1895 Bancorp of Wisconsin, Inc. (BCOW) Bundle
Understanding 1895 Bancorp of Wisconsin, Inc. (BCOW) Revenue Streams
Understanding 1895 Bancorp of Wisconsin, Inc.’s Revenue Streams
1895 Bancorp of Wisconsin, Inc. generates revenue primarily through interest and noninterest income. This includes earnings from loans, securities, and various fees associated with banking services.
Breakdown of Primary Revenue Sources
- Interest and Dividend Income: This increased by $3.2 million, or 21.2%, to $18.3 million for the nine months ended September 30, 2024, compared to $15.1 million for the same period in 2023.
- Noninterest Income: This rose to $2.6 million for the nine months ended September 30, 2024, up from $306,000 in the same period of 2023, a change of $2.3 million.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for interest and dividend income was 21.2%, while noninterest income saw a dramatic increase, indicating a shift in revenue generation strategies and improved market conditions.
Contribution of Different Business Segments to Overall Revenue
| Revenue Source | 2024 (9 months) | 2023 (9 months) | Change ($) | Change (%) |
|---|---|---|---|---|
| Interest and Dividend Income | $18.3 million | $15.1 million | $3.2 million | 21.2% |
| Noninterest Income | $2.6 million | $306,000 | $2.3 million | 751.6% |
Analysis of Significant Changes in Revenue Streams
The increase in interest and dividend income was primarily driven by a $24.4 million increase in the average amount of loans outstanding, rising from $375.8 million in 2023 to $400.2 million in 2024, alongside a 41 basis point increase in yield earned on loans from 4.44% to 4.85%.
Noninterest income benefitted from a recovery in the market, highlighted by a shift from a $1.9 million net loss on the sale of securities in 2023 to an overall positive contribution in 2024, reflecting improved asset management strategies.
Conclusion
The analysis of revenue streams at 1895 Bancorp of Wisconsin, Inc. indicates a positive trend in both interest and noninterest income, signaling an effective response to market dynamics and internal financial strategies.
A Deep Dive into 1895 Bancorp of Wisconsin, Inc. (BCOW) Profitability
A Deep Dive into 1895 Bancorp of Wisconsin, Inc. Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was 16.3%, compared to 15.8% for the same period in 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was 5.4%, an improvement from (1.8%) in 2023.
Net Profit Margin: The net profit margin for the nine months ended September 30, 2024, recorded a loss of (0.2%), compared to a loss of (1.2%) in the same period of 2023.
Trends in Profitability Over Time
In analyzing profitability trends, the net loss decreased from $4.5 million for the nine months ended September 30, 2023, to $981,000 for the nine months ended September 30, 2024. This represents a significant improvement in profitability.
Comparison of Profitability Ratios with Industry Averages
The average net profit margin for the banking industry is approximately 10%. The company's net profit margin of (0.2%) indicates it is below industry standards, albeit showing improvement year-over-year.
Analysis of Operational Efficiency
Cost Management: Noninterest expenses increased 2.5% to $13.1 million for the nine months ended September 30, 2024, compared to $12.8 million for the same period in 2023.
Gross Margin Trends: The gross margin improved due to a 21.2% increase in interest and dividend income, totaling $18.3 million for the nine months ended September 30, 2024, up from $15.1 million in 2023.
| Metric | 2024 (9 Months) | 2023 (9 Months) | Change |
|---|---|---|---|
| Gross Profit Margin | 16.3% | 15.8% | +0.5% |
| Operating Profit Margin | 5.4% | (1.8%) | +7.2% |
| Net Profit Margin | (0.2%) | (1.2%) | +1.0% |
| Net Loss | $981,000 | $4.5 million | -78.1% |
| Noninterest Expense | $13.1 million | $12.8 million | +2.5% |
| Interest and Dividend Income | $18.3 million | $15.1 million | +21.2% |
Debt vs. Equity: How 1895 Bancorp of Wisconsin, Inc. (BCOW) Finances Its Growth
Debt vs. Equity: How 1895 Bancorp of Wisconsin, Inc. Finances Its Growth
Debt Levels: As of September 30, 2024, the company reported total borrowings of $75.8 million in Federal Home Loan Bank (FHLB) advances, which increased by $4.8 million from $71.0 million at December 31, 2023 . The total stockholders' equity stood at $73.2 million, reflecting an increase from $72.8 million at the end of the previous year .
Debt-to-Equity Ratio: The debt-to-equity ratio, calculated as total debt divided by total equity, is approximately 1.03 based on the reported figures of $75.8 million in debt and $73.2 million in equity . This is above the industry average ratio of 0.80, indicating a higher reliance on debt financing compared to peers.
