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MINEOLA, Texas, Aug. 1, 2025 /PRNewswire/ — Texas Community Bancshares, Inc. (NASDAQ: TCBS), parent to Broadstreet Bank, SSB, is riding high after a strong second quarter. The bank reported net income of $678,000 for the three months ended June 30, 2025, and $1.3 million for the six months ended June 30, 2025. This is a significant jump compared to the $348,000 net income reported for the same quarter last year, and a stark turnaround from the $2.3 million net loss in the first half of 2024. Is this just a blip, or a sign of sustained growth?
Jason Sobel, President and CEO of Texas Community Bancshares, is understandably upbeat. “We are thrilled about the trend we are seeing in our net income. It increased from $643,000 in the first quarter of 2025 to $678,000 in the second quarter for five straight quarters of increased earnings.” He added that this marks the bank’s best quarter since its IPO four years ago. Sobel points to a solid increase in net interest income, climbing from $6.1 million in the first half of 2024 to $6.5 million for the same period this year, as evidence that the repositioning of the balance sheet last year is finally paying dividends.
What’s driving this profitability? Sobel credits higher-yielding commercial loans and relationships, a laser focus on loan and deposit pricing to boost net interest margins, and tight expense management. “We are excited about the future and our goal is to continue to build a rewarding experience for our customers, shareholders and employees,” he said.
Broadstreet Bank is also betting on technology to stay competitive. “The bank has invested more than ever into new technology and new products, including an automated consumer loan process from application to funding, online account opening, and online mortgage products,” Sobel noted. The bank is also rolling out deposit-taking ATMs and tailoring products more to customer needs, including new Treasury Management services and one-time-close home improvement loans.
However, not all is rosy. The bank is grappling with two sizeable loan relationships that are over 90 days delinquent. “This quarter we had two large loan relationships on our over 90-day delinquent list. They are both well collateralized real estate projects with loan-to-values below 65%,” Sobel explained. One involves a $6.2 million multi-family project, and the other a $2.8 million land development project. While both clients are reportedly working to resolve the issues, the loans have been placed on nonaccrual status, which is likely the culprit for part of the decrease in interest income this quarter.
Despite these challenges, Sobel remains optimistic. “We believe we are stronger and better positioned to capitalize on opportunities in 2025. Daily we are looking at ways to enhance our market share, branch network, and client base. We remain committed to executing our strategic growth plan while creating long-term value for our shareholders.” The question remains if investors agree.
Income
Analyzing the numbers, net interest income showed a healthy increase of $356,000, or 5.8%, reaching $6.5 million for the first six months of 2025 – a jump from $6.1 million during the same period last year. This growth is largely attributed to a reduction in interest expenses of $347,000, stemming primarily from a $22.0 million (30.9%) reduction in Federal Home Loan Bank (FHLB) advances. While deposit interest expense remained relatively stable year-over-year, deposit balances actually increased by $14.6 million (4.5%), further demonstrating efficient management.
- Total interest income was flat for the first half of 2025 compared to last year; however, there was a $207,000 decrease in the three months ended June 30, 2025 compared to 2024. This was primarily due to a $217,000 reversal of accrued interest from the previously mentioned distressed loans.
- Interest expense decreased by $347,000 (7.0%) to $4.6 million for the first six months of 2025, down from $5.0 million in 2024, with $198,000 of that decrease occurring in the second quarter. This is linked to the reduction in FHLB advances. Consequently, interest on FHLB advances decreased by $182,000 in the second quarter of 2025, and $375,000 for the first half of the year. Despite increasing deposit balances, interest on deposits remained flat due to lower deposit rates.
To provide meaningful comparisons, the following noninterest income and expense details will focus on quarterly data, as the six months ended June 30, 2024, included a loan sale loss, a real estate owned write down and a property disposal cost associated with a new branch.
- Noninterest income increased by $186,000 (47.3%) to $579,000 for the three months ended June 30, 2025, from $393,000 for the three months ended June 30, 2024. This was mainly driven by a $73,000 gain on an equity investment, compared to a $78,000 loss on other real estate owned in 2024, and a $69,000 loss on loans sold in 2024. This was partially offset by a $72,000 decrease in other service charges and fee income.
