What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-08 compared with 2023-11-08 · 256 added, 360 removed, 1013 unchanged (38% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Cash and due from banks $ 245,043 $ 267,521

4 unchanged sentences

Available for sale investment securities, at fair value 108,417 109,736

Held to maturity investment securities, at amortized cost (fair values of $ 14,317 and $ 15,435 at September 30, 2023 and December 31, 2022, respectively)

Held to maturity investment securities, at amortized cost (fair values of $ 15,488 and $ 15,903 at March 31, 2024 and December 31, 2023, respectively)

15,739 15,817

Total investment securities 126,225 127,623

Loans receivable (net of ACL-Loans of $ 29,284 at September 30, 2023 and $ 22,431 at December 31, 2022)

Loans receivable (net of ACL-Loans of $ 27,991 at March 31, 2024 and $ 27,946 at December 31, 2023, respectively)

2,646,686 2,685,301

12 unchanged sentences

Advances from the Federal Home Loan Bank 90,000 90,000

Subordinated debentures (face value of $ 70,000 and $ 70,000 at September 30, 2023 and December 31, 2022, respectively, less unamortized debt issuance costs of $ 857 and $ 1,041 at September 30, 2023 and December 31, 2022, respectively)

Subordinated debentures (face value of $ 70,000 and $ 70,000 at March 31, 2024 and December 31, 2023, respectively, less unamortized debt issuance costs of $ 734 and $ 795 at March 31, 2024 and December 31, 2023, respectively)

69,266 69,205

4 unchanged sentences

Common stock, no par value;

10,000,000 shares authorized, 7,841,616 and 7,730,699 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

10,000,000 shares authorized, 7,908,180 and 7,882,616 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

118,401 118,247

7 unchanged sentences

(In thousands, except share data)

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Interest and dividend income

8 unchanged sentences

Net interest income 21,147 25,541

(Credit) provision for credit losses ( 1,579 ) 2,381 1,826 1,165

Net interest income after (credit) provision for credit losses 24,270 22,220 70,397 66,769

Provision for credit losses 3,683 826

Net interest income after provision for credit losses 17,464 24,715

Noninterest income

28 unchanged sentences

(In thousands)

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Net income $ 3,763 $ 10,379

10 unchanged sentences

Unrealized gains (losses) on interest rate swaps, net of tax 61 ( 1,579 )

Total other comprehensive income (loss), net of tax 192 ( 545 ) ( 1,335 ) 8,361

Total other comprehensive (loss) income, net of tax ( 55 ) ( 945 )

Comprehensive income $ 3,708 $ 9,434

4 unchanged sentences

Number of Outstanding Shares Common Stock Retained Earnings Accumulated Other Comprehensive (Loss) Income Total

Balance at June 30, 2023 7,829,950 $ 116,541 $ 133,988 $ ( 1,716 ) $ 248,813

Net income — — 9,777 — 9,777

Other comprehensive income, net of tax — — — 192 192

Cash dividends declared ($ 0.20 per share)

— — ( 1,560 ) — ( 1,560 )

Stock-based compensation expense — 640 — — 640

Issuance of restricted stock 11,666 — — — —

Stock options exercised — — — — —

Repurchase of common stock — — — — —

Balance at September 30, 2023 7,841,616 $ 117,181 $ 142,205 $ ( 1,524 ) $ 257,862

Number of Outstanding Shares Common Stock Retained Earnings Accumulated Other Comprehensive (Loss) Income Total

Balance at June 30, 2022 7,752,389 $ 115,599 $ 109,523 $ 345 $ 225,467

Balance at December 31, 2023 7,882,616 $ 118,247 $ 149,169 $ ( 1,664 ) $ 265,752

Net income — — 3,763 — 3,763

3 unchanged sentences

Stock-based compensation expense — 1,074 — — 1,074

Warrants exercised — — — — —

Forfeitures of restricted stock ( 100 ) — — — —

Issuance of restricted stock 61,844 — — — —

1 unchanged sentence

Repurchase of common stock ( 36,180 ) ( 920 ) — — ( 920 )

Balance at September 30, 2022 7,711,843 $ 114,548 $ 117,152 $ ( 200 ) $ 231,500

See accompanying notes to consolidated financial statements (unaudited)

Balance at March 31, 2024 7,908,180 $ 118,401 $ 151,350 $ ( 1,719 ) $ 268,032

Number of Outstanding Shares Common Stock Retained Earnings Accumulated Other Comprehensive (Loss) Income Total

4 unchanged sentences

Net income — — 10,379 — 10,379

Other comprehensive (loss), net of tax — — — ( 1,335 ) ( 1,335 )

Cash dividends declared ($ 0.60 per share)

— — ( 4,681 ) — ( 4,681 )

Stock-based compensation expense — 2,008 — — 2,008

Forfeitures of restricted stock ( 15,438 ) — — — —

Issuance of restricted stock 117,675 — — — —

Stock options exercised 8,680 155 — — 155

Repurchase of common stock — — — — —

Balance at September 30, 2023 7,841,616 $ 117,181 $ 142,205 $ ( 1,524 ) $ 257,862

Number of Outstanding Shares Common Stock Retained Earnings Accumulated Other Comprehensive (Loss) Income Total

Balance at December 31, 2021 7,803,166 $ 118,148 $ 92,400 $ ( 8,561 ) $ 201,987

Net income — — 29,408 — 29,408

Other comprehensive income, net of tax — — — ( 945 ) ( 945 )

6 unchanged sentences

Repurchase of common stock — — — — —

Balance at September 30, 2022 7,711,843 $ 114,548 $ 117,152 $ ( 200 ) $ 231,500

Balance at March 31, 2023 7,843,438 $ 115,875 $ 127,566 $ ( 1,134 ) $ 242,307

See accompanying notes to consolidated financial statements (unaudited)

2 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities

10 unchanged sentences

Stock-based compensation 1,074 702

Loss (gain) on sale of premises and equipment 13 ( 51 )

Net change in:

8 unchanged sentences

Purchases of marketable equity securities — ( 12 )

Purchases of available for sale securities — ( 22,572 )

Purchases of held to maturity securities ( 15 ) —

Net increase in loans ( 118,992 ) ( 436,869 )

Net decrease (increase) in loans 30,931 ( 94,960 )

Proceeds from sales of loans not originated for sale 3,119 12,725

6 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from financing activities

1 unchanged sentence

Net change in other deposits ( 39,613 ) ( 114,677 )

Net change in FHLB advances — 40,000

Issuance of subordinated debt — 34,352

Proceeds from exercise of options — 155

29 unchanged sentences

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and general practices within the banking industry.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the consolidated balance sheet, and revenue and expenses for the period.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities as of the date of the consolidated balance sheet and revenue and expenses for the period.

Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change in the near term relate to the allowance for credit losses, the valuation of derivative instruments, investment securities valuation, evaluation of investment securities for other than temporary impairment and deferred income taxes valuation.

Material estimates that are particularly susceptible to significant change in the near-term relate to the Allowance for Credit Losses-Loans ("ACL-Loans"), derivative instrument valuation, investment securities valuation, Allowance for Credit Losses-Securities, and deferred income taxes valuation.

The Company has one reportable segment.

All of the Company’s activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Company supports the others.

For example, lending is dependent upon the ability of the Company to fund itself with deposits and borrowings while managing the interest rate and credit risk.

Accordingly, all significant operating decisions are based upon analysis of the Company as one segment or unit.

Basis of Consolidated Financial Statement Presentation

7 unchanged sentences

The Company has a significant concentration in commercial real estate loans, with a growing percentage being owner-occupied, which present a lower risk profile.

ACL-Loans and Allowance for Credit Losses-Unfunded Commitments ("ACL-Unfunded Commitments")

The ACL-Loans is measured on each loan’s amortized cost basis, excluding interest receivable, and is initially recognized upon origination or purchase of the loan, and subsequently remeasured on a recurring basis.

The ACL-Loans is recognized as a contra-asset, and credit loss expense is recorded as a provision for loan losses in the consolidated statements of income.

losses are charged off against the ACL-Loans when management believes the loan is uncollectible.

Subsequent recoveries, if any, are credited to the ACL-Loans.

Loans are normally placed on nonaccrual status if it is probable that the Company will be unable to collect the full payment of principal and interest when due according to the contractual terms of the loan agreement, or the loan is past due for a period of 90 days or more unless the obligation is well-secured and is in the process of collection.

The Company generally does not recognize an allowance for credit losses ("ACL") on accrued interest receivables, consistent with its policy to reverse interest income when interest is 90 days or more past due.

The Company also records an ACL-Unfunded commitments, which is based on the same assumptions as funded loans and also considers the probability of funding.

The ACL is recognized as a liability, and credit loss expense is recorded as a provision for unfunded loan commitments within the provision for credit losses in the Consolidated statements of income.

For collectively evaluated loans and related unfunded commitments, the Company utilizes software provided by a third party, which includes various models for forecasting expected credit losses, to calculate its ACL.

Management selected lifetime loss rate models, utilizing CRE, C&I, and Consumer specific models, to calculate the expected losses over the life of each loan based on exposure at default, loan attributes and reasonable, supportable economic forecasts.

