1895 Bancorp of Wisconsin(BCOW) - 2023 Q1 - Quarterly Report

Financial Position - Total assets increased by $8.6 million, or 1.6$551.6 million at March 31, 2023, from $543.0 million at December 31, 2022, primarily due to a$7.9 million net increase in loans[114] - Loans held for investment increased by $7.6 million, or 2.1$370.4 million at March 31, 2023, with commercial real estate loans growing by $4.1 million to$215.0 million[114] - Deposits decreased by $15.7 million, or 4.0$372.0 million at March 31, 2023, attributed to a $9.1 million decrease in money market accounts and a$7.9 million decrease in noninterest-bearing checking accounts[114] - FHLB advances increased by $20.5 million, or 28.7$92.0 million at March 31, 2023, used to partially fund outgoing cash flows from the decrease in deposits and the increase in net loans[116] - The allowance for credit losses increased to $4.4 million at March 31, 2023, with the allowance for loans at$3.7 million, or 1.00% of loans, net of deferred costs[115] - Total stockholders' equity increased by $0.5 million to$75.9 million at March 31, 2023, primarily due to a $2.2 million decrease in net unrealized losses on available-for-sale securities[118] - Cash and cash equivalents increased by$0.7 million, or 2.5%, to $29.0 million at March 31, 2023, driven by$64.5 million of additional FHLB advances[114] - Advance payments by borrowers for taxes and insurance increased by $3.0 million to$4.0 million at March 31, 2023, due to normal seasonal activity[114] - The net unrealized loss on available-for-sale securities was $13.5 million at March 31, 2023, reflecting changes in market interest rates[115] Income and Expenses - The company recorded a net loss of$361,000 for Q1 2023, compared to a net loss of $55,000 in Q1 2022[124] - Interest and dividend income increased by$826,000, or 21.2%, to $4.7 million in Q1 2023 from$3.9 million in Q1 2022[124] - The average amount of loans outstanding increased by $34.5 million, from$329.8 million in Q1 2022 to $364.3 million in Q1 2023[124] - The yield on loans increased by 21 basis points, from 4.05$1.1 million, or 322.6%, to $1.5 million in Q1 2023 from$341,000 in Q1 2022[124] - Net interest income decreased by $310,000, or 8.9$3.2 million in Q1 2023 from $3.5 million in Q1 2022[125] - The provision for credit losses was$75,000 for Q1 2023, compared to $105,000 in Q1 2022[125] - The net interest rate spread decreased by 48 basis points to 2.23$379,000, or 96.9%, to $770,000 for Q1 2023, primarily due to a$430,000 increase in market value of equity securities[126] - Noninterest expense rose by $496,000, or 12.7$4.4 million for Q1 2023, mainly driven by a $628,000 increase in salaries and benefits[126] - The net gain on the sale of loans decreased by$4.3 million, from $6.8 million in Q1 2022 to$2.5 million in Q1 2023, attributed to the changing interest rate environment[126] - The company recorded an income tax benefit of $151,000 for Q1 2023, compared to$60,000 for Q1 2022, due to an increase in loss before taxes[126] Capital and Funding - As of March 31, 2023, the company had $92.0 million in advances from the FHLB and$71.2 million in additional borrowing capacity[137] - Total risk-based capital was $69.1 million, or 17.4$39.8 million[141] - The company anticipates sufficient funds to meet current funding commitments based on strategies to increase core deposits and utilize FHLB advances[140] Economic Factors - The estimated economic value of equity (EVE) would increase by 2.50% with a 200-basis point increase in interest rates as of March 31, 2023[132] - Increased operating costs are primarily driven by inflation, impacting the company's performance[143] - Interest rates have a more significant effect on the performance of financial institutions compared to inflation[143] Workforce and Operations - The company has reduced the number of full-time equivalent employees by 15 since March 2022 as part of cost-reduction measures[126] - The financial statements are prepared in accordance with generally accepted accounting principles in the United States, focusing on dollar measurements without adjusting for inflation effects[143]