Catalyst Bancorp, Inc.
For the period ended Mar 31, 2025. Filed May 14, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 14, 2025
CLST$17.50-2.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0001558370-24-015502
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-14.
0001558370-25-007768
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 83 previous paragraphs and 67 current paragraphs.
31 unchanged; 28 reworded; 7 added; 20 removed; 4 previous and 1 current paragraphs rearranged.
Tables are not compared: 61 previous and 56 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Total Assets. Total assets decreased $5.0 million, or 1.8%, to $271.6 million at March 31, 2025 from $276.7 million at December 31, 2024. The decrease was primarily due to a decrease in cash as a result of a decline in total public fund deposits.
Current report
Allowance for Credit Losses. At both March 31, 2025 and December 31, 2024, the allowance for credit losses on loans totaled $2.5 million, or 1.51% of total loans. The allowance for credit losses on unfunded commitments totaled $104,000, down $17,000 from December 31, 2024. The provision for credit losses was zero and net loan charge-offs were $39,000 for the three months ended March 31, 2025. Net loan charge-offs were primarily related to residential mortgages and overdrawn deposit accounts.
Current report
General. For the three months ended March 31, 2025, the Company reported net income of $586,000, compared to a net loss of $4.7 million for the three months ended March 31, 2024. Net interest income was up $272,000, or 13.0%, for the three months ended March 31, 2025, compared to the same period in 2024. The provision for credit losses was zero for the three months ended March 31, 2025, compared to $95,000 for the same period in 2024. Non-interest income was $553,000 for the three months ended March 31, 2025, compared to a net loss of $5.2 million for the same period in 2024. During the three months ended March 31, 2024, the Company sold 50 available-for-sale investment securities for a total pre-tax loss of $5.5 million. Non-interest expense for the three months ended March 31, 2025 was down $593,000, or 21.2%, compared to the same period in 2024, primarily due to expenses incurred during the 2024 period related to the Company’s upgrade to a new core processing system.
Current report
average rate earned on other interest-earning assets was 4.36% for the three months ended March 31, 2025, down 72 basis points compared to the same period in 2024.
Current report
Non-interest Income*.*Non-interest income for the three months ended March 31, 2025 totaled $553,000, up $5.7 million compared to the same period in 2024. Non-interest income for the three months ended March 31, 2025 included insurance proceeds of $216,000 for fire and flood damages related to foreclosed properties. During the three months ended March 31, 2024, the Company sold 50 available-for-sale investment securities for a total pre-tax loss of $5.5 million.
Current report
Non-interest Expense. Non-interest expense totaled $2.2 million for the three months ended March 31, 2025, down $593,000, or 21.2%, compared to the three months ended March 31, 2024. During the three months ended March 31, 2024, the Company upgraded to a new core processing system and incurred $560,000 of data conversion and other associated expenses.
Current report
Foreclosed assets expense totaled $89,000 for the three months ended March 31, 2025, up $81,000 compared to the same period in 2024. Foreclosed assets expense for the three months ended March 31, 2025 included net losses of $88,000 on the sale of foreclosed properties.
Removed paragraphs (20)
Previous report
During the three months ended March 31, 2024, the measurement of the Company’s deferred income tax assets and liabilities was identified as a critical accounting estimate. Deferred income tax assets and liabilities are determined based on the tax effects of the temporary differences between the book and tax bases of the various assets and liabilities and gives current recognition to changes in tax rates and laws. At September 30, 2024, the Company’s net deferred tax asset totaled $1.4 million and is included in other assets on the statement of financial condition. According to Subtopic 740-10 of the Accounting Standards Codification (“ASC 740-10”), the measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized. At September 30, 2024, the Company has not recorded a valuation allowance for its deferred tax assets. Realizing our deferred tax assets principally depends upon our achieving projected future taxable income. We may change our judgments regarding future profitability due to future market conditions and other factors. We may adjust our deferred tax asset balances if our judgments change, which may impact total income tax expense in future periods.
