What changed in this filing

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Item 1. Business

2025-03-27 compared with 2024-03-27 · 63 added, 60 removed, 697 unchanged (15% of the section changed)

44 unchanged sentences

Broadstreet Bank, SSB

Formerly named Mineola Community Bank, S.S.B., Broadstreet Bank is a Texas-chartered savings bank headquartered in Mineola, Texas.

Formerly named Mineola Community Bank, S.S.B., Broadstreet Bank, SSB is a Texas-chartered savings bank headquartered in Mineola, Texas.

On December 4, 2023, the name of the Bank changed from Mineola Community Bank to Broadstreet Bank to be more inclusive of all of the communities we serve.

Our business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations and borrowings from the Federal Home Loan Bank of Dallas, in residential real estate loans and commercial real estate loans and, to a lesser extent, commercial loans, construction and land loans, and consumer and other loans.

The majority of Broadstreet Bank’s loans are currently fixed-rate loans, however the Bank is originating more commercial loans with

adjustable rates to diversify our loan portfolio and decrease risk associated with fluctuations in market rates.

Our business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations and borrowings from the Federal Home Loan Bank of Dallas, in residential real estate loans, commercial real estate loans, construction and land loans, municipality loans, and, to a lesser extent, commercial loans, and consumer and other loans.

The majority of Broadstreet Bank’s loans are currently fixed-rate loans, however the Bank is originating more

commercial loans with adjustable rates to diversify our loan portfolio and decrease risk associated with fluctuations in market rates.

We also invest in securities, which have historically consisted primarily of mortgage-backed securities and obligations issued by U.S.

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We consider Franklin County, Hopkins County, Smith County, Van Zandt County and Wood County, and contiguous areas, as our primary market area for originating loans and gathering deposits.

Our main office, six branch offices and a loan production office (LPO) are located in these counties.

In 2023, we opened an LPO in Canton, Texas, which is located in Van Zandt County.

In the first quarter of 2024, the Bank opened an additional branch in Tyler, Texas, which is located in Smith County.

Our main office and six branch offices are located in these counties including the Tyler, Texas branch in Smith County which opened in the first quarter of 2024.

Our branch office in Winnsboro, Texas, is in Wood County, but the Winnsboro city limits also lie within Franklin County and Hopkins County.

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Our historical lending activity consists primarily of originating one-to four-family residential mortgage loans, commercial real estate loans, and construction and land loans.

To a substantially lesser extent, we originate agricultural loans, commercial loans, and consumer and other loans.

The majority of the loans we originate are fixed rate loans, however we have updated our commercial lending terms and are originating more commercial loans with adjustable rates.

To a substantially lesser extent, we originate agricultural loans, commercial loans, loans to municipalities, and consumer and other loans.

While the majority of the Company’s loan portfolio is comprised of fixed rate loans, we have updated our commercial lending terms and are originating more commercial loans with adjustable rates.

Loan Portfolio Composition.

The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated.

In addition to the loans disclosed in the table below, we had loans in process of $22.9 million and $23.3 million at December 31, 2023 and December 31, 2022, respectively.

In addition to the loans disclosed in the table below, we had loans in process, with scheduled closings, of $6.2 million and $22.9 million at December 31, 2024 and December 31, 2023, respectively.

We had no loans held for sale at December 31, 2024 and December 31, 2023, respectively.

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Commercial loans

Municipalities

Consumer and other

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After 15 years

Municipalities

(in thousands)

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Commercial loans

Municipalities

Consumer and other loans

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We have also originated residential mortgage loans secured by owner-occupied properties located in the northern and eastern sections of the Dallas Metroplex.

We began originating these loans in 2014, and continue to do so primarily through word-of-mouth referrals.

These loans are originated primarily through existing relationships and word-of-mouth referrals.

These are generally jumbo loans with low loan-to-value ratios, generally in the range of 60% to 75%.

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Substantially all of our residential mortgage loans are fixed-rate loans.

Residential mortgage loans are generally originated at a fixed rate of 15, 20, or 30 years or with the optional 10-year balloon terms based on a 20- or 30-year amortization schedule.

Residential mortgage loans are generally originated at a fixed rate of 15, 20, or 30 years or with the optional 6-year or 10-year balloon terms based on a 20- or 30-year amortization schedule.

