What changed in this filing

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Item 1. Financial Statements

2024-11-05 compared with 2024-08-06 · 206 added, 198 removed, 1354 unchanged (23% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

June 30, 2024 (unaudited) and December 31, 2023

September 30, 2024 (unaudited) and December 31, 2023

(derived from audited financial statements)

(in thousands, except share and per share data)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Cash and cash equivalents $ 36,632 $ 37,138

Available for sale ("AFS") securities, at fair value (amortized cost of $ 170,494 , net of allowance for credit losses of $ 0 at June 30, 2024 and amortized cost of $ 179,744 , net of allowance for credit losses of $ 0 at December 31, 2023)

Available for sale ("AFS") securities, at fair value (amortized cost of $ 168,882 , net of allowance for credit losses of $ 0 at September 30, 2024 and amortized cost of $ 179,744 , net of allowance for credit losses of $ 0 at December 31, 2023)

149,432 155,743

Held to maturity ("HTM") securities, at amortized cost (fair value of $ 69,027 , net of allowance for credit losses of $ 0 at June 30, 2024 and fair value of $ 73,262 , net of allowance for credit losses of $ 0 at December 31, 2023)

Held to maturity ("HTM") securities, at amortized cost (fair value of $ 71,046 , net of allowance for credit losses of $ 0 at September 30, 2024 and fair value of $ 73,262 , net of allowance for credit losses of $ 0 at December 31, 2023)

87,033 91,229

31 unchanged sentences

Consolidated Statements of Operations (unaudited)

Three and Six Months Ended June 30, 2024 and 2023

Three and Nine Months Ended September 30, 2024 and 2023

(in thousands, except per share data)

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Three Months Ended Nine Months Ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Interest and dividend income:

30 unchanged sentences

Professional services 336 342 1,249 1,153

Gains on repossessed assets, net ( 18 ) ( 9 ) ( 18 ) ( 38 )

Losses on repossessed assets, net 65 100 47 62

Other 603 645 2,427 2,085

10 unchanged sentences

Consolidated Statements of Comprehensive Income (Loss) (unaudited)

Three and Six months ended June 30, 2024 and 2023

Three and Nine months ended September 30, 2024 and 2023

(in thousands)

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Three Months Ended Nine Months Ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Net income attributable to common stockholders $ 3,286 $ 2,498 $ 11,049 $ 9,366

5 unchanged sentences

Other comprehensive income (loss), net of tax 3,552 ( 2,862 ) 3,483 ( 4,083 )

Comprehensive income $ 4,308 $ 920 $ 7,694 $ 5,647

Comprehensive income (loss) $ 6,838 $ ( 364 ) $ 14,532 $ 5,283

See accompanying condensed notes to unaudited consolidated financial statements.

1 unchanged sentence

Consolidated Statement of Changes in Stockholders’ Equity (unaudited)

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

(in thousands, except shares and per share data)

18 unchanged sentences

Balance at June 30, 2024 10,297,341 103 117,838 75,501 ( 17,397 ) 176,045

Net income — — — 3,286 — 3,286

Other comprehensive income, net of tax — — — — 3,552 3,552

Common stock repurchased ( 223,205 ) ( 2 ) ( 2,542 ) ( 349 ) — ( 2,893 )

Amortization of restricted stock — — 159 — — 159

Balance, September 30, 2024 10,074,136 $ 101 $ 115,455 $ 78,438 $ ( 13,845 ) $ 180,149

See accompanying condensed notes to unaudited consolidated financial statements.

38 unchanged sentences

Consolidated Statements of Cash Flows (unaudited)

Six Months Ended June 30, 2024 and 2023

Nine Months Ended September 30, 2024 and 2023

(in thousands)

Six Months Ended

June 30, 2024 June 30, 2023

Nine Months Ended

September 30, 2024 September 30, 2023

Cash flows from operating activities:

6 unchanged sentences

Net realized gain on sale of debt securities — ( 12 )

Deferred tax asset valuation allowance — 1,828

Increase in mortgage servicing rights resulting from transfers of financial assets ( 258 ) ( 138 )

5 unchanged sentences

Net gain from disposals of foreclosed and repossessed assets ( 23 ) 62

Provision for valuation allowance on foreclosed properties 70 —

Gain on sale of loans held for sale, net ( 1,998 ) ( 1,501 )

35 unchanged sentences

Net cash (used in) provided by financing activities ( 71,068 ) 12,256

Net (decrease) increase in cash and cash equivalents ( 252 ) 7,606

Net decrease in cash and cash equivalents ( 506 ) ( 2,831 )

Cash and cash equivalents at beginning of period 37,138 35,363

23 unchanged sentences

Additionally, the Bank is subject to the regulations of certain regulatory agencies and undergoes periodic examination by those regulatory agencies.

In preparing these consolidated financial statements, we evaluated the events and transactions that occurred subsequent to the balance sheet date of June 30, 2024, through the date on which the consolidated financial statements were available to be issued on August 6, 2024, for items that should potentially be recognized or disclosed in these consolidated financial statements.

In preparing these consolidated financial statements, we evaluated the events and transactions that occurred subsequent to the balance sheet date of September 30, 2024, through the date on which the consolidated financial statements were available to be issued on November 5, 2024, for items that should potentially be recognized or disclosed in these consolidated financial statements.

The accompanying consolidated interim financial statements are unaudited.

11 unchanged sentences

the matters described in “Risk Factors” in Item 1A of the quarterly reports on Form 10-Q for the quarter ended March 31, 2024, filed with the SEC on May 8, 2024;

the matters described in “Risk Factors” in Item 1A of the quarterly reports on Form 10-Q for the quarter ended June 30, 2024, filed with the SEC on August 6, 2024;

the matters described in “Risk Factors” in Item 1A of this Form 10-Q;

27 unchanged sentences

The Company has elected to not measure an ACL on accrued interest on available for sale and held to maturity securities, as it would write off accrued interest in a timely manner if the related security was determined to have a credit loss.

The Company has no available for sale securities or held to maturity securities which it deems to have a credit loss at June 30, 2024.

The Company has no available for sale securities or held to maturity securities which it deems to have a credit loss at September 30, 2024.

Equity investments - The Company is required to maintain an investment in Federal Agricultural Mortgage Corporation (“Farmer Mac”) equity securities.

9 unchanged sentences

SBICs and investment funds report their investments at estimated fair value.

We record the unrealized gains and losses resulting from changes in the fair value of these investments as net gains or losses on investment securities in our consolidated statements of operations.

We record the unrealized gains and losses resulting from changes in the fair value of these investments as

net gains or losses on investment securities in our consolidated statements of operations.

The carrying value of these investments is equal to the capital account as provided by the investee and adjusted as necessary.

8 unchanged sentences

Based on management’s quarterly evaluation, no impairment has been recorded on these securities.

Other investments totaling $ 13,878 at June 30, 2024 consisted of $ 5,447 of FHLB stock, $ 5,707 of Federal Reserve Bank stock and $ 2,724 of Bankers’ Bank stock.

