What changed in this filing

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Item 1. Financial Statements

2021-10-29 compared with 2021-07-30 · 185 added, 142 removed, 1233 unchanged (21% of the section changed)

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Consolidated Balance Sheets

September 30,

2021 December 31,

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Preferred stock, $ 0.01 par value, 2,500,000 shares authorized, no ne issued or outstanding

Common stock, $ 0.01 par value, 25,000,000 shares authorized, 9,323,605 and 9,234,460 shares issued, 8,617,761 and 8,566,960 shares outstanding at June 30, 2021 and December 31, 2020, respectively

Common stock, $ 0.01 par value, 25,000,000 shares authorized, 9,325,746 and 9,234,460 shares issued, 8,483,099 and 8,566,960 shares outstanding at September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 84,959 83,125

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Accumulated other comprehensive loss ( 1,455 ) ( 933 )

Treasury stock, 705,844 and 667,500 shares at June 30, 2021 and December 31, 2020, respectively, at cost

Treasury stock, 842,647 and 667,500 shares at September 30, 2021 and December 31, 2020, respectively, at cost

( 21,269 ) ( 16,553 )

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Consolidated Statements of Income (Unaudited)

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2021 2020 2021 2020

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Collateral liquidation costs 47 45 224 281

Net (gain) loss on foreclosed properties ( 1 ) 348 1 450

Net loss (gain) on foreclosed properties 6 ( 121 ) 7 329

Impairment of tax credit investments — 113 — 2,066

SBA recourse provision (benefit) 245 ( 30 ) 115 ( 5 )

SBA recourse (benefit) provision ( 69 ) 57 45 53

Loss on early extinguishment of debt — — — 744

1 unchanged sentence

Total non-interest expense 18,490 16,758 54,003 51,245

Income before income tax expense (benefit) 10,747 1,395 23,543 5,531

Income tax expense (benefit) 2,512 ( 1,928 ) 5,577 ( 1,070 )

Income before income tax expense 12,017 5,436 35,561 10,967

Income tax expense 2,819 1,143 8,396 73

Net income $ 9,198 $ 4,293 $ 27,165 $ 10,894

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Consolidated Statements of Comprehensive Income (Unaudited)

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2021 2020 2021 2020

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Securities available-for-sale:

Unrealized securities gains (losses) arising during the period 662 ( 264 ) ( 1,576 ) 4,237

Unrealized securities (losses) gains arising during the period ( 1,457 ) ( 377 ) ( 3,033 ) 3,860

Reclassification adjustment for net (gain) loss realized in net income — — ( 29 ) 4

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Interest rate swaps:

Unrealized (losses) gains on interest rate swaps arising during the period ( 271 ) ( 418 ) 1,818 ( 4,043 )

Income tax (expense) benefit ( 94 ) 171 ( 58 ) ( 56 )

Total other comprehensive income (loss) 275 ( 501 ) 170 162

Unrealized gains (losses) on interest rate swaps arising during the period 520 389 2,338 ( 3,654 )

Income tax benefit (expense) 238 ( 6 ) 180 ( 62 )

Total other comprehensive (loss) income ( 692 ) 16 ( 522 ) 178

Comprehensive income $ 8,506 $ 4,309 $ 26,643 $ 11,072

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Balance at June 30, 2020 8,575,134 $ 92 $ 82,121 $ 132,882 $ ( 1,186 ) $ ( 16,347 ) $ 197,562

Net income — — — 4,293 — — 4,293

Other comprehensive loss — — — — 16 — 16

Share-based compensation - restricted shares, net

( 4,410 ) — 499 — — — 499

Cash dividends ($ 0.165 per share)

— — — ( 1,415 ) — — ( 1,415 )

Treasury stock purchased ( 9,010 ) — — — — ( 170 ) ( 170 )

Balance at September 30, 2020 8,561,714 $ 92 $ 82,620 $ 135,760 $ ( 1,170 ) $ ( 16,517 ) $ 200,785

Common Shares Outstanding Common

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Balance at June 30, 2021 8,617,761 $ 93 $ 84,343 $ 155,300 $ ( 763 ) $ ( 17,521 ) $ 221,452

Net income — — — 9,198 — — 9,198

Other comprehensive loss — — — — ( 692 ) — ( 692 )

Share-based compensation - restricted shares and employee stock purchase plan 651 — 578 — — — 578

Issuance of common stock under the employee stock purchase plan 1,490 — 38 — — — 38

Cash dividends ($ 0.18 per share)

— — — ( 1,546 ) — — ( 1,546 )

Treasury stock purchased ( 136,803 ) — — — — ( 3,748 ) ( 3,748 )

Balance at September 30, 2021 8,483,099 $ 93 $ 84,959 $ 162,952 $ ( 1,455 ) $ ( 21,269 ) $ 225,280

See accompanying Notes to Unaudited Consolidated Financial Statements.

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Consolidated Statements of Cash Flows (Unaudited)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

(In Thousands)

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Provision for loan and lease losses ( 5,295 ) 12,487

SBA recourse provision (benefit) 115 ( 5 )

SBA recourse provision 45 53

Derivative credit valuation adjustment ( 376 ) —

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Net decrease (increase) in loans and leases 23,969 ( 456,933 )

Investments in limited partnerships ( 672 ) ( 750 )

Returns of investments in limited partnerships 60 —

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Purchases of leasehold improvements and equipment, net ( 224 ) ( 204 )

Proceeds from sale of leasehold improvements and equipment 12 —

Purchases of bank-owned life insurance policies — ( 8,000 )

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Non-cash investing and financing activities:

Increase in right-of-use exchange for operating lease liability 316 —

Right-of-use assets obtained in exchange for operating lease liabilities 316 190

Transfer from loans and leases to foreclosed properties 145 80

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generally accepted accounting principles (“GAAP”).

FBB operates as a commercial banking institution primarily in Wisconsin and the greater Kansas City Metro.

FBB operates as a commercial banking institution primarily in Wisconsin and the greater Kansas City metropolitan area.

The Bank provides a full range of financial services to businesses, business owners, executives, professionals, and high net worth individuals.

