Bank First Corp 10-Q

ITEM 1. Financial Statements Continued: BANK FIRST CORPORATION Consolidated Statements of Cash Flows (Continued) (In thousands) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, ​ ​ 2024 2023 ​ ​ ​ ​ ​ Cash flows from financing activities, net of effects of business combination: ​ ​ ​ ​ Net decrease in deposits ​ $ ( 32,933 ) ​ $ ( 187,026 ) ​ Net decrease in securities sold under repurchase agreements ​ ( 75,747 ) ​ ( 73,394 ) ​ Proceeds from advances of notes payable ​ 102,000 ​ 121,700 ​ Repayment of notes payable ​ ( 47,000 ) ​ ( 92,507 ) ​ Repayment of junior subordinated debentures ​ ​ ( 4,124 ) ​ ​ — ​ Dividends paid ​ ( 7,052 ) ​ ( 5,733 ) ​ Proceeds from sales of common stock ​ 120 ​ 81 ​ Repurchase of common stock ​ ( 30,226 ) ​ ( 8,068 ) ​ Net cash used in financing activities ​ ( 94,962 ) ​ ( 244,947 ) ​ Net decrease in cash and cash equivalents ​ ( 148,518 ) ​ ( 8,025 ) ​ Cash and cash equivalents at beginning of period ​ 247,468 ​ 119,351 ​ Cash and cash equivalents at end of period ​ $ 98,950 ​ $ 111,326 ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures of cash flow information: ​ ​ ​ Cash paid during the period for: ​ ​ ​ ​ ​ ​ ​ Interest ​ $ 30,608 ​ $ 17,546 ​ Income taxes ​ 6,286 ​ 8,606 ​ Supplemental schedule of noncash activities: ​ ​ ​ ​ ​ MSR resulting from sale of loans ​ 488 ​ 389 ​ Change in unrealized gains and losses on investment securities available for sale, net of tax ​ ( 625 ) ​ 628 ​ ​ ​ ​ ​ ​ ​ ​ ​ Acquisition: ​ ​ ​ ​ ​ ​ ​ Fair value of assets acquired ​ $ — ​ $ 615,105 ​ Fair value of liabilities assumed ​ ​ — ​ ​ 549,564 ​ Net assets acquired ​ $ — ​ $ 65,541 ​ Common stock issued in acquisition ​ $ — ​ $ 115,079 ​ ​ See accompanying notes to consolidated financial statements. ​ 8 Table of Contents ​ BANK FIRST CORPORATION NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data) NOTE 1 – BASIS OF PRESENTATION Bank First Corporation (the “Company”) provides a variety of financial services to individual and corporate customers through its wholly-owned subsidiary, Bank First, N.A. (the “Bank”). The Bank operates as a full-service financial institution with a primary market area including, but not limited to, the counties in which the Bank’s branches are located. The Bank has twenty-six locations located in Manitowoc, Outagamie, Brown, Winnebago, Sheboygan, Shawano, Waupaca, Ozaukee, Monroe, Fond du Lac, Waushara, Dane, Columbia and Jefferson counties in Wisconsin. The Company and Bank are subject to the regulations of certain federal agencies and undergo periodic examinations by those regulatory authorities. These interim unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures required by GAAP have been omitted or abbreviated. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (“Annual Report”). The unaudited consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The results for interim periods are not necessarily indicative of results for a full year. Critical Accounting Policies and Estimates The accounting and reporting policies of the Company conform to GAAP in the United States and general practices within the financial institution industry. To prepare financial statements in conformity with GAAP, management makes estimates, assumptions and judgments based on available information. These estimates, assumptions and judgments are based on information available as of the date of the financial statements and, as this information changes, actual results could differ from the estimates, assumptions and judgments reflected in the financial statement. As disclosed in the Company’s Annual Report, management has identified several accounting policies that, due to the estimates, assumptions and judgments inherent in those policies, are critical in understanding our financial statements. These include accounting for business combinations (primarily related to core deposit intangibles and acquired loans), accounting for the ACL-Loans, and the valuation and recording of deferred tax assets and liabilities. ​ There have been no material changes or developments with respect to the assumptions or methodologies that the Company uses when applying what management believes are critical accounting policies and developing critical accounting estimates as previously disclosed in the Company’s Annual Report. Recently Issued Not Yet Effective Accounting Standards In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. It provides optional expedients and exceptions for applying GAAP to contracts hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In December 2022, the FASB issued ASU 2022-06, Reference rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which defers the sunset date of the original guidance from December 31, 2022 to December 31, 2024. The Company has been diligent in responding to reference rate reform and does not anticipate a significant impact to its financial statements as a result. 9 Table of Contents ​ In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements. This ASU modifies the disclosure or presentation requirements of a variety of Topics in the Codification. Certain of the amendments represent clarifications to or technical corrections of the current requirements. The effective date for each amendment will be the date on which the Security and Exchange Commission’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. If, by June 30, 2027, the Securities and Exchange Commission has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. The Company does not anticipate a significant impact to its financial statement disclosures as a result of this ASU. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU is intended to improve the disclosures about a public entity’s reportable segments and addresses requests from investors and other decision makers for additional, more detailed information about a reportable segment’s expenses. The amendment applies to all public entities that are required to report segment information in accordance with Topic 280. This update is effective for annual periods beginning after December 15, 2023, applied retrospectively to all periods presented. The Company does not currently expect adoption of the amendment to have a material impact on its consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU is intended to improve the transparency and decision usefulness of income tax disclosures by requiring specific categories in the rate reconciliation table and disaggregation of taxes paid by jurisdiction. All public entities must also provide additional information for reconciling items that meet a specific quantitative threshold. This update is effective for annual periods beginning after December 15, 2024. NOTE 2 – ACQUISITIONS On February 10, 2023, the Company completed a merger with Hometown Bancorp, Ltd. (“Hometown”), a bank holding company headquartered in Fond du Lac, Wisconsin, pursuant to the Agreement and Plan of Bank Merger (“Merger Agreement”), dated as of July 25, 2022 by and among the Company and Hometown, whereby Hometown merged with and into the Company, and Hometown Bank, Hometown’s wholly-owned banking subsidiary, merged with and into the Bank. Hometown’s principal activity was the ownership and operation of Hometown Bank, a state-chartered banking institution that operated ten ( 10 ) branches in Wisconsin at the time of closing. The merger consideration totaled approximately $ 130.5 million. Pursuant to the terms of the Merger Agreement, Hometown shareholders could elect to receive either 0.3962 shares of the Company’s common stock or $ 29.16 in cash for each outstanding share of Hometown common stock, subject to a maximum of 30 % cash consideration in total, with cash paid in lieu of any remaining fractional share. Company stock issued totaled 1,450,272 shares valued at approximately $ 115.1 million, with cash of $ 15.4 million comprising the remainder of merger consideration. 