Previous report
Total Assets. Total assets increased $9.7 million, or 3.6%, to $280.6 million at September 30, 2024 from $270.9 million at December 31, 2023. The increase was primarily due to an increase in cash as a result of additional borrowings under the Bank Term Funding Program (“BTFP”).
Previous report
Allowance for Credit Losses. At September 30, 2024, the allowance for loan losses totaled $2.4 million, or 1.46% of total loans, compared to 1.47% of total loans at December 31, 2023. The allowance for credit losses on unfunded commitments totaled $231,000, down $26,000 from December 31, 2023. The provision for credit losses, inclusive of the provision for unfunded commitments, for the nine months ended September 30, 2024 totaled $531,000 and was largely attributable to commercial loan growth.
Previous report
During the three months ended March 31, 2024, the Company sold 50 available-for-sale investment securities for a total pre-tax loss of $5.5 million. Proceeds from the sales totaled $42.6 million, inclusive of accrued interest. During the six-month period ending September 30, 2024, the Company re-deployed a portion of the sales proceeds by purchasing $7.9 million of fixed-rate government-sponsored mortgage-backed securities.
Previous report
Borrowings*.*Total borrowings at September 30, 2024 were $29.5 million, up $10.1 million from December 31, 2023. During the first three months of 2024, the Bank increased its borrowings from the Federal Reserve Bank of Atlanta through the BTFP. At September 30, 2024, the Bank had one $20.0 million BTFP advance outstanding with a contractual interest rate of 4.76% and a maturity date of January 15, 2025.
Previous report
General. For the three months ended September 30, 2024, the Company reported net income of $447,000, compared to net income of $151,000 for the three months ended September 30, 2023. Net interest income was up $584,000, or 30.0%, for the three months ended September 30, 2024, compared to the same period in 2023. The provision for credit losses totaled $337,000 for the three months ended September 30, 2024, compared to zero provision for the same period in 2023. Non-interest income was up $314,000, or 102.6%, for the three months ended September 30, 2024, compared to the same period in 2023. Non-interest income for the 2024 period included grant income of $280,000 due to a Bank Enterprise Award (“BEA”) Program grant from the Community Development Financial Institution (“CDFI”) Fund. Non-interest expense for the three months ended September 30, 2024 was up $179,000, or 8.6%, compared to the same period in 2023.
Previous report
Non-interest Income*.*Non-interest income for the three months ended September 30, 2024 totaled $620,000, up $314,000, or 102.6%, compared to the same period in 2023. The Company recognized as income a $280,000 Bank Enterprise Award (“BEA”) Program grant from the CDFI Fund during the three months ended September 30, 2024.
Previous report
Non-interest Expense. Non-interest expense totaled $2.3 million for the three months ended September 30, 2024, up $179,000, or 8.6%, compared to the three months ended September 30, 2023.
Previous report
Salaries and employee benefits expense totaled $1.2 million for the three months ended September 30, 2024, up $59,000, or 5.2%, compared to the same period in 2023 primarily due to raises that became effective at the start of the 2024 period.
Previous report
Professional fees totaled $151,000 for the three months ended September 30, 2024, up $51,000, or 51.0%, compared to the same period in 2023. Professional fees associated with obtaining the BEA Program grant totaled $42,000 and were expensed during the three months ended September 30, 2024.
Previous report
Foreclosed assets expense totaled $33,000 for the three months ended September 30, 2024, up $31,000 compared to the same period in 2023. During the three months ended September 30, 2024, the Company recorded net write-downs on foreclosed assets of $39,000.
Previous report
Other non-interest expense totaled $184,000 for the three months ended September 30, 2024, up $87,000, or 89.7%, compared to the same period in 2023 primarily due to increased loan collection expenses and fraud losses during the 2024 period.
