KNOXVILLE, Tenn., Oct. 20, 2025 /PRNewswire/ -- Mountain Commerce Bancorp, Inc. (the "Company") (OTCQX: MCBI), the holding company for century-old Mountain Commerce Bank (the "Bank"), today announced financial results and related data as of and for the three and nine months ended September 30, 2025.
The Company also announced today that its Board of Directors declared a quarterly cash dividend of $0.07 per common share, its twentieth consecutive quarterly dividend. The dividend is payable on December 1, 2025 to shareholders of record as of the close of business on November 3, 2025.
Management Commentary
William E. "Bill" Edwards, III, Chief Executive Officer of the Company, commented as follows:
"We are pleased to see our earnings continue to increase with adjusted return on average assets and equity rising to 0.86% and 10.92%, respectively, for the third quarter of 2025, compared to 0.68% and 8.84%, respectively, in the second quarter of 2025. We continued to see further improvements in our net interest margin, which improved from 2.40% in the second quarter of 2025 to 2.50% in the third quarter of 2025, and increased significantly from 2.08% one year ago in the quarter ended September 30, 2024.
While we have experienced an increase in non-performing assets year-to-date, we believe these assets are well collateralized and do not represent a risk of material loss to the Company. Our adjusted noninterest expense to average assets was 1.46% during the third quarter of 2025, which continues to be nearly half that of similarly-sized peer banks based on recent call report data. Careful management of our dividend and asset growth has allowed our tangible common equity to tangible assets ratio to rise to 7.94% at September 30, 2025 from 7.58% at December 31, 2024, with the Bank's leverage ratio finishing the third quarter of 2025 at 9.22%. We also remain committed to paying down debt, with our senior debt declining by $4 million and our subordinated debt declining by $2 million for the nine months ended September 30, 2025.
In summary, we will seek to continue to carefully control our risk and growth while net interest margin and earnings continue to recover. Our modeling and forecasting suggest continued improvement in earnings throughout 2025, given the current macro-economic conditions hold."
Highlights
The following tables highlight the trends that the Company believes are most relevant to understanding the performance of the Company as of and for the three and nine months ended September 30, 2025. As further detailed in Appendix A and Appendix C to this press release, adjusted results (which are non-GAAP financial measures), reflect adjustments for realized and unrealized investment gains and losses, gains and losses from the sale of fixed assets and other real estate owned, corporate and strategic planning expenses, the provision for or recovery of credit losses, and net loan charge-offs or recoveries. See Appendix B to this press release for more information on the Company's tax equivalent net interest margin. All financial information in this press release is unaudited.
| | | For the Three Months Ended September 30 | |||||||
| | | (Dollars in thousands, except per share data) | |||||||
| | | | | | | | | | |
| | | 2025 | | | 2024 | ||||
| | | | | | | | | | |
| | | GAAP | | Adjusted (1) | | | GAAP | | Adjusted (1) |
| Net income | $ | 3,898 | | 3,858 | | $ | 2,992 | | 2,214 |
| Diluted earnings per share | $ | 0.62 | | 0.62 | | $ | 0.48 | | 0.35 |
| Return on average assets (ROAA) | | 0.87 % | | 0.86 % | | | 0.67 % | | 0.50 % |
| Return on average equity | | 11.03 % | | 10.92 % | | | 9.17 % | | 6.79 % |
| Noninterest expense to average assets | | 1.46 % | | 1.46 % | | | 1.46 % | | 1.45 % |
| Net interest margin (tax equivalent) | | 2.50 % | | 2.50 % | | | 2.08 % | | 2.08 % |
| | | | | | | | | | |
| Pre-tax, pre-provision earnings (1) | $ | | | 4,781 | | $ | | | 2,450 |
| Pre-tax, pre-provision ROAA (1) | | | | 1.07 % | | | | | 0.55 % |
| | | | | | | | | | |
| (1) Represents a non-GAAP financial measure. See Appendix A to this press release for more information. | |||||||||
| | | For the Nine Months Ended September 30 | |||||||
| | | (Dollars in thousands, except per share data) | |||||||
| | | | | | | | | | |
| | | 2025 | | | 2024 | ||||
| | | | | | | | | | |
| | | GAAP | | Adjusted (1) | | | GAAP | | Adjusted (1) |
| Net income | $ | 8,883 | | 9,110 | | $ | 6,830 | | 5,463 |
| Diluted earnings per share | $ | 1.41 | | 1.45 | | $ | 1.09 | | 0.87 |
| Return on average assets (ROAA) | | 0.67 % | | 0.68 % | | | 0.51 % | | 0.41 % |
| Return on average equity | | 8.58 % | | 8.80 % | | | 7.22 % | | 5.78 % |
| Noninterest expense to average assets | | 1.50 % | | 1.48 % | | | 1.37 % | | 1.36 % |
| Net interest margin (tax equivalent) | | 2.37 % | | 2.37 % | | | 1.88 % | | 1.88 % |
| | | | | | | | | | |
| Pre-tax, pre-provision earnings (1) | $ | | | 11,215 | | $ | | | 6,315 |
| Pre-tax, pre-provision ROAA (1) | | | | 0.84 % | | | | | 0.47 % |
| | | | | | | | | | |
| (1) Represents a non-GAAP financial measure. See Appendix A to this press release for more information. | |||||||||
Five Quarter Trends
| | | For the Three Months Ended | ||||||
| | | (Dollars in thousands, except per share data) | ||||||
| | | | | | | | | |
| | | 2025 | | 2024 | ||||
| | | September 30 | June 30 | March 31 | | December 31 | | September 30 |
| | | GAAP | GAAP | GAAP | | GAAP | | GAAP |
| Net income | $ | 3,898 | 2,806 | 2,179 | | 2,092 | | 2,992 |
| Diluted earnings per share | $ | 0.62 | 0.45 | 0.35 | | 0.33 | | 0.48 |
| Return on average assets (ROAA) | | 0.87 % | 0.63 % | 0.50 % | | 0.47 % | | 0.67 % |
| Return on average equity | | 11.03 % | 8.17 % | 6.43 % | | 6.32 % | | 9.17 % |
| Noninterest expense to average assets | | 1.46 % | 1.55 % | 1.50 % | | 1.40 % | | 1.46 % |
| Net interest margin (tax equivalent) | | 2.50 % | 2.40 % | 2.31 % | | 2.29 % | | 2.08 % |
| Yield on interest-earning assets | | 5.61 % | 5.65 % | 5.58 % | | 5.69 % | | 5.70 % |
| Cost of funds | | 3.19 % | 3.32 % | 3.30 % | | 3.48 % | | 3.70 % |
| | | | | | | | | |
| | | 2025 | | 2024 | ||||
| | | September 30 | June 30 | March 31 | | December 31 | | September 30 |
| | | Adjusted (1) | Adjusted (1) | Adjusted (2) | | Adjusted (2) | | Adjusted (2) |
| Net income | $ | 3,858 | 3,037 | 2,214 | | 2,481 | | 2,203 |
| Diluted earnings per share | $ | 0.62 | 0.48 | 0.35 | | 0.39 | | 0.35 |
| Return on average assets (ROAA) | | 0.86 % | 0.68 % | 0.50 % | | 0.56 % | | 0.49 % |
| Return on average equity | | 10.92 % | 8.84 % | 6.53 % | | 7.49 % | | 6.75 % |
| Noninterest expense to average assets | | 1.46 % | 1.49 % | 1.50 % | | 1.40 % | | 1.46 % |
| | | | | | | | | |
| Pre-tax, pre-provision earnings | $ | 4,781 | 3,612 | 2,823 | | 3,441 | | 2,450 |
| Pre-tax, pre-provision ROAA | | 1.07 % | 0.81 % | 0.64 % | | 0.78 % | | 0.55 % |
| | | | | | | | | |
| (1) Represents a non-GAAP financial measure. See Appendix A to this press release for more information. | | | ||||||
| (2) Represents a non-GAAP financial measure. See Appendix C to this press release for more information. | | | ||||||
Asset Quality and Other Data
| | | | As of and for the | | | As of and for the | | | As of and for the |
| | | | 3 Months Ended | | | 3 Months Ended | | | 12 Months Ended |
| | | | September 30, | | | June 30, | | | December 31, |
| | | | 2025 | | | 2025 | | | 2024 |
| | | | | | | | | | |
| | | | (Dollars in thousands, except share data) | ||||||
| Asset Quality | | | | | | | | | |
| | Non-performing loans | $ | 7,661 | | $ | 7,638 | | $ | 1,383 |
| | Real estate owned | $ | 2,788 | | $ | 2,788 | | $ | 2,572 |
| | Non-performing assets | $ | 10,449 | | $ | 10,426 | | $ | 3,955 |
| | Non-performing loans to total loans | | 0.52 % | | | 0.52 % | | | 0.09 % |
| | Non-performing assets to total assets | | 0.58 % | | | 0.58 % | | | 0.23 % |
| | Year-to-date net charge-offs (recoveries) | $ | 167 | | $ | 162 | | $ | (247) |
| | Allowance for credit losses to non-performing loans | | 148.40 % | | | 152.41 % | | | 835.14 % |
| | Allowance for credit losses to total loans | | 0.77 % | | | 0.79 % | | | 0.79 % |
| | | | | | | | | | |
| Other Data | | | | | | | | | |
| | Cash dividends declared and paid | $ | 0.070 | | $ | 0.070 | | $ | 0.230 |
| | Shares outstanding | | 6,357,359 | | | 6,365,711 | | | 6,393,081 |
| | Book and tangible book value per share (2) | $ | 22.50 | | $ | 21.72 | | $ | 20.70 |
| | Accumulated other comprehensive loss (AOCI) per share | | (1.85) | | | (2.04) | | | (2.37) |
| | Book and tangible book value per share, excluding AOCI (1) (2) | | 24.35 | | $ | 23.76 | | $ | 23.07 |
| | Closing market price per common share | $ | 20.45 | | $ | 19.90 | | $ | 21.52 |
| | Closing price to book value ratio | | 90.88 % | | | 91.62 % | | | 103.95 % |
| | Tangible common equity to tangible assets ratio | | 7.94 % | | | 7.66 % | | | 7.58 % |
| | Bank regulatory leverage ratio | | 9.22 % | | | 9.22 % | | | 9.31 % |
| | | | | | | | | | |
| | (1) As further detailed in Appendix A and Appendix C to this press release, this is a non-GAAP financial measure. | | | | |||||
| | (2) The Company does not have any intangible assets. | | | | | | | | |
Net Interest Income
Net interest income increased $1.9 million, or 23.3%, from $8.3 million for the three months ended September 30, 2024 to $10.2 million for the same period in 2025. The change between the periods was primarily the net result of the following factors:
- Average interest-earning assets increased $11.5 million, or 0.7%, from $1.673 billion to $1.684 billion, driven primarily by increases in taxable loans and interest earning deposits.
