What changed in this filing

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Item 1. Financial Statements

2024-08-09 compared with 2024-05-07 · 263 added, 182 removed, 1300 unchanged (26% of the section changed)

5 unchanged sentences

We have reviewed the accompanying interim consolidated financial information of The First Bancorp, Inc.

and Subsidiary as of March 31, 2024 and 2023 and for the three-month periods then ended, and the related notes (collectively referred to as the "interim financial information").

and Subsidiary as of June 30, 2024 and 2023 and for the three-month and six-month periods then ended, and the related notes (collectively referred to as the "interim financial information").

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for them to be in conformity with accounting principles generally accepted in the United States of America.

7 unchanged sentences

Portland, Maine

August 9, 2024

Consolidated Balance Sheets (Unaudited)

1 unchanged sentence

and Subsidiary

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

June 30, 2024 December 31, 2023 June 30, 2023

Cash and cash equivalents $ 27,816,000 $ 31,942,000 $ 25,077,000

1 unchanged sentence

Securities available for sale 273,501,000 282,053,000 278,355,000

Securities held-to-maturity (net of ACL), fair value of $ 327,816,000 at March 31, 2024, $ 338,570,000 at December 31, 2023 and $ 344,053,000 at March 31, 2023)

Securities held-to-maturity (net of ACL), fair value of $ 321,616,000 at June 30, 2024, $ 338,570,000 at December 31, 2023 and $ 336,007,000 at June 30, 2023

377,522,000 385,235,000 389,987,000

5 unchanged sentences

Premises and equipment, net 27,929,000 28,684,000 27,808,000

Other real estate owned 208,000 — 64,000

Goodwill 30,646,000 30,646,000 30,646,000

19 unchanged sentences

Net unrealized loss on securities transferred from available-for-sale to held-to-maturity ( 51,000 ) ( 56,000 ) ( 59,000 )

Net unrealized gain (loss) on cash flow hedging derivative instruments 735,000 300,000 ( 2,192,000 )

Net unrealized gain on cash flow hedging derivative instruments 733,000 300,000 680,000

Net unrealized gain on postretirement costs 303,000 303,000 273,000

10 unchanged sentences

and Subsidiary

For the three months ended March 31,

For the six months ended June 30, For the quarter ended June 30,

2024 2023 2024 2023

Interest income

Interest and fees on loans (includes YTD tax-exempt income of $ 521,000 for March 31, 2024 and $ 329,000 for March 31, 2023)

Interest and fees on loans (includes YTD tax-exempt income of $ 1,111,000 for June 30, 2024 and $ 801,000 for June 30, 2023)

$ 62,043,000 $ 50,531,000 $ 31,839,000 $ 26,406,000

Interest on deposits with other banks 134,000 89,000 56,000 49,000

Interest and dividends on investments (includes YTD tax-exempt income of $ 1,995,000 for March 31, 2024 and $ 2,002,000 for March 31, 2023)

Interest and dividends on investments (includes YTD tax-exempt income of $ 3,985,000 for June 30, 2024 and $ 4,016,000 for June 30, 2023)

9,369,000 9,478,000 4,663,000 4,729,000

5 unchanged sentences

Net interest income 29,955,000 33,400,000 15,075,000 15,925,000

Provision for credit losses - loans 99,000 550,000

Provision (reduction) for credit losses - debt securities HTM ( 252,000 ) —

Provision (reduction) for credit losses - off-balance sheet credit exposures ( 360,000 ) —

Total provision (reduction) for credit losses ( 513,000 ) 550,000

Credit loss expense - loans 638,000 580,000 539,000 30,000

Credit loss reduction - debt securities HTM ( 286,000 ) ( 10,000 ) ( 34,000 ) ( 10,000 )

Credit loss (reduction) expense - off-balance sheet credit exposures ( 353,000 ) 131,000 7,000 131,000

Total credit loss (reduction) expense ( 1,000 ) 701,000 512,000 151,000

Net interest income after provision for credit losses 29,956,000 32,699,000 14,563,000 15,774,000

30 unchanged sentences

and Subsidiary

Three Month Period Ended March 31, 2024 and 2023

Six Month Period Ended June 30, 2024 and 2023

Common stock and

9 unchanged sentences

Net unrealized gain on securities transferred from available for sale to held to maturity, net of tax — — — 5,000 5,000

Net unrealized loss on hedging derivative instruments, net of tax — — — ( 2,736,000 ) ( 2,736,000 )

Net unrealized gain on hedging derivative instruments, net of tax — — — 136,000 136,000

Comprehensive income — — 15,365,000 1,078,000 16,443,000

7 unchanged sentences

2016-13 ( 6,277,000 ) ( 6,277,000 )

Balance at March 31, 2023 11,074,182 $ 68,941,000 $ 202,036,000 $ ( 42,516,000 ) $ 228,461,000

Balance at June 30, 2023 11,081,800 $ 69,351,000 $ 205,539,000 $ ( 42,887,000 ) $ 232,003,000

Balance at December 31, 2023 11,098,057 $ 70,182,000 $ 211,925,000 $ ( 39,028,000 ) $ 243,079,000

10 unchanged sentences

Proceeds from sale of common stock 17,604 421,000 — — 421,000

Balance at June 30, 2024 11,139,639 $ 71,053,000 $ 215,999,000 $ ( 42,384,000 ) $ 244,668,000

Three Month Period Ended June 30, 2024 and 2023

Common stock and

additional paid-in capital Retained

earnings Accumulated

comprehensive

income (loss) Total

shareholders'

Shares Amount

Balance at March 31, 2023 11,074,182 $ 68,941,000 $ 202,036,000 $ ( 42,516,000 ) $ 228,461,000

Net income — — 7,394,000 — 7,394,000

Net unrealized loss on securities available for sale, net of tax — — — ( 3,244,000 ) ( 3,244,000 )

Net unrealized gain on securities transferred from available for sale to held to maturity, net of tax — — — 1,000 1,000

Net unrealized gain on cash flow hedging derivative instruments, net of tax — — — 2,872,000 2,872,000

Comprehensive income (loss) — — 7,394,000 ( 371,000 ) 7,023,000

Cash dividends declared ($ 0.35 per share)

— — ( 3,878,000 ) — ( 3,878,000 )

Equity compensation expense — 213,000 — — 213,000

Issuance of restricted stock ( 555 ) — ( 13,000 ) — ( 13,000 )

Proceeds from sale of common stock 8,173 197,000 — — 197,000

Balance at June 30, 2023 11,081,800 $ 69,351,000 $ 205,539,000 $ ( 42,887,000 ) $ 232,003,000

Balance at March 31, 2024 11,130,933 $ 70,617,000 $ 213,839,000 $ ( 41,832,000 ) $ 242,624,000

Net income — — 6,171,000 — 6,171,000

Net unrealized loss on securities available for sale, net of tax — — — ( 553,000 ) ( 553,000 )

Net unrealized gain on securities transferred from available for sale to held to maturity, net of tax — — — 3,000 3,000

Net unrealized loss on hedging derivative instruments, net of tax — — — ( 2,000 ) ( 2,000 )

Comprehensive income (loss) — — 6,171,000 ( 552,000 ) 5,619,000

Cash dividends declared ($ 0.36 per share)

— — ( 4,011,000 ) — ( 4,011,000 )

Equity compensation expense — 218,000 — — 218,000

Payment to repurchase common stock ( 850 ) — — — —

Proceeds from sale of common stock 9,556 218,000 — — 218,000

Balance at June 30, 2024 11,139,639 $ 71,053,000 $ 215,999,000 $ ( 42,384,000 ) $ 244,668,000

See Report of Independent Registered Public Accounting Firm.