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Material estimates that could significantly change in the near-term include the value of securities and interest rate swaps, level of the allowance for loan and lease losses, lease residuals, property under operating leases, goodwill, level of the Small Business Administration (“SBA”) recourse reserve, and income taxes.

The results of operations for the three and six months ended June 30, 2021, are not necessarily indicative of results that may be expected for any other interim period or the entire fiscal year ending December 31, 2021.

The results of operations for the three and nine months ended September 30, 2021, are not necessarily indicative of results that may be expected for any other interim period or the entire fiscal year ending December 31, 2021.

Certain amounts in prior periods may have been reclassified to conform to the current presentation.

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Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No.

In June 2016, the Financial Accounting Standards Board (FASB) issued ASU No.

2016-13, “ Financial Instruments- Credit Losses (Topic 326), ” which is often referred to as CECL.

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The Corporation has established a cross-functional committee and has implemented a third-party software solution to assist with the adoption of the standard.

Management has gathered all necessary data and reviewed potential methods to calculate the expected credit losses.

Management is currently calculating sample expected loss computations and developing the allowance

methodology and assumptions that will be used under the new standard.

Management has gathered all necessary

data and reviewed potential methods to calculate the expected credit losses.

Management is currently calculating sample expected loss computations and developing the allowance methodology and assumptions that will be used under the new standard.

Management will continue to progress on its implementation project plan and improve the Corporation’s approach throughout the deferral period.

In March 2020, the FASB issued ASU 2020-04 “Reference Rate Reform (Topic 848),” which provides temporary, optional practical expedients and exceptions to ease the potential burden of transitioning to the new reference rates which will replace LIBOR and other reference rates expected to be discontinued.

Adoption of the provisions of ASU 2020-04 is optional.

The amendments are effective for all entities from the beginning of the interim period that includes the issuance date of the ASU.

An entity may elect to apply the amendments prospectively through December 31, 2022.

The Corporation is currently evaluating the impact of ASU 2020-04 on its financial position, results of operations and liquidity.

The adoption of this standard is not expected to have a material effect on the Corporation's operating results or financial condition.

In January, 2021, the FASB released ASU 2021-01, “Reference Rate Reform (Topic 848),” which clarifies that certain optional expedients and exceptions in topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition related to reference rate reform.

The amendments in this update are effective immediately for all entities.

An entity may elect to apply the amendments in the update on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued.

The Corporation does not expect this amendment to have a material effect on its financial statements.

In March 2020, the FASB issued ASU No.

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

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” These amendments provide temporary optional guidance to ease the potential burden in accounting for reference rate reform.

The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.

It is intended to help stakeholders during the global market-wide reference rate transition period.

In January 2021, the FASB issued ASU 2021-01 which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

The guidance is effective for all entities as of March 12, 2020 through December 31, 2022.

The Corporation continues to implement its transition plan toward cessation of LIBOR and the modification of its loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR.

The Corporation expects to utilize the LIBOR transition relief allowed under ASU 2020-04 and ASU 2020-01, as applicable, and does not expect such adoption to have a material impact on its accounting and disclosures.

The Corporation will continue to assess the impact as the reference rate transition occurs over the next two years.

In August 2021, the FASB issued Accounting Standards Update (ASU) No.

2021-06 “Presentation of Financial Statements (Topic 205), Financial Services-Depository and Lending (Topic 942), and Financial Services-Investment Companies (Topic 946):

Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No.

33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, and No.

33-10835, Update of Statistical Disclosures for Bank and Savings and Loan Registrants.” This ASU amends the SEC sections of the Codification related to Final Rule Releases No.

33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, and No.

33-10835, Update to Statistical Disclosures for Bank and Savings and Loan Registrants.

The guidance is effective upon its addition to the FASB codification.

The Corporation is assessing the impact of ASU 2021-06 and its impact on its disclosures.

Note 2 — Other Events

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Based on the national and local guidelines, the Corporation developed a phased-in approach for returning to the office.

Under this phased-in approach, offices opened in early June 2021.

Under this phased-in approach, employees began returning to office in early June 2021.

The return to office included enhanced safety protocols and processes to provide the best working environment possible for employees.

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The outbreak has had a significant adverse impact on certain industries the Corporation serves, including retail, restaurants and food services, hospitality, and entertainment.

As of June 30, 2021, the Corporation’s aggregate outstanding exposure in these segments was $ 195.5 million, or 9.6 % of the Corporation’s gross loans and leases less net PPP loans.

Because of the significant uncertainties related to the ultimate duration of the COVID-19 pandemic and its effects on clients and prospects, and on the national and local economy as a whole, there can be no assurances as to how the crisis may ultimately affect the Corporation’s loan portfolio.

As of September 30, 2021, the Corporation’s aggregate outstanding exposure in these segments was $ 189.8 million, or 9.2 % of the Corporation’s gross loans and leases less Paycheck Protection Program (“PPP”) loans.

Because of the significant uncertainties related to the ultimate duration of the COVID-19 pandemic and its effects on clients and prospects, and on the national and local economy as a whole, there can be no assurances as to the future effect of the ongoing pandemic on the Corporation’s loan portfolio.

The Corporation provided loan payment deferrals for certain borrowers impacted by COVID-19 who were current in their payments at the inception of the Corporation’s loan modification program.

As of June 30, 2021, the Corporation had five deferral requests outstanding, representing $ 20.5 million in total loans, or 1.0 % of gross loans and leases, excluding net PPP loans, compared to $ 27.0 million, or 1.4 % of gross loans and leases, excluding net PPP loans as of December 31, 2020.

Of the $ 20.5 million of deferred loans outstanding as of June 30, 2021, $ 19.8 million relate to two hospitality credits which went on deferral during the second quarter of 2021 and are both accruing interest and current on payments.

As of September 30, 2021, the Corporation had five deferral requests outstanding, representing $ 24.1 million in total loans, or 1.2 % of gross loans and leases, excluding PPP loans, compared to $ 27.0 million, or 1.4 % of gross loans and leases, excluding PPP loans as of December 31, 2020.