- Noninterest expense decreased by $224,000 (3.7%) for the six months ending June 30, 2025 and $81,000 (2.7%) to $3.0 million for the three months ended June 30, 2025 from $3.1 million for the three months ended June 30, 2024. The primary drivers were decreases in technology expense and salary and employee benefits. This was partially offset by an increase in other expenses:
- Technology expenses decreased by $113,000 (59.8%), mostly due to card processing project implementation fees incurred in the first half of 2024 related to a “tap” debit card project.
- Salary and employee benefit expenses decreased by $75,000 (4.6%) to $1.6 million for the three months ended June 30, 2025. Reduced officer compensation of $48,000 and reduced compensation expense related to equity awards of $30,000 (including a $26,000 one-time accrual reversal for forfeited awards), along with lower director fees due to a reduction in the number of directors, are the drivers behind the decline. The number of Directors decreased from 14 to 12 in May 2024, and to nine in May of 2025. Expect continued quarterly director fee decreases of $18,000 moving forward.
- Other expenses increased by $120,000 (21.3%) to $684,000 for the three months ended June 30, 2025, from $564,000 for the three months ended June 30, 2024. This increase can be attributed to a $51,000 increase in audit and accounting expenses (additional internal audits and audit price adjustments), a $47,000 increase in marketing expense (engagement of an outside consultant and a new advertising campaign including local television and streaming services), and $28,000 in expense related to an equity investment.
Asset Quality
The Company recorded a provision for credit losses of $71,000 for the six months ended June 30, 2025, which is an increase of $224,000 (146.4%) from a provision for credit loss reversal of $153,000 for the six months ended June 30, 2024. This is primarily attributable to an increase in average loans of $21.1 million and changes in the loan portfolio’s composition.
Though delinquencies and nonaccrual loans have increased, net charge-offs remain low, and the loan portfolio’s overall quality is still considered strong. Past due loans represented 3.71% of the loan portfolio at June 30, 2025, and nonaccrual loans 3.58%. The aforementioned relationships account for much of this increase. Both are secured by real estate with loan-to-values below 65%.
Other real estate owned consists of two bank properties previously held for expansion and now marketed for sale, with a fair value of $428,000.
Shareholders’ Equity
Total shareholders’ equity increased by $761,000 (1.5%) to $52.9 million at June 30, 2025, from $52.1 million at December 31, 2024. This increase was primarily due to net income of $1.3 million, a $608,000 decrease in accumulated other comprehensive loss, net of tax, an increase of $305,000 from vesting of the 2022 Equity Plan, and an increase of $110,000 from the accrual of ESOP commitments. This was partially offset by the repurchase of 84,500 shares of the Company’s common stock at $1.3 million and quarterly dividends paid totaling $242,000. At June 30, 2025, Broadstreet Bank was well-capitalized with a leverage ratio of 11.32%.
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At June 30, |
At December 31, |
|||||
|
2025 |
2024 |
|||||
|
(Unaudited) |
||||||
|
Selected Financial Condition Data (Amounts in thousands): |
||||||
|
Total assets |
$ |
444,082 |
$ |
443,457 |
||
|
Cash and cash equivalents |
11,295 |
13,290 |
||||
|
Interest bearing deposits in banks |
17,311 |
9,720 |
||||
|
Securities available for sale |
73,188 |
75,189 |
||||
|
Securities held to maturity |
20,294 |
22,096 |
||||
|
Loans and leases receivable, net |
294,021 |
293,708 |
||||
|
Premises and equipment, net |
11,511 |
11,526 |
||||
|
Bank owned life insurance |
6,453 |
6,370 |
||||
|
Other real estate owned |
428 |
480 |
||||
|
Restricted investments carried at cost |
3,344 |
4,252 |
||||
|
Core deposit intangible |
66 |
132 |
||||
|
Total deposits |
339,180 |
335,828 |
||||
|
Advances from the Federal Home Loan Bank |
49,236 |
49,878 |
||||
|
Total shareholders’ equity |
52,869 |
52,108 |
||||
|
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||
|
2025 |
2024 |
2025 |
2024 |
|||||||||
|
(Unaudited) |
(Unaudited) |
|||||||||||
|
Selected Operating Data (Amounts in thousands): |
||||||||||||
|
Interest income |
$ |
5,474 |
5,681 |
$ |
11,108 |
11,099 |
||||||
|
Interest expense |
||||||||||||