3 unchanged sentences

and Subsi diary

For the three months ended March 31,

For the six months ended June 30,

Cash flows from operating activities

3 unchanged sentences

Change in deferred taxes 100,000 ( 1,503,000 )

Provision (reduction) for credit losses ( 513,000 ) 550,000

Credit loss (reduction) expense ( 1,000 ) 701,000

Loans originated for resale ( 819,000 ) ( 1,679,000 )

4 unchanged sentences

Net increase in other assets and accrued interest ( 6,979,000 ) ( 550,000 )

Net (decrease) increase in other liabilities ( 2,385,000 ) 4,115,000

Net decrease in other liabilities ( 2,511,000 ) ( 226,000 )

Net loss on disposal of premises and equipment 9,000 1,000

1 unchanged sentence

Net acquisition amortization 13,000 13,000

Net cash (used) provided by operating activities ( 1,497,000 ) 5,047,000

Net cash provided by operating activities 4,881,000 15,901,000

Cash flows from investing activities

3 unchanged sentences

Purchases of securities available for sale ( 8,994,000 ) ( 3,496,000 )

Purchases of securities to be held to maturity ( 1,250,000 ) —

Change in restricted equity securities ( 3,725,000 ) ( 1,344,000 )

4 unchanged sentences

Net decrease in demand, savings, and money market accounts ( 63,074,000 ) ( 60,973,000 )

Net (decrease) increase in certificates of deposit ( 4,820,000 ) 141,996,000

Net increase in certificates of deposit 41,492,000 181,958,000

Net increase (decrease) in short-term borrowings 90,968,000 ( 13,998,000 )

8 unchanged sentences

Cash and cash equivalents at end of period $ 27,816,000 $ 25,077,000

For the six months ended June 30,

Interest paid $ 40,905,000 $ 26,369,000

Income taxes paid 2,657,000 3,170,000

Non-cash transactions

Change in net unrealized loss on available for sale securities, net of tax $ 3,794,000 $ ( 937,000 )

Net transfer from loans to other real estate owned 208,000 64,000

See Report of Independent Registered Public Accounting Firm.

42 unchanged sentences

Subsequent Events

Events occurring subsequent to March 31, 2024, have been evaluated as to their potential impact to the financial statements.

Events occurring subsequent to June 30, 2024, have been evaluated as to their potential impact to the financial statements.

Note 2 – Investment Securities

The following table summarizes the amortized cost and estimated fair value of investment securities at March 31, 2024:

The following table summarizes the amortized cost and estimated fair value of investment securities at June 30, 2024:

Cost Unrealized Gains Unrealized Losses Fair Value (Estimated)

37 unchanged sentences

$ 3,385,000 $ — $ — $ 3,385,000

The following table summarizes the amortized cost and estimated fair value of investment securities at March 31, 2023:

The following table summarizes the amortized cost and estimated fair value of investment securities at June 30, 2023:

Cost Unrealized Gains Unrealized Losses Fair Value (Estimated)

24 unchanged sentences

Similarly, the agency and mortgage-backed securities in the HTM portfolio have been determined to all be investment grade with no ACL required.

Municipal securities within HTM include two private activity bonds issued by well-known customers of the Bank with total balances of $ 19,441,000 as of March 31, 2024.

Municipal securities within HTM include two private activity bonds issued by well-known customers of the Bank with total balances of $ 19,294,000 as of June 30, 2024.

Corporate securities in HTM consist of 13 individual companies in the banking industry.

1 unchanged sentence

Aggregate credit risk of the private activity bonds and corporate securities is considered very low and an immaterial ACL has been established.

As of March 31, 2024 and 2023, and December 31, 2023, the total ACL for HTM securities was $ 182,000 , $ 438,000 and $ 434,000 , respectively.

As of June 30, 2024 and 2023, and December 31, 2023, the total ACL for HTM securities was $ 149,000 , $ 428,000 and $ 434,000 , respectively.

Changes in the ACL are recorded as credit loss expense, or reversal.

Losses would be charged against the allowance when management believes collection of the full contractual amount due on a security is unlikely.

The following table summarizes the contractual maturities of investment securities at March 31, 2024:

The following table summarizes the contractual maturities of investment securities at June 30, 2024:

Securities available for sale Securities to be held to maturity

15 unchanged sentences

$ 332,148,000 $ 282,053,000 $ 385,669,000 $ 338,570,000

The following table summarizes the contractual maturities of investment securities at March 31, 2023:

The following table summarizes the contractual maturities of investment securities at June 30, 2023:

Securities available for sale Securities to be held to maturity

6 unchanged sentences

$ 333,773,000 $ 278,355,000 $ 390,415,000 $ 336,007,000

At March 31, 2024, securities with a carrying value of $ 314,208,000 were pledged to secure public deposits, repurchase agreements, and for other purposes as required by law.

This compares to securities with a carrying value of $ 340,623,000 as of December 31, 2023 and $ 324,716,000 at March 31, 2023, pledged for the same purposes.

At June 30, 2024, securities with a carrying value of $ 310,931,000 were pledged to secure public deposits, repurchase agreements, and for other purposes as required by law.

This compares to securities with a carrying value of $ 340,623,000 as of December 31, 2023 and $ 329,615,000 at June 30, 2023, pledged for the same purposes.

Gains and losses on the sale of securities are computed by subtracting the amortized cost at the time of sale from the security's selling price, net of accrued interest to be received.

There were no gains or losses on the sale of securities for the three months ended March 31, 2024 and 2023.

As of March 31, 2024, there were 236 AFS securities with unrealized losses held in the Company's portfolio.

There were no gains or losses on the sale of securities for the six months ended June 30, 2024 and 2023.

As of June 30, 2024, there were 238 AFS securities with unrealized losses held in the Company's portfolio.

The Company has the ability and intent to hold its securities which are in an unrealized loss position until a recovery of their amortized cost, which may be at maturity.

The following table summarizes AFS debt securities in an unrealized loss position for which an ACL has not been recorded at March 31, 2024, aggregated by major security type and length of time in a continuous unrealized loss position:

The following table summarizes AFS debt securities in an unrealized loss position for which an ACL has not been recorded at June 30, 2024, aggregated by major security type and length of time in a continuous unrealized loss position:

Less than 12 months 12 months or more Total

3 unchanged sentences

State and political subdivisions 4,484,000 ( 62,000 ) 28,616,000 ( 6,840,000 ) 33,100,000 ( 6,902,000 )

Asset-backed securities 1,300,000 ( 3,000 ) — — 1,300,000 ( 3,000 )

$ 14,235,000 $ ( 108,000 ) $ 245,549,000 $ ( 54,858,000 ) $ 259,784,000 $ ( 54,966,000 )

9 unchanged sentences

$ 3,794,000 $ ( 63,000 ) $ 257,711,000 $ ( 50,342,000 ) $ 261,505,000 $ ( 50,405,000 )

As of March 31, 2023, there were 232 AFS securities with unrealized losses held in the Company's portfolio.

As of June 30, 2023, there were 235 AFS securities with unrealized losses held in the Company's portfolio.

The Company has the ability and intent to hold its securities which are in an unrealized loss position until a recovery of their amortized cost, which may be at maturity.

