TEXAS COMMUNITY BANCSHARES, INC. REPORTS UNAUDITED FINANCIAL RESULTS FOR THE SECOND QUARTER ENDED JUNE 30, 2025
MINEOLA, Texas, Aug. 1, 2025 /PRNewswire/ -- Texas Community Bancshares, Inc. ("Texas Community Bancshares" or the "Company") (NASDAQ:TCBS), the holding company for Broadstreet Bank, SSB, today reported net income of $678,000 for the three months ended June 30, 2025 and $1.3 million for the six months ended June 30, 2025 compared to net income of $348,000 for the three months ended June 30, 2024 and a net loss of $2.3 million for the six months ended June 30, 2024.
Texas Community Bancshares' President and Chief Executive Officer (CEO) Jason Sobel, said, "We are thrilled about the trend we are seeing in our net income. It increased from $643,000 in the first quarter of 2025 to $678,000 in the second quarter for five straight quarters of increased earnings. This has led us to our best quarter since our initial public offering (IPO) 4 years ago. We believe that with the growth of net interest income from $6.1 million for the first half of 2024 to $6.5 million for same period in 2025 we are continuing to see the earnings impact of repositioning the balance sheet completed last year and the ongoing improvements in efficiency. The driving forces of the increased earnings are higher yielding commercial loans and relationships, continued focus on loan and deposit pricing to further expand net interest margin, and managing expenses closely. We are excited about the future and our goal is to continue to build a rewarding experience for our customers, shareholders and employees."
"The bank has invested more than ever into new technology and new products, including an automated consumer loan process from application to funding, online account opening, and online mortgage products. We are setting up deposit taking ATMs and working on making our products more focused on the customer, including new Treasury Management products, and one-time-close home improvement loans. We are dedicated to finding the needs of our clients and filling them."
"This quarter we had two large loan relationships on our over 90-day delinquent list. They are both well collateralized real estate projects with loan-to-values below 65%. One involves a $6.2 million multi-family project and the other a $2.8 million land development project. Both clients are working to resolve their respective issues as quickly as possible, but they have been placed on nonaccrual while they work through it."
"We believe we are stronger and better positioned to capitalize on opportunities in 2025. Daily we are looking at ways to enhance our market share, branch network, and client base. We remain committed to executing our strategic growth plan while creating long-term value for our shareholders."
Income
Net interest income increased $356,000, or 5.8%, to $6.5 million for the six months ended June 30, 2025 from $6.1 million for the six months ended June 30, 2024 due to a decrease in interest expense of $347,000. This resulted primarily from a reduction of $22.0 million, or 30.9%, in FHLB advances from $71.2 million at June 30, 2024 to $49.2 million at June 30, 2025. Deposit interest expense remained relatively flat in the first six months of 2025 when compared to the prior year, even though deposit balances increased $14.6 million, or 4.5%, from $324.6 million at June 30, 2024 to $339.2 million at June 30, 2025. The increase in deposits included an additional $10.0 million in brokered deposits added at the end of 2024.
Total interest income remained flat for the first six months of 2025 compared with 2024, but declined $207,000 in the three months ended June 30, 2025 compared to 2024. This was due primarily to a reversal of accrued interest of $217,000 from the two large loan relationships previously mentioned being placed on nonaccrual status.
Interest expense decreased $347,000, or 7.0% to $4.6 million for the six months ended June 30, 2025 from $5.0 million for the six months ended June 30, 2024 with $198,000 of that decrease occurring in the three months ended June 30, 2025. This is due primarily to a reduction of $22.0 million, or 30.9% in FHLB advances from $71.2 million at June 30, 2024 to $49.2 million at June 30, 2025. This resulted in a decrease of $182,000 in interest on FHLB advances in the second quarter of 2025, and a $375,000 decrease in the six months ended June 30, 2025 when compared to the prior year. Despite the increase in deposit balances, interest on deposits remained flat due to decreases in deposit rates.
For the six months ended June 30, 2024, noninterest income includes the loan sale loss, a real estate owned write down and a property disposal cost associated with a new branch. Noninterest expense includes expenses related to branch and building projects in 2024. To keep comparisons meaningful, we will only address quarterly details here.
Noninterest income increased $186,000, or 47.3%, to $579,000 for the three months ended June 30, 2025 from $393,000 for the three months ended June 30, 2024. This was due primarily to a $73,000 gain on an equity investment, a $78,000 loss on other real estate owned in 2024, and a $69,000 loss on loans sold in 2024. This was partially offset by a $72,000 decrease in other service charges and fee income.
Noninterest expense decreased $224,000, or 3.7%, for the six months ending June 30, 2025 and $81,000, or 2.7%, to $3.0 million for the three months ended June 30, 2025 from $3.1 million for the three months ended June 30, 2024 primarily due to decreases in technology expense and salary and employee benefits. This was partially offset by an increase in other expenses:
Technology expenses decreased $113,000, or 59.8%, primarily due to card processing project implementation fees incurred in the first half of 2024 associated with a "tap" debit card project.
Salary and employee benefit expenses decreased by $75,000, or 4.6%, to $1.6 million for the three months ended June 30, 2025, due primarily to reduced officer compensation of $48,000 and reduced compensation expense related to equity awards of $30,000, including a $26,000 one-time accrual reversal for awards forfeited, and lower director fees due to a reduction in the number of directors. In May 2024, the number of Directors decreased from 14 to 12 and in May of 2025, the number of Directors decreased to nine, which will result in a decrease in director fees of $18,000 per quarter going forward.
Other expenses increased by $120,000, or 21.3%, to $684,000 for the three months ended June 30, 2025 from $564,000 for the three months ended June 30, 2024. This is due to a $51,000 increase in audit and accounting expenses for additional internal audits and audit price adjustments, a $47,000 increase in marketing expense following the engagement of an outside consultant and a new advertising ...