We generally limit the loan-to-value ratios of our one-to-four family residential mortgage loans to 80% (or 95% with private mortgage insurance) of the purchase price or appraised value, whichever is lower.

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In general, we do not currently offer “subprime loans” on one-to-four family residential real estate loans (i.e., generally loans to borrowers with credit scores less than 620).

In 2023, the Company entered into an agreement with The Independent Bankers Bank (“TIB”) to facilitate the loan application process for conventional, FHA, VA, and USDA residential mortgage loans.

During the year ended

December 31, 2024, we derived $194,000 in noninterest income from the facilitation of 35 loan applications for a total of $10.0 million.

Commercial Real Estate Loans .

At December 31, 2024, we had $56.1 million in commercial real estate loans, or 18.9% of total loans.

Substantially all of our commercial real estate loans are fixed-rate balloon loans with a six to ten year initial term and with a 10- to 20-year amortization period.

In 2023, we changed our commercial real estate loan

terms to include more adjustable rates tied to the WSJ Prime rate.

Our commercial real estate loans are fixed-rate balloon loans with a six to ten year initial term and with a 10- to 20-year amortization period or adjustable rate loans tied to WSJ Prime rate.

The majority of the commercial real estate loans originated in 2024 have adjustable rates.

The maximum loan-to-value ratio of our commercial real estate loans is generally 80%.

At December 31, 2023, we had twelve loans secured by self-storage facilities totaling $16.6 million, eight loans secured by churches totaling $4.7 million, two loans secured by a rural water district totaling $3.6 million, five loans secured by restaurant/fast food restaurant properties totaling $2.0 million, and eleven loans secured by commercial rental properties totaling $3.6 million.

At December 31, 2024, we had twelve loans secured by self-storage facilities totaling $16.3 million, seven loans secured by gas stations with convenience stores totaling $10.5 million, sixteen loans secured by commercial rental properties totaling $7.6 million, eight loans secured by churches totaling $4.5 million, two loans secured by a rural water district totaling $3.8 million, six loans secured by restaurant/fast food restaurant properties totaling $3.6 million, and one loan secured by a hotel totaling $923,000.

At December 31, 2024, all of these loans were performing according to their terms.

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Personal guarantees are generally obtained from the principals of commercial real estate borrowers.

At December 31, 2023, our largest commercial real estate loan relationship consisted of three loans totaling $7.5 million, which are secured by self-storage facilities.

At December 31, 2023, all of these loans were performing according to their original terms.

At December 31, 2024, our largest commercial real estate loan relationship consisted of a $7.5 million loan secured by self-storage facilities.

At December 31, 2024, this loan was performing according to its original terms.

Multi-Family Loans.

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We make construction loans primarily to individuals for the construction of their primary residences and to contractors and builders of single-family homes.

We also make a limited amount of land loans to complement our construction lending activities, as such loans are generally secured by lots that will be used for residential development.

We also originate land loans to complement our construction lending activities, as such loans are generally secured by lots that will be used for residential development, and land loans for future commercial real estate development.

Land loans also include loans secured by land purchased for investment purposes.

At December 31, 2023, our construction and development loans totaled $31.2 million, or 11.0% of our total loan portfolio, in addition to $6.3 million of land loans.

At December 31, 2024, our construction and development loans totaled $33.1 million, or 11.2% of our total loan portfolio, in addition to $21.0 million in land loans.

At December 31, 2024, $7.7 million of our single-family construction loans were to individuals and $3.9 million were to builders.

At December 31, 2023, our largest single family residence construction loan was for $822,000, with 66.1%, or $543,000 funded.

At December 31, 2023, our largest construction and land development loan relationship consisted of eight loans totaling $6.4 million, which is the funded portion of the construction projects in process.

At December 31, 2024, our construction portfolio also included $4.5 million in commercial real estate construction, $15.4 million in apartment or duplex construction, and $1.5 million in subdivision developments.

At December 31, 2024, our largest single family residence construction loan was for $752,000, upon completion.

At December 31, 2024, our largest construction and land development loan relationship consisted of three loans totaling $8.0 million, which is fully funded.

At December 31, 2024, all of these loans were performing according to their original terms.

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We have also developed long-term relationships with borrowers who now reside in the northern and eastern sections of the Dallas Metroplex and continue to provide them with financing, including residential construction.