10 Table of Contents ​ The fair value of the assets acquired and liabilities assumed on February 10, 2023 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As Recorded by Fair Value ​ As Recorded by ​ ​ Hometown Adjustments the Company Cash, cash equivalents and securities ​ $ 174,582 ​ $ ( 1,010 ) ​ $ 173,572 Other investments ​ 1,195 ​ — ​ ​ 1,195 Loans, net ​ 406,168 ​ ( 10,367 ) ​ ​ 395,801 Premises and equipment, net ​ 7,577 ​ ( 1,109 ) ​ ​ 6,468 Core deposit intangible ​ 405 ​ 16,085 ​ ​ 16,490 Other assets ​ 28,011 ​ ( 6,432 ) ​ ​ 21,579 Total assets acquired ​ $ 617,938 ​ $ ( 2,833 ) ​ $ 615,105 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits ​ $ 532,165 ​ $ 209 ​ $ 532,374 Other borrowings ​ 5,000 ​ ( 331 ) ​ 4,669 Junior subordinated debentures ​ ​ 12,372 ​ ​ ( 1,464 ) ​ ​ 10,908 Other liabilities ​ 469 ​ 1,144 ​ 1,613 Total liabilities assumed ​ $ 550,006 ​ $ ( 442 ) ​ $ 549,564 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Excess of assets acquired over liabilities assumed ​ $ 67,932 ​ $ ( 2,391 ) ​ $ 65,541 Less: purchase price ​ ​ ​ 130,452 Goodwill ​ ​ ​ ​ ​ ​ ​ ​ 64,911 Refinement to fair value estimates (1) ​ ​ ​ ​ ​ ​ ​ ​ ( 30 ) Goodwill (after refinement) ​ ​ ​ $ 64,881 (1) Refinement consists of adjustments to the initial fair value estimates of other assets and liabilities. ​ The Company purchased loans through the acquisition of Hometown for which there was, at the date of acquisition, more than insignificant deterioration of credit quality since origination (PCD Loans). The carrying amount of these loans at acquisition was as follows: ​ ​ ​ ​ ​ ​ February 10, 2023 Purchase price of PCD loans at acquisition ​ $ 25,778 Non-credit discount on PCD loans at acquisition ​ ​ 4,498 Allowance for credit losses on PCD loans at acquisition ​ ​ 5,534 Par value of PCD acquired loans at acquisition ​ $ 35,810 ​ The Company accounted for this transaction under the acquisition method of accounting, and thus, the financial position and results of operations of Hometown prior to the consummation date was not included in the accompanying consolidated financial statements. The accounting required assets purchased and liabilities assumed to be recorded at their respective fair values at the date of acquisition. The Company determined the fair value of core deposit intangibles, securities, premises and equipment, loans, other assets and liabilities and deposits with the assistance of third-party valuations, appraisals and third-party advisors. The estimated fair values were subject to refinement for up to one year after deal consummation as additional information became available relative to the closing date fair values. For more information concerning the Company’s acquisitions, see “Note 2 – Acquisition” in the Company’s audited consolidated financial statements included in the Company’s Annual Report. ​ ​ NOTE 3 – EARNINGS PER SHARE The two-class method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. There were no anti-dilutive stock options for the six months ended June 30, 2024 or 2023. 11 Table of Contents ​ The following table presents the factors used in the earnings per share computations for the period indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ Six Months Ended June 30, ​ 2024 2023 2024 2023 Basic ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income available to common shareholders ​ $ 16,059 ​ $ 14,132 ​ $ 31,471 ​ $ 24,812 Less: Earnings allocated to participating securities ​ ​ ( 84 ) ​ ​ ( 80 ) ​ ​ ( 169 ) ​ ​ ( 144 ) Net income allocated to common shareholders ​ $ 15,975 ​ $ 14,052 ​ $ 31,302 ​ $ 24,668 ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding including participating securities ​ ​ 10,078,611 ​ ​ 10,389,790 ​ ​ 10,155,979 ​ ​ 10,083,026 Less: Participating securities (1) ​ ​ ( 52,634 ) ​ ​ ( 58,065 ) ​ ​ ( 54,488 ) ​ ​ ( 58,467 ) Average shares ​ ​ 10,025,977 ​ ​ 10,331,725 ​ ​ 10,101,491 ​ ​ 10,024,559 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings per common shares ​ $ 1.59 ​ $ 1.37 ​ $ 3.10 ​ $ 2.46 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income available to common shareholders ​ $ 16,059 ​ $ 14,132 ​ $ 31,471 ​ $ 24,812 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding for basic earnings per common share ​ ​ 10,025,977 ​ ​ 10,331,725 ​ ​ 10,101,491 ​ ​ 10,024,559 Add: Dilutive effects of stock based compensation awards ​ ​ 13,885 ​ ​ 14,850 ​ ​ 21,073 ​ ​ 22,728 Average shares and dilutive potential common shares ​ ​ 10,039,862 ​ ​ 10,346,575 ​ ​ 10,122,564 ​ ​ 10,047,287 Diluted earnings per common share ​ $ 1.59 ​ $ 1.37 ​ $ 3.10 ​ $ 2.46 (1) Participating securities are restricted stock awards whereby the stock certificates have been issued, are included in outstanding shares, receive dividends and can be voted, but have not vested. ​ ​ NOTE 4 – SECURITIES The following is a summary of available for sale securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Gross ​ ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Estimated ​ ​ ​ Cost ​ Gains ​ Losses ​ Fair Value ​ June 30, 2024 ​ ​ ​ ​ ​ Obligations of U.S. Government sponsored agencies ​ $ 30,070 ​ $ — ​ $ ( 3,215 ) ​ $ 26,855 ​ Obligations of states and political subdivisions ​ ​ 63,007 ​ ​ 9 ​ ​ ( 6,230 ) ​ ​ 56,786 ​ Mortgage-backed securities ​ ​ 32,103 ​ ​ 2 ​ ​ ( 1,884 ) ​ ​ 30,221 ​ Corporate notes ​ 15,665 ​ — ​ ( 1,550 ) ​ 14,115 ​ Total available for sale securities ​ $ 140,845 ​ $ 11 ​ $ ( 12,879 ) ​ $ 127,977 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ Obligations of U.S. Government sponsored agencies ​ $ 31,453 ​ $ 4 ​ $ ( 3,163 ) ​ $ 28,294 ​ Obligations of states and political subdivisions ​ ​ 63,929 ​ ​ 77 ​ ​ ( 5,760 ) ​ ​ 58,246 ​ Mortgage-backed securities ​ 37,789 ​ 5 ​ ( 1,664 ) ​ 36,130 ​ Corporate notes ​ 20,657 ​ — ​ ( 1,619 ) ​ 19,038 ​ Certificates of deposit ​ ​ 490 ​ ​ — ​ ​ ( 1 ) ​ ​ 489 ​ Total available for sale securities ​ $ 154,318 ​ $ 86 ​ $ ( 12,207 ) ​ $ 142,197 ​ ​ 12 Table of Contents ​ The following is a summary of held to maturity securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Gross ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Estimated ​ ​ Cost ​ Gains ​ Losses ​ Fair Value June 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury securities ​ $ 107,452 ​ $ 628 ​ $ ( 1,471 ) ​ $ 106,609 Obligations of states and political subdivisions ​ ​ 3,196 ​ ​ — ​ ​ — ​ ​ 3,196 Total held to maturity securities ​ $ 110,648 ​ $ 628 ​ $ ( 1,471 ) ​ $ 109,805 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ U.S. Treasury securities ​ $ 99,173 ​ $ 1,372 ​ $ ( 1,070 ) ​ $ 99,475 Obligations of states and political subdivisions ​ ​ 4,151 ​ ​ — ​ ​ — ​ ​ 4,151 Total held to maturity securities ​ $ 103,324 ​ $ 1,372 ​ $ ( 1,070 ) ​ $ 103,626 ​ The following table shows the fair value and gross unrealized losses of securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less Than 12 Months ​ Greater Than 12 Months ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number ​ Fair Unrealized Fair Unrealized Fair ​ Unrealized ​ of ​ Value ​ Losses ​ Value ​ Losses ​ Value ​ Losses ​ Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2024 - Available for Sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Obligations of U.S. Government sponsored agencies $ 2,214 ​ $ ( 21 ) ​ $ 24,641 ​ $ ( 3,194 ) ​ $ 26,855 ​ $ ( 3,215 ) ​ 27 Obligations of states and political subdivisions ​ 7,601 ​ ​ ( 99 ) ​ ​ 46,195 ​ ​ ( 6,131 ) ​ ​ 53,796 ​ ​ ( 6,230 ) ​ 73 Mortgage-backed securities 1,844 ​ ( 42 ) ​ 28,147 ​ ( 1,842 ) ​ 29,991 ​ ( 1,884 ) 102 Corporate notes — ​ — ​ 12,980 ​ ( 1,550 ) ​ 12,980 ​ ( 1,550 ) 9 Totals $ 11,659 ​ $ ( 162 ) ​ $ 111,963 ​ $ ( 12,717 ) ​ $ 123,622 ​ $ ( 12,879 ) 211 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2024 - Held to Maturity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Treasury securities $ 22,932 ​ $ ( 231 ) ​ $ 60,789 ​ $ ( 1,240 ) ​ $ 83,721 ​ $ ( 1,471 ) ​ 51 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 - Available for Sale ​ ​ ​ ​ ​ Obligations of U.S. Government sponsored agencies $ 6,519 ​ $ ( 173 ) ​ $ 19,519 ​ $ ( 2,990 ) ​ $ 26,038 ​ $ ( 3,163 ) ​ 24 Obligations of states and political subdivisions ​ 6,806 ​ ​ ( 71 ) ​ ​ 40,959 ​ ​ ( 5,689 ) ​ ​ 47,765 ​ ​ ( 5,760 ) ​ 65 Mortgage-backed securities 5,751 ​ ( 95 ) ​ 28,693 ​ ( 1,569 ) ​ 34,444 ​ ( 1,664 ) 104 Corporate notes 4,926 ​ ( 68 ) ​ 12,487 ​ ( 1,551 ) ​ 17,413 ​ ( 1,619 ) 9 Certificate of deposits ​ — ​ ​ — ​ ​ 489 ​ ​ ( 1 ) ​ ​ 489 ​ ​ ( 1 ) ​ 2 Totals $ 24,002 ​ $ ( 407 ) ​ $ 102,147 ​ $ ( 11,800 ) ​ $ 126,149 ​ $ ( 12,207 ) ​ 204 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 - Held to Maturity ​ ​ ​ ​ ​ U.S. Treasury securities $ 31,785 ​ $ ( 99 ) ​ $ 35,362 ​ $ ( 971 ) ​ $ 67,147 ​ $ ( 1,070 ) ​ 49 Obligations of states and political subdivisions — ​ — ​ 220 ​ — ​ 220 ​ — ​ 1 Totals $ 31,785 ​ $ ( 99 ) ​ $ 35,582 ​ $ ( 971 ) ​ $ 67,367 ​ $ ( 1,070 ) ​ 50 ​ 13 Table of Contents ​ As of June 30, 2024, no allowance for credit losses has been recognized on available for sale securities in an unrealized loss position as the Company does not believe any of the debt securities are credit impaired. This is based on the Company’s analysis of the risk characteristics, including credit ratings, and other qualitative factors related to these securities. The issuers of these securities continue to make timely principal and interest payments under the contractual terms of the securities. As of June 30, 2024, the Company did not intend to sell these securities and it was more likely than not that the Company would not be required to sell the debt securities before recovery of their amortized cost, which may be at maturity. The unrealized losses have occurred as a result of changes in interest rates, market spreads and market conditions subsequent to purchase, not credit deterioration. Furthermore, based on its analysis the Company has determined that held to maturity securities have zero expected credit losses. U.S. Treasury securities have the full faith and credit backing of the United States Government. The following is a summary of amortized cost and estimated fair value of securities by contractual maturity as of June 30, 2024. Contractual maturities will differ from expected maturities for mortgage-backed securities because borrowers may have the right to call or prepay obligations without penalties. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Available for Sale ​ Held to Maturity ​ Amortized Estimated Amortized Estimated ​ ​ Cost ​ Fair Value ​ Cost ​ Fair Value Due in one year or less ​ $ 2,815 ​ $ 2,808 ​ $ 21,562 ​ $ 21,392 Due after one year through 5 years ​ 16,425 ​ 16,042 ​ ​ 53,071 ​ ​ 52,035 Due after 5 years through 10 years ​ 39,428 ​ 35,657 ​ ​ 36,015 ​ ​ 36,378 Due after 10 years ​ 50,074 ​ 43,249 ​ ​ — ​ ​ — Subtotal ​ 108,742 ​ 97,756 ​ ​ 110,648 ​ ​ 109,805 Mortgage-backed securities ​ 32,103 ​ 30,221 ​ ​ — ​ ​ — Total ​ $ 140,845 ​ $ 127,977 ​ $ 110,648 ​ $ 109,805 ​ As of June 30, 2024 and December 31, 2023, the carrying values of securities pledged to secure public deposits, securities sold under repurchase agreements, and for other purposes required or permitted by law were approximately $ 160.4 million and $ 204.8 million, respectively. ​ There were no sales of securities available for sale during the three months ended June 30, 2024 or 2023. Sales of securities available for sale produced $ 10.2 million in proceeds with immaterial gross losses for the six months ended June 30, 2024. Sales of securities available for sale produced $ 34.2 million in proceeds, $ 0.1 million in gross gains and $ 0.2 million in gross losses for the six months ended June 30, 2023. ​ NOTE 5 – LOANS, ALLOWANCE FOR CREDIT LOSSES, AND CREDIT QUALITY The following table presents total loans by portfolio segment and class of loan as of June 30, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Commercial/industrial ​ $ 507,895 ​ $ 488,498 Commercial real estate - owner occupied ​ 921,204 ​ 893,977 Commercial real estate - non-owner occupied ​ 472,392 ​ 473,829 Multi-family ​ ​ 333,660 ​ ​ 332,959 Construction and development ​ 230,791 ​ 201,823 Residential 1‑4 family ​ 896,957 ​ 888,412 Consumer ​ 52,946 ​ 50,741 Other ​ 14,795 ​ 14,980 Subtotals ​ 3,430,640 ​ 3,345,219 ACL - Loans ​ ( 45,118 ) ​ ( 43,609 ) Loans, net of ACL - Loans ​ 3,385,522 ​ 3,301,610 Deferred loan fees, net ​ ( 2,005 ) ​ ( 2,245 ) Loans, net ​ $ 3,383,517 ​ $ 3,299,365 ​ 14 Table of Contents ​ The ACL - Loans is based on the Company’s evaluation of historical default and loss experience, current and projected economic conditions, asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrowers’ ability to repay a loan, the estimated value of any underlying collateral, composition of the loan portfolio and other relevant factors. More information regarding the Company’s methodology related to the ACL-Loans can be found in the Company’s Annual Report. ​ The Company utilized the high-end range of the Federal Reserve Bank Open Market Committee forecast for national unemployment and the low-end range for national GDP growth at June 30, 2024 and December 31, 2023. As of June 30, 2024, the Company anticipates the national unemployment rate to rise during the forecast period and the national GDP growth rate to decline. Due to recent volatility in forecasts, the Company utilized long-term averages for the remaining loss drivers. ​ A roll forward of the ACL-Loans is summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ Year Ended ​ ​ June 30, 2024 ​ June 30, 2023 ​ June 30, 2024 ​ June 30, 2023 ​ December 31, 2023 ​ Beginning Balance $ 44,378 ​ $ 43,316 ​ $ 43,609 ​ $ 22,680 ​ $ 22,680 ​ Adoption of ASU 2016-13 ​ - ​ ​ - ​ ​ - ​ ​ 10,972 ​ ​ 10,972 ​ ACL on PCD loans acquired ​ - ​ ​ - ​ ​ - ​ ​ 5,534 ​ ​ 5,534 ​ Provision for credit losses ​ 500 ​ ​ - ​ ​ 700 ​ ​ 4,092 ​ ​ 4,292 ​ Charge-offs ​ ( 25 ) ​ ​ ( 46 ) ​ ​ ( 77 ) ​ ​ ( 55 ) ​ ​ ( 88 ) ​ Recoveries ​ 265 ​ ​ 139 ​ ​ 886 ​ ​ 186 ​ ​ 219 ​ Net recoveries ​ 240 ​ ​ 93 ​ ​ 809 ​ ​ 131 ​ ​ 131 ​ Ending Balance $ 45,118 ​ $ 43,409 ​ $ 45,118 ​ $ 43,409 ​ $ 43,609 ​ ​ ​ A summary of the activity in the ACL - Loans by loan type for the six months ended June 30, 2024 is summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real Estate - ​ Real Estate  - ​ ​ ​ ​ Construction ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial / ​ Owner ​ Non - Owner ​ Multi- ​ and ​ Residential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Industrial ​ Occupied ​ Occupied ​ Family ​ Development ​ 1-4 Family ​ Consumer ​ Other ​ Total ACL - Loans - January 1, 2024 ​ $ 5,965 ​ $ 12,285 ​ $ 5,700 ​ $ 4,754 ​ $ 3,597 ​ $ 10,620 ​ $ 615 ​ $ 73 ​ $ 43,609 Charge-offs ​ ( 17 ) ​ ​ ( 1 ) ​ ​ — ​ ​ — ​ — ​ ( 1 ) ​ ( 6 ) ​ ( 52 ) ​ ( 77 ) Recoveries ​ 2 ​ ​ 861 ​ ​ — ​ ​ — ​ — ​ 6 ​ 2 ​ 15 ​ 886 Provision ​ ( 195 ) ​ ​ 193 ​ ​ ( 61 ) ​ ​ ( 84 ) ​ 572 ​ 184 ​ ( 1 ) ​ 92 ​ 700 ACL - Loans - June 30, 2024 ​ $ 5,755 ​ $ 13,338 ​ $ 5,639 ​ $ 4,670 ​ $ 4,169 ​ $ 10,809 ​ $ 610 ​ $ 128 ​ $ 45,118 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ A summary of the activity in the ACL – Loans by loan type for the six months ended June 30, 2023 is summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Commercial ​ ​ ​ ​ ​ Real Estate - ​ Real Estate - ​ ​ ​ ​ Construction ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial / ​ Owner ​ Non - Owner ​ Multi- ​ and ​ Residential ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Industrial ​ Occupied ​ Occupied ​ Family ​ Development ​ 1-4 Family ​ Consumer ​ Other ​ Total ACL - Loans - January 