UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the Quarterly Period ended
or
For transition period from to
Commission File Number
(Exact Name of Registrant as Specified in Charter)
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(State or Other Jurisdiction of Incorporation) |
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(I.R.S. Employer Identification No.) |
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(Address of Principal Executive Offices) |
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(Zip Code) |
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(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and formal fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading symbol |
Name of each exchange on which registered |
Indicate by check mark whether the registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports),
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
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Accelerated filer ☐ |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date:
CULLMAN BANCORP, INC.
Form 10-Q Quarterly Report
Table of Contents
PART I |
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ITEM 1. |
2 |
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
31 |
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ITEM 3. |
37 |
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ITEM 4. |
37 |
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PART II |
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ITEM 1. |
39 |
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ITEM 1A. |
39 |
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ITEM 2. |
39 |
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ITEM 3. |
39 |
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ITEM 4. |
39 |
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ITEM 5. |
39 |
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ITEM 6. |
40 |
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41 |
1
PART I
ITEM 1. FINANCIAL STATEMENTS
CULLMAN BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
March 31, 2024 and December 31, 2023
(All amounts in thousands, except share and per share data)
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March 31, 2024 (Unaudited) |
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December 31, |
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ASSETS |
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Interest bearing cash and cash equivalents |
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$ |
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$ |
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Non-interest bearing cash and cash equivalents |
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Federal funds sold |
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Total cash and cash equivalents |
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Securities available for sale |
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Loans, net of allowance of $ |
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Premises and equipment, net |
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Accrued interest receivable |
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Restricted equity securities |
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Bank owned life insurance |
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Deferred tax asset, net |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Deposits |
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Non-interest bearing |
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$ |
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$ |
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Interest bearing |
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Total deposits |
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Federal Home Loan Bank advances |
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Accrued interest payable |
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Other liabilities |
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Total liabilities |
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Shareholders' equity |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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Unearned ESOP shares, at cost |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
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$ |
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$ |
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See accompanying notes to consolidated financial statements.
2
CULLMAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF NET INCOME (unaudited)
Three months ended March 31, 2024 and 2023
(All amounts in thousands, except share and per share data)
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For the Three Months |
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2024 |
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2023 |
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Interest and dividend income: |
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Loans, including fees |
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$ |
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$ |
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Non taxable securities |
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Taxable securities |
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FHLB dividends |
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Federal funds sold and other |
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Total interest income |
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Interest expense: |
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Deposits |
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Federal Home Loan Bank advances and other borrowings |
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Total interest expense |
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Net interest income |
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Provision for (reversal of) credit losses on loans |
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Provision for (reversal of) unfunded commitments |
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Net interest income after provision for credit losses |
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Noninterest income: |
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Service charges on deposit accounts |
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Income on bank owned life insurance |
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Gain on sales of mortgage loans |
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Other |
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Total noninterest income |
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Noninterest expense: |
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Salaries and employee benefits |
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Occupancy and equipment |
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Data processing |
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Professional and supervisory fees |
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Office expense |
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Advertising |
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FDIC deposit insurance |
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Other |
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Total noninterest expense |
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Income before income taxes |
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Income tax expense |
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Net income |
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$ |
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$ |
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Earnings per share: |
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Basic |
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$ |
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$ |
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Dilutive |
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$ |
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$ |
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3
CULLMAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
Three months ended March 31, 2024 and 2023
(All amounts in thousands, except share and per share data)
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Three Months Ended March 31, |
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2024 |
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2023 |
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Net Income |
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$ |
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$ |
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Other comprehensive income (loss), net of tax |
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Unrealized gain/(loss) on securities available for sale |
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Income tax benefit |
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Other comprehensive income (loss) |
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( |
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Comprehensive income |
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$ |
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$ |
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4
CULLMAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
Three months ended March 31, 2024 and 2023
(All amounts in thousands, except share and per share data)
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Shares |
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Common |
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Additional |
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Retained |
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Accumulated |
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Unearned |
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Total |
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Balance at January 1, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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Share repurchase |
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( |
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— |
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( |
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— |
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— |
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— |
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( |
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ESOP shares earned |
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— |
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— |
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— |
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— |
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— |
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Dividend paid |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Balance at January 1, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Cumulative change in accounting principle (Note 1) |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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Balance at January 1, 2023 (as adjusted for change in accounting principal) |
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( |
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( |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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— |
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Share repurchase |
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( |
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— |
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( |
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— |
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— |
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— |
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( |
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ESOP shares earned |
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— |
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— |
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— |
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— |
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— |
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Dividend paid |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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5
CULLMAN BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three months ended March 31, 2024 and 2023
(All amounts in thousands, except share and per share data)
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2024 |
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2023 |
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Cash flows from operating activities |
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Net income |
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$ |
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$ |
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Adjustment to reconcile net income to net cash provided from operating |
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(Recovery)/provision for credit losses |
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( |
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Depreciation and amortization, net |
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Deferred income taxes |
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Losses on disposal of fixed assets |
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Gains on sales of repossessions |
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Capital improvements to foreclosed real estate |
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( |
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Gains from change in fair value of equity securities |
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( |
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Income on bank owned life insurance |
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( |
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( |
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Gains on sale of mortgage loans |
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( |
) |
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( |
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Mortgage loans originated for sale |
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( |
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( |
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Mortgage loans sold |
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ESOP compensation expense |
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Stock based compensation expense |
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Net change in operating assets and liabilities |
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(Increase)/decrease in accrued interest receivable |
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( |
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Increase/(decrease) in accrued interest payable |
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( |
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Decrease in other assets |
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Net cash provided by operating activities |
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Cash flows from investing activities |
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Net purchases of premises and equipment |
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( |
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Redemption of equity securities |
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Proceeds from maturities, prepayments and calls of available for sale securities |
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Proceeds from sales of foreclosed real estate |
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Purchases of restricted equity securities |
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( |
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( |
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Loan originations and payments, net |
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( |
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( |
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Net cash used in investing activities |
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( |
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( |
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Cash flows from financing activities |
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Net decrease in deposits |
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( |
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( |
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Proceeds from Federal Home Loan Bank advances |
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Cash payment of dividends |
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( |
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( |
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Payments from share repurchases |
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( |
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( |
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Net cash provided by/(used in) financing activities |
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( |
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Net change in cash and cash equivalents |
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( |
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Cash and cash equivalents at the beginning of period |
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Cash and cash equivalents at end of the period |
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$ |
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$ |
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Supplemental cash flow information |
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Interest paid |
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$ |
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$ |
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Income taxes paid |
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Supplemental noncash disclousres |
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Day 1 impact of Current Expected Credit Losses |
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( |
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6
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Principles of Consolidation: The consolidated financial statements of Cullman Bancorp, Inc. (“the Bancorp”) include the accounts of its wholly owned subsidiary, Cullman Savings Bank (“the Bank”), together referred to as “the Company”.