Of the $ 24.1 million of deferred loans outstanding as of September 30, 2021, $ 23.5 million relate to three hospitality credits which received

principal deferrals and are accruing interest and current on interest payments.

For loans subject to the program, each borrower is required to resume making regularly scheduled loan payments at the end of the modification period and the deferred amounts will be moved to the end of the loan term.

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On December 27, 2020, the Consolidated Appropriations Act, 2021 (“CAA”) was signed into law.

The CAA is a $2.3 trillion spending bill that combines $900 billion in stimulus relief for the COVID-19 pandemic in the United States with a $1.4 trillion omnibus spending bill for the 2021 federal fiscal year and prevents a government shutdown.

The CAA allows for a second draw for certain businesses under the PPP.

Like the original program, loan proceeds are available to help fund payroll and group health benefit costs, as well as certain mortgage interest, rent and utilities.

In addition, authorized costs now also include

COVID-19 related worker protection costs, uninsured property damage costs due to looting or vandalism during 2020 and certain supplier costs and expenses for operations.

The CAA also expands benefit costs to include group dental, vision, life and disability benefits.

The CAA is a $2.3 trillion spending bill that combined $900 billion in stimulus relief for the COVID-19 pandemic in the United States with a $1.4 trillion omnibus spending bill for the 2021 federal fiscal year and prevented a government shutdown.

The CAA allowed for a second draw for certain businesses under the PPP.

Like the original program, loan proceeds were available to help fund payroll and group health benefit costs, as well as certain mortgage interest, rent and utilities.

In addition, authorized costs also included COVID-19 related worker protection costs, uninsured property damage costs due to looting or vandalism during 2020 and certain supplier costs and expenses for operations.

The CAA also expanded benefit costs to include group dental, vision, life and disability benefits.

All of these changes are generally retroactive to the original CARES Act, meaning that the changes may be taken into account in processing loan forgiveness with respect to an original PPP loan.

The Corporation began accepting and processing applications for second draw PPP loans on January 13, 2021.

As of June 30, 2021, the Corporation had $ 123.8 million in gross PPP loans outstanding and deferred processing fees outstanding of $ 3.1 million.

The Corporation accepted and processed applications for second draw PPP loans from January 13, 2021 through the application deadline of May 31, 2021.

As of September 30, 2021, the Corporation had $ 65.9 million in gross PPP loans outstanding and deferred processing fees outstanding of $ 1.4 million.

The processing fees are deferred and recognized over the contractual life of the loan, or accelerated at forgiveness, as an adjustment of yield using the interest method.

During the three and six months ended June 30, 2021, $ 2.5 million and $ 4.8 million, respectively, was recognized in loans and leases interest income in the unaudited Consolidated Statements of Income.

During the three and nine months ended September 30, 2021, $ 1.7 million and $ 6.4 million, respectively, was recognized in loans and leases interest income in the unaudited Consolidated Statements of Income.

The SBA provides a guaranty to the lender of 100% of principal and interest, unless the lender violated an obligation under the agreement.

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Diluted earnings per share are computed by dividing net income allocated to common shares adjusted for reallocation of undistributed earnings of unvested restricted shares by the weighted average number of shares determined for the basic earnings per common share computation plus the dilutive effect of common stock equivalents using the treasury stock method.

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2021 2020 2021 2020

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The Plan is administered by the Compensation Committee of the Board of Directors of the Corporation and provides for the grant of equity ownership opportunities through incentive stock options and nonqualified stock options (“Stock Options”), restricted stock, restricted stock units, dividend equivalent units, and any other type of award permitted by the Plan.

As of June 30, 2021, 219,531 shares were available for future grants under the Plan.

As of September 30, 2021, 218,880 shares were available for future grants under the Plan.

Shares covered by awards that expire, terminate, or lapse will again be available for the grant of awards under the Plan.

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The compensation expense for the awards expected to vest for the percentage of performance based restricted stock units subject to the TSR metric are never adjusted, and are amortized utilizing the accounting fair value provided using a Monte Carlo pricing model.

Restricted stock activity for the year ended December 31, 2020 and the six months ended June 30, 2021 was as follows:

Restricted stock activity for the year ended December 31, 2020 and the nine months ended September 30, 2021 was as follows:

Restricted Shares Weighted Average

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Forfeited ( 6,633 ) 22.94

Nonvested balance as of June 30, 2021 239,410 $ 24.21

Nonvested balance as of September 30, 2021 216,070 $ 24.55

(1) The number of restricted shares/units shown includes the shares that would be granted if the target level of performance is achieved related to the performance based restricted stock units.

The number of shares actually issued may vary.

As of June 30, 2021, the Corporation had $ 4.1 million of unvested compensation expense, which the Corporation expects to recognize over a weighted-average period of approximately 2.4 years.

As of September 30, 2021, the Corporation had $ 3.6 million of unvested compensation expense, which the Corporation expects to recognize over a weighted-average period of approximately 2.2 years.

Employee Stock Purchase Plan

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The ESPP is treated as a compensatory item for purposes of share-based compensation expense.

During the six months ended June 30, 2021, the Corporation issued 3,469 shares of common stock under the ESPP.

As of June 30, 2021, 242,564 shares remained available for issuance under the ESPP.

During the nine months ended September 30, 2021, the Corporation issued 4,959 shares of common stock under the ESPP.

As of September 30, 2021, 241,074 shares remained available for issuance under the ESPP.

Share-based compensation expense related to restricted stock included in the unaudited Consolidated Statements of Income was as follows:

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2021 2020 2021 2020

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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 were as follows:

As of June 30, 2021

As of September 30, 2021

Amortized Cost Gross

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Available-for-sale:

treasuries $ 4,970 $ 1 $ — 4,971

government agency securities - government-sponsored enterprises 20,376 264 ( 75 ) 20,565

$ 20,929 $ 279 $ ( 64 ) $ 21,144

Municipal securities 30,403 422 ( 328 ) 30,497

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The amortized cost and fair value of securities held-to-maturity and the corresponding amounts of gross unrealized gains and losses were as follows:

As of June 30, 2021

As of September 30, 2021

Amortized Cost Gross

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Other securities represent certificates of deposit of insured banks and savings institutions with an original maturity greater than three months.

