
+Added: At September 30, 2024 and December 31, 2023, the aggregate notional amount of the related hedged items of the securities available for sale totaled $ 25 million and the fair value of the swaps associated with the derivative related to hedged items was an unrealized loss of $ 148 and an unrealized gain of $ 119 , respectively.
+Added: During the nine months ended September 30, 2024, the carrying amount of the hedged assets decreased due to the sale of two securities with an amortized cost of $ 5,500 .
+Added: At September 30, 2024, the hedging relationship still qualified for hedge accounting due to the amortized cost of the remaining securities exceeding the notional amount.
+Added: The Company applies hedge accounting in accordance with ASC 815, Derivatives and Hedging , and the fair value hedge and the underlying hedged item, attributable to the risk being hedged, are recorded at fair value with unrealized gains and losses being recorded within financial derivative interest income on the Company’s Consolidated Statements of Operations.
The Company assesses the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows on the derivative hedging instrument with the changes in fair value or cash flows on the designated hedged item or transactions for the risk being hedged.
6 unchanged sentences
Notes to Consolidated Financial Statements (Unaudited)
−Removed: Three and Six Months Ended June 30, 2024 and 2023
+Added: Three and Nine Months Ended September 30, 2024 and 2023
(Amounts in thousands, except share and per share data)
−Removed: The following table summarizes key elements of the Company’s derivative instruments as of June 30, 2024 and December 31, 2023, segregated by derivatives that are considered accounting hedges and those that are not:
−Removed: June 30, 2024
+Added: The following table summarizes key elements of the Company’s derivative instruments as of September 30, 2024 and December 31, 2023, segregated by derivatives that are considered accounting hedges and those that are not:
+Added: September 30, 2024
December 31, 2023
3 unchanged sentences
Fair Value Hedges
−Removed: The following table summarizes the carrying value of the Company’s hedged assets in fair value hedges and the associated cumulative basis adjustments included in those carrying values as of June 30, 2024 and December 31, 2023:
−Removed: June 30, 2024
+Added: The following table summarizes the carrying value of the Company’s hedged assets in fair value hedges and the associated cumulative basis adjustments included in those carrying values as of September 30, 2024 and December 31, 2023:
+Added: September 30, 2024
December 31, 2023
6 unchanged sentences
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, 2024 and consolidated results of operations for the three and six months ended June 30, 2024 and 2023.
+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, 2024 and consolidated results of operations for the three and nine months ended September 30, 2024 and 2023.
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.
9 unchanged sentences
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:
−Removed: ● our ability to control costs and manage liquidity through a period of high inflation and rising interest rates;
+Added: ● our ability to control costs and manage liquidity;
● our ability to maintain our deposit base cost-effectively and access cost-effective funding;
1 unchanged sentence
● changes in yields on our assets resulting from changes in market interest rates;
−Removed: ● fluctuation in the demand for construction loans in our market area due to increased cost of building materials and their availability;
+Added: ● fluctuation in the demand for construction loans in our market area;
● changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses;
−Removed: ● risks related to a high concentration of loans secured by real estate located in our market area;
−Removed: ● our ability to control costs when hiring employees in a highly competitive labor market;
+Added: ● risks related to a high concentration of loans secured by 1-4 family real estate located in our market area;
+Added: ● risks related to higher levels of commercial real estate and development loans;
+Added: ● our ability to control costs when hiring employees in a competitive labor market and rural area;
● our ability to control cost and expenses, particularly those associated with operating a publicly traded company;
−Removed: ● fluctuations in real estate values and both residential and commercial real estate market conditions;
+Added: ● fluctuations in real estate values and market conditions in both residential and commercial real estate;
● demand for loans and deposits in our market area;
49 unchanged sentences
The total allowance is available to absorb losses from any segment of the loan portfolio.
−Removed: Management believes the allowance for credit losses on loans was adequate at June 30, 2024 and December 31, 2023.
+Added: Management believes the allowance for credit losses on loans was adequate at September 30, 2024 and December 31, 2023.
The allowance analysis is reviewed by the board of directors on a quarterly basis in compliance with regulatory requirements.
3 unchanged sentences
The allowance for credit losses on unfunded commitments is calculated using the same methodology as loans and considers the funding probability and the amount to be expected to be funded over the life of the commitment.
−Removed: The Company assesses held to maturity (HTM) securities for credit losses and due to the HTM securities primarily being issued by government-sponsored entities or being highly rated municipals, management concluded that no credit loss should be recognized for these securities for the six months ended June 30, 2024.
+Added: The Company assesses held to maturity (HTM) securities for credit losses and due to the HTM securities primarily being issued by government-sponsored entities or being highly rated municipals, management concluded that no credit loss should be recognized for these securities for the nine months ended September 30, 2024.
The CECL standard also requires for credit losses on available for sale (AFS) securities to be recorded through an allowance for credit losses rather a write-down of the individual security.
−Removed: As of June 30, 2024, the Company did not have an allowance for credit losses on AFS securities based upon the decline in fair value being attributable to changes in market interest rates and not credit quality.
+Added: As of September 30, 2024, the Company did not have an allowance for credit losses on AFS securities based upon the decline in fair value being attributable to changes in market interest rates and not credit quality.
Income Taxes.
10 unchanged sentences
Penalties related to unrecognized tax benefits are classified as income tax expense.
−Removed: Comparison of Financial Condition at June 30, 2024 and December 31, 2023
+Added: Comparison of Financial Condition at September 30, 2024 and December 31, 2023
Total Assets.
−Removed: Total assets were $451.6 million at June 30, 2024, a decrease of $449,000, or 0.1%, from $452.0 million at December 31, 2023.
−Removed: The decrease was due primarily to a decrease in net loans and leases of $11.2 million, or 4.0%, to $268.7 million at June 30, 2024 from $279.9 million at December 31, 2023 and a decrease in securities of $5.9 million, or 4.9%, to $113.4 million at June 30, 2024 from $119.3 million at December 31, 2023 partially offset by increases in cash, fed funds sold and interest bearing deposits in banks of $14.6 million, or 57.5%, to $40.0 million at June 30, 2024 from $25.4 million at December 31, 2023.
−Removed: The decrease in loans was primarily due to the sale of 122 performing residential mortgage loans totaling $27.1 million at a loss of $3.8 million, net of mortgage servicing rights retained, as part of a portfolio repositioning strategy to take advantage of repricing opportunities with the goal of increasing yield, shortening weighted average life and diversifying the loan portfolio by reducing the concentration in residential mortgage loans.
+Added: Total assets were $446.0 million at September 30, 2024, a decrease of $6.0 million, or 1.3%, from $452.0 million at December 31, 2023.
+Added: The decrease was due primarily to a decrease in securities of $15.7 million, or 13.2%, to $103.6 million at September 30, 2024 from $119.3 million at December 31, 2023 and a decrease in interest bearing deposits in banks of $9.1 million, or 74.0%, to $3.2 million at September 30, 2024 from $12.3 million at December 31, 2023 partially offset by an increase in net loans and leases of $13.1 million, or 4.7%, to $293.0 million at September 30, 2024 from $279.9 million at December 31, 2023 and an increase in cash and cash equivalents of $4.7 million, or 35.9%, to $17.8 million at September 30, 2024 from $13.1 million at December 31, 2023.
+Added: The increase in loans was net of the sale of 122 performing residential mortgage loans totaling $27.1 million at a loss of $3.8 million, net of mortgage servicing rights retained, as part of a portfolio repositioning strategy to take advantage of repricing opportunities with the goal of increasing yield, shortening weighted average life and diversifying the loan portfolio by reducing the concentration in residential mortgage loans.
Cash and Cash Equivalents.
−Removed: Cash and cash equivalents increased $19.2 million, or 146.6%, to $32.3 million (which includes fed funds sold of $25.5 million) at June 30, 2024 from $13.1 million (which includes fed funds sold of $7.6 million) at December 31, 2023.
−Removed: This increase was primarily the result of a decrease in net loans and leases of $11.2, million, or 4.0%, resulting primarily from the strategic sale of loans totaling $27.1 million, an increase in deposits of $7.4 million, or, 2.3%, a decrease in securities of $5.9 million, and a decrease in interest bearing deposits in banks of $4.5 million partially offset primarily by dividends paid of $255,000, stock repurchases of $584,000, and a decrease in FHLB advances of $5.7 million.
+Added: Cash and cash equivalents increased $4.7 million, or 35.9%, to $17.8 million (which includes fed funds sold of $12.6 million) at September 30, 2024 from $13.1 million (which includes fed funds sold of $7.6 million) at December 31, 2023.
+Added: This increase was primarily the result of an increase in deposits of $9.1 million, or 2.9%, a decrease in securities of $15.7 million and a decrease in interest bearing deposits in banks of $9.1 million partially offset primarily by an increase in loans of $13.1 million, dividends paid of $380,000, stock repurchases of $1.0 million, and a decrease in FHLB advances of $13.7 million.
Interest Bearing Deposits in Banks.
−Removed: Interest bearing deposits in banks decreased $4.5 million, or 36.6%, to $7.8 million at June 30, 2024, compared to $12.3 million at December 31, 2023.
−Removed: The decrease was primarily the result of net purchases of $4.2 million in Qwickrate Certificates of Deposit (CDs) offset by $9.0 million being moved to cash primarily to be used for the payoff of $5.0 million in FHLB advances.
