Executive Summary

Fiscal Q4 2024 (quarter ended September 30, 2024) closed with full-year net income of $693k ($0.73 EPS) per audited 10-K, while the preliminary 8‑K reported $730k ($0.77 EPS); we note the discrepancy between the preliminary and final audited results .
Net interest income increased year over year to $5.713M, but net interest margin compressed as higher deposit and borrowing costs outpaced asset yields; noninterest expenses rose on ESOP, professional services, IT outsourcing, and loan program costs .
Balance sheet ended strong: total assets $181.7M, net loans $145.1M, total deposits $134.6M; nonperforming assets fell to 0.21% of total assets .
Key potential stock catalyst: adoption of a share repurchase program for up to ~10% of shares (102,297), no expiration; repurchases to begin after blackout ends following Q4 results release .
No Wall Street consensus estimates available from S&P Global for Q4; estimate comparisons are therefore not possible.

What Went Well and What Went Wrong

What Went Well

Loan growth and asset expansion: total assets rose to $181.7M (+14.3% YoY) and net loans to $145.1M (+11.6% YoY), reflecting strong origination activity and portfolio growth .
Improved asset quality metrics: nonperforming assets declined to 0.21% of total assets; allowance coverage remained robust (ACL $963k; 249.7% coverage of NPLs) at year end .
Strategic capital return: board adopted a stock repurchase program of up to 102,297 shares (~10% of outstanding), a potential support for per‑share metrics; “The repurchase program has no expiration date” .

What Went Wrong

Margin compression and funding cost pressure: net interest margin decreased as deposit costs and FHLB advance costs rose; interest expense climbed sharply year over year (+322% to $2.534M) .
Elevated noninterest expense: expenses increased $502k (+9.8%) YoY on ESOP compensation, professional services tied to public company reporting, data processing (IT outsourcing), and loan program costs .
Internal control remediation: a material weakness related to accruals was identified and remediated in interim quarters; disclosure controls were “not effective” at Q2/Q3 2024 before remediation steps .

Financial Results

Quarterly performance comparison (company reports quarterly in 10‑Qs; Q4 standalone figures are not separately disclosed in filings—full-year shown for context):

Metric	Q2 2024 (3 months ended Mar 31, 2024)	Q3 2024 (3 months ended Jun 30, 2024)	FY 2024 (year ended Sep 30, 2024)
Total Interest Income ($USD)	$1,955,998	$2,118,431	$8,247,551
Interest Expense ($USD)	$578,261	$671,403	$2,534,074
Net Interest Income ($USD)	$1,377,737	$1,447,028	$5,713,477
Total Noninterest Income ($USD)	$153,025	$199,474	$845,923
Net Income ($USD)	$129,093	$144,630	$692,737
EPS (Basic & Diluted) ($USD)	$0.14	$0.15	$0.73
Net Interest Margin (%)	3.78% (six months run‑rate)	3.51% (quarter)	3.49% (year)

Loan composition at Q4 (year-end):

Loan Category	Sep 30, 2024 ($USD)	% of Total Loans
One‑ to Four‑Family Residential	$73,285,469	49.3%
Agricultural Real Estate	$53,523,748	36.0%
Construction and Land	$6,024,429	4.1%
Home Equity Lines of Credit	$4,959,058	3.3%
Commercial Real Estate	$2,453,082	1.7%
Consumer	$5,518,844	3.7%
Commercial & Industrial	$1,666,188	1.1%
Total Loans	$148,690,458	100.0%

Key Q4 KPIs (as of Sep 30, 2024):

Total assets: $181.7M
Total deposits: $134.6M
Net loans (ex loans held for sale): $145.1M
Nonperforming loans: $359,260; Nonperforming assets/Total assets: 0.21%
ACL: $963,268; ACL/Total loans: 0.65%
FHLB advances: $22.0M, $19.0M maturing within one year

Notes: The 8‑K reported preliminary full-year net income of $730k ($0.77 EPS), versus $692,737 ($0.73 EPS) in the audited 10‑K; other totals are consistent within rounding .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance / Action	Change
Share Repurchase	Ongoing post‑blackout (after Q4 release)	None	Up to 102,297 shares (~10% of outstanding); open market/blocks/10b5‑1; no expiration	Initiated
Dividends	Ongoing	None	Company does not anticipate paying dividends currently	Maintained
Branch Expansion	2025	NA	New branch planned in Berne, Adams County, IN to expand deposits/customer access	Announced/Planned

No revenue, margin, OpEx, OI&E, or tax rate quantitative guidance was provided in filings for Q4.

Earnings Call Themes & Trends

No Q4 earnings call transcript was found; themes below derive from 10‑Q/10‑K commentary.

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q4)	Trend
Deposit strategy and mix	Shift to CDs (brokered +$5M) with higher rates; push to grow lower‑cost core deposits	Core deposits 68.1% of total; continued efforts to grow consumer/business demand deposits	Ongoing deposit mix optimization; cost pressure persists
Funding/borrowings	FHLB advances increased (Q2: $13.0M) to fund loans	FHLB advances $22.0M with near‑term maturities	Elevated borrowings; duration management focus
Indirect auto lending	Program initiated; loans held for sale $7.2M (Q2); no sales yet	Loans held for sale $10.5M; sales anticipated to begin marketing in 2Q 2025	Building inventory; future fee income potential
IT and operations	Decision to outsource IT functions; higher data processing costs (Q1/Q2)	Contract with new provider expected Feb 2025 to lower fees and enhance capabilities	Transition underway; cost normalization expected
Internal controls	Identified material weakness in Q2; implemented remediation	Q3 10‑Q reported “not effective” but remediation steps underway	Remediation progressing
Capital actions	NA	Adoption of share repurchase program (up to ~10%)	New capital return lever

Management Commentary

“We intend to continue our efforts to increase core deposits, with an emphasis on growth in consumer and business demand deposits.”
“We intend to prudently increase our originations of consumer automobile loans… and intend to pool and sell to investors some of the automobile loans that we originate to enhance fee income.”
“The repurchase program has no expiration date” and may be modified or suspended based on market conditions, liquidity, and alternative opportunities .

Q&A Highlights

No Q4 earnings call transcript was available. As such, there are no Q&A highlights or clarifications to report for the period.

Estimates Context

S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable, preventing beat/miss analysis against Street expectations. Values retrieved from S&P Global were not accessible due to data limitations.

Key Takeaways for Investors

Share repurchase program adds an active capital return mechanism (~10% capacity), potentially supportive for EPS and book value per share if deployed into weakness .
Funding costs and NIM compression are the core earnings headwinds; watch deposit pricing, brokered CDs, and FHLB advance refinancing/maturity schedule .
Loan growth remains strong, led by agricultural and residential; asset quality metrics are healthy (NPAs ~0.21% of assets), sustaining credit resilience .
Indirect auto program buildup (loans held for sale $10.5M) sets up potential fee income from pool sales beginning marketing in 2Q 2025—monitor execution and credit outcomes .
Noninterest expense inflation (ESOP, professional services, data processing) should moderate as IT transition completes in early 2025; near‑term operating leverage depends on managing these inputs .
Internal control remediation is progressing; continued improvement supports reporting reliability and reduces operational risk .
With no dividend expected currently, tangible catalysts are repurchases and operating execution on deposits, funding, and loan sales; absent Street estimates, price reactions may center on capital actions and margin trajectory .

Sources: SEC filings and company disclosures as cited above.

Mercer Bancorp, Inc. (MSBB)·Q4 2024 Earnings Summary