The Company provides financial services through its offices in Cullman County, Alabama. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are residential mortgage, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. There are no significant concentrations of loans to any one industry or customer. However, the customers ability to repay their loans is dependent on the real estate and general economic conditions in the area. The unaudited consolidated financial statements, including the notes thereto, have been prepared in accordance with U.S. GAAP interim reporting requirements and general banking industry guidelines, and therefore, do not include all information and notes included in the annual consolidated financial statements in conformity with GAAP. These interim consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K.
Risk and Uncertainties: The ongoing economic challenges, including issues such as rising inflation and effects of related governmental responses continue to evolve, in addition to the risk related to recent and potential bank failures. Because of the significant uncertainties related to the inflation and its potential effects on customers and prospects, and on the national and local economy as a whole, there can be no assurances as to how it may ultimately affect the Company. Related to potential bank failures, there can be no assurance on how our customers will react. It is reasonably possible that estimates made in the financial statements could be materially and adversely impacted in the near term as a result of these conditions, including expected credit losses on loans and off-balance sheet credit exposures as well as run off of deposits.
R
As an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), the Company is permitted an extended transition period for complying with new or revised accounting standards affecting public companies. We will remain an emerging growth company until the earliest of (i) the end of the fiscal year during which we have total annual gross revenues of $
7
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ADOPTION OF NEW ACCOUNTING STANDARDS:
The Company did not modify or adopt any new accounting policies during the three months ended March 31, 2024 that were not disclosed in the Company's 2023 audited consolidated financial statements included on the Form 10-K.
The Company has reviewed newly issued not yet effective accounting standards and concluded as of March 31, 2024, there are none that are likely to impact the Company's financial statements or disclosures.
(Continued)
8
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 2 – SECURITIES AVAILABLE FOR SALE
Debt Securities
The fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income at March 31, 2024 and December 31, 2023 were as follows:
March 31, 2024 |
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Amortized |
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Gross |
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Gross |
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Estimated |
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U.S Government sponsored entities |
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$ |
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|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Municipal – taxable |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Municipal – tax exempt |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Residential mortgage-backed |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Commercial mortgage-backed |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
SBA(1) guaranteed debenture |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2023 |
|
Amortized |
|
|
Gross |
|
|
Gross |
|
|
Estimated |
|
||||
U.S Government sponsored entities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Municipal – taxable |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Municipal – tax exempt |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Residential mortgage-backed |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Commercial mortgage-backed |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
SBA guaranteed debenture |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
(1)
The Company’s mortgage-backed securities are primarily issued by agencies such as Fannie Mae and Ginnie Mae. There were
The amortized cost and fair value of the investment securities portfolio are shown below by expected maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.
|
|
March 31, 2024 |
|
|||||
|
|
Amortized |
|
|
Estimated |
|
||
Due within one year |
|
$ |
|
|
$ |
|
||
Due after one to five years |
|
|
|
|
|
|
||
Due after five to ten years |
|
|
|
|
|
|
||
Due after ten years |
|
|
|
|
|
|
||
Commercial mortgage-backed |
|
|
|
|
|
|
||
Residential mortgage-backed |
|
|
|
|
|
|
||
SBA guaranteed debenture |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
(Continued)
9
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 2 – SECURITIES AVAILABLE FOR SALE (CONTINUED)
Carrying amounts of securities pledged to secure public deposits as of March 31, 2024 and December 31, 2023 were $
Securities with unrealized losses at March 31, 2024 and December 31, 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:
|
|
Less than 12 months |
|
|
12 months or more |
|
|
Total |
|
|||||||||||||||
March 31, 2024 |
|
Fair |
|
|
Unrealized |
|
|
Fair |
|
|
Unrealized |
|
|
Fair |
|
|
Unrealized |
|
||||||
U.S Government sponsored entities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||||
Municipal – taxable |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Municipal – tax exempt |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Residential mortgage-backed |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Commercial mortgage-backed |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
SBA guaranteed debenture |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Total temporarily impaired |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
|
Less than 12 months |
|
|
12 months or more |
|
|
Total |
|
|||||||||||||||
December 31, 2023 |
|
Fair |
|
|
Unrealized |
|
|
Fair |
|
|
Unrealized |
|
|
Fair |
|
|
Unrealized |
|
||||||
U.S Government sponsored entities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||||
Municipal – taxable |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Municipal – tax exempt |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Residential mortgage-backed |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Commercial mortgage-backed |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
SBA guaranteed debenture |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Total temporarily impaired |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
Unrealized losses have not been recognized into income because the issuers bonds are of high credit quality, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continues to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.
All of the securities except for two municipal-taxable securities have unrealized losses at March 31, 2024.