+Added: Interest bearing deposits in banks decreased $9.1 million, or 74.0%, to $3.2 million at September 30, 2024, compared to $12.3 million at December 31, 2023.
+Added: The decrease was primarily the result of a reduction of $3.2 million in Qwickrate Certificates of Deposit (CDs) and $6.0 million in money market funds with correspondent banks being moved to cash primarily to be used for the payoff of $12.7 million in FHLB advances.
The Bank utilizes the Qwickrate listing service, which is a resource where banks can purchase and sell Certificates of Deposit (CDs) with other banks to invest excess funds in CDs at a competitive rate.
−Removed: At June 30, 2024, there was $7.5 million in short-term (3-6 months) Qwickrate CDs with other banks.
+Added: At September 30, 2024, there were no Qwickrate CDs with other banks.
Securities Available for Sale.
−Removed: Securities available for sale decreased by $3.7 million, or 4.0%, to $89.6 million at June 30, 2024 from $93.3 million at December 31, 2023.
−Removed: During the six months ended June 30, 2024, we had purchases of securities of $3.5 million, received paydowns of $5.7 million and had one security of $2.0 million called.
−Removed: Net unrealized losses on the available for sale portfolio, including derivatives, decreased by $723,000, or 12.9%, to $4.9 million, net of tax, from $5.6 million, net of tax, due primarily to decreases in market interest rates.
−Removed: Gross unrealized losses on the AFS portfolio consisting of 84 securities decreased from $7.2 million, or 7.2% of the portfolio’s amortized cost of $100.5 million at December 31, 2023, to $6.8 million, or 7.1% of the amortized cost of $96.4 million at June 30, 2024.
+Added: Securities available for sale decreased by $12.6 million, or 13.5%, to $80.7 million at September 30, 2024 from $93.3 million at December 31, 2023.
+Added: During the nine months ended September 30, 2024, we had purchases of securities of $3.5 million, received paydowns of $9.4 million and securities of $3.4 million being called.
+Added: During the nine months ended September 30, 2024, we sold two floating rate securities totaling $5.5 million to be reinvested at a fixed rate.
+Added: Net unrealized losses on the available for sale portfolio, including derivatives, decreased by $1.5 million, or 26.8%, to $4.1 million, net of tax, from $5.6 million, net of tax, due primarily to decreases in market interest rates.
+Added: Gross unrealized losses on the AFS portfolio consisting of 81 securities decreased from $7.2 million, or 7.2% of the portfolio’s amortized cost of $100.5 million at December 31, 2023, to $5.1 million, or 6.0% of the amortized cost of $85.8 million at September 30, 2024.
These unrealized losses are due to increases in market interest rates.
Securities Held to Maturity.
−Removed: Securities held to maturity decreased by $2.2 million, or 8.5%, to $23.8 million at June 30, 2024 from $26.0 million at December 31, 2023.
+Added: Securities held to maturity decreased by $3.1 million, or 11.9%, to $22.9 million at September 30, 2024 from $26.0 million at December 31, 2023.
This decrease is due primarily to one security of $395,000 being called and paydowns of $2.6 million.
−Removed: The HTM portfolio had 69 securities with gross unrealized losses of $2.6 million, or 10.9%, of the amortized cost of $23.8 million at June 30, 2024 compared to $2.6 million, or 10.0%, of the amortized cost of $26.0 million at December 31, 2023.
+Added: The HTM portfolio had 69 securities with gross unrealized losses of $2.0 million, or 8.8%, of the amortized cost of $22.9 million at September 30, 2024 compared to $2.6 million, or 10.0%, of the amortized cost of $26.0 million at December 31, 2023.
These unrealized losses are due to increases in market interest rates.
Loans and Leases Receivable, Net.
−Removed: Net loans and leases receivable decreased $11.2 million, or 4.0%, to $268.7 million at June 30, 2024 from $279.9 million at December 31, 2023.
−Removed: The decrease in loans was primarily due to the sale of 122 performing residential mortgage loans totaling $27.1 million being sold at a loss of $3.8 million, net of mortgage servicing rights retained of $239,000.
−Removed: The sales are part of a portfolio repositioning strategy to take advantage of repricing opportunities with the goal of increasing yield, shortening weighted average life and diversifying the loan portfolio by reducing concentration risk in residential mortgage loans.
−Removed: In addition to the loan sale, there was $42.1 million in loan originations partially offset by $24.3 million in payoffs and $6.7 million in normal monthly loan paydowns.
−Removed: The loan and lease portfolio totaled $271.7 million and is comprised of $249.2 million, or 91.7%, real estate loans, $7.0 million, or 2.6%, commercial and industrial loans, $6.7 million, or 2.5%, consumer loans and $8.7 million, or 3.2%, municipal and other loans.
−Removed: Real estate loans include $145.3 million, or 53.5%, 1-4 family residential loans, $10.5 million, or 3.9%, multi-family loans, $42.7 million, or 15.7%, commercial real estate (CRE), $20.5 million, or 7.5%, in 1-4 family construction loans, $22.8 million, or 8.4%, in other construction and development loans and $7.5 million, or 2.7%, in farmland loans.
−Removed: Total loans include interim construction loans of $34.4 million, or 69.7%, of the completed project balance of $49.3 million which includes $20.3 million in single-family residence loans, including $5.2 million in speculative loans to builders, $2.0 million in subdivision construction, $16.8 million in muti-family construction and $10.2 million in CRE.
−Removed: The total construction loan portfolio consisted of 69 loans with outstanding balances of $49.3 million at June 30, 2024 compared to 82 loans at December 31, 2023 with outstanding balances of $54.3 million.
−Removed: Deposits increased $7.4 million, or 2.3%, to $324.6 million at June 30, 2024 from $317.2 million at December 31, 2023.
−Removed: Core deposits (defined as all deposits other than certificates of deposit) increased $6.4 million, or 3.2%, to $204.9 million at June 30, 2024 from $198.5 million at December 31, 2023.
−Removed: Retail certificates of deposit increased $1.3 million, or 1.2%, to $107.8 million at June 30, 2024 from $106.5 million at December 31, 2023.
−Removed: At June 30, 2024, there was $12.0 million in brokered deposits.
−Removed: The average cost of deposits increased 48 basis points, or 23.1%, to 2.56% at June 30, 2024 compared to 2.08% at December 31, 2023.
−Removed: At June 30, 2024, there were 187 accounts with balances in excess of the $250,000 FDIC insurance limit with an aggregate balance of $93.7 million, or 28.9% of deposits.
+Added: Net loans and leases receivable increased $13.0 million, or 4.7%, to $293.0 million at September 30, 2024 from $279.9 million at December 31, 2023.
+Added: The increase in loans was primarily due to an increase in commercial real estate loans after reinvesting the funds from the sale of 122 performing residential mortgage loans totaling $27.1 million being sold at a loss of $3.8 million, net of mortgage servicing rights retained of $239,000.
+Added: The sales were part of a portfolio repositioning strategy to take advantage of repricing opportunities with the goal of increasing yield, shortening weighted average life and diversifying the loan portfolio by reducing concentration risk in residential mortgage loans.
+Added: In addition to the loan sale, there was $77.8 million in loan originations partially offset by $37.2 million in payoffs and $9.9 million in contractual repayments.
+Added: The loan and lease portfolio totaled $296.1 million and is comprised of $273.6 million, or 92.4%, real estate loans, $7.1 million, or 2.4%, commercial and industrial loans, $6.1 million, or 2.1%, consumer loans and other loans, and $9.3 million, or 3.1%, municipal loans.
+Added: Real estate loans include $143.1 million, or 48.3%, 1-4 family residential loans, $10.5 million, or 3.6%, multi-family loans, $55.5 million, or 18.8%, commercial real estate (CRE) loans, $22.1 million, or 7.4%, in 1-4 family construction loans, $33.1 million, or 11.2%, in other construction and development loans and $9.3 million, or 3.2%, in farmland loans.
+Added: Total loans include interim construction loans of $37.9 million, or 76.9%, of the completed project balance of $49.3 million which includes $21.3 million in single-family residence loans, including $7.9 million in speculative construction loans to builders, $2.4 million in subdivision construction, $16.8 million in muti-family construction loans and $8.8 million in CRE loans.
+Added: The total construction loan portfolio consisted of 65 loans with outstanding balances of $49.3 million at September 30, 2024 compared to 82 loans with outstanding balances of $54.3 million at December 31, 2023.
+Added: At September 30, 2024, commercial real estate loans consisted of $23.5 million owner occupied and $32.0 million non-owner occupied real estate.
+Added: At September 30, 2024, commercial real estate loans primarily include loans collateralized by self-storage facilities ($16.4 million), commercial rental properties ($9.4 million), gas stations with convenience stores ($8.4 million), churches ($4.6 million), rural water district assets ($3.8 million), and restaurants ($2.4 million).
+Added: The maximum loan-to-value ratio of our commercial real estate loans is generally 80%.
+Added: Generally, we require the debt service coverage ratio to be at least 1.2x.
+Added: The significant majority of our commercial real estate loans are appraised by outside independent appraisers approved by the board of directors.
+Added: Personal guarantees are generally obtained from the principals of commercial real estate borrowers.
+Added: We consider a number of factors in originating commercial real estate loans.
+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.
+Added: 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.
+Added: Deposits increased $9.1 million, or 2.9%, to $326.3 million at September 30, 2024 from $317.2 million at December 31, 2023.