The following table summarizes AFS debt securities in an unrealized loss position for which an ACL has not been recorded at March 31, 2023 aggregated by major security type and length of time in a continuous unrealized loss position:

The following table summarizes AFS debt securities in an unrealized loss position for which an ACL has not been recorded at June 30, 2023 aggregated by major security type and length of time in a continuous unrealized loss position:

Less than 12 months 12 months or more Total

17 unchanged sentences

These securities are regularly monitored as part of an overall credit relationship with the issuers;

both issuers were in good standing as of March 31, 2024.

both issuers were in good standing as of June 30, 2024.

HTM corporate debt holdings consist of 13 individual companies in the banking industry.

Management conducts periodic reviews of the collectability of these securities taking into consideration such factors as the financial condition of the issuers;

each were in good standing as of March 31, 2024.

The following table presents the activity in the ACL for HTM debt securities by major security type for the three months ended March 31, 2024:

State and Political Subdivisions Corporate Securities Total

each were in good standing as of June 30, 2024.

The following table presents the activity in the ACL for HTM debt securities by major security type for the periods ended June 30, 2024 and 2023:

For the six months ended June 30, 2024 For the six months ended June 30, 2023

State and Political Subdivisions Corporate Securities Total State and Political Subdivisions Corporate Securities Total

Allowance for credit losses:

Beginning balance $ 222,000 $ 212,000 $ 434,000 $ — $ — $ —

Credit loss expense (reduction) ( 109,000 ) ( 143,000 ) ( 252,000 )

Impact of adopting ASC 326 — — — 229,000 209,000 438,000

Credit loss reduction 1

( 129,000 ) ( 156,000 ) ( 285,000 ) ( 5,000 ) ( 5,000 ) ( 10,000 )

Securities charged-off — — — — — —

1 unchanged sentence

Total ending allowance balance $ 93,000 $ 56,000 $ 149,000 $ 224,000 $ 204,000 $ 428,000

1 June 30, 2024 total of ( 285,000 ) will not tie to Consolidated Statement of Income Credit loss reduction - debt securities HTM due to rounding.

There was no ACL on U.S.

Government-sponsored enterprise, agency securities, or mortgage-backed securities as of March 31, 2024 .

Government-sponsored enterprise, agency securities, or mortgage-backed securities as of June 30, 2024 .

A security is considered to be past due once it is 30 days contractually past due under the terms of the agreement.

As of March 31, 2024, none of the Company’s HTM debt securities were past due or on non-accrual status.

As of June 30, 2024, none of the Company’s HTM debt securities were past due or on non-accrual status.

Re-Classified Securities:

During the third quarter of 2014, the Company transferred securities with a total amortized cost of $ 89,780,000 with a corresponding fair value of $ 89,757,000 from available for sale to held to maturity.

2 unchanged sentences

The amortization of the net unrealized loss reported in AOCI will offset the effect on interest income of the discount for the transferred securities.

The remaining unamortized balance of the net unrealized losses for the securities transferred from available for sale to held to maturity was $ 54,000 , net of taxes, at March 31, 2024.

This compares to $ 56,000 and $ 60,000 , net of taxes, at December 31, 2023 and March 31, 2023, respectively.

The remaining unamortized balance of the net unrealized losses for the securities transferred from available for sale to held to maturity was $ 51,000 , net of taxes, at June 30, 2024.

This compares to $ 56,000 and $ 59,000 , net of taxes, at December 31, 2023 and June 30, 2023, respectively.

These securities were transferred as a part of the Company's overall investment and balance sheet strategies.

Restricted Equity Securities:

The Bank is a member of the FHLBB, a cooperatively owned wholesale bank for housing and finance in the six New England States.

1 unchanged sentence

The Bank uses the FHLBB for a portion of its wholesale funding needs.

As of March 31, 2024 and 2023, and December 31, 2023, the Bank's investment in FHLBB stock totaled $ 4,896,000 , $ 2,837,000 and $ 2,348,000 , respectively.

As of June 30, 2024 and 2023, and December 31, 2023, the Bank's investment in FHLBB stock totaled $ 6,073,000 , $ 4,190,000 and $ 2,348,000 , respectively.

FHLBB stock is a non-marketable equity security and therefore is reported at cost, which equals par value.

2 unchanged sentences

The Bank uses FRBB for certain correspondent banking services and maintains borrowing capacity at its discount window.

The Bank's investment in FRBB stock totaled $ 1,037,000 at March 31, 2024 and 2023, and December 31, 2023.

The Bank's investment in FRBB stock totaled $ 1,037,000 at June 30, 2024 and 2023, and December 31, 2023.

The Company periodically evaluates its investment in FHLBB and FRBB stock for impairment based on, among other factors, the capital adequacy of the Banks and their overall financial condition.

No impairment losses have been recorded through March 31, 2024.

No impairment losses have been recorded through June 30, 2024.

The Bank will continue to monitor its investment in these restricted equity securities.

3 unchanged sentences

In addition home equity installment loans which had previously been included in the residential term class were included in the home equity revolving and term class.

In the current reporting period, a new segment has been established for Agriculture loans;

In the first quarter of 2024, a new segment was established for Agriculture loans;

certain prior period information of these loans continues to be included the C&I and CRE non-owner occupied segments.

Loan Portfolio by Class:

The following table shows the composition of the Company's loan portfolio by class of financing receivable as of March 31, 2024 and 2023 and at December 31, 2023:

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

The following table shows the composition of the Company's loan portfolio by class of financing receivable as of June 30, 2024 and 2023 and at December 31, 2023:

June 30, 2024 December 31, 2023 June 30, 2023

Real estate owner occupied $ 341,043,000 15.1 % $ 314,819,000 14.8 % $ 301,320,000 14.6 %

10 unchanged sentences

Total $ 2,247,670,000 100.0 % $ 2,129,454,000 100.0 % $ 2,060,953,000 100.0 %

Loan balances include net deferred loan costs of $ 11,745,000 as of March 31, 2024, $ 11,479,000 as of December 31, 2023, and $ 10,315,000 as of March 31, 2023.

Loan balances include net deferred loan costs of $ 12,130,000 as of June 30, 2024, $ 11,479,000 as of December 31, 2023, and $ 10,824,000 as of June 30, 2023.

Net deferred loan costs have increased from a year ago and year-to-date based upon loan origination unit volume over the periods, prepayments, and normal repayment activity.

Loan balances in the Residential Term segment also include a valuation adjustment for fair value swaps hedged by certain loans in the portfolio.

This adjustment added $ 313,000 to the loan balances as of March 31, 2024 and $ 2,149,000 as of December 31, 2023;

there was no such adjustment as of March 31, 2023.

Pursuant to collateral agreements, qualifying first mortgage loans and commercial real estate loans, which totaled $ 565,047,000 at March 31, 2024, were used to collateralize borrowings from the FHLBB.

This compares to qualifying loans which totaled $ 561,574,000 at December 31, 2023, and $ 527,949,000 at March 31, 2023.

In addition, commercial, residential construction and home equity loans totaling $ 322,124,000 at March 31, 2024, $ 320,083,000 at December 31, 2023, and $ 373,791,000 at March 31, 2023, were used to collateralize a standby line of credit at the FRBB.

This adjustment subtracted $ 68,000 from the loan balances as of June 30, 2024 and added $ 2,149,000 to the loan balances as of December 31, 2023;

there was no such adjustment as of June 30, 2023.

Pursuant to collateral agreements, qualifying first mortgage loans and commercial real estate loans, which totaled $ 624,058,000 at June 30, 2024, were used to collateralize borrowings from the FHLBB.