Previous report
General. For the nine months ended September 30, 2024, the Company reported a net loss of $3.7 million, compared to net income of $219,000 for the nine months ended September 30, 2023. Net interest income was up $1.3 million, or 22.8%, for the nine months ended September 30, 2024, compared to the same period in 2023. The provision for credit losses totaled $531,000 for the nine months ended September 30, 2024, compared to zero provision for the same period in 2023. Non-interest income was down $5.1 million for the nine
Previous report
months ended September 30, 2024, compared to the same period in 2023, primarily due to losses on the sales of investment securities. Non-interest expense for the nine months ended September 30, 2024 was up $662,000, or 10.3%, compared to the same period in 2023, primarily due to expenses associated with the Company’s upgrade to a new core processing system.
Previous report
Interest Income. Total interest income increased $3.3 million, or 46.7%, to $10.4 million for the nine months ended September 30, 2024, compared to the same period in 2023. Interest income on loans and other interest-earning assets were up $2.1 million and $1.6 million, respectively. These increases were partially offset by a $453,000 decrease in interest income on investment securities.
Previous report
The average loan yield was 6.42% for the nine months ended September 30, 2024, up from 5.16% for the same period in 2023. Average loans were $152.1 million for the nine months ended September 30, 2024, up $18.1 million, or 13.5%, compared to the same period in 2023.
Previous report
Interest Expense. Total interest expense increased $2.0 million, or 152.7%, to $3.3 million for the nine months ended September 30, 2024, compared to $1.3 million for the same period in 2023. Interest expense on deposits was $2.4 million during the nine months ended September 30, 2024, up $1.3 million, or 117.0%, compared to the same period in 2023. The average rate paid on interest-bearing deposits was 2.20% during the nine months ended September 30, 2024, up 114 basis points compared to the same period in 2023. Interest expense on borrowings increased by $703,000 during the nine months ended September 30, 2024 compared to the same period in 2023 mainly due to interest expense on BTFP advances.
Previous report
Net Interest Income. Net interest income was $7.1 million for the nine months ended September 30, 2024, up $1.3 million, or 22.8%, compared to 2023. Our interest rate spread was 2.68% and 2.54% for the nine months ended September 30, 2024 and 2023, respectively. Our net interest margin was 3.56% and 3.04% for the nine months ended September 30, 2024 and 2023, respectively. The increase in net interest margin and net interest income over the comparable periods was primarily the result of increased yields on our interest-earning assets, partially offset by the rising cost of interest-bearing liabilities.
Previous report
Provision for Credit Losses. The total provision for credit losses on loans and unfunded commitments was $531,000 for the nine months ended September 30, 2024, compared to no provision for the same period in 2023. In 2024, the provision for credit losses was largely attributable to commercial loan growth and an increase in the allowance for credit losses on individually evaluated loans.
Previous report
Non-interest Income*.*Non-interest income for the nine months ended September 30, 2024 was down $5.1 million compared to $917,000 for the same period in 2023. Non-interest income for 2024 includes the $5.5 million loss on the sales of investment securities discussed previously.
Reworded paragraphs (28)
Previous wording
Management’s Discussion and Analysis of Financial Condition and Results of Operations at September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 is intended to assist in understanding our financial condition and results of operations. The information contained in this section should be read in conjunction with the unaudited consolidated financial statements of the Company and the notes thereto appearing in Part I, Item 1, of this Quarterly Report on Form 10-Q as well as the business and financial information included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2023.
Current wording
Management’s Discussion and Analysis of Financial Condition and Results of Operations at March 31, 2025 and for the three months ended March 31, 2025 and 2024 is intended to assist in understanding our financial condition and results of operations. The information contained in this section should be read in conjunction with the unaudited consolidated financial statements of the Company and the notes thereto appearing in Part I, Item 1, of this Quarterly Report on Form 10-Q as well as the business and financial information included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2024.
Previous wording
The following is an overview of financial results for the three and nine months ended September 30, 2024:
Current wording
The following is an overview of financial results for the three months ended March 31, 2025:
Previous wording
Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and could reflect materially different results under different assumptions and conditions. Methodologies the Company uses when applying critical accounting policies and developing critical estimates are included in its Annual Report on Form 10-K for the year ended December 31, 2023. Our accounting policies for allowance for credit losses, investment securities, and income taxes comprise those that management believes involve the most critical estimates and aid in fully understanding and evaluating our reported financial results.