+Added: Core deposits (defined as all deposits other than certificates of deposit) increased $6.4 million, or 3.2%, to $204.9 million at September 30, 2024 from $198.5 million at December 31, 2023.
+Added: Retail certificates of deposit increased $3.0 million, or 2.8%, to $109.5 million at September 30, 2024 from $106.5 million at December 31, 2023.
+Added: At September 30, 2024, there were $12.0 million in brokered deposits.
+Added: The year-to-date average cost of interest-bearing deposits increased 50 basis points, or 24.1%, to 2.58% at September 30, 2024 compared to 2.08% at December 31, 2023.
+Added: Due to a strategic effort to increase noninterest bearing deposits, cost of total deposits increased 11 basis points, or 5.3%, from 2.09% at December 31, 2023 to 2.20% at September 30, 2024.
+Added: At September 30, 2024, there were 198 accounts with balances in excess of the $250,000 FDIC insurance limit with an aggregate balance of $99.5 million, or 30.5% of deposits.
The amount that was over the FDIC insurance limit was $50.0 million, or 15.3%, that was potentially uninsured, including certificates of deposit of $9.7 million, money market accounts of $12.3 million and $28.0 million in checking and savings accounts.
Advances from Federal Home Loan Bank.
−Removed: Advances from Federal Home Loan Bank decreased by $5.7 million, or 7.4%, to $71.2 million at June 30, 2024 from $76.9 million at December 31, 2023 due to the payoff of an advance of $5.0 million and to normal payments on amortizing advances of $684,000.
−Removed: There are five advances totaling $10.7 million that will mature in 2024.
−Removed: There are no current plans to renew these advances.
+Added: Advances from Federal Home Loan Bank decreased by $13.7 million, or 17.8%, to $63.2 million at September 30, 2024 from $76.9 million at December 31, 2023 due to the payoff of five advances totaling $12.7 million and to normal principal payments on amortizing advances of $1.0 million.
+Added: There is one additional $3.0 million advance that will mature in 2024.
+Added: There are no current plans to renew the advance.
Total Shareholders’ Equity.
−Removed: Total shareholders’ equity decreased $1.9 million, or 3.5%, to $51.8 million at June 30, 2024 from $53.7 million at December 31, 2023.
−Removed: This decrease was primarily due to a net loss for the six months
−Removed: ended June 30, 2024 of $2.3 million resulting primarily from the pre-tax loss of $3.8 million, net of mortgage servicing rights retained, on the sale of residential mortgage loans.
−Removed: The Company also repurchased 40,600 shares of its common stock for a decrease of $584,000 and paid quarterly dividends totaling $255,000, partially offset by an increase in equity of $446,000 from vesting of the 2022 Equity Plan and an increase of $93,000 with the accrual of ESOP commitments for the six months ended June 30, 2024.
−Removed: There was a decrease in the accumulated other comprehensive loss, net of tax, due to decreases in market interest rates that added $723,000 to shareholder’s equity at June 30, 2024.
−Removed: At June 30, 2024, 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 decreased $1.0 million, or 1.9%, to $52.7 million at September 30, 2024 from $53.7 million at December 31, 2023.
+Added: This decrease was primarily due to a net loss for the nine months ended September 30, 2024 of $1.8 million resulting primarily from the pre-tax loss of $3.8 million, net of mortgage servicing rights retained, on the sale of residential mortgage loans.
+Added: The Company also repurchased 69,931 shares of its common stock for a decrease of $1.0 million and paid quarterly dividends totaling $380,000, partially offset by an increase in equity of $623,000 from vesting of the 2022 Equity Plan and an increase of $139,000 with the accrual of ESOP commitments for the nine months ended September 30, 2024.
+Added: There was a decrease in the accumulated other comprehensive loss, net of tax, due to decreases in market interest rates that added $1.5 million to shareholder’s equity at September 30, 2024.
+Added: At September 30, 2024, 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, 2024, Broadstreet Bank was well capitalized and had a ratio of 10.14%.
+Added: At September 30, 2024, Broadstreet Bank was well capitalized and had a ratio of 10.59%.
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 $115,000 and $143,000 for the three months ended June 30, 2024 and 2023, respectively.
+Added: Average yields for loans include loan fees of $175,000 and $242,000 for the three months ended September 30, 2024 and 2023, 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)
30 unchanged sentences
(3) Net interest margin represents net interest income divided by average total interest earning assets.
−Removed: Comparison of the Operating Results for the Three months ended June 30, 2024 and June 30, 2023
−Removed: The Company had net income of $348,000 for the three months ended June 30, 2024, compared to net income of $160,000 for the three months ended June 30, 2023, an increase of $188,000, or 117.5%.
−Removed: The increase was primarily due to a $531,000, or 20.0%, increase in net interest income partially offset by a $31,000, or 33.3%, increase in the provision for credit losses, a $118,000, or 23.1% decrease in noninterest income, a $175,000, or 6.1% increase in noninterest expense and a $19,000 increase in income tax expense.
+Added: Comparison of the Operating Results for the Three Months Ended September 30, 2024 and September 30, 2023
+Added: The Company had net income of $515,000 for the three months ended September 30, 2024, compared to net income of $456,000 for the three months ended September 30, 2023, an increase of $59,000, or 12.9%.
+Added: The increase was primarily due to a $369,000, or 13.0%, increase in net interest income and a $29,000 decrease in income tax expense partially offset by a $234,000 increase in the provision for credit losses, a $62,000, or 10.5%, decrease in noninterest income, and a $43,000, or 1.5%, increase in noninterest expense.
Interest Income.
−Removed: Interest income increased $1.2 million, or 26.7%, to $5.7 million for the three months ended June 30, 2024 from $4.5 million for the three months ended June 30, 2023.
+Added: Interest income increased $726,000, or 14.6%, to $5.7 million for the three months ended September 30, 2024 from $5.0 million for the three months ended September 30, 2023.
This was primarily the result of increased interest income on loans due to increased yields and an increase in the average balance of loans.
−Removed: Average interest earning assets increased by $24.5 million, or 6.1%, from $403.4 million for the three months ended June 30, 2023 to $427.9 million for the three months ended June 30, 2024, and interest earning assets increased 81 basis points, or 18.0%, from 4.50% for the three months ended June 30, 2023 to 5.31% for the three months ended June 30, 2024.
−Removed: Interest income on loans increased $702,000, or 22.7%, to $3.8 million for the three months ended June 30, 2024 from $3.1 million for the three months ended June 30, 2023.
−Removed: This increase resulted primarily from an increase in average loans of $9.6 million, or 3.6%, from $266.5 million for the three months ended June 30, 2023 to $276.1 million for the three months ended June 30, 2024, with an increase in loan yield of 86 basis points, or 18.4%, to 5.51% for the three months ended June 30, 2024 from 4.65% for the three months ended June 30, 2023.
−Removed: The increase in loan yield was due primarily to increased market interest rates.
−Removed: Interest income on securities decreased $20,000, or 1.6%, from $1.3 million for the three months ended June 30, 2023 to $1.2 million for the three months ended June 30, 2024.
−Removed: This decrease resulted from a decrease in the average balance of securities of $10.0 million, or 7.9%, from $126.3 million for the three months ended June 30, 2023 to $116.3 million for the three months ended June 30, 2024, partially offset by an increase of 27 basis points, or 6.8%, in average yield from 3.99% for the three months ended June 30, 2023 to 4.26% for the three months ended June 30, 2024.
−Removed: The rate increase is reflective of market interest rate increases and the diversification of the securities portfolio to include higher yielding commercial mortgage-backed securities, subordinated bank debt and other bonds with interest rates that are not tied to conventional residential mortgage loan rates.
−Removed: Interest income on restricted investments, which includes primarily Federal Home Loan Bank (FHLB) and TIB Bank stock dividends, increased $18,000, or 50.0%, from $36,000 for the three months ended June 30, 2023 to $54,000 for the three months ended June 30, 2024.
−Removed: This increase resulted from an increase in the average balance of these investments of $557,000 or 18.6%, from $3.0 million for the three months ended June 30, 2023 to $3.6 million for the three months ended June 30, 2024 in addition to an increase of 127 basis points, or 26.5%, in average yield from 4.80% for the three months ended June 30, 2023 to 6.07% for the three months ended June 30, 2024.
+Added: Average interest earning assets increased by $10.2 million, or 2.5%, from $405.7 million for the three months ended September 30, 2023 to $415.9 million for the three months ended September 30, 2024 and the yield on average interest earning assets increased 57 basis points, or 11.6%, from 4.91% for the three months ended September 30, 2023 to 5.48% for the three months ended September 30, 2024.
+Added: Interest income on loans increased $633,000, or 18.6%, to $4.0 million for the three months ended September 30, 2024 from $3.4 million for the three months ended September 30, 2023.
+Added: This increase resulted primarily from an increase in average loans of $6.8 million, or 2.5%, from $272.2 million for the three months ended September 30, 2023 to $279.0 million for the three months ended September 30, 2024 and an increase in loan yield of 79 basis points, or 15.7%, to 5.80% for the three months ended September 30, 2024 from 5.01% for the three months ended September 30, 2023.
+Added: The increase in loan yield was due primarily to increased market interest rates and diversification of the loan portfolio to include higher yielding commercial real estate loans.
+Added: Interest income on securities decreased $206,000, or 16.1%, from $1.3 million for the three months ended September 30, 2023 to $1.1 million for the three months ended September 30, 2024.