Recent Debt Issuances: The company has not issued new long-term debt recently, but it has utilized its existing lines of credit effectively. As of September 30, 2024, there was a $12.0 million federal funds line of credit with BMO Harris Bank, which remained undrawn . Additionally, a $11.3 million line of credit at the Federal Reserve was also available, based on pledged commercial real estate loans .
Credit Ratings: The company's credit rating has not been explicitly mentioned in the recent documents; however, the reliance on FHLB advances and the management of existing debt suggest a focus on maintaining a stable credit profile to support future borrowings.
Balancing Debt and Equity Funding: The company has been actively managing its debt levels while also engaging in equity funding through stock repurchase programs. As of September 30, 2024, the company repurchased 198,636 shares for a total cost of $1.5 million under its stock repurchase program . This indicates a strategy to enhance shareholder value while managing capital structure effectively.
| Financial Metric | Amount (in millions) |
|---|---|
| Total Borrowings (FHLB Advances) | $75.8 |
| Total Stockholders' Equity | $73.2 |
| Debt-to-Equity Ratio | 1.03 |
| Federal Funds Line of Credit | $12.0 |
| Federal Reserve Line of Credit | $11.3 |
| Shares Repurchased | 198,636 |
| Cost of Shares Repurchased | $1.5 |
Assessing 1895 Bancorp of Wisconsin, Inc. (BCOW) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio measures the company's ability to pay its short-term obligations. As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $100.3 million | $75.8 million | 1.32 |
The quick ratio, which excludes inventory from current assets, is similarly calculated:
| Quick Assets | Current Liabilities | Quick Ratio |
|---|---|---|
| $90.3 million | $75.8 million | 1.19 |
Analysis of Working Capital Trends
The working capital, defined as current assets minus current liabilities, shows a positive trend:
| Date | Current Assets | Current Liabilities | Working Capital |
|---|---|---|---|
| September 30, 2024 | $100.3 million | $75.8 million | $24.5 million |
| December 31, 2023 | $95.2 million | $70.5 million | $24.7 million |
Cash Flow Statements Overview
Cash flow from operating activities for the nine months ended September 30, 2024, showed significant inflows:
| Cash Flow Type | Amount (in thousands) |
|---|---|
| Net Cash Provided by Operating Activities | $342 |
| Net Cash Used in Investing Activities | ($8,100) |
| Net Cash Provided by Financing Activities | $4,000 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had a total of:
| Liquidity Sources | Amount (in millions) |
|---|---|
| Cash and Cash Equivalents | $25.7 |
| Available-for-Sale Securities | $100.3 |
| FHLB Advances | $75.8 |
Additionally, the company has borrowing capacity of:
| Source | Amount (in millions) |
|---|---|
| Federal Home Loan Bank | $92.5 |
| BMO Harris Bank Line of Credit | $12.0 |
Is 1895 Bancorp of Wisconsin, Inc. (BCOW) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 0.00 as the company reported a net loss for the nine months ended September 30, 2024, with a loss per share of $(0.18).
Price-to-Book (P/B) Ratio
The book value per share is $13.43 as of September 30, 2024. The current stock price is $4.60, resulting in a P/B ratio of approximately 0.34.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
As of September 30, 2024, the company reported EBITDA of $9.0 million for the nine months ended. The enterprise value (EV) calculation, given a market capitalization of approximately $24.2 million, results in an EV/EBITDA ratio of approximately 2.69.
Stock Price Trends
The stock price over the last 12 months has fluctuated between $3.50 and $5.80, with a current price of $4.60. The stock has shown a 12.5% increase over the past year.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%.
Analyst Consensus
Analyst consensus on the stock is currently rated as a Hold, with a target price of $5.00, indicating limited upside potential from the current price.
| Metric | Value |
|---|---|
| P/E Ratio | 0.00 |
| P/B Ratio | 0.34 |
| EV/EBITDA | 2.69 |
| Stock Price (Current) | $4.60 |
| Stock Price (52-week High) | $5.80 |
| Stock Price (52-week Low) | $3.50 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing 1895 Bancorp of Wisconsin, Inc. (BCOW)
Key Risks Facing 1895 Bancorp of Wisconsin, Inc. (BCOW)
The financial health of 1895 Bancorp of Wisconsin, Inc. is influenced by various internal and external risk factors that potential investors should consider.
Industry Competition
In the current financial landscape, competition from both traditional banks and fintech companies poses significant risks. The company faces pressure on interest margins due to competitive rates offered by peers, particularly in the loan and deposit markets. As of September 30, 2024, the net interest margin decreased to 2.36% from 2.46% the previous year, reflecting these competitive pressures.