At December 31, 2023, eight construction loans totaling $4.6 million were outstanding to individual borrowers in the Metroplex.

At December 31, 2024, five construction loans totaling $3.2 million, upon completion, were in process to individual borrowers in the Metroplex.

While we may originate loans to builders whether or not the collateral property underlying the loan is under contract for sale, we consider each project carefully in light of current residential real estate market conditions.

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We actively monitor the number of unsold homes in our construction loan portfolio and local housing markets to attempt to maintain an appropriate balance between home sales and new loan originations.

We generally will limit the maximum number of speculative units (units that are not

pre-sold) approved for each builder, typically starting with one speculative loan per builder until we develop a relationship with the builder.

At December 31, 2023, speculative construction loans consisted of four loans totaling $6.8 million, upon completion.

Due to the continued growth in our market area, the need for multi-family housing has increased.

At December 31, 2023, multi-family construction totaled $10.3 million, upon completion, and is primarily apartment construction in our market area.

We generally will limit the maximum number of speculative units (units that are not pre-sold) approved for each builder, typically starting with one speculative loan per builder until we develop a relationship with the builder.

At December 31, 2024, speculative construction loans consisted of thirteen loans totaling $5.1 million, upon completion.

Due to the continued growth in our market area, the need for multi-family housing has increased and at December 31, 2024, multi-family construction totaled $15.5 million, upon completion, which primarily consists of apartment and quad-plex construction in our market area.

Our single-family construction loans are fixed rate interest-only loans that provide for the payment of interest during the construction phase, which is usually up to 12 months.

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These loans are generally secured by business assets, such as equipment and accounts receivable.

Commercial loans secured by accounts receivable are made with fixed-interest rates and for terms not to exceed 12 months.

Commercial loans secured by accounts receivable are made with adjustable rates and for terms not to exceed 12 months.

Commercial equipment loans are made with fixed-interest rates and for terms generally up to 60 months.

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At December 31, 2024, our largest commercial loan totaled $843,000 and is secured by manufacturing equipment.

Our largest commercial relationship consists of seven loans totaling $1.1 million and is secured by machinery and equipment.

At December 31, 2023, these loans were performing according to the original terms.

At December 31, 2024, this loan was classified as collateral dependent with an associated allowance for credit losses of $54,000.

Our largest commercial relationship consists of five loans totaling $925,000 and is secured by machinery and equipment.

At December 31, 2024, these loans performing according to the original terms.

Consumer and Other Loans .

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We have generally required that the properties securing these real estate loans have an aggregate debt service ratio, including the guarantor’s cash flows and the borrower’s other projects, of at least 1.20x.

An environmental phase one report is

obtained when required by policy or when the possibility exists that hazardous materials may have existed on the site, the site may have been impacted by adjoining properties that handled hazardous materials.

An environmental phase one report is obtained when required by policy or when the possibility exists that hazardous materials may have existed on the site or the site may have been impacted by adjoining properties that handled hazardous materials.

If we foreclose on a commercial real estate loan, the marketing and liquidation period to convert the real estate asset to cash can be lengthy with substantial holding costs.

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These increased risks arise because of the risk that there will be inadequate demand to ensure the sale of the property within an acceptable time.

As a result, in addition to the risks associated with traditional construction loans, speculative construction loans carry the added risk that the builder will have to pay the property taxes and other carrying costs of the property until an end buyer is found.

in addition to the risks associated with traditional construction loans, speculative construction loans carry the added risk that the builder will have to pay the property taxes and other carrying costs of the property until an end buyer is found.

Land loans have substantially similar risks to speculative construction loans.

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Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and a small remaining deficiency often does not warrant further substantial collection efforts against the borrower.

Consumer loan collections depend on the borrower’s continuing financial stability, and therefore are likely to be adversely affected

by various factors, including job loss, divorce, illness or personal bankruptcy.

Consumer loan collections depend on the borrower’s continuing financial stability, and therefore are likely to be adversely affected by various factors, including job loss, divorce, illness or personal bankruptcy.

Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.

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All loans originated by us are underwritten pursuant to our policies and procedures.

We primarily originate fixed-rate loans, but we have updated our commercial loan terms to include more adjustable rates.

We originate fixed-rate consumer purpose loans and commercial loans generally have adjustable rates.