There were seven sales of available-for-sale securities that occurred during the three and six months ended June 30, 2021.

There were no sales of available-for-sale securities that occurred during three months ended June 30, 2020 and one sale that occurred during the six months ended June 30, 2020.

At June 30, 2021 and December 31, 2020, securities with a fair value of $ 37.0 million and $ 73.7 million, respectively, were pledged to secure various obligations, including interest rate swap contracts.

The amortized cost and fair value of securities by contractual maturity at June 30, 2021 are shown below.

There were no sales of available-for-sale securities that occurred during the three months ended September 30, 2021 and seven sales of available-for-sale securities that occurred during the nine months ended September 30, 2021.

There were no sales of available-for-sale securities that occurred during three months ended September 30, 2020 and one sale that occurred during the nine months ended September 30, 2020.

At September 30, 2021 and December 31, 2020, securities with a fair value of $ 44.4 million and $ 73.7 million, respectively, were pledged to secure various obligations, including interest rate swap contracts.

The amortized cost and fair value of securities by contractual maturity at September 30, 2021 are shown below.

Actual maturities may differ from contractual maturities because issuers have the right to call or prepay certain obligations with or without call or prepayment penalties.

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$ 192,774 $ 194,056 $ 21,196 $ 21,825

The tables below show the Corporation’s gross unrealized losses and fair value of available-for-sale investments aggregated by investment category and length of time that individual investments were in a continuous loss position at June 30, 2021 and December 31, 2020.

At June 30, 2021, the Corporation held 23 available-for-sale securities that were in an unrealized loss position.

At September 30, 2021, the Corporation held 42 available-for-sale securities that were in an unrealized loss position.

Such securities have not experienced credit rating downgrades;

however, they have primarily declined in value due to the current interest rate environment.

At June 30, 2021, the Corporation held no available-for-sale securities that had been in a continuous unrealized loss position for twelve months or greater.

At September 30, 2021, the Corporation held no available-for-sale securities that had been in a continuous unrealized loss position for twelve months or greater.

The Corporation also has not specifically identified available-for-sale securities in a loss position that it intends to sell in the near term and does not believe that it will be required to sell any such securities.

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Based on the Corporation’s evaluation, it is expected that the Corporation will recover the entire amortized cost basis of each security.

Accordingly, no other-than-temporary impairment was recorded in the unaudited Consolidated Statements of Income for the three and six months ended June 30, 2021 and 2020.

Accordingly, no other-than-temporary impairment was recorded in the unaudited Consolidated Statements of Income for the three and nine months ended September 30, 2021 and 2020.

A summary of unrealized loss information for securities available-for-sale, categorized by security type and length of time for which the security has been in a continuous unrealized loss position, follows:

As of June 30, 2021

As of September 30, 2021

Less than 12 Months 12 Months or Longer Total

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13,384 328 — — 13,384 328

Residential mortgage-backed securities - government issued

7,910 58 — — 7,910 58

Residential mortgage-backed securities - government-sponsored enterprises

47,459 571 — — 47,459 571

Commercial mortgage-backed securities - government issued

2,252 46 — — 2,252 46

Commercial mortgage-backed securities - government-sponsored enterprises

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$ 33,543 $ 98 $ 4,031 $ 34 $ 37,574 $ 132

The tables below show the Corporation’s gross unrealized losses and fair value of held-to-maturity investments, aggregated by investment category and length of time that individual investments were in a continuous loss position at June 30, 2021 and December 31, 2020.

At June 30, 2021, the Corporation held two held-to-maturity securities that were in an unrealized loss position and had been in a continuous loss position for twelve months or greater.

At September 30, 2021, the Corporation held three held-to-maturity securities that were in an unrealized loss position.

Such securities have not experienced credit rating downgrades;

however, they have primarily declined in value due to the current interest rate environment.

At September 30, 2021, the Corporation held two held-to-maturity securities that had been in a continuous unrealized loss position for twelve months or greater.

It is expected that the Corporation will recover the entire amortized cost basis of each held-to-maturity security based upon an evaluation of aforementioned factors.

Accordingly, no other-than-temporary impairment was recorded in the unaudited Consolidated Statements of Income for the three and six months ended June 30, 2021 and 2020.

Accordingly, no other-than-temporary impairment was recorded in the unaudited Consolidated Statements of Income for the three and nine months ended September 30, 2021 and 2020.

A summary of unrealized loss information for securities held-to-maturity, categorized by security type and length of time for which the security has been in a continuous unrealized loss position, follows:

As of June 30, 2021

As of September 30, 2021

Less than 12 Months 12 Months or Longer Total

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Loan and lease receivables consist of the following:

September 30,

2021 December 31,

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$ 2,098,630 $ 2,117,449

As of June 30, 2021 and December 31, 2020, the Corporation had $ 123.8 million and $ 228.9 million, respectively, in gross PPP loans outstanding included in the commercial and industrial loan category and deferred processing fees outstanding of $ 3.1 million and $ 3.5 million, respectively, included in deferred loan fees.

As of September 30, 2021 and December 31, 2020, the Corporation had $ 65.9 million and $ 228.9 million, respectively, in gross PPP loans outstanding included in the commercial and industrial loan category and deferred processing fees outstanding of $ 1.4 million and $ 3.5 million, respectively, included in deferred loan fees.

The processing fees are deferred and recognized over the contractual life of the loan, or accelerated at forgiveness, as an adjustment of yield using the interest method.

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The total amount of the Corporation’s ownership of SBA loans is comprised of the following:

September 30,

2021 December 31,

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Total SBA loans $ 131,201 $ 292,714

As of June 30, 2021 and December 31, 2020, $ 3.4 million and $ 9.3 million of SBA loans were considered impaired, respectively.

As of September 30, 2021 and December 31, 2020, $ 1.9 million and $ 9.3 million of SBA loans were considered impaired, respectively.

Loans transferred to third parties consist of the guaranteed portions of SBA loans which the Corporation sold in the secondary market and participation interests in other, non-SBA originated loans.