This compares to qualifying loans which totaled $ 561,574,000 at December 31, 2023, and $ 541,345,000 at June 30, 2023.

In addition, commercial, residential construction and home equity loans totaling $ 353,650,000 at June 30, 2024, $ 320,083,000 at December 31, 2023, and $ 331,836,000 at June 30, 2023, were used to collateralize a standby line of credit at the FRBB.

Past Due Loans:

For all loan classes, loans over 30 days past due are considered delinquent.

Information on the past-due status of loans by class of financing receivable as of March 31, 2024, is presented in the following table:

Information on the past-due status of loans by class of financing receivable as of June 30, 2024, is presented in the following table:

Past Due 60-89 Days

28 unchanged sentences

Total $ 1,969,000 $ 979,000 $ 940,000 $ 3,888,000 $ 2,125,566,000 $ 2,129,454,000 $ 429,000

Information on the past-due status of loans by class of financing receivable as of March 31, 2023, is presented in the following table:

Information on the past-due status of loans by class of financing receivable as of June 30, 2023, is presented in the following table:

Past Due 60-89 Days

18 unchanged sentences

As a general rule, a loan may be restored to accrual status when payments are current for a substantial period of time, generally six months, and repayment of the remaining contractual amounts is expected, or when it otherwise becomes well secured and in the process of collection.

The following table presents the amortized costs basis of loans on nonaccrual status as of March 31, 2024, December 31, 2023 and March 31, 2023:

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

The following table presents the amortized costs basis of loans on nonaccrual status as of June 30, 2024, December 31, 2023 and June 30, 2023:

June 30, 2024 December 31, 2023 June 30, 2023

Dollars in thousands Nonaccrual with Allowance for Credit Loss Nonaccrual with no Allowance for Credit Loss Total Nonaccrual Nonaccrual with Allowance for Credit Loss Nonaccrual with no Allowance for Credit Loss Total Nonaccrual Nonaccrual with Allowance for Credit Loss Nonaccrual with no Allowance for Credit Loss Total Nonaccrual

14 unchanged sentences

Individually Analyzed Loans:

IAL include loans placed on non-accrual and loans reported as TDR prior to adoption of ASU 2022-02 with balances of $250,000 or more.

IAL include loans with balances of $250,000 or more that have either been placed into non-accrual, were loans reported as TDR prior to adoption of ASU 2022-02, or are loans identified by management as having characteristics that merit individual analysis.

These loans are measured at the present value of expected future cash flows discounted at the loan's effective interest rate or at the fair value of the collateral if the loan is collateral dependent.

If the measure of an IAL loan is lower than the recorded investment in the loan and estimated selling costs, a specific reserve is established for the difference, or, in certain situations, if the measure of an IAL loan is lower than the recorded investment in the loan and estimated selling costs, the difference is written off.

The following table presents the amortized cost basis of collateral-dependent loans as of March 31, 2024 by collateral type:

The following table presents the amortized cost basis of collateral-dependent loans as of June 30, 2024 by collateral type:

Collateral Type

Residential Real Estate Total

Commercial Real Estate Residential Real Estate Total

Real estate owner occupied $ 283,000 $ — $ 283,000

7 unchanged sentences

Revolving and term — — —

Consumer — — —

Total $ 283,000 $ 569,000 $ 852,000

12 unchanged sentences

Total $ 685,000 $ 685,000

For the period ended March 31, 2023, IAL include all loans that had been reported as TDR loans prior to adoption of ASU 2022-02 and loans placed on non-accrual.

The following table presents the amortized cost basis of collateral-dependent loans as of March 31, 2023 by collateral type:

The following table presents the amortized cost basis of collateral-dependent loans as of June 30, 2023 by collateral type:

Collateral Type

Commercial Real Estate Residential Real Estate Equipment 1

Commercial Real Estate Residential Real Estate Total

Real estate owner occupied $ — $ — $ —

1 unchanged sentence

Construction — — —

C&I 79,000 — 192,000 271,000

Multifamily — — —

5 unchanged sentences

Total $ 725,000 $ 385,000 $ 1,110,000

1 Collateral may consist of a boat, vehicle or other equipment.

Loan Modifications to Borrowers Experiencing Financial Difficulty:

1 unchanged sentence

It is the intent to minimize future losses while providing borrowers with financial relief.

The following tables represent loan modifications made to borrowers experiencing financial difficulty by modification type and class of financing receivable, during the three months ended March 31, 2024:

Payment Deferral

Amortized Cost Basis at March 31, 2024 % of Total Class of Financing Receivable

The following table represents loan modifications made to borrowers experiencing financial difficulty by modification type and class of financing receivable, during the three months ended June 30, 2024:

Amortized Cost Basis

Payment Deferral Term Extension Interest Rate Reduction Principal Forgiveness Combination Payment Deferral and Term Extension % of Total Class of Financing Receivable

Real estate owner occupied $ 635,000 $ — $ — $ — $ — 0.19 %

Real estate non-owner occupied — — — — — — %

Construction — — — — — — %

1 unchanged sentence

Multifamily — — — — — — %

Agriculture — — — — — — %

Municipal — — — — — — %

Term — — — — — — %

Total $ 3,085,000

Payment Deferral & Term Extension

Amortized Cost Basis at March 31, 2024 % of Total Class of Financing Receivable

Construction — — — — — — %

Revolving and term — — — — — — %

Consumer — — — — — — %

Total $ 812,000 $ — $ — $ — $ 170,000 0.04 %

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty for the three months ended March 31, 2024:

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

Payment Deferral

Financial Effect

Construction Temporary payment accommodation, payments deferred to end of loan.

Real estate owner occupied Temporary payment accommodation, payments deferred to end of loan.

C&I Temporary payment accommodation, payments deferred to end of loan.

Multifamily Temporary payment accommodation, payments deferred to end of loan.

Term Temporary payment accommodation, payments deferred to end of loan.

Payment Deferral & Term Extension

Financial Effect

Revolving and Term Temporary payment accommodation, extended term 60 days.

Term Extension

Amortized Cost Basis at March 31, 2023 % of Total Class of Financing Receivable

C&I $ 23,000 0.01 %

Total $ 23,000

Payment Deferral

Amortized Cost Basis at March 31, 2023 % of Total Class of Financing Receivable

C&I Temporary payment accommodation, extended term 60 days.

Amortized Cost Basis

Payment Deferral Term Extension Interest Rate Reduction Principal Forgiveness Combination Payment Deferral and Term Extension % of Total Class of Financing Receivable

Real estate owner occupied $ — $ — $ — $ — $ — — %

Real estate non-owner occupied — — — — — — %

Construction — — — — — — %

C&I — 4,000 — — — 0.001 %

Multifamily — — — — — — %

Agriculture — — — — — — %

Municipal — — — — — — %

Term — — — — — — %

Construction — — — — — — %

Revolving and term — — — — — — %

Consumer — — — — — — %

Total $ — $ 4,000 $ — $ — $ — 0.0002 %

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty for the three months ended March 31, 2023:

The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty for the three months ended June 30, 2023:

Term Extension

Financial Effect

C&I Extended Term 12 months

Payment Deferral

Financial Effect

C&I Temporary payment accommodation, payments deferred to end of loan.