Other investments totaling $ 12,311 at September 30, 2024 consisted of $ 3,875 of FHLB stock, $ 5,712 of Federal Reserve Bank stock and $ 2,724 of Bankers’ Bank stock.

Other investments totaling $ 15,725 at December 31, 2023 consisted of $ 7,302 of FHLB stock and $ 5,699 of Federal Reserve Bank stock and $ 2,724 of Bankers’ Bank stock.

29 unchanged sentences

and other relevant factors determined by management.

To ensure that the ACL is maintained at an adequate level, a detailed analysis is performed on a quarterly basis and an appropriate provision is made to adjust the allowance.

To ensure that the ACL is maintained at an adequate level, a detailed analysis is

performed on a quarterly basis and an appropriate provision is made to adjust the allowance.

The entire ACL balance is available for any loan that, in management’s judgment, should be charged off.

42 unchanged sentences

The valuation of MSRs and related amortization, included in mortgage servicing rights expense in the consolidated statements of operations, thereon are based on numerous factors, assumptions and judgments, such as those for:

changes in the

mix of loans, interest rates, prepayment speeds, and default rates.

changes in the mix of loans, interest rates, prepayment speeds, and default rates.

Changes in these factors, assumptions and judgments may have a material effect on the valuation and amortization of MSRs.

16 unchanged sentences

A reporting unit is defined as any distinct, separately identifiable component of the Company’s one operating segment for which complete, discrete financial information is available and reviewed regularly by the segment’s management.

The Company has one reporting unit as of June 30, 2024, which is related to its banking activities.

The Company has one reporting unit as of September 30, 2024, which is related to its banking activities.

The impairment testing process is conducted by assigning net assets and goodwill to the Company’s reporting unit.

12 unchanged sentences

Income from the increase in cash surrender value of the policies as well as the receipt of death benefits is included in non-interest income on the consolidated statements of operations.

New Markets Tax Credits - As a part of its commitment to the communities it serves, in the first quarter of 2022, the Company made an investment in an LLC that is sponsoring a community development project that has been awarded a New Markets Tax Credit (“NMTC”) through the U.S.

New Markets Tax Credits - As a part of its commitment to the communities it serves, in the first quarter of 2022 and the third quarter of 2024, the Company made investments in LLC’s that are sponsoring community development projects that have been awarded New Markets Tax Credits (“NMTC”) through the U.S.

Department of the Treasury’s Community Development Financial Institutions Fund.

This investment is Community Reinvestment Act eligible and is designed to generate a return primarily through the realization of the tax credit.

This LLC is considered a Variable Interest Entity (VIE) as the Company represents the holder of the equity investment at risk.

However, the Company does not have the ability to direct the activities that most significantly affect the performance of the LLC.

As such, the Company is not the primary beneficiary of the VIE and the LLC has not been consolidated.

With the adoption of ASU 2023-02 on January 1, 2023 discussed in Recent Accounting Pronouncements -

Adopted below, the investment is accounted for using the proportional amortization method, which requires amortizing the investment in the period of and in proportion to the recognition of the related tax credit.

These investments are Community Reinvestment Act eligible and are designed to generate a return primarily through the realization of the tax credit.

These LLC’s are considered a Variable Interest Entity (VIE) as the Company represents the holder of the equity investment at risk.

However, the Company does not have the ability to direct the activities

that most significantly affect the performance of the LLC.

As such, the Company is not the primary beneficiary of the VIE and the LLC’s have not been consolidated.

With the adoption of ASU 2023-02 on January 1, 2023, the investments are accounted for using the proportional amortization method, which requires amortizing the investment in the period of and in proportion to the recognition of the related tax credit.

Amortization of the investment is included in provision for income taxes and the utilization of the tax credit is recorded as a reduction in provision for income taxes.

Prior to the adoption of ASU 2023-02 the investment was accounted for using the equity method of accounting and was amortized through non-interest expense.

As of June 30, 2024, the carrying amount of this investment, which is included in other assets in the consolidated balance sheets, was $ 2,608 .

As of September 30, 2024, the carrying amount of this investment, which is included in other assets in the consolidated balance sheets, was $ 4,719 .

The risk of loss with this investment is limited to its carrying value and is tied to its ability to operate in compliance with the rules and regulations necessary for the qualification of the tax credit generated by the investment.

As of June 30, 2024, there were no known instances of noncompliance associated with the investment.

As of September 30, 2024, there were no known instances of noncompliance associated with either investment.

Leases - We determine if an arrangement is a lease at inception.

11 unchanged sentences

These variable costs are recognized when incurred and are also included in lease expense.

Federal Hold Loan Bank (“FHLB”) advances - The Bank holds both $ 16,500 and $ 44,000 short-term and $ 15,000 and $ 35,530 long-term FHLB advances as of June 30, 2024 and December 31, 2023, respectively.

Federal Hold Loan Bank (“FHLB”) advances - The Bank holds both $ 11,000 and $ 44,000 short-term and $ 10,000 and $ 35,530 long-term FHLB advances as of September 30, 2024 and December 31, 2023, respectively.

For cash flow purposes the short-term FHLB advances are disclosed net with original maturities of three months or less.

12 unchanged sentences

Advertising, Marketing and Public Relations Expense— The Company expenses all advertising, marketing and public relations costs as they are incurred.

Income Taxes – The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” Under this guidance, deferred taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of

existing assets and liabilities and their respective tax basis.

recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.

Deferred tax assets and liabilities are measured using enacted tax rates that will apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

6 unchanged sentences

Accordingly, the Company’s evaluation is based on current tax laws as well as management’s expectations of future performance.

The Company’s effective tax rates were 22.1 % and 25.5 % for the three months ended June 30, 2024 and June 30, 2023, and 21.6 % and 25.5 % for the six months ended June 30, 2024 and June 30, 2023.

The Company’s effective tax rates were 21.5 % and 50.5 % for the three months ended September 30, 2024 and September 30, 2023, and 21.6 % and 34.3 % for the nine months ended September 30, 2024 and September 30, 2023.

The Wisconsin state budget, signed July 5, 2023, effective January 1, 2023, made originated loans in Wisconsin for business purposes up to $5,000 non-taxable.

41 unchanged sentences

However, the fair value of the forward loan sale agreement related to such loan commitment should increase by substantially the same amount, effectively eliminating the Company’s interest rate and price risks.

At June 30, 2024, the Company had $ 4,174 of loan commitments outstanding related to loans being originated for sale, all of which were subject to interest rate lock commitments and corresponding forward loan sale agreements, as described above.

The net fair values of outstanding interest rate-lock commitments and forward sale agreements were considered immaterial to the Company’s consolidated financial statements as of June 30, 2024.

At September 30, 2024, the Company had $ 3,411 of loan commitments outstanding related to loans being originated for sale, all of which were subject to interest rate lock commitments and corresponding forward loan sale agreements, as described above.

The net fair values of outstanding interest rate-lock commitments and forward sale agreements were considered immaterial to the Company’s consolidated financial statements as of September 30, 2024.