+Added: This decrease resulted from a decrease in the average balance of securities of $13.9 million, or 11.4%, from $122.3 million for the three months ended September 30, 2023 to $108.4 million for the three months ended September 30, 2024 and a decrease of 22 basis points, or 5.3%, in average yield from 4.17% for the three months ended September 30, 2023 to 3.95% for the three months ended September 30, 2024.
+Added: The rate decrease is reflective of market interest rate decreases and the sale of some higher yielding securities with a floating rate in order to reprice at a fixed rate.
+Added: Interest income on restricted investments, which includes primarily Federal Home Loan Bank (FHLB) and TIB Bank stock dividends, increased $11,000, or 25.0%, from $44,000 for the three months ended September 30, 2023 to $55,000 for the three months ended September 30, 2024.
+Added: This increase resulted from an increase in the average balance of these investments of $344,000 or 10.5%, from $3.3 million for the three months ended September 30, 2023 to $3.6 million for the three months ended September 30, 2024 in addition to an increase of 70 basis points, or 13.0%, in average yield from 5.39% for the three months ended September 30, 2023 to 6.09% for the three months ended September 30, 2024.
The increase in yield was due primarily to increases in dividends paid by the banks and the increase in investments is due to additional required purchases of FHLB stock resulting from an increase in FHLB advances.
−Removed: Interest income on interest bearing deposits in banks increased $143,000, or 181.0%, from $79,000 for the three months ended June 30, 2023 to $222,000 for the three months ended June 30, 2024.
−Removed: This increase resulted primarily from an increase in average interest-bearing deposits of $8.7 million, or 116.0% from $7.5 million for the three months ended June 30, 2023 to $16.2 million for the three months ended June 30, 2024 and an increase in average yield of 128 basis points, or 30.5%, from 4.21% for the three months ended June 30, 2023 to 5.49% for the three months ended June 30, 2024.
−Removed: There was also an increase of $208,000 in fed funds interest income for the three months ended June 30, 2024 primarily from an increase of 26 basis points, or 5.2%, in average yield on fed funds sold from 5.07% for the three months ended June 30, 2023 to 5.33% for the three months ended June 30, 2024 and a $15.5 million, or 645.8%, increase in average fed funds sold from $2.4 million for the three months ended June 30, 2023 to $17.9 million for the three months ended June 30, 2024.
+Added: Interest income on interest bearing deposits in banks increased $51,000, or 68.9%, from $74,000 for the three months ended September 30, 2023 to $125,000 for the three months ended September 30, 2024.
+Added: This increase resulted primarily from an increase in average interest-bearing deposits of $2.7 million, or 48.2%, from $5.6 million for the three months ended September 30, 2023 to $8.3 million for the three months ended September 30, 2024 and an increase in average yield of 76 basis points, or 14.3%, from 5.28% for the three months ended September 30, 2023 to 6.04% for the three months ended September 30, 2024.
+Added: There was also an increase of $214,000, or 356.7%, in fed funds interest income for the three months ended September 30, 2024 from $60,000 for the three months ended September 30, 2023 to $274,000 for the three months ended September 30, 2024, primarily from an increase of 43 basis points, or 8.2%, in average yield on fed funds sold from 5.22% for the three months ended September 30, 2023 to 5.65% for the three months ended September 30, 2024 and a $14.8 million, or 321.7%, increase in average fed funds sold from $4.6 million for the three months ended September 30, 2023 to $19.4 million for the three months ended September 30, 2024.
The increase in yields on deposits in banks and fed funds is reflective of the increase in market interest rates.
−Removed: During the three months ended June 30, 2024, the Company maintained higher account balances in interest bearing deposits in banks and fed funds sold, due to receipt of cash from the loan sale and generally maintaining higher levels of liquidity.
−Removed: Interest income from the fair value hedge was $125,000 for the three months ended June 30, 2024 compared to $33,000 for the three months ended June 30, 2023.
+Added: three months ended September 30, 2024, the Company maintained higher account balances in interest bearing deposits in banks and fed funds sold, due to receipt of cash from the loan sale and generally maintaining higher levels of liquidity.
+Added: Interest income from the fair value hedge was $135,000 for the three months ended September 30, 2024 compared to $112,000 for the three months ended September 30, 2023.
The Company entered into an interest rate swap agreement in May 2023 to convert a portion of its interest rate exposure from fixed rates to floating rates to help manage the interest rate risk position.
1 unchanged sentence
Interest Expense.
−Removed: Total interest expense increased $612,000, or 32.3%, to $2.5 million for the three months ended June 30, 2024 from $1.9 million for the three months ended June 30, 2023 primarily due to an increase in average interest-bearing liabilities of $35.6 million, or 11.0%, to $360.1 million for the three months ended June 30, 2024 from $324.5 million for the three months ended June 30, 2023 and an increase in the average cost of interest-bearing liabilities of 45 basis points, or 19.3%, from 2.32% for the three months ended June 30, 2023 to 2.77% for the three months ended June 30, 2024, primarily due to increases in higher cost deposit accounts.
−Removed: Interest expense on deposit accounts increased $566,000, or 45.4%, to $1.8 million for the three months ended June 30, 2024 from $1.2 million for the three months ended June 30, 2023, due to an increase in the average deposit cost of 58 basis points, or 29.6%, from 1.97% for the three months ended June 30, 2023 to 2.55% for the three months ended June 30, 2024 and an increase in average interest-bearing deposits of $31.0 million, or 12.2% from $253.8 million for the three months ended June 30, 2023 to $284.8 million for the three months ended June 30, 2024, with the largest increases being in higher cost certificates of deposit and money market accounts.
−Removed: Interest expense on Federal Home Loan Bank advances increased $47,000, or 7.4%, to $683,000 for the three months ended June 30, 2024 from $636,000 for the three months ended June 30, 2023.
−Removed: This increase was due primarily to the increase in the average balance of Federal Home Loan Bank advances of $4.4 million, or 6.3%, to $74.6 million for the three months ended June 30, 2024 from $70.2 million for the three months ended June 30, 2023 and an increase in average yield of three basis points, or 0.8%, from 3.63% for the three months ended June 30, 2023 to 3.66% for the three months ended June 30, 2024.
−Removed: The increase in average advances was primarily to fund loan growth while maintaining a higher level of liquidity.
+Added: Total interest expense increased $357,000, or 16.7%, to $2.5 million for the three months ended September 30, 2024 from $2.1 million for the three months ended September 30, 2023 primarily due to an increase in average interest-bearing liabilities of $17.8 million, or 5.4%, to $348.5 million for the three months ended September 30, 2024 from $330.7 million for the three months ended September 30, 2023 and an increase in the average cost of interest-bearing liabilities of 28 basis points, or 10.8%, from 2.58% for the three months ended September 30, 2023 to 2.86% for the three months ended September 30, 2024, primarily due to increases in higher cost deposit accounts.
+Added: Interest expense on deposit accounts increased $400,000, or 27.7%, to $1.8 million for the three months ended September 30, 2024 from $1.4 million for the three months ended September 30, 2023, due to an increase in the average deposit cost of 35 basis points, or 15.4%, from 2.28% for the three months ended September 30, 2023 to 2.63% for the three months ended September 30, 2024 and an increase in average interest-bearing deposits of $27.1 million, or 10.7% from $253.6 million for the three months ended September 30, 2023 to $280.7 million for the three months ended September 30, 2024, with increases being in certificates of deposit, money market accounts and demand deposits.
+Added: Interest expense on Federal Home Loan Bank advances decreased $44,000, or 6.4%, to $643,000 for the three months ended September 30, 2024 from $687,000 for the three months ended September 30, 2023.
+Added: This decrease was due primarily to the decrease in the average balance of Federal Home Loan Bank advances of $9.4 million, or 12.3%, to $67.0 million for the three months ended September 30, 2024 from $76.4 million for the three months ended September 30, 2023.
+Added: The average yield on advances increased 24 basis points, or 6.8%, from 3.60% for the three months ended September 30, 2023 to 3.84% for the three months ended September 30, 2024 due to paying off $7.7 million in advances from 2019 with significantly lower rates than the weighted average cost of all FHLB borrowings.
+Added: The decrease in average advances was primarily due to paying off $7.7 million in maturing advances in the three months ended September 30, 2024 compared to purchasing $8.0 million in the three months ended September 30, 2023 to maintain a higher level of liquidity in 2023 due to market uncertainty.
Net Interest Income.
−Removed: Net interest income increased $531,000, or 20.0%, to $3.2 million for the three months ended June 30, 2024 from $2.7 million for the three months ended June 30, 2023 due primarily to an increase in net interest margin of 35 basis points, or 13.2%, to 2.98% for the three months ended June 30, 2024 from 2.63% for the three months ended June 30, 2023 partially offset by a decrease in average net interest-earning assets of $11.1 million, or 14.1%, to $67.8 million at June 30, 2024 from $78.9 million at June 30, 2023.
−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 interest-bearing liabilities.
+Added: Net interest income increased $369,000, or 13.0%, to $3.2 million for the three months ended September 30, 2024 from $2.8 million for the three months ended September 30, 2023 due primarily to an increase in net interest margin of 29 basis points, or 10.2%, to 3.09% for the three months ended September 30, 2024 from 2.80% for the three months ended September 30, 2023 partially offset by a decrease in average net interest-earning assets of $7.5 million, or 10.0%, to $67.5 million at September 30, 2024 from $75.0 million at September 30, 2023.