1, 2023 ​ $ 4,071 ​ $ 5,204 ​ $ 2,644 ​ $ 2,761 ​ $ 1,592 ​ $ 5,944 ​ $ 314 ​ $ 150 ​ $ 22,680 Adoption of ASU 2016-13 ​ ​ 1,859 ​ ​ 1,982 ​ ​ 1,161 ​ ​ 753 ​ ​ 2,063 ​ ​ 2,567 ​ ​ 620 ​ ​ ( 33 ) ​ ​ 10,972 ACL - Loans on PCD loans acquired ​ ​ 1,082 ​ ​ 4,424 ​ ​ — ​ ​ — ​ ​ — ​ ​ 28 ​ ​ — ​ ​ — ​ ​ 5,534 Charge-offs ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ — ​ — ​ ( 55 ) ​ ( 55 ) Recoveries ​ 3 ​ ​ 70 ​ ​ — ​ ​ — ​ — ​ 102 ​ 3 ​ 8 ​ 186 Provision ​ 135 ​ ​ 1,171 ​ ​ 929 ​ ​ 151 ​ ( 417 ) ​ 2,004 ​ 76 ​ 43 ​ 4,092 ACL - Loans - June 30, 2023 ​ $ 7,150 ​ $ 12,851 ​ $ 4,734 ​ $ 3,665 ​ $ 3,238 ​ $ 10,645 ​ $ 1,013 ​ $ 113 ​ $ 43,409 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In addition to the ACL-Loans, the Company has established an allowance for credit losses on unfunded commitments (“ACL-Unfunded Commitments”), classified in other liabilities on the consolidated balance sheets. This allowance is maintained to absorb losses arising from unfunded loan commitments, and is determined quarterly based on methodology similar to the methodology for determining the ACL-Loans. The ACL - Unfunded Commitments was $ 3.3 million and $ 3.8 million at June 30, 2024 and December 31, 2023, respectively. See Note 10 for further information on commitments. ​ 15 Table of Contents ​ The provision for credit losses is determined by the Company as the amount to be added to the ACL loss accounts for various types of financial instruments including loans, investment securities, and off-balance sheet credit exposures after net charge-offs have been deducted to bring the ACL to a level that, in management’s judgment, is necessary to absorb expected credit losses over the lives of the respective financial instruments. The following table presents the components of the provision for credit losses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ Year Ended ​ ​ June 30, 2024 ​ June 30, 2023 ​ June 30, 2024 ​ June 30, 2023 ​ December 31, 2023 Provision for credit losses on: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ $ 500 ​ $ — ​ $ 700 ​ $ 4,092 ​ $ 4,292 Unfunded Commitments ​ ​ ( 500 ) ​ ​ 90 ​ ​ ( 500 ) ​ ​ 90 ​ ​ 390 Total provision for credit losses ​ $ — ​ $ — ​ $ 200 ​ $ 4,182 ​ $ 4,682 ​ The Company’s past due and non-accrual loans as of June 30, 2024 is summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 90 Days ​ ​ ​ ​ ​ Non-Accrual ​ ​ 30-89 Days ​ or more ​ ​ ​ ​ ​ ​ ​ with no ​ ​ Past Due ​ Past Due ​ Non- ​ ​ ​ ​ specifically ​ ​ Accruing ​ and Accruing ​ Accrual ​ Total ​ allocated ACL Commercial/industrial ​ $ 2 ​ $ 15 ​ $ 4,301 ​ $ 4,318 ​ $ 19 Commercial real estate - owner occupied ​ — ​ 2,477 ​ 2,754 ​ 5,231 ​ 13 Commercial real estate - non-owner occupied ​ 80 ​ — ​ — ​ 80 ​ — Multi-family ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Construction and development ​ — ​ — ​ — ​ — ​ — Residential 1‑4 family ​ 528 ​ 874 ​ 218 ​ 1,620 ​ 218 Consumer ​ 96 ​ 19 ​ 10 ​ 125 ​ 10 Other ​ — ​ — ​ — ​ — ​ — ​ ​ $ 706 ​ $ 3,385 ​ $ 7,283 ​ $ 11,374 ​ $ 260 ​ The Company’s past due and non-accrual loans as of December 31, 2023 is summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 90 Days ​ ​ ​ ​ ​ Non-Accrual ​ ​ 30-89 Days ​ or more ​ ​ ​ ​ ​ ​ ​ with no ​ ​ Past Due ​ Past Due ​ Non- ​ ​ ​ ​ specifically ​ ​ Accruing ​ and Accruing ​ Accrual ​ Total ​ allocated ACL Commercial/industrial ​ $ 4,303 ​ $ 106 ​ $ 1,344 ​ $ 5,753 ​ $ 365 Commercial real estate - owner occupied ​ 180 ​ 252 ​ 3,877 ​ 4,309 ​ 343 Commercial real estate - non-owner occupied ​ 14 ​ — ​ — ​ 14 ​ — Multi-family ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Construction and development ​ — ​ — ​ — ​ — ​ — Residential 1‑4 family ​ 871 ​ 507 ​ 429 ​ 1,807 ​ 394 Consumer ​ 68 ​ 28 ​ 12 ​ 108 ​ 11 Other ​ — ​ — ​ — ​ — ​ — ​ ​ $ 5,436 ​ $ 893 ​ $ 5,662 ​ $ 11,991 ​ $ 1,113 ​ Interest recognized on non-accrual loans is considered immaterial to the consolidated financial statements for the six months ended June 30, 2024 and 2023. ​ A loan is considered to be collateral dependent when, based upon management’s assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. For collateral dependent loans, expected credit losses are based on amortized cost of the loan less the estimated fair value of the collateral at the balance sheet date, with consideration for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. ​ ​ 16 Table of Contents ​ The following tables present collateral dependent loans by portfolio segment and collateral type, including those loans with and without a related allowance allocation. A significant portion of the loan balances in these tables and essentially all of the allowance allocations relate to PCD loans which were acquired from Hometown. Real estate collateral primarily consists of operating facilities of the underlying borrowers. Other business assets collateral primarily consists of equipment, receivables and inventory of the underlying borrowers. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Collateral Type ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, 2024 ​ ​ ​ ​ Other ​ ​ ​ ​ Without an ​ With an ​ Allowance ​ ​ Real Estate ​ Business Assets ​ Total ​ Allowance ​ Allowance ​ Allocation Commercial/industrial ​ $ — ​ $ 4,305 ​ $ 4,305 ​ $ — ​ $ 4,305 ​ $ 842 Commercial real estate - owner occupied ​ 9,212 ​ — ​ 9,212 ​ — ​ 9,212 ​ 3,729 Commercial real estate - non-owner occupied ​ — ​ — ​ — ​ — ​ — ​ — Multi-family ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Construction and development ​ 707 ​ — ​ 707 ​ 707 ​ — ​ — Residential 1‑4 family ​ — ​ — ​ — ​ — ​ — ​ — Consumer ​ — ​ — ​ — ​ — ​ — ​ — Other ​ — ​ — ​ — ​ — ​ — ​ — Total Loans ​ $ 9,919 ​ $ 4,305 ​ $ 14,224 ​ $ 707 ​ $ 13,517 ​ $ 4,571 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Collateral Type ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ ​ ​ ​ Other ​ ​ ​ ​ Without an ​ With an ​ Allowance ​ ​ Real Estate ​ Business Assets ​ Total ​ Allowance ​ Allowance ​ Allocation Commercial/industrial ​ $ — ​ $ 5,320 ​ $ 5,320 ​ $ 47 ​ $ 5,273 ​ $ 1,089 Commercial real estate - owner occupied ​ 8,131 ​ — ​ 8,131 ​ 794 ​ 7,337 ​ 3,156 Commercial real estate - non-owner occupied ​ — ​ — ​ — ​ — ​ — ​ — Multi-family ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Construction and development ​ — ​ — ​ — ​ — ​ — ​ — Residential 1‑4 family ​ 35 ​ — ​ 35 ​ 35 ​ — ​ — Consumer ​ — ​ — ​ — ​ — ​ — ​ — Other ​ — ​ — ​ — ​ — ​ — ​ — Total Loans ​ $ 8,166 ​ $ 5,320 ​ $ 13,486 ​ $ 876 ​ $ 12,610 ​ $ 4,245 ​ The Company utilizes a numerical risk rating system for commercial relationships. All other types of relationships (ex: residential, consumer, other) are assigned a “Pass” rating, unless they have fallen 90 days past due or more, at which time they are assessed for a rating of 5, 6 or 7. The Company uses split ratings for government guaranties on loans. The portion of a loan that is supported by a government guaranty is included with other Pass credits. The determination of a commercial loan risk rating begins with completion of a matrix, which assigns scores based on the strength of the borrower’s debt service coverage, collateral coverage, balance sheet leverage, industry outlook, and customer concentration. A weighted average is taken of these individual scores to arrive at the overall rating. This rating is subject to adjustment by the loan officer based on facts and circumstances pertaining to the borrower. Risk ratings are subject to independent review. Commercial borrowers with ratings between 1 and 5 are considered Pass credits, with 1 being most acceptable and 5 being just above the minimum level of acceptance. Commercial borrowers rated 6 have potential weaknesses which may jeopardize repayment ability. Borrowers rated 7 have a well-defined weakness or weaknesses such as the inability to demonstrate significant cash flow for debt service based on analysis of the company’s financial information. These loans remain on accrual status provided full collection of principal and interest is reasonably expected. Otherwise they are deemed impaired and placed on nonaccrual status. Borrowers rated 8 are the same as 7 rated credits with one exception: collection or liquidation in full is not probable. 