Current wording
Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and could reflect materially different results under different assumptions and conditions. Methodologies the Company uses when applying critical accounting policies and developing critical estimates are included in its Annual Report on Form 10-K for the year ended December 31, 2024. Our accounting policies for allowance for credit losses, investment securities, and income taxes comprise those that management believes involve the most critical estimates to aid in fully understanding and evaluating our reported financial results. These policies require numerous estimates or economic assumptions that may prove inaccurate or may be subject to variations which may significantly affect our reported results and financial condition for the period or in future periods.
Previous wording
There were no other material changes from the significant accounting policies or critical accounting estimates previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. In preparing the financial statements, the Company is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the Company’s financial condition, results of operations, comprehensive income, changes in equity and cash flows for the interim periods presented. These adjustments are of a normal recurring nature and include appropriate estimated provisions.
Current wording
There were no changes from the significant accounting policies or critical accounting estimates previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. In preparing the financial statements, the Company is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the Company’s financial condition, results of operations, comprehensive income, changes in equity and cash flows for the interim periods presented. These adjustments are of a normal recurring nature and include appropriate estimated provisions.
Previous wording
Additionally, as discussed in detail in Note 1 to the Company’s financial statements reported in this Quarterly Report on Form 10-Q, during June of 2024, the Bank became aware of interest owed by it to a deposit customer that was not properly accrued or paid by the Bank during the period beginning August 1, 2022 and ending March 31, 2024. Accordingly, management revised the prior period financial statements, related disclosures and supplemental information presented in this filing to correct the misstatement. The Company will also revise previously reported financial information for these immaterial errors in its future filings, as applicable. The information in this Item 2 and throughout this Quarterly Report on Form 10-Q has been adjusted to reflect these revisions as described in Note 1 to the Company’s financial statements of this Quarterly Report on Form 10-Q.
Current wording
As discussed in detail in Note 1 to the Company’s financial statements reported in this Quarterly Report on Form 10-Q, during June of 2024, the Bank became aware of interest owed by it to a deposit customer that was not properly accrued or paid by the Bank during the period beginning August 1, 2022 and ending March 31, 2024. Accordingly, management revised the prior period financial statements, related disclosures and supplemental information presented in this filing to correct the misstatement. The Company will also revise previously reported financial information for these immaterial errors in its future filings, as applicable. The information in this Item 2 and throughout this Quarterly Report on Form 10-Q has been adjusted to reflect these revisions as described in Note 1 to the Company’s financial statements of this Quarterly Report on Form 10-Q.
Previous wording
Our loan growth has largely been the result of our re-focused business strategy. Since 2021, we have been targeting small- to mid-sized businesses and business professionals in our market areas while continuing to serve our traditional customer base. The following table presents certain major segments of our commercial real estate, construction and land, and commercial and industrial loan balances as of the dates indicated.
Current wording
The following table presents certain major segments of our commercial real estate, construction and land, and commercial and industrial loan balances as of the dates indicated.
Previous wording
The following table presents the changes in the allowance for loan losses and other related data for the periods indicated.
Current wording
The following table presents the changes in the allowance for credit losses and other related data for the periods indicated.
Previous wording
**Non-performing Assets.**The following table shows the amounts of our non-performing assets, which include non-accruing loans, accruing loans 90 days or more past due and foreclosed assets at the dates indicated.
Current wording
**Substandard Loans and Non-performing Assets.**The following table shows the amounts of our substandard loans and non-performing assets, which include non-accruing loans, accruing loans 90 days or more past due and foreclosed assets at the dates indicated. During the three months ended March 31, 2025, the Company downgraded a $3.3 million non-real estate, commercial loan relationship to substandard due to declines in debt service coverage. At March 31, 2025, all loans within the downgraded relationship were current and performing.