- Average net interest-earning assets increased $2.8 million, or 1.0%, from $298.9 million to $301.8 million, due primarily to $10.9 million increase in shareholders' equity.
- Cost of funds declined 51 bp from 3.70% to 3.19% resulting in tax-equivalent net interest rate spread expanding by 54 bp to 1.83% from 1.29% and tax-equivalent net interest margin expanding 42 bp to 2.50% from 2.08%. As noted above, cost of funds and the yield earned on interest-earning assets over the comparable period last year have been impacted by 125 bp of decreases in short-term interest rates by the Federal Reserve since September 2024.
Net interest income increased $6.2 million, or 27.5%, from $22.5 million for the nine months ended September 30, 2024 to $28.7 million for the same period in 2025. The change between the periods was primarily the net result of the following factors:
- Average interest-earning assets declined $1.7 million, or 0.1%, from $1.672 billion to $1.670 billion, driven primarily by decreases in taxable investments and interest earning deposits.
- Average net interest-earning assets increased $5.8 million, or 2.0%, from $282.8 million to $288.6 million, due primarily to a $11.9 million increase in shareholders' equity.
- Cost of funds declined 48 bp from 3.77% to 3.29%, while the average yield earned on interest-earning assets remained at 5.58%, resulting in tax-equivalent net interest rate spread expanding by 57 bp from 1.13% to 1.70% and tax-equivalent net interest margin expanding 49 bp from 1.88% to 2.37%.
Rate Sensitivity
The Company has the following assets, derivatives and liabilities subject to contractual repricing of interest rates:
| (In thousands) | | September 30, 2025 |
| | | |
| Interest-earning deposits | $ | 90,070 |
| Investments available for sale | | 15,277 |
| Loans receivable | | 437,290 |
| Interest rate swaps (notional) | | 260,000 |
| | $ | 802,637 |
| | | |
| Deposits | $ | 105,846 |
| Senior debt | | 10,000 |
| Subordinated debt | | 7,995 |
| | $ | 123,841 |
Interest owed on the Company's subordinated debt adjusted to a floating rate from its original fixed rate during the third quarter of 2025.
Interest Rate Swaps
The Company has the following interest rate swaps designated as hedges as of September 30, 2025:
| | | | | Estimated | | | | |
| | | | Fair | Annual | | | Receive | Pay |
| Hedged Item | | Notional | Value | Earnings | Term | Maturity | Rate | Rate |
| (dollars in thousands) | | | | | | | | |
| | | | | | | | | |
| Fixed rate loans | $ | 150,000 | (1,712) | (585) | 3 Yrs | 10/1/2026 | 4.30 % | 4.69 % |
| Fixed rate loans | | 75,000 | (33) | 444 | 2 Yrs | 9/1/2026 | 4.30 % | 3.71 % |
| Floating rate deposit | | 35,000 | (13) | 232 | 1.5 Yrs | 10/22/2026 | 4.31 % | 3.65 % |
| | $ | 260,000 | (1,758) | 91 | | | | |
Provision For (Recovery Of) Credit Losses
The following summarizes the Company's provision for (recovery of) credit losses and net charge-offs (recoveries) for each of the last five quarters:
| | | Three Months Ended | ||||||||
| | | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| (In thousands) | | 2025 | | 2025 | | 2025 | | 2024 | | 2024 |
| | | | | | | | | | | |
| Provision for (recovery of) credit losses | $ | (33) | | 138 | | 64 | | 480 | | (1,282) |
| Net charge-offs (recoveries) | | 5 | | 7 | | 155 | | 11 | | -15 |
The Company continues to experience historically lower levels of specific reserves and net charge-offs which, when combined with minimal changes in economic factors, has resulted in minimal provisions for credit losses during the last five quarters. Given our limited loss history, the Company utilizes peer data in its estimation of expected loan losses.
Noninterest Income
The following summarizes changes in the Company's noninterest income for the periods indicated:
| | | Three Months Ended September 30 | ||
| (In thousands) | | 2025 | 2024 | Change |
| | | | | |
| Service charges and fees | $ | 404 | 389 | 15 |
| Bank owned life insurance | | 56 | 56 | - |
| Realized gain (loss) on sale of investment securities available for sale | | (13) | - | (13) |
| Realized and unrealized loss on equity securities | | 29 | 57 | (28) |
| Gain (loss) on sale of loans | | 4 | 12 | (8) |
| Wealth management | | 239 | 193 | 46 |
| Swap fees | | 75 | - | 75 |
| Limited partnership income | | 352 | - | 352 |
| Other | | 8 | 3 | 5 |
| | | | | |
| Total noninterest income | $ | 1,154 | 710 | 444 |
Noninterest income increased to $1.2 million in the third quarter of 2025 from $0.7 million in the same quarter of 2024. The following factors had an impact on noninterest income during these periods:
- Wealth management fees improved by $0.1 million as a result of an improvement in equity market conditions and assets under management.
- Swap fees increased $0.1 million due to an increased demand from customers wanting to lock in a fixed interest rate on loans. The Bank receives a fee for delivering the swap to a third party with our borrower as counterparty to the swap, but does not maintain a contractual obligation for the swap other than in the event of a default.
- Limited partnership income increased $0.4 million from distributions from certain of the Company's investments in limited partnerships, which tend to have distributions towards the end of their life.
| | | Nine Months Ended September 30 | ||
| (In thousands) | | 2025 | 2024 | Change |
| | | | | |
| Service charges and fees | $ | 1,140 | 1,142 | (2) |
| Bank owned life insurance | | 167 | 166 | 1 |
| Realized gain (loss) on sale of investment securities available for sale | | (160) | 69 | (229) |
| Realized and unrealized loss on equity securities | | 18 | 30 | (12) |
| Gain on sale of loans | | 6 | 39 | (33) |
| Gain (loss) on sale of fixed assets | | 5 | 30 | (25) |
| Wealth management | | 681 | 611 | 70 |
| Swap fees | | 385 | 51 | 334 |
| Limited partnership income | | 352 | - | 352 |
| Other | | 25 | 26 | (1) |
| | | | | |
| Total noninterest income | $ | 2,619 | 2,164 | 455 |
Noninterest income increased to $2.6 million during the nine months ended September 30, 2025 from $2.2 million during the same period of 2024. The following factors had an impact on noninterest income during these periods:
- Realized gain (loss) on sale of investment securities available for sale declined by $0.2 million from the first nine months of 2024 due to management's decision during January 2025 to sell a municipal bond at a loss as a risk mitigation measure given that it was issued by a municipality that was in close proximity to the California wildfires.
- Wealth management fees improved by $0.1 million as a result of an improvement in equity market conditions and assets under management.
- Swap fees increased $0.3 million due to an increased demand from customers wanting to lock in a fixed interest rate on loans. The Bank receives a fee for delivering the swap to a third party with our borrower as counterparty to the swap, but does not maintain a contractual obligation for the swap other than in the event of a default.
- Limited partnership income increased $0.4 million from distributions from certain of the Company's investments in limited partnerships, which tend to have distributions towards the end of their life.
