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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

⌧

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

OR

◻

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File No. 001-40610

Texas Community Bancshares, Inc.

(Exact Name of Registrant as Specified in Its Charter)

​

​

​

Maryland

    

86-2760335

(State or Other Jurisdiction of Incorporation or Organization)

​

(I.R.S. Employer Identification No.)

​

​

​

215 West Broad Street, Mineola, Texas

​

75773

(Address of Principal Executive Offices)

​

(Zip Code)

​

(903) 569-2602

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:  

​

​

 

 

 

 

Common stock, $0.01 par value per share

 

TCBS

 

The Nasdaq Stock Market LLC

(Title of Each Class)

(Trading Symbol(s))

 

(Name of Each Exchange on Which Registered)

​

Indicate by check mark whether the registrant (1) 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), and (2) has been subject to such requirements for the past 90 days.   YES  ⌧    NO  ◻

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).   YES  ⌧   NO  ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 ◻

    

Accelerated filer ◻

Non-accelerated filer ⌧

​

Smaller reporting company ☒

​

​

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  ⌧

There were 3,155,675 shares, par value $0.01 per share, of the Registrant’s common stock outstanding as of August 12, 2024.

​

​

​

Texas Community Bancshares, Inc.

Form 10-Q

Table of Contents

​

​

​

​

​

​

    

​

    

Page

PART I. FINANCIAL INFORMATION

​

​

​

​

​

Item 1.

​

Financial Statements

​

1

​

​

​

​

​

​

​

Consolidated Statements of Financial Condition at June 30, 2024 (unaudited) and December 31, 2023

​

1

​

​

​

​

​

​

​

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)

​

2

​

​

​

​

​

​

​

Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)

​

3

​

​

​

​

​

​

​

Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)

​

4

​

​

​

​

​

​

​

Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)

​

5

​

​

​

​

​

​

​

Notes to Consolidated Financial Statements (unaudited)

​

6

​

​

​

​

​

Item 2.

​

Management’s Discussion and Analysis of Financial Condition and Results of Operations

​

34

​

​

​

​

​

Item 3.

​

Quantitative and Qualitative Disclosures About Market Risk

​

52

​

​

​

​

​

Item 4.

​

Controls and Procedures

​

52

​

​

​

​

​

PART II. OTHER INFORMATION

​

​

​

​

​

Item 1.

​

Legal Proceedings

​

53

​

​

​

​

​

Item 1A.

​

Risk Factors

​

53

​

​

​

​

​

Item 2.

​

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

​

53

​

​

​

​

​

Item 3.

​

Defaults Upon Senior Securities

​

53

​

​

​

​

​

Item 4.

​

Mine Safety Disclosures

​

53

​

​

​

​

​

Item 5.

​

Other Information

​

53

​

​

​

​

​

Item 6.

​

Exhibits

​

54

​

​

​

​

​

​

​

Signatures

​

55

​

​

​

​

​

PART I – FINANCIAL INFORMATION

Item 1.        Financial Statements

Texas Community Bancshares, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

June 30, 2024 and December 31, 2023

(Amounts in thousands, except share and per share data)

​

​

​

​

​

​

​

​

    

June 30, 

    

December 31, 

​

​

2024

​

2023

​

​

(unaudited)

​

​

​

Assets

​

​

  

​

​

  

Cash and due from banks

 

$

6,738

 

$

5,412

Federal funds sold

​

​

25,541

​

​

7,648

Cash and cash equivalents

​

​

32,279

​

​

13,060

Interest bearing deposits in banks

​

​

7,758

​

​

12,298

Securities available for sale

​

​

89,554

​

​

93,327

Securities held to maturity (fair values of $21,253 at June 30, 2024 and $23,400 at December 31, 2023)

​

​

23,848

​

​

26,020

Loans receivable, net of allowance for credit losses of $2,975 at June 30, 2024 and $3,096 at December 31, 2023