+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 interest-bearing liabilities in addition to a more disciplined approach to deposit pricing.
The average yield on interest-earning assets increased by 57 basis points, or 11.6%, compared to the average increase on interest bearing liabilities increasing by 28 basis points, or 10.8%.
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 $31,000, or 33.3%, to $124,000 for the three months ended June 30, 2024 from a provision for credit losses of $93,000 for the three months ended June 30, 2023, primarily due to an adjustment to the allowance related to the loan sale and an increase in average loans and leases of $9.6 million from $266.5 million for the three months ended June 30, 2023 to $276.1 million for the three months ended June 30, 2024.
−Removed: The provision increase was primarily due to loan volume.
−Removed: The allowance for credit losses was 1.10% of total loans at June 30, 2024.
+Added: Based on management’s analysis of the adequacy of the allowance for credit losses, the provision for credit losses increased $234,000, or 806.9%, to $263,000 for the three months ended September 30, 2024 from a provision for credit losses of $29,000 for the three months ended September 30, 2023, 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.
+Added: Many of the loans added are in the commercial portfolio that carry a higher allowance requirement as well.
+Added: An increase in average loans and leases of $6.8 million from $272.2 million for the three months ended September 30, 2023 to $279.0 million for the three months ended September 30, 2024 and charge-offs of $9,000 that weren’t already specifically reserved for also added to the provision required.
+Added: The allowance for credit losses was 1.07% of total loans at September 30, 2024.
Noninterest Income.
−Removed: Noninterest income decreased $118,000, or 23.1%, to $393,000 for the three months ended June 30, 2024 from $511,000 for the three months ended June 30, 2023, primarily due to an additional loss of $69,000 on the final piece of the loan sale due to a reduction in price primarily resulting from changing market interest rates.
−Removed: The loan sale included 122 performing loans totaling $27.1 million at a pre-tax loss of $3.8 million, net of mortgage servicing rights retained.
−Removed: Servicing was retained on 86, or 70.5%, of the loans sold.
−Removed: The sale was part of a portfolio repositioning strategy to take advantage of repricing opportunities with the goal of increasing yield, shortening weighted average life and diversifying the loan portfolio by reducing the concentration in residential mortgages.
−Removed: Decreases including a charge of $78,000 related to the write-down of bank property that was being held for expansion being marked to fair value and moved to other real estate owned when listed for sale, a decrease in other
−Removed: income of $8,000 primarily due to an off-book loan that paid off in 2023 and a decrease in net appreciation of bank-owned life insurance of $13,000 due to a one-time fee for changing carriers to increase yield and future earnings, were partially offset by an increase in other service charges and fees of $54,000 primarily due to receiving $10,000 in new fee income from the servicing retained in the 2024 loan sale and an increase of $42,000 in fee income on wholesale loans sold from $43,000 for the three months ended June 30, 2023 to $85,000 for the three months ended June 30, 2024.
+Added: Noninterest income decreased $62,000, or 10.5%, to $530,000 for the three months ended September 30, 2024 from $592,000 for the three months ended September 30, 2023, primarily due to a decrease of $42,000 in loan fee income from the wholesale lending program, a decrease of $10,000 in deposit service charges, and nonrecurring income of $36,000 related to write up of foreclosed property in 2023 partially offset by a $15,000 increase in net appreciation of bank-owned life insurance due to a change in carriers to increase yield.
Noninterest Expense.
−Removed: Noninterest expense increased $175,000, or 6.1%, to $3.1 million for the three months ended June 30, 2024 from $2.9 million for the three months ended June 30, 2023 primarily due to increases in occupancy and equipment expenses related to new branches, data processing, technology and other expenses.
−Removed: Occupancy and equipment expenses increased $68,000, or 33.2%, from $205,000 for the three months ended June 30, 2023 to $273,000 for the three months ended June 30, 2024 primarily due to expenses related to putting two new branches into operation.
−Removed: Data processing increased $12,000, or 5.4%, due primarily to normal cost increases from providers and technology expenses increased $74,000, or 64.3%, primarily due to an increase in card processing fees associated with a “tap” debit card implementation project.
−Removed: We expect to receive a credit in a future period to cover the cost of implementation.
−Removed: Other expenses increased $73,000, or 14.9%, primarily due to increased auditing expenses of $46,000, or 70.8%, due primarily to additional internal audits and overall price increases, an increase in FDIC assessment expenses of $11,000 primarily due to an overall increase in the FDIC assessment rate, a $5,000 increase in marketing expenses, a $14,000 increase in training expenses and a nonrecurring fee of $37,000 related to a board member departure were partially offset by a decrease of $53,000 in other operating expenses due to a nonrecurring $56,000 fee in 2023 for executive recruiting.
−Removed: Salary and employee benefit expenses decreased by $39,000, or 2.3%, to $1.6 million for the three months ended June 30, 2024 from $1.7 million for the three months ended June 30, 2023, due primarily to reduced benefit costs from terminating a deferred compensation plan at December 31, 2023, CEO transition in 2023 and decreased director fees of $21,000 due to a reduction in the number of directors in the quarter ended June 30, 2024.
+Added: Noninterest expense increased $43,000, or 1.5%, to $2.9 million for the three months ended September 30, 2024 from $2.8 million for the three months ended September 30, 2023 primarily due to increases in occupancy and equipment expenses related to new branches and other expenses partially offset by decreases in salary and employee benefit expenses, data processing, technology expenses and director fees.
+Added: Occupancy and equipment expenses increased $68,000, or 35.2%, from $193,000 for the three months ended September 30, 2023 to $261,000 for the three months ended September 30, 2024 primarily due to expenses related to opening two new branches.
+Added: Data processing decreased $11,000, or 4.5%, due primarily to a contract negotiation and technology expenses decreased $61,000, or 49.6%, due to receipt of a credit associated with the provider reimbursing the cost of tap debit card implementation.
+Added: Other expenses increased $128,000, or 30.3%, primarily due to increased auditing expenses of $28,000 due primarily to additional internal audits and overall price increases, an increase in FDIC assessment expenses of $15,000 primarily due to an overall increase in the FDIC assessment rate, a $19,000 increase in marketing expenses, a $13,000 increase in insurance expenses, and a $23,000 increase in training expenses.
+Added: Salary and employee benefit expenses decreased by $50,000, or 3.0%, to $1.6 million for the three months ended September 30, 2024 from $1.7 million for the three months ended September 30, 2023, due primarily to reduced benefit costs from terminating a deferred compensation plan at December 31, 2023, CEO transition in 2023 and decreased director fees of $31,000 due to a reduction in the number of directors in 2024.
Income Tax Expense.
−Removed: Income tax expense increased by $19,000, or 61.3%, to $50,000 for the three months ended June 30, 2024 from $31,000 for the three months ended June 30, 2023, due to an increase in net income before taxes of $207,000 from $191,000 for the three months ended June 30, 2023 to $398,000 for the three months ended June 30, 2024.
−Removed: The effective tax rate was 12.5% and 16.2% for the three months ended June 30, 2024 and 2023, respectively.
−Removed: The decrease in effective tax rate was primarily due to nontaxable income increasing at a faster rate than taxable income.
+Added: Income tax expense decreased by $29,000, or 24.8%, to $88,000 for the three months ended September 30, 2024 from $117,000 for the three months ended September 30, 2023, although there was an increase in net income before taxes of $30,000 from $573,000 for the three months ended September 30, 2023 to $603,000 for the three months ended September 30, 2024.
+Added: The effective tax rate was 14.6% and 20.4% for the three months ended September 30, 2024 and 2023, respectively.
+Added: The decrease in taxes and effective tax rate was primarily due to nontaxable 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 $200,000 and $214,000 for the six months ended June 30, 2024 and 2023, respectively.
+Added: Average yields for loans include loan fees of $375,000 and $456,000 for the nine months ended September 30, 2024 and 2023, 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)
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(3) Net interest margin represents net interest income divided by average total interest earning assets.
−Removed: Comparison of the Operating Results for the Six months ended June 30, 2024 and June 30, 2023
−Removed: The Company had a net loss of $2.3 million for the six months ended June 30, 2024, compared to a net loss of $857,000 for the six months ended June 30, 2023, a decrease of $1.4 million, or 155.6%.
+Added: Comparison of the Operating Results for the Nine Months Ended September 30, 2024 and September 30, 2023
+Added: The Company had a net loss of $1.8 million for the nine months ended September 30, 2024, compared to a net loss of $401,000 for the nine months ended September 30, 2023, a decrease of $1.4 million, or 350.0%.
The net loss was primarily due to a $2.5 million, or 2,500%, decrease in noninterest income resulting primarily from the sale of 122 performing residential mortgage loans as part of a balance sheet repositioning strategy at a pre-tax loss of $3.8 million, net of mortgage servicing rights retained.
−Removed: Additionally, there was a $608,000, or 10.9%, increase in noninterest expenses, partially offset by an increase in net interest income of $862,000, or 16.3%, to $6.1 million for the six months ended June 30, 2024 from $5.3 million for the six months ended June 30, 2023 and a $336,000, or 183.6%, decrease in the provision for credit losses and a $403,000, or 158.0%, decrease in income tax expense.
+Added: Additionally, there was a $651,000, or 7.8%, increase in noninterest expenses, partially offset by an increase in net interest income of $1.3 million, or 16.0%, to $9.4 million for the nine months ended September 30, 2024 from $8.1 million for the nine months ended September 30, 2023 and a $102,000, or 48.1%, decrease in the provision for credit losses and a $432,000, or 313.0%, decrease in income tax expense.