Common Stock Repurchased -The Company is incorporated in Maryland.

22 unchanged sentences

NOTE 2 – INVESTMENT SECURITIES

The amortized cost and fair value of securities available for sale and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income as of June 30, 2024 and December 31, 2023, respectively, were as follows:

The amortized cost and fair value of securities available for sale and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income as of September 30, 2024 and December 31, 2023, respectively, were as follows:

Available for sale securities Amortized

Losses Estimated

June 30, 2024

September 30, 2024

government agency obligations $ 14,497 $ 55 $ 95 $ 14,457

9 unchanged sentences

Total available for sale securities $ 179,744 $ 95 $ 24,096 $ 155,743

The amortized cost and fair value of securities held to maturity and the corresponding amounts of gross unrecognized gains and losses as of June 30, 2024 and December 31, 2023, respectively, were as follows:

The amortized cost and fair value of securities held to maturity and the corresponding amounts of gross unrecognized gains and losses as of September 30, 2024 and December 31, 2023, respectively, were as follows:

Held to maturity securities Amortized

Losses Estimated

June 30, 2024

September 30, 2024

Obligations of states and political subdivisions $ 500 $ — $ 19 $ 481

5 unchanged sentences

Total held to maturity securities $ 91,229 $ 6 $ 17,973 $ 73,262

At June 30, 2024, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $ 28,454 as collateral to secure a line of credit with the Federal Reserve Bank.

As of June 30, 2024, there were no borrowings outstanding on this Federal Reserve Bank line of credit.

As of June 30, 2024, the Bank has pledged certain of its U.S.

At September 30, 2024, the Bank has pledged certain of its mortgage-backed securities with a carrying value of $ 34,700 as collateral to secure a line of credit with the Federal Reserve Bank.

As of September 30, 2024, there were no borrowings outstanding on this Federal Reserve Bank line of credit.

As of September 30, 2024, the Bank has pledged certain of its U.S.

Government Agency securities with a carrying value of $ 353 and mortgage-backed securities with a carrying value of $ 1,811 as collateral against specific municipal deposits.

As of June 30, 2024, the Bank also has mortgage-backed securities with a carrying value of $ 125 and U.S.

Government Agencies with a carrying value of $ 449 pledged as collateral to the Federal Home Loan Bank of Des Moines.

As of September 30, 2024, the Bank also has mortgage-backed securities with a carrying value of $ 103 pledged as collateral to the Federal Home Loan Bank of Des Moines.

At December 31, 2023, the Bank had pledged certain of its mortgage-backed securities with a carrying value of $ 29,191 as collateral to secure a line of credit with the Federal Reserve Bank.

4 unchanged sentences

Government Agencies with a carrying value of $ 415 pledged as collateral to the Federal Home Loan Bank of Des Moines.

For the three and six month periods ended June 30, 2024, there were no sales of available for sale securities.

For the three and nine month periods ended September 30, 2024, there were no sales of available for sale securities.

In June 2024, senior debt of a community development financial institution, classified as available-for-sale securities with a carrying value of $ 2,082 , was exchanged for preferred equity of the financial institution’s operating subsidiary.

The exchange resulted in $ 168 of unrealized losses on available-for-sale securities, previously included in other comprehensive income, being recognized on the June 30, 2024, consolidated statement of operations as loss on investment securities.

For the three and six month periods ended June 30, 2023, gross sales of available for sale securities were $ 5,105 , gross gains on the sale of available for sale securities were $ 12 , and gross loss on the sale of available for sale securities were $ 0 .

The estimated fair value of securities at June 30, 2024 and December 31, 2023, by contractual maturity, is shown below.

June 30, 2024 December 31, 2023

The exchange resulted in the recognition of $ 168 of unrealized losses on available-for-sale securities, previously included in other comprehensive income, as well as an additional $ 270 loss, for a total loss of $ 438 .

This total loss of $ 438 was recognized on the June 30, 2024, consolidated statement of operations as net losses on equity securities.

For the three month period ended September 30, 2023, there were no sales of available for sale securities.

For the nine month period ended September 30, 2023, gross sales of available for sale securities were $ 5,105 , gross gains on the sale of available for sale securities were $ 12 , and gross losses on the sale of available for sale securities were $ 0 .

The estimated fair value of securities at September 30, 2024 and December 31, 2023, by contractual maturity, is shown below.

September 30, 2024 December 31, 2023

Available for sale securities Amortized

9 unchanged sentences

Total available for sale securities $ 168,882 $ 149,432 $ 179,744 $ 155,743

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Held to maturity securities Amortized

8 unchanged sentences

Total held to maturity securities $ 87,033 $ 71,046 $ 91,229 $ 73,262

Securities with unrealized losses at June 30, 2024 and December 31, 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

Securities with unrealized losses at September 30, 2024 and December 31, 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

Less than 12 Months 12 Months or More Total

3 unchanged sentences

Value Unrealized

June 30, 2024

September 30, 2024

government agency obligations $ 4,750 $ 11 $ 3,382 $ 84 $ 8,132 $ 95

9 unchanged sentences

Total $ 10,474 $ 103 $ 133,027 $ 23,993 $ 143,501 $ 24,096

At June 30, 2024 no ACL was established for available for sale or held to maturity securities.

At September 30, 2024 no ACL was established for available for sale or held to maturity securities.

Substantially all the held to maturity portfolio is made up of agency backed mortgage securities.

1 unchanged sentence

government, are highly rated by major rating agencies, and have a long history of no credit losses.

At June 30, 2024, there were no past due held to maturity securities.

At September 30, 2024, there were no past due held to maturity securities.

Accordingly, the Company does not expect to incur credit losses on these securities.

32 unchanged sentences

Interest on substantially all loans is credited to income based on the principal amount outstanding.

A summary of loans at June 30, 2024, and December 31, 2023, follows:

June 30, 2024

A summary of loans at September 30, 2024, and December 31, 2023, follows:

September 30, 2024

December 31, 2023

15 unchanged sentences

Total loans receivable $ 1,424,828 100 % $ 1,460,792 100 %

Less Allowance for credit losses ( 21,178 ) ( 22,908 )

Allowance for credit losses ( 21,000 ) ( 22,908 )

Net loans receivable $ 1,403,828 $ 1,437,884

20 unchanged sentences

This classification does not mean that the loan has absolutely no recovery or salvage value, and a partial recovery may occur in the future.

As of June 30, 2024, and December 31, 2023, there were no loans classified as doubtful with a risk rating of 8 and no loans classified as loss with a risk rating of 9.

As of September 30, 2024, and December 31, 2023, there were no loans classified as doubtful with a risk rating of 8 and no loans classified as loss with a risk rating of 9.

Residential and consumer loans are typically not rated until they are past due 90 days at month-end which is why they are classified as pass graded 1-5 and once past due or have a history of delinquencies, get assigned a grade 7.