The total principal amount of the guaranteed portions of SBA loans sold during the three months ended June 30, 2021, and 2020, was $ 9.0 million and $ 6.5 million, respectively.

The total principal amount of the guaranteed portions of SBA loans sold during the six months ended June 30, 2021, and 2020, was $ 19.6 million and $ 9.2 million, respectively.

Each of the transfers of these financial assets met the qualifications for sale accounting, and therefore all of the loans transferred during the three and six months ended June 30, 2021, and 2020, have been derecognized in the unaudited Consolidated Financial Statements.

The total principal amount of the guaranteed portions of SBA loans sold during the three months ended September 30, 2021, and 2020, was $ 5.3 million and $ 7.9 million, respectively.

The total principal amount of the guaranteed portions of SBA loans sold during the nine months ended September 30, 2021, and 2020, was $ 25.0 million and $ 17.2 million, respectively.

Each of the transfers of these financial assets met the qualifications for sale accounting, and therefore all of the loans transferred during the three and nine months ended September 30, 2021, and 2020, have been derecognized in the unaudited Consolidated Financial Statements.

The guaranteed portions of SBA loans were transferred at their fair value and the related gain was recognized upon the transfer as non-interest income in the unaudited Consolidated Financial Statements.

The total outstanding balance of sold SBA loans at June 30, 2021, and December 31, 2020, was $ 87.8 million and $ 79.5 million, respectively.

The total principal amount of transferred participation interests in other, non-SBA originated loans during the three months ended June 30, 2021, and 2020, was $ 11.8 million and $ 10.3 million, respectively.

The total principal amount of transferred participation interests in other, non-SBA originated loans during the six months ended June 30, 2021, and 2020, was $ 16.9 million and $ 22.2 million, respectively, all of which were treated as sales and derecognized under the applicable accounting guidance at the time of transfer.

The total outstanding balance of sold SBA loans at September 30, 2021, and December 31, 2020, was $ 90.5 million and $ 79.5 million, respectively.

The total principal amount of transferred participation interests in other, non-SBA originated loans during the three months ended September 30, 2021, and 2020, was $ 18.9 million and $ 7.7 million, respectively.

The total principal amount of transferred participation interests in other, non-SBA originated loans during the nine months ended September 30, 2021, and 2020, was $ 35.8 million and $ 29.9 million, respectively, all of which were treated as sales and derecognized under the applicable accounting guidance at the time of transfer.

No gain or loss was recognized on participation interests in other, non-SBA originated loans as they were transferred at or near the date of loan origination and the payments received for servicing the portion of the loans participated represents adequate compensation.

The total outstanding balance of these transferred loans at June 30, 2021, and December 31, 2020, was $ 157.9 million and $ 153.6 million, respectively.

As of June 30, 2021, and December 31, 2020, the total amount of the Corporation’s partial ownership of these transferred loans on the unaudited Consolidated Balance Sheets was $ 269.5 million and $ 276.5 million, respectively.

As of June 30, 2021 and December 31, 2020, the non-SBA originated participation portfolio contained an impaired loan totaling $ 3.0 million with a sold portion of $ 4.2 million.

The total outstanding balance of these transferred loans at September 30, 2021, and December 31, 2020, was $ 172.2 million and $ 153.6 million, respectively.

As of September 30, 2021, and December 31, 2020, the total amount of the Corporation’s partial ownership of these transferred loans on the unaudited Consolidated Balance Sheets was $ 293.7 million and $ 276.5 million, respectively.

As of September 30, 2021, the non-SBA originated participation portfolio contained no impaired loans.

As of December 31, 2020, the non-SBA originated participation portfolio contained an impaired loan totaling $ 3.0 million with a sold portion of $ 4.2 million.

The Corporation does not share in the participant’s portion of any potential charge-offs.

There were no loan participations purchased on the unaudited Consolidated Balance Sheets as of June 30, 2021, and the total of loan participations purchased as of December 31, 2020 was $ 410,000 .

There were no loan participations purchased on the unaudited Consolidated Balance Sheets as of September 30, 2021, and the total of loan participations purchased as of December 31, 2020 was $ 410,000 .

The following tables illustrate ending balances of the Corporation’s loan and lease portfolio, including impaired loans by class of receivable, and considering certain credit quality indicators:

June 30, 2021

September 30, 2021

I II III IV Total

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The risk rating grades follow a consistent definition and are then applied to specific loan types based on the nature of the loan.

Each risk rating is subjective and, depending on the size and nature of the credit, subject to various levels of review and concurrence on

the stated risk rating.

rating is subjective and, depending on the size and nature of the credit, subject to various levels of review and concurrence on the stated risk rating.

In addition to its nine grade risk rating system, the Corporation groups loans into four loan and related risk categories which determine the level and nature of review by management.

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The delinquency aging of the loan and lease portfolio by class of receivable was as follows:

June 30, 2021

September 30, 2021

Days Past Due 60-89

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The Corporation’s total impaired assets consisted of the following:

September 30,

2021 December 31,

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Total impaired assets $ 7,658 $ 26,697

September 30,

2021 December 31,

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Allowance for loan and lease losses to non-accrual loans and leases 331.98 107.15

As of June 30, 2021, and December 31, 2020, $ 523,000 and $ 6.5 million of the non-accrual loans and leases were considered troubled debt restructurings, respectively.

No specific reserves were allocated to troubled debt restructurings as of June 30, 2021 and $ 760,000 were allocated as of December 31, 2020.

There were no unfunded commitments associated with troubled debt restructured loans and leases as of June 30, 2021.

As of September 30, 2021 and December 31, 2020, $ 857,000 and $ 6.5 million of the non-accrual loans and leases were considered troubled debt restructurings, respectively.

As of September 30, 2021 and December 31, 2020, $ 201,000 and $ 760,000 in specific reserves were allocated to troubled debt restructurings, respectively.

There were no unfunded commitments associated with troubled debt restructured loans and leases as of September 30, 2021.

All loans and leases modified as a troubled debt restructuring are measured for impairment.