Noninterest Expense
The following summarizes changes in the Company's noninterest expense for the periods indicated:
| | | | Three Months Ended September 30 | ||
| | (In thousands) | | 2025 | 2024 | Change |
| | | | | | |
| | Compensation and employee benefits | $ | 3,384 | 2,904 | 480 |
| | Occupancy | | 767 | 780 | (13) |
| | Furniture and equipment | | 302 | 320 | (18) |
| | Data processing | | 671 | 955 | (284) |
| | FDIC insurance | | 363 | 371 | (8) |
| | Office | | 200 | 214 | (14) |
| | Advertising | | 89 | 121 | (32) |
| | Professional fees | | 385 | 441 | (56) |
| | Real Estate Owned | | 53 | - | 53 |
| | Other noninterest expense | | 331 | 406 | (75) |
| | | | | | |
| | Total noninterest expense | $ | 6,545 | 6,512 | 33 |
Noninterest expense was $6.5 million for both the three months ended September 30, 2025 and 2024. The following factors had an impact on noninterest expense during these periods:
- Compensation and employee benefits expense increased $0.5 million, or 16.5%, due primarily to an increase in incentive accruals and bonuses tied to forecasted 2025 performance as well as merit increases. A decrease in FTE employees from 112 to 107 between the periods partially offset the increase.
- Data processing decreased $0.3 million, or 29.7%, due primarily to a $0.3 million one-time payment to a vendor in connection with the termination of a software relationship in the prior year's comparable period.
| | | Nine Months Ended September 30 | ||
| (In thousands) | | 2025 | 2024 | Change |
| | | | | |
| Compensation and employee benefits | $ | 10,462 | 8,902 | 1,560 |
| Occupancy | | 2,283 | 2,011 | 272 |
| Furniture and equipment | | 928 | 834 | 94 |
| Data processing | | 2,006 | 2,009 | (3) |
| FDIC insurance | | 1,069 | 1,119 | (50) |
| Office | | 557 | 560 | (3) |
| Advertising | | 296 | 323 | (27) |
| Professional fees | | 1,469 | 1,591 | (122) |
| Real Estate Owned | | 17 | - | 17 |
| Other noninterest expense | | 985 | 982 | 3 |
| | | | | |
| Total noninterest expense | $ | 20,072 | 18,331 | 1,741 |
Noninterest expense increased $1.7 million, or 9.5%, from $18.3 million for the nine months ended September 30, 2024 to $20.0 million in the same period of 2025. The following factors had an impact on changes in noninterest expense during these periods:
- Compensation and employee benefits expense increased $1.6 million, or 17.5%, due primarily to an increase in incentive accruals and bonuses tied to forecasted 2025 performance as well as merit increases. A decrease in FTE employees from 108 to 107 between the comparable periods partially offset the increase.
- Occupancy and furniture and equipment expenses increased by a combined $0.4 million, or 12.9%, due to the opening of the Johnson City financial center on July 1, 2024, offset, in part, by the elimination of expenses for the formerly leased facilities.
Income Taxes
The effective tax rates of the Company were as follows for the periods indicated:
| Three Months Ended September 30 | |
| 2025 | 2024 |
| 19.03 % | 19.83 % |
| | |
| Nine Months Ended September 30 | |
| 2025 | 2024 |
| 19.58 % | 20.26 % |
The Company's marginal tax rate of 26.14% is favorably impacted by certain sources of non-taxable income including bank-owned life insurance (BOLI) and investments in tax-free municipal securities, and state tax credits on certain loans. The Company's effective tax rate declined in the 2025 periods compared to 2024 due to higher utilization of state tax credits.
Balance Sheet
Total assets increased $60.0 million, or 3.3%, from $1.746 billion at December 31, 2024 to $1.803 billion at September 30, 2025. The change was primarily driven by the following factors:
- Cash and cash equivalents increased $37.1 million, or 49.1%, due to deposit growth outpacing asset growth, in part because, as described below, the Company is intentionally managing its loan growth.
- Available for sale investment security balances increased $0.7 million, or 0.6%, primarily due to a $1.3 million improvement in the fair value of the underlying bonds.
The following summarizes the composition of the Company's available for sale investment securities portfolio (at fair value) as of the periods indicated:
| | | September 30, 2025 | | December 31, 2024 | ||
| | | Estimated | Net | | Estimated | Net |
| | | Fair | Unrealized | | Fair | Unrealized |
| | | Value | Gain (Loss) | | Value | Gain (Loss) |
| (in thousands) | | | | | | |
| | | | | | | |
| Agency MBS / CMO | $ | 11,318 | (1,408) | | 11,560 | (1,960) |
| Agency multifamily (non-guaranteed) | | 5,814 | (449) | | 7,081 | (750) |
| Agency floating rate | | 11,631 | 34 | | 6,647 | 18 |
| Business Development Companies | | 3,644 | (108) | | 3,522 | (236) |
| Corporate | | 20,270 | (1,026) | | 22,832 | (1,860) |
| Municipal | | 26,896 | (5,613) | | 25,987 | (7,169) |
| Non-agency MBS / CMO | | 34,721 | (7,334) | | 35,331 | (8,566) |
| | | | | | | |
| | $ | 114,295 | (15,904) | | 112,960 | (20,523) |
Non-agency MBS/CMO have an average credit-enhancement of approximately 33% as of September 30, 2025. Municipal securities are generally rated AA or higher.
- The Company did not have any securities classified as held-to-maturity as of September 30, 2025 and December 31, 2024.
- Loans receivable increased $21.0 million, or 1.4%, from $1.463 billion at December 31, 2024 to $1.484 billion at September 30, 2025. The Company is intentionally managing its loan growth as it seeks to improve its risk profile by paying down debt, increasing capital, and reducing the amount of its wholesale borrowings. The Company is managing its exposure to commercial real estate and has a regulatory commercial real estate concentration of 336% of total risk-based capital as of September 30, 2025 as compared to 325% at December 31, 2024, while our AD&C concentration remains low at 32% of total risk-based capital as of September 30, 2025 as compared to 43% at December 31, 2024. The following summarizes changes in loan balances over the last five quarters:
| | | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| | | 2025 | | 2025 | | 2025 | | 2024 | | 2024 |
| (in thousands) | | | | | | | | | | |
| | | | | | | | | | | |
| Residential construction | $ | 23,446 | | 18,811 | | 19,636 | | 14,831 | | 18,957 |
| Other construction | | 33,642 | | 51,846 | | 51,047 | | 60,474 | | 48,991 |
| Farmland | | 10,531 | | 8,192 | | 7,577 | | 4,513 | | 9,462 |
| Home equity | | 64,272 | | 60,625 | | 56,588 | | 57,972 | | 53,407 |
| Residential | | 430,970 | | 445,966 | | 444,620 | | 449,056 | | 466,107 |
| Multi-family | | 131,836 | | 125,803 | | 121,511 | | 114,634 | | 115,069 |
| Owner-occupied commercial | | 266,357 | | 251,842 | | 252,764 | | 252,615 | | 260,981 |
| Non-owner occupied commercial | | 403,709 | | 395,038 | | 389,666 | | 382,136 | | 367,918 |
| Commercial & industrial | | 107,338 | | 108,151 | | 114,899 | | 115,234 | | 122,096 |
| PPP Program | | 37 | | 50 | | 66 | | 83 | | 101 |
| Consumer | | 11,924 | | 12,068 | | 11,112 | | 11,559 | | 9,409 |
| | | | | | | | | | | |
| | $ | 1,484,062 | | 1,478,392 | | 1,469,486 | | 1,463,107 | | 1,472,498 |
The following summarizes the industry components of the Company's non-owner occupied commercial real estate loans as of September 30, 2025. Office loans are primarily comprised of low-rise office space.
| | | Loan | | % of Total |
| | | Balance | | Loans |
| | | | | |
| Hotels | $ | 93,866 | | 6.3 % |
| Retail | | 84,107 | | 5.7 % |
| Office | | 86,183 | | 5.8 % |
| Marina | | 23,096 | | 1.6 % |
| Campground | | 23,584 | | 1.6 % |
| Warehouse | | 21,670 | | 1.5 % |
| Mini-storage | | 21,717 | | 1.5 % |
| Vacation Rentals | | 24,888 | | 1.7 % |
| Car Wash | | 5,394 | | 0.4 % |
| Entertainment | | 8,216 | | 0.6 % |
| Restaurant | | 3,900 | | 0.3 % |
| Other | | 7,087 | | 0.5 % |
| | $ | 403,709 | | 27.2 % |
The following summarizes the Company's loan portfolio by market where the loan was originated:
| | | September 30, | | December 31, |
| | | 2025 | | 2024 |
| | | | | |
| Tri-Cities | $ | 189,113 | | 189,287 |
| Knoxville | | 1,004,532 | | 1,019,266 |
| Nashville | | 290,417 | | 254,554 |
| | $ | 1,484,062 | | 1,463,107 |
- Other real estate owned increased $0.2 million, or 8.4%, from $2.6 million at December 31, 2024 to $2.8 million at September 30, 2025. The following summarizes the detail of Other real estate owned as of the periods indicated:
| | | September 30, | | December 31, |
| | | 2025 | | 2024 |
| | | | | |
| Residential | $ | 2,572 | | 2,572 |
| Land | | 216 | | - |
| | $ | 2,788 | | 2,572 |
- Total deposits increased $55.9 million, or 3.7%, from $1.527 billion at December 31, 2024 to $1.583 billion at September 30, 2025.