We originate real estate and other loans through our loan officers, marketing efforts, our customer base, walk-in customers and referrals from real estate brokers, builders and attorneys.

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We underwrite our participation interest in the loan that we are purchasing according to our own underwriting criteria and procedures.

At December 31, 2023, we had one purchased construction loan participation interest in commercial real estate of $403,000 and one purchased construction participation of $1.0 million secured by a hotel and two purchased participations of residential real estate of $202,000.

At December 31, 2024, we had one purchased construction loan participation interest in commercial real estate of $403,000, upon completion, and one purchased construction participation of $1.0 million, upon completion, secured by a hotel.

At December 31, 2024, we had one loan for the construction of a convenience store, secured by the completed project of $4.2 million, for which we sold one participation interest totaling $1.2 million.

6 unchanged sentences

Notwithstanding this legal limit, Broadstreet Bank had an in-house limit of $3.0 million for a consumer borrower and $8.0 million for a commercial borrower at December 31, 2024.

At December 31, 2023, our largest loan relationship with one borrower had extensions of credit totaling $10.4 million, when fully funded, secured by single-family residential construction and land development projects.

At December 31, 2023, $7.2 million, or 69.2%, was funded and was performing according to its original terms.

The largest outstanding relationship with one borrower had a net outstanding balance of $7.7 million.

This loan relationship is secured by one loan on a townhome apartment complex and was performing according to its original terms at December 31, 2023.

At December 31, 2024, our largest loan relationship with one borrower had extensions of credit totaling $9.0 million, when fully funded, secured primarily by single-family residential construction and multi-family construction projects.

At December 31, 2024, the loans were fully funded and were performing according to the original terms.

Our lending is subject to written underwriting standards and origination procedures.

Decisions on loan applications are made on the basis of detailed applications submitted by the prospective borrower, credit histories that we obtain, and property valuations (consistent with our appraisal policy) prepared by our internal licensed appraiser and outside independent licensed appraisers approved by our board of directors as well as internal evaluations, where permitted by regulations.

Decisions on loan applications are made on the basis of detailed applications submitted by the prospective borrower, credit histories that we obtain, and property valuations (consistent with our appraisal policy) prepared by our internal licensed appraiser or outside independent licensed appraisers approved by our board of directors as well as internal evaluations, where permitted by regulations.

The loan applications are designed primarily to determine the borrower’s ability to repay the requested loan, and the more significant items on the application are verified through use of credit reports, bank statements and tax returns.

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Commercial loans

Consumer loans

Consumer and other loans

Nonperforming Assets.

The following table sets forth information regarding our nonperforming assets.

There were four non-accruing loans modified to borrowers experiencing financial difficulties included in nonaccrual loans as of December 31, 2023 totaling $323,000 and $364,000 as of December 31, 2022.

At December 31,

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General allowances represent loss allowances which have been established to cover probable accrued losses associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets.

When an insured institution classifies problem assets as “loss,” it is required either to establish a specific allowance for losses equal to

100% of that portion of the asset so classified or to charge-off such amount.

When an insured institution classifies problem assets as “loss,” it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount.

An institution’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the regulatory authorities, such that additional general or specific loss allowances may be required.

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Changes in the allowance relating to collateral dependent loans are charged or credited to the provision for credit losses.

Management’s periodic evaluation of the adequacy of the allowance is based on various factors, including, but not limited to, management’s ongoing review and grading of loans, facts and issues related to specific loans, historical loan loss and delinquency experience, trends in past due and nonaccrual loans, existing risk characteristics of specific loans or loan pools, the fair value of underlying collateral, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses.

specific loans or loan pools, the fair value of underlying collateral, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses.

As an integral part of their examination process, the Texas Department of Savings and Mortgage Lending and the Federal Deposit Insurance Corporation will periodically review our allowance for credit losses, and as a result of such reviews, we may have to adjust our allowance for credit losses.

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Commercial loans

Municipalities

Consumer and other loans

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securities issued by the U.S.

government and its agencies or government sponsored enterprises including mortgage-backed securities and collateralized mortgage obligations;

government and its agencies or government sponsored enterprises including mortgage-backed securities, mortgage backed securities and collateralized mortgage obligations issued by other entities;

corporate and municipal bonds;

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After Ten Years

No Fixed Maturity

Total Investment Securities

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Corporate bonds

Government and agency

Total securities available for sale

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After Ten Years

No Fixed Maturity

Total Investment Securities

9 unchanged sentences

Customer deposits have traditionally been our primary source of funds for use in lending and investment activities.