(Continued)
10
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 3 – LOANS
Loans at March 31, 2024 and December 31, 2023 were as follows:
|
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
|
||
Real Estate Loans: |
|
|
|
|
|
|
||
One-to-four family |
|
$ |
|
|
$ |
|
||
Multi-family |
|
|
|
|
|
|
||
Commercial |
|
|
|
|
|
|
||
Construction |
|
|
|
|
|
|
||
Total real estate loans |
|
|
|
|
|
|
||
Commercial loans |
|
|
|
|
|
|
||
Consumer loans: |
|
|
|
|
|
|
||
Home equity loans and lines of credit |
|
|
|
|
|
|
||
Other consumer |
|
|
|
|
|
|
||
Total consumer loans |
|
|
|
|
|
|
||
Total loans |
|
|
|
|
|
|
||
Net deferred loans fees |
|
|
( |
) |
|
|
( |
) |
Allowance for credit losses |
|
|
( |
) |
|
|
( |
) |
Loans, net |
|
$ |
|
|
$ |
|
The following table present the activity in the allowance for credit losses by portfolio segment for the period ending March 31, 2024.
|
|
Real Estate |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
March 31, 2024 |
|
One-to-Four Family |
|
|
Multi-Family |
|
|
Commercial |
|
|
Construction |
|
|
Commercial |
|
|
Consumer |
|
|
Total |
|
|||||||
Beginning balance January 1, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Charge offs |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Provisions |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Total ending balance March 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
(Continued)
11
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 3 – LOANS (CONTINUED)
The following tables present the activity in the allowance for credit losses for the periods ended December 31, 2023 and March 31, 2023. The recorded investment in loans in any of the following tables does not include accrued and unpaid interest or any deferred loan fees or costs, as amounts are not significant.
|
|
Real Estate |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
December 31, 2023 |
|
One-to-Four Family |
|
|
Multi-Family |
|
|
Commercial |
|
|
Construction |
|
|
Commercial |
|
|
Consumer |
|
|
Total |
|
|||||||
Beginning balance January 1, 2023, prior to adoption of ASC 326 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Impact of adopting 326 |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|||||
Charge offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||||
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Provisions |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Total ending balance December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
Real Estate |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
March 31, 2023 |
|
One-to-Four Family |
|
|
Multi-Family |
|
|
Commercial |
|
|
Construction |
|
|
Commercial |
|
|
Consumer |
|
|
Total |
|
|||||||
Beginning balance January 1, 2023, prior to adoption of ASC 326 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Impact of adopting 326 |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|||||
Charge offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||||
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Provisions |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Total ending balance March 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
For collateral-dependent loans, the allowance for credit losses is individually assessed based on the fair value of the collateral less estimated costs of sale.
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Real estate loans: |
|
|
|
|
|
|
||
One-to-four family |
|
$ |
|
|
$ |
|
||
Multi-family |
|
|
|
|
|
|
||
Commercial |
|
|
|
|
|
|
||
Commercial |
|
|
|
|
|
|
||
Consumer: |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
The difference between interest income recognized and cash basis interest income recognized was not material.
(Continued)
12
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 3 – LOANS (CONTINUED)
The following tables present the aging of the recorded investment in past due loans at March 31, 2024 and December 31, 2023 by portfolio class of loans:
March 31, 2024 |
|
30-59 Days Past Due |
|
|
60-89 Days Past Due |
|
|
90 Days or More Past Due |
|
|
Total Past Due |
|
|
Current |
|
|
Total Loans |
|
||||||
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
One-to-four family |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Multi-family |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total real estate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Consumer loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Home equity loans and lines of credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other consumer loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
December 31, 2023 |
|
30-59 Days Past due |
|
|
60-89 Days Past due |
|
|
90 Days or More Past Due |
|
|
Total Past Due |
|
|
Current |
|
|
Total Loans |
|
||||||
Real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
One-to-four family |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Multi-family |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total real estate loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Consumer loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Home equity loans and lines of credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other consumer loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
A loan need not be placed in nonaccrual status if the loan is a consumer loan (loans to individuals for household, family and other personal expenditures) or the loan is secured by a one- to four family residential property. Such loans should be subject to other alternative methods of evaluation to assure that the Bank's interest income is not materially overstated. The loans that were past due 90 days or more were accruing interest as of March 31, 2024 and December 31, 2023 due to the fact that they were well secured and in the process of collection. As of March 31, 2024 and December 31, 2023, there were no loans on nonaccrual.
(Continued)
13
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 3 – LOANS (CONTINUED)
Loan Modifications to Borrowers Experiencing Financial Difficulty:
Occasionally, the Company may make certain modifications of loans to borrowers experiencing financial difficulty.
These modifications may be in the form of an interest rate reduction, a term extension or a combination thereof.
Upon the Company's determination that a modified loan has subsequently been uncollectible, the portion of the loan
deemed uncollectible is charged off against the allowance for credit losses on loans held for investment.
The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of these modifications efforts. During the quarter ended March 31, 2024 and the year ended December 31, 2023, the Company had no modified loans to borrowers experiencing financial difficulty.
Credit Quality Indicators:
The Company utilizes a grading system whereby all loans are assigned a grade based on the risk profile of each loan. Loan grades are determined based on an evaluation of relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. All loans, regardless of size, are analyzed and are given a grade based upon the management’s assessment of the ability of borrowers to service their debts. The analysis is performed on a quarterly basis.
The Company uses the following definitions for loan grades:
Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of repayment prospects for the loan or of the institution’s credit position at some future date.
Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
Loans not meeting the criteria above are graded Pass. These loans are included within groups of homogeneous pools of loans based upon portfolio segment and class for estimation of the allowance for credit losses on a collective basis.