The following summarizes changes in deposit balances over the last five quarters:
| | | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| | | 2025 | | 2025 | | 2025 | | 2024 | | 2024 |
| (in thousands) | | | | | | | | | | |
| | | | | | | | | | | |
| Non-interest bearing transaction | $ | 257,199 | | 264,725 | | 248,711 | | 248,298 | | 268,563 |
| NOW and money market | | 514,932 | | 503,216 | | 462,367 | | 431,629 | | 437,579 |
| Savings | | 177,863 | | 185,815 | | 189,814 | | 189,246 | | 207,466 |
| Retail time deposits | | 373,209 | | 364,027 | | 372,741 | | 370,989 | | 382,386 |
| | | 1,323,203 | | 1,317,783 | | 1,273,633 | | 1,240,162 | | 1,295,994 |
| Wholesale time deposits | | 259,438 | | 267,072 | | 296,578 | | 286,552 | | 255,739 |
| | | | | | | | | | | |
| Total deposits | $ | 1,582,641 | | 1,584,855 | | 1,570,211 | | 1,526,714 | | 1,551,733 |
The following summarizes core deposits, treasury deposits, and wholesale deposits and average interest rate as of the period indicated:
| | September 30, 2025 | |
| (In thousands) | Balance | Rate |
| | | |
| Core | | |
| Non-interest DDA | $ 257,199 | 0.00 % |
| Interest DDA | 39,571 | 0.75 % |
| Money Market | 379,079 | 3.26 % |
| Savings | 131,391 | 1.89 % |
| Retail CDs | 373,209 | 4.08 % |
| Total Core | $ 1,180,449 | 2.55 % |
| | | |
| Treasury | | |
| Inspira | $ 50,183 | 4.45 % |
| PMA/ICS/CDARS | 92,571 | 3.81 % |
| Total Treasury | $ 142,754 | 3.92 % |
| | | |
| Wholesale | | |
| Brokered CDs | 188,607 | 4.50 % |
| QwickRate CDs | 70,831 | 4.78 % |
| Total Wholesale | $ 259,438 | 4.58 % |
| | | |
| Total Deposits | $ 1,582,641 | 3.01 % |
The following summarizes the composition of certificates of deposit by maturity and average interest rate as of September 30, 2025:
| Maturity | | Brokered CD | | Qwickrate CD | | Retail CD | | Total | ||||||||
| Date | | Amount | | Rate | | Amount | | Rate | | Amount | | Rate | | Amount | | Rate |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Q4 2025 | | 25,555 | | 4.16 % | | 11,526 | | 4.89 % | | 74,918 | | 4.03 % | | 111,999 | | 4.15 % |
| Q1 2026 | | 70,300 | | 4.56 % | | 5,904 | | 4.49 % | | 159,205 | | 4.13 % | | 235,409 | | 4.27 % |
| Q2 2026 | | - | | - | | 14,439 | | 5.52 % | | 51,867 | | 4.03 % | | 66,306 | | 4.35 % |
| Q3 2026 | | - | | - | | 18,500 | | 4.56 % | | 29,835 | | 4.11 % | | 48,335 | | 4.28 % |
| Q4 2026 | | 48,551 | | 4.50 % | | 14,983 | | 4.39 % | | 22,771 | | 4.04 % | | 86,305 | | 4.36 % |
| Q1 2027 | | - | | - | | 4,187 | | 4.93 % | | 30,960 | | 4.00 % | | 35,147 | | 4.11 % |
| Q2 2027 | | 44,201 | | 4.60 % | | 1,044 | | 4.10 % | | 1,796 | | 4.17 % | | 47,041 | | 4.57 % |
| Q3 2027 | | - | | - | | 248 | | 3.75 % | | 1,729 | | 4.21 % | | 1,977 | | 4.15 % |
| Thereafter | | - | | - | | - | | | | 128 | | 2.79 % | | 128 | | 2.79 % |
| | | 188,607 | | 4.50 % | | 70,831 | | 4.78 % | | 373,209 | | 4.08 % | | 632,647 | | 4.28 % |
The following summarizes deposits by market where the deposit was originated:
| | | September 30, | | December 31, |
| | | 2025 | | 2024 |
| | | | | |
| Tri-Cities | $ | 349,521 | | 329,912 |
| Knoxville | | 711,949 | | 688,049 |
| Nashville | | 112,518 | | 100,928 |
| | $ | 1,173,988 | | 1,118,889 |
- FHLB borrowings were $45.0 million at September 30, 2025 and December 31, 2024 and consisted of the following at September 30, 2025:
| Amounts | Original | Current | Maturity |
| (000's) | Term | Rate | Date |
| | | | |
| 15,000 | 1 Week | 4.22 % | 10/07/25 |
| 20,000 | 3 Month | 4.26 % | 12/16/25 |
| 10,000 | 2 Years | 4.38 % | 11/05/26 |
| | | | |
| 45,000 | | 4.27 % | |
- Total equity increased $10.7 million, or 8.1%, from $132.4 million at December 31, 2024 to $143.1 million at September 30, 2025. The following summarizes the components of the change in total shareholders' equity and tangible book value per share for the nine months ended September 30, 2025:
| | | Total | Tangible |
| | | Shareholders' | Book Value |
| | | Equity | Per Share |
| (In thousands) | | | |
| | | | |
| December 31, 2024 | $ | 132,353 | 20.70 |
| | | | |
| Net income | | 8,883 | 1.41 |
| Dividends paid | | (1,214) | (0.19) |
| Stock compensation | | 706 | 0.11 |
| Share repurchases from stock compensation | | (54) | (0.01) |
| Share repurchases | | (1,003) | (0.16) |
| Change in fair value of investments available for sale | | 3,387 | 0.53 |
| | | | |
| September 30, 2025 | $ | 143,058 | 22.50 |
| * Sum of the individual components may not equal the total | | | |
The Company's tangible equity to tangible assets ratio increased to 7.94% at September 30, 2025 from 7.58% at December 31, 2024, as the Company continues to manage its growth and dividend levels in light of current income levels. The Company and Bank both remain well capitalized at September 30, 2025, with the Bank maintaining a regulatory leverage ratio of 9.22% at September 30, 2025.
Share Repurchases
The Company has an active authorization to repurchase up to $5 million of shares through March 31, 2026. 50,000 shares at an average price of $20.00 per share were repurchased pursuant to such plan during the nine months ended September 30, 2025.
Asset Quality
Non-performing loans to total loans increased to 0.52% at September 30, 2025 from 0.09% at December 31, 2024. Non-performing assets to total assets increased to 0.58% at September 30, 2025 from 0.23% at December 31, 2024. The following summarizes the composition of non-performing loans and related collateral values as of September 30, 2025:
| No. of | Collateral | | Loan | Collateral |
| Properties | Type | | Amount | Value |
| | | | | |
| | | | | |
| 1 | Multifamily residential | $ | 506 | 1,058 |
| 1 | Owner occupied CRE | | 308 | 315 |
| 8 | 1-4 Family residential | | 6,782 | 11,225 |
| | | | | |
| 10 | | $ | 7,596 | 12,598 |
Other real estate owned of $2.8 million at September 30, 2025 is comprised of two properties for which no remaining loss on sale is anticipated. Net charge-offs of $0.2 million were recognized during the nine months ended September 30, 2025 in conjunction with the transfer of multiple properties to other real estate owned, compared to net recoveries of $0.2 million during the year ended December 31, 2024.
The allowance for credit losses to total loans declined to 0.77% at September 30, 2025 from 0.79% at both September 30, 2025 and December 31, 2024. Coverage of non-performing loans by the allowance for credit losses was nearly 1.5 to 1 at September 30, 2025, down from more than 8 to 1 at December 31, 2024 due to the increase in non-performing loans. Loans represented in the increase in non-performing loans during the quarter ended September 30, 2025 have been individually evaluated for collateral adequacy and did not require additional specific reserves.
Non-GAAP Financial Measures
Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables in Appendix A and Appendix C, which provide a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures. This press release and the accompanying tables discuss financial measures such as adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average equity, and adjusted noninterest expense to average assets, which are all non-GAAP financial measures. We also present in this press release and the accompanying tables pre-tax, pre-provision earnings, pre-tax, pre-provision return on average assets, and book and tangible book value per share excluding AOCI, which are also non-GAAP financial measures. We believe that such non-GAAP financial measures are useful because they enhance the ability of investors and management to evaluate and compare the Company's operating results from period to period in a meaningful manner. Non-GAAP financial measures should not be considered as an alternative to any measure of performance calculated pursuant to GAAP, nor are they necessarily comparable to non-GAAP financial measures that may be presented by other companies. Investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.