We also use borrowings, and occasionally brokered deposits, to supplement cash flow needs, lengthen the maturities of liabilities for interest rate risk purposes and to manage the cost of funds.

We also use borrowings, and occasionally brokered deposits, to supplement cash flow needs, manage the maturities of liabilities for interest rate risk purposes and to manage the cost of funds.

In addition, we receive funds from scheduled loan payments, investment maturities, loan prepayments, retained earnings and income on earning assets.

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At December 31, 2024 and 2023, the aggregate amount of uninsured deposits, which includes deposit account balances in excess of $250,000, which is the maximum amount for federal deposit insurance, was $50.3 million and $37.2 million, respectively.

At December 31, 2023 and 2022, the aggregate amount of all our uninsured certificates of deposit was $8.6 million and $5.9 million, respectively.

At December 31, 2024 and 2023, the aggregate amount of our uninsured certificates of

deposit balances in excess of $250,000 was $10.7 million and $8.6 million, respectively.

At December 31, 2024 and December 31, 2023, we had no deposits that were uninsured for any reason other than being in excess of the maximum amount for federal deposit insurance.

At December 31, 2023, we had $12.0 million in callable brokered certificates of deposit that were fully insured and issued as part of an investment strategy.

At December 31, 2024 and 2023, the amount of deposits that were brokered was $22.0 million and $12.0 million, respectively.

All brokered deposits were fully insured.

The following table sets forth the maturity of our uninsured certificates of deposit at December 31, 2024.

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For further information regarding our borrowings from the Federal Home Loan Bank of Dallas, see note 8 of the notes to consolidated financial statements.

As of December 31, 2023, we had 62 full-time employees and five part-time employees.

As of December 31, 2024, we had 60 full-time employees and eight part-time employees.

Our employees are not represented by any collective bargaining group.

1 unchanged sentence

Subsidiary Activities

Broadstreet Bank is the sole and wholly owned subsidiary of Texas Community Bancshares, Inc.

Broadstreet Bank is the sole and wholly owned subsidiary of Texas Community Bancshares.

Broadstreet Bank has one subsidiary, Mineola Financial Service Corporation, which is currently inactive.

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and establish the timing and amounts of assessments and fees.

Moreover, as part of their examination authority, the banking regulators assign numerical ratings to banks and savings institutions relating to capital, asset quality, management, liquidity, earnings and

other factors.

These ratings are inherently subjective and the receipt of a less than satisfactory rating in one or more categories may result in enforcement action by the banking regulators against a financial institution.

A less than satisfactory rating may also prevent a financial institution, such as Broadstreet Bank or its holding company, from obtaining necessary regulatory approvals to access the capital markets, pay dividends, acquire other financial institutions or establish new branches.

A less than satisfactory rating may also prevent a financial institution, such as Broadstreet Bank or its holding company, from

obtaining necessary regulatory approvals to access the capital markets, pay dividends, acquire other financial institutions or establish new branches.

In addition, we must comply with significant anti-money laundering and anti-terrorism laws and regulations, Community Reinvestment Act laws and regulations, and fair lending laws and regulations.

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Various state consumer laws and regulations also affect the operations of Broadstreet Bank, including state usury laws and consumer credit laws.

Texas law further provides that, subject to the limitations established by rule of the Texas Finance Commission, a Texas savings bank may make any loan or investment or engage in any activity permitted under state law for a bank or savings and loan association or under federal law for a federal savings and loan association, savings bank or national bank if such institution’s principal office is located in Texas.

savings and loan association or under federal law for a federal savings and loan association, savings bank or national bank if such institution’s principal office is located in Texas.

This provision is commonly referred to as the “Expansion of Powers” provision of the Texas Finance Code applicable to state savings banks.

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As a result of the Tax Cuts and Jobs Act generally, a financial institution may carry net operating losses forward indefinitely.

At December 31, 2023, Broadstreet Bank had no federal net operating loss carryforwards.

At December 31, 2023, Broadstreet Bank had a $2.3 million federal net operating loss carryforward.

Capital Loss Carryovers.

17 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.

What changed 10-K

Item 1. Business