​

​

267,344

​

​

279,896

Net investment in direct financing leases

​

​

1,340

​

​

36

Accrued interest receivable

​

​

1,739

​

​

1,728

Premises and equipment, net

​

​

11,732

​

​

11,609

Bank-owned life insurance

​

​

6,281

​

​

6,238

Other real estate owned

​

​

480

​

​

162

Restricted investments carried at cost

​

​

4,106

​

​

3,909

Core deposit intangible

​

​

198

​

​

265

Deferred income taxes

​

​

2,904

​

​

2,432

Financial derivative

​

​

632

​

​

115

Other assets

​

​

1,400

​

​

949

​

​

$

451,595

​

$

452,044

Liabilities and Shareholders' Equity

​

​

  

​

​

  

Liabilities

​

​

  

​

​

  

Noninterest bearing

​

$

42,958

​

$

45,538

Interest bearing

​

​

281,625

​

​

271,703

Total deposits

​

​

324,583

​

​

317,241

Advances from Federal Home Loan Bank (FHLB)

​

​

71,212

​

​

76,896

Accrued expenses and other liabilities

​

​

4,025

​

​

4,218

Total liabilities

​

​

399,820

​

​

398,355

Shareholders' Equity

​

​

​

​

​

​

Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued and outstanding

​

​

—

​

​

—

Common stock, $0.01 par value, 19,000,000 shares authorized, 3,371,117 issued and 3,155,675 outstanding at June 30, 2024 and 3,350,268 issued and 3,175,426 outstanding at December 31, 2023

​

​

34

​

​

34

Additional paid in capital

​

​

32,145

​

​

31,671

Retained earnings

​

​

29,380

​

​

31,972

Accumulated other comprehensive loss

​

​

(4,869)

​

​

(5,592)

Unearned Employee Stock Ownership Program (ESOP) shares, at cost

​

​

(2,132)

​

​

(2,197)

Treasury stock, at cost (215,442 shares at June 30, 2024 and 174,842 shares at December 31, 2023)

​

​

(2,783)

​

​

(2,199)

Total shareholders' equity

​

​

51,775

​

​

53,689

​

​

$

451,595

​

$

452,044

See Notes to Consolidated Financial Statements

​

1

Texas Community Bancshares, Inc. and Subsidiaries

Consolidated Statements of Operations (Unaudited)

Three and Six Months Ended June 30, 2024 and 2023

(Amounts in thousands, except share and per share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

Six Months Ended

​

​

June 30, 

​

June 30, 

​

​

2024

    

2023

    

2024

    

2023

Interest Income

​

​

  

 

​

  

 

​

Loans, including fees

​

$

3,801

​

$

3,099

​

$

7,510

​

$

5,879

Debt securities

​

 

  

​

 

​

​

 

​

​

 

​

Taxable

​

 

1,204

​

 

1,216

​

 

2,374

​

 

2,420

Non taxable

​

 

36

​

 

44

​

 

82

​

 

93

Dividends on restricted investments

​

 

54

​

 

36

​

 

109

​

 

61

Federal funds sold

​

 

239

​

 

31

​

 

306

​

 

70

Deposits with banks

​

 

222

​

 

79

​

 

478

​

 

128

Financial derivative

​

 

125

​

 

33

​

 

240

​

 

33

Total interest income

​

 

5,681

​

 

4,538

​

 

11,099

​

 

8,684

Interest Expense

​

​

​

​

 

  

​

​

​

​

 

  

Deposits

​

 

1,813

​

 

1,247

​

 

3,570

​

 

2,233

Advances from FHLB

​

 

683

​

 

636

​

 

1,379

​

 

1,162

Other

​

 

2

​

 

3

​

 

4

​

 

5

Total interest expense

​

 

2,498

​

 

1,886

​

 

4,953

​

 

3,400

Net Interest Income

​

 

3,183

​

 

2,652

​

 