Forward-Looking Statements
This press release contains forward-looking statements. The words "expect," "intend," "should," "may," "could," "believe," "suspect," "anticipate," "seek," "plan," "estimate" and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical fact may also be considered forward-looking. Such forward-looking statements involve known and unknown risks and uncertainties that include, without limitation, (i) deterioration in the financial condition of our borrowers, including as a result of continued elevated interest rates, persistent inflationary pressures and challenging economic conditions, resulting in significant increases in credit losses and provisions for those losses; (ii) the impact of U.S. and global trade policies and tensions, including changes in, or the imposition of, tariffs and/or trade barriers and the economic impacts, volatility and uncertainty resulting there from, and geopolitical instability, (iii) fluctuations or differences in interest rates on loans or deposits from those that we are modeling or anticipating, including as a result of our inability to better match deposit rates with the changes in the short-term rate environment, or that affect the yield curve; (iv) deterioration in the real estate market conditions in our market areas; (v) our ability to grow and retain low cost core deposits and retain large, uninsured deposits including during times when we are seeking to limit the rates we pay with other financial institutions, including pricing pressures, and the resulting impact on our results, including as a result of compression to our net interest margin; (vi) the deterioration of the economy in our market areas, including the negative impact of inflationary pressures and other challenging economic conditions on our customers and their businesses; (vii) risks associated with a prolonged shutdown of the United States federal government, including adverse effects on the national or local economies and adverse effects resulting from a shutdown of the U.S. Small Business Administration's SBA loan program; (viii) our ability to meet our liquidity needs without having to liquidate investment securities that we own while those securities are in an unrealized loss position as a result of the elevated rate environment, or increase the rates we pay on deposits or increase our levels of non-core deposits to levels that cause our net interest margin to decline; (ix) significant downturns in the business of one or more large customers; (x) effectiveness of our asset management activities in improving, resolving or liquidating lower quality assets; (xi) our inability to maintain the historical, long-term growth rate of our loan portfolio; (xii) risks of expansion into new geographic or product markets; (xiii) the possibility of increased compliance and operational costs as a result of increased regulatory oversight; (xiv) our inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies and required capital maintenance levels; (xv) the ineffectiveness of our hedging strategies, or the unexpected counterparty failure or failure of the underlying hedges; (xvi) changes in or interpretations of state or Federal regulations, policies, or legislation applicable to banks and other financial service providers, including regulatory or legislative developments arising out of current unsettled conditions in the economy; (xvii) changes in capital levels and loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (xviii) inadequate allowance for credit losses; (xix) results of regulatory examinations; (xx) the vulnerability of our network and online banking portals, and the systems of parties with whom we contract or do business with, to unauthorized access, computer viruses, phishing schemes, spam attacks, ransomware attacks, human error, natural disasters, power loss and other security breaches; (xxi) loss of key personnel; and (xxii) adverse results (including costs, fines, reputational harm and/or other negative effects) from current or future litigation, examinations or other legal and/or regulatory actions. These risks and uncertainties may cause our actual results or performance to be materially different from any future results or performance expressed or implied by such forward-looking statements. Our future operating results depend on a number of factors which were derived utilizing numerous assumptions that could cause actual results to differ materially from those projected in forward-looking statements.
About Mountain Commerce Bancorp, Inc. and Mountain Commerce Bank
Mountain Commerce Bancorp, Inc. is the holding company for Mountain Commerce Bank. The Company's shares of common stock trade on the OTCQX under the symbol "MCBI".
Mountain Commerce Bank is a state-chartered financial institution headquartered in Knoxville, TN. The Bank traces its history back over a century and serves Middle and East Tennessee through 7 branches located in Brentwood, Erwin, Johnson City (2), Bearden (Knoxville), West Knoxville and Unicoi. The Bank focuses on responsive relationship banking of small and medium-sized businesses, professionals, affluent individuals, and those who value the personal service and attention that only a community bank can offer. For further information, please visit us at www.mcb.com.
| Mountain Commerce Bancorp, Inc. and Subsidiaries | |||||||||
| Condensed Consolidated Statements of Income | |||||||||
| (Amounts in thousands, except share data) | |||||||||
| | | | | | | | | | |
| | | | Three Months Ended | | | Nine Months Ended | |||
| | | | September 30, | June 30, | September 30, | | | September 30, | September 30, |
| | | | 2025 | 2025 | 2024 | | | 2025 | 2024 |
| Interest income | | | | | | | | | |
| | Loans | $ | 21,349 | 21,102 | 21,131 | | $ | 62,847 | 61,518 |
| | Investment securities - taxable | | 1,024 | 1,061 | 1,100 | | | 3,113 | 3,534 |
| | Investment securities - tax exempt | | 29 | 30 | 29 |
| | 88 | 88 |
| | Dividends and other | | 940 | 992 | 1,224 | | | 2,689 | 3,684 |
| | | | 23,342 | 23,185 | 23,484 | | | 68,737 | 68,824 |
| Interest expense | | | | | | | | | |
| | Savings | | 1,155 | 1,178 | 1,550 | | | 3,530 | 5,488 |
| | Interest bearing transaction accounts | | 4,138 | 3,850 | 4,178 | | | 11,501 | 12,001 |
| | Time certificates of deposit of $250,000 or more | | 3,828 | 4,141 | 4,319 | | | 12,207 | 13,480 |
| | Other time deposits | | 3,043 | 3,514 | 3,710 | | | 10,035 | 10,931 |
| | Total deposits | | 12,164 | 12,683 | 13,757 | | | 37,273 | 41,900 |
| | Senior debt | | 181 | 183 | 347 | | | 592 | 1,157 |
| | Subordinated debt | | 191 | 165 | 164 | | | 520 | 493 |
| | FHLB advances | | 634 | 565 | 964 | | | 1,684 | 2,792 |
| | | | 13,170 | 13,596 | 15,232 | | | 40,069 | 46,342 |
| | | | | | | | | | |
| Net interest income | | 10,172 | 9,589 | 8,252 | | | 28,668 | 22,482 | |
| | | | | | | | | | |
| Provision for (recovery of) credit losses | | (33) | 138 | (1,282) | | | 169 | (2,250) | |
| | | | | | | | | | |
| Net interest income after provision for (recovery of) credit losses | | 10,205 | 9,451 | 9,534 | | | 28,499 | 24,732 | |
| | | | | | | | | | |
| Noninterest income | | | | | | | | | |
| | Service charges and fees | | 404 | 353 | 389 | | | 1,140 | 1,142 |
| | Bank owned life insurance | | 56 | 55 | 56 | | | 167 | 166 |
| | Realized gain (loss) on sale of investment securities available for sale | | (13) | (8) | - | | | (160) | 69 |
| | Realized and unrealized gain (loss) on equity securities | | 29 | (6) | 57 | | | 18 | 30 |
| | Gain on sale of loans | | 4 | - | 12 | | | 6 | 39 |
| | Gain on sale of fixed assets | | - | - | - | | | 5 | 30 |