The models selected by the Company in its ACL calculation rely upon historical losses from a broad cross section of U.S.

banks that also utilize the same third party for ACL calculations.

Management reviewed the third party’s analysis of the banks included in the models as part of their model development dataset and determined the Company’s loan portfolio composition by property type, balance distribution by loan age, and delinquency status are similar, which supports the use of these loss rate models.

The Company also noted the third party’s model development dataset has loan concentrations that are evenly distributed across the United States, while the Company’s portfolio is mainly concentrated in the Northeast.

Based on the disparate regional concentration, management determined that a select group of peer banks is necessary to scale the loss rate models to produce an ACL that is more representative of the Company’s loan portfolio.

This peer-based calibration, called a "peer scalar", utilizes the loss rates of a subset of peer banks to appropriately scale the initial model results.

These peers have been selected by the Company given their similar characteristics, such as loan portfolio composition and location, to better align the models’ results to the Company’s expected losses.

Key assumptions used in the models include portfolio segmentation, risk rating, forecasted economic scenarios, the peer scalar, and the expected utilization of unfunded commitments, among others.

Our loan portfolios are segmented by loan level attributes such as loan type, size, date of origination, and delinquency status to create homogenous loan pools.

Pool level metrics are calculated, and loss rates are subsequently applied to the pools as the loans have similar characteristics.

To account for economic uncertainty, the Company incorporates multiple economic scenarios in determining the ACL.

The scenarios include various projections based on variables such as Gross Domestic Product, interest rates, property price indices, and employment measures, among others.

The scenarios are probability-weighted based on available information at the time the calculation is conducted.

As part of our ongoing governance of ACL, scenario weightings and model parameters are reviewed periodically by management and are subject to change, as deemed appropriate.

The Company also considers qualitative adjustments to expected credit loss estimates for information not already captured in the quantitative loss estimation models.

Qualitative factor adjustments may increase or decrease management’s estimate of expected credit losses.

Qualitative loss factors are based on the Company’s judgment of market, changes in loan composition or concentrations, performance trends, regulatory changes, uncertainty of macroeconomic forecasts, and other asset specific risk characteristics.

When loans do not share risk characteristics with other financial assets they are evaluated individually.

Management applies its normal loan review procedures in making these judgments.

Individually evaluated loans consist of loans with credit quality indicators which are substandard or doubtful.

The Company also individually evaluates all insurance premium loans.

While insurance premium loans are considered consumer loans, the third-party Consumer ACL model is designed for unsecured lending, whereas these loans are secured.

To account for the fully secured structure of this type of loan, management determined each loan will be individually evaluated, regardless of the credit quality indicators.

These loans are evaluated based upon their collateral, which primarily consists of cash, cash surrender value life insurance, and in some cases real estate.

In determining the ACL-Loans for individually evaluated loans, the Company generally applies a discounted cash flow method for instruments that are individually assessed.

For collateral dependent financial assets where the Company has determined that foreclosure of the collateral is probable and where the borrower is experiencing financial difficulty, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date.

Fair value is generally calculated based on the value of the underlying collateral less an appraisal discount and the estimated cost to sell.

ACL-Securities

The Company individually evaluates the available for sale debt securities and held to maturity securities for impairment credit losses.

Available for sale securities include U.S.

Treasuries, mortgage-backed securities, and corporate bonds.

and mortgaged-backed securities are guaranteed by the U.S.

Government and as a result, management has a zero loss expectation.

No ACL-Securities was recorded for these securities as of March 31, 2024.

For the corporate bond portfolio, the Company developed a metric that includes each issuer’s current credit ratings and key financial performance metrics to assess the underlying performance of each issuer.

The analysis of the issuers’ performance and the intent of the Company to retain these securities support the determination that there is no expected credit loss, and therefore, no ACL-Securities were recognized on the corporate bond portfolio as of March 31, 2024.

Of our held to maturity securities portfolio, one security’s fair value was less than its amortized cost as of March 31, 2024.

Since this is a highly rated state agency and municipal obligation, the Company's expectation of nonpayment of the amortized cost basis is zero.

No allowance for ALC-Securities was recorded for this security as of March 31, 2024.

Common Share Repurchases

9 unchanged sentences

Recently issued accounting pronouncements not yet adopted

2023-09—Income Taxes (Topic 740):

"Improvements to Income Tax Disclosures":

The amendments in this update provide more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2024.

The Company believes this ASU will not have a material impact on existing disclosures and will continue to monitor for SEC action, and plan accordingly for adoption.

2023-06, Disclosure Improvements:

25 unchanged sentences

For all other entities, the amendments will be effective two years later.

The amendments in this Update should be applied prospectively.

For all entities, if by June 30, 2027, the SEC 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 amendments in this update are to be applied prospectively.

For all entities, if by June 30, 2027, the SEC 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 believes this ASU will not have a material impact on existing disclosures and will continue to monitor for SEC action, and plan accordingly for adoption.

2022-06, Reference Rate Reform (Topic 848) :

“Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

The objective of the guidance in Topic 848 is to provide temporary relief during the transition period.

The Board included a sunset provision within Topic 848 based on expectations of when the London Interbank Offered Rate (LIBOR) would cease being published.

At the time that Update 2020-04 was issued, the UK Financial Conduct Authority (FCA) had established its intent that it would no longer be necessary to persuade, or compel, banks to submit to LIBOR after December 31, 2021.

As a result, the sunset provision was set for December 31, 2022 (12 months after the expected cessation date of all currencies and tenors of LIBOR).

In March 2021, the FCA announced that the intended cessation date of the overnight 1, 3, 6, and 12 month tenors of USD LIBOR would be June 30, 2023, which is beyond the current sunset date of Topic 848.

As the current relief in Topic 848 may not cover a period of time during which a significant number of modifications may take place, the amendments in this Update defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

Recently adopted accounting pronouncements

2017-04, Intangibles – Goodwill and Other (Topic 350):

“Simplifying the Test for Goodwill Impairment.” This ASU simplifies the test for goodwill impairment by eliminating Step 2 from the goodwill impairment test.

In computing the implied fair value of goodwill under Step 2, an entity was required to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination.

Instead, under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.

An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value;

however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

In addition, this ASU also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test.

Therefore, the same impairment assessment applies to all reporting units.

An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets.

An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.

On October 16, 2019, the FASB voted in favor of a proposal to defer the effective date of this standard in the same manner it is deferring the effective date of ASC 326.

The FASB issued ASU No.

2019-10, which officially delayed the adoption of this standard for smaller reporting companies until fiscal years beginning after December 15, 2022.

The Company has adopted ASU No.

2017-04 as of March 31, 2023 and it had no impact to the Company's financial statements.

2016-13, Financial Instruments—Credit Losses (Topic 326):

“Measurement of Credit Losses on Financial Instruments.” This ASU changes the impairment model for most financial assets and certain other instruments.

For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward looking “expected loss” model that will replace today’s “incurred loss” model and can result in the earlier recognition of credit losses.

For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except that the losses will be recognized as an allowance.

On November 15, 2019, the FASB issued ASU No.

2019-10, which officially delayed the adoption of this standard for smaller reporting companies (as defined by the SEC) until fiscal years beginning after December 15, 2022.

In accordance with ASU No.

2019-10, on January 1, 2023, the Company adopted Topic 326.

Upon adoption of CECL, the Company recorded a one-time cumulative effect, pre-tax adjustment of $ 5.1 million to the allowance for credit loss - loans and a corresponding net of tax adjustment to beginning retained earnings.

The Company also recorded a one-time cumulative effect, pre-tax adjustment of $ 1.3 million to the allowance for credit losses - unfunded commitments (which is reflected in Accrued expenses and other liabilities on the Consolidated Balanc e Sheets) and a corresponding net of tax adjustment to beginning retained earnings.

These impacts are reflected in the Company's first quarter 2023 financial statements.

The future impact of CECL on the Company’s allowance for credit losses and provision (credit) for credit losses subsequent to the initial adoption will depend on refinements to key assumptions including forecasting and qualitative factors, as well as changes in the loan portfolio and economic conditions.

The Company measured its allowance under its incurred loan loss model as of December 31, 2022.

In addition, the Company also evaluated its Held to maturity investment securities and Available for sale investment securities upon the adoption of the standard on January 1, 2023.

The Held to maturity investment securities were related to housing authority bonds in the towns of New Canaan and Stamford, CT.

The Company determined these housing authority bonds had remote risk of loss based on the historical performance of housing authority bonds and the strong credit ratings of both the towns of New Canaan and Stamford, CT.

The Available for sale securities consisted of government backed U.S.

Treasuries, Mortgage-Backed Securities, and Corporate Securities.

Treasuries and Mortgage-Backed Securities were guaranteed by the U.S.

Government and had minimal risk of loss.

The Corporate Securities had minimal default risk.

As such, management concluded that no allowance for expected credit losses

was required for the Held to maturity investment securities or the Available for sale investment securities upon adoption of the standard on January 1, 2023.