6,146

​

 

5,284

Provision (Credit) for Credit Losses - loans

​

​

163

​

​

112

​

​

(88)

​

​

195

Provision (Credit) for Credit Losses - off-balance sheet credit exposures

​

​

(39)

​

​

(19)

​

​

(65)

​

​

(12)

Provision (Credit) for Credit Losses

​

 

124

​

 

93

​

 

(153)

​

 

183

Net Interest Income After Provision for Credit Losses

​

 

3,059

​

 

2,559

​

 

6,299

​

 

5,101

Noninterest Income

​

​

​

​

 

  

​

​

​

​

 

  

Service charges on deposit accounts

​

 

167

​

 

170

​

 

335

​

 

331

Other service charges and fees

​

 

356

​

 

301

​

 

616

​

 

580

Net loss on securities transactions

​

 

—

​

 

—

​

 

—

​

 

(1,687)

Net loss on sale of loans

​

 

(69)

​

 

—

​

 

(3,850)

​

 

—

Net loss on sale of other real estate owned

​

 

(78)

​

 

—

​

 

(41)

​

 

—

Net loss on sale of premises and equipment

​

 

—

​

 

—

​

 

(283)

​

 

—

Net appreciation on bank-owned life insurance

​

 

13

​

 

26

​

 

43

​

 

51

Other income

​

 

4

​

 

14

​

 

11

​

 

29

Total noninterest income (loss)

​

 

393

​

 

511

​

 

(3,169)

​

 

(696)

Noninterest Expenses

​

​

​

​

 

  

​

​

​

​

 

  

Salaries and employee benefits

​

 

1,644

​

 

1,683

​

 

3,309

​

 

3,250

Occupancy and equipment expense

​

 

273

​

 

205

​

 

558

​

 

402

Data processing

​

 

233

​

 

221

​

 

474

​

 

442

Technology expense

​

 

189

​

 

115

​

 

303

​

 

224

Contract services

​

 

72

​

 

65

​

 

134

​

 

127

Director fees

​

 

79

​

 

99

​

 

162

​

 

197

Other expense

​

 

564

​

 

491

​

 

1,185

​

 

875

Total noninterest expense

​

 

3,054

​

 

2,879

​

 

6,125

​

 

5,517

Income (Loss) Before Income Taxes

​

 

398

​

 

191

​

 

(2,995)

​

 

(1,112)

Income Tax Expense (Benefit)

​

 

50

​

 

31

​

 

(658)

​

 

(255)

Net Income (Loss)

​

$

348

​

$

160

​

$

(2,337)

​

$

(857)

Income (loss) per share - basic

​

$

0.12

​

$

0.05

​

$

(0.79)

​

$

(0.28)

Income (loss) per share - diluted

​

$

0.12

​

$

0.05

​

$

(0.78)

​

$

(0.28)

Weighted-average shares outstanding - basic

​

​

2,962,136

​

​

3,131,800

​

​

2,967,570

​

​

3,093,113

Weighted-average shares outstanding - diluted

​

​

3,007,309

​

​

3,131,800

​

​

3,012,493

​

​

3,093,113

See Notes to Consolidated Financial Statements

​

2

Texas Community Bancshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Three and Six Months Ended June 30, 2024 and 2023

(Amounts in thousands, except share and per share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

Six Months Ended

​

​

June 30, 

​

June 30, 

​

    

2024

    

2023

    

2024

    

2023

Net Income (Loss)

​

$

348

​

$

160

​

$

(2,337)

​

$

(857)

​

​

​

​

​

​

​

​

​

​

​

​

​

Other items of comprehensive income (loss)

​

​

​

​

​

​

​

​

​

​

​

​

Debt Securities

​

​

​

​

​

​

​

​

​

​

​

​

Net changes in fair value of available for sale securities, before tax

​

 

311

​

 

(1,397)

​

 

398

​

 