17 Table of Contents ​ The following tables present total loans by risk ratings and year of origination. Loans acquired from other previously acquired institutions have been included in the table based upon the actual origination date. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized Cost Basis by Origination Year ​ ​ ​ ​ ​ ​ As of June 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving ​ ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ Prior ​ Revolving ​ to Term ​ Total Commercial/industrial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grades 1-4 $ 46,155 $ 56,427 $ 74,025 $ 56,328 $ 45,320 $ 24,366 $ 80,376 $ - $ 382,997 Grade 5 ​ 9,817 ​ 8,843 ​ 52,195 ​ 7,612 ​ 2,889 ​ 2,368 ​ 24,402 ​ - ​ 108,126 Grade 6 ​ - ​ 837 ​ 82 ​ 578 ​ 122 ​ 211 ​ 3,796 ​ - ​ 5,626 Grade 7 ​ 506 ​ 378 ​ 240 ​ 4,594 ​ 1,149 ​ 1,320 ​ 2,959 ​ - ​ 11,146 Grade 8 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Total $ 56,478 $ 66,485 $ 126,542 $ 69,112 $ 49,480 $ 28,265 $ 111,533 $ - $ 507,895 Current-period gross charge-offs $ - $ - $ - $ 15 $ - $ 2 $ - $ - $ 17 Commercial real estate - owner occupied ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grades 1-4 $ 24,487 $ 61,890 $ 106,742 $ 154,122 $ 101,966 $ 204,971 $ 52,271 $ - $ 706,449 Grade 5 ​ 17,641 ​ 7,124 ​ 24,876 ​ 33,421 ​ 12,603 ​ 32,025 ​ 21,578 ​ - ​ 149,268 Grade 6 ​ - ​ 815 ​ 2,098 ​ 3,231 ​ 96 ​ 5,060 ​ 585 ​ - ​ 11,885 Grade 7 ​ - ​ 2,708 ​ 7,381 ​ 8,126 ​ 2,210 ​ 30,364 ​ 2,813 ​ - ​ 53,602 Grade 8 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Total $ 42,128 $ 72,537 $ 141,097 $ 198,900 $ 116,875 $ 272,420 $ 77,247 $ - $ 921,204 Current-period gross charge-offs $ - $ - $ - $ - $ - $ 1 $ - $ - $ 1 Commercial real estate - non-owner occupied ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grades 1-4 $ 18,879 $ 51,557 $ 68,458 $ 132,059 $ 50,282 $ 105,912 $ 10,249 $ - $ 437,396 Grade 5 ​ 1,566 ​ 1,158 ​ 2,078 ​ 9,895 ​ 3,612 ​ 13,193 ​ - ​ - ​ 31,502 Grade 6 ​ - ​ - ​ - ​ - ​ - ​ 2,872 ​ - ​ - ​ 2,872 Grade 7 ​ - ​ - ​ - ​ 63 ​ 359 ​ 200 ​ - ​ - ​ 622 Grade 8 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Total $ 20,445 $ 52,715 $ 70,536 $ 142,017 $ 54,253 $ 122,177 $ 10,249 $ - $ 472,392 Current-period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - $ - Multi-family ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grades 1-4 $ 1,280 $ 25,021 $ 32,624 $ 100,662 $ 73,174 $ 88,854 $ 1,081 $ - $ 322,696 Grade 5 ​ 784 ​ 880 ​ 1,881 ​ 4,241 ​ - ​ 126 ​ - ​ - ​ 7,912 Grade 6 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Grade 7 ​ - ​ - ​ - ​ - ​ - ​ 3,052 ​ - ​ - ​ 3,052 Grade 8 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Total $ 2,064 $ 25,901 $ 34,505 $ 104,903 $ 73,174 $ 92,032 $ 1,081 $ - $ 333,660 Current-period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - $ - Construction and development ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grades 1-4 $ 17,960 $ 88,626 $ 65,032 $ 12,308 $ 4,645 $ 5,691 $ 566 $ - $ 194,828 Grade 5 ​ 131 ​ 25,481 ​ 526 ​ 1,261 ​ 695 ​ 183 ​ 1,051 ​ - ​ 29,328 Grade 6 ​ - ​ 2,490 ​ - ​ 2,497 ​ - ​ - ​ - ​ - ​ 4,987 Grade 7 ​ - ​ 707 ​ - ​ - ​ 166 ​ 775 ​ - ​ - ​ 1,648 Grade 8 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Total $ 18,091 $ 117,304 $ 65,558 $ 16,066 $ 5,506 $ 6,649 $ 1,617 $ - $ 230,791 Current-period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - $ - Residential 1 ‑ 4 family ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grades 1-4 $ 43,807 $ 98,818 $ 188,160 $ 188,302 $ 151,373 $ 113,386 $ 87,782 $ - $ 871,628 Grade 5 ​ 2,433 ​ 3,489 ​ 6,574 ​ 2,906 ​ 215 ​ 2,567 ​ 425 ​ - ​ 18,609 Grade 6 ​ - ​ 155 ​ 315 ​ - ​ - ​ 178 ​ - ​ - ​ 648 Grade 7 ​ - ​ 312 ​ 321 ​ 1,043 ​ 1,731 ​ 2,491 ​ 174 ​ - ​ 6,072 Grade 8 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Total $ 46,240 $ 102,774 $ 195,370 $ 192,251 $ 153,319 $ 118,622 $ 88,381 $ - $ 896,957 Current-period gross charge-offs $ - $ - $ - $ - $ - $ 1 $ - $ - $ 1 Consumer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grades 1-4 $ 16,137 $ 15,728 $ 10,169 $ 5,007 $ 3,434 $ 1,951 $ 501 $ - $ 52,927 Grade 5 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Grade 6 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Grade 7 ​ - ​ - ​ - ​ - ​ - ​ 19 ​ - ​ - ​ 19 Grade 8 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Total $ 16,137 $ 15,728 $ 10,169 $ 5,007 $ 3,434 $ 1,970 $ 501 $ - $ 52,946 Current-period gross charge-offs $ - $ - $ 3 $ - $ 3 $ - $ - $ - $ 6 Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grades 1-4 $ 859 $ 185 $ 635 $ 499 $ 559 $ 9,502 $ 2,473 $ - $ 14,712 Grade 5 ​ - ​ - ​ - ​ - ​ - ​ - ​ 83 ​ - ​ 83 Grade 6 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Grade 7 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Grade 8 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Total $ 859 $ 185 $ 635 $ 499 $ 559 $ 9,502 $ 2,556 $ - $ 14,795 Current-period gross charge-offs $ - $ - $ - $ - $ - $ - $ 52 $ - $ 52 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Loans $ 202,442 $ 453,629 $ 644,412 $ 728,755 $ 456,600 $ 651,637 $ 293,165 $ - $ 3,430,640 Total current-period gross charge-offs $ - $ - $ 3 $ 15 $ 3 $ 4 $ 52 $ - $ 77 ​ ​ 18 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized Cost Basis by Origination Year ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving ​ ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ Prior ​ Revolving ​ to Term ​ Total Commercial/industrial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grades 1-4 $ 59,526 $ 133,469 $ 62,894 $ 54,552 $ 10,380 $ 20,575 $ 78,439 $ - $ 419,835 Grade 5 ​ 6,127 ​ 5,367 ​ 11,641 ​ 4,208 ​ 1,180 ​ 3,039 ​ 21,420 ​ - ​ 52,982 Grade 6 ​ 671 ​ 93 ​ 61 ​ 206 ​ - ​ - ​ 627 ​ - ​ 1,658 Grade 7 ​ 365 ​ 271 ​ 5,756 ​ 2,351 ​ 30 ​ 1,687 ​ 3,563 ​ - ​ 14,023 Grade 8 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Total $ 66,689 $ 139,200 $ 80,352 $ 61,317 $ 11,590 $ 25,301 $ 104,049 $ - $ 488,498 Current-period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - $ - Commercial real estate - owner occupied ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grades 1-4 $ 55,239 $ 105,187 $ 167,124 $ 108,680 $ 47,115 $ 178,586 $ 33,220 $ - $ 695,151 Grade 5 ​ 7,586 ​ 24,734 ​ 24,890 ​ 12,955 ​ 11,168 ​ 26,179 ​ 21,519 ​ - ​ 129,031 Grade 6 ​ - ​ 1,161 ​ 1,694 ​ 110 ​ 867 ​ 6,552 ​ 699 ​ - ​ 11,083 Grade 7 ​ 3,143 ​ 9,988 ​ 10,061 ​ 2,313 ​ 14,775 ​ 15,777 ​ 2,655 ​ - ​ 58,712 Grade 8 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Total $ 65,968 $ 141,070 $ 203,769 $ 124,058 $ 73,925 $ 227,094 $ 58,093 $ - $ 893,977 Current-period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - $ - Commercial real estate - non-owner occupied ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grades 1-4 $ 54,774 $ 72,336 $ 127,450 $ 53,341 $ 45,898 $ 84,129 $ 9,870 $ - $ 447,798 Grade 5 ​ 944 ​ 4,819 ​ 2,872 ​ 3,516 ​ 97 ​ 10,081 ​ - ​ - ​ 22,329 Grade 6 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Grade 7 ​ - ​ - ​ 64 ​ 366 ​ 2,722 ​ 550 ​ - ​ - ​ 3,702 Grade 8 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Total $ 55,718 $ 77,155 $ 130,386 $ 57,223 $ 48,717 $ 94,760 $ 9,870 $ - $ 473,829 Current-period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - $ - Commercial real estate - multi-family ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grades 1-4 $ 25,099 $ 28,144 $ 103,804 $ 74,083 $ 25,640 $ 61,589 $ 2,149 $ - $ 320,508 Grade 5 ​ 672 ​ 1,092 ​ 10,660 ​ - ​ - ​ 27 ​ - ​ - ​ 12,451 