FSEA

First Seacoast Bancorp, Inc. (FSEA) - 10-Q Summary

Business Context and Reporting Period

This report covers the quarterly period ended September 30, 2025. First Seacoast Bancorp, Inc. operates as a smaller reporting company and non-accelerated filer. The Company, through its subsidiary First Seacoast Bank, provides commercial and consumer banking services, including residential and commercial real estate lending, through five full-service branches in New Hampshire and Southern Maine.

Key Financial Metrics

Material Changes vs. Prior Period

• Profitability: The Company reported a net income of $390,000 for Q3 2025, a significant improvement from $44,000 in Q3 2024. However, the nine-month period ended September 30, 2025, resulted in a net loss of $758,000, compared to net income of $895,000 in the same period in 2024. The YTD loss was primarily driven by a $2.2 million decrease in non-interest income (excluding a one-time $2.5 million gain on sale of land in 2024) and a $969,000 increase in non-interest expenses.
• Interest Income & Expense: Net interest income increased $465,000 (15.6%) in Q3 2025 compared to the prior year, driven by higher yields on interest-earning assets. For the nine months, net interest income increased $1.2 million (13.0%). Interest expense on borrowings decreased significantly due to lower average balances.
• Balance Sheet: Total assets increased $28.8 million (5.0%) from December 31, 2024, primarily due to a $12.5 million increase in cash and a $22.3 million increase in available-for-sale securities. Net loans decreased $5.5 million (1.3%).
• Non-Performing Assets: Non-performing loans increased to $194,000 at September 30, 2025, from $0 at December 31, 2024. This includes a residential mortgage loan and consumer loans.

Guidance, Outlook, and Risks

• Capital Position: The Bank is categorized as "well-capitalized" under regulatory frameworks. Total Capital ratio was 15.53% and Common Equity Tier 1 ratio was 14.48% as of September 30, 2025, well above minimum requirements.
• Liquidity: The Company maintains strong liquidity with $19.6 million in cash and $142.5 million in available-for-sale securities. Unused borrowing capacity includes approximately $98.7 million at the Federal Home Loan Bank (FHLB) and $37.6 million at the Federal Reserve Bank (FRB).
• Interest Rate Risk: The Company is exposed to interest rate risk. Net Portfolio Value (NPV) modeling indicates that a 200 basis point increase in interest rates would result in a 20.9% decrease in economic value of equity, slightly exceeding the Company's policy limit of 20%. This sensitivity is attributed to the migration of deposits to more interest-sensitive products.
• Stock Repurchases: The Company continues its stock repurchase program. As of September 30, 2025, 490,703 shares have been repurchased under the program, with 245,862 shares remaining available for purchase.
• Unusual Items: The YTD 2024 results included a one-time $2.5 million gain on the sale of land and buildings, which is not present in the current period, contributing to the year-over-year decline in non-interest income.

Investor Verification Checklist

• YTD Loss Drivers: Verify the sustainability of the $2.2 million decline in non-interest income and the $969,000 increase in operating expenses, particularly in equity compensation and occupancy costs.
• Interest Rate Sensitivity: Review the Asset/Liability Management Committee (ALCO) strategies to address the NPV sensitivity exceeding policy limits in a rising rate environment.
• Asset Quality: Monitor the $194,000 in non-performing loans and the adequacy of the $3.5 million Allowance for Credit Losses (ACL) given the recent emergence of non-accrual loans.
• Deposit Composition: Assess the impact of the shift toward interest-bearing time deposits and brokered deposits on future net interest margins.
• Capital Ratios: Confirm the "well-capitalized" status remains stable despite the YTD net loss and continued stock repurchases.