Interest Income.
−Removed: Interest income increased $2.4 million, or 27.6%, to $11.1 million for the six months ended June 30, 2024 from $8.7 million for the six months ended June 30, 2023.
−Removed: This was primarily the result of increased interest income on loans and interest-bearing deposits in banks due to increased yields and an increase in the average balances.
−Removed: Average interest earning assets increased by $28.1 million, or 7.1%, from $398.3 million for the six months ended June 30, 2023 to $426.4 million at June 30, 2024, and an increase in the yield on interest earning assets of 85 basis points, or 19.5%, from 4.36% for the six months ended June 30, 2023 to 5.21% for the six months ended June 30, 2024.
−Removed: Interest income on loans increased $1.6 million, or 27.1%, to $7.5 million for the six months ended June 30, 2024 from $5.9 million for the six months ended June 30, 2023.
−Removed: This increase resulted primarily from an increase in average loans of $17.0 million, or 6.5%, from $261.7 million for the six months ended June 30, 2023 to $278.7 million for the six months ended June 30, 2024, with an increase in loan yield of 90 basis points, or 19.9%, to 5.39% for the six months ended June 30, 2024 from 4.49% for the six months ended June 30, 2023.
−Removed: The increase in loan yield was due primarily to increased market interest rates.
−Removed: Additionally, the Company recognized $76,000 during the six months ended June 30, 2024 in interest income on a loan payoff from a loan that had been on nonaccrual status.
−Removed: Interest income on securities decreased $57,000, or 2.3%, from $2.5 million for the six months ended June 30, 2023 to $2.4 million for the six months ended June 30, 2024.
−Removed: This decrease resulted from a decrease in the average balance of securities of $8.8 million, or 7.0%, from $126.5 million for the six months ended June 30, 2023 to $117.7 million for the six months ended June 30, 2024, partially offset by and an increase of 20 basis points, or 5.1%, in average yield from 3.97% for the six months ended June 30, 2023 to 4.17% for the six months ended June 30, 2024.
−Removed: The rate increase is reflective of market rate increases and the diversification of the securities portfolio to include higher yielding commercial mortgage-backed securities, subordinated bank debt and other bonds with interest rates that are not tied to conventional residential mortgage loan rates.
−Removed: Interest income on interest bearing deposits in banks increased $350,000, or 273.4%, from $128,000 for the six months ended June 30, 2023 to $478,000 for the six months ended June 30, 2024.
−Removed: This increase resulted primarily from an increase in average interest-bearing deposits of $11.4 million, or 186.9% from $6.1 million for the six months ended June 30, 2023 to $17.5 million for the six months ended June 30, 2024 and an increase in average yield of 127 basis points, or 30.3%, from 4.19% for the six months ended June 30, 2023 to 5.46% for the six months ended June 30, 2024.
−Removed: There was also an increase of $236,000 in fed funds interest income for the six months ended June 30, 2024 primarily from an increase of 54 basis points, or 11.4%, in average yield on fed funds sold from 4.79% for the six months ended June 30, 2023 to 5.33% for the six months ended June 30, 2024 and a $8.6 million, or 296.6%, increase in average fed funds sold from $2.9 million for the six months ended June 30, 2023 to $11.5 million for the six months ended June 30, 2024.
+Added: Interest income increased $3.1 million, or 22.6%, to $16.8 million for the nine months ended September 30, 2024 from $13.7 million for the nine months ended September 30, 2023.
+Added: This was primarily the result of increased interest income on loans, interest-bearing deposits in banks, and federal funds sold due to increased yields and an increase in the average balances.
+Added: Average interest earning assets increased by $22.1 million, or 5.5%, from $400.8 million for the nine months ended September 30, 2023 to $422.9 million at September 30, 2024, and an increase in the yield on interest earning assets of 76 basis points, or 16.8%, from 4.54% for the nine months ended September 30, 2023 to 5.30% for the nine months ended September 30, 2024.
+Added: Interest income on loans increased $2.3 million, or 24.7%, to $11.6 million for the nine months ended September 30, 2024 from $9.3 million for the nine months ended September 30, 2023.
+Added: This increase resulted primarily from an increase in average loans of $13.6 million, or 5.1%, from $265.2 million for the nine months ended September 30, 2023 to $278.8 million for the nine months ended September 30, 2024, with an increase in loan yield of 85 basis points, or 18.3%, to 5.52% for the nine months ended September 30, 2024 from 4.67% for the nine months ended September 30, 2023.
+Added: The increase in loan yield was due primarily to increased market interest rates and originating more commercial based loans at higher rates to replace the $27.1 million residential loans that were sold.
+Added: Additionally, the Company recognized $76,000 during the nine months ended September 30, 2024 in interest income on a loan payoff from a loan that had been on nonaccrual status.
+Added: Interest income on securities decreased $263,000, or 6.9%, from $3.8 million for the nine months ended September 30, 2023 to $3.5 million for the nine months ended September 30, 2024.
+Added: This decrease resulted from a decrease in the average balance of securities of $10.5 million, or 8.4%, from $125.1 million for the nine months ended September 30, 2023 to $114.6 million for the nine months ended September 30, 2024, partially offset by an increase of six basis points, or 1.5%, in average yield from 4.04% for the nine months ended September 30, 2023 to 4.10% for the nine months ended September 30, 2024.
+Added: Interest income on interest bearing deposits in banks increased $401,000, or 198.5%, from $202,000 for the nine months ended September 30, 2023 to $603,000 for the nine months ended September 30, 2024.
+Added: This increase resulted primarily from an increase in average interest-bearing deposits of $8.5 million, or 144.1% from $5.9 million for the nine months ended September 30, 2023 to $14.4 million for the nine months ended September 30, 2024 and an increase in average yield of 105 basis points, or 23.1%, from 4.53% for the nine months ended September 30, 2023 to 5.58% for the nine months ended September 30, 2024.
+Added: There was also an increase of $450,000 in fed funds interest income for the nine months ended September 30, 2024 primarily from an increase of 50 basis points, or 10.1%, in average yield on fed funds sold from 4.97% for the nine months ended September 30, 2023 to 5.47% for the nine months ended September 30, 2024 and a $10.6 million, or 302.9%, increase in average fed funds sold from $3.5 million for the nine months ended September 30, 2023 to $14.1 million for the nine months ended September 30, 2024.
The increase in yields on deposits in banks and fed funds is reflective of the increase in market interest rates.
−Removed: Dividends from restricted investments increased $48,000, or 78.7%, from $61,000 for the six months ended June 30, 2023 to $109,000 for the six months ended June 30, 2024.
−Removed: This increase primarily resulted from a $46,000, or 78.0%, increase in dividends from FHLB stock from $59,000 for the six months ended June 30, 2023 to $105,000 for the six months ended June 30, 2024.
−Removed: Interest income on the fair value hedge increased $207,000, or 627.3%, from $33,000 for the six months ended June 30, 2023 to $240,000 for the six months ended June 30, 2024.
−Removed: The Company entered into an interest rate swap
−Removed: agreement in May 2023 to convert a portion of its interest rate exposure from fixed rates to floating rates to help manage the interest rate risk position.
+Added: The increase in balances resulted from increases in deposits and holding funds in interest bearing accounts with a competitive rate while originating loans to replace the loans sold.
+Added: Dividends from restricted investments increased $59,000, or 56.2%, from $105,000 for the nine months ended September 30, 2023 to $164,000 for the nine months ended September 30, 2024.
+Added: This increase primarily resulted from a $56,000, or 54.9%, increase in dividends from FHLB stock from $102,000 for the nine months ended September 30, 2023 to $158,000 for the nine months ended September 30, 2024 due primarily to an increase in the amount of FHLB stock owned.
+Added: Interest income on the fair value hedge increased $230,000, or 158.6%, from $145,000 for the nine months ended September 30, 2023 to $375,000 for the nine months ended September 30, 2024.
+Added: The Company entered into an interest rate swap agreement in May 2023 to convert a portion of its interest rate exposure from fixed rates to floating rates to help manage the interest rate risk position.
Refer to additional detail regarding the fair value hedge in Note 10 – Derivatives of the accompanying unaudited consolidated financial statements.
Interest Expense.
−Removed: Total interest expense increased $1.6 million, or 47.1%, to $5.0 million for the six months ended June 30, 2024 from $3.4 million for the six months ended June 30, 2023 primarily due to an increase in average interest bearing liabilities of $36.9 million, or 11.6%, to $355.7 million for the six months ended June 30, 2024 from $318.8 million for the six months ended June 30, 2023 and an increase in the average cost of interest-bearing liabilities of 65 basis points, or 30.6%, from 2.13% for the six months ended June 30, 2023 to 2.78% for the six months ended June 30, 2024, primarily due to an increase in deposit and funding costs.
−Removed: Interest expense on deposit accounts increased $1.4 million, or 63.7%, to $3.6 million for the six months ended June 30, 2024 from $2.2 million for the six months ended June 30, 2023, due to an increase in the average deposit cost of 80 basis points, or 45.5%, from 1.76% for the six months ended June 30, 2023 to 2.56% for the six months ended June 30, 2024 and an increase in average interest-bearing deposits of $26.2 million, or 10.3% from $253.2 million for the six months ended June 30, 2023 to $279.4 million for the six months ended June 30, 2024, with the increase being in higher yielding certificates of deposit, money market deposits and interest-bearing demand deposits, offset by a decrease in lower cost savings accounts.