Grade 6 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Grade 7 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Grade 8 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Total $ 25,771 $ 29,236 $ 114,464 $ 74,083 $ 25,640 $ 61,616 $ 2,149 $ - $ 332,959 Current-period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - $ - Construction and development ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grades 1-4 $ 65,134 $ 67,396 $ 35,017 $ 5,013 $ 1,853 $ 4,281 $ 779 $ - $ 179,473 Grade 5 ​ 11,796 ​ 1,190 ​ 6,060 ​ 743 ​ - ​ 84 ​ 808 ​ - ​ 20,681 Grade 6 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Grade 7 ​ 707 ​ - ​ - ​ 172 ​ - ​ 790 ​ - ​ - ​ 1,669 Grade 8 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Total $ 77,637 $ 68,586 $ 41,077 $ 5,928 $ 1,853 $ 5,155 $ 1,587 $ - $ 201,823 Current-period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - $ - Residential 1 ‑ 4 family ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grades 1-4 $ 102,529 $ 199,295 $ 197,713 $ 160,489 $ 44,411 $ 77,644 $ 80,659 $ - $ 862,740 Grade 5 ​ 3,816 ​ 4,819 ​ 6,269 ​ 119 ​ 612 ​ 2,465 ​ 604 ​ - ​ 18,704 Grade 6 ​ 158 ​ 319 ​ 810 ​ - ​ - ​ 180 ​ 249 ​ - ​ 1,716 Grade 7 ​ 316 ​ 366 ​ 29 ​ 1,022 ​ 400 ​ 2,947 ​ 172 ​ - ​ 5,252 Grade 8 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Total $ 106,819 $ 204,799 $ 204,821 $ 161,630 $ 45,423 $ 83,236 $ 81,684 $ - $ 888,412 Current-period gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - $ - Consumer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grades 1-4 $ 23,711 $ 12,497 $ 6,570 $ 4,498 $ 1,194 $ 1,326 $ 925 $ - $ 50,721 Grade 5 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Grade 6 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Grade 7 ​ - ​ - ​ - ​ - ​ - ​ 20 ​ - ​ - ​ 20 Grade 8 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Total $ 23,711 $ 12,497 $ 6,570 $ 4,498 $ 1,194 $ 1,346 $ 925 $ - $ 50,741 Current-period gross charge-offs $ - $ - $ - $ - $ - $ - $ 4 $ - $ 4 Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grades 1-4 $ 347 $ 663 $ 551 $ 1,076 $ 38 $ 9,697 $ 2,520 $ - $ 14,892 Grade 5 ​ - ​ - ​ - ​ - ​ - ​ - ​ 88 ​ - ​ 88 Grade 6 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Grade 7 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Grade 8 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ - Total $ 347 $ 663 $ 551 $ 1,076 $ 38 $ 9,697 $ 2,608 $ - $ 14,980 Current-period gross charge-offs $ - $ - $ - $ - $ - $ - $ 84 $ - $ 84 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Loans $ 422,660 $ 673,206 $ 781,990 $ 489,813 $ 208,380 $ 508,205 $ 260,965 $ - $ 3,345,219 Total current-period gross charge-offs $ - $ - $ - $ - $ - $ - $ 88 $ - $ 88 ​ Loans that were both experiencing financial difficulty and were modified during the six months ended June 30, 2024 and 2023, were insignificant to these consolidated financial statements. ​ ​ ​ 19 Table of Contents ​ NOTE 6 – MORTGAGE SERVICING RIGHTS Loans serviced for others are not included in the accompanying consolidated balance sheets. MSRs are recognized as separate assets when loans sold in the secondary market are sold with servicing retained. The Company utilizes a third-party consulting firm to assist with determining an accurate assessment of the MSRs fair value. The third-party firm collects relevant data points from numerous sources. Some of these data points relate directly to the pricing level or relative value of the mortgage servicing while other data points relate to the assumptions used to derive fair value. In addition, the valuation evaluates specific collateral types, and current and historical performance of the collateral in question. The valuation process focuses on the non-distressed secondary servicing market, common industry practices and current regulatory standards. The primary determinants of the fair value of MSRs are servicing fee percentage, ancillary income, expected loan life or prepayment speeds, discount rates, costs to service, delinquency rates, foreclosure losses and recourse obligations. The valuation data also contains interest rate shock analyses for monitoring fair value changes in differing interest rate environments. Following is an analysis of activity in the MSR asset: ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended Year Ended ​ ​ June 30, 2024 ​ December 31, 2023 Fair value at beginning of period ​ $ 13,668 ​ $ 9,582 ​ ​ ​ ​ ​ ​ ​ Servicing asset additions ​ 488 ​ 879 Loan payments and payoffs ​ ( 819 ) ​ ( 1,624 ) Changes in valuation inputs and assumptions used in the valuation model ​ 357 ​ 1,140 Amount recognized through earnings ​ ​ 26 ​ ​ 395 MSR asset acquired ​ — ​ 3,691 Fair value at end of period ​ $ 13,694 ​ $ 13,668 ​ ​ ​ ​ ​ ​ ​ Unpaid principal balance of loans serviced for others ​ $ 1,164,785 ​ $ 1,175,709 Mortgage servicing rights as a percent of loans serviced for others ​ 1.18 ​ 1.16 ​ The primary economic assumptions utilized by the Company in measuring the value of MSRs were constant prepayment speeds of 7.8 and 7.5 months as of June 30, 2024 and December 31, 2023, respectively, and discount rates of 10.19 % as of each of those periods. The constant prepayment speeds are obtained from publicly available sources for each of the loan programs the Company originates under. ​ NOTE 7 – NOTES PAYABLE The Company utilizes FHLB advances to fund liquidity. The Company had outstanding balances borrowed from the FHLB of $ 90.5 million at June 30, 2024 and $ 35.5 million as of December 31, 2023. The advances, rate, and maturities of FHLB advances were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ Maturity ​ Rate ​ 2024 ​ 2023 Fixed rate, fixed term ​ 06/30/2025 ​ 5.16 % ​ $ 25,000 ​ $ — Fixed rate, fixed term ​ 03/23/2026 ​ 4.02 % ​ ​ 10,000 ​ ​ 10,000 Fixed rate, fixed term ​ 05/26/2026 ​ 1.95 % ​ ​ 5,000 ​ ​ 5,000 Fixed rate, fixed term ​ 06/29/2026 ​ 4.77 % ​ ​ 15,000 ​ ​ — Fixed rate, fixed term ​ 03/23/2027 ​ 3.91 % ​ ​ 10,000 ​ ​ 10,000 Fixed rate, fixed term ​ 06/28/2027 ​ 4.57 % ​ ​ 15,000 ​ ​ — Fixed rate, fixed term ​ 03/23/2028 ​ 3.85 % ​ ​ 10,000 ​ ​ 10,000 Fixed rate, fixed term ​ 04/22/2030 ​ 0.00 % ​ ​ 508 ​ ​ 508 ​ ​ ​ ​ ​ ​ ​ 90,508 ​ ​ 35,508 Adjustment due to purchase accounting ​ ​ ​ ​ ​ ​ ( 187 ) ​ ​ ( 238 ) ​ ​ ​ ​ ​ ​ $ 90,321 ​ $ 35,270 ​ 20 Table of Contents ​ Future maturities of borrowings were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2024 ​ 2023 1 year or less ​ $ 25,000 ​ $ — 1 to 2 years ​ 30,000 ​ — 2 to 3 years ​ 25,000 ​ 15,000 3 to 4 years ​ 10,000 ​ 10,000 4 to 5 years ​ — ​ 10,000 Over 5 years ​ ​ 508 ​ ​ 508 ​ ​ $ 90,508 ​ $ 35,508 ​ As of June 30, 2024, the Company had borrowing availability at the FHLB totaling $ 737.1 million in addition to the existing borrowings noted in the tables above. ​ ​ NOTE 8 – SUBORDINATED NOTES AND JUNIOR SUBORDINATED DEBENTURES During July 2020, the Company entered into subordinated note agreements with two separate commercial banks. The Company had through December 31, 2020, to borrow funds up to a maximum availability of $ 6.0 million under each agreement, or $ 12.0 million total. These notes were issued with 10 -year maturities, carry interest at a fixed rate of 5.0 % through June 30, 2025, and at a variable rate thereafter, payable quarterly. These notes are callable on or after January 1, 2026 and qualify for Tier 2 capital for regulatory purposes. The Company had outstanding balances of $ 6.0 million under these agreements at June 30, 2024 and December 31, 2023. ​ During August 2022, the Company entered into subordinated note agreements with an individual. The Company had outstanding balances of $ 6.0 million under these agreements as of June 30, 2024 and December 31, 2023. These notes were issued with 10 -year maturities, carry interest at a fixed rate of 5.25 % through August 6, 2027, and at a variable rate