Change in Consolidated Statement of Conditions Tax Effected Change to Retained Earnings from Adoption of CECL

Total ACL- Loans $ 5,079 $ 1,167 $ 3,912

Total ACL-Unfunded Commitments 1,273 292 981

Total impact of CECL adoption $ 6,352 $ 1,459 $ 4,893

2020-04, Reference Rate Reform (Topic 848):

"Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This ASU 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.

The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022.

Optional expedients include that modifications of contracts should be accounted for by prospectively adjusting the effective interest rate and modifications of leases should be accounted for as a continuation of the existing contract with no reassessments of lease classification and discount rate or remeasurements of lease payments.

This ASU also provides many practical expedients for derivative accounting.

In addition, an entity may elect to sell and/or transfer held to maturity securities that reference a rate affected by the reference rate reform classified as held to maturity prior to January 1, 2020.

In particular, the Company made the following elections as it relates to hedging relationships;

(1) Option to not reassess a previous accounting determination (paragraph 848-20-35-2);

(2) Option to not dedesignate a hedging relationship due to a change in critical term (paragraph 848-20-35-3);

(3) Option to change the contractual terms of a hedging instrument, hedged item, or forecasted transaction and to not dedesignate a hedging relationship (paragraph 848-30-25-5);

(4) Adopt expedient ASC 848-50-25-2 to assert probability of the hedged interest regardless of any expected modification in terms related to reference rate reform;

and (5) To continue the method of assessing effectiveness as documented in the original hedge documentation and apply the expedient in ASC 848-50-35-17 so that the reference rate on the hypothetical derivative matches the reference rate on the hedging instrument.

For new hedging relationships designated subsequent to December 31, 2020, the Company elects to apply the expedient in ASC 848-50-25-11 to assume that the reference rate will not be replaced for the remainder of the hedging relationship.

The application of this guidance did not have a material impact on the Company's financial statements.

2022-02, Financial Instruments Credit Losses (Topic 326) :

"Troubled Debt Restructurings and Vintage Disclosures".

ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings (“TDRs”) in ASC 310-40, “Receivables - Troubled Debt Restructurings by Creditors” for entities that have adopted the current expected credit loss (“CECL”) model introduced by ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments” (ASU 2016-13”).

ASU 2022-02 also requires that public business entities disclose current-period gross charge-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, “Financial Instruments—Credit Losses—Measured at Amortized Cost”.

ASU 2022-02 is effective for the Company for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted.

The Company adopted ASU 2022-02 on January 1, 2023 and it did not have a material effect on the Company’s consolidated financial statements.

Investment Securities

The amortized cost, gross unrealized gains and losses and fair value of available for sale and held to maturity securities at September 30, 2023 were as follows:

September 30, 2023

The amortized cost, gross unrealized gains and losses and fair value of available for sale and held to maturity securities at March 31, 2024 were as follows:

March 31, 2024

Amortized Cost Gross Unrealized Fair Value

2 unchanged sentences

Government and agency obligations

Less than one year $ 9,885 $ — $ ( 54 ) $ 9,831

Due from one through five years $ 55,260 $ 40 $ ( 2,797 ) $ 52,503

19 unchanged sentences

Government and agency obligations

Less than one year $ 9,836 $ — $ ( 52 ) $ 9,784

Due from one through five years $ 55,288 $ 123 $ ( 2,680 ) $ 52,731

13 unchanged sentences

Total held to maturity securities $ 15,817 $ 717 $ ( 631 ) $ 15,903

There were no sales of investment securities during the nine months ended September 30, 2023 or 2022.

At September 30, 2023 and December 31, 2022, none of the Company's securities were pledged as collateral with the Federal Home Loan Bank ("FHLB") or any other institution.

As of September 30, 2023 and December 31, 2022, the actual durations of the Company's available for sale securities were significantly shorter than the stated maturities.

As of September 30, 2023, the Company held marketable equity securities with a fair value of $ 2.0 million and an amortized cost of $ 2.2 million.

There were no sales of investment securities during the three months ended March 31, 2024 or 2023.

At March 31, 2024 and December 31, 2023, none of the Company's securities were pledged as collateral with the Federal Home Loan Bank ("FHLB") or any other institution.

As of March 31, 2024 and December 31, 2023, the actual durations of the Company's available for sale securities were significantly shorter than the stated maturities.

As of March 31, 2024, the Company held marketable equity securities with a fair value of $ 2.1 million an d an amortized cost of $ 2.2 million.

At December 31, 2023, the Company held marketable equity securities with a fair value of $ 2.1 million and an amortized cost of $ 2.2 million.

These securities represent an investment in mutual funds that have an objective to make investments for Community Reinvestment Act ("CRA") purposes.

The following tables provide information regarding available for sale securities and held to maturity securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2023 and December 31, 2022:

Length of Time in Continuous Unrealized Loss Position

5 unchanged sentences

(Dollars in thousands)

September 30, 2023

March 31, 2024

Government and agency obligations $ — $ — — % $ 83,725 $ ( 5,570 ) 6.24 % $ 83,725 $ ( 5,570 ) 6.24 %

14 unchanged sentences

Total investment securities $ — $ — — % $ 103,829 $ ( 8,294 ) 7.40 % $ 103,829 $ ( 8,294 ) 7.40 %

There were thirty-seven and thirty-six available for sale securities or held to maturity securities as of September 30, 2023 and December 31, 2022, respectively, in which the fair value of the security was less than the amortized cost of the security.

There were thirty-four and thirty-four available for sale securities or held to maturity securities as of March 31, 2024 and December 31, 2023, respectively, in which the fair value of the security was less than the amortized cost of the security.

Government and agency obligations owned are either direct obligations of the U.S.

3 unchanged sentences

The Company monitors its corporate bond, state agency and municipal bond portfolios and considers them to have minimal default risk.

The Company has the intent and ability to retain its investment securities in an unrealized loss position at September 30, 2023 until the decline in value has recovered or the security has matured.

The Company has the intent and ability to retain its investment securities in an unrealized loss position at March 31, 2024 until the decline in value has recovered or the security has matured.

Loans Receivable and ACL-Loans

The following table sets forth a summary of the loan portfolio at September 30, 2023 and December 31, 2022:

(In thousands) September 30, 2023 December 31, 2022

The following table sets forth a summary of the loan portfolio at March 31, 2024 and December 31, 2023:

(In thousands) March 31, 2024 December 31, 2023

Real estate loans:

4 unchanged sentences

Commercial business 508,912 500,569

508,626 520,447

Consumer 41,946 36,045

3 unchanged sentences

Loans receivable, net $ 2,646,686 $ 2,685,301

(1) The September 30, 2023 and December 31, 2022 balances in clude $ 23 thousand and $ 33 thousand, respectively, of Paycheck Protection Program ("PPP") loans made under the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act").

Lending activities primarily consist of commercial real estate loans, commercial business loans and, to a lesser degree, consumer loans.

9 unchanged sentences

The Company does not provide first or second lien consumer mortgage loans secured by residential properties but has a small legacy portfolio which continues to amortize, pay off due to the sale of the collateral, or refinance away from the Company.

Credit quality of loans and the Allowance for Credit Losses - Loans (ACL-Loans)

Credit quality of loans and the ACL-Loans

Management segregates the loan portfolio into defined segments, which are used to develop and document a systematic method for determining the Company's ACL-Loans.

20 unchanged sentences

Commercial business loans generally have higher interest rates and shorter terms than other loans, and their repayment generally depends on the successful operation of the client’s business.

This portfolio segment includes loans secured by savings or certificate accounts, as well as unsecured personal loans and overdraft lines of credit.

In addition, there are loans to finance insurance premiums, secured primarily by the cash surrender value of life insurance and marketable securities.

The following tables set forth the activity in the Company’s ACL-Loans for the three and nine months ended September 30, 2023 and 2022, by portfolio segment:

Residential Real Estate Commercial Real Estate Construction Commercial Business Consumer Total

(In thousands)

Three Months Ended September 30, 2023

Beginning balance $ 190 $ 19,948 $ 1,798 $ 6,788 $ 1,970 $ 30,694

Charge-offs — — — — ( 32 ) ( 32 )

Recoveries — — — 35 20 55

(Credit) provision for credit losses ( 29 ) 788 ( 183 ) ( 639 ) ( 1,370 ) ( 1,433 )

Ending balance $ 161 $ 20,736 $ 1,615 $ 6,184 $ 588 $ 29,284

This portfolio segment includes loans to finance insurance premiums secured by the cash surrender value of life insurance and marketable securities, overdraft lines of credit, and unsecured personal loans to high net worth individuals.