(Continued)
14
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 3 – LOANS (CONTINUED)
At March 31, 2024, based on the most recent analysis performed, the risk category of loans by class of loans is as follows:
|
|
Term Loans by Origination Year |
|
|
|
|
|
|
|
|||||||||||||||||||||||
March 31, 2024 |
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
Prior |
|
|
Revolving Loans |
|
|
Total |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
One-to-four family |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total one-to-four family |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Multi-family |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total multi-family |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Commercial real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total commercial real estate |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total construction |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
(Continued)
15
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 3 – LOANS (CONTINUED)
|
|
Term Loans by Origination Year |
|
|
|
|
|
|
|
|||||||||||||||||||||||
March 31, 2024 |
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
Prior |
|
|
Revolving Loans |
|
|
Total |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total commercial |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Commercial loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current period gross write offs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Home equity and lines of credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total home equity and lines of credit |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total consumer |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Loans |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
(Continued)
16
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 3 – LOANS (CONTINUED)
At December 31, 2023, based on the most recent analysis performed, the loan grade for each loan by portfolio class is as follows:
|
|
Term Loans by Origination Year |
|
|
|
|
|
|
|
|||||||||||||||||||||||
December 31, 2023 |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
Prior |
|
|
Revolving Loans |
|
|
Total |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
One-to-four family |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total one-to-four family |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Multi-family |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total multi-family |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Commercial real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total commercial real estate |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total construction |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total commercial |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
(Continued)
17
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 3 – LOANS (CONTINUED)
|
|
Term Loans by Origination Year |
|
|
|
|
|
|
|
|||||||||||||||||||||||
December 31, 2023 |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
Prior |
|
|
Revolving Loans |
|
|
Total |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Home equity and lines of credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total home equity and lines of credit |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total consumer |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Loans |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
NOTE 4- PREMISES AND EQUIPMENT
Premises and equipment at March 31, 2024 and December 31, 2023 were as follows:
|
|
2024 |
|
|
2023 |
|
||
Land |
|
$ |
|
|
$ |
|
||
Buildings and improvements |
|
|
|
|
|
|
||
Furniture, fixtures and equipment |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Less: Accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
|
|
$ |
|
|
$ |
|
As of March 31, 2024, building and improvements included construction in process for the Hanceville branch and a new 278 drive-through for $
(Continued)
18
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 5 – DEPOSITS
Time deposits that meet or exceed the FDIC insurance limit of $
2024 |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
At March 31, 2024 and 2023, overdraft demand and savings deposits reclassified to loans totaled $
NOTE 6 – FEDERAL HOME LOAN BANK ADVANCES AND OTHER DEBT
At March 31, 2024 and December 31, 2023, advances from the Federal Home Loan Bank were as follows:
|
|
2024 |
|
|
2023 |
|
||
Maturities October 2025 through January 2029, fixed rate at rates |
|
$ |
|
|
$ |
|
||
Maturities October 2025 through March 2028, fixed rate at rates |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
(Continued)
19
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 6 – FEDERAL HOME LOAN BANK ADVANCES AND OTHER DEBT (CONTINUED)
Each advance, in the table above, is payable at its maturity date, with a prepayment penalty for fixed rate advances. The advances were collateralized by $
Payments over the next five years are as follows:
2024 |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
Thereafter |
|
|
|
The Company had approximately $
NOTE 7 - EMPLOYEE STOCK OWNERSHIP PLAN
With the conversion to the stock holding company,
The Company will make discretionary contributions to the ESOP, as well as paying dividends on unallocated shares to the ESOP, and the ESOP uses funds it receives to repay the loan. When loan payments are made, ESOP shares are allocated to participants based on relative compensation and expense is recorded. Dividends on allocated shares increase participant accounts.
Participants receive the shares at the end of employment. A participant may require stock received to be repurchased unless the stock is traded on an established market.
The ESOP compensation expense for the three months ended March 31, 2024 and 2023 was $
(Continued)
20
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 8 – STOCK BASED COMPENSATION
In May 2020, the stockholders approved the Cullman Bancorp, Inc. 2020 Equity Incentive Plan (the “2020 Equity Incentive Plan”) for employees and directors of the Company. The Equity Incentive Plan authorizes the issuance of up to
In May 2023, the stockholders approved the Cullman Bancorp, Inc. 2023 Equity Incentive Plan (the "2023 Equity Incentive Plan") for employees and directors of the Company. The 2023 Equity Incentive Plan authorizes the issuance of up to
As of March 31, 2024, there were
The following table summarizes stock option activity for the three months ended March 31, 2024:
|
|
Options |
|
|
Weighted- |
|
|
Weighted- |
|
|
Aggregate |
|
||||
Outstanding Beginning of period |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exercised |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forfeited |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outstanding End of Period |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Vested or expected to vest |
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|||
Exercisable at period end |
|
|
|
|
|
|
|
|
|
|
$ |
( |
) |
(1)
(Continued)
21
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 8 – STOCK BASED COMPENSATION (CONTINUED)
Stock based compensation expense for stock options for the three months ended March 31, 2024 and 2023 was $
In relation to the 2023 Equity Incentive Plan, there were
The following table summarizes non-vested restricted stock activity for the quarter ended March 31, 2024:
Nonvested Shares |
|
2024 |
|
Weighted Average Grant-Date Fair Value |
|
||
Balance – January 1, 2024 |
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
||
Vested |
|
|
|
|
|
||
Balance – March 31, 2024 |
|
|
|
$ |
|
The following table summarizes the restricted stock fair value:
Date of Awards |
|
Shares |
|
|
Converted Shares |
|
|
Vesting Period (years) |
|
|
Converted Fair Value |
|
||||
August 2020 |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
August 2023 |
|
|
|
|
|
|
|
|
|
|
$ |
|
Stock-based compensation expense for restricted stock included in noninterest expense for the three months ended March 31, 2024 and 2023 was $
For the three months ended March 31, 2024, stock-based compensation expense for restricted stock included in noninterest expense was $
(Continued)
22
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 9 - REGULATORY CAPITAL MATTERS
Banks are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. Management believes as of March 31, 2024, the Bank meets all capital adequacy requirements to which they are subject. The Bancorp is not subject to regulatory capital requirements due to its size.
Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. As of March 31, 2024 and December 31, 2023, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.
The community bank leverage ratio framework (CBLR framework) provides qualifying community banking organizations an optional, simplified measure to determine capital adequacy. The Bank initially made the CBLR election as of December 31, 2020.
The community bank leverage ratio removes the requirement for qualifying banking organizations to calculate and report risk-based capital but rather only requires a Tier 1 to average assets (leverage) ratio. Qualifying banking organizations that elect to use the community bank leverage rate framework and that maintain a leverage ratio of greater than required minimums will be considered to have satisfied the generally applicable risk based and leverage capital requirements in the agencies’ capital rules (generally applicable rule) and, if applicable, will be considered to have met the well capitalized ratio requirements for purposes of the Federal Deposit Insurance Act. The community bank leverage ratio minimum requirement is currently
An eligible banking organization can opt out of the CBLR framework and revert back to the risk-weighting framework without restriction. As of March 31, 2024 the Bank was a qualifying community banking organization as defined by the federal banking agencies and elected to measure capital adequacy under the CBLR framework.