−Removed: Part of the migration to higher yielding accounts resulted from a deposit retention strategy of offering a special higher interest rate CD and higher money market rates implemented during 2023.
−Removed: Interest expense on Federal Home Loan Bank advances increased $217,000, or 18.7%, to $1.4 million for the six months ended June 30, 2024 from $1.2 million for the six months ended June 30, 2023.
−Removed: This increase was due primarily to the increase in the average balance of Federal Home Loan Bank advances of $10.5 million, or 16.1%, to $75.6 million for the six months ended June 30, 2024 from $65.1 million for the six months ended June 30, 2023 and an increase in average yield of 8 basis points, or 2.2%, from 3.57% for the six months ended June 30, 2023 to 3.65% for the six months ended June 30, 2024.
−Removed: The increase in average advances was primarily to fund loan growth.
+Added: Total interest expense increased $1.9 million, or 34.5%, to $7.4 million for the nine months ended September 30, 2024 from $5.5 million for the nine months ended September 30, 2023 primarily due to an increase in average interest bearing liabilities of $30.5 million, or 9.4%, to $353.3 million for the nine months ended September 30, 2024 from $322.8 million for the nine months ended September 30, 2023 and an increase in the average cost of interest-bearing liabilities of 53 basis points, or 23.3%, from 2.28% for the nine months ended September 30, 2023 to 2.81% for the nine months ended September 30, 2024, primarily due to an increase in deposit and funding costs.
+Added: Interest expense on deposit accounts increased $1.7 million, or 47.3%, to $5.4 million for the nine months ended September 30, 2024 from $3.7 million for the nine months ended September 30, 2023, due to an increase in the average interest-bearing deposit cost of 65 basis points, or 33.7%, from 1.93% for the nine months ended September 30, 2023 to 2.58% for the nine months ended September 30, 2024 and an increase in average interest-bearing deposits of $26.6 million, or 10.5% from $253.3 million for the nine months ended September 30, 2023 to $279.9 million for the nine months ended September 30, 2024, with the increase being in higher yielding certificates of deposit, money market deposits and interest-bearing demand deposits, offset by a decrease in lower cost savings accounts.
+Added: Part of the migration to higher yielding accounts resulted from a deposit retention strategy initiated in 2023 offering a special higher interest rate CD and higher money market rates during a competitive rate environment.
+Added: Interest expense on Federal Home Loan Bank advances increased $173,000, or 9.4%, to $2.0 million for the nine months ended September 30, 2024 from $1.8 million for the nine months ended September 30, 2023.
+Added: This increase was due primarily to the increase in the average balance of Federal Home Loan Bank advances of $3.8 million, or 5.5%, to $72.7 million for the nine months ended September 30, 2024 from $68.9 million for the nine months ended September 30, 2023 and an increase in average cost of 13 basis points, or 3.6%, from 3.58% for the nine months ended September 30, 2023 to 3.71% for the nine months ended September 30, 2024.
+Added: The increase in average advances was primarily to fund loan growth and maintain higher levels of liquidity.
Net Interest Income.
−Removed: Net interest income increased $862,000, or 16.3%, to $6.1 million for the six months ended June 30, 2024 from $5.3 million for the six months ended June 30, 2023 due primarily to an increase in interest-earning assets of $28.1 million, or 7.1%, to $426.4 million for the six months ended June 30, 2024 from $398.3 million for the six months ended June 30, 2023.
−Removed: Net interest margin had a 23 basis point, or 8.6%, increase to 2.88% for the six months ended June 30, 2024 from 2.65% for the six months ended June 30, 2023.
+Added: Net interest income increased $1.3 million, or 16.0%, to $9.4 million for the nine months ended September 30, 2024 from $8.1 million for the nine months ended September 30, 2023 due primarily to an increase in interest-earning assets of $22.1 million, or 5.5%, to $422.9 million for the nine months ended September 30, 2024 from $400.8 million for the nine months ended September 30, 2023.
+Added: Net interest margin had a 25 basis point, or 9.1%, increase to 2.95% for the nine months ended September 30, 2024 from 2.70% for the nine months ended September 30, 2023.
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 interest-bearing liabilities.
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Provision for Credit Losses.
−Removed: Based on management’s analysis of the adequacy of the allowance for credit losses, a reversal of provision for credit losses was $153,000 for the six months ended June 30, 2024, compared to a provision for credit losses of $183,000 for the six months ended June 30, 2023, resulted in a decrease of $336,000, or 183.6%, to the provision expense primarily due to a decrease of $11.2 million in net loans and leases receivable to $268.7 million at June 30, 2024 from $279.9 million at December 31, 2023.
−Removed: The sale of $27.1 million in loans during the six months ended June 30, 2024 accounted for a $244,000 decrease in the provision for credit losses.
+Added: Based on management’s analysis of the adequacy of the allowance for credit losses, a provision for credit losses of $110,000 for the nine months ended September 30, 2024, compared to a provision for credit losses of $212,000 for the nine months ended September 30, 2023, resulted in a decrease of $102,000, or 48.1%, to the provision expense primarily due to the sale of $27.1 million in loans during the nine months ended September 30, 2024 which accounted for a $244,000 decrease in the provision for credit losses when the loans were sold or transferred to held for sale.
Noninterest Income.
−Removed: Noninterest income decreased $2.5 million, or 357.1%, to a loss of $3.2 million for the six months ended June 30, 2024 from a loss of $696,000 for the six months ended June 30, 2023, due primarily to a pre-tax loss of $3.8 million, net of mortgage servicing rights retained, from the sale of $27.1 million in residential mortgage loans, a loss of $283,000 associated with demolition of the previous Lindale branch building, and a $78,000 loss related to the write down of two bank properties transferred to other real estate owned which are listed for sale.
+Added: Noninterest income decreased $2.5 million, or 2500%, to a loss of $2.6 million for the nine months ended September 30, 2024 from a loss of $104,000 for the nine months ended September 30, 2023, due primarily to a pre-tax loss of $3.8 million, net of mortgage servicing rights retained, from the sale of $27.1 million in residential mortgage loans, a loss of $283,000 associated with demolition of the previous Lindale branch building, and a $78,000 loss related to the write down of two bank properties transferred to other real estate owned which are listed for sale.
The loan sale included the sale of 122 performing loans totaling $27.1 million at a pre-tax loss of $3.8 million, net of mortgage servicing rights retained, as part of a portfolio repositioning strategy to take advantage of repricing opportunities with the goal of increasing yield, shortening weighted average life and diversifying the loan portfolio by reducing the concentration in residential mortgage loans.
+Added: In the nine months ending September 30, 2023 there was a $1.7 million loss on the sale of securities that were part of an investment repricing strategy.
Noninterest Expense.
−Removed: Noninterest expense increased $608,000, or 10.9%, to $6.1 million for the six months ended June 30, 2024 from $5.5 million for the six months ended June 30, 2023 primarily due to increases in salaries and employee benefits, occupancy and equipment, technology, and other expenses.
−Removed: Salary and employee benefit expenses increased by $59,000, or 1.8%, to $3.3 million for the six months ended June 30, 2024 from $3.2 million for the six months ended June 30, 2023, due to an initial $129,000 vesting expense for equity awards in 2024 offset by reduced executive salary expense related to the CEO transition in 2023 and termination of the deferred compensation plan as of December 31, 2023.
−Removed: Occupancy and equipment expense increased $156,000, 38.8%, primarily due to additional expenses related to a new branch in Tyler and completion of a new branch building in Lindale.
−Removed: Technology expenses increased $79,000, or 35.3%, due primarily to nonrecurring fees associated with a “tap” debit card implementation project.
−Removed: We expect to receive a credit in a future period to cover these implementation costs.
−Removed: Other expenses increased $310,000, or 35.4%, primarily due to an increase of $107,000 in audit and accounting expenses related primarily to loan review, an increase in FDIC assessment expenses of $34,000 primarily due to an overall increase in the FDIC assessment rate and an increase in deposits, an increase of $31,000 in training expense primarily associated with executive training, and an increase of $22,000 in marketing expense primarily related to opening new locations, entering new markets and expenses associated with changing the Bank’s name.
−Removed: The Company had nonrecurring director costs of $37,000 and legal fees of $38,000 related to executive and board transitions in the six months ending June 30, 2024.
+Added: Noninterest expense increased $651,000, or 7.9%, to $9.0 million for the nine months ended September 30, 2024 from $8.3 million for the nine months ended September 30, 2023 primarily due to increases in occupancy and equipment, data processing, technology, and other expenses.
+Added: Salary and employee benefit expenses increased by $9,000, or 0.2%, to $4.9 million for the nine months ended September 30, 2024 from $4.9 million for the nine months ended September 30, 2023, due to an initial $129,000 vesting expense for equity awards in 2024 offset by reduced executive salary expense related to the CEO transition in 2023 and termination of the deferred compensation plan as of December 31, 2023.
+Added: Occupancy and equipment expense increased $224,000, 37.6%, primarily due to additional expenses related to a new branch in Tyler, completion of a new branch building in Lindale and general increases in costs.
+Added: Technology expenses increased $18,000, or 5.2%, due primarily to nonrecurring fees associated with a “tap” debit card implementation project which was partially offset by a credit from the provider.