C&I Extended Term 90 days

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

The following table depicts the performance of loans that have been modified during the previous 12 months:

The following table depicts the performance of loans that have been modified during the previous 12 months as of June 30, 2024:

Payment Status (Amortized Cost Basis)

10 unchanged sentences

Total $ 4,150,000 $ 544,000 $ — $ 296,000

The following table depicts the performance of loans that have been modified during the three months ended March 31, 2023:

The following table depicts the performance of loans that have been modified during the six months ended June 30, 2023:

Payment Status (Amortized Cost Basis)

5 unchanged sentences

Residential Mortgage Loans in Process of Foreclosure

As of March 31, 2024, there were four mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $ 510,000 .

This compares to five mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $ 400,000 as of December 31, 2023 and two mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $ 166,000 March 31, 2023.

As of June 30, 2024, there were two mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $ 127,000 .

This compares to five mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $ 400,000 as of December 31, 2023.

There were no mortgage loans collateralized by residential real estate in the process of foreclosure as of June 30, 2023.

Allowance for Credit Losses

42 unchanged sentences

Loans are primarily paid by the cash flow generated from the agricultural property or operation of equipment.

Risk factors typically include competitive market forces, overall economic demand for the product, and may be further influenced by weather conditions which impact growing and/or harvesting, or other factors such as changes in government regulation(s).

Risk factors typically include competitive market forces, overall economic demand for the product, and may be further

influenced by weather conditions which impact growing and/or harvesting, or other factors such as changes in government regulation(s).

Residential Real Estate Term - residential term loans consist of residential real estate loans held in the Company's loan portfolio made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors.

23 unchanged sentences

Construction, land, and land development :

CLLD loans, both commercial and residential, represented 43.4 % of total Bank capital as of March 31, 2024 and remain below the regulatory guidance of 100.0 % of total Bank capital.

Construction loans and non-owner-occupied commercial real estate loans represented 223.7 % of total Bank capital at March 31, 2024, below the regulatory guidance of 300.0 % of total Bank capital.

CLLD loans, both commercial and residential, represented 47.8 % of total Bank capital as of June 30, 2024 and remain below the regulatory guidance of 100.0 % of total Bank capital.

Construction loans and non-owner-occupied commercial real estate loans represented 230.2 % of total Bank capital at June 30, 2024, below the regulatory guidance of 300.0 % of total Bank capital.

Composition of the ACL:

A breakdown of the ACL as of March 31, 2024, by class of financing receivable and allowance element, is presented in the following table:

As of March 31, 2024 Specific Reserves on Loans Evaluated Individually General Reserves on Loans Based on Historical Loss Experience Reserves for Qualitative Factors Total Reserves

A breakdown of the ACL as of June 30, 2024, by class of financing receivable and allowance element, is presented in the following table:

As of June 30, 2024 Specific Reserves on Loans Evaluated Individually General Reserves on Loans Based on Historical Loss Experience Reserves for Qualitative Factors Total Reserves

Real estate owner occupied $ — $ 4,434,000 $ 819,000 $ 5,253,000

23 unchanged sentences

$ 264,000 $ 20,833,000 $ 2,933,000 $ 24,030,000

A breakdown of the ACL as of March 31, 2023, by class of financing receivable and allowance element, is presented in the following table:

As of March 31, 2023 Specific Reserves on Loans Evaluated Individually General Reserves on Loans Based on Historical Loss Experience Reserves for Qualitative Factors Total Reserves

A breakdown of the ACL as of June 30, 2023, by class of financing receivable and allowance element, is presented in the following table:

As of June 30, 2023 Specific Reserves on Loans Evaluated Individually General Reserves on Loans Based on Historical Loss Experience Reserves for Qualitative Factors Total Reserves

Real estate owner occupied $ — $ 3,998,000 $ 721,000 $ 4,719,000

9 unchanged sentences

$ 186,000 $ 20,150,000 $ 3,129,000 $ 23,465,000

The ACL as a percent of total loans stood at 1.11 % as of March 31, 2024, 1.13 % at December 31, 2023 and 1.18 % as of March 31, 2023.

The ACL as a percent of total loans stood at 1.10 % as of June 30, 2024, 1.13 % at December 31, 2023 and 1.14 % as of June 30, 2023.

Off-Balance Sheet Credit Exposures:

8 unchanged sentences

The Company’s ACL on unfunded commitments is recognized as a liability, included within other liabilities on the consolidated balance sheet.

The following table presents the activity in the ACL for off-balance sheet credit exposures for the three months ended March 31, 2024:

The following table presents the activity in the ACL for off-balance sheet credit exposures for the six months and quarters ended June 30, 2024 and 2023:

For the six months ended June 30, For the quarter ended June 30,

2024 2023 2024 2023

Allowance for credit losses:

Beginning balance $ 1,255,000 $ 100,000 $ 895,000 $ 1,397,000

Credit loss reduction ( 360,000 )

Impact of adopting ASC 326 — 1,297,000 — —

Credit loss (reduction) expense ( 353,000 ) 131,000 7,000 131,000

Total ending allowance balance $ 902,000 $ 1,528,000 $ 902,000 $ 1,528,000

26 unchanged sentences

Loans that are past due more than 90 days are considered non-performing.

The following table summarizes the credit quality for the Company's portfolio by risk category of loans and by class by vintage as of March 31, 2024:

The following table summarizes the credit quality for the Company's portfolio by risk category of loans and by class by vintage as of June 30, 2024:

Term Loans Amortized Cost Basis by Origination Year

Dollars in thousands 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total

As of March 31, 2024

As of June 30, 2024

Real estate owner occupied

38 unchanged sentences

Dollars in thousands 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total

As of March 31, 2024

As of June 30, 2024

Pass (risk rating 1-5) 7,505 20,704 4,608 4,254 9,370 15,664 — — 62,105

85 unchanged sentences

Total loans $ 337,620 $ 465,386 $ 397,864 $ 236,621 $ 122,371 $ 379,108 $ 178,798 $ 11,686 $ 2,129,454

The following table summarizes the credit quality for the Company's portfolio by risk category of loans and by class by vintage as of March 31, 2023:

The following table summarizes the credit quality for the Company's portfolio by risk category of loans and by class by vintage as of June 30, 2023:

Term Loans Amortized Cost Basis by Origination Year

Dollars in thousands 2023 2022 2021 2020 2019 Prior Total

As of March 31, 2023

Dollars in thousands 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total

As of June 30, 2023

Real estate owner occupied

37 unchanged sentences

Term Loans Amortized Cost Basis by Origination Year

Dollars in thousands 2023 2022 2021 2020 2019 Prior Total

As of March 31, 2023

Pass (risk rating 1-5) 6,640 51,206 34,748 16,901 6,777 18,211 134,483

Special Mention (risk rating 6) — — — — — — —

Substandard (risk rating 7) — — — — — 59 59

Doubtful (risk rating 8) — — — — — — —

Dollars in thousands 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total

As of June 30, 2023

Performing 29,366 137,663 146,868 99,721 41,667 187,272 1,903 134 644,594

Non-performing — — — — 262 271 — — 533

Total Term 29,366 137,663 146,868 99,721 41,929 187,543 1,903 134 645,127

Current period gross write-offs — — — — — — — — —

Pass (risk rating 1-5) 1,310 5,915 3,219 1,046 — — 11,490

Special Mention (risk rating 6) — — — — — — —

Substandard (risk rating 7) — — — — — — —

Doubtful (risk rating 8) — — — — — — —

Performing 6,627 22,880 — 1,305 — — — — 30,812

Non-performing — — — — — — — — —

Total Construction 6,627 22,880 — 1,305 — — — — 30,812

1 unchanged sentence

Home Equity Revolving and Term

Pass (risk rating 1-5) 1,472 10,440 2,194 1,453 445 1,735 17,739

Special Mention (risk rating 6) — — — — — — —

Substandard (risk rating 7) — — — — — 185 185

Doubtful (risk rating 8) — — — — — — —

Performing 5,632 9,504 2,188 1,253 744 1,836 67,376 10,675 99,208

Non-performing — — — — — 118 149 191 458

Total Home Equity Revolving and Term 5,632 9,504 2,188 1,253 744 1,954 67,525 10,866 99,666