(1,159)

Reclassification adjustment for realized loss on sale of investment securities included in net loss, before tax

​

​

—

​

​

—

​

​

—

​

​

1,687

Net changes in fair value of available for sale securities hedged, before tax

​

 

75

​

 

550

​

 

516

​

 

550

Total other items of comprehensive income (loss), before tax

​

 

386

​

 

(847)

​

 

914

​

 

1,078

​

​

​

​

​

​

​

​

​

​

​

​

​

Income tax (expense) benefit related to other items of comprehensive income (loss)

​

 

(80)

​

 

179

​

 

(191)

​

 

(226)

Total other items of comprehensive income (loss), after tax

​

 

306

​

 

(668)

​

 

723

​

 

852

​

​

​

​

​

​

​

​

​

​

​

​

​

Comprehensive Income (Loss)

​

$

654

​

$

(508)

​

$

(1,614)

​

$

(5)

See Notes to Consolidated Financial Statements

​

​

3

Texas Community Bancshares, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity (Unaudited)

Three and Six Months Ended June 30, 2024 and 2023

(Amounts in thousands, except share and per share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

​

​

    

​

​

    

​

​

    

Accumulated

    

​

    

​

    

​

​

​

​

​

​

​

Additional

​

​

​

​

Other

​

Unearned

​

​

​

Total

​

​

Preferred

​

Common

​

Paid In

​

Retained

​

Comprehensive

​

ESOP

​

Treasury

​

Shareholders'

Three Months Ended June 30, 2024 and 2023

​

Stock

​

Stock

​

Capital

​

Earnings

​

Loss

​

Shares

​

Stock

​

Equity

Balance at April 1, 2024

​

$

—

​

$

34

​

$

31,970

​

$

29,159

​

$

(5,175)

​

$

(2,164)

​

$

(2,353)

​

$

51,471

Net income

​

 

—

​

 

—

​

 

—

​

 

348

​

 

—

​

 

—

​

 

—

​

 

348

Stock based compensation expense

​

​

—

​

​

—

​

​

160

​

​

—

​

​

—

​

​

—

​

​

—

​

​

160

Other comprehensive income, net of tax

​

 

—

​

 

—

​

 

—

​

 

—

​

 

306

​

 

—

​

 

—

​

 

306

Cash dividend declared ($0.04 per share)

​

 

—

​

 

—

​

 

—

​

 

(127)

​

 

—

​

 

—

​

 

—

​

 

(127)

ESOP shares committed to be released, 3,277 shares

​

 

—

​

 

—

​

 

15

​

 

—

​

 

—

​

 

32

​

 

—

​

 

47

Treasury stock purchased, 29,600 shares

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

(430)

​

 

(430)

Balance at June 30, 2024

​

$

—

​

$

34

​

$

32,145

​

$

29,380

​

$

(4,869)

​

$

(2,132)

​

$

(2,783)

​

$

51,775

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance at April 1, 2023

​

$

—

​

$

34

​

$

31,218

​

$

31,989

​

$

(5,479)

​

$

(2,313)

​

$

—

​

$

55,449

Net income

​

 

—

​

 

—

​

 

—

​

 

160

​

 

—

​

 

—

​

 

—

​

 

160

Stock based compensation expense

​

​

—

​

​

—

​

​

182

​

​

—

​

​

—

​

​

—

​

​

—

​

​

182

Other comprehensive loss, net of tax

​

 

—

​

 

—

​

 

—

​

 

—

​

 

(668)

​

 

—

​

 

—

​

 

(668)

Cash dividend declared ($0.03 per share)

​

​

—

​

​

—

​

​

—

​

​

(101)

​

​

—

​

​

—

​

​

—

​

​

(101)

ESOP shares committed to be released, 3,258 shares

​

 

—

​

 

—

​

 

5

​

 

—

​

 

—

​

 

33

​

 

—

​

 