+Added: We expect to receive additional credits related to the project as expenses are incurred.
+Added: Other expenses increased $438,000, or 33.7%, primarily due to an increase of $135,000 in audit and accounting expenses related primarily to loan review, an increase in FDIC assessment expenses of $49,000 primarily due to an overall increase in the FDIC assessment rate and an increase in deposits, an increase of $19,000 in insurance expenses, an increase of $54,000 in training expense primarily associated with executive training and increased emphasis on training, and an increase of $41,000 in marketing expense primarily related to opening new locations, entering new markets and changing the Bank’s name.
+Added: The Company had nonrecurring director costs of $37,000 and legal fees of $38,000 related to executive and board transitions in the nine months ending September 30, 2024.
Income Tax Expense.
−Removed: Income tax expense decreased by $403,000, or 158.0%, to a tax benefit $658,000 for the six months ended June 30, 2024 from a tax benefit of $255,000 for the six months ended June 30, 2023, due to a decrease in net income before taxes of $1.9 million from a loss of $1.1 million for the six months ended June 30, 2023 to a loss of $3.0 million for the six months ended June 30, 2024.
−Removed: The effective tax rate was 21.97% and 22.93% for the six months ended June 30, 2024 and 2023, respectively.
+Added: Income tax expense decreased by $432,000, or 313.0%, to a tax benefit $570,000 for the nine months ended September 30, 2024 from a tax benefit of $138,000 for the nine months ended September 30, 2023, due to a decrease in net income before taxes of $1.9 million from a loss of $539,000 for the nine months ended September 30, 2023 to a loss of $2.4 million for the nine months ended September 30, 2024.
+Added: The effective tax rate was 23.83% and 25.6% for the nine months ended September 30, 2024 and 2023, respectively.
The decrease in effective tax rate was primarily due to nontaxable income increasing at a faster rate than taxable income.
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We are also able to borrow from the Federal Home Loan Bank of Dallas.
−Removed: At June 30, 2024, we had outstanding advances of $71.2 million from the Federal Home Loan Bank of Dallas.
−Removed: At June 30, 2024, we had unused borrowing capacity of $75.0 million with the Federal Home Loan Bank of Dallas.
−Removed: In addition, at June 30, 2024, we had an unused $10.0 million line of credit with Texas Independent Bankers Bank and an unused $5.0 million line of credit with First Horizon Bank.
+Added: At September 30, 2024, we had outstanding advances of $63.2 million from the Federal Home Loan Bank of Dallas.
+Added: At September 30, 2024, we had unused borrowing capacity of $74.2 million with the Federal Home Loan Bank of Dallas.
+Added: In addition, at September 30, 2024, we had an unused unsecured $10.0 million line of credit and an unused secured $3.0 million line of credit with Texas Independent Bankers Bank and an unused $5.0 million line of credit with First Horizon Bank.
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 flows for the six months ended June 30, 2024 and 2023 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, 2024 and 2023 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, 2024, Texas Community Bancshares, Inc.
+Added: At September 30, 2024, Texas Community Bancshares, Inc.
(on a stand-alone, unconsolidated basis) had liquid assets of $8.5 million.
Liquidity management and asset quality continue to be high priorities.
−Removed: With continued volatility in the market, recent banking sector events and market interest rate increases, liquidity management and analysis is a key factor in daily asset and liability management and strategic planning.
+Added: With continued volatility in the market, recent banking sector events and market interest rate fluctuations, liquidity management and analysis is a key factor in daily asset and liability management and strategic planning.
We are monitoring deposit balances daily.
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We are closely monitoring our assets, liabilities, capital and investment portfolio unrealized losses for possible issues and opportunities related to the current economic and market conditions.
−Removed: We are monitoring our large depositors and continue to 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, 2024, there were 187 accounts with balances in excess of the $250,000 FDIC insurance limit with a total of $93.7 million, or 28.9% of deposits.
+Added: 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.
+Added: At September 30, 2024, there were 198 accounts with balances in excess of the $250,000 FDIC insurance limit totaling $99.5 million, or 30.5% of deposits.
The amount that was over $250,000 was $50.0 million, or 15.3%, that was potentially uninsured, including certificates of deposit of $9.7 million and $40.3 million in checking, MMDA and savings accounts.
−Removed: At June 30, 2024, the weighted average life (WAL) of our securities portfolio is 4.9 years.
+Added: At September 30, 2024, the weighted average life (WAL) of our securities portfolio is 4.9 years.
The gross unrealized losses on the AFS securities was $5.1 million, or 5.9% of the $85.8 million AFS portfolio and 9.0% of capital.
−Removed: Unrealized losses on the HTM securities were $2.6 million, or 10.9% of the $23.8 million HTM portfolio and 4.6% of capital.
+Added: Unrealized losses on the HTM securities were $2.0 million, or 8.7 % of the $22.9 million HTM portfolio and
+Added: 3.5% of capital.
The total gross unrealized losses are $7.1 million, or 6.5% of the $108.7 million securities portfolio and 12.5% of capital, which includes $55.8 million, or 51.3%, that are agency issued and guaranteed by the U.S.
−Removed: 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 credit and other risks.
The net unrealized loss on AFS securities and derivatives combined, and the corresponding other comprehensive loss, was $4.1 million, or 7.2% of capital.
−Removed: Over the next 24 months from June 30, 2024, we expect to realize $39.6 million in cash flow from the securities portfolio with $13.0 million in 2024, $20.3 million in 2025 and $6.3 million in 2026.
+Added: Over the next 24 months from September 30, 2024, we expect to realize $34.7 million in cash flow from the securities portfolio with $8.3 million in 2024, $16.9 million in 2025 and $9.5 million in 2026.
We should receive $24.9 million of that over the next 12 months.
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During the year ended December 31, 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: At June 30, 2024, the derivatives were highly effective and offset the unrealized loss on AFS securities by $504,000, bringing the net other comprehensive loss from $5.4 million to $4.9 million.
+Added: At September 30, 2024, the derivatives remained highly effective, however the fair value went negative temporarily due to a strong reaction to the 50 basis point decrease by the Federal Reserve in the fed funds target rate.
+Added: This caused an unrealized loss on the derivative of $117,000 that increased the net unrealized loss on the AFS securities of $4.0 to an accumulated other comprehensive loss (AOCI) of $4.1 million at September 30, 2024.
+Added: This is an increase in AFS fair value and decrease in AOCI of $1.5 million from a net unrealized loss position of $5.6 million at December 31, 2023.
Our asset quality remains strong.
−Removed: We are being optimistically cautious with our lending and strategic decisions, staying focused on long-term goals and taking advantage of opportunities while being diligent about recognizing and mitigating risk.
−Removed: At June 30, 2024, our allowance for credit losses to loans and leases held for investment was 1.10%.
−Removed: The Bank continues to monitor rates and loan demand weekly and align pricing accordingly.
−Removed: Housing supply and demand, primarily in our Mineola and Lindale markets where home sales and new home construction have been active, are monitored for indicators of a significant change in the local housing markets.
+Added: We are cautiously optimistic with our lending and strategic decisions, staying focused on long-term goals and taking advantage of opportunities while being diligent about recognizing and mitigating risk.
+Added: At September 30, 2024, our allowance for credit losses to loans and leases held for investment was 1.07%.
+Added: The Company continues to monitor rates and loan demand weekly and align pricing accordingly.
+Added: Housing supply and demand are monitored for indicators of a significant change in the local housing markets.
We are increasing our lending in CRE, other commercial lending and loans to municipalities to more strategically balance our loan portfolio.
This is a key component of the loan sale strategy resulting in $27.1 million in residential mortgage loans sold.
−Removed: At June 30, 2024, we do not have any plans to sell additional loans.
+Added: At September 30, 2024, we do not have any plans to sell additional loans.
We are currently utilizing listed CDs (Qwickrate) with terms of 3-6 months with full FDIC insurance in order to keep funds liquid while also earning a higher return than holding balances in fed funds.
−Removed: The following are the various liquidity sources we had available at June 30, 2024 that we could use as needed:
+Added: The following are the various liquidity sources we had available at September 30, 2024 that we could use as needed:
● FHLB borrowing capacity of $74.2 million
5 unchanged sentences
● The ability to sell a group of loans in the secondary market on an as needed basis
−Removed: ● The ability to sell some of our BOLI assets
−Removed: At June 30, 2024, Broadstreet Bank exceeded all of its regulatory capital requirements, and was categorized as well-capitalized at that date.
+Added: ● The ability to sell a portion of our BOLI assets
+Added: At September 30, 2024, 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, 2024
+Added: At September 30, 2024
Change in Interest Rates
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(1) Assumes an immediate uniform change in interest rates at all maturities.
−Removed: The table above indicates that at June 30, 2024, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 6.6% increase in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 9.6% decrease in net interest income.
+Added: The table above indicates that at September 30, 2024, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 6.63% increase in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 5.54% decrease in net interest income.
Net Economic Value .
3 unchanged sentences
The table below sets forth the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the United States Treasury yield curve.
−Removed: At June 30, 2024
+Added: At September 30, 2024
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, 2024, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 1.85% increase in EVE, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 11.6% decrease in EVE.
+Added: The table above indicates that at September 30, 2024, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would experience a 5.42% increase in EVE, and in the event of an instantaneous 200 basis point decrease in interest rates, we would experience a 17.25% decrease in EVE.
Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements.
7 unchanged sentences
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.