The following tables set forth the activity in the Company’s ACL-Loans for the three months ended March 31, 2024 and 2023, by portfolio segment:

Residential Real Estate Commercial Real Estate Construction Commercial Business Consumer Total

(In thousands)

Three Months Ended September 30, 2022

Three Months Ended March 31, 2024

Beginning balance $ 149 $ 20,950 $ 1,699 $ 4,562 $ 586 $ 27,946

1 unchanged sentence

Recoveries — — — 27 4 31

(Credit) provision for credit losses ( 159 ) 1,446 38 985 71 2,381

Provision (credit) for credit losses 116 4,022 ( 156 ) ( 314 ) 30 3,698

Ending balance $ 133 $ 21,666 $ 1,543 $ 4,078 $ 571 $ 27,991

1 unchanged sentence

(In thousands)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2023

Balance as of December 31, 2022 $ 163 $ 15,597 $ 311 $ 6,214 $ 146 $ 22,431

5 unchanged sentences

Ending balance $ 207 $ 19,413 $ 1,070 $ 6,593 $ 715 $ 27,998

Residential Real Estate Commercial Real Estate Construction Commercial Business Consumer Total

(In thousands)

Nine Months Ended September 30, 2022

Beginning balance $ 504 $ 12,751 $ 4 $ 3,590 $ 53 $ 16,902

Charge-offs — — — — ( 12 ) ( 12 )

Recoveries — 77 — 34 1 112

(Credit) provision for credit losses ( 332 ) 98 129 1,184 86 1,165

Ending balance $ 172 $ 12,926 $ 133 $ 4,808 $ 128 $ 18,167

We evaluate whether a modification, extension or renewal of a loan is a current period origination in accordance with GAAP.

Generally, loans up for renewal are subject to a full credit evaluation before the renewal is granted and such loans are considered current period originations for purpose of the tables below.

The following tables present loans by origination and risk designation as of September 30, 2023 and December 31, 2022 (dollars in thousands):

Amortized Cost Balances by Origination Year as of September 30, 2023

The following tables present loans by origination and risk designation as of March 31, 2024 and December 31, 2023 (dollars in thousands):

Amortized Cost Balances by Origination Year as of March 31, 2024

2024 2023 2022 2021 2020 Prior Total

6 unchanged sentences

Residential Real Estate charge-off

Current period net charge-offs $ — $ — $ — $ — $ — $ — $ —

Current period charge-offs $ — $ — $ — $ — $ — $ 132 $ 132

Commercial Real Estate Loans

5 unchanged sentences

Commercial Real Estate charge-off

Current period net charge-offs $ — $ — $ — $ — $ — $ — $ —

Current period charge-offs $ — $ — $ — $ — $ — $ 3,306 $ 3,306

Construction Loans

5 unchanged sentences

Construction charge-off

Current period net charge-offs $ — $ — $ — $ — $ — $ — $ —

Current period charge-offs $ — $ — $ — $ — $ — $ — $ —

Commercial Business Loans

5 unchanged sentences

Commercial Business charge-off

Current period net charge-offs $ — $ — $ — $ — $ 371 $ — $ 371

Current period charge-offs $ — $ — $ — $ 197 $ — $ — $ 197

Consumer Loans

5 unchanged sentences

Consumer charge-off

Current period net charge-offs $ 34 $ — $ — $ — $ — $ — $ 34

Current period charge-offs $ 3 $ — $ — $ 46 $ — $ — $ 49

Pass $ 63,863 $ 266,550 $ 1,054,209 $ 380,615 $ 132,967 $ 636,626 $ 2,534,830

4 unchanged sentences

Total charge-off

Current period net charge-offs $ 34 $ — $ — $ — $ 371 $ — $ 405

Current period charge-offs $ 3 $ — $ — $ 243 $ — $ 3,438 $ 3,684

Amortized Cost Balances by Origination Year as of December 31, 2023

7 unchanged sentences

Residential Real Estate charge-off

Current period net charge-offs $ — $ — $ — $ — $ — $ — $ —

Current period charge-offs $ — $ — $ — $ — $ — $ — $ —

Commercial Real Estate Loans

5 unchanged sentences

Commercial Real Estate charge-off

Current period net charge-offs $ ( 76 ) $ — $ — $ — $ — $ — $ ( 76 )

Current period charge-offs $ — $ — $ 213 $ — $ — $ 611 $ 824

Construction Loans

5 unchanged sentences

Construction charge-off

Current period net charge-offs $ — $ — $ — $ — $ — $ — $ —

Current period charge-offs $ — $ — $ — $ — $ — $ — $ —

Commercial Business Loans

5 unchanged sentences

Commercial Business charge-off

Current period net charge-offs $ ( 24 ) $ — $ — $ — $ — $ ( 11 ) $ ( 35 )

Current period charge-offs $ — $ — $ — $ — $ 440 $ — $ 440

Consumer Loans

5 unchanged sentences

Consumer charge-off

Current period net charge-offs $ 18 $ — $ — $ — $ — $ 1 $ 19

Current period charge-offs $ 83 $ — $ — $ — $ — $ — $ 83

Pass $ 266,946 $ 1,083,543 $ 425,772 $ 149,001 $ 140,500 $ 509,339 $ 2,575,101

4 unchanged sentences

Total charge-off

Current period net charge-offs $ ( 82 ) $ — $ — $ — $ — $ ( 10 ) $ ( 92 )

Loans evaluated for impairment and the related ACL-Loans as of September 30, 2023 and December 31, 2022 were as follows:

Current period charge-offs $ 83 $ — $ 213 $ — $ 440 $ 611 $ 1,347

Loans evaluated for impairment and the related ACL-Loans as of March 31, 2024 and December 31, 2023 were as follows:

Portfolio ACL-Loans

(In thousands)

September 30, 2023

March 31, 2024

Loans individually evaluated for impairment:

21 unchanged sentences

Commercial business 19,848 —

Consumer 22,129 —

Subtotal 105,005 955

10 unchanged sentences

This risk rating represents an assessed level of a loan’s risk based on the character and creditworthiness of the borrower/guarantor, the capacity of the borrower to adequately service the debt, any credit enhancements or additional sources of repayment, and the quality, value and coverage of the collateral, if any.

credit weaknesses so that timely action can be taken to minimize a potential credit loss, to identify relevant trends affecting the collectability of the loan portfolio, to isolate potential problem areas and to provide essential information for determining the adequacy of the ACL-Loans.

The objectives of the Company’s risk rating system are to provide the Board of Directors and senior management with an objective assessment of the overall quality of the loan portfolio, to promptly and accurately identify loans with well-defined credit weaknesses so that timely action can be taken to minimize a potential credit loss, to identify relevant trends affecting the collectability of the loan portfolio, to isolate potential problem areas and to provide essential information for determining the adequacy of the ACL-Loans.

The Company’s credit risk rating system has nine grades, with each grade corresponding to a progressively greater risk of default or non-payment.

5 unchanged sentences

This classification does not mean that the loan has absolutely no recovery or salvage value;

rather, it is not practical or desirable to defer writing-off this asset even though partial recovery may be made in the future.

rather, it is not practical or desirable to defer charging off this asset even though partial recovery may be made in the future.

Risk ratings are assigned as necessary to differentiate risk within the portfolio.

2 unchanged sentences

In addition to internal review at multiple points, outsourced loan review opines on risk ratings with regard to the sample of loans their review covers.

The following tables present credit risk ratings by loan segment as of September 30, 2023 and December 31, 2022:

The following tables present credit risk ratings by loan segment as of March 31, 2024 and December 31, 2023:

Commercial Credit Quality Indicators

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Commercial Real Estate Construction Commercial Business Total Commercial Real Estate Construction Commercial Business Total

7 unchanged sentences

Residential and Consumer Credit Quality Indicators

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Residential Real Estate Consumer Total Residential Real Estate Consumer Total

15 unchanged sentences

A loan is considered to be no longer delinquent when timely payments are made for a period of at least six months (one year for loans providing for quarterly or semi-annual payments) by the borrower in accordance with the contractual terms.

The following tables set forth certain information with respect to the Company's loan portfolio delinquencies by portfolio segment as of September 30, 2023 and December 31, 2022:

September 30, 2023

The following tables set forth certain information with respect to the Company's loan portfolio delinquencies by portfolio segment as of March 31, 2024 and December 31, 2023:

March 31, 2024

30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due Total Past Due Current Total Loans

17 unchanged sentences

Total loans $ 6,763 $ 3,150 $ 11,365 $ 21,278 $ 2,697,329 $ 2,718,607

There w ere no lo ans delinquent greater than 90 days and still accruing interest as of September 30, 2023 or December 31, 2022.

There w ere no lo ans delinquent greater than 90 days and still accruing interest as of March 31, 2024 or December 31, 2023.

Loans on nonaccrual status

The following is a summary of nonaccrual loans by portfolio segment as of September 30, 2023 and December 31, 2022:

September 30, 2023 December 31, 2022

The following is a summary of nonaccrual loans by portfolio segment as of March 31, 2024 and December 31, 2023:

March 31, 2024 December 31, 2023

(In thousands)

3 unchanged sentences

Construction 9,382 9,382

Consumer 7,917 —

Total $ 46,543 $ 49,207

Interest income on loans that would have been recognized if loans on nonaccrual status had been current in accordance with their original terms for the nine months ended September 30, 2023 and 2022 was $ 5.1 million and $ 0.7 million, respectively.

There was no i nterest income recognized on these loans for the nine months ended September 30, 2023 and 2022.

At September 30, 2023 and December 31, 2022, there were no commitments to lend additional funds to any borrower on nonaccrual status.