Current period gross write-offs — — — — — — — — —

Pass (risk rating 1-5) 190 — — — — 1 191

Special Mention (risk rating 6) — — — — — — —

Substandard (risk rating 7) — — — — — — —

Doubtful (risk rating 8) — — — — — — —

Performing 2,411 2,684 1,425 2,207 643 4,705 6,241 — 20,316

Non-performing — — — — — — — — —

Total Consumer 2,411 2,684 1,425 2,207 643 4,705 6,241 — 20,316

8 unchanged sentences

This is subject to completion of a current assessment of the value of the collateral with any outstanding loan balance in excess of the fair value of the property, less costs to sell, written down or charged-off.

The following table presents ACL activity by class for the three months ended March 31, 2024:

The following table presents ACL activity by class for the six months and quarter ended June 30, 2024:

Dollars in thousands Commercial Municipal Residential Home Equity Consumer Total

Real Estate Owner Occupied Real Estate Non-Owner Occupied Construction C&I Multifamily Agriculture Term Construction Revolving and term

For the three months ended March 31, 2024

For the six months ended June 30, 2024

Beginning balance $ 4,633 $ 4,285 $ 1,978 $ 5,001 $ 1,318 $ — $ 334 $ 4,991 $ 618 $ 626 $ 246 $ 24,030

1 unchanged sentence

Recoveries 100 — — 23 — — — 29 — 18 46 216

Provision (credit) 447 ( 20 ) ( 1,158 ) 59 189 392 ( 140 ) 338 ( 56 ) 48 — 99

Credit loss (reduction) expense 520 ( 37 ) ( 1,056 ) ( 3 ) 249 428 ( 154 ) 576 ( 31 ) 107 39 638

Ending balance $ 5,253 $ 4,248 $ 922 $ 5,021 $ 1,567 $ 428 $ 180 $ 5,560 $ 587 $ 744 $ 183 $ 24,693

For the three months ended June 30, 2024

Beginning balance $ 5,180 $ 4,265 $ 820 $ 5,083 $ 1,507 $ 392 $ 194 $ 5,354 $ 562 $ 677 $ 173 $ 24,207

Charge offs — — — — — — — ( 36 ) — ( 7 ) ( 52 ) ( 95 )

Recoveries — — — — — — — 4 — 15 23 42

Credit loss (reduction) expense 73 ( 17 ) 102 ( 62 ) 60 36 ( 14 ) 238 25 59 39 539

Ending balance $ 5,253 $ 4,248 $ 922 $ 5,021 $ 1,567 $ 428 $ 180 $ 5,560 $ 587 $ 744 $ 183 $ 24,693

The following table presents ACL activity by class for the year ended December 31, 2023:

5 unchanged sentences

Recoveries 2 75 — 3 — — 14 — 13 97 — 204

Provision (credit) 241 ( 105 ) 214 409 134 40 540 ( 316 ) 90 83 — 1,330

Credit loss (reduction) expense 241 ( 105 ) 214 409 134 40 540 ( 316 ) 90 83 — 1,330

Impact of adopting ASC 326 ( 1,686 ) 4,315 943 1,645 1,184 132 1,878 735 ( 456 ) ( 802 ) ( 1,678 ) 6,210

Ending balance $ 4,633 $ 4,285 $ 1,978 $ 5,001 $ 1,318 $ 334 $ 4,991 $ 618 $ 626 $ 246 $ — $ 24,030

The following table presents ACL activity by class for the three months ended March 31, 2023:

The following table presents ACL activity by class for the six months and quarter ended June 30, 2023:

Dollars in thousands Commercial Municipal Residential Home Equity Consumer Unallocated Total

Real Estate Owner Occupied Real Estate Non-Owner Occupied Construction C&I Multifamily Term Construction Revolving and term

For the three months ended March 31, 2023

For the six months ended June 30, 2023

Beginning balance prior to adoption of ASC 326 $ 6,116 $ — $ 821 $ 3,097 $ — $ 162 $ 2,559 $ 199 $ 1,029 $ 1,062 $ 1,678 $ 16,723

1 unchanged sentence

Recoveries — — — 3 — — 6 — 7 58 — 74

Provision 79 107 20 94 22 13 169 15 26 5 — 550

Credit loss (reduction) expense 328 177 ( 295 ) ( 24 ) 128 105 388 ( 325 ) 55 43 — 580

Impact of adopting ASC 326 ( 1,686 ) 4,315 943 1,645 1,184 132 1,878 735 ( 456 ) ( 802 ) ( 1,678 ) 6,210

Ending balance $ 4,719 $ 4,492 $ 1,469 $ 4,721 $ 1,312 $ 399 $ 4,831 $ 609 $ 635 $ 278 $ — $ 23,465

As of March 31, 2024, the significant model inputs and assumptions used within the discounted cash flow model for purposes of estimating the ACL on loans were:

For the three months ended June 30, 2023

Beginning balance $ 4,470 $ 4,422 $ 1,784 $ 4,838 $ 1,206 $ 307 $ 4,608 $ 949 $ 603 $ 271 $ — $ 23,458

Charge offs — — — — — — — — — ( 46 ) — ( 46 )

Recoveries — — — 1 — — 4 — 3 15 — 23

Credit loss (reduction) expense 249 70 ( 315 ) ( 118 ) 106 92 219 ( 340 ) 29 38 — 30

Ending balance $ 4,719 $ 4,492 $ 1,469 $ 4,721 $ 1,312 $ 399 $ 4,831 $ 609 $ 635 $ 278 $ — $ 23,465

As of June 30, 2024, the significant model inputs and assumptions used within the discounted cash flow model for purposes of estimating the ACL on loans were:

Macroeconomic loss drivers :

34 unchanged sentences

Other compensation under the 2020 Plan qualifies as performance-based for purposes of Section 162(m) of the Internal Revenue Code, and satisfies NASDAQ guidelines relating to equity compensation.

As of March 31, 2024, 131,419 shares of restricted stock had been granted under the 2020 Plan, of which 88,268 shares remain restricted as of March 31, 2024 as detailed in the following table:

As of June 30, 2024, 131,419 shares of restricted stock had been granted under the 2020 Plan, of which 87,418 shares remain restricted as of June 30, 2024 as detailed in the following table:

Granted Vesting Term

8 unchanged sentences

The compensation cost related to these non-vested restricted stock grants is $ 2,544,000 and is recognized over the vesting terms of each grant.

In the three months ended March 31, 2024, $ 231,000 of expense was recognized for these restricted shares, leaving $ 1,486,000 in unrecognized expense as of March 31, 2024.

In the three months ended March 31, 2023, $ 184,000 of expense was recognized for restricted shares, leaving $ 1,501,000 in unrecognized expense as of March 31, 2023.

In the six months ended June 30, 2024, $ 450,000 of expense was recognized for these restricted shares, leaving $ 1,242,000 in unrecognized expense as of June 30, 2024.