Previous wording
Investment Securities*.* Total investment securities were $45.6 million at September 30, 2024, down $38.4 million, or 45.7%, compared to $84.0 million at December 31, 2023. Net unrealized losses on securities available-for-sale totaled $3.4 million at September 30, 2024, compared to $9.2 million at December 31, 2023. Unrealized losses on available-for-sale securities relate principally to increases in market interest rates for similar securities. Our investment securities portfolio consists primarily of debt obligations issued by the U.S. government and government agencies and government-sponsored mortgage-backed securities.
Current wording
Investment Securities*.* Total investment securities were $43.3 million at March 31, 2025, up $1.1 million, or 2.7%, compared to $42.2 million at December 31, 2024. Net unrealized losses on securities available-for-sale totaled $3.9 million at March 31, 2025, compared to $4.5 million at December 31, 2024. Unrealized losses on available-for-sale securities relate principally to increases in market interest rates for similar securities. Our investment securities portfolio consists primarily of debt obligations issued by the U.S. government and government agencies and government-sponsored mortgage-backed securities.
Previous wording
The ratio of the Company’s total loans to total deposits was 99.1% and 87.5% as of September 30, 2024 and December 31, 2023, respectively.
Current wording
The ratio of the Company’s total loans to total deposits was 92.0% and 90.0% as of March 31, 2025 and December 31, 2024, respectively.
Previous wording
Total public fund deposits amounted to $21.0 million, or 13% of total deposits, at September 30, 2024, compared to $23.3 million, or 14% of total deposits, at December 31, 2023. At September 30, 2024, approximately 74% of our total public fund deposits consisted of non-interest-bearing and interest-bearing demand deposits from municipalities within our market.
Current wording
The decline in total deposits was largely due to fluctuations in public fund balances. Total public fund deposits amounted to $29.8 million, or 17% of total deposits, at March 31, 2025, compared to $35.6 million, or 19% of total deposits, at December 31, 2024. At March 31, 2025, approximately 80% of our total public fund deposits consisted of non-interest-bearing and interest-bearing demand deposits from municipalities within our market.
Previous wording
Our total uninsured deposits (that is deposits in excess of the FDIC’s insurance limit), inclusive of public funds, were approximately $40.2 million at September 30, 2024 and $44.6 million at December 31, 2023. Total uninsured non-public fund deposits were approximately $23.6 million and $26.3 million at September 30, 2024 and December 31, 2023, respectively. At September 30, 2024, the full amount of our public fund deposits in excess of the FDIC’s insurance limit were secured by either pledged investment securities of $14.4 million or $19.0 million of a custodial letter of credit granted by the Federal Home Loan Bank of Dallas.
Current wording
The estimated amount of our total uninsured deposits (that is deposits in excess of the FDIC’s insurance limit), inclusive of public funds, was approximately $44.3 million at March 31, 2025 and $53.7 million at December 31, 2024. Total uninsured non-public fund deposits were approximately $19.2 million and $22.5 million at March 31, 2025 and December 31, 2024, respectively. At March 31, 2025, the full amount of our public fund deposits in excess of the FDIC’s insurance limit were secured by either pledged investment securities of $19.1 million or $25.0 million of a custodial letter of credit granted by the Federal Home Loan Bank of Dallas.
Previous wording
Other borrowings outstanding consisted of FHLB advances totaling $9.5 million at September 30, 2024 and $9.4 million at December 31, 2023. Deferred prepayment penalties on our FHLB advances totaled $487,000 and $622,000 at September 30, 2024 and December 31, 2023, respectively.
Current wording
Borrowings. Borrowings outstanding at March 31, 2025 and December 31, 2024 consisted of FHLB advances totaling $9.6 million. The small change in the carrying value of our FHLB advances reflects the amortization of deferred prepayment penalties on $10.0 million in advances restructured in December of 2020. Deferred prepayment penalties on our FHLB advances totaled $397,000 and $442,000 at March 31, 2025 and December 31, 2024, respectively.