Nonaccrual loans with no specific reserve totaled $ 24.9 million and $ 14.7 million at September 30, 2023 and December 31, 2022, respectively, as these loans were deemed to be adequately collateralized.

Interest income on loans that would have been recognized if loans on nonaccrual status had been current in accordance with their original terms for the three months ended March 31, 2024 and 2023 was $ 0.9 million and $ 3.2 million, respectively.

At March 31, 2024 and December 31, 2023, there were no commitments to lend additional funds to any borrower on nonaccrual status.

Nonaccrual loans with no specific reserve totaled $ 37.8 million and $ 48.3 million at March 31, 2024 and December 31, 2023, respectively, as these loans were deemed to be adequately collateralized.

Individually evaluated loans

2 unchanged sentences

When the Company classifies a problem loan as impaired, it evaluates whether a specific valuation allowance is required for that portion of the asset that is estimated to be impaired.

Beginning in the third quarter of 2023, the Company individually evaluated all insurance premium loans within the Consumer portfolio segment, irrespective of credit risk ratings.

The following table summarizes individually evaluated loans by portfolio segment as of September 30, 2023 and December 31, 2022.

Beginning in the third quarter of 2023, the Company individually evaluates all insurance premium loans within the Consumer portfolio segment, irrespective of credit risk ratings.

The following table summarizes individually evaluated loans by portfolio segment as of March 31, 2024 and December 31, 2023.

Carrying Amount Unpaid Principal Balance Associated ACL-Loans

September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023

(In thousands)

14 unchanged sentences

Total individually evaluated loans $ 106,343 $ 105,005 $ 112,468 $ 107,084 $ 363 $ 955

The following table summarizes the average carrying amount of individually evaluated impaired loans and interest income recognized on individually evaluated loans by portfolio segment for the three and nine months ended September 30, 2023 and 2022:

Average Carrying Amount Interest Income Recognized

Three Months Ended September 30, Three Months Ended September 30,

2023 2022 2023 2022

(In thousands)

Individually evaluated impaired loans without a valuation allowance:

Residential real estate $ 3,760 $ 3,864 $ 28 $ 21

Commercial real estate 1,900 1,082 — —

Commercial business 6,387 2,585 48 6

Construction 9,382 9,382 — —

Consumer 8,981 — — —

Total individually evaluated impaired loans without a valuation allowance 30,410 16,913 76 27

Individually evaluated impaired loans with a valuation allowance:

Residential real estate $ — $ — $ — $ —

Commercial real estate 21,934 24,419 87 148

Construction — — — —

Commercial business 3,092 2,000 — 20

Consumer — — — —

Total individually evaluated impaired loans with a valuation allowance 25,026 26,419 87 168

Total individually evaluated impaired loans $ 55,436 $ 43,332 $ 163 $ 195

Average Carrying Amount Interest Income Recognized

Nine Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31, Three Months Ended March

2024 2023 2024 2023

19 unchanged sentences

Modified terms are dependent upon the financial position and needs of the individual borrower.

There were no new loan modifications reportable under ASU 2022-02 at September 30, 2023.

Information on loan modifications prior to the adoption of ASU 2022-02 is presented in accordance with the applicable accounting standards in effect at that time.

As of December 31, 2022, loan modifications to taled $ 22.2 million.

There were no new loan modifications reportable under ASU 2022-02 at March 31, 2024 and December 31, 2023.

The following table provides information on loans that were modified during the periods indicated.

1 unchanged sentence

(Dollars in thousands) 2024 2023 2024 2023 2024 2023

Three Months Ended September 30,

Residential real estate — — $ — $ — $ — $ —

Commercial business — — — — — —

Commercial real estate — — — — — —

Total — — $ — $ — $ — $ —

Number of Loans Pre-Modification Post-Modification

(Dollars in thousands) 2023 2022 2023 2022 2023 2022

Nine Months Ended September 30,

Three Months Ended March 31,

Residential real estate — — $ — $ — $ — $ —

2 unchanged sentences

Total — — $ — $ — $ — $ —

The following table provides information on how loans were modified during the three and nine months ended September 30, 2023 and September 30, 2022.

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

The following table provides information on how loans were modified during the three months ended March 31, 2024 and March 31, 2023.

Three Months Ended March 31,

(In thousands)

6 unchanged sentences

The provision is recorded within the Provision for credit losses on the Company’s Consolidated Statements of Income.

The following table presents a roll forward of the ACL-Unfunded Commitments for the three and nine months ended September 30, 2023 and September 30, 2022:

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

The following table presents a roll forward of the ACL-Unfunded Commitments for the three months ended March 31, 2024 and March 31, 2023:

Three Months Ended March 31,

(In thousands)

3 unchanged sentences

(Credit) for credit losses (unfunded commitments) ( 15 ) ( 108 )

( 146 ) — ( 353 ) ( 110 )

Balance at end of period $ 911 $ 1,165

(1) In 2022, unfunded commitments were recorded as "Other" in noninterest expense.

Components of Provision for Credit Losses

The following table summarizes the Provision for credit losses for the three and nine months ended September 30, 2023 and September 30, 2022:

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

The following table summarizes the Provision for credit losses for the three months ended March 31, 2024 and March 31, 2023:

Three Months Ended March 31,

(In thousands)

(Credit) provision for credit losses (loans) $ ( 1,433 ) $ 2,381 $ 2,179 $ 1,165

Provision for credit losses (loans) $ 3,698 $ 934

(Credit) for credit losses (unfunded commitments) ( 15 ) ( 108 )

( 146 ) — ( 353 ) —

(Credit) provision for credit losses $ ( 1,579 ) $ 2,381 $ 1,826 $ 1,165

(1) In 2022, unfunded commitments was recorded as "Other" in noninterest expense.

Provision for credit losses $ 3,683 $ 826

Shareholders' Equity

The Company has 10,000,000 shares authorized and 7,841,616 shares issued and outstanding at September 30, 2023 and 10,000,000 shares authorized and 7,730,699 shares issued and outstanding at December 31, 2022.

The Company has 10,000,000 shares authoriz ed and 7,908,180 shares issued and outstanding at March 31, 2024 and 10,000,000 shares authorized and 7,882,616 shares issued and outstanding at December 31, 2023.

The Company's stock is traded on the Nasdaq Global Market under the ticker symbol BWFG.

7 unchanged sentences

The timing, price and volume of repurchases will be based on market conditions, relevant securities laws and other factors.

The share repurchase plan does not obligate the Company to acquire any particular amount of Common Stock, and it may be modified or suspended at any time at the Co mpany's discretion.

During the nine months ended September 30, 2023, the Company purchased no shares of its Common Stock .

During the year ended December 31, 2022, the Company purchased 166,375 shares of its Common Stock at a weighted average price of $ 33.30 per share.

The share repurchase plan does not obligate the Company to acquire any particular amount of Common Stock, and it may b e modified or suspended at any time at the Company's discretion.

During the three months ended March 31, 2024, the Company purchased 36,180 shares of its Common Stock at a weighted average price of $ 25.38 per share.

During the year ended December 31, 2023, the Company had no purchases of Common Stock.

Comprehensive Income

2 unchanged sentences

Changes in fair value of the Company's cash flow swap derivatives are primarily driven by changes in interest rates and recognized in other comprehensive income.

The Company’s total compreh ensive income or loss for the three and nine months ended September 30, 2023 and September 30, 2022 is reported in the Consolidated Statements of Comprehensive Income.

The following tables present the changes in accumulated other comprehensive (loss) income by component, net of tax for the three and nine months ended September 30, 2023 and September 30, 2022:

Net Unrealized Gain (Loss) on Available for Sale Securities Net Unrealized Gain (Loss) on Interest Rate Swaps Total

(In thousands)

Balance at June 30, 2023 $ ( 7,611 ) $ 5,895 $ ( 1,716 )

Other comprehensive (loss) income before reclassifications, net of tax ( 579 ) 1,718 1,139

Amounts reclassified from accumulated other comprehensive income, net of tax — ( 947 ) ( 947 )

Net other comprehensive (loss) income ( 579 ) 771 192

Balance at September 30, 2023 $ ( 8,190 ) $ 6,666 $ ( 1,524 )

Net Unrealized Gain (Loss) on Available for Sale Securities Net Unrealized Gain (Loss) on Interest Rate Swaps Total

(In thousands)

Balance at June 30, 2022 $ ( 3,546 ) $ 3,891 $ 345

Other comprehensive (loss) income before reclassifications, net of tax ( 3,447 ) 3,095 ( 352 )

Amounts reclassified from accumulated other comprehensive income, net of tax — ( 193 ) ( 193 )

Net other comprehensive (loss) income ( 3,447 ) 2,902 ( 545 )

Balance at September 30, 2022 $ ( 6,993 ) $ 6,793 $ ( 200 )

The Company’s total compreh ensive income or loss for the three March 31, 2024 and March 31, 2023 is reported in the Consolidated Statements of Comprehensive Income.