Below is a summary of the amortized cost of loans summarized by class, credit quality risk rating and year of origination as of June 30, 2024, and gross charge-offs for the six months ended June 30, 2024:

Below is a summary of the amortized cost of loans summarized by class, credit quality risk rating and year of origination as of September 30, 2024, and gross charge-offs for the nine months ended September 30, 2024:

Amortized Cost Basis by Origination Year

139 unchanged sentences

The Company estimates the appropriate level of allowance for credit losses by evaluating loans collectively on a pooled basis when similar risk characteristics exist, and on an individual basis when management determines that a loan does not share similar risk characteristics with other loans.

The following tables present the balance and activity in the allowance for credit losses (“ACL”) - loans by portfolio segment for the three and six months ended June 30, 2024:

The following tables present the balance and activity in the allowance for credit losses (“ACL”) - loans by portfolio segment for the three and nine months ended September 30, 2024:

Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Total

Three months ended June 30, 2024

Three months ended September 30, 2024

Allowance for Credit Losses - Loans:

5 unchanged sentences

Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Total

Six months ended June 30, 2024

Nine months ended September 30, 2024

Allowance for Credit Losses - Loans:

4 unchanged sentences

ACL - Loans, at end of period $ 16,923 $ 1,351 $ 2,494 $ 232 $ 21,000

The following table presents the balance and activity in the allowance for credit losses (“ACL”) - loans by portfolio segment for the three and six months ended June 30, 2023:

The following table presents the balance and activity in the allowance for credit losses (“ACL”) - loans by portfolio segment for the three and nine months ended September 30, 2023:

Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Unallocated Total

Three months ended June 30, 2023

Three months ended September 30, 2023

Allowance for Credit Losses - Loans:

5 unchanged sentences

Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Unallocated Total

Six months ended June 30, 2023

Nine months ended September 30, 2023

Allowance for Credit Losses - Loans:

15 unchanged sentences

ACL - Loans, at end of period $ 18,784 $ 1,105 $ 2,744 $ 275 $ — $ 22,908

Allowance for Credit Losses - Unfunded Commitments - In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $ 712 at June 30, 2024, and $ 1,250 at December 31, 2023, classified in other liabilities on the consolidated balance sheets.

The following table presents the balance and activity in the ACL - Unfunded Commitments for the three and six months ended June 30, 2024, and the twelve months ended December 31, 2023.

June 30, 2024 and Three Months Ended June 30, 2024 and Six Months Ended December 31, 2023 and Twelve Months Ended

Allowance for Credit Losses - Unfunded Commitments - In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $ 460 at September 30, 2024, and $ 1,250 at December 31, 2023, classified in other liabilities on the consolidated balance sheets.

The following table presents the balance and activity in the ACL - Unfunded Commitments for the three and nine months ended September 30, 2024, and the twelve months ended December 31, 2023.

September 30, 2024 and Three Months Ended September 30, 2024 and Nine Months Ended December 31, 2023 and Twelve Months Ended

ACL - Unfunded Commitments - beginning of period $ 712 $ 1,250 $ —

4 unchanged sentences

The following table presents the components of the negative provision for credit losses.

June 30, 2024 and Three Months Ended June 30, 2024 and Six Months Ended

September 30, 2024 and Three Months Ended September 30, 2024 and Nine Months Ended

(Negative) provision for credit losses on:

2 unchanged sentences

Total (negative) provision for credit losses $ ( 400 ) $ ( 2,725 )

An aging analysis of the Company’s commercial/agricultural real estate, C&I, agricultural operating, residential mortgage, consumer installment and purchased third party loans as of June 30, 2024, and December 31, 2023, respectively, was as follows:

An aging analysis of the Company’s commercial/agricultural real estate, C&I, agricultural operating, residential mortgage, consumer installment and purchased third party loans as of September 30, 2024, and December 31, 2023, respectively, was as follows:

(Loan balances at amortized cost) 30-59 Days Past Due 60-89 Days Past Due Greater Than 89 Days Past Due Total

Past Due Current Total

June 30, 2024

September 30, 2024

Commercial/Agricultural real estate:

31 unchanged sentences

Total $ 1,405 $ 891 $ 8,228 $ 10,524 $ 1,450,268 $ 1,460,792

Nonaccrual Loans - The following tables present the amortized cost basis of loans on nonaccrual status and of nonaccrual loans individually evaluated at June 30, 2024, December 31, 2023, and June 30, 2023, with no allowance for credit losses:

June 30, 2024 Total Nonaccrual Loans Nonaccrual with no Allowance for Credit Losses

Nonaccrual Loans - The following tables present the amortized cost basis of loans on nonaccrual status and of nonaccrual loans individually evaluated at September 30, 2024, December 31, 2023, and September 30, 2023, with no allowance for credit losses:

September 30, 2024 Total Nonaccrual Loans Nonaccrual with no Allowance for Credit Losses

Commercial/Agricultural real estate:

1 unchanged sentence

Agricultural real estate 6,193 6,193

Construction and land development 106 106

C&I/Agricultural operating:

21 unchanged sentences

Total $ 13,184 $ 12,939

June 30, 2023 Total Nonaccrual Loans Nonaccrual with no Allowance for Credit Losses

September 30, 2023 Total Nonaccrual Loans Nonaccrual with no Allowance for Credit Losses

Commercial/Agricultural real estate:

3 unchanged sentences

C&I/Agricultural operating:

Commercial and industrial 4 4

Agricultural operating 1,373 1,373

18 unchanged sentences

For collateral dependent loans, expected credit losses are based on the 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.

The following tables present the amortized cost basis of collateral dependent loans by portfolio segment and collateral type that were individually evaluated to determine expected credit losses and the related allowance for credit losses as of June 30, 2024, and December 31, 2023.

Collateral Type

June 30, 2024 Real Estate Other Assets Total Without an Allowance With an Allowance Allowance Allocation

September 30, 2024 Real Estate Other Assets Total Without an Allowance With an Allowance Allowance Allocation

Commercial/Agricultural real estate:

26 unchanged sentences

Total $ 25,149 $ 3,473 $ 28,622 $ 24,332 $ 4,290 $ 791

There were no outstanding commitments to borrowers experiencing financial difficulty as of June 30, 2024.

There were unused lines of credit totaling $ 662 on loans with borrowers experiencing financial difficulties as of June 30, 2024.

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the three months ended June 30, 2024:

Other-Than-Insignificant Payment Delay

Loan Class Amortized Cost Basis at June 30, 2024 % of Total Class of Financing Receivables

Commercial and industrial $ 920 0.72 %

There were no outstanding commitments to borrowers experiencing financial difficulty as of September 30, 2024.

There were unused lines of credit totaling $ 10 on loans with borrowers experiencing financial difficulties as of September 30, 2024.