Previous wording
Shareholders’ Equity. Shareholders’ equity totaled $81.7 million, or 29.1% of total assets, at September 30, 2024, down $2.9 million, or 3.4%, from $84.6 million, or 31.2% of total assets, at December 31, 2023. During the nine months ended September 30, 2024, shareholders’ equity decreased by $4.3 million due to the Company’s repurchases of its common stock. The Company’s net loss of $3.7 million for the nine months ended September 30, 2024 was offset by other comprehensive income of $4.6 million, which was the result of the change in unrealized losses on available-for-sale investment securities during the first nine months of 2024.
Current wording
Shareholders’ Equity. Shareholders’ equity totaled $80.6 million, or 29.7% of total assets, at March 31, 2025, up $387,000, or 0.5%, from $80.2 million, or 29.0% of total assets, at December 31, 2024. During the three months ended March 31, 2025, shareholders’ equity increased by the Company’s net income of $586,000 and other comprehensive income of $466,000, which was the result of the change in unrealized losses on available-for-sale investment securities. These increases were partially offset by the Company’s repurchases of its common stock.
Previous wording
The Company repurchased 362,199 shares of its common stock at an average cost per share of $11.98 during the nine months ended September 30, 2024. Under the May 2024 Repurchase Plan, 93,127 shares of the Company’s common stock were available for repurchase at September 30, 2024. Since the announcement of our first share repurchase plan on January 26, 2023 and through September 30, 2024, the Company has repurchased a total of 890,873 shares of its common stock, or approximately 17% of the common shares originally issued, at an average cost per share of $11.96.
Current wording
The Company repurchased 72,949 shares of its common stock at an average cost per share of $11.86 during the three months ended March 31, 2025. Under the November 2024 Repurchase Plan, 114,201 shares of the Company’s common stock were available for repurchase at March 31, 2025. Since the announcement of our first share repurchase plan on January 26, 2023 and through March 31, 2025, the Company has repurchased a total of 1,084,799 shares of its common stock, or approximately 21% of the common shares originally issued, at an average cost per share of $11.93.
Previous wording
Interest Income. Total interest income increased $1.2 million, or 48.7%, to $3.7 million for the three months ended September 30, 2024, compared to the same period in 2023. Interest income on loans and other interest-earning assets were up $865,000 and $485,000, respectively, for the three months ended September 30, 2024, compared to the same period in 2023. These increases were partially offset by a decrease in interest income on investment securities of $148,000 for the three months ended September 30, 2024, compared to the same period in 2023.
Current wording
Interest Income. Total interest income increased $219,000, or 6.9%, to $3.4 million for the three months ended March 31, 2025, compared to the same period in 2024. Interest income on loans was up $524,000 for the three months ended March 31, 2025, compared to the same period in 2024. This increase was partially offset by decreases in interest income on investment securities and cash and due from banks of $50,000 and $253,000, respectively, for the three months ended March 31, 2025, compared to the same period in 2024.
Previous wording
The average loan yield was 6.70% for the three months ended September 30, 2024, up from 5.45% for the same period in 2023. Average loans were $161.4 million for the three months ended September 30, 2024, up $26.6 million, or 19.7%, compared to the same period in 2023. At September 30, 2024, approximately 50% of our total loans have adjustable rates and approximately 51% of total loans are scheduled to re-price or mature during the next 12 months.
Current wording
The average loan yield was 6.68% for the three months ended March 31, 2025, up from 6.17% for the same period in 2024. Average loans were $166.1 million for the three months ended March 31, 2025, up $21.7 million, or 15.0%, compared to the same period in 2024. At March 31, 2025, approximately 51% of our total loans have adjustable rates and approximately 51% of total loans are scheduled to re-price or mature during the next 12 months.
Previous wording
The decrease in interest income on investment securities was primarily due to the decrease in the average balance of total investment securities due to the sales executed during the three months ended March 31, 2024. The average rate earned on our investment securities portfolio was 2.11% for the three months ended September 30, 2024, up 47 basis points compared to the same period 2023 primarily due to investment securities purchased during 2024.