The following tables present the changes in accumulated other comprehensive (loss) income by component, net of tax for the three months ended March 31, 2024 and March 31, 2023:

Net Unrealized Gain (Loss) on Available for Sale Securities Net Unrealized Gain (Loss) on Interest Rate Swaps Total

4 unchanged sentences

Net other comprehensive (loss) income ( 116 ) 61 ( 55 )

Balance at September 30, 2023 $ ( 8,190 ) $ 6,666 $ ( 1,524 )

Balance at March 31, 2024 $ ( 5,926 ) $ 4,207 $ ( 1,719 )

Net Unrealized Gain (Loss) on Available for Sale Securities Net Unrealized Gain (Loss) on Interest Rate Swaps Total

4 unchanged sentences

Net other comprehensive (loss) income 634 ( 1,579 ) ( 945 )

Balance at September 30, 2022 $ ( 6,993 ) $ 6,793 $ ( 200 )

Balance at March 31, 2023 $ ( 6,116 ) $ 4,982 $ ( 1,134 )

The following table provides information for the items reclassified from accumulated other comprehensive income or loss:

Accumulated Other Comprehensive Income Components Three Months Ended September 30, Nine Months Ended September 30, Associated Line Item in the Consolidated Statements of Income

2023 2022 2023 2022

Accumulated Other Comprehensive Income Components Three Months Ended March 31, Associated Line Item in the Consolidated Statements of Income

(In thousands)

10 unchanged sentences

The following table is a reconciliation of earnings available to common shareholders and basic weighted average common shares outstanding to diluted weighted average common shares outstanding, reflecting the application of the two-class method:

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

(In thousands, except per share data)

14 unchanged sentences

Regulatory Matters

The Federal Reserve, the FDIC and the other federal and state bank regulatory agencies establish regulatory capital guidelines for U.S.

The Federal Reserve, the FDIC and other federal and state bank regulatory agencies establish regulatory capital guidelines for U.S.

banking organizations.

1 unchanged sentence

The Bank must maintain the capital conservation buffer to avoid restrictions on the ability to pay dividends, pay discretionary bonuses, or to engage in share repurchases.

The Company is subject to the Federal Reserve Small Bank Holding Company Policy Statement.

The Company will no longer be eligible for the Small Bank Holding Company Policy Statement as of March 2024, as the Company’s consolidated assets were above $3.0 billion as of June 30, 2023.

As of June 30, 2023, the Company no longer met the definition of a Small Bank Holding Company as the Company's assets exceeded $3 billion.

Effective March 31, 2024, the Company is subject to the larger company capital requirements as set forth in the Economic Growth Act.

Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements.

As of September 30, 2023, the Bank and Company met all capital adequacy requirements to which they are subject.

As of March 31, 2024, the Bank and Company met all capital adequacy requirements to which they are subject.

There are no conditions or events since then that management believes have changed this conclusion.

The capital amounts and ratios for the Bank and the Company at September 30, 2023 and December 31, 2022 were as follows:

The capital amounts and ratios for the Bank and the Company at March 31, 2024 and December 31, 2023 were as follows:

Minimum Regulatory Capital Required for Capital Adequacy plus Capital Conservation Buffer Minimum Regulatory Capital to be Well Capitalized Under Prompt Corrective Action Provisions

2 unchanged sentences

Bankwell Bank

September 30, 2023

March 31, 2024

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 324,355 11.60 % $ 195,791 7.00 % $ 181,806 6.50 %

Total Capital to Risk-Weighted Assets 344,064 11.86 % 304,485 10.50 % 289,986 10.00 %

Tier I Capital to Risk-Weighted Assets 324,355 11.60 % 237,746 8.50 % 223,761 8.00 %

Total Capital to Risk-Weighted Assets 353,257 12.63 % 293,686 10.50 % 279,701 10.00 %

Tier I Capital to Average Assets 324,355 10.09 % 128,626 4.00 % 160,782 5.00 %

3 unchanged sentences

Bankwell Financial Group, Inc.

September 30, 2023

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 256,124 8.85 % $ 130,301 4.50 % N/A N/A

Total Capital to Risk-Weighted Assets 355,470 12.28 % 231,647 8.00 % N/A N/A

Tier I Capital to Risk-Weighted Assets 256,124 8.85 % 173,735 6.00 % N/A N/A

Tier I Capital to Average Assets 256,124 7.83 % 130,922 4.00 % N/A N/A

March 31, 2024

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 266,561 9.47 % $ 126,602 4.50 % $ 182,869 6.50 %

Tier I Capital to Risk-Weighted Assets 266,561 9.47 % 168,803 6.00 % 225,070 8.00 %

Total Capital to Risk-Weighted Assets 364,729 12.96 % 225,070 8.00 % 281,338 10.00 %

Tier I Capital to Average Assets 266,561 8.28 % 128,767 4.00 % 160,959 5.00 %

Minimum Regulatory Capital Required for Capital Adequacy plus Capital Conservation Buffer Minimum Regulatory Capital to be Well Capitalized Under Prompt Corrective Action Provisions

4 unchanged sentences

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 321,432 11.30 % $ 199,047 7.00 % $ 184,829 6.50 %

Total Capital to Risk-Weighted Assets 317,437 11.07 % 301,177 10.50 % 286,836 10.00 %

Tier I Capital to Risk-Weighted Assets 321,432 11.30 % 241,700 8.50 % 227,482 8.00 %

Total Capital to Risk-Weighted Assets 350,303 12.32 % 298,571 10.50 % 284,353 10.00 %

Tier I Capital to Average Assets 321,432 9.81 % 131,110 4.00 % 163,888 5.00 %

5 unchanged sentences

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 264,209 9.28 % $ 128,121 4.50 % N/A N/A

Total Capital to Risk-Weighted Assets 327,142 11.39 % 229,745 8.00 % N/A N/A

Tier I Capital to Risk-Weighted Assets 264,209 9.28 % 170,828 6.00 % N/A N/A

Total Capital to Risk-Weighted Assets 362,285 12.72 % 227,770 8.00 % N/A N/A

Tier I Capital to Average Assets 264,209 8.05 % 131,232 4.00 % N/A N/A

4 unchanged sentences

Reserve Requirements on Cash

The Bank was not required to maintain a minimum reserve balance in the Federal Reserve Bank (FRB) at September 30, 2023 or December 31, 2022.

At September 30, 2023 and December 31, 2022, deposits consisted of the following:

September 30, 2023 December 31, 2022

The Bank was not required to maintain a minimum reserve balance in the Federal Reserve Bank (FRB) at March 31, 2024 or December 31, 2023.

At March 31, 2024 and December 31, 2023, deposits consisted of the following:

March 31, 2024 December 31, 2023

(In thousands)

7 unchanged sentences

Total deposits $ 2,673,522 $ 2,736,757

Maturities of time certificates of deposit as of September 30, 2023 and December 31, 2022 are summarized below:

September 30, 2023 December 31, 2022

Maturities of time certificates of deposit as of March 31, 2024 and December 31, 2023 are summarized below:

March 31, 2024 December 31, 2023

(In thousands)

1 unchanged sentence

2025 552,886 318,961

2025 318,587 5,927

After 2028 16,225 16,213

Total $ 1,291,451 $ 1,315,073

The aggregate amount of individual certificate accounts, with balances of $250,000 or more, was approximately $ 140.8 million at September 30, 2023 and $ 74.6 million at December 31, 2022.

The following table summarizes interest expense on deposits by account type for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

The aggregate amount of individual certificate accounts, with balances of $250,000 or more, was approximately $ 172.3 million at March 31, 2024 and $ 151.6 million at December 31, 2023.

Brokered certificates of deposits tot aled $ 780.5 million at March 31, 2024 and $ 860.5 million at December 31, 2023, respectively.

Brokered money market accounts totaled $ 51.4 million at March 31, 2024 and $ 91.4 million at December 31, 2023, respectively.

There were no certificates of deposits from national l isting services, one-way buy Certificate of Deposit Account Registry Service ("CDARS") or one-way buy Insured Cash Sweep Service ("ICS") at March 31, 2024 or December 31, 2023.

Brokered deposits are comprised of Brokered CDs, brokered money market accounts, one-way buy CDARS, and one-way buy ICS.

The following table summarizes interest expense on deposits by account type for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

(In thousands)

6 unchanged sentences

Equity award plans

The Company has stock options or unvested restricted stock outstanding under three equity award plans, which are collectively referred to as the “Stock Plans”.

The Company has unvested restricted stock outstanding under two equity award plans, which are collectively referred to as the “Stock Plans”.

The current plan under which any future issuances of equity awards will be made is the 2022 Bankwell Financial Group, Inc.

2 unchanged sentences

To date, all equity awards have been in the form of stock options or restricted stock.

At September 30, 2023, there were 349,076 shares reserved for future issuance under the 2022 Plan.

Stock Options :

The Company accounts for stock options based on the fair value at the date of grant and records an expense over the vesting period of such awards on a straight line basis.

There were no options granted during the nine months ended September 30, 2023.

A summary of the status of outstanding stock options for the nine months ended September 30, 2023 is presented below:

Nine Months Ended September 30, 2023

Number of Shares Weighted Average Exercise Price

Options outstanding at beginning of period 8,680 $ 17.86

Exercised ( 8,680 ) 17.86

Options outstanding at end of period — —

Options exercisable at end of period — —

As of September 30, 2023, all awarded options have been exercised.