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the three months ended September 30, 2024:

Term Extension

Loan Class Amortized Cost Basis at September 30, 2024 % of Total Class of Financing Receivables

Residential mortgage $ 5 — %

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the three months ended June 30, 2024:

Other consumer $ 1 0.02 %

Other-Than-Insignificant Payment Delay

Loan Class Amortized Cost Basis at September 30, 2024 % of Total Class of Financing Receivables

Commercial real estate $ 1,182 0.16 %

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the three months ended September 30, 2024:

Term Extension

Loan Class Financial Effect

Commercial and industrial Payments were deferred a weighted average of 3 months

Residential mortgage Payments were deferred a weighted average of 3 months

The tables below detail Loan Modifications made to Borrowers Experiencing Financial Difficulty during the twelve months ended June 30, 2024:

Residential mortgage A weighted average of 36 months was added to the term of the loans

Other Consumer A weighted average of 12 months was added to the term of the loans

Other-Than-Insignificant Payment Delay

Loan Class Financial Effect

Commercial real estate Payments were deferred a weighted average of 3 months

The tables below detail Loan Modifications made to Borrowers Experiencing Financial Difficulty during the twelve months ended September 30, 2024:

Term Extension

Loan Class Amortized Cost Basis at June 30, 2024 % of Total Class of Financing Receivables

Commercial real estate $ 4,434 0.61 %

Loan Class Amortized Cost Basis at September 30, 2024 % of Total Class of Financing Receivables

Commercial and industrial $ 1,500 1.26 %

Residential mortgage $ 5 — %

Other Consumer $ 1 0.02 %

Other-Than-Insignificant Payment Delay

Loan Class Amortized Cost Basis at June 30, 2024 % of Total Class of Financing Receivables

Loan Class Amortized Cost Basis at September 30, 2024 % of Total Class of Financing Receivables

Commercial real estate $ 1,182 0.16 %

Commercial and industrial $ 836 0.70 %

Residential mortgage $ 240 0.18 %

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the twelve months ended June 30, 2024:

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the twelve months ended September 30, 2024:

Term Extension

Loan Class Financial Effect

Commercial real estate A weighted average of 20 months was added to the term of the loans

Commercial and industrial A weighted average of 11 months was added to the term of the loans

Residential mortgage A weighted average of 36 months was added to the term of the loans

Other consumer Payments were deferred a weighted average of 12 months

Other-Than-Insignificant Payment Delay

Loan Class Financial Effect

Commercial real estate Payments were deferred a weighted average of 3 months

Commercial and industrial Payments were deferred a weighted average of 3 months

Residential mortgage Payments were deferred a weighted average of 3 months

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the three months ended June 30, 2023:

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the three months ended September 30, 2023:

Term Extension

Loan Class Amortized Cost Basis at

June 30, 2023 % of Total Class of Financing Receivables

Commercial and industrial $ 8 0.01 %

Agricultural operating $ 179 0.73 %

Other-Than-Insignificant Payment Delay

Loan Class Amortized Cost Basis at

June 30, 2023 % of Total Class of Financing Receivables

Residential mortgage $ 69 0.06 %

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the three months ended June 30, 2023:

Loan Class Financial Effect

Commercial and industrial A weighted average of 3 months was added to the term of the loans

Agricultural operating A weighted average of 3 months was added to the term of the loans

Other-Than-Insignificant Payment Delay

September 30, 2023 % of Total Class of Financing Receivables

Commercial real estate $ 4,826 0.65 %

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the three months ended September 30, 2023:

Loan Class Financial Effect

Residential Mortgage Payments were deferred a weighted average of 6 months

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the six months ended June 30, 2023:

Commercial real estate A weighted average of 20 months was added to the term of the loans

The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the nine months ended September 30, 2023:

Term Extension

Loan Class Amortized Cost Basis at

June 30, 2023 % of Total Class of Financing Receivables

September 30, 2023 % of Total Class of Financing Receivables

Commercial real estate $ 4,826 0.65 %

Commercial and industrial $ 8 0.01 %

Agricultural operating $ 179 0.73 %

2 unchanged sentences

Loan Class Amortized Cost Basis at

June 30, 2023 % of Total Class of Financing Receivables

September 30, 2023 % of Total Class of Financing Receivables

Residential mortgage $ 69 0.06 %

Other consumer $ 20 0.31 %

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the six months ended June 30, 2023:

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the nine months ended September 30, 2023:

Loan Class Financial Effect

Commercial real estate A weighted average of 20 months was added to the term of the loans

Commercial and industrial A weighted average of 3 months was added to the term of the loans

Agricultural operating A weighted average of 3 months was added to the term of the loans

5 unchanged sentences

The Company closely monitors the performance of loans that have been modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table shows the performance of such loans that have been modified during the twelve months ended June 30, 2024.

The following table shows the performance of such loans that have been modified during the twelve months ended September 30, 2024.

Current 30-59 Days Past Due 60-89 Days Past Due Greater Than 89 Days Past Due

2 unchanged sentences

Residential mortgage 163 — 82 —

Other consumer 1 — — —

Total $ 3,682 $ — $ 82 $ —

No loan modified during the six months ended June 30, 2023 has subsequently defaulted.

The following table shows the performance of such loans that have been modified during the six months ended June 30, 2023.

No loan modified during the nine months ended September 30, 2023 has subsequently defaulted.

The following table shows the performance of such loans that have been modified during the nine months ended September 30, 2023.

Current 30-59 Days Past Due 60-89 Days Past Due Greater Than 89 Days Past Due

Commercial real estate $ 4,826 $ — $ — $ —

Commercial and industrial 8 — — —

Agricultural operating 179 — — —

4 unchanged sentences

Mortgage servicing rights-- Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets.

The unpaid balances of these loans as of June 30, 2024 and December 31, 2023 were $ 483,269 and $ 495,531 , respectively, and consisted of one to four family residential real estate loans.

The unpaid balances of these loans as of September 30, 2024 and December 31, 2023 were $ 482,868 and $ 495,531 , respectively, and consisted of one to four family residential real estate loans.

These loans are serviced primarily for the Federal Home Loan Mortgage Corporation, Federal Home Loan Bank and the Federal National Mortgage Association.

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in deposits were $ 5,031 and $ 2,665 at June 30, 2024 and December 31, 2023, respectively.

Mortgage servicing rights activity for the three and six month periods ended June 30, 2024 and June 30, 2023, were as follows:

As of and for the Three Months Ended As of and for the Three Months Ended As of and for the Six Months Ended As of and for the Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in deposits were $ 6,393 and $ 2,665 at September 30, 2024 and December 31, 2023, respectively.

Mortgage servicing rights activity for the three and nine month periods ended September 30, 2024 and September 30, 2023, were as follows:

As of and for the Three Months Ended As of and for the Three Months Ended As of and for the Nine Months Ended As of and for the Nine Months Ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Mortgage servicing rights:

12 unchanged sentences

The current period change in valuation allowance, if applicable, is included in non-interest expense as mortgage servicing rights expense, net on the consolidated statement of operations.

Servicing fees totaled $ 310 and $ 325 for the three months ended June 30, 2024 and June 30, 2023, respectively.

Servicing fees totaled $ 621 and $ 655 for the six months ended June 30, 2024 and June 30, 2023, respectively.