Current wording
The decrease in interest income on investment securities was primarily due to the decrease in the average balance of total investment securities as a result of the sales executed during the three months ended March 31, 2024. The average rate earned on our investment securities portfolio was 2.35% for the three months ended March 31, 2025, up 64 basis points compared to the same period 2024 primarily due to investment securities purchased after March 31, 2024.
Previous wording
Interest income on other interest-earning assets, consisting primarily of interest-earning cash and deposits at other financial institutions, increased mainly due to the re-investment of proceeds from investment securities sales executed during the first three months of 2024.
Current wording
Interest income on other interest-earning assets, consisting primarily of interest-earning cash and deposits at other financial institutions, decreased mainly due to the decline in the average balance of interest-earning cash, as well as a decline in the average rate earned. The
Previous wording
Interest Expense. Total interest expense increased $618,000, or 118.6%, to $1.1 million for the three months ended September 30, 2024, compared to $521,000 for the same period in 2023. Interest expense on deposits was $830,000 during the three months ended September 30, 2024, up $378,000, or 83.6%, compared to the same period in 2023. The average rate paid on interest-bearing deposits was 2.34% during the three months ended September 30, 2024, up 100 basis points compared to the same period in 2023. Interest expense on borrowings increased by $240,000 during the three months ended September 30, 2024 compared to the same period in 2023 mainly due to interest expense on BTFP advances.
Current wording
Interest Expense. Total interest expense decreased $53,000, or 5.0%, to $1.0 million for the three months ended March 31, 2025, compared to $1.1 million for the same period in 2024. Interest expense on deposits was $941,000 during the three months ended March 31, 2025, up $172,000, or 22.4%, compared to the same period in 2024. The average rate paid on interest-bearing deposits was 2.54% during the three months ended March 31, 2025, up 42 basis points compared to the same period in 2024. Interest expense on borrowings decreased by $225,000 during the three months ended March 31, 2025 compared to the same period in 2024 mainly due to the payoff of an advance under the Bank Term Funding Program (“BTFP”) during the fourth quarter of 2024.
Previous wording
Net Interest Income. Net interest income was $2.5 million for the three months ended September 30, 2024, up $584,000, or 30.0%, compared to 2023. Our interest rate spread was 2.94% and 2.46% for the three months ended September 30, 2024 and 2023, respectively. Our net interest margin was 3.86% and 3.09% for the three months ended September 30, 2024 and 2023, respectively. The increase in net interest margin and net interest income over the comparable periods was primarily the result of increased yields on our interest-earning assets, partially offset by the rising cost of interest-bearing liabilities.
Current wording
Net Interest Income. Net interest income was $2.4 million for the three months ended March 31, 2025, up $272,000, or 13.0%, compared to the same period in 2024. Our interest rate spread was 2.98% and 2.25% for the three months ended March 31, 2025 and 2024, respectively. Our net interest margin was 3.89% and 3.12% for the three months ended March 31, 2025 and 2024, respectively. The increase in net interest margin and net interest income over the comparable periods was largely the result of loan growth during the last nine months of 2024.
Previous wording
Provision for Credit Losses. The total provision for credit losses on loans and unfunded commitments was $337,000 for the three months ended September 30, 2024, compared to zero provision for the same period in 2023. In 2024, the provision for credit losses was largely attributable to commercial loan growth.
Current wording
Provision for Credit Losses. The total provision for credit losses on loans and unfunded commitments was zero for the three months ended March 31, 2025, compared to $95,000 for the same period in 2024. In 2024, the provision for credit losses was largely attributable to growth in total construction loan commitments.
Previous wording
Non-interest Expense. Non-interest expense totaled $7.1 million for the nine months ended September 30, 2024, up $662,000, or 10.3%, compared to the same period in 2023. Non-interest expense for the nine months ended September 30, 2024 includes $531,000 of data conversion and other associated expenses related to the Company’s upgrade to a new core processing system, which occurred during the first three months of 2024. Most of these costs are included in data processing and communication expense. Data processing and communication expense was up $495,000, or 73.3%, for the nine months ended September 30, 2024 compared to the same period in 2023.