| | Wealth management | | 239 | 223 | 193 | | | 681 | 611 |
| | Swap fees | | 75 | 310 | - | | | 385 | 51 |
| | Limited partnership income | | 352 | - | - | | | 352 | - |
| | Other | | 8 | 11 | 3 | | | 25 | 26 |
| | | | 1,154 | 938 | 710 | | | 2,619 | 2,164 |
| Noninterest expense | | | | | | | | | |
| | Compensation and employee benefits | | 3,384 | 3,549 | 2,904 | | | 10,462 | 8,902 |
| | Occupancy | | 767 | 766 | 780 | | | 2,283 | 2,011 |
| | Furniture and equipment | | 302 | 293 | 320 | | | 928 | 834 |
| | Data processing | | 671 | 670 | 955 | | | 2,006 | 2,009 |
| | FDIC insurance | | 363 | 327 | 371 | | | 1,069 | 1,119 |
| | Office | | 200 | 189 | 214 | | | 557 | 560 |
| | Advertising | | 89 | 111 | 121 | | | 296 | 323 |
| | Professional fees | | 385 | 659 | 441 | | | 1,469 | 1,591 |
| | Real estate owned expense (recovery) | | 53 | (59) | - | | | 17 | - |
| | Other noninterest expense | | 331 | 410 | 406 | | | 985 | 982 |
| | | | 6,545 | 6,915 | 6,512 | | | 20,072 | 18,331 |
| | | | | | | | | | |
| Income before income taxes | | 4,814 | 3,474 | 3,732 | | | 11,046 | 8,565 | |
| | | | | | | | | | |
| Income taxes | | 916 | 668 | 740 | | | 2,163 | 1,735 | |
| | | | | | | | | | |
| Net income | $ | 3,898 | 2,806 | 2,992 | | $ | 8,883 | 6,830 | |
| | | | | | | | | | |
| Earnings per common share: | | | | | | | | | |
| | Basic | $ | 0.62 | 0.45 | 0.48 | | $ | 1.42 | 1.09 |
| | Diluted | $ | 0.62 | 0.45 | 0.48 | | $ | 1.41 | 1.09 |
| | | | | | | | | | |
| Weighted average common shares outstanding: | | | | | | | | | |
| | Basic | | 6,251,027 | 6,273,181 | 6,271,047 | | | 6,271,670 | 6,262,499 |
| | Diluted | | 6,270,773 | 6,283,413 | 6,279,212 | | | 6,290,357 | 6,271,068 |
| Mountain Commerce Bancorp, Inc. and Subsidiaries | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| (Amounts in thousands) | |||||||||
| | | | | | | | | | |
| | | | September 30, | | | June 30, | | | December 31, |
| | | | 2025 | | | 2025 | | | 2024 |
| Assets | | | | | | | | | |
| | | | | | | | | | |
| Cash and due from banks | $ | 22,528 | | $ | 23,463 | | $ | 15,819 | |
| Interest-earning deposits in other banks | | 90,070 | | | 94,247 | | | 59,717 | |
| | Cash and cash equivalents | | 112,598 | | | 117,710 | | | 75,536 |
| | | | | | | | | | |
| Investments available for sale | | 113,617 | | | 116,616 | | | 112,960 | |
| Equity securities | | 2,763 | | | 2,716 | | | 2,695 | |
| Premises and equipment held for sale | | 3,762 | | | 3,762 | | | 3,762 | |
| | | | | | | | | | |
| Loans receivable | | 1,484,062 | | | 1,478,392 | | | 1,463,107 | |
| Allowance for credit losses | | (11,369) | | | (11,641) | | | (11,550) | |
| | Net loans receivable | | 1,472,693 | | | 1,466,751 | | | 1,451,557 |
| | | | | | | | | | |
| Premises and equipment, net | | 59,552 | | | 60,006 | | | 61,215 | |
| Accrued interest receivable | | 5,567 | | | 5,487 | | | 5,587 | |
| Other real estate owned | | 2,788 | | | 2,788 | | | 2,572 | |
| Bank owned life insurance | | 10,358 | | | 10,301 | | | 10,190 | |
| Restricted stock | | 3,710 | | | 4,546 | | | 4,317 | |
| Deferred tax assets, net | | 6,946 | | | 7,204 | | | 7,762 | |
| Other assets | | 8,286 | | | 7,784 | | | 7,516 | |
| | | | | | | | | | |
| Total assets | $ | 1,802,640 | | $ | 1,805,671 | | $ | 1,745,669 | |
| | | | | | | | | | |
| Liabilities and Shareholders' Equity | | | | | | | | | |
| | | | | | | | | | |
| Noninterest-bearing deposits | $ | 257,199 | | $ | 264,725 | | $ | 248,298 | |
| Interest-bearing deposits | | 1,066,004 | | | 1,053,058 | | | 991,864 | |
| Wholesale deposits | | 259,438 | | | 267,072 | | | 286,552 | |
| | Total deposits | | 1,582,641 | | | 1,584,855 | | | 1,526,714 |
| | | | | | | | | | |
| FHLB borrowings | | 45,000 | | | 50,000 | | | 50,000 | |
| Senior debt, net | | 10,000 | | | 10,000 | | | 14,000 | |
| Subordinated debt, net | | 7,995 | | | 10,000 | | | 9,971 | |
| Accrued interest payable | | 2,921 | | | 2,821 | | | 4,435 | |
| Post-employment liabilities | | 3,357 | | | 3,339 | | | 3,285 | |
| Other liabilities | | 7,668 | | | 6,399 | | | 4,911 | |
| | | | | | | | | | |
| Total liabilities | | 1,659,582 | | | 1,667,414 | | | 1,613,316 | |
| | | | | | | | | | |
| Total shareholders' equity | | 143,058 | | | 138,257 | | | 132,353 | |
| | | | | | | | | | |
| Total liabilities and shareholders' equity | $ | 1,802,640 | | $ | 1,805,671 | | $ | 1,745,669 | |
| Appendix A - Reconciliation of Non-GAAP Financial Measures | ||||||
| | | | | | | |
| | | Three Months Ended | | Nine Months Ended | ||
| | | September 30 | | September 30 | ||
| | | (Dollars in thousands, except per share data) | | (Dollars in thousands, except per share data) | ||
| | | | | | | |
| | | 2025 | 2024 | | 2025 | 2024 |
| Adjusted Net Income | | | | | | |
| Net income (GAAP) | $ | 3,898 | 2,992 | $ | 8,883 | 6,830 |
| Realized (gain) loss on sale of investment securities available for sale | | 13 | - | | 160 | (69) |
| Realized and unrealized (gain) loss on equity securities | | (29) | (57) | | (18) | (30) |
| Gain on sale of fixed assets | | - | - | | (5) | (30) |
| Gain on sale of real estate owned | | - | - | | (75) | - |
| Corporate and strategic initiatives | | - | - | | 243 | - |
| Provision for (recovery of) credit losses | | (33) | (1,282) | | 169 | (2,250) |
| Net (charge-offs) recoveries of credit losses | | (5) | 15 | | (167) | 258 |
| Software conversion expense | | - | 271 | | - | 271 |
| Tax effect of adjustments | | 14 | 275 | | (80) | 483 |
| Adjusted net income (Non-GAAP) | $ | 3,858 | 2,214 | $ | 9,110 | 5,463 |
| | | | | | | |
| Adjusted Diluted Earnings Per Share | | | | | | |
| Diluted earnings per share (GAAP) | $ | 0.62 | 0.48 | $ | 1.41 | 1.09 |
| Realized (gain) loss on sale of investment securities available for sale | | 0.00 | - | | 0.03 | (0.01) |
| Realized and unrealized (gain) loss on equity securities | | (0.00) | (0.01) | | (0.00) | (0.00) |
| Gain on sale of fixed assets | | - | - | | (0.00) | (0.00) |
| Gain on sale of real estate owned | | - | - | | (0.01) | - |
| Corporate and strategic initiatives | | - | - | | 0.04 | - |
| Provision for (recovery of) credit losses | | (0.01) | (0.20) | | 0.03 | (0.36) |
| Net (charge-offs) recoveries of credit losses | | (0.00) | 0.00 | | (0.03) | 0.04 |
| Software conversion expense | | - | 0.04 | | - | 0.04 |
| Tax effect of adjustments | | 0.00 | 0.04 | | (0.01) | 0.08 |
| Adjusted diluted earnings per share (Non-GAAP) | $ | 0.62 | 0.35 | $ | 1.45 | 0.87 |
| | | | | | | |
| Adjusted Return on Average Assets | | | | | | |
| Return on average assets (GAAP) | | 0.87 % | 0.67 % | | 0.67 % | 0.51 % |
| Realized (gain) loss on sale of investment securities available for sale | | 0.00 % | 0.00 % | | 0.01 % | -0.01 % |
| Realized and unrealized (gain) loss on equity securities | | -0.01 % | -0.01 % | | 0.00 % | 0.00 % |
| Gain on sale of fixed assets | | 0.00 % | 0.00 % | | 0.00 % | 0.00 % |
| Gain on sale of real estate owned | | 0.00 % | 0.00 % | | -0.01 % | 0.00 % |
| Corporate and strategic initiatives | | 0.00 % | 0.00 % | | 0.02 % | 0.00 % |
| Provision for (recovery of) credit losses | | -0.01 % | -0.29 % | | 0.01 % | -0.17 % |
| Net (charge-offs) recoveries of credit losses | | 0.00 % | 0.00 % | | -0.01 % | 0.02 % |
| Software conversion expense | | 0.00 % | 0.06 % | | 0.00 % | 0.02 % |
| Tax effect of adjustments | | 0.00 % | 0.06 % | | -0.01 % | 0.04 % |
| Adjusted return on average assets (Non-GAAP) | | 0.86 % | 0.50 % | | 0.68 % | 0.41 % |
| | | | | | | |
| Adjusted Return on Average Equity | | | | | | |
| Return on average equity (GAAP) | | 11.03 % | 9.17 % | | 8.58 % | 7.22 % |