Servicing fees totaled $ 308 and $ 321 for the three months ended September 30, 2024 and September 30, 2023, respectively.

Servicing fees totaled $ 929 and $ 976 for the nine months ended September 30, 2024 and September 30, 2023, respectively.

Servicing fees are included in loan servicing income on the consolidated statement of operations.

3 unchanged sentences

Central to the valuation model is the discount rate.

Fair value at June 30, 2024, was determined using discount rates ranging from 9.9 % to 12.9 %.

Fair value at June 30, 2023, was determined using discount rates ranging from 9.5 % to 12.5 %.

Fair value at September 30, 2024, was determined using discount rates ranging from 9.125 % to 12.125 %.

Fair value at September 30, 2023, was determined using discount rates ranging from 10.125 % to 13.125 %.

Other assumptions utilized in the valuation model include, but are not limited to, prepayment speed, servicing costs, delinquencies, costs of advances, foreclosure costs, ancillary income, and income earned on float and escrow.

3 unchanged sentences

Some of the leases include an option to extend, the longest of which is for two 5 year terms.

As of June 30, 2024, we have no lease commitments that have not yet commenced.

As of September 30, 2024, we have no lease commitments that have not yet commenced.

The Company also leases a portion of some of its facilities and receives rental income from such lease agreements, all of which are considered operating leases.

Six Months Ended

June 30, 2024 June 30, 2023

Nine Months Ended

September 30, 2024 September 30, 2023

The components of total lease cost were as follows:

9 unchanged sentences

Operating leases $ 2 $ 225

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Supplemental balance sheet information related to leases was as follows:

18 unchanged sentences

NOTE 6 – DEPOSITS

The following is a summary of deposits by type at June 30, 2024 and December 31, 2023, respectively:

June 30, 2024 December 31, 2023

The following is a summary of deposits by type at September 30, 2024 and December 31, 2023, respectively:

September 30, 2024 December 31, 2023

Non-interest bearing demand deposits $ 256,840 $ 265,704

4 unchanged sentences

Total deposits $ 1,520,667 $ 1,519,092

At June 30, 2024, the scheduled maturities of certificate accounts were as follows for the year ended, except December 31, 2024, which is the six months ended:

At September 30, 2024, the scheduled maturities of certificate accounts were as follows for the year ended, except December 31, 2024, which is the three months ended:

December 31, 2024 $ 158,795

5 unchanged sentences

Total $ 381,693

Certificate accounts of $250 or more were $ 100,293 and $ 103,802 at June 30, 2024 and December 31, 2023, respectively.

Brokered deposits were $ 96,796 at June 30, 2024 and consisted of $ 54,123 of brokered certificate accounts and $ 42,673 of brokered money market accounts.

Certificate accounts of $250 or more were $ 100,945 and $ 103,802 at September 30, 2024 and December 31, 2023, respectively.

Brokered deposits were $ 66,654 at September 30, 2024 and consisted of $ 48,578 of brokered certificate accounts and $ 18,076 of brokered money market accounts.

Brokered Deposits were $ 98,259 at December 31, 2023 and consisted of $ 58,209 of brokered certificate accounts and $ 40,050 of brokered money market accounts.

At June 30, 2024, the scheduled maturities of brokered certificate accounts were as follows for the year ended, except December 31, 2024, which is the six months ended:

At September 30, 2024, the scheduled maturities of brokered certificate accounts were as follows for the year ended, except December 31, 2024, which is the three months ended:

December 31, 2024 $ 34,455

4 unchanged sentences

NOTE 7 – FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS

A summary of Federal Home Loan Bank advances and other borrowings at June 30, 2024 and December 31, 2023, is as follows:

June 30, 2024

A summary of Federal Home Loan Bank advances and other borrowings at September 30, 2024 and December 31, 2023, is as follows:

September 30, 2024

December 31, 2023

11 unchanged sentences

Totals $ 82,548 $ 146,995

(1) The FHLB advances bear fixed rates, require interest-only monthly payments, and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans and certain other loans which had a pledged balance of $ 1,099,969 and $ 1,106,267 at June 30, 2024 and December 31, 2023, respectively.

At June 30, 2024, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $ 416,063 compared to $ 370,569 as of December 31, 2023.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $ 81,000 and $ 217,530 , during the six months ended June 30, 2024 and the twelve months ended December 31, 2023, respectively.

(3) The weighted-average interest rate on FHLB borrowings maturing within twelve months as of June 30, 2024 and December 31, 2023 were 3.54 % and 4.16 %, respectively.

(1) The FHLB advances bear fixed rates, require interest-only monthly payments, and are collateralized by a blanket lien on pre-qualifying first mortgages, home equity lines, multi-family loans and certain other loans which had a pledged balance of $ 1,081,967 and $ 1,106,267 at September 30, 2024 and December 31, 2023, respectively.

At September 30, 2024, the Bank’s available and unused portion under the FHLB borrowing arrangement was approximately $ 414,369 compared to $ 370,569 as of December 31, 2023.

(2) Maximum month-end borrowed amounts outstanding under this borrowing agreement were $ 81,000 and $ 217,530 , during the nine months ended September 30, 2024 and the twelve months ended December 31, 2023, respectively.

(3) The weighted-average interest rate on FHLB borrowings maturing within twelve months as of September 30, 2024 and December 31, 2023 were 3.28 % and 4.16 %, respectively.

(4) In June 2024, the FHLB called the $ 10,000 , 3.82 % advance maturing in 2028.

15 unchanged sentences

This irrevocable standby letter of credit (“LOC”) is supported by loan collateral as an alternative to directly pledging investment securities on behalf of a municipal customer as collateral for their interest bearing deposit balances.

The letters of credit balances were $ 435,250 and $ 452,280 at June 30, 2024 and December 31, 2023, respectively.

The letters of credit balances were $ 206,750 and $ 452,280 at September 30, 2024 and December 31, 2023, respectively.

Federal Reserve Borrowings

At June 30, 2024 and December 31, 2023, the Bank had the ability to borrow $ 21,386 and $ 22,417 from the Federal Reserve Bank of Minneapolis.

The ability to borrow is based on mortgage-backed securities pledged with a carrying value of $ 28,454 and $ 29,191 as of June 30, 2024, and December 31, 2023, respectively.

There were no Federal Reserve borrowings outstanding as of June 30, 2024, and December 31, 2023.

At September 30, 2024 and December 31, 2023, the Bank had the ability to borrow $ 27,145 and $ 22,417 from the Federal Reserve Bank of Minneapolis.

The ability to borrow is based on mortgage-backed securities pledged with a carrying value of $ 34,700 and $ 29,191 as of September 30, 2024, and December 31, 2023, respectively.

There were no Federal Reserve borrowings outstanding as of September 30, 2024, and December 31, 2023.

Federal Funds Purchased Lines of Credit

As of June 30, 2024, the Bank maintains two unsecured federal funds purchased lines of credit with its banking partners which total $ 70,000 .