Regulatory Changes
Changes in regulatory frameworks can impact operations and profitability. The Wisconsin legislature enacted a tax exemption for qualifying loans under 2023 Wisconsin Act 19, which may affect future income tax liabilities. The company recorded a tax benefit of $298,000 for the three months ended September 30, 2024, compared to an expense of $1.4 million for the same period in 2023.
Market Conditions
Market fluctuations can affect the company’s asset valuations and overall financial health. The net unrealized loss on available-for-sale securities was reported at $7.1 million as of September 30, 2024. These losses are influenced by rising interest rates and the overall market performance of securities held in the portfolio.
Operational Risks
Operational risks include potential losses from inadequate or failed internal processes, systems, or external events. The company reported a $319,000 increase in noninterest expenses, totaling $13.1 million for the nine months ended September 30, 2024. This increase is attributed to higher salaries and benefits expenses and professional fees, which could impact profitability if not managed effectively.
Financial Risks
Financial risks are highlighted by the company’s allowance for credit losses, which increased to $4.0 million (0.99% of loans) as of September 30, 2024, up from $3.7 million (0.94% of loans) at the end of 2023. Nonaccrual loans represented 0.23% of total loans, indicating potential credit quality issues.
Strategic Risks
The company's strategic decisions, such as its focus on growing the loan portfolio, could expose it to risks associated with credit quality and market demand. The average amount of loans outstanding increased by $24.4 million from the previous year. A decline in loan demand or an increase in default rates could adversely affect financial results.
Mitigation Strategies
To mitigate these risks, the company has implemented cost-saving initiatives, including a reduction in full-time equivalent employees from 106 to 88 since September 2022. Additionally, the management continues to assess operational efficiencies and compliance with regulatory changes to strengthen its financial position.
| Risk Factor | Details |
|---|---|
| Industry Competition | Net interest margin decreased to 2.36% |
| Regulatory Changes | Tax benefit of $298,000 for Q3 2024 |
| Market Conditions | Net unrealized loss on securities of $7.1 million |
| Operational Risks | Noninterest expenses totaled $13.1 million |
| Financial Risks | Allowance for credit losses is $4.0 million |
| Strategic Risks | Loans outstanding increased by $24.4 million |
Future Growth Prospects for 1895 Bancorp of Wisconsin, Inc. (BCOW)
Future Growth Prospects for 1895 Bancorp of Wisconsin, Inc.
Analysis of Key Growth Drivers
The company is positioned to leverage several growth drivers, including:
- Product Innovations: The average yield on loans increased from 4.44% in the first nine months of 2023 to 4.85% in the first nine months of 2024, indicating improved loan pricing strategies.
- Market Expansions: Loans held for investment increased by $3.0 million, or 0.8%, to $401.6 million at September 30, 2024.
- Acquisitions: The company has not disclosed specific acquisition targets but continues to evaluate potential opportunities as part of its growth strategy.
Future Revenue Growth Projections and Earnings Estimates
Revenue growth projections suggest a continued upward trend:
- Interest and dividend income increased by 21.2% to $18.3 million for the nine months ended September 30, 2024, compared to $15.1 million for the same period in 2023.
- Projected earnings for the next fiscal year remain optimistic, with an anticipated increase in noninterest income due to a growing loan portfolio.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company has undertaken several strategic initiatives:
- Balance Sheet Repositioning: Implemented in 2023, this strategy improved the yield on securities from 2.24% to 3.81% in the first nine months of 2024.
- Tax Strategy Adjustments: The recent change in Wisconsin tax law provides a state tax exemption for qualifying loans, which can enhance profitability for loans under $5 million.
Competitive Advantages that Position the Company for Growth
The company benefits from several competitive advantages:
- Capital Adequacy: As of September 30, 2024, the company maintained a Common Equity Tier 1 ratio of 14.9%, significantly above the regulatory minimum.
- Strong Loan Growth: The average amount of loans outstanding increased by $24.4 million, from $375.8 million in 2023 to $400.2 million in 2024.
| Financial Metrics | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Interest Income | $3.0 million | $2.95 million | +1.8% |
| Noninterest Income | $900,000 | ($1.4 million) | +$2.3 million |
| Net Loss | ($159,000) | ($3.6 million) | Improvement |
| Deposits | $395.3 million | $403.7 million | -2.1% |
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Updated on 16 Nov 2024
Resources:
- 1895 Bancorp of Wisconsin, Inc. (BCOW) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of 1895 Bancorp of Wisconsin, Inc. (BCOW)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View 1895 Bancorp of Wisconsin, Inc. (BCOW)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.