Summary of Key Points

Overview of Financial Performance

• The company recorded net income of $3.67 million for the first quarter of 2025, down 14.2% from the same period in 2024. Diluted earnings per share were $0.23, down 11.5% year-over-year.
• Net interest income increased 3.8% to $15.9 million, while net interest margin expanded to 3.64% from 3.49%.
• The company recorded a provision for credit losses of $0.9 million, compared to a reversal of $0.3 million in the prior year period.
• Total assets declined 0.9% to $1.88 billion, while total loans (net) decreased 0.5% to $1.04 billion and total deposits fell 1.5% to $1.67 billion.

Revenue and Profit Trends

• Interest income on loans increased 0.9% year-over-year, driven by a 13 basis point rise in loan yields.
• Interest income on certificates of deposit and interest-bearing due from banks declined due to lower balances and yields.
• Investment securities income grew 53.1% due to higher yields and balances.
• Deposit interest expense rose 11.9% as rates and balances increased.
• The provision for credit losses increased due to higher specific reserves, partially offset by lower calculated loss rates.
• Non-interest income declined 3.6% primarily from lower bank-owned life insurance income.
• Non-interest expenses increased 3.2% mainly from higher consulting fees, partially offset by lower salaries and benefits.

Strengths and Weaknesses

Strengths:

• Solid net interest margin expansion
• Diversified loan portfolio
• Strong capital ratios exceeding regulatory requirements

Weaknesses:

• Decline in net income and earnings per share
• Increase in provision for credit losses
• Decrease in total assets, loans, and deposits

Outlook

• Loan demand and deposit balances in 2025 will depend on economic and competitive conditions.
• The company maintains ample liquidity through cash, investment securities, and borrowing capacity.
• The company does not intend to elect the community bank leverage ratio framework and will continue to be subject to the generally applicable risk-based capital rules.
• Asset quality remains a focus, with the allowance for credit losses at 1.56% of total loans.
• The company expects to continue its non-payment of cash dividends on common stock in the foreseeable future.