thereafter, payable quarterly. These notes are callable on or after August 6, 2027 and qualify for Tier 2 capital for regulatory purposes. ​ As a result of the acquisition of Hometown during February 2023, the Company acquired all of the common securities of Hometown’s wholly-owned subsidiaries, Hometown Bancorp, Ltd. Capital Trust I (“Trust I”) and Hometown Bancorp, Ltd. Capital Trust II (“Trust II”). The Company also assumed adjustable rate junior subordinated debentures issued to these trusts. The junior subordinated debentures issued to Trust I and Trust II totaled $ 4.1 million and $ 8.2 million, respectively, carried interest at floating rates resetting on each quarterly payment date, and were due on January 7, 2034 and December 15, 2036, respectively. Applicable discounts originally totaling $ 1.5 million were recorded to carry the assumed debentures at their then estimated fair value and were being accreted to interest expense over the remaining life of the debentures. Both junior subordinated debentures were redeemable by the Company, subject to prior approval by the Federal Reserve Bank, on any quarterly payment date. The junior subordinated debentures represented the sole asset of Trust I and Trust II. The trusts were not included in the Company’s consolidated financial statements. The net effect of all agreements assumed with respect to Trust I and Trust II is that the Company, through payments on its debentures, was liable for the distributions and other payments required on the trusts’ preferred securities. Trust I and Trust II also provided the Company with $ 12.0 million in Tier 1 capital for regulatory capital purposes. The Company redeemed the junior subordinated debenture related to Trust II during December 2023 and the junior subordinated debenture related to Trust I during January 2024, resulting in the trusts’ dissolution. As a result of the redemption of the junior subordinated debenture related to Trust II and notification of the Company’s intent to redeem the junior subordinated debenture of Trust I prior to December 31, 2023, the Company amortized the remaining original fair value discounts into interest expense during December 2023. ​ 21 Table of Contents ​ NOTE 9 – REGULATORY MATTERS Banks and certain bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Under regulatory guidance for non-advanced approaches institutions, the Bank and Company are required to maintain minimum amounts and ratios of common equity Tier I capital to risk-weighted assets, including an additional conservation buffer determined by banking regulators. As of June 30, 2024 and December 31, 2023, this buffer was 2.5 %. The Bank met all capital adequacy requirements to which they are subject as of June 30, 2024 and December 31, 2023. Actual and required capital amounts and ratios are presented below at period-end: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ To Be Well ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Capital ​ Capitalized Under ​ ​ ​ ​ ​ ​ ​ For Capital ​ Adequacy with ​ Prompt Corrective ​ ​ Actual ​ Adequacy Purposes ​ Capital Buffer ​ Action Provisions ​ Amount Ratio Amount Ratio Amount Ratio Amount Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total capital (to risk-weighted assets): ​ ​ ​ ​ ​ Company ​ $ 482,349 13.66 % $ 282,548 8.00 % $ 370,844 10.50 % ​ NA NA ​ Bank ​ $ 434,726 12.32 % $ 282,387 8.00 % $ 370,633 10.50 % $ 352,984 10.00 % Tier 1 capital (to risk-weighted assets): ​ ​ ​ ​ ​ ​ ​ ​ ​ Company ​ $ 429,847 12.17 % $ 211,911 6.00 % $ 300,207 8.50 % ​ NA NA ​ Bank ​ $ 394,224 11.17 % $ 211,790 6.00 % $ 300,036 8.50 % $ 282,387 8.00 % Common Equity Tier 1 capital (to risk-weighted assets): ​ ​ ​ ​ ​ ​ ​ ​ Company ​ $ 429,847 12.17 % $ 158,933 4.50 % $ 247,229 7.00 % ​ NA NA ​ Bank ​ $ 394,224 11.17 % $ 158,843 4.50 % $ 247,089 7.00 % $ 229,440 6.50 % Tier 1 capital (to average assets): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company ​ $ 429,847 10.98 % $ 156,549 4.00 % $ 156,549 4.00 % ​ NA NA ​ Bank ​ $ 394,224 10.07 % $ 156,540 4.00 % $ 156,540 4.00 % $ 195,675 5.00 % December 31, 2023 ​ ​ ​ ​ ​ ​ ​ Total capital (to risk-weighted assets): ​ ​ ​ ​ ​ ​ Company ​ $ 484,398 13.99 % $ 276,904 8.00 % $ 363,437 10.50 % ​ NA NA ​ Bank ​ $ 446,634 12.91 % $ 276,726 8.00 % $ 363,202 10.50 % $ 345,907 10.00 % Tier 1 capital (to risk-weighted assets): ​ ​ ​ ​ ​ ​ ​ ​ ​ Company ​ $ 437,979 12.65 % $ 207,678 6.00 % $ 294,211 8.50 % ​ NA NA ​ Bank ​ $ 412,215 11.92 % $ 207,544 6.00 % $ 294,021 8.50 % $ 276,726 8.00 % Common Equity Tier 1 capital (to risk-weighted assets): ​ ​ ​ ​ ​ ​ ​ ​ Company ​ $ 433,979 12.54 % $ 155,759 4.50 % $ 242,291 7.00 % ​ NA NA ​ Bank ​ $ 412,215 11.92 % $ 155,658 4.50 % $ 242,135 7.00 % $ 224,840 6.50 % Tier 1 capital (to average assets): ​ ​ ​ ​ ​ ​ ​ ​ Company ​ $ 437,979 11.05 % $ 158,581 4.00 % $ 158,581 4.00 % ​ NA NA ​ Bank ​ $ 412,215 10.40 % $ 158,585 4.00 % $ 158,585 4.00 % $ 198,231 5.00 % ​ ​ ​ ​ 22 Table of Contents ​ NOTE 10 – COMMITMENTS AND CONTINGENCIES The Company enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (rate-lock commitments). Rate-lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Accordingly, such commitments, along with any related fees received from potential borrowers, are recorded at fair value in derivative assets or liabilities, with changes in fair value recorded in the net gain or loss on sale of mortgage loans. Fair value is based on fees currently charged to enter into similar agreements and for fixed rate commitments also considers the difference between current levels of interest rates and committed rates. The notional amount of rate-lock commitments at June 30, 2024 and December 31, 2023 was approximately $ 13.2 million and $ 5.9 million, respectively. The fair value of these rate-lock commitments are not material to these financial statements and have not been recorded. The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets. The Company’s exposure to credit loss is represented by the contractual or notional amount of these commitments. The Company follows the same credit policies in making commitments as it does for on-balance-sheet instruments. Since some of the commitments are expected to expire without being drawn upon and some of the commitments may not be drawn upon to the total extent of the commitment, the notional amount of these commitments does not necessarily represent future cash requirements. The following commitments were outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ Notional Amount ​ June 30, 2024 ​ December 31, 2023 ​ ​ ​ ​ ​ ​ ​ Commitments to extend credit: ​ ​ Fixed ​ $ 59,958 ​ $ 92,113 Variable ​ 704,141 ​ 707,285 Credit card arrangements ​ 22,273 ​ 21,213 Letters of credit ​ 11,265 ​ 9,785 ​ ​ NOTE 11 – FAIR VALUE MEASUREMENTS Accounting guidance establishes a fair value hierarchy to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value. Level 1: Quoted prices (unadjusted) or identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. ​ 23 Table of Contents ​ Information regarding the fair value of assets measured at fair value on a recurring basis is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Instruments Markets Other Significant ​ ​ Measured ​ for Identical ​ Observable ​ Unobservable ​ ​ At Fair ​ Assets ​ Inputs ​ Inputs ​ ​ Value ​ (Level 1) ​ (Level 2) ​ (Level 3) June 30, 2024 ​ ​ ​ ​ Assets ​ ​ ​ ​ Securities available for sale ​ ​ ​ ​ ​ Obligations of U.S. Government sponsored agencies ​ $ 26,855 ​ $ — ​ $ 26,855 ​ $ — Obligations of states and political subdivisions ​ 56,786 ​ — ​ 56,786 ​ — Mortgage-backed securities ​ ​ 30,221 ​ ​ — ​ ​ 30,221 ​ ​ — Corporate notes ​ 14,115 ​ — ​ 14,115 ​ — Mortgage servicing rights ​ 13,694 ​ — ​ 13,694 ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ Assets ​ ​ ​ ​ Securities available for sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Obligations of U.S. Government sponsored agencies ​ $ 28,294 ​ $ — ​ $ 28,294 ​ $ — Obligations of states and political subdivisions ​ 58,246 ​ — ​ 58,246 ​ — Mortgage-backed securities ​ ​ 36,130 ​ ​ — ​ ​ 36,130 ​ ​ — Corporate notes ​ 19,038 ​ — ​ 19,038 ​ — Certificates of deposit ​ ​ 489 ​ ​ — ​ ​ 489 ​ ​ — Mortgage servicing rights ​ 13,668 ​ — ​ 13,668 ​ — ​ There were no assets measured on a recurring basis using significant unobservable inputs (Level 3) during these periods. Furthermore, there were no liabilities measured on a recurring basis during the periods. ​ Information regarding the fair value of assets measured at fair value on a non-recurring basis is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quoted Prices ​ ​ ​ ​ ​ ​ ​ ​ ​ In Active ​ Significant ​ ​ ​ ​ ​ Assets ​ Markets ​ Other ​ Significant ​ ​ Measured ​ for Identical ​ Observable ​ Unobservable ​ ​ At Fair ​ Assets ​ Inputs ​ Inputs ​ ​ Value ​ (Level 1) ​ (Level 2) ​ (Level 3) June 30, 2024 ​ ​ ​ ​ OREO ​ $ 712 ​ $ — ​ $ — ​ $ 712 Loans individually evaluated, net of reserve ​ ​ 9,653 ​ ​ — ​ ​ — ​ ​ 9,653 ​ ​ $ 10,365 ​ $ — ​ $ — ​ $ 10,365 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ OREO ​ $ 2,573 ​ $ — ​ $ — ​ $ 2,573 Loans individually evaluated, net of reserve ​ 9,242 ​ — ​ — ​ 9,242 ​ ​ $ 11,815 ​ $ — ​ $ — ​ $ 11,815 ​ The following is a description of the valuation methodologies used by the Company for the items noted in the table above, including the general classification of such instruments in the fair value hierarchy. For loans individually evaluated, the amount of reserve is based upon the present value of expected future cash flows discounted at the loan’s effective interest rate, the estimated fair value of the underlying collateral for collateral-dependent loans, or the estimated liquidity of the note. For OREO, the fair value is based upon the estimated fair value of the underlying collateral adjusted for the expected costs to sell. 24 Table of Contents ​ The following table shows significant unobservable inputs used in the fair value measurement of Level 3 assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Unobservable ​ Range of ​ Average ​ ​ Valuation Technique ​ Inputs ​ Discounts Discount ​ As of June 30, 2024 ​ OREO Third party appraisals, sales contracts or brokered price options Collateral discounts and estimated costs to sell 61 % 61 % Loans individually evaluated Third party appraisals and discounted cash flows Collateral discounts and discount rates 0 % - 71 % 35 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ OREO Third party appraisals, sales contracts or brokered price options Collateral discounts and estimated costs to sell 3 % - 71 % 38 % Loans individually evaluated Third party appraisals and discounted cash flows Collateral discounts and discount rates 0 % - 53 % 31 % ​ The carrying value and estimated fair value of financial instruments not measured and reported at fair value on a recurring or non-recurring basis at June 30, 2024 and December 31, 2023 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Carrying ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2024 amount Level 1 Level 2 Level 3 Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financial assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 98,950 ​ $ 98,950 ​ $ — ​ $ — ​ $ 98,950 Securities held to maturity ​ 110,648 ​ 106,609 ​ 3,196 ​ — ​ 109,805 Loans held for sale ​ 2,274 ​ — ​ 2,274 ​ — ​ 2,274 Loans, net ​ 3,383,517 ​ — ​ — ​ 3,172,419 ​ 3,172,419 Other investments ​ 21,256 ​ — ​ — ​ 21,256 ​ 21,256 Mortgage servicing rights ​ 13,694 ​ — ​ 13,694 ​ — ​ 13,694 Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits ​ $ 3,399,941 ​ $ — ​ $ — ​ $ 3,129,841 ​ $ 3,129,841 Notes payable ​ ​ 90,321 ​ ​ — ​ ​ 90,321 ​ ​ — ​ ​ 90,321 Subordinated notes ​ 12,000 ​ ​ — ​ ​ 12,000 ​ ​ — ​ ​ 12,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Carrying ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ amount ​ Level 1 ​ Level 2 ​ Level 3 ​ Total Financial assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 247,468 ​ $ 247,468 ​ $ — ​ $ — ​ $ 247,468 Securities held to maturity ​ 103,324 ​ 99,475 ​ 4,151 ​ — ​ 103,626 Loans held for sale ​ 3,012 ​ — ​ 3,012 ​ — ​ 3,012 Loans, net ​ 3,299,365 ​ — ​ — ​ 3,168,749 ​ 3,168,749 Other investments ​ 21,366 ​ — ​ — ​ 21,366 ​ 21,366 Mortgage servicing rights ​ 13,668 ​ — ​ 13,668 ​ — ​ 13,668 Financial liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits ​ $ 3,432,920 ​ — ​ — ​ 3,153,512 ​ ​ 3,153,512 Securities sold under repurchase agreements ​ ​ 75,747 ​ ​ — ​ ​ 75,747 ​ ​ — ​ ​ 75,747 Notes payable ​ 35,270 ​ ​ — ​ ​ 35,270 ​ ​ — ​ ​ 35,270 Subordinated notes ​ 12,000 ​ ​ — ​ ​ 12,000 ​ ​ — ​ ​ 12,000 Junior subordinated debentures ​ ​ 4,124 ​ ​ — ​ ​ 4,124 ​ ​ — ​ ​ 4,124 ​ 25 Table of Contents ​ The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Consequently, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters that could affect the estimates. Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Deposits with no stated maturities are defined as having a fair value equivalent to the amount payable on demand. This prohibits adjusting fair value derived from retaining those deposits for an expected future period of time. This component, commonly referred to as a deposit base intangible, is neither considered in the above amounts nor is it recorded as an intangible asset on the consolidated balance sheet. Significant assets and liabilities that are not considered financial assets and liabilities include premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates. ​ NOTE 12 – STOCK BASED COMPENSATION The Company has made restricted share grants pursuant to the Bank First Corporation 2011 Equity Plan and the Bank First Corporation 2020 Equity Plan, which replaced the 2011 Plan. The purpose of the Plan is to provide financial incentives for selected employees and for the non-employee Directors of the Company, thereby promoting the long-term growth and financial success of the Company. The number of shares of Company stock that may be issued pursuant to awards under the 2020 Plan shall not exceed, in the aggregate, 700,000 . As of June 30, 2024, 100,954 shares of Company stock have been awarded under the 2020 Plan. Compensation expense for restricted stock is based on the fair value of the awards of Bank First Corporation common stock at the time of grant. The value of restricted stock grants that are expected to vest is amortized into expense over the vesting periods. For the three months ended June 30, 2024 and 2023, compensation expense of $ 0.5 million and $ 0.6 million, respectively, was recognized related to restricted stock awards. For the six months ended June 30, 2024 and 2023, compensation expense of $ 1.1 million and $ 1.0 million, respectively, was recognized related to restricted stock awards. As of June 30, 2024, there was $ 3.0 million of unrecognized compensation cost related to non-vested restricted stock awards granted under the plan. That cost is expected to be recognized over a weighted average period of 1.66 years. The aggregate grant date fair value of restricted stock awards that vested during the six months ended June 30, 2024, was approximately $ 2.1 million. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the period ended ​ For the period ended ​ ​ June 30, 2024 ​ June 30, 2023 ​ ​ Weighted- ​ Weighted- ​ ​ ​ ​ Average Grant- ​ ​ ​ Average Grant- ​ ​ Shares ​ Date Fair Value ​ Shares ​ Date Fair Value Restricted Stock ​ ​ Outstanding at beginning of period 58,196 ​ $ 72.28 59,272 ​ $ 65.85 Granted 24,581 ​ 85.85 25,375 ​ 80.17 Vested ( 30,143 ) ​ 71.14 ( 25,762 ) ​ 62.05 Forfeited or cancelled — ​ — ( 820 ) ​ 65.09 Outstanding at end of period 52,634 ​ $ 79.27 58,065 ​ $ 71.41 ​ ​ ​ ​ ​ 26 Table of Contents ​