The nature and extent of the impairment of restructured loans, including those which have experienced a default, is considered in the determination of an appropriate level of the allowance for loan and lease losses.

During the three and six months ended June 30, 2021, no loans were modified to a troubled debt restructuring.

The following table provides the number of loans modified in a troubled debt restructuring and the pre- and post-modification recorded investment by class of receivable:

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

Number of Loans Pre-Modification

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(Dollars in Thousands)

Commercial and industrial 1 73 70 2 129 121

Total 1 $ 73 $ 70 2 $ 129 $ 121

For the Three Months Ended September 30, For the Nine Months Ended September 30,

Number of Loans Pre-Modification

Investment Post-Modification

Investment Number of Loans Pre-Modification

Investment Post-Modification

(Dollars in Thousands)

Commercial real estate:

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Restructured loan modifications may include payment schedule modifications, interest rate concessions, maturity date extensions, principal reduction, or some combination of these concessions.

During the three and six months ended June 30, 2020, the modification of terms primarily consisted of payment schedule modifications or principal reductions.

There were no loans modified in troubled debt restructurings during the previous 12 months which subsequently defaulted during the three and six months ended June 30, 2021.

There were two commercial and industrial loans totaling $ 2.7 million and four owner-occupied commercial real estate loans totaling $ 3.8 million modified in a troubled debt restructuring which subsequently defaulted during the three and six months ended June 30, 2020.

During the three and nine months ended September 30, 2021, the modification of terms primarily consisted of payment schedule modifications.

During the three and nine months ended September 30, 2020, the modification of terms primarily consisted of payment schedule modifications or principal reductions.

There was one commercial and industrial loan totaling $ 281,000 modified in a troubled debt restructuring during the previous 12 months which subsequently defaulted during the three and nine months ended September 30, 2021.

There were two commercial and industrial loans totaling $ 703,000 and two owner-occupied commercial real estate loans totaling $ 272,000 modified in a troubled debt restructuring which subsequently defaulted during the three and nine months ended September 30, 2020.

The following represents additional information regarding the Corporation’s impaired loans and leases, including performing troubled debt restructurings, by class:

As of and for the Six Months Ended June 30, 2021

As of and for the Nine Months Ended September 30, 2021

Investment (1)

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(2) Average recorded investment is calculated primarily using daily average balances.

The difference between the recorded investment of loans and leases and the unpaid principal balance of $ 3.9 million and $ 14.6 million as of June 30, 2021, and December 31, 2020, respectively, represents partial charge-offs of loans and leases resulting from losses due to the valuation of the collateral securing the loans and leases being below the carrying values of the loans and leases.

Impaired loans and leases also included $ 56,000 and $ 46,000 of loans as of June 30, 2021, and December 31, 2020, respectively, that were performing troubled debt restructurings, and although not on non-accrual, were reported as impaired due to the concession in terms.

The difference between the recorded investment of loans and leases and the unpaid principal balance of $ 144,000 and $ 14.6 million as of September 30, 2021, and December 31, 2020, respectively, represents partial charge-offs of loans and leases resulting from losses due to the valuation of the collateral securing the loans and leases being below the carrying values of the loans and leases.

Impaired loans and leases also included $ 53,000 and $ 46,000 of loans as of September 30, 2021, and December 31, 2020, respectively, that were performing troubled debt restructurings, and although not on non-accrual, were reported as impaired due to the concession in terms.

When a loan is placed on non-accrual, interest accrual is discontinued and previously accrued but uncollected interest is deducted from interest income.

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A summary of the activity in the allowance for loan and lease losses by portfolio segment is as follows:

As of and for the Three Months Ended June 30, 2021

As of and for the Three Months Ended September 30, 2021

Real Estate Commercial

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Recoveries 1,501 128 5 1,634

Net charge-offs ( 165 ) ( 2,161 ) ( 23 ) ( 2,349 )

Net recoveries (charge-offs) 1,494 ( 228 ) 4 1,270

Provision for loan and lease losses ( 2,736 ) 563 ( 96 ) ( 2,269 )

Ending balance $ 15,634 $ 8,216 $ 826 $ 24,676

As of and for the Three Months Ended June 30, 2020

As of and for the Three Months Ended September 30, 2020

Real Estate Commercial

5 unchanged sentences

Recoveries — 21 2 23

Net charge-offs ( 25 ) ( 722 ) ( 6 ) ( 753 )

Net (charge-offs) recoveries — ( 484 ) 2 ( 482 )

Provision for loan and lease losses 3,742 127 ( 34 ) 3,835

Ending balance $ 20,180 $ 9,822 $ 815 $ 30,817

As of and for the Six Months Ended June 30, 2021

As of and for the Nine Months Ended September 30, 2021

Real Estate Commercial

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Ending balance $ 15,634 $ 8,216 $ 826 $ 24,676

As of and for the Six Months Ended June 30, 2020

As of and for the Nine Months Ended September 30, 2020

Real Estate Commercial

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The following tables provide information regarding the allowance for loan and lease losses and balances by type of allowance methodology.

As of June 30, 2021

As of September 30, 2021

Real Estate Commercial

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Note 7 — Leases

The Corporation leases various office spaces and specialty financing production offices under non-cancellable operating leases which expire on various dates through 2028.

The Corporation leases various office spaces and specialized lending production offices under non-cancellable operating leases which expire on various dates through 2028.

The Corporation also leases office equipment.

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During 2021, the Corporation extended the term of two of its office spaces by one and three years, resulting in a $ 316,000 increase in the right-of-use assets in exchange for a lease liability.

The Corporation entered into a sublease for office space it vacated in its Kansas City Metro market which expires in 2023.

The Corporation entered into a sublease for office space it vacated in its Kansas City metropolitan area which expires in 2023.

The components of total lease expense were as follows:

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2021 2020 2021 2020

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Short-term lease cost

31 52 119 174

Variable lease cost

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Quantitative information regarding the Corporation’s operating leases was as follows:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Weighted-average remaining lease term (in years)

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A summary of accrued interest receivable and other assets was as follows:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(In Thousands)

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Average balances represent year to date averages.