In the six months ended June 30, 2023, $ 398,000 of expense was recognized for restricted shares, leaving $ 1,287,000 in unrecognized expense as of June 30, 2023.

Note 6 – Common Stock

Proceeds from sale of common stock totaled $ 204,000 and $ 212,000 for the three months ended March 31, 2024 and 2023, respectively.

Proceeds from sale of common stock totaled $ 421,000 and $ 408,000 for the six months ended June 30, 2024 and 2023, respectively.

Note 7 – Earnings Per Share

The following table sets forth the computation of basic and diluted EPS for the three months ended March 31, 2024 and 2023:

The following table sets forth the computation of basic and diluted EPS for the six months ended June 30, 2024 and 2023:

Income (Numerator) Shares (Denominator) Per-Share Amount

For the three months ended March 31, 2024

For the six months ended June 30, 2024

Net income as reported $ 12,192,000

3 unchanged sentences

Income available to common shareholders plus assumed conversions $ 12,192,000 11,128,506 $ 1.10

For the three months ended March 31, 2023

For the six months ended June 30, 2023

Net income as reported $ 15,365,000

3 unchanged sentences

Income available to common shareholders plus assumed conversions $ 15,365,000 11,079,287 $ 1.39

The following table sets forth the computation of basic and diluted EPS for the quarters ended June 30, 2024 and 2023:

Income (Numerator) Shares (Denominator) Per-Share Amount

For the quarter ended June 30, 2024

Net income as reported $ 6,171,000

Income available to common shareholders 6,171,000 11,049,110 $ 0.56

Effect of dilutive securities:

restricted stock 88,081

Income available to common shareholders plus assumed conversions $ 6,171,000 11,137,191 $ 0.55

For the quarter ended June 30, 2023

Net income as reported $ 7,394,000

Income available to common shareholders 7,394,000 10,989,302 $ 0.67

Effect of dilutive securities:

restricted stock 83,501

Income available to common shareholders plus assumed conversions $ 7,394,000 11,072,803 $ 0.67

Note 8 – Employee Benefit Plans

2 unchanged sentences

The Plan is a safe harbor plan whereby the Bank also contributes a minimum 3.0 % of annual compensation to the plan for all eligible employees.

The expense related to the 401(k) plan was $ 315,000 and $ 326,000 for the three months ended March 31, 2024 and 2023, respectively.

The expense related to the 401(k) plan was $ 585,000 and $ 584,000 for the six months ended June 30, 2024 and 2023, respectively.

Deferred Compensation and Supplemental Retirement Benefits

3 unchanged sentences

The costs for these benefits are recognized over the service periods of the participating officers in accordance with FASB ASC Topic 712 "Compensation – Nonretirement Postemployment Benefits".

The expense of these supplemental retirement benefits was $ 37,000 and $ 41,000 for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, the associated accrued liability included in other liabilities in the balance sheet was $ 2,629,000 compared to $ 2,664,000 and $ 2,862,000 at December 31, 2023 and March 31, 2023, respectively.

The expense of these supplemental retirement benefits was $ 74,000 and $ 57,000 for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, the associated accrued liability included in other liabilities in the balance sheet was $ 2,594,000 compared to $ 2,664,000 and $ 2,807,000 at December 31, 2023 and June 30, 2023, respectively.

Postretirement Benefit Plans

6 unchanged sentences

The following table sets forth the accumulated postretirement benefit obligation and funded status:

At or for the three months ended March 31,

At or for the six months ended June 30,

Change in benefit obligation

8 unchanged sentences

The following table sets forth the net periodic pension cost:

For the three months ended March 31,

For the six months ended June 30, For the quarter ended June 30,

2024 2023 2024 2023

Components of net periodic benefit cost

2 unchanged sentences

Amounts not yet reflected in net periodic benefit cost and included in AOCI are as follows:

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

June 30, 2024 December 31, 2023 June 30, 2023

Unamortized net actuarial gain $ 384,000 $ 384,000 $ 345,000

8 unchanged sentences

Note 9 - Other Comprehensive Income (Loss)

The following table summarizes activity in the unrealized gain or loss on available for sale securities included in OCI for the three months ended March 31, 2024 and 2023.

For the three months ended March 31,

The following table summarizes activity in the unrealized gain or loss on available for sale securities included in OCI for the six months and quarters ended June 30, 2024 and 2023.

For the six months ended June 30, For the quarter ended June 30,

2024 2023 2024 2023

Balance at beginning of period $ ( 39,575,000 ) $ ( 44,718,000 ) $ ( 42,816,000 ) $ ( 40,537,000 )

4 unchanged sentences

The reclassification of realized gains is included in the net securities gains line of the consolidated statements of income and comprehensive income and the tax effect is included in the income tax expense line of the same statement.

The following table summarizes activity in the unrealized loss on securities transferred from available for sale to held to maturity included in OCI for the three months ended March 31, 2024 and 2023.

For the three months ended March 31,

The following table summarizes activity in the unrealized loss on securities transferred from available for sale to held to maturity included in OCI for the six months and quarters ended June 30, 2024 and 2023.

For the six months ended June 30, For the quarter ended June 30,

2024 2023 2024 2023

Balance at beginning of period $ ( 56,000 ) $ ( 64,000 ) $ ( 54,000 ) $ ( 60,000 )

3 unchanged sentences

Balance at end of period $ ( 51,000 ) $ ( 59,000 ) $ ( 51,000 ) $ ( 59,000 )

The following table presents the effect of the Company's derivative financial instruments included in OCI for the three months ended March 31, 2024 and 2023.

For the three months ended March 31,

The following table presents the effect of the Company's derivative financial instruments included in OCI for the six months and quarters ended June 30, 2024 and 2023.

For the six months ended June 30, For the quarter ended June 30,

2024 2023 2024 2023

Balance at beginning of period $ 300,000 $ 544,000 $ 735,000 $ ( 2,192,000 )

3 unchanged sentences

Balance at end of period $ 733,000 $ 680,000 $ 733,000 $ 680,000

There was no activity in the unrealized gain or loss on postretirement benefits included in OCI for the three months ended March 31, 2024 and 2023.

There was no activity in the unrealized gain or loss on postretirement benefits included in OCI for the six months and quarters ended June 30, 2024 and 2023.

Note 10 - Financial Derivative Instruments

9 unchanged sentences

Any ineffective portion is recorded in earnings.

The Bank discontinues hedge accounting when it is determined that the derivative is no longer highly effective in offsetting changes of the hedged risk on the hedged item, or management determines that the designation of the derivative as a hedging instrument is no longer appropriate.

The Bank discontinues hedge accounting

when it is determined that the derivative is no longer highly effective in offsetting changes of the hedged risk on the hedged item, or management determines that the designation of the derivative as a hedging instrument is no longer appropriate.

The details of the Bank's swap agreements are as follows:

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

June 30, 2024 December 31, 2023 June 30, 2023

Effective Date Maturity Date Variable Index Received Fixed Rate Paid Presentation on Consolidated Balance Sheets Notional Amount Fair Value

5 unchanged sentences

04/27/2022 04/27/2024 USD-SOFR-COMPOUND 2.619 % Other Assets — — 10,000,000 86,000 10,000,000 219,000

01/10/2023 01/01/2026 USD-SOFR-OIS COMPOUND 3.836 % Other (Liabilities) Assets 75,000,000 910,000 75,000,000 272,000 75,000,000 ( 196,000 )

01/10/2023 01/01/2026 USD-SOFR-OIS COMPOUND 3.836 % Other Assets 75,000,000 928,000 75,000,000 272,000 75,000,000 1,154,000

$ 75,000,000 $ 928,000 $ 95,000,000 $ 380,000 $ 105,000,000 $ 1,620,000

12 unchanged sentences

Such loan level arrangements are not designated as hedges for accounting purposes, and are recorded at fair value in the Company’s consolidated balance sheets.