| Realized (gain) loss on sale of investment securities available for sale | | 0.04 % | 0.00 % | | 0.15 % | -0.07 % |
| Realized and unrealized (gain) loss on equity securities | | -0.08 % | -0.17 % | | -0.02 % | -0.03 % |
| Gain on sale of fixed assets | | 0.00 % | 0.00 % | | 0.00 % | -0.03 % |
| Gain on sale of real estate owned | | 0.00 % | 0.00 % | | -0.07 % | 0.00 % |
| Corporate and strategic initiatives | | 0.00 % | 0.00 % | | 0.23 % | 0.00 % |
| Provision for (recovery of) credit losses | | -0.09 % | -3.93 % | | 0.16 % | -2.38 % |
| Net (charge-offs) recoveries of credit losses | | -0.01 % | 0.05 % | | -0.16 % | 0.27 % |
| Software conversion expense | | 0.00 % | 0.83 % | | 0.00 % | 0.29 % |
| Tax effect of adjustments | | 0.04 % | 0.84 % | | -0.08 % | 0.51 % |
| Adjusted return on average equity (Non-GAAP) | | 10.92 % | 6.79 % | | 8.80 % | 5.78 % |
| Appendix A - Reconciliation of Non-GAAP Financial Measures, Continued | ||||||
| | | | | | | |
| | | Three Months Ended | | Nine Months Ended | ||
| | | September 30 | | September 30 | ||
| | | (Dollars in thousands, except per share data) | | (Dollars in thousands, except per share data) | ||
| | | | | | | |
| | | 2025 | 2024 | | 2025 | 2024 |
| | | | | | | |
| Noninterest Expense to Average Assets | | | | | | |
| Noninterest expense to average assets (GAAP) | $ | 1.46 % | 1.46 % | $ | 1.50 % | 1.37 % |
| Software conversion expense | | 0.00 % | -0.02 % | | 0.00 % | -0.02 % |
| Corporate and strategic initiatives | | 0.00 % | 0.00 % | | -0.02 % | 0.00 % |
| Noninterest expense to average assets (Non-GAAP) | $ | 1.46 % | 1.45 % | $ | 1.48 % | 1.36 % |
| | | | | | | |
| Pre-tax, Pre-Provision Earnings | | | | | | |
| Net income (GAAP) | $ | 3,898 | 2,992 | $ | 8,883 | 6,830 |
| Income taxes | | 916 | 740 | | 2,163 | 1,735 |
| Provision for (recovery of) credit losses | | (33) | (1,282) | | 169 | (2,250) |
| Pre-tax, pre-provision earnings (non-GAAP) | $ | 4,781 | 2,450 | $ | 11,215 | 6,315 |
| | | | | | | |
| Pre-tax, Pre-Provision Return on Average Assets (ROAA) | | | | | | |
| Return on average assets (GAAP) | | 0.87 % | 0.67 % | $ | 0.67 % | 0.51 % |
| Income taxes | | 0.20 % | 0.17 % | | 0.16 % | 0.13 % |
| Provision for (recovery of) credit losses | | -0.01 % | -0.29 % | | 0.01 % | -0.17 % |
| Pre-tax, pre-provision return on average assets (non-GAAP) | | 1.07 % | 0.55 % | $ | 0.84 % | 0.47 % |
| | | | | | | |
| Book and Tangible Book Value Per Share, excluding AOCI | | | | | | |
| Book and tangible book value per share (GAAP) | $ | 22.50 | 20.83 | | | |
| Impact of AOCI per share | | 1.85 | 2.02 | | | |
| Book and tangible book value per share, excluding AOCI (non-GAAP) | $ | 24.35 | 22.85 | | | |
| Appendix B - Tax Equivalent Net Interest Margin Analysis | ||||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | For the Three Months Ended September 30, | |||||||
| | | | 2025 | | | 2024 | ||||
| | | | Average | | | | | Average | | |
| | | | Outstanding | | Yield / | | | Outstanding | | Yield / |
| | | | Balance | Interest | Rate | | | Balance | Interest | Rate |
| | | | (Dollars in thousands) | |||||||
| Interest-earning Assets: | | | | | | | | | | |
| | Loans - taxable, including loans held for sale | $ | 1,442,327 | 21,349 | 5.87 % | | $ | 1,427,693 | 21,131 | 5.89 % |
| | Loans - imputed tax credits (2) | | 26,859 | 457 | 6.75 % | | | 28,814 | 489 | 6.75 % |
| | Investments - taxable | | 112,344 | 1,024 | 3.62 % | | | 115,964 | 1,100 | 3.77 % |
| | Investments - tax exempt (1) | | 4,161 | 37 | 3.50 % | | | 4,244 | 37 | 3.44 % |
| | Interest earning deposits | | 92,667 | 823 | 3.52 % | | | 90,779 | 1,093 | 4.79 % |
| | Other investments, at cost | | 6,015 | 107 | 7.06 % | | | 5,429 | 131 | 9.60 % |
| | Total interest-earning assets | | 1,684,373 | 23,797 | 5.61 % | | | 1,672,923 | 23,981 | 5.70 % |
| | Noninterest-earning assets | | 108,074 | | | | | 107,583 | | |
| | Total assets | $ | 1,792,447 | | | | $ | 1,780,506 | | |
| | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | |
| | Interest-bearing transaction accounts | $ | 131,362 | 1,054 | 3.18 % | | $ | 137,038 | 1,370 | 3.98 % |
| | Savings accounts | | 178,807 | 1,154 | 2.56 % | | | 218,956 | 1,550 | 2.82 % |
| | Money market accounts | | 379,865 | 3,085 | 3.22 % | | | 291,614 | 2,808 | 3.83 % |
| | Retail time deposits | | 364,675 | 3,287 | 3.58 % | | | 382,547 | 4,348 | 4.52 % |
| | Wholesale time deposits | | 260,340 | 3,584 | 5.46 % | | | 252,313 | 3,681 | 5.80 % |
| | Total interest bearing deposits | | 1,315,049 | 12,164 | 3.67 % | | | 1,282,468 | 13,757 | 4.27 % |
| | | | | | | | | | | |
| | Senior debt | | 10,000 | 181 | 7.18 % | | | 17,000 | 347 | 8.12 % |
| | Subordinated debt | | 8,304 | 191 | 9.13 % | | | 9,953 | 164 | 6.56 % |
| | Federal Home Loan Bank advances | | 49,239 | 634 | 5.11 % | | | 64,565 | 964 | 5.94 % |
| | Total interest-bearing liabilities | | 1,382,592 | 13,170 | 3.78 % | | | 1,373,986 | 15,232 | 4.41 % |
| | | | | | | | | | | |
| | Noninterest-bearing deposits | | 256,206 | | | | | 264,015 | | |
| | Other noninterest-bearing liabilities | | 12,332 | | | | | 12,039 | | |
| | Total liabilities | | 1,651,130 | | | | | 1,650,040 | | |
| | | | | | | | | | | |
| | Total shareholders' equity | | 141,317 | | | | | 130,466 | | |
| | Total liabilities and shareholders' equity | $ | 1,792,447 | | | | $ | 1,780,506 | | |
| | | | | | | | | | | |
| | Tax-equivalent net interest income | | | 10,627 | | | | | 8,749 | |
| | | | | | | | | | | |
| | Net interest-earning assets (3) | $ | 301,781 | | | | $ | 298,937 | | |
| | | | | | | | | | | |
| | Average interest-earning assets to interest- | | | | | | | | | |
| | bearing liabilities | | 122 % | | | | | 122 % | | |
| | | | | | | | | | | |
| | Tax-equivalent net interest rate spread (4) | | 1.83 % | | | | | 1.29 % | | |
| | | | | | | | | | | |
| | Tax equivalent net interest margin (5) | | 2.50 % | | | | | 2.08 % | | |
| | | | | | | | | | | |
| | (1) Tax exempt investments are calculated assuming a 21% federal tax rate | | | | | | | |||
| | (2) Reflects the tax equivalent yield of a 5% state tax credit assuming a 26% federal and state tax rate | | | |||||||
| | (3) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities | | | |||||||
| | (4) Tax-equivalent net interest rate spread represents the difference between the tax equivalent yield on average | | | |||||||
| | interest-earning assets and the cost of average interest-bearing liabilities. | | | | | | | |||
| | (5) Tax equivalent net interest margin represents tax equivalent net interest income divided by average total | | | |||||||
| | interest-earning assets | | | | | | | | | |
| Appendix B - Tax Equivalent Net Interest Margin Analysis | ||||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | For the Nine Months Ended September 30, | |||||||
| | | | 2025 | | | 2024 | ||||
| | | | Average | | | | | Average | | |
| | | | Outstanding | | Yield / | | | Outstanding | | Yield / |
| | | | Balance | Interest | Rate | | | Balance | Interest | Rate |
| | | | (Dollars in thousands) | |||||||
| Interest-earning Assets: | | | | | | | | | | |
| | Loans, including loans held for sale | $ | 1,437,638 | 62,847 | 5.84 % | | $ | 1,423,285 | 61,518 | 5.77 % |
| | Loans - imputed tax credits (2) | | 27,568 | 979 | 4.75 % | | | 29,104 | 1,035 | 4.75 % |
| | Investments - taxable | | 112,984 | 3,113 | 3.68 % | | | 119,110 | 3,534 | 3.96 % |
| | Investments - tax exempt (1) | | 4,169 | 111 | 3.57 % | | | 4,222 | 111 | 3.52 % |
| | Interest earning deposits | | 82,300 | 2,338 | 3.80 % | | | 90,268 | 3,184 | 4.71 % |
| | Other investments, at cost | | 5,770 | 320 | 7.41 % | | | 6,118 | 499 | 10.89 % |