(Continued)
23
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 9 - REGULATORY CAPITAL MATTERS (CONTINUED)
Actual and required capital amounts for the Bank and ratios at March 31, 2024 and December 31, 2023 are presented below:
|
|
Actual |
|
|
To be well Capitalized |
|
||||||||||
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
||||
March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Tier 1 (Core) Capital to average total |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Tier 1 (Core) Capital to average total |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
Dividend Restrictions - The Company’s principal source of funds for dividend payments is dividends received from the Bank as well as proceeds retained from the mutual-to-stock conversion. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. During 2024, the Bank could, without prior approval from its regulators, declare dividends of approximately $
(Continued)
24
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 10 – FAIR VALUES OF FINANCIAL INSTRUMENTS
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability; or generated from model-based techniques that use at least one significant assumption not observable in the market. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.
The Company used the following methods and significant assumptions to estimate fair value:
Investment Securities: The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing. Matrix pricing is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). Equity securities are carried at fair value, with changes in fair value reported in net income. This investment is considered an equity security with readily determinable fair value not held for trading (Level 3).
For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). The Company’s taxable municipal investment securities’ fair values are determined based on a discounted cash flow analysis prepared by an independent third party.
(Continued)
25
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 10 – FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
Collateral Dependent Loans: For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Collateral dependent loans are evaluated on a quarterly basis and associated specific reserves are adjusted accordingly.
Foreclosed Real Estate: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.
Appraisals for loans where the value is $
(Continued)
26
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 10 – FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
Assets and Liabilities Measured on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis are summarized below:
|
|
Fair Value Measurement Using |
|
|||||||||
|
|
Quoted Prices in |
|
|
Significant Other |
|
|
Significant |
|
|||
March 31, 2024 |
|
|
|
|
|
|
|
|
|
|||
Securities available for sale |
|
|
|
|
|
|
|
|
|
|||
U.S. Government sponsored agencies |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Municipal – taxable |
|
|
|
|
|
|
|
|
|
|||
Municipal – taxable exempt |
|
|
|
|
|
|
|
|
|
|||
Residential mortgage-backed |
|
|
|
|
|
|
|
|
|
|||
Commercial mortgage-backed |
|
|
|
|
|
|
|
|
|
|||
SBA guaranteed debenture |
|
|
|
|
|
|
|
|
|
|||
Total investment securities available for sale |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Fair Value Measurement Using |
|
|||||||||
|
|
Quoted Prices in |
|
|
Significant Other |
|
|
Significant |
|
|||
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|||
Securities available for sale |
|
|
|
|
|
|
|
|
|
|||
U.S. Government sponsored agencies |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Municipal – taxable |
|
|
|
|
|
|
|
|
|
|||
Municipal – taxable exempt |
|
|
|
|
|
|
|
|
|
|||
Residential mortgage-backed |
|
|
|
|
|
|
|
|
|
|||
Commercial mortgage-backed |
|
|
|
|
|
|
|
|
|
|||
SBA guaranteed debenture |
|
|
|
|
|
|
|
|
|
|||
Total investment securities available for sale |
|
$ |
|
|
$ |
|
|
$ |
|
There were no assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of March 31, 2024 or December 31, 2023. There were
(Continued)
27
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 10 – FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
Our state and municipal securities valuations are supported by analysis prepared by an independent third party. Their approach to determining fair value involves using recently executed transactions for similar securities and market quotations for similar securities. As these securities are not rated by the rating agencies and trading volumes are thin, it was determined that these were valued using Level 3 inputs. The significant unobservable inputs used in the fair value measurement of the Company's taxable municipal securities are discount rates and credit spreads that the market would require for taxable municipal securities with similar maturities and risk characteristics. Significant increases/(decreases) in any of those inputs in isolation would result in a significantly lower/(higher) fair value measurement.
Assets and Liabilities Measured on a Nonrecurring Basis
The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with U.S. generally accepted accounting principles. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period.
|
|
Fair Value Measurements |
|
|||||
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Individually evaluated Loans: |
|
|
|
|
|
|
||
RE loans: |
|
|
|
|
|
|
||
One-to four family |
|
$ |
|
|
$ |
|
||
Commercial |
|
|
|
|
|
|
||
Commercial |
|
|
|
|
|
|
(Continued)
28
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 10 – FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
The Company has estimated the fair values of these assets using Level 3 inputs, specifically the appraised value of the collateral. Impaired loan balances represent those collateral dependent impaired loans where management has estimated the credit loss by comparing the loan’s carrying value against the expected realizable fair value of the impaired loan for the amount of the credit loss. The Company had
The carrying amounts and estimated fair values of the Company’s on-balance sheet financial instruments at March 31, 2024 and December 31, 2023 are summarized below:
|
|
|
|
|
Fair Value Measurements at |
|
||||||||||||||
|
|
Carrying Amount |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Securities available for sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loan, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accrued interest receivable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Restricted equity securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A |
|
|||||
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Deposits |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|||||
Federal Home Loan Bank advances |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accrued interest payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at |
|
||||||||||||||
|
|
Carrying Amount |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Securities available for sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loan, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accrued interest receivable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Restricted equity securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A |
|
|||||
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Deposits |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Federal Home Loan Bank advances |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accrued interest payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Continued)
29
CULLMAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except share and per share data)
NOTE 11 – EARNINGS PER COMMON SHARE
The factors used in the earnings per common share computation follow:
|
|
For the Three Months |
|
|
|||||
|
|
2024 |
|
|
2023 |
|
|
||
Earnings per share |
|
|
|
|
|
|
|
||
Net Income |
|
$ |
|
|
$ |
|
|
||
Less: Distributed earning allocated to participating |
|
|
|
|
|
|
|
||
Less: Earnings allocated to participating securities |
|
|
|
|
|
( |
) |
|
|
Net earnings allocated to common stock |
|
|
|
|
|
|
|
||
Weighted common shares outstanding |
|
|
|
|
|
|
|
||
Less: Participating securities |
|
|
( |
) |
|
|
( |
) |
|
Less: Average unearned ESOP shares |
|
|
( |
) |
|
|
( |
) |
|
Weighted average shares |
|
|
|
|
|
|
|
||
Basic earnings per share |
|
$ |
|
|
$ |
|
|
||
Dilutive |
|
|
|
|
|
|
|
||
Net earnings allocated to common stock |
|
|
|
|
|
|
|
||
Weighted average shares |
|
|
|
|
|
|
|
||
Add: dilutive effects of assumed exercises of stock |
|
|
|
|
|
|
|
||
Average shares and dilutive potential common shares |
|
|
|
|
|
|
|
||
Dilutive earnings per share |
|
$ |
|
|
$ |
|
|
Stock options for
(Continued)
30
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Information
This Quarterly Report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect,” “will,” “may,” “continue” and words of similar meaning. These forward-looking statements include, but are not limited to:
These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. You should not place undue reliance on such statements. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this Quarterly Report.
