MINEOLA, Texas, May 13, 2024 /PRNewswire/ -- Texas Community Bancshares, Inc. ("Texas Community Bancshares" or the "Company") (NASDAQ:TCBS), the holding company for Broadstreet Bank, SSB, today reported a net loss of $2.7 million for the three months ended March 31, 2024 compared to net loss of $1.0 million for the three months ended March 31, 2023. Losses per basic and diluted shares for the three months ended March 31, 2024 were $(0.90) and $(0.89) respectively, compared to losses per basic and diluted share of $(0.33) for the three months ended March 31, 2023.  Texas Community Bancshares' President and Chief Executive Officer (CEO) Jason Sobel, said, "The loss experienced in the first quarter was the result of deliberate actions taken as part of an ongoing strategic plan to reposition the balance sheet and improve the future performance of the Company. The reported loss was primarily the result of loans sold, and the fair value write-down on pending loan sales. All loans sold were performing loans. The average yield on loans sold was 4.5% while the fed funds target rate is 5.5% allowing for an immediate increase in yield even while redeploying the funds." "The sales allow us to reinvest in higher yielding loans while also improving both loan portfolio diversification and the interest rate risk position of the balance sheet. Activity thus far in the second quarter suggests positive redeployment into higher yielding more commercially focused loans. In the prior year period, first quarter 2023, investment securities were sold at a loss as part of the same ongoing strategic plan." "We believe we are stronger and better positioned to capitalize on opportunities with the changes that were initiated. We remain committed to executing our strategic plan while creating long-term value for our shareholders." Income Net interest income increased $331,000, or 12.6%, to $3.0 million for the three months ended March 31, 2024 from $2.6 million for the three months ended March 31, 2023 due primarily to an increase in interest-earning assets of $32.4 million, or 8.3%, to $424.9 million at March 31, 2024 from $392.5 million at March 31, 2023. Net interest margin had an 11 basis point, or 4.0%, increase to 2.79% for the three months ended March 31, 2024 from 2.68% for the three months ended March 31, 2023. The increase in net interest rate spread was primarily due to repricing strategies initiated in 2023 allowing us to increase the speed of repricing interest earning assets to better align with the speed of interest bearing liabilities. The average yield on interest earning assets increased by 88 basis points, or 20.7%, compared to the average increase on interest bearing liabilities increasing by 86 basis points, or 44.5%. Noninterest income decreased $2.4 million, or 200.0%, to a loss of $3.6 million for the three months ended March 31, 2024 from a loss of $1.2 million for the three months ended March 31, 2023, due primarily to a loss of $1.5 million, net of mortgage servicing rights, from the sale of loans, writing down a group of residential mortgage loans being held for sale to fair value by providing a valuation allowance of $2.3 million, and a loss of $283,000 associated with demolition of the previous Lindale branch building. This was partially offset by a gain on the sale of other real estate owned of $37,000. The losses of the loan sales involved the sale of a block of 54 performing loans totaling $12.4 million at a loss of $1.5 million, net of mortgage servicing rights, with another 81 loans totaling $17.0 million being marked down to a fair value of $14.7 million as part of a portfolio repositioning strategy to take advantage of repricing opportunities with the goal of increasing yield, shortening weighted average life and diversifying the loan portfolio while reducing the concentration in residential mortgages. Noninterest expense increased $433,000, or 16.4%, to $3.1 million for the three months ended March 31, 2024 from $2.6 million for the three months ended March 31, 2023 primarily due to increases in salaries and employee benefits, occupancy and equipment, data processing, and other expenses. Salary and employee benefit expenses increased by $98,000, or 6.3%, to $1.7 million for the three months ended March 31, 2024 from $1.6 million for the three months ended March 31, 2023, due primarily to an initial $129,000 vesting expense for equity awards partially offset by reduced salary expense related to the CEO transition. Occupancy and equipment expense increased $88,000, 44.7%, primarily due to additional expenses related to a new branch in Tyler and completion of a new branch building in Lindale. Data processing increased $20,000, or 9.0%, due primarily to normal cost increases from providers. Other expenses increased $237,000, or 61.7%, primarily due to an increase of $61,000 in audit and accounting expenses related primarily to loan review, an increase in FDIC assessment expenses of $23,000 primarily due to an overall increase in the FDIC assessment rate and an increase in deposits, an increase of $20,000 in office supply expense and $17,000 in marketing expense primarily related to opening new locations, entering new markets and expenses associated with changing the Bank's name. The Bank had nonrecurring costs of $28,000 associated with the demolition cost of the existing building in Lindale and legal fees of $38,000. Asset Quality The Company had a reversal ...