Current wording
Data processing and communication expense totaled $182,000 for the three months ended March 31, 2025, down $612,000, or 77.1%, compared to the same period in 2024. Data processing and communication expense for the 2024 period included $550,000 of data conversion and other associated expenses due to the Company’s upgrade to a new core processing system.
Previous wording
ATM and debit card expense totaled $24,000 for the three months ended September 30, 2024, down $44,000, or 64.7%, compared to the same period in 2023. During the first three months of 2024, the Company upgraded to a new core processing system which largely contributed to reductions in debit card processing costs during the three months ended September 30, 2024.
Current wording
ATM and debit card expense totaled $22,000 for the three months ended March 31, 2025, down $47,000, or 68.1%, compared to the same period in 2024 largely due to reductions in processing costs following the Company’s upgrade to a new core processing system.
Previous wording
Income Tax Expense. The Company reported an income tax benefit of $1.0 million for the nine months ended September 30, 2024, compared to income tax expense of $2,000 for the nine months ended September 30, 2023. The change in income taxes over the comparable prior period was largely due to the loss on sales of investment securities in 2024.
Current wording
Income Tax Expense. The Company reported income tax expense of $134,000 for the three months ended March 31, 2025 compared to an income tax benefit of $1.3 million for the three months ended March 31, 2024. The change in income taxes over the comparable prior period was largely due to the loss on sales of investment securities in 2024.
Previous wording
At September 30, 2024, our borrowed funds consisted of a $20 million BTFP advance and FHLB advances with a total net carrying value of $9.5 million. The table below summarizes our unused and available liquidity sources as of September 30, 2024.
Current wording
At March 31, 2025, our borrowed funds consisted of FHLB advances with a total net carrying value of $9.6 million. The table below summarizes our unused and available liquidity sources as of March 31, 2025.
Previous wording
The Company also has a $25.0 million custodial letter of credit outstanding from the FHLB as of September 30, 2024, which is included in the calculation of our available capacity with the FHLB indicated above. The Company can allocate portions of this letter of credit to collateralize certain deposit balances in excess of the FDIC’s insurance limit as an alternative to pledging investment securities for the same purpose. At September 30, 2024, the Company used $19.0 million of the FHLB custodial letter of credit to collateralize public fund deposits.
Current wording
The Bank’s available borrowing capacity with the FHLB is secured through a blanket floating lien on real estate loans. The Company also has a $25.0 million custodial letter of credit outstanding from the FHLB as of March 31, 2025, which is included in the calculation of our available capacity with the FHLB indicated above. The Company can allocate portions of this letter of credit to collateralize certain deposit balances in excess of the FDIC’s insurance limit as an alternative to pledging investment securities for the same purpose. At March 31, 2025, the Company used $25.0 million of the FHLB custodial letter of credit to collateralize public fund deposits.
Previous wording
Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. The most significant uses and sources of cash flows during the nine months ended September 30, 2024 included:
Current wording
Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. The most significant uses and sources of cash flows during the three months ended March 31, 2025 included:
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Revision of Prior Period Financial Statements
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Income Tax Expense. The Company reported income tax expense of $108,000 for the three months ended September 30, 2024 compared to $22,000 for the three months ended September 30, 2023. The change in income taxes over the comparable prior period was largely due to the change in taxable earnings over the comparable periods.
Previous report — wording carried elsewhere
Comparison of Results of Operations for the Nine Months Ended September 30, 2024 and 2023.
Previous report — wording carried elsewhere
The decrease in interest income on investment securities was primarily due to the decrease in the average balance of total investment securities due to the sales executed during the three months ended March 31, 2024. The average rate earned on our investment securities portfolio was 1.88% for the nine months ended September 30, 2024, up 23 basis points compared to the same period in 2023 primarily due to investment securities purchased during 2024.
Previous report — wording carried elsewhere
Interest income on other interest-earning assets, consisting primarily of interest-earning cash and deposits at other financial institutions, increased mainly due to the re-investment of proceeds from investment securities sales executed during the first three months of 2024.