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:
31
Comparison of Financial Condition at March 31, 2024 and December 31, 2023
Total assets increased $9.1 million, or 2.2%, to $420.7 million at March 31, 2024 from $411.6 million at December 31, 2023. The increase was due to increases in cash, loans held for investment, and premises and equipment.
Cash and cash equivalents increased $4.3 million, or 33.1%, to $17.3 million at March 31, 2024 from $13.0 million at December 31, 2023. The increase was due to an increase in fed funds, as we have held excess cash to increase liquidity.
32
Gross loans held for investment increased $3.6 million, or 1.1%, to $346.3 million at March 31, 2024 from $342.7 million at December 31, 2023. The increase was primarily due to an increase in commercial real estate loans, which increased $3.4 million, or 3.4%, to $104.7 million at March 31, 2024 from $101.3 million at December 31, 2023.
Securities available for sale decreased $634 thousand, or 2.2%, to $27.7 million at March 31, 2024 from $28.3 million at December 31, 2023. The decrease is primarily due to the paydowns received in mortgaged-backed securities. The decrease is additionally due an increase in the unrealized loss.
Total deposits decreased $563 thousand, or 0.2%, to $268.4 million at March 31, 2024 from $269.0 million at December 31, 2023. We experienced decreases in interest-bearing demand deposits of $5.0 million, or 4.7%, to $101.3 million at March 31, 2024 from $106.3 million at December 31, 2023, and regular savings and other deposits of $4.1 million, or 7.2%, to $53.2 million at March 31, 2024 from $57.3 million at December 31, 2023. The decreases were due a decrease in public funds as well as cyclical decreases. The decreases were offset by an increase in time deposits of $7.2 million, or 8.0%, to $98.0 million at March 31, 2024 from $90.8 million at December 31, 2023. This increase is primarily due to a $5 million brokered certificate.
Borrowings increased $10.0 million, or 28.6%, to $45.0 million at March 31, 2024, from $35.0 million at December 31, 2023. We increased our borrowings due to loan demand and to increase liquidity. We regularly review our liquidity position based on alternative uses of available funds as well as market conditions.
Stockholders’ equity decreased $402 thousand, or 0.4%, to $101.3 million at March 31, 2024 from $101.7 million at December 31, 2023. The decrease was mainly due to share repurchases of $373 thousand and the decrease in accumulated other comprehensive income (unrealized losses on securities available-for-sale) of $163 thousand for the three months ended March 31, 2024. Stockholders' equity (book value) per share at March 31, 2024 was $13.95 compared to $13.93 at December 31, 2023.
Average Balance Sheets
The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Nonaccrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Loan balances exclude loans held for sale. We had no intangible assets at March 31, 2024.
33
|
|
Three Months Ended March 31, |
|
|||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
||||||||||||||||||
|
|
Average |
|
|
Interest |
|
|
Average |
|
|
Average |
|
|
Interest |
|
|
Average |
|
||||||
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loans |
|
$ |
344,013 |
|
|
$ |
4,633 |
|
|
|
5.39 |
% |
|
$ |
336,250 |
|
|
$ |
4,133 |
|
|
|
4.92 |
% |
Securities |
|
|
28,194 |
|
|
|
226 |
|
|
|
3.21 |
% |
|
|
30,289 |
|
|
|
249 |
|
|
|
3.29 |
% |
Federal Home Loan Bank and Federal Reserve Bank stock |
|
|
3,141 |
|
|
|
36 |
|
|
|
4.58 |
% |
|
|
2,091 |
|
|
|
18 |
|
|
|
3.44 |
% |
Federal funds sold |
|
|
13,616 |
|
|
|
185 |
|
|
|
5.43 |
% |
|
|
22,581 |
|
|
|
252 |
|
|
|
4.46 |
% |
Total interest-earning assets |
|
|
388,964 |
|
|
|
5,080 |
|
|
|
5.22 |
% |
|
|
391,211 |
|
|
|
4,652 |
|
|
|
4.76 |
% |
Noninterest-earning assets |
|
|
28,336 |
|
|
|
|
|
|
|
|
|
24,264 |
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
417,300 |
|
|
|
|
|
|
|
|
$ |
415,475 |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest-bearing demand deposits |
|
$ |
102,441 |
|
|
|
164 |
|
|
|
0.64 |
% |
|
$ |
108,546 |
|
|
|
54 |
|
|
|
0.20 |
% |
Regular savings and other deposits |
|
|
55,181 |
|
|
|
55 |
|
|
|
0.40 |
% |
|
|
75,870 |
|
|
|
88 |
|
|
|
0.46 |
% |
Money market deposits |
|
|
2,630 |
|
|
|
5 |
|
|
|
0.76 |
% |
|
|
2,945 |
|
|
|
2 |
|
|
|
0.27 |
% |
Certificates of deposit |
|
|
95,331 |
|
|
|
878 |
|
|
|
3.68 |
% |
|
|
80,410 |
|
|
|
332 |
|
|
|
1.65 |
% |
Total interest-bearing deposits |
|
|
255,583 |
|
|
|
1,102 |
|
|
|
1.72 |
% |
|
|
267,771 |
|
|
|
476 |
|
|
|
0.71 |
% |
Federal Home Loan Bank advances |
|
|
42,472 |
|
|
|
457 |
|
|
|
4.30 |
% |
|
|
26,111 |
|
|
|
283 |
|
|
|
4.34 |
% |
Total interest-bearing liabilities |
|
|
298,055 |
|
|
|
1,559 |
|
|
|
2.09 |
% |
|
|
293,882 |
|
|
|
759 |
|
|
|
1.03 |
% |
Noninterest-bearing demand deposits |
|
|
11,378 |
|
|
|
|
|
|
|
|
|
15,529 |
|
|
|
|
|
|
|
||||
Other noninterest-bearing liabilities |
|
|
6,333 |
|
|
|
|
|
|
|
|
|
5,696 |
|
|
|
|
|
|
|
||||
Total liabilities |
|
|
315,766 |
|
|
|
|
|
|
|
|
|
315,107 |
|
|
|
|
|
|
|
||||
Total shareholders’ equity |
|
|
101,534 |
|
|
|
|
|
|
|
|
|
100,368 |
|
|
|
|
|
|
|
||||
Total liabilities and shareholders’ |
|
$ |
417,300 |
|
|
|
|
|
|
|
|
$ |
415,475 |
|
|
|
|
|
|
|
||||
Net interest income |
|
|
|
|
$ |
3,521 |
|
|
|
|
|
|
|
|
$ |
3,893 |
|
|
|
|
||||
Net interest rate spread (2) |
|
|
|
|
|
|
|
|
3.13 |
% |
|
|
|
|
|
|
|
|
3.73 |
% |
||||
Net interest-earning assets (3) |
|
$ |
90,909 |
|
|
|
|
|
|
|
|
$ |
97,329 |
|
|
|
|
|
|
|
||||
Net interest margin (4) |
|
|
|
|
|
|
|
|
3.62 |
% |
|
|
|
|
|
|
|
|
3.98 |
% |
||||
Average interest-earning assets to |
|
1.31x |
|
|
|
|
|
|
|
|
1.33x |
|
|
|
|
|
|
|
34
The following table presents the effects of changing rates and volumes on our net interest income for the three months ended March 31, 2024 and 2023. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. There were no out-of-period items or adjustments required to be excluded from the table below.