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Balance Average

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Total deposits $ 1,904,282 $ 1,895,680 0.20 $ 1,855,516 $ 1,711,092 0.52

A summary of annual maturities of in-market and wholesale certificates of deposit at June 30, 2021 is as follows:

A summary of annual maturities of in-market and wholesale certificates of deposit at September 30, 2021 is as follows:

(In Thousands)

2 unchanged sentences

Thereafter 490

Wholesale deposits include $ 29.5 million and $ 115.0 million of wholesale certificates of deposit and non-reciprocal interest-bearing transaction accounts, respectively, at June 30, 2021, compared to $ 47.5 million and $ 125.0 million of wholesale certificates of deposit and non-reciprocal interest-bearing transaction accounts, respectively, at December 31, 2020.

Deposits include $ 12.4 million and $ 28.7 million of certificates of deposit and wholesale deposits which are denominated in amounts of $250,000 or more at June 30, 2021 and December 31, 2020, respectively.

Wholesale deposits include $ 19.6 million and $ 55.0 million of wholesale certificates of deposit and non-reciprocal interest-bearing transaction accounts, respectively, at September 30, 2021, compared to $ 47.5 million and $ 125.0 million of wholesale certificates of deposit and non-reciprocal interest-bearing transaction accounts, respectively, at December 31, 2020.

Deposits include $ 10.0 million and $ 28.7 million of certificates of deposit and wholesale deposits which are denominated in amounts greater than $250,000 at September 30, 2021 and December 31, 2020, respectively.

Note 10 — FHLB Advances, Other Borrowings and Junior Subordinated Notes

1 unchanged sentence

Average balances represent year to date averages.

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Balance Weighted Average

13 unchanged sentences

$ 404,162 $ 425,458 1.84 $ 429,229 $ 429,624 1.91

A summary of annual maturities of borrowings at June 30, 2021 is as follows:

A summary of annual maturities of borrowings at September 30, 2021 is as follows:

(In Thousands)

5 unchanged sentences

As of November 2, 2020, the borrowing was paid in full.

As of June 30, 2021, the Corporation had other borrowings of $ 8.5 million, which consisted of $ 7.6 million of sold loans accounted for as secured borrowings because they did not qualify for true sale accounting, and borrowings associated with our investment in a community development entity.

As of June 30, 2021 and December 31, 2020, the Corporation was in compliance with its debt covenants under its third-party secured senior line of credit.

As of September 30, 2021, the Corporation had other borrowings of $ 12.5 million, which consisted of $ 11.5 million of sold loans accounted for as secured borrowings because they did not qualify for true sale accounting, and borrowings associated with our investment in a community development entity.

As of September 30, 2021 and December 31, 2020, the Corporation was in compliance with its debt covenants under its third-party secured senior line of credit.

Per the promissory note dated February 19, 2021, the Corporation pays a fee on this line of credit.

During the six months ended June 30, 2021 and 2020, the Corporation incurred interest expense of $ 6,600 and $ 7,000 , respectively, due to this fee.

During both the nine months ended September 30, 2021 and 2020, the Corporation incurred interest expense of $ 10,000 due to this fee.

Note 11 — Commitments and Contingencies

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In addition, the Corporation retains the option to repurchase the sold guaranteed portion of an SBA loan if the loan defaults.

Management has assessed estimated losses inherent in the outstanding guaranteed portions of SBA loans sold in accordance with ASC 450, Contingencies , and determined a recourse reserve based on the probability of future losses for these loans to be $ 830,000 at June 30, 2021, which is reported in accrued interest payable and other liabilities on the unaudited Consolidated Balance Sheets.

Management has assessed estimated losses inherent in the outstanding guaranteed portions of SBA loans sold in accordance with ASC 450, Contingencies , and determined a recourse reserve based on the probability of future losses for these loans to be $ 760,000 at September 30, 2021, which is reported in accrued interest payable and other liabilities on the unaudited Consolidated Balance Sheets.

The summary of the activity in the SBA recourse reserve is as follows:

As of and for the Three Months Ended June 30, As of and for the Six Months Ended June 30,

As of and for the Three Months Ended September 30, As of and for the Nine Months Ended September 30,

2021 2020 2021 2020

1 unchanged sentence

Balance at the beginning of the period $ 829 $ 1,007 $ 723 $ 1,345

SBA recourse provision (benefit) 245 ( 30 ) 115 ( 5 )

SBA recourse (benefit) provision ( 69 ) 57 45 53

Charge-offs, net — ( 4 ) ( 8 ) ( 338 )

13 unchanged sentences

Assets and liabilities measured at fair value on a recurring basis, segregated by fair value hierarchy level, are summarized below:

June 30, 2021

September 30, 2021

Fair Value Measurements Using

2 unchanged sentences

Securities available-for-sale:

treasuries $ — $ 4,971 $ — $ 4,971

government agency securities - government-sponsored enterprises — 20,565 — 20,565

21 unchanged sentences

Interest rate swaps — 54,927 — 54,927

For assets and liabilities measured at fair value on a recurring basis, there were no transfers between the levels during the three and six months ended June 30, 2021 or the year ended December 31, 2020 related to the above measurements.

For assets and liabilities measured at fair value on a recurring basis, there were no transfers between the levels during the three and nine months ended September 30, 2021 or the year ended December 31, 2020 related to the above measurements.

Assets and liabilities measured at fair value on a non-recurring basis, segregated by fair value hierarchy are summarized below:

June 30, 2021

September 30, 2021

Fair Value Measurements Using

11 unchanged sentences

Loan servicing rights — — 1,325 1,325

Impaired loans were written down to the fair value of their underlying collateral less costs to sell of $ 7.9 million and $ 17.2 million at June 30, 2021 and December 31, 2020, respectively, through the establishment of specific reserves or by recording charge-offs when the carrying value exceeded the fair value of the underlying collateral of impaired loans.

Impaired loans were written down to the fair value of their underlying collateral less costs to sell of $ 4.0 million and $ 17.2 million at September 30, 2021 and December 31, 2020, respectively, through the establishment of specific reserves or by recording charge-offs when the carrying value exceeded the fair value of the underlying collateral of impaired loans.