As of September 30, 2024, the Bank maintains two unsecured federal funds purchased lines of credit with its banking partners which total $ 70,000 .

As of December 31, 2023, the Bank maintained three unsecured federal funds purchased lines of credit with its banking partners which totaled $ 70,000 .

These lines bear interest at the lender bank’s announced daily federal funds rate, mature daily and are revocable at the discretion of the lending institution.

There were no borrowings outstanding on these lines of credit as of June 30, 2024 or December 31, 2023.

There were no borrowings outstanding on these lines of credit as of September 30, 2024 or December 31, 2023.

NOTE 8 - CAPITAL MATTERS

7 unchanged sentences

If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.

At June 30, 2024, the Bank was categorized as “Well Capitalized”, under Prompt Corrective Action Provisions.

The Bank’s Tier 1 (leverage) and risk-based capital ratios at June 30, 2024, and December 31, 2023, respectively, are presented below:

At September 30, 2024, the Bank was categorized as “Well Capitalized”, under Prompt Corrective Action Provisions.

The Bank’s Tier 1 (leverage) and risk-based capital ratios at September 30, 2024, and December 31, 2023, respectively, are presented below:

Actual For Capital Adequacy

3 unchanged sentences

Amount Ratio Amount Ratio Amount Ratio

As of June 30, 2024

As of September 30, 2024

Total capital (to risk weighted assets) $ 226,597 15.0 % $ 120,814 > = 8.0 % $ 151,018 > = 10.0 %

7 unchanged sentences

Tier 1 leverage ratio (to adjusted total assets) 208,726 11.5 % 72,479 > = 4.0 % 90,599 > = 5.0 %

The Company’s Tier 1 (leverage) and risk-based capital ratios at June 30, 2024 and December 31, 2023, respectively, are presented below:

The Company’s Tier 1 (leverage) and risk-based capital ratios at September 30, 2024 and December 31, 2023, respectively, are presented below:

Actual For Capital Adequacy

Amount Ratio Amount Ratio

As of June 30, 2024

As of September 30, 2024

Total capital (to risk weighted assets) $ 231,825 15.3 % $ 120,972 > = 8.0 %

11 unchanged sentences

The aggregate number of shares of common stock initially reserved and available for issuance under the 2018 Equity Incentive Plan was 350,000 shares.

As of June 30, 2024, 315,947 restricted shares had been granted under this plan.

As of September 30, 2024, 315,947 restricted shares had been granted under this plan.

This amount includes 8,805 shares of performance based restricted stock granted in 2021 and issued in January 2024 upon achievement of the performance criteria and completion of the three-year performance period beginning in January 2021 and ending December 31, 2023.

The amount also includes 18,551 shares of performance based restricted stock granted in 2020 and issued in January 2023 upon achievement of the performance criteria and completion of the three year performance period beginning in January 2020 and ending December 31, 2022.

As of June 30, 2024, no stock options had been granted under this plan.

As of September 30, 2024, no stock options had been granted under this plan.

In February 2008, the Company’s stockholders approved the Company’s 2008 Equity Incentive Plan for a term of 10 years.

Due to the plan’s expiration, no new awards can be granted under this plan.

As of June 30, 2024, there are no awarded unvested restricted shares, and 54,000 awarded unexercised vested options remaining from the plan.

As of September 30, 2024, there are no awarded unvested restricted shares, and 54,000 awarded unexercised vested options remaining from the plan.

Options granted under this plan vested pro rata over a five-year period from the grant date and were fully vested as of October 2022.

Unexercised incentive stock options expire within 10 years of the grant date.

Net compensation expense related to restricted stock awards from these plans was $ 158 and $ 316 for the three and six months ended June 30, 2024, compared to $ 216 and $ 382 for the three and six months ended June 30, 2023.

Net compensation expense related to restricted stock awards from these plans was $ 159 and $ 475 for the three and nine months ended September 30, 2024, compared to $ 208 and $ 590 for the three and nine months ended September 30, 2023.

Restricted Common Stock Award

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Number of Shares Weighted

6 unchanged sentences

Unvested and outstanding at end of period 56,126 $ 12.30 75,601 $ 12.41

June 30, 2024

September 30, 2024

Number of Shares Weighted

8 unchanged sentences

Term in Years Aggregate

June 30, 2024

September 30, 2024

Outstanding at beginning of year 54,000 $ 11.59

8 unchanged sentences

Information related to the 2008 Equity Incentive Plan for the respective periods follows:

Six months ended June 30, 2024 Twelve months ended December 31, 2023

Nine months ended September 30, 2024 Twelve months ended December 31, 2023

Intrinsic value of options exercised $ — $ 2

10 unchanged sentences

At the end of each reporting period, the Company estimates its potential liability related to the Plan and records any change to this liability as compensation expense in the consolidated statement of operations.

At June 30, 2024, the related liability was $ 63 , which is included in other liabilities on the consolidated balance sheet.

For the three and six months ended June 30, 2024, the Company recorded related expense of $ 37 and $ 63 which is included in compensation and related benefits/non-interest expense on the Company’s consolidated statement of operations.

At September 30, 2024, the related liability was $ 121 , which is included in other liabilities on the consolidated balance sheet.

For the three and nine months ended September 30, 2024, the Company recorded related expense of $ 58 and $ 121 which is included in compensation and related benefits/non-interest expense on the Company’s consolidated statement of operations.

NOTE 10 – FAIR VALUE ACCOUNTING

11 unchanged sentences

Assets Measured on a Recurring Basis

The following tables present the financial instruments measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023:

The following tables present the financial instruments measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023:

Value Quoted Prices in

3 unchanged sentences

(Level 2) Significant

June 30, 2024

September 30, 2024

Investment securities:

24 unchanged sentences

During the three months ended June 30, 2024, senior debt of a community development financial institution, classified as available-for-sale securities was exchanged for preferred equity of the financial institution’s operating subsidiary.

At June 30, 2024, the Company owned $ 1,812 preferred equity investments for which the Company utilized significant unobservable inputs (Level 3 inputs) to determine fair value.

At September 30, 2024, the Company owned $ 1,812 preferred equity investments for which the Company utilized significant unobservable inputs (Level 3 inputs) to determine fair value.

For the twelve months ended December 31, 2023, the Company did not own any securities for which the Company utilized significant unobservable inputs (Level 3 inputs) to determine fair value.

During the three and six months ended June 30, 2024, $ 2,082 of senior debt, previously measured as a Level 1 instrument, was exchanged for preferred equity, now measured as a Level 3 instrument, resulting in a transfer out of Level 1 fair value measurement to Level 3 fair value measurement.

During the three and nine months ended September 30, 2024, $ 0 and $ 2,082 of senior debt, previously measured as a Level 1 instrument, was exchanged for preferred equity, now measured as a Level 3 instrument, resulting in a transfer out of Level 1 fair value measurement to Level 3 fair value measurement.

The exchange resulted in the recognition of $ 0 and $ 168 of unrealized losses on available-for-sale securities during the three and nine months ended September 30, 2024, previously included in other comprehensive income, as well as an additional $ 270 loss, for a total loss of $ 438 .