At March 31, 2024 and December 31, 2023, there were seven customer loan swap arrangements in place.

This compares to six customer loan swap arrangements in place at March 31, 2023.

At June 30, 2024 there were eight customer loan swap arrangements in place.

This compares to seven customer loan swap arrangements in place at December 31, 2023 and six customer loan swap arrangements in place at June 30, 2023.

The details of the Bank's customer loan swap arrangements are detailed below:

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

June 30, 2024 December 31, 2023 June 30, 2023

Presentation on Consolidated Balance Sheet Number of Positions Notional Amount Fair Value Number of Positions Notional Amount Fair Value Number of Positions Notional Amount Fair Value

9 unchanged sentences

The Bank's arrangement with its institutional counterparty requires it to post cash or other assets as collateral for its various loan swap contracts in a net liability position based on their fair values and the Bank's credit rating or receive cash collateral for contracts in a net asset position as requested.

At March 31, 2024, there was no collateral posted on its swap contracts or required amount to be pledged.

At June 30, 2024, there was no collateral posted on its swap contracts or required amount to be pledged.

Note 11 – Mortgage Servicing Rights

3 unchanged sentences

The model utilizes several assumptions, the most significant of which is loan prepayments, calculated using a three-months moving average of weekly prepayment data published by the PSA and modeled against the serviced loan portfolio, and the discount rate to discount future cash flows.

As of March 31, 2024, the prepayment assumption using the PSA model was 101, which translates into an anticipated prepayment rate of 4.85 %.

As of June 30, 2024, the prepayment assumption using the PSA model was 108, which translates into an anticipated prepayment rate of 5.18 %.

The discount rate is 9.75 %.

2 unchanged sentences

Amortization of mortgage servicing rights, as well as write-offs due to prepayments of the related mortgage loans, are recorded as a charge against mortgage servicing fee income.

For the three months ended March 31, 2024 and 2023, servicing rights capitalized totaled $ 4,000 and $ 7,000 , respectively.

Servicing rights amortized for the three-month periods ended March 31, 2024 and 2023 were $ 84,000 and $ 98,000 , respectively.

The fair value of servicing rights was $ 3,423,000 , $ 3,583,000 , and $ 3,505,000 at March 31, 2024, December 31, 2023 and March 31, 2023, respectively.

The Bank serviced loans for others totaling $ 315,414,000 , $ 321,178,000 , and $ 337,585,000 at March 31, 2024, December 31, 2023, and March 31, 2023, respectively.

For the six months ended June 30, 2024 and 2023, servicing rights capitalized totaled $ 8,000 and $ 17,000 , respectively.

Servicing rights amortized for the six-month periods ended June 30, 2024 and 2023 were $ 164,000 and $ 197,000 , respectively.

The fair value of servicing rights was $ 3,281,000 , $ 3,583,000 , and $ 3,639,000 at June 30, 2024, December 31, 2023 and June 30, 2023, respectively.

The Bank serviced loans for others totaling $ 307,637,000 , $ 321,178,000 , and $ 332,993,000 at June 30, 2024, December 31, 2023, and June 30, 2023, respectively.

Mortgage servicing rights are included in other assets and detailed in the following table:

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

June 30, 2024 December 31, 2023 June 30, 2023

Mortgage servicing rights $ 8,709,000 $ 8,702,000 $ 8,671,000

6 unchanged sentences

Note 13 - Certificates of Deposit

The following table represents the breakdown of certificates of deposit at March 31, 2024 and 2023, and at December 31, 2023:

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

The following table represents the breakdown of certificates of deposit at June 30, 2024 and 2023, and at December 31, 2023:

June 30, 2024 December 31, 2023 June 30, 2023

Certificates of deposit < $100,000 $ 728,410,000 $ 646,818,000 $ 667,552,000

56 unchanged sentences

The credit value adjustments associated with derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties.

As of March 31, 2024 and 2023, and December 31, 2023, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives due to collateral postings.

As of June 30, 2024 and 2023, and December 31, 2023, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives due to collateral postings.

Customer Loan Derivatives

12 unchanged sentences

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

The following tables present the balances of assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2024, December 31, 2023 and March 31, 2023.

At March 31, 2024

The following tables present the balances of assets and liabilities that were measured at fair value on a recurring basis as of June 30, 2024, December 31, 2023 and June 30, 2023.

At June 30, 2024

Level 1 Level 2 Level 3 Total

9 unchanged sentences

Total assets $ — $ 279,476,000 $ — $ 279,476,000

At March 31, 2024

At June 30, 2024

Level 1 Level 2 Level 3 Total

19 unchanged sentences

Total liabilities $ — $ 6,497,000 $ — $ 6,497,000

At March 31, 2023

At June 30, 2023

Level 1 Level 2 Level 3 Total

9 unchanged sentences

Total assets $ — $ 284,690,000 $ — $ 284,690,000

At March 31, 2023

At June 30, 2023

Level 1 Level 2 Level 3 Total

5 unchanged sentences

Mortgage servicing rights are presented at fair value with no impairment reserve for each of the periods presented.

OREO is presented net of no allowance at June 30, 2024 and 2023.

There was no OREO or related allowance at

December 31, 2023.

Only collateral-dependent IAL with a related specific ACL or a partial charge off are included in IAL for purposes of fair value disclosures.

There were no collateral-dependent IAL with a related specific ACL or a partial charge off at March 31, 2024.

IAL below are presented net of specific allowances of $ 19,000 and $ 132,000 at December 31, 2023, and March 31, 2023, respectively.

At March 31, 2024

There were no collateral-dependent IAL with a related specific ACL or a partial charge off at June 30, 2024.

IAL below are presented net of specific allowances of $ 19,000 and $ 157,000 at December 31, 2023, and June 30, 2023, respectively.

At June 30, 2024

Level 1 Level 2 Level 3 Total

Mortgage servicing rights $ — $ 3,281,000 $ — $ 3,281,000

OREO — 208,000 — 208,000

Total assets $ — $ 3,489,000 $ — $ 3,489,000

4 unchanged sentences

Total assets $ — $ 3,868,000 $ — $ 3,868,000

At March 31, 2023

At June 30, 2023

Level 1 Level 2 Level 3 Total

Mortgage servicing rights $ — $ 3,639,000 $ — $ 3,639,000

OREO — 64,000 — 64,000

Individually analyzed loans — 215,000 — 215,000

13 unchanged sentences

Carrying value is used because the accounts have no stated maturity and the customer has the ability to withdraw funds immediately.

The carrying amount and estimated fair values for financial instruments as of March 31, 2024 were as follows:

The carrying amount and estimated fair values for financial instruments as of June 30, 2024 were as follows:

Carrying value Estimated fair value Level 1 Level 2 Level 3

41 unchanged sentences

Total borrowed funds 69,652,000 69,536,000 — 69,536,000 —

The carrying amount and estimated fair values for financial instruments as of March 31, 2023 were as follows:

The carrying amount and estimated fair values for financial instruments as of June 30, 2023 were as follows:

Carrying value Estimated fair value Level 1 Level 2 Level 3

32 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