|
For the Three Months ended March 31, 2024 vs. 2023 |
|
|||||||||
|
|
|
|||||||||
|
Increase (Decrease) Due to |
|
|
Total Increase |
|
||||||
|
Volume |
|
|
Rate |
|
|
(Decrease) |
|
|||
|
|
|
|
(In thousands) |
|
|
|
|
|||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|||
Loans |
$ |
382 |
|
|
$ |
118 |
|
|
$ |
500 |
|
Securities |
|
(69 |
) |
|
|
46 |
|
|
|
(23 |
) |
Federal Home Loan Bank and Federal Reserve stock |
|
36 |
|
|
|
(18 |
) |
|
|
18 |
|
Federal funds sold |
|
(400 |
) |
|
|
333 |
|
|
|
(67 |
) |
Total interest-earning assets |
|
(51 |
) |
|
|
479 |
|
|
|
428 |
|
|
|
|
|
|
|
|
|
|
|||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|||
Interest-bearing demand Deposits |
|
(12 |
) |
|
|
122 |
|
|
|
110 |
|
Regular savings and other deposits |
|
(95 |
) |
|
|
62 |
|
|
|
(33 |
) |
Money market deposits |
|
(1 |
) |
|
|
4 |
|
|
|
3 |
|
Certificates of deposit |
|
246 |
|
|
|
300 |
|
|
|
546 |
|
Total interest-bearing deposits |
|
138 |
|
|
|
488 |
|
|
|
626 |
|
Federal Home Loan Bank advances |
|
710 |
|
|
|
(536 |
) |
|
|
174 |
|
Total interest bearing liabilities |
|
848 |
|
|
|
(48 |
) |
|
|
800 |
|
|
|
|
|
|
|
|
|
|
|||
Change in net interest income |
$ |
(899 |
) |
|
$ |
527 |
|
|
$ |
(372 |
) |
Comparison of Operating Results for the Three months ended March 31, 2024 and 2023
General. Net income was $714 thousand for the three months ended March 31, 2024, a decrease of $301 thousand from net income of $1.0 million for the three months ended March 31, 2023.
Interest Income. Interest income increased $428 thousand, or 9.2%, to $5.1 million for three months ended March 31, 2024 from $4.7 million for the three months ended March 31, 2023. The increase was due primarily to an increase in interest income on loans, which is our primary source of interest income. Interest income on loans increased $500 thousand, or 12.1%, to $4.6 million for the three months ended March 31, 2024 from $4.1 million for the three months ended March 31, 2023. Our average balance of loans increased $7.7 million, or 2.3% for the three months ended March 31, 2024, to $344.0 million for three months ended March 31, 2024 from $336.3 million for the three months ended March 31, 2023. The increase is due to our increase in loan demand. Our weighted average yield on loans increased 47 basis points to 5.39% for the three months ended March 31, 2024 compared to 4.92% for the three months ended March 31, 2023. The increase was a reflection of the current rate environment.
Interest Expense. Interest expense increased $800 thousand or 105.4% to $1.6 million for the three months ended March 31, 2024 compared to $759 thousand for the three months ended March 31, 2023. The increase was due to increases in rates for deposits as well an increase in certificates of deposits and borrowings.
Interest expense on deposits increased $626 thousand, or 131.5%, to $1.1 million for the three months ended March 31, 2024 compared to $476 thousand for the three months ended March 31, 2023. The
35
increase was due primarily to an increase in expense on certificates of deposit. Interest expense on certificates of deposit increased $546 thousand, or 164.5%, to $878 thousand for the three months ended March 31, 2024, compared to $332 thousand for the three months ended March 31, 2023. We experienced increases in both the average balance of certificates of deposit ($14.9 million, or 18.6%) for the three months ended March 31, 2024 and 2023, and rates paid on certificates of deposit (203 basis points, to 3.68%) for the three months ended March 31, 2024. Rates have increased during the current interest rate environment.
Interest expense on borrowings increased $174 thousand, to $457 thousand for the three months ended March 31, 2024, compared to $283 thousand for the three months ended March 31, 2023. The average balance of borrowings increased $16.4 million, or 62.7% to $42.5 million for the three months ended March 31, 2024, compared to $26.1 million for the three months ended March 31, 2023. The average rate paid on borrowings decreased four basis points to 4.30% for the three months ended March 31, 2024 compared to 4.34% for the three months ended March 31, 2023. The decrease was due an increase in the duration of the new advances in 2024.
Net Interest Income. Net interest income decreased $372 thousand, or 9.6%, to $3.5 million for the three months ended March 31, 2024 from $3.9 million for the three months ended March 31, 2023. Our interest rate spread decreased 60 basis points to 3.13% for the three months ended March 31, 2024, compared to 3.73% for the three months ended March 31, 2023. Our interest margin decreased 36 basis points to 3.62% for the three months ended March 31, 2024 compared to 3.98% for the three months ended March 31, 2023.
