Central Plains Bancshares, Inc. — Form 10-K Summary
Reporting period: Fiscal year ended March 31, 2024, compared with the year ended March 31, 2023. Although the request metadata says “2023 Q4,” this filing reports a full fiscal year, not a standalone quarter. Central Plains Bancshares became the holding company for Home Federal Savings upon its mutual-to-stock conversion, completed October 19, 2023. Financial information before that date relates to the Association and its subsidiary.
Business context
The company operates Home Federal Bank, a Nebraska community savings association focused on residential mortgages and commercial real estate lending, alongside commercial, agricultural and consumer loans. It serves southcentral Nebraska through nine office locations. In the conversion and offering, it sold 4,130,815 shares at $10 each for approximately $41.3 million gross proceeds.
Financial performance and position
- Assets and capital: Total assets were $463.3 million at March 31, 2024, up 5.8% year over year. Stockholders’ equity rose to $78.3 million from $38.7 million, primarily reflecting the stock offering. The Association was well-capitalized; its total risk-based capital ratio was 18.01% and Tier 1 leverage ratio was 13.98%.
- Revenue and earnings: Net interest income before credit-loss provision was $14.5 million, up 8.0%. Net income increased to $3.8 million from $1.6 million; basic and diluted earnings per share were $2.19, with no comparable 2023 EPS because the company had no shares outstanding then. Return on average assets was 0.84% and return on average equity was 8.22%.
- Margins and costs: Net interest margin improved to 3.36% from 3.27%, while the interest rate spread narrowed to 2.61% from 3.04%. Interest income rose 29.9% to $21.0 million, while interest expense rose 136.8% to $6.5 million. The average cost of deposits increased to 2.24% from 0.81%. Non-interest income was $2.9 million and non-interest expense was $12.6 million; the efficiency ratio increased to 72.73% from 69.13%.
- Credit quality: The credit-loss provision was $88,000 versus $2.9 million in fiscal 2023. The prior-year provision chiefly reflected a $2.4 million commercial non-real-estate loan charge-off after a borrower provided false financial information and the collateral proved valueless. The allowance for credit losses was $5.9 million, or 1.54% of loans. Non-performing loans were $662,000 (0.17% of loans), down from $1.0 million; non-performing assets were also $662,000, versus $1.3 million.
- Loans and concentrations: Gross loans grew 7.5% to $380.2 million. Commercial real estate loans increased 20.4% to $123.3 million, or 32.43% of loans. Residential real estate loans were $149.9 million, or 39.41%. Loan participations where the Association was not lead lender totaled $84.8 million, or 22.3% of the portfolio.
- Deposits and liquidity: Deposits declined 4.0% to $375.1 million; certificates of deposit and IRAs increased as customers sought higher yields, while NOW, savings and non-interest-bearing balances fell. Uninsured deposits were $34.3 million, down from $59.2 million. Cash and cash equivalents were $11.5 million, down from $16.6 million. The company had no borrowings at year-end, with approximately $40.1 million of FHLB borrowing availability and a $5.0 million private-bank line.
- Cash flow and securities: Operating activities provided $5.7 million; investing activities used $31.2 million, chiefly from loan growth and securities purchases; financing activities provided $20.3 million, including stock-offering proceeds. Cash declined by $5.1 million. Available-for-sale securities had a fair value of $60.4 million versus $66.2 million amortized cost, an unrealized loss of approximately $5.8 million before tax.
Material changes, outlook and risks
- The company adopted CECL on April 1, 2023. Adoption increased the loan allowance by $299,000, established a $210,000 allowance for unfunded commitments and reduced retained earnings by $402,000 net of tax. Prior-year results remain under the previous incurred-loss method.
- Profit growth chiefly reflects the much lower credit-loss provision compared with fiscal 2023; it should be considered alongside the prior-year unusual commercial loan charge-off. Higher loan yields and loan growth supported interest income, but rising deposit costs pressured spread and earnings.
- Management said it expects sufficient funds for current commitments and expects a substantial portion of maturing time deposits to renew. Certificates scheduled to mature within one year totaled $92.2 million; failure to retain deposits could require higher-cost funding or deposit pricing. No formal earnings or financial guidance was provided.
- Management plans to establish a Lincoln, Nebraska branch to replace its loan production office, with opening anticipated in the second quarter of 2025. The company does not currently intend to pay cash dividends.
- Key disclosed risks include interest-rate and funding sensitivity, concentration in local real estate and commercial lending, competition, economic weakness in its market, credit-loss estimation uncertainty, cybersecurity and third-party service-provider risks, and regulatory requirements. Management reported no known cybersecurity incident materially affecting or reasonably likely to materially affect the company and no material legal proceedings.
- The financial statements received an unqualified audit opinion. The filing does not include management’s assessment or an auditor attestation of internal control over financial reporting because of the newly public company transition period.
Important facts for investors to verify
- How deposit balances, deposit pricing and retention of near-term maturing certificates evolve, including uninsured-deposit levels.
- Whether commercial real estate growth and the $84.8 million of non-lead participations maintain acceptable credit performance and concentration levels.
- Credit quality trends, criticized/classified loans and the adequacy of the CECL allowance, particularly as the loan portfolio grows.
- Whether asset yields keep pace with deposit costs and how actual results compare with the filing’s interest-rate sensitivity estimates.
- The use of conversion proceeds, future capital distributions, and any stock-based compensation plans requiring shareholder approval.