Executive Summary

Q2 2025 net income was $0.68M, up 95% y/y and 5% q/q, driven by higher noninterest income and lower operating expense; net interest income was modestly lower y/y on a $217k interest reversal tied to two loans moved to nonaccrual .
Funding costs improved as FHLB advances fell 31% y/y to $49.2M, reducing interest expense by $198k in the quarter and $375k YTD; deposit interest expense stayed flat despite deposit growth to $339.2M (+4.5% y/y) .
Asset quality mixed: nonaccrual loans rose to 3.58% of loans and past-due to 3.71% due to two well‑collateralized real estate relationships totaling $9.0M placed on nonaccrual; net charge-offs remained low .
Management highlighted five straight quarters of earnings increases and “best quarter since IPO,” citing balance-sheet repositioning, higher-yielding commercial loans, disciplined pricing, and efficiency gains as drivers .
Guidance/estimates: No formal financial guidance and no Street consensus available via S&P Global for EPS or revenue; dividend maintained at $0.04/share (May and August declarations) . Values marked with an asterisk are retrieved from S&P Global and reflect the latest available data.

What Went Well and What Went Wrong

What Went Well
- Continued earnings momentum: “five straight quarters of increased earnings” and “best quarter since IPO,” supported by higher-yielding commercial loans, active loan/deposit pricing, and expense control .
- Funding optimization: Interest expense fell with FHLB advances down to $49.2M (-$22.0M y/y), lowering quarterly interest on advances by $182k; deposit costs remained flat despite deposit growth to $339.2M .
- Noninterest income inflected: up 47% y/y to $0.58M on equity gains and lapping prior-year OREO/loan-sale losses; noninterest expense fell 2.7% y/y on tech and compensation savings .
What Went Wrong
- Interest income pressure: total interest income declined $207k y/y in Q2 due to a $217k reversal of accrued interest on two loans placed on nonaccrual .
- Asset quality optics: nonaccrual loans rose to 3.58% and past-due to 3.71% of loans, tied to two credits ($6.2M multifamily and $2.8M land development), though both <65% LTV and well collateralized .
- Other expenses: while overall noninterest expense fell, “other” expenses rose by $120k (+21%) on audit, marketing, and equity-investment-related costs .

Financial Results

Consolidated P&L (Amounts in $USD Millions unless noted)

Metric	Q2 2024	Q1 2025	Q2 2025
Total Operating Revenue (NII + Noninterest)	$3.58 (NII $3.18 + NII’ncome $0.39)	$3.79 (NII $3.33 + NII’ncome $0.46)	$3.75 (NII $3.17 + NII’ncome $0.58)
Net Interest Income	$3.18	$3.33	$3.17
Noninterest Income	$0.39	$0.46	$0.58
Noninterest Expense	$3.05	$2.93	$2.97
Pre-tax Income	$0.40	$0.75	$0.82
Net Income	$0.35	$0.64	$0.68
Diluted EPS ($)	$0.12*	$0.22	$0.23*
Net Income Margin %	10.08%*	17.49%*	17.87%*

Notes: “Total Operating Revenue” is constructed as NII + Noninterest income from company disclosures. Asterisked values retrieved from S&P Global.
KPIs and Balance Sheet

KPI	Q1 2025	Q2 2025
Total Assets ($M)	$442.21	$444.08
Loans & Leases, net ($M)	$297.52	$294.02
Total Deposits ($M)	$337.53	$339.18
FHLB Advances ($M)	$49.56	$49.24
Nonaccrual Loans (% of Loans)	0.67%	3.58%
Past-Due Loans (% of Loans)	—	3.71%
Bank Leverage Ratio	11.09%	11.32%
OREO (fair value, $M)	$0.45	$0.43

Versus Estimates (S&P Global)

Metric	Q2 2025 Actual	Q2 2025 Consensus	Surprise
Revenue/Operating Revenue	$3.75M (constructed from company data)	N/A (not available via S&P Global)	N/A
EPS (diluted)	$0.23*	N/A (not available via S&P Global)	N/A

Values retrieved from S&P Global where marked with an asterisk. Consensus estimates were not available via S&P Global for TCBS in Q2 2025.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Formal financial guidance (revenue, margins, EPS, expenses)	FY/Quarter	None disclosed	None disclosed	—
Quarterly Dividend	Q2 and Q3 2025	$0.04/share (Feb 26, 2025 dividend; continued)	$0.04/share (May 20 and Aug 26 declarations)	Maintained
Director Fees (run-rate)	Ongoing	—	-$18k per quarter going forward due to board size reduction	Lowered OpEx run-rate

No explicit revenue, margin, OpEx, OI&E, tax rate, or segment guidance was provided in Q2 2025 disclosures .