At March 31, 2024, there were 275,791 shares reserved for future issuance under the 2022 Plan.

Restricted Stock :

2 unchanged sentences

Restricted stock awards generally vest over one to five years .

The following table presents the activity for restricted stock for the nine months ended September 30, 2023:

Nine Months Ended September 30, 2023

The following table presents the activity for restricted stock for the three months ended March 31, 2024:

Three Months Ended March 31, 2024

Number of Shares Weighted Average Grant Date Fair Value

4 unchanged sentences

Unvested at end of period 233,191

(1) Includes 34,369 shares of performance based restricted stock.

( 2) Includes 33,106 shares of performance based restricted stock.

(1) Inclu des 33,115 shares of performan ce based restricted stock.

(2) Includes 18,598 shares of performance based restricted stock.

(3) Includes 15,694 shares of performance based restricted stock.

The total fair value of restricted stock awards vested during the nine months ended September 30, 2023 was $ 2.4 million.

The Company's restricted stock expense for the nine months ended September 30, 2023 and September 30, 2022 was $ 2.0 million and $ 1.9 million, respectively.

At September 30, 2023, there was $ 4.7 million of unrecognized stock compensation expense for restricted stock, expected to be recognized over a weighted average period of 1.7 years.

The total fair value of restricted stock awards vested during the three months ended March 31, 2024 was $ 2.2 million.

The Company's restricted stock expense for the three months ended March 31, 2024 and March 31, 2023 was $ 1.1 million and $ 0.7 million, respectively.

At March 31, 2024, there wa s $ 6.5 million of unrecognized stock compensation expense for restricted stock, expected to be recognized over a weighted average period of 1.4 years.

Performance Based Restricted Stock :

The Company has 36,315 shares of performance based restricted stock outstanding as of September 30, 2023 pursuant to the Company’s Stock Plans.

The Compa ny has 36,019 s hares of performance based restricted stock outstanding as of March 31, 2024 pursuant to the Company’s Stock Plans.

The awards vest over a three year service period, provided certain performance metrics are met.

The share quantity that ultimately vests can range between 0 % and 200 %, which is dependent on the degree to which the performance metrics are met.

The Company records an expense over the vesting period based on (a) the probability that the performance metric will be met and (b) the fair market value of the Company’s stock at the date of the grant.

The Company records an expense over the vesting period based on (a) the probability that the performance metrics will be met and (b) the fair market value of the Company’s stock at the date of the grant.

Derivative Instruments

1 unchanged sentence

The Company does not use derivatives for speculative purposes.

As of September 30, 2023, the Company was a party to five cash flow swaps, designated as hedging instruments, to add stability to interest expense and to manage its exposure to the variability of the future cash fl ows attributable to the contractually specified interest rates.

As of March 31, 2024, the Company was a party to five cash flow swaps, designated as hedging instruments, to add stability to interest expense and to manage its exposure to the variability of the future cash fl ows attributable to the contractually specified interest rates.

The notional amount for each swap is $ 25 million and in each case, the Company has entered into pay-fixed cash flow swaps to convert rolling 90 - day Federal Home Loan Bank advances or brokered deposits.

2 unchanged sentences

The underlying debt associated with the terminated swaps was kept in place.

The fair value of the terminated swaps totaled $ 144.5 thousand as of September 30, 2023.

The fair value of the terminated swaps totaled $ 137.7 thousand as of March 31, 2024.

The fair value of the terminated swaps will be reclassified from other comprehensive income to interest expense on a straight-line basis over the original term of the hedging relationship.

4 unchanged sentences

The carrying value of the fair value swap on the Consolidated Balance Sheets will also be adjusted through interest income, based on changes in fair value attributable to changes in the hedged risk.

The following table represents the carrying value of the portfolio layer method hedged asset and the cumulative fair value hedging adjustment included in the carrying value of the hedged asset as of September 30, 2023 and December 31, 2022:

September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023

Carrying Value of Hedged Asset Hedged Items

3 unchanged sentences

(1) These amounts include the amortized cost basis of closed portfolios of fixed rate loans used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedged period.

As of September 30, 2023 , the amortized cost basis of the closed portfolio used in this hedging relationship was $ 654.5 million , the cumulative basis adjustments associated with this hedging relationships was $ 1.7 million , and the amount of the designated hedged item was $ 150.0 million.

As of September 30, 2023, the Company has interest rate swaps not designated as hedging instruments, to minimize interest rate risk exposure with loans to clients.

As of March 31, 2024 and December 31, 2023, the amortized cost basis of the closed portfolio used in this hedging relationship was $ 587.4 million and $ 611.5 million , the cumulative basis adjustments associated with this hedging relationships was $ 1.2 million and $ 1.1 million, respectively.

As of March 31, 2024 and December 31, 2023, t he amount of the designated hedged item was $ 150.0 million, respectively.

As of March 31, 2024, the Company has interest rate swaps not designated as hedging instruments, to minimize interest rate risk exposure with loans to clients.

The Company accounts for all non-client related interest rate swaps as either effective cash flow or fair value swaps.

5 unchanged sentences

As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the client derivatives and the offsetting derivatives are recognized directly in earnings.

Information about derivative instruments at September 30, 2023 and December 31, 2022 is as follows:

As of September 30, 2023

Information about derivative instruments at March 31, 2024 and December 31, 2023 is as follows:

As of March 31, 2024

Derivative Assets Derivative Liabilities

8 unchanged sentences

(1) Represents interest rate swaps with commercial banking clients, which are offset by derivatives with a third party.

Accrued interest receivables related to interest rate swaps as of September 30, 2023 totaled $ 0.8 million and is excluded from the fair value p resented in the table above.

The fair value of interest rate swaps in a net asset position, including accrued interest, totaled $ 9.3 million as of September 30, 2023.

Accru ed interest receivables related to interest rate swaps as of March 31, 2024 totaled $ 0.9 million and is excluded from the fair value presented in the table above.

The fair value of interest rate swaps in a net asset position, including accrued interest, totaled $ 7.0 million as of March 31, 2024.

As of December 31, 2023

4 unchanged sentences

Cash flow swaps $ 125,000 Other assets $ 5,240 $ — Accrued expenses and other liabilities $ —

Fair value swap $ 150,000 Other assets $ — $ — Accrued expenses and other liabilities $ 917

Derivatives not designated as hedging instruments:

Interest rate swaps (1)

Cash flow swaps (1)

$ 38,500 Other assets $ 3,579 $ 38,500 Accrued expenses and other liabilities $ 3,579

10 unchanged sentences

The Company does not offset derivative assets and derivative liabilities for financial statement presentation purposes.

Changes in the consolidated statements of comprehensive income (loss) related to interest rate derivatives designated as hedges of cash flows were as follows for the three and nine months ended September 30, 2023 and September 30, 2022:

Three Months Ended September 30, Nine Months Ended September 30,

Changes in the consolidated statements of comprehensive income (loss) related to interest rate derivatives designated as hedges of cash flows were as follows for the three months ended March 31, 2024 and March 31, 2023:

Three Months Ended March 31,

(In thousands) 2024 2023

Interest rate swaps designated as cash flow hedges:

Unrealized loss recognized in accumulated other comprehensive income before reclassifications $ 2,230 $ 3,986 $ 3,528 $ 20,871

Unrealized gain (loss) recognized in accumulated other comprehensive income before reclassifications $ 1,382 $ ( 999 )

Amounts reclassified from accumulated other comprehensive income ( 1,257 ) ( 982 )

3 unchanged sentences

Generally, a lower interest rate environment will result in a negative impact to comprehensive income whereas a higher interest rate environment will result in a positive impact to comprehensive income.

The following table summarizes the effect of the fair value hedging relationship recognized in the consolidated statements of income for the three and nine months ended September 30, 2023 and September 30, 2022:

Three Months Ended

September 30, Nine Months Ended September 30,

The following table summarizes the effect of the fair value hedging relationship recognized in the consolidated statements of income for the three months ended March 31, 2024 and March 31, 2023:

Three Months Ended March 31,

(In thousands) 2024 2023

Gain (loss) on fair value hedging relationship:

(Loss) gain on fair value hedging relationship:

Hedged asset $ ( 1,668 ) $ 2,403

Fair value derivative designated as hedging instrument 840 ( 2,353 )

Total gain recognized in the consolidated statements of income within interest and fees on loans $ 387 $ — $ 711 $ —

The following tables summarize gross and net information about derivative instruments that are offset in the Consolidated Balance Sheets at September 30, 2023 and December 31, 2022:

September 30, 2023

Total (loss) gain recognized in the consolidated statements of income within interest and fees on loans $ ( 828 ) $ 50

The following tables summarize gross and net information about derivative instruments that are offset in the Consolidated Balance Sheets at March 31, 2024 and December 31, 2023:

March 31, 2024

(In thousands)

3 unchanged sentences

Derivative assets $ 11,303 $ — $ 11,303 $ — $ 10,832 $ 471

(1) Includes accrued interest receivable totaling $ 756 thousand.