Valuation techniques consistent with the market approach, income approach, or cost approach were used to measure fair value.

These techniques included observable inputs for the individual impaired loans being evaluated, such as current appraisals, recent sales of similar assets, or other observable market data, and unobservable inputs, typically when discounts are applied to appraisal values to adjust such values to current market conditions or to reflect net realizable values.

The quantification of unobservable inputs for Level 3 impaired loan values range from 10 % - 90 % as of the measurement date of June 30, 2021.

The quantification of unobservable inputs for Level 3 impaired loan values range from 13 % - 90 % as of the measurement date of September 30, 2021.

The weighted average of those unobservable inputs was 26 %.

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Fair value estimates, methods, and assumptions, consistent with exit price concepts for fair value measurements, are set forth below:

June 30, 2021

September 30, 2021

Amount Fair Value

63 unchanged sentences

This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities.

The Corporation incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the

respective counterparty’s nonperformance risk in the fair value measurements.

The Corporation incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.

In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Corporation considers the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

14 unchanged sentences

When evaluating the fair value of its derivative contracts for the effects of non-performance and credit risk, the Corporation considered the impact of netting and any applicable credit enhancements such as collateral postings, thresholds, and guarantees.

During the three and six months ended June 30, 2021, the credit valuation adjustment was adjusted resulting in a benefit of $206,000 and $376,000, respectively.

At June 30, 2021, the aggregate amortizing notional value of interest rate swaps with various commercial borrowers was $ 637.0 million.

As of September 30, 2021, the credit valuation allowance was $85,000 compared to $461,000 as of December 31, 2020.

At September 30, 2021, the aggregate amortizing notional value of interest rate swaps with various commercial borrowers was $ 634.0 million.

The Corporation receives fixed rates and pays floating rates based upon LIBOR on the swaps with commercial borrowers.

2 unchanged sentences

These commercial borrower swaps were reported on the unaudited Consolidated Balance Sheet as a derivative asset of $ 28.7 million and a derivative liability of $ 6.1 million.

At June 30, 2021, the aggregate amortizing notional value of interest rate swaps with dealer counterparties was also $ 637.0 million.

At September 30, 2021, the aggregate amortizing notional value of interest rate swaps with dealer counterparties was also $ 634.0 million.

The Corporation pays fixed rates and receives floating rates based upon LIBOR on the swaps with dealer counterparties.

2 unchanged sentences

The gross amount of dealer counterparty swaps, without regard to the enforceable master netting agreement, was a gross derivative liability of $ 28.7 million and $ 6.1 million gross derivative asset.

No right of offset existed with dealer counterparty swaps as of June 30, 2021.

No right of offset existed with dealer counterparty swaps as of September 30, 2021.

All changes in the fair value of these instruments are recorded in other non-interest income.

Given the mirror-image terms of the outstanding derivative portfolio, the change in fair value for the three and six months ended June 30, 2021 and 2020 had an insignificant impact on the unaudited Consolidated Statements of Income.

Given the mirror-image terms of the outstanding derivative portfolio, the change in fair value for the three and nine months ended September 30, 2021 and 2020 had an insignificant impact on the unaudited Consolidated Statements of Income.

The Corporation also enters into interest rate swaps to manage interest rate risk and reduce the cost of match-funding certain long-term fixed rate loans.

2 unchanged sentences

The change in the fair value of these hedging instruments is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged transactions affects earnings.

As of June 30, 2021, the aggregate notional value of interest rate swaps designated as cash flow hedges was $ 114.0 million.

As of September 30, 2021, the aggregate notional value of interest rate swaps designated as cash flow hedges was $ 114.0 million.

These interest rate swaps mature between December 2021 and December 2027.

A pre-tax unrealized loss of $ 271,000 and gain of $ 1.8 million was recognized in other comprehensive income for the three and six months ended June 30, 2021, and there was no ineffective portion of these hedges.

A pre-tax unrealized gain of $ 520,000 and $ 2.3 million was recognized in other comprehensive income for the three and nine months ended September 30, 2021, and there was no ineffective portion of these hedges.

Information about the balance sheet location and fair value of the Corporation’s derivative instruments below:

4 unchanged sentences

Derivatives not designated as hedging instruments

June 30, 2021 Derivatives $ 32,377 Derivatives $ 32,377

September 30, 2021 Derivatives $ 28,678 Derivatives $ 28,678

December 31, 2020 Derivatives $ 49,377 Derivatives $ 49,377

Derivatives designated as hedging instruments

June 30, 2021 Accumulated other comprehensive income (1)

September 30, 2021 Accumulated other comprehensive income (1)

$ 3,212 Derivatives $ 3,212

17 unchanged sentences

The Bank is also subject to certain legal, regulatory, and other restrictions on their ability to pay dividends to the Corporation.

As a bank holding company, the payment of dividends by the Bank to the Corporation is one of the sources of funds the

Corporation could use to pay dividends, if any, in the future and to make other payments.

As a bank holding company, the payment of dividends by the Bank to the Corporation is one of the sources of funds the Corporation could use to pay dividends, if any, in the future and to make other payments.

Future dividend decisions by the Bank and the Corporation will continue to be subject to compliance with various legal, regulatory, and other restrictions as defined from time to time.

1 unchanged sentence

These risk-based capital requirements presently address credit risk related to both recorded and off-balance sheet commitments and obligations.

As of June 30, 2021, the Corporation’s capital levels exceeded the regulatory minimums and the Bank’s capital levels remained characterized as well capitalized under the regulatory framework.

As of September 30, 2021, the Corporation’s capital levels exceeded the regulatory minimums and the Bank’s capital levels remained characterized as well capitalized under the regulatory framework.

The following tables summarize both the Corporation’s and the Bank’s capital ratios and the ratios required by their federal regulators:

As of June 30, 2021

As of September 30, 2021

Actual Minimum Required for Capital Adequacy Purposes For Capital Adequacy Purposes Plus Capital Conservation Buffer Minimum Required to Be Well

40 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