Mercer Bancorp Reports 59.2% Increase in Net Income for Q4 2024

Mercer Bancorp, Inc. reported a net income of $276,308 for the three months ended December 31, 2024, marking a 59.2% increase from $173,534 in the same period of the previous year. This growth was primarily driven by a significant rise in net interest income, which increased by 15.3% to $1,593,285, compared to $1,381,551 in the prior year. Total interest income rose to $2,333,657, up 24.3% from $1,877,505, largely due to a 26.5% increase in interest from loans, which reached $2,170,292. However, total noninterest income decreased by 6.1% to $151,708, influenced by declines in late charges and fees on loans.

In terms of operational metrics, the company experienced a slight increase in net loans, which rose by $732,000 to $145,810,402 as of December 31, 2024. The agricultural real estate loan segment saw a notable increase of 4.5%, while residential real estate loans decreased by 1.0%. The total deposits decreased by $878,000 to $133,679,157, with core deposits increasing by 2.7% to $94,200,000. The company continues to focus on growing its loan portfolio, particularly in owner-occupied residential and agricultural real estate loans.

Mercer Bancorp's strategic developments included the ongoing implementation of its indirect automobile lending program, which began in fiscal 2023. This initiative contributed to the origination of auto loans totaling $456,000 during the quarter, although no sales of these loans occurred. The company also reported a decrease in cash and cash equivalents, which fell by 17.2% to $4,882,904, attributed to the decline in deposits during the quarter.

The company adopted the current expected credit loss (CECL) model effective October 1, 2023, which resulted in an increase in the allowance for credit losses to $959,771 as of December 31, 2024. This represented 0.64% of total loans, reflecting a slight decrease from the previous quarter. The total nonperforming loans increased to $697,000, compared to $386,000 at the end of September 2024, indicating a need for continued monitoring of asset quality.

Looking ahead, Mercer Bancorp anticipates that the average interest rate on its loan portfolio will continue to rise in 2025, despite recent decreases in rates. The company remains committed to enhancing its product offerings and marketing strategies to attract more core deposits, particularly in consumer and business demand accounts. Management is also focused on addressing identified weaknesses in internal controls over financial reporting, particularly regarding the allowance for credit losses and accrued expenses, to ensure compliance and improve operational efficiency.