Earnings Call Themes & Trends

Note: No Q2 2025 earnings call transcript for TCBS was available in our document system; trends are synthesized from the Q1 and Q2 press releases.

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Technology/product initiatives	Q1: Efficiency from renegotiated vendor contracts; operating leverage improvements .	Investment in automated consumer loan origination, online account opening/mortgage, deposit‑taking ATMs; new Treasury Management products .	Accelerating investment focus
Balance sheet repositioning	Q1: 2024 loan sale; redeployment to higher‑yielding commercial; NIM 3.24% in Q1 .	Benefits continue; NII up YTD; disciplined loan/deposit pricing to expand NIM .	Ongoing benefit
Funding costs & liquidity	Q1: FHLB down $26.9M y/y; lower cost of interest-bearing liabilities .	FHLB down to $49.2M; quarterly interest on advances down $182k; deposit costs flat despite growth .	Improving
Asset quality	Q1: Nonaccrual 0.67% of loans; strong asset quality .	Two credits placed on nonaccrual; nonaccrual up to 3.58%; still well collateralized (<65% LTV) .	Deteriorated (idiosyncratic)
Capital/returns	Q1: New 5% buyback authorization; dividend $0.04 .	84.5k shares repurchased ($1.3M) and dividends paid ($242k) YTD; dividend maintained .	Continuing

Management Commentary

“We are thrilled about the trend we are seeing in our net income. It increased from $643,000 in the first quarter of 2025 to $678,000 in the second quarter for five straight quarters of increased earnings. This has led us to our best quarter since our initial public offering (IPO) 4 years ago.” — Jason Sobel, CEO .
“The driving forces of the increased earnings are higher yielding commercial loans and relationships, continued focus on loan and deposit pricing to further expand net interest margin, and managing expenses closely.” .
“The bank has invested more than ever into new technology and new products… automated consumer loan process… online account opening… online mortgage… new Treasury Management products…” .
On asset quality: two large relationships ($6.2M multifamily; $2.8M land development) moved to nonaccrual; both <65% LTV and well collateralized .

Q&A Highlights

No Q2 2025 earnings call transcript was available for TCBS; therefore, no Q&A highlights or real-time guidance clarifications could be reviewed [earnings-call-transcript list returned none for the period].

Estimates Context

S&P Global consensus for EPS and revenue was not available for TCBS in Q2 2025; therefore, no formal beat/miss vs Street can be determined. Values marked with an asterisk are retrieved from S&P Global.
Given micro-cap coverage limitations, we would expect limited estimate dispersion; near-term estimate updates (if any) would likely reflect: (i) higher noninterest income run-rate, (ii) slightly lower interest income due to nonaccrual interest reversal, and (iii) lower funding costs as FHLB balances remain reduced .

Key Takeaways for Investors

Earnings trajectory intact: five consecutive quarters of improvement, with Q2 2025 net income at $0.68M despite a one-time interest reversal; operating leverage and balance-sheet repositioning continue to work .
Funding cost tailwind: materially lower FHLB balances and stable deposit costs underpin NII resilience even as headline interest income was pressured by nonaccrual reversals .
Asset quality watch item: spike in nonaccrual to 3.58% tied to two credits; collateral coverage (<65% LTV) helps limit loss risk, but timing of resolution is a swing factor for NII and reserve needs near term .
Expense discipline sustained: tech and compensation savings trimmed noninterest expense; board downsizing implies ~$18k lower director fees per quarter going forward .
Shareholder returns steady: dividend maintained at $0.04/share and active buybacks (84.5k shares; $1.3M) support capital return without compromising well-capitalized status (11.32% leverage ratio) .
Trading setup: Near-term stock moves likely hinge on confidence in nonaccrual resolutions versus continued operating momentum (NII stability, fee income) and cost controls; absence of Street estimates lowers headline beat/miss volatility but heightens narrative-driven moves .

References: Q2 2025 8‑K/press release and financial tables ; Q1 2025 press release and tables for prior-quarter comparisons ; Dividend releases (May 20 and Aug 26, 2025) . Values marked with an asterisk were retrieved from S&P Global.

Texas Community Bancshares, Inc. (TCBS)·Q2 2025 Earnings Summary