Provision for Credit Losses. The Company recorded a reversal of provision of $40 thousand for the three months ended March 31, 2024, compared to provision of credit losses of $74 thousand for the three months ended March 31, 2023. The reversal was $6 related to unfunded commitments and $34 related to loans. Our allowance for credit losses was $2.9 million at March 31, 2024 compared to the $3.2 million at December 31, 2023 and $3.1 million at March 31, 2023. The ratio of our allowance for credit losses to total loans was 0.85% at March 31, 2024 compared to 0.95% at December 31, 2023 and 0.92% at March 31, 2023, while the allowance for credit losses to non-performing loans was 593.3% at March 31, 2024 compared to 2,255.9% at December 31, 2023. We had $300 thousand of charge-offs and no recoveries for the three months ended March 31, 2024 compared to $11 thousand of charge-offs and no recoveries during the three months ended March 31, 2023.The decrease in the allowance for credit losses was driven primarily by a decrease in required reserves as a result of changes in expected cashflows due to updates to quantitative models made during the first quarter of 2024.
Non-interest Income. Non-interest income increased $17 thousand to $389 thousand for the three months ended March 31, 2024 from $372 thousand for the three months ended March 31, 2023. The increase was due an increase in service charges on deposit accounts.
Non-interest Expense. Non-interest expense increased $219 thousand, or 7.7%, to $3.0 million for the three months ended March 31, 2024 compared to $2.8 million for the three months ended March 31, 2023. The increase was primarily due to an increase in salaries and employee benefits related to an increase in the number of full-time employees throughout the year of 2023.
Income Tax Expense. We recognized income tax expense of $183 thousand and $342 thousand for the three months ended March 31, 2024 and 2023, respectively, resulting in effective rates of 20.4% and 25.2%, respectively. The difference in the effective tax rate for the two years is primarily due to the lower taxable income in 2024 causing our tax credits to greater affect the effective tax rate than when our income was higher.
36
Liquidity and Capital Resources
Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from the sale of loans, and proceeds from maturities of securities. We also have the ability to borrow from the Federal Home Loan Bank of Atlanta. At March 31, 2024 and December 31, 2023, we had a $123.0 million and $124.8 million line of credit with the Federal Home Loan Bank of Atlanta, and had $45 million and $35 million outstanding as of those dates, respectively. In addition, at March 31, 2024, we had an unsecured federal funds line of credit of $10.0 million. No amount was outstanding on this line of credit at March 31, 2024. At March 31, 2024, we had approximately $43 million of uninsured/uncollateralized deposits. With our sources of funds mentioned above, we anticipate that we will have sufficient funds to meet liquidity needs.
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. Our most liquid assets are cash and short-term investments including interest-bearing demand deposits. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.
Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $1.6 million and $1.5 million for the three months ended March 31, 2024 and 2023, respectively. Net cash used in investing activities, which consists primarily of disbursements for loan originations and the purchase of investment securities and bank owned life insurance, offset by principal collections on loans, proceeds from the sale of securities and proceeds from maturing securities and pay downs on securities, was $5.5 million and $2.9 million for the three months ended March 31, 2024 and 2023, respectively. Net cash provided by/(used in) financing activities, consisting primarily of activity in deposit accounts and proceeds from Federal Home Loan Bank borrowings, offset by repayment of Federal Home Loan Bank borrowings, was $8.2 million and ($7.5 million) for the three months ended March 31, 2024 and 2023, respectively.
We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained.
At March 31, 2024, Cullman Savings Bank exceeded all of its regulatory capital requirements, and was categorized as well capitalized. Management is not aware of any conditions or events since the most recent notification that would change our category.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable to smaller reporting companies.
Item 4. Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange
37
Act) as of the end of the period covered by the quarterly report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.
There has been no change in our internal control over financial reporting during the most recent fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
As of March 31, 2024, we were not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.
Item 1A. Risk Factors.
Not applicable as Cullman Bancorp, Inc. is a smaller company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The following table sets forth information in connection with repurchases of our shares of common stock during the three months ended March 31, 2024.
Period |
|
Total Number of Shares Purchased |
|
|
Average Price Paid per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs for the Quarter |
|
|
Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs (1) |
|
||||
January 1, 2024 through January 31, 2024 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
|
268,090 |
|
February 1, 2024 through February 28, 2024 |
|
|
25,000 |
|
|
|
10.50 |
|
|
|
25,000 |
|
|
|
243,090 |
|
March 1, 2024 through March 31, 2024 |
|
|
10,593 |
|
|
|
10.49 |
|
|
|
35,593 |
|
|
|
232,497 |
|
Total |
|
|
35,593 |
|
|
$ |
10.50 |
|
|
|
35,593 |
|
|
|
232,497 |
|
(1)On October 18, 2022, the Board of Directors announced a repurchase program under which the Company may repurchase up to 555,000 shares of the Company's common stock. The repurchase program has no expiration date.
Item 3 – Defaults Upon Senior Securities
None
Item 4 – Mine Safety Disclosures
Not applicable
Item 5 – Other Information
None
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Item 6 – Exhibits
Exhibit Number |
|
Description |
31.1 |
|
|
|
|
|
31.2 |
|
|
|
|
|
32 |
|
|
|
|
|
101 |
|
The following materials from Cullman Bancorp Inc.’s Form 10-Q report for the quarter ended March 31, 2024, formatted in Inline XBRL pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Net Income; (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Changes in Shareholders’ Equity (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements. |
|
|
|
101.INS |
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase |
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 |
|
Cover Page Interactive Data File (formatted as inline XBRL document and contained in Exhibit 101) |
40
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
CULLMAN BANCORP INC. |
|
(Registrant) |
|
|
|
|
Date: May 14, 2024 |
/s/ John A. Riley, III |
|
John A. Riley, III |
|
Chairman of the Board, President and Chief Executive Officer |
|
|
|
|
Date: May 14, 2024 |
/s/ Katrina I. Stephens |
|
Katrina I. Stephens |
|
Senior Vice President and |
41