38

Treasury stock purchased, 50,267 shares

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(610)

​

​

(610)

Balance at June 30, 2023

​

$

—

​

$

34

​

$

31,405

​

$

32,048

​

$

(6,147)

​

$

(2,280)

​

$

(610)

​

$

54,450

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

​

​

    

​

​

    

​

​

    

​

​

    

Accumulated

    

​

    

​

    

​

​

​

​

​

​

​

Additional

​

​

​

​

Other

​

Unearned

​

​

​

Total

​

​

Preferred

​

Common

​

Paid In

​

Retained

​

Comprehensive

​

ESOP

​

Treasury

​

Shareholders'

Six Months Ended June 30, 2024 and 2023

​

Stock

​

Stock

​

Capital

​

Earnings

​

Loss

​

Shares

​

Stock

​

Equity

Balance at January 1, 2024

​

$

—

​

$

34

​

$

31,671

​

$

31,972

​

$

(5,592)

​

$

(2,197)

​

$

(2,199)

​

$

53,689

Net loss

​

 

—

​

 

—

​

 

—

​

 

(2,337)

​

 

—

​

 

—

​

 

—

​

 

(2,337)

Stock based compensation expense

​

​

—

​

​

—

​

​

446

​

​

—

​

​

—

​

​

—

​

​

—

​

​

446

Other comprehensive income, net of tax

​

 

—

​

 

—

​

 

—

​

 

—

​

 

723

​

 

—

​

 

—

​

 

723

Cash dividend declared ($0.04 per share)

​

 

—

​

 

—

​

 

—

​

 

(255)

​

 

—

​

 

—

​

 

—

​

 

(255)

ESOP shares committed to be released, 6,554 shares

​

 

—

​

 

—

​

 

28

​

 

—

​

 

—

​

 

65

​

 

—

​

 

93

Treasury stock purchased, 40,600 shares

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

—

​

 

(584)

​

 

(584)

Balance at June 30, 2024

​

$

—

​

$

34

​

$

32,145

​

$

29,380

​

$

(4,869)

​

$

(2,132)

​

$

(2,783)

​

$

51,775

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance at January 1, 2023

​

$

—

​

$

33

​

$

31,099

​

$

34,083

​

$

(6,999)

​

$

(2,346)

​

$

—

​

$

55,870

Cumulative change in accounting principle (adoption of ASC 326)

​

​

—

​

​

—

​

​

—

​

​

(1,010)

​

​

—

​

​

—

​

​

—

​

​

(1,010)

Balance at January 1, 2023 (as adjusted for change in accounting principle)

​

​

—

​

​

33

​

​

31,099

​

​

33,073

​

​

(6,999)

​

​

(2,346)

​

​

—

​

​

54,860

Net loss

​

 

—

​

 

—

​

 

—

​

 

(857)

​

 

—

​

 

—

​

 

—

​

 

(857)

Stock based compensation expense

​

​

—

​

​

—

​

​

285

​

​

—

​

​

—

​

​

—

​

​

—

​

​

285

Issuance of restricted stock awards

​

​

—

​

​

1

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

1

Other comprehensive income, net of tax

​

 

—

​

 

—

​

 

—

​

 

—

​

 

852

​

 

—

​

 

—

​

 

852

Cash dividend declared ($0.02 per share in Q1 and $0.03 per share in Q2)

​

​

—

​

​

—

​

​

—

​

​

(168)

​

​

—

​

​

—

​

​

—

​

​

(168)

ESOP shares committed to be released, 6,516 shares

​

 

—

​

 

—

​

 

21

​

 

—

​

 

—

​

 

66

​

 

—

​

 

87

Treasury stock purchased, 50,267 shares

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(610)

​

​

(610)

Balance at June 30, 2023

​

$

—

​

$

34

​

$

31,405

​

$

32,048

​

$

(6,147)

​

$

(2,280)

​

$

(610)