| | Total interest-earning assets | | 1,670,429 | 69,708 | 5.58 % | | | 1,672,107 | 69,881 | 5.58 % |
| | Noninterest-earning assets | | 110,444 | | | | | 105,609 | | |
| | Total assets | $ | 1,780,873 | | | | $ | 1,777,716 | | |
| | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | |
| | Interest-bearing transaction accounts | $ | 130,734 | 3,296 | 3.37 % | | $ | 130,577 | 3,815 | 3.90 % |
| | Savings accounts | | 186,731 | 3,530 | 2.53 % | | | 239,298 | 5,487 | 3.06 % |
| | Money market accounts | | 346,102 | 8,205 | 3.17 % | | | 269,662 | 8,186 | 4.05 % |
| | Retail time deposits | | 369,086 | 10,768 | 3.90 % | | | 385,760 | 12,868 | 4.46 % |
| | Wholesale time deposits | | 278,667 | 11,474 | 5.51 % | | | 264,603 | 11,544 | 5.83 % |
| | Total interest bearing deposits | | 1,311,320 | 37,273 | 3.80 % | | | 1,289,900 | 41,900 | 4.34 % |
| | | | | | | | | | | |
| | Senior debt | | 11,143 | 592 | 7.10 % | | | 18,667 | 1,157 | 8.28 % |
| | Subordinated debt | | 9,429 | 520 | 7.37 % | | | 9,941 | 493 | 6.62 % |
| | Federal Home Loan Bank advances | | 49,963 | 1,684 | 4.51 % | | | 70,803 | 2,792 | 5.27 % |
| | Total interest-bearing liabilities | | 1,381,855 | 40,069 | 3.88 % | | | 1,389,311 | 46,342 | 4.46 % |
| | | | | | | | | | | |
| | Noninterest-bearing deposits | | 248,194 | | | | | 250,811 | | |
| | Other noninterest-bearing liabilities | | 12,844 | | | | | 11,527 | | |
| | Total liabilities | | 1,642,893 | | | | | 1,651,649 | | |
| | | | | | | | | | | |
| | Total shareholders' equity | | 137,980 | | | | | 126,067 | | |
| | Total liabilities and shareholders' equity | $ | 1,780,873 | | | | $ | 1,777,716 | | |
| | | | | | | | | | | |
| | Tax-equivalent net interest income | | | 29,639 | | | | | 23,539 | |
| | | | | | | | | | | |
| | Net interest-earning assets (3) | $ | 288,574 | | | | $ | 282,796 | | |
| | | | | | | | | | | |
| | Average interest-earning assets to interest- | | | | | | | | | |
| | bearing liabilities | | 121 % | | | | | 120 % | | |
| | | | | | | | | | | |
| | Tax-equivalent net interest rate spread (4) | | 1.70 % | | | | | 1.13 % | | |
| | | | | | | | | | | |
| | Tax equivalent net interest margin (5) | | 2.37 % | | | | | 1.88 % | | |
| | | | | | | | | | | |
| | (1) Tax exempt investments are calculated assuming a 21% federal tax rate | | | | | | | | ||
| | (2) Reflects the tax equivalent yield of a 5% state tax credit assuming a 26% federal and state tax rate | | | | | |||||
| | (3) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities | | | | ||||||
| | (4) Tax-equivalent net interest rate spread represents the difference between the tax equivalent yield on average | | | |||||||
| | interest-earning assets and the cost of average interest-bearing liabilities. | | | | | | | |||
| | (5) Tax equivalent net interest margin represents tax equivalent net interest income divided by average total | | | |||||||
| | interest-earning assets | | | | | | | | | |
| Appendix C - Reconciliation of Prior Period Non-GAAP Financial Measures | ||||
| | | | | |
| | | Three Months Ended | ||
| | | (Dollars in thousands, except per share data) | ||
| | | | | |
| | | June 30, 2025 | March 31, 2025 | December 31, 2024 |
| Adjusted Net Income | | | | |
| Net income (GAAP) | $ | 2,806 | 2,179 | 2,092 |
| Realized loss on sale of investment securities available for sale | | 8 | 139 | - |
| Realized and unrealized (gain) loss on equity securities | | 6 | 4 | 58 |
| Gain on sale of fixed assets | | - | (5) | - |
| Gain on sale of real estate owned | | (75) | - | - |
| Corporate and strategic initiatives | | 243 | - | - |
| Provision for (recovery of) credit losses | | 138 | 64 | 480 |
| Net (charge-offs) recoveries of credit losses | | (7) | (155) | (11) |
| Tax effect of adjustments | | (82) | (12) | (138) |
| Adjusted net income (Non-GAAP) | $ | 3,037 | 2,214 | 2,481 |
| | | | | |
| Adjusted Diluted Earnings Per Share | | | | |
| Diluted earnings per share (GAAP) | $ | 0.45 | 0.35 | 0.33 |
| Realized loss on sale of investment securities available for sale | | 0.00 | 0.02 | - |
| Realized and unrealized (gain) loss on equity securities | | 0.00 | 0.00 | 0.01 |
| Gain on sale of fixed assets | | - | (0.00) | - |
| Gain on sale of real estate owned | | (0.01) | - | - |
| Corporate and strategic initiatives | | 0.04 | - | - |
| Provision for (recovery of) credit losses | | 0.02 | 0.01 | 0.08 |
| Net (charge-offs) recoveries of credit losses | | (0.00) | (0.02) | (0.00) |
| Tax effect of adjustments | | (0.01) | (0.00) | (0.02) |
| Adjusted diluted earnings per share (Non-GAAP) | $ | 0.48 | 0.35 | 0.39 |
| | | | | |
| Adjusted Return on Average Assets | | | | |
| Return on average assets (GAAP) | | 0.63 % | 0.50 % | 0.47 % |
| Realized loss on sale of investment securities available for sale | | 0.00 % | 0.00 | - |
| Realized and unrealized (gain) loss on equity securities | | 0.00 % | 0.00 % | 0.01 % |
| Gain on sale of fixed assets | | 0.00 % | (0.00) | - |
| Gain on sale of real estate owned | | -0.02 % | - | - |
| Corporate and strategic initiatives | | 0.05 % | - | - |
| Provision for (recovery of) credit losses | | 0.03 % | 0.01 % | 0.11 % |
| Net (charge-offs) recoveries of credit losses | | 0.00 % | -0.04 % | 0.00 % |
| Tax effect of adjustments | | -0.02 % | 0.00 % | -0.03 % |
| Adjusted return on average assets (Non-GAAP) | | 0.68 % | 0.50 % | 0.56 % |
| | | | | |
| Adjusted Return on Average Equity | | | | |
| Return on average equity (GAAP) | | 8.17 % | 6.43 % | 6.32 % |
| Realized loss on sale of investment securities available for sale | | 0.02 % | 0.00 | - |
| Realized and unrealized (gain) loss on equity securities | | 0.02 % | 0.01 % | 0.18 % |
| Gain on sale of fixed assets | | 0.00 % | (0.00) | - |
| Gain on sale of real estate owned | | -0.22 % | - | - |
| Corporate and strategic initiatives | | 0.71 % | - | - |
| Provision for (recovery of) credit losses | | 0.40 % | 0.19 % | 1.45 % |
| Net (charge-offs) recoveries of credit losses | | -0.02 % | -0.46 % | -0.03 % |
| Tax effect of adjustments | | -0.24 % | -0.04 % | -0.42 % |
| Adjusted return on average equity (Non-GAAP) | | 8.84 % | 6.53 % | 7.49 % |
| Appendix C - Reconciliation of Prior Period Non-GAAP Financial Measures, Continued | ||||
| | | | | |
| | | | | |
| | | Three Months Ended | ||
| | | (Dollars in thousands, except per share data) | ||
| | | | | |
| | | June 30, 2025 | March 31, 2025 | December 31, 2024 |
| Adjusted Noninterest Expense to Average Assets | | | | |
| Noninterest expense to average assets (GAAP) | | 1.55 % | 1.50 % | 1.40 % |
| Corporate and strategic initiatives | | -0.05 % | 0.00 % | 0.00 % |
| Adjusted noninterest expense to average assets (Non-GAAP) | | 1.49 % | 1.50 % | 1.40 % |
| | | | | |
| Pre-tax Pre-Provision Earnings | | | | |
| Net income (GAAP) | $ | 2,806 | 2,179 | 2,092 |
| Income taxes | | 668 | 580 | 869 |
| Provision for (recovery of) credit losses | | 138 | 64 | 480 |
| Pre-tax Pre-provision earnings (non-GAAP) | $ | 3,612 | 2,823 | 3,441 |
| | | | | |
| Pre-tax Pre-Provision Return on Average Assets (ROAA) | | | | |
| Return on average assets (GAAP) | $ | 0.63 % | 0.50 % | 0.47 % |
| Income taxes | | 0.15 % | 0.13 % | 0.20 % |
| Provision for (recovery of) credit losses | | 0.03 % | 0.01 % | 0.11 % |
| Pre-tax Pre-provision return on average assets (non-GAAP) | $ | 0.81 % | 0.64 % | 0.78 % |
| | | | | |
| Book and Tangible Book Value Per Share, excluding AOCI | | | | |
| Book and tangible book value per share (GAAP) | $ | 21.72 | 21.26 | 20.70 |
| Impact of AOCI per share | | 2.04 | 2.09 | 2.37 |
| Book and tangible book value per share, excluding AOCI (non-GAAP) | $ | 23.76 | 23.35 | 23.07 |
SOURCE Mountain Commerce Bancorp, Inc.