This total loss of $ 438 was recognized on the consolidated statement of operations as net losses on equity securities.

There were no transfers in or out of Level 1, Level 2 or Level 3 fair value measurements relating to the available-for-sale securities above during the twelve months ended December 31, 2023.

There were no losses included in earnings attributable to the change in unrealized gains or losses relating to the available-for-sale securities above with fair value measurements utilizing significant unobservable inputs for the twelve months ended December 31, 2023, respectively.

There were no losses included in earnings attributable to the change in unrealized gains or

losses relating to the available-for-sale securities above with fair value measurements utilizing significant unobservable inputs for the twelve months ended December 31, 2023, respectively.

Assets Measured on Nonrecurring Basis

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of June 30, 2024 and December 31, 2023:

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of September 30, 2024 and December 31, 2023:

Carrying Value Quoted Prices in

3 unchanged sentences

(Level 2) Significant

June 30, 2024

September 30, 2024

Foreclosed and repossessed assets, net $ 1,572 $ — $ — $ 1,572

13 unchanged sentences

recurring and nonrecurring basis and for which we have utilized Level 3 inputs to determine their fair value at

June 30, 2024.

September 30, 2024.

Value Valuation Techniques (1) Significant Unobservable Inputs (2) Range

June 30, 2024

September 30, 2024

Foreclosed and repossessed assets, net $ 1,572 Appraisal value Estimated costs to sell 10 % - 15 %

10 unchanged sentences

The carrying amount and estimated fair value of the Company’s financial instruments as of the dates indicated below were as follows:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Valuation Method Used Carrying

4 unchanged sentences

Cash and cash equivalents (Level I) $ 36,632 $ 36,632 $ 37,138 $ 37,138

Other interest-bearing deposits (Level II) — — — —

Securities available for sale “AFS” (Level II) 149,432 149,432 155,743 155,743

18 unchanged sentences

A reconciliation of the basic and diluted earnings per share is as follows:

Three Months Ended Six Months Ended

(Share count in thousands) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Three Months Ended Nine Months Ended

(Share count in thousands) September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Net income attributable to common stockholders $ 3,286 $ 2,498 $ 11,049 $ 9,366

8 unchanged sentences

Dilutive shares outstanding consist of exercisable stock options whose strike prices were less than the quarterly average closing price of the Company’s common stock.

At June 30, 2024 and June 30, 2023, there were 20 and 40 exercisable stock options, respectively, with a potentially dilutive effect.

At September 30, 2024 and September 30, 2023, there were 20 and 40 exercisable stock options, respectively, with a potentially dilutive effect.

However their strike prices were higher than the quarterly and annual average closing prices of the Company’s common stock and thus, excluded from diluted shares outstanding.

NOTE 12 – OTHER COMPREHENSIVE INCOME (LOSS)

The following tables show the tax effects allocated to each component of other comprehensive income (loss) for the three and six months ended June 30, 2024 and 2023:

The following tables show the tax effects allocated to each component of other comprehensive income (loss) for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended

June 30, 2024 June 30, 2023

September 30, 2024 September 30, 2023

Amount Tax Benefit

5 unchanged sentences

Net unrealized gains (losses) arising during the period $ 4,605 $ ( 1,053 ) $ 3,552 $ ( 3,701 ) $ 839 $ ( 2,862 )

Reclassification adjustment for gains included in net income — — — ( 12 ) 3 ( 9 )

Reclassification for net loss on exchanged security, included in net income, net of tax 168 ( 38 ) 130 — — —

Other comprehensive income (loss) $ 4,605 $ ( 1,053 ) $ 3,552 $ ( 3,701 ) $ 839 $ ( 2,862 )

Six Months Ended

June 30, 2024 June 30, 2023

Nine Months Ended

September 30, 2024 September 30, 2023

Amount Tax Benefit

3 unchanged sentences

(Expense) Net-of-Tax

Unrealized (losses) gains on securities:

Net unrealized losses arising during the period $ ( 223 ) $ 24 $ ( 199 ) $ ( 1,672 ) $ 460 $ ( 1,212 )

Unrealized gains (losses) on securities:

Net unrealized gains (losses) arising during the period $ 4,383 $ ( 1,030 ) $ 3,353 $ ( 5,373 ) $ 1,299 $ ( 4,074 )

Reclassification adjustment for gains included in net income — — — ( 12 ) 3 ( 9 )

Reclassification for net loss on exchanged security, included in net income, net of tax 168 ( 38 ) 130 — — —

Other comprehensive loss $ ( 55 ) $ ( 14 ) $ ( 69 ) $ ( 1,684 ) $ 463 $ ( 1,221 )

The changes in the accumulated balances for each component of other comprehensive income (loss), net of tax for the twelve months ended December 31, 2023 and the six months ended June 30, 2024 were as follows:

Other comprehensive income (loss) $ 4,551 $ ( 1,068 ) $ 3,483 $ ( 5,385 ) $ 1,302 $ ( 4,083 )

The changes in the accumulated balances for each component of other comprehensive income (loss), net of tax for the twelve months ended December 31, 2023 and the nine months ended September 30, 2024 were as follows:

Gains (Losses)

2 unchanged sentences

Income (Loss), net of tax

Beginning Balance, January 1, 2023 $ ( 24,353 ) $ ( 17,656 )

Ending Balance, December 31, 2022 $ ( 24,353 ) $ ( 17,656 )

Current year-to-date other comprehensive income 352 328

Ending balance, December 31, 2023 $ ( 24,001 ) $ ( 17,328 )

Current year-to-date other comprehensive loss ( 55 ) ( 69 )

Ending balance, June 30, 2024 $ ( 24,056 ) $ ( 17,397 )

Reclassifications out of accumulated other comprehensive income (loss) for the three and six month periods ended June 30, 2024 and June 30, 2023 were as follows:

Current year-to-date other comprehensive income 4,551 3,483

Ending balance, September 30, 2024 $ ( 19,450 ) $ ( 13,845 )

Reclassifications out of accumulated other comprehensive income (loss) for the three and nine month periods ended September 30, 2024 and September 30, 2023 were as follows:

Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)

Details about Accumulated Other Comprehensive Income (Loss) Components Three months ended June 30, 2024 Six months ended June 30, 2024 Affected Line Item on the Statement of Operations

Details about Accumulated Other Comprehensive Income (Loss) Components Three months ended September 30, 2024 Nine months ended September 30, 2024 Affected Line Item on the Statement of Operations

Unrealized gains and losses

3 unchanged sentences

Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)

Details about Accumulated Other Comprehensive Income (Loss) Components Three months ended June 30, 2023 Six months ended June 30, 2023 Affected Line Item on the Statement of Operations

Details about Accumulated Other Comprehensive Income (Loss) Components Three months ended September 30, 2023 Nine months ended September 30, 2023 Affected Line Item on the Statement of Operations

Unrealized gains and losses

3 unchanged sentences

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