September 30, 2023

(1) Includes accru ed interest receivable totaling $ 931 thousand.

March 31, 2024

(In thousands)

3 unchanged sentences

Derivative liabilities $ 4,334 $ — $ 4,334 $ — $ — $ 4,334

(1) Includes net accrued interest payable totaling $ 20 thousand.

(1) Includes net ac crued interest payable totaling $ 74 thousand.

December 31, 2023

11 unchanged sentences

Derivative liabilities $ 4,473 $ — $ 4,473 $ — $ — $ 4,473

(1) Includes no accrued interest.

(1) Includes net interest receivable totaling $ 23 thousand.

Fair Value of Financial Instruments

14 unchanged sentences

Management monitors rates and maturities of assets and liabilities and attempts to minimize interest rate risk.

The carrying values, fair values and placement in the fair value hierarchy of the Company's financial instruments at September 30, 2023 and December 31, 2022 were as follows:

September 30, 2023

The carrying values, fair values and placement in the fair value hierarchy of the Company's financial instruments at March 31, 2024 and December 31, 2023 were as follows:

March 31, 2024

Carrying Value Fair Value Level 1 Level 2 Level 3

19 unchanged sentences

Subordinated debentures 69,266 64,873 — — 64,873

Servicing liability 3 3 — — 3

Derivative liability 4,260 4,260 — 4,260 —

24 unchanged sentences

The following methods and assumptions were used by management in estimating the fair value of its financial instruments:

Cash and due from banks, federal funds sold, accrued interest receivable and accrued interest payable:

The carrying amount is a reasonable estimate of fair value.

Marketable equity securities and available for sale securities:

4 unchanged sentences

Treasury notes and in marketable equity securities for which a quoted price is readily available in the market.

Level 3 held to maturity securities represent private placement municipal housing authority bonds for which no quoted market price is available.

The fair value for these securities is estimated using a discounted cash flow model, using discount rates ranging from 4.8 % to 6.9 % as of March 31, 2024 and 4.5 % to 6.9 % as of December 31, 2023.

These securities are CRA eligible investments.

The carrying value of FHLB stock approximates fair value based on the most recent redemption provisions of the FHLB.

Loans receivable:

For variable rate loans which reprice frequently and have no significant change in credit risk, fair values are based on carrying values.

The fair value of fixed rate loans are estimated by discounting the future cash flows using the rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

The fair value methodology includes prepayment, default and loss severity assumptions applied by type of loan.

The fair value estimate of the loans includes an expected credit loss.

Derivative asset (liability):

The valuation of the Company’s interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative.

The valuation of the Company’s interest rate swaps is obtained from a third-party pricing service and is determined using a discounte d cash flow analysis on the expected cash flows of each derivative.

The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves.

4 unchanged sentences

The fair value represents the price that would be received to sell the asset (the exit price).

The fair value of demand deposits, regular savings and certain money market deposits is the amount payable on demand at the reporting date.

The fair value of certificates of deposit and other time deposits is estimated using a discounted cash flow calculation that applies interest rates currently being offered for deposits of similar remaining maturities to a schedule of aggregated expected maturities on such deposits.

Borrowings and subordinated debentures:

The fair value of the Company’s borrowings and subordinated debentures is estimated using a discounted cash flow calculation that applies discount rates currently offered based on similar maturities.

The Company also considers its own creditworthiness in determining the fair value of its borrowings and subordinated debt.

Contractual cash flows for the subordinated debt are reduced based on the estimated rates of default, the severity of losses to be incurred on a default, and the rates at which the subordinated debt is expected to prepay after the call date.

Servicing asset (liability):

1 unchanged sentence

The Company estimates the fair value of servicing assets and liabilities using discounted cash flow models, incorporating numerous assumptions from the perspective of a market participant, including market discount rates.

Off-balance-sheet instruments:

Loan commitments on which the committed interest rate is less than the current market rate are insignificant at March 31, 2024 and December 31, 2023 .

Fair Value Measurements

13 unchanged sentences

Financial instruments measured at fair value on a recurring basis

The following table details the financial instruments carried at fair value on a recurring basis at September 30, 2023 and December 31, 2022, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value.

The Company had no transfers into or out of Levels 1, 2 or 3 during the nine months ended September 30, 2023 and for the year ended December 31, 2022.

The following table details the financial instruments carried at fair value on a recurring basis at March 31, 2024 and December 31, 2023, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value.

The Company had no transfers into or out of Levels 1, 2 or 3 during the three months ended March 31, 2024 and for the year ended December 31, 2023.

(In thousands) Level 1 Level 2 Level 3

September 30, 2023:

March 31, 2024:

Marketable equity securities $ 2,069 $ — $ —

22 unchanged sentences

These include assets that are measured at the lower-of-cost-or-market that were recognized at fair value below cost at the end of the period as well as assets that are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.

The following table details the financial instruments measured at fair value on a nonrecurring basis at September 30, 2023 and December 31, 2022, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:

The following table details the financial instruments measured at fair value on a nonrecurring basis at March 31, 2024 and December 31, 2023, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:

(In thousands) Level 1 Level 2 Level 3

September 30, 2023:

March 31, 2024:

Individually evaluated loans $ — $ — $ 105,980

3 unchanged sentences

Servicing asset, net — — 865

The following table presents information about quantitative inputs and assumptions for Level 3 financial instruments carried at fair value on a nonrecurring basis at September 30, 2023 and December 31, 2022:

The following table presents information about quantitative inputs and assumptions for Level 3 financial instruments carried at fair value on a nonrecurring basis at March 31, 2024 and December 31, 2023:

Fair Value Valuation Methodology Unobservable Input Range

(Dollars in thousands)

September 30, 2023:

March 31, 2024:

Individually evaluated loans $ 28,429 Appraisals Discount to appraised value 8.00 %

5 unchanged sentences

Individually evaluated loans $ 31,527 Appraisals Discount to appraised value 8.00 %

22,129 Appraisals, cash surrender value life insurance, securities, cash held as collateral Discounts to appraised value and securities value — % - 8.00 %

50,394 Discounted cash flows Discount rate 3.38 - 10.75 %

1 unchanged sentence

Prepayment rate 3.00 - 17.00 %

(1) Servicing liabilities totaling $ 23 thousand were valued using a discount rate of 4.0 %.

Individually evaluated loans :

3 unchanged sentences

Such amounts are generally based on the fair value of the underlying collateral supporting the loan.

Collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or other assumptions.

Collateral is typically valued using appraisals or other

indications of value based on recent comparable sales of similar properties or other assumptions.

Estimates of fair value based on collateral are generally based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3.

6 unchanged sentences

On October 14, 2021, the Company completed a private placement of a $ 35.0 million fixed-to-floating rate subordinated note (the “2021 Note”) to an institutional accredited investor.

The Company used the net proceeds to repay the $ 15.5 million principal balance of subordinated notes issued in 2015 for general corporate purposes.

The Company used the net proceeds to repay the outstanding balance of subordinated debt issued in 2015 and for general corporate purposes.

The 2021 Note bears interest at a fixed rate of 3.25 % per year until October 14, 2026.

14 unchanged sentences

The Company capitalized these costs and they have been presented within subordinated debentures on the consolidated balance sheets.

At September 30, 2023 and December 31, 2022, unamortized debt issuance costs were $ 0.9 million and $ 1.0 million, respectively.

At March 31, 2024 and December 31, 2023, unamortize d debt issuance costs were $ 0.7 million and $ 0.8 million, respectively.

Debt issuance costs amortize over the expected life of the related debt.

For the three months ended September 30, 2023 and 2022 the amortization expense for debt issuance costs were $ 62 thousand and $ 45 thousand, respectively, and were recognized as an increase to interest expense on borrowings within the Consolidated Statements of Income.

For the nine months ended September 30, 2023 and 2022, the amortization expense for debt issuance costs were $ 185 thousand and $ 104 thousand, respectively.

The Company recognized $ 0.8 million and $ 0.5 million in interest expense related to its subordinated debt for the three-month periods ended September 30, 2023 and 2022, respectively.

The Company recognized $ 2.4 million and $ 1.1 million in interest expense related to its subordinated debt for the nine-month periods ended September 30, 2023 and 2022, respectively.

For the three months ended March 31, 2024 and 2023 the amortization expense for debt issuance costs were $ 62 thousand and $ 62 thousand, respectively, and were recognized as an increase to interest expense on borrowings within the Consolidated Statements of Income.

The Co mpany recognized $ 0.8 million and $ 0.8 million in interest expense related to its subordinated debt for the three-month periods ended March 31, 2024 and 2023, respectively.

Subsequent Events

On October 25, 2023, the Company’s Board of Directors declared a $ 0.20 per share cash dividend, payable on November 20, 2023 to shareholders of record on November 10, 2023.

On April 24, 2024, the Company’s Board of Directors declared a $ 0.20 per share cash dividend, payable on May 21, 2024, to shareholders of record on May 10, 2024.

Subsequent to March 31, 2024, the Company purchased 9,744 shares at a weighted average price of $ 25.14 per share.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements