TC Bancshares, Inc. (TCBC) is a Georgia-based community bank that has been serving its customers for over 80 years. The company operates four branch locations in Georgia and Florida, providing a range of financial products and services to both consumers and commercial clients. As the banking industry navigates the challenges of rising interest rates and evolving customer preferences, TC Bancshares has demonstrated its ability to adapt and capitalize on emerging opportunities.

Business Overview

TC Bancshares operates as the holding company for TC Federal Bank, which was originally chartered as a mutual savings and loan association in 1934. The bank has since transformed into a full-service community bank, offering a diverse array of lending and deposit products. The company's primary lending focus is on single-family residential mortgages, commercial and multi-family real estate loans, commercial and industrial loans, and consumer loans. On the deposit side, TC Bancshares provides personal and business checking accounts, savings accounts, money market accounts, and certificates of deposit.

In recent years, the company has strategically expanded its footprint, opening new branch locations in Savannah, Georgia, and Jacksonville, Florida. This expansion has allowed TC Bancshares to better serve its existing customer base while also tapping into new markets. The company's commitment to community banking and personalized service has been a key driver of its success, as it continues to build strong relationships with both retail and commercial clients.

Financials

TC Bancshares reported annual net income of $332,029,000 and annual revenue of $21,922,308,000 in its most recent fiscal year. The company's annual operating cash flow was $1,990,780,000, while its annual free cash flow was -$134,499,000. These financial results demonstrate the company's ability to generate consistent earnings and cash flow, despite the challenges faced by the banking industry.

In the first quarter of 2024, TC Bancshares reported net income of $22,237,000, a decrease from the previous quarter. This decline was primarily due to a rise in interest expense, as the company worked to attract and retain deposits in the face of rapidly increasing interest rates. Total revenue for the quarter was $6,044,762,000, up from $4,879,321,000 in the first quarter of 2023, driven by growth in both loan and investment income.

Loan Portfolio and Asset Quality

As of March 31, 2024, TC Bancshares' loan portfolio totaled $381,404,580,000, an increase of 1.2% from the $376,899,968,000 reported at the end of 2023. The company's loan mix remains well-diversified, with 38.7% in residential real estate, 34.4% in commercial real estate, 13.5% in construction and land development, 4.8% in multi-family, 2.9% in home equity, and 4.8% in commercial and industrial loans.

Asset quality remains a key focus for TC Bancshares, as the company navigates the evolving economic landscape. The allowance for credit losses stood at $4,889,067,000, or 1.28% of total loans, as of March 31, 2024, compared to $4,836,878,000, or 1.28% of total loans, at the end of 2023. Nonperforming loans totaled $1,223,367,000, or 0.32% of total loans, at the end of the first quarter of 2024, down from $1,288,172,000, or 0.34% of total loans, at the end of 2023.

The company's proactive approach to credit risk management has been a key strength, as it has allowed TC Bancshares to maintain a relatively low level of problem assets. The company's classified (substandard, doubtful, and loss) loans increased to $11,653,910,000, or 3.05% of total loans, as of March 31, 2024, compared to $7,938,553,000, or 2.10% of total loans, at the end of 2023.

Liquidity

TC Bancshares maintains a strong liquidity position, with a loan-to-deposit ratio of 100.4% as of March 31, 2024. The company's primary sources of liquidity include deposits, principal and interest payments on loans and securities, and borrowing capacity from the Federal Home Loan Bank of Atlanta and the Federal Reserve Bank of Atlanta.

As of March 31, 2024, the company had $97,600,000 in available borrowing capacity with the Federal Home Loan Bank, net of the $11,000,000 in advances outstanding. Additionally, TC Bancshares had $28,500,000 in unsecured federal funds lines of credit and $26,500,000 in secured borrowing capacity through the Federal Reserve Bank of Atlanta, with no amounts outstanding on these facilities.

The company's capital position remains solid, with a Tier 1 capital ratio of 19.31% and a total risk-based capital ratio of 20.57% as of March 31, 2024. These ratios exceed the regulatory requirements for a "well-capitalized" institution, providing TC Bancshares with the financial flexibility to support its growth initiatives and weather potential economic headwinds.

Recent Developments

In 2023, TC Bancshares opened new full-service branch locations in Savannah, Georgia, and Jacksonville, Florida, further expanding its geographic footprint and customer reach. These new branches have been instrumental in driving deposit growth, with the company's total deposits increasing by $10,418,806,000, or 2.8%, to $380,287,600,000 as of March 31, 2024.

The company's focus on commercial and industrial lending has also been a key growth driver, with this segment of the loan portfolio increasing by $1,409,361,000, or 8.3%, to $18,327,919,000 during the first quarter of 2024. TC Bancshares has leveraged its strong relationships with local businesses and its expertise in commercial lending to capture market share in this important lending segment.

Looking ahead, TC Bancshares remains committed to prudent growth and diversification. The company is exploring opportunities to further expand its geographic footprint, while also investing in technology and digital banking capabilities to enhance the customer experience and drive operational efficiency.

Risks and Challenges

As with any financial institution, TC Bancshares faces a variety of risks and challenges that could impact its future performance. These include:

1. Interest Rate Risk: The company's net interest margin has been under pressure due to the rapid rise in interest rates, as its cost of funds has increased at a faster pace than the yields on its interest-earning assets.

2. Credit Risk: While TC Bancshares has maintained a relatively strong asset quality profile, the company remains exposed to potential deterioration in the credit quality of its loan portfolio, particularly in the commercial real estate and construction lending segments.

3. Regulatory Environment: The banking industry is subject to a complex and evolving regulatory landscape, which could result in increased compliance costs and operational challenges for TC Bancshares.

4. Competition: The company faces intense competition from both traditional banks and emerging fintech players, which could put pressure on its market share and profitability.

To mitigate these risks, TC Bancshares has implemented robust risk management practices, diversified its loan portfolio, and invested in technology and talent to enhance its competitive position. The company's experienced management team and strong capital position provide a solid foundation for navigating the challenges ahead.

Conclusion

TC Bancshares, Inc. (TCBC) has demonstrated its ability to adapt and thrive in the ever-changing banking landscape. The company's focus on community banking, prudent growth, and sound risk management has allowed it to generate consistent financial results and maintain a strong capital position. As TC Bancshares continues to expand its geographic footprint and diversify its product offerings, the company is well-positioned to capitalize on emerging opportunities and deliver long-term value for its shareholders.