FNLC filing — read by section

Item 1. Financial Statements

Item 1 – Financial Statements 
 
 Report of Independent Registered Public Accounting Firm 
 
 The Board of Directors and Shareholders 
 The First Bancorp, Inc. 
 
 Results of Review of Interim Financial Information 
 
 We have reviewed the accompanying interim consolidated financial information of The First Bancorp, Inc. and Subsidiary as of September 30, 2024 and 2023 and for the three-month and nine-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. 
 
 Basis for Review Results 
 
 This consolidated interim financial information is the responsibility of the Company's management. We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. 
 
 /s/ Berry Dunn McNeil & Parker, LLC 
 Portland, Maine 
 November 8, 2024 
 2 

 Consolidated Balance Sheets (Unaudited) The First Bancorp, Inc. and Subsidiary 
 
 September 30, 2024 December 31, 2023 September 30, 2023 
 Assets 
 Cash and cash equivalents $ 35,136,000 $ 31,942,000 $ 29,894,000 
 Interest bearing deposits in other banks 17,199,000 3,488,000 38,366,000 
 Securities available for sale 285,021,000 282,053,000 284,972,000 
 Securities held-to-maturity (net of ACL), fair value of $ 333,575,000 at September 30, 2024, $ 338,570,000 at December 31, 2023 and $ 311,864,000 at September 30, 2023 
 377,635,000 385,235,000 387,374,000 
 Restricted equity securities, at cost 6,420,000 3,385,000 3,860,000 
 Loans held for sale — — 268,000 
 Loans 2,307,253,000 2,129,454,000 2,079,860,000 
 Less allowance for credit losses 23,999,000 24,030,000 23,322,000 
 Net loans 2,283,254,000 2,105,424,000 2,056,538,000 
 Accrued interest receivable 14,600,000 11,894,000 12,038,000 
 Premises and equipment, net 27,449,000 28,684,000 28,868,000 
 Other real estate owned 173,000 — — 
 Goodwill 30,646,000 30,646,000 30,646,000 
 Other assets 65,030,000 63,947,000 71,315,000 
 Total assets $ 3,142,563,000 $ 2,946,698,000 $ 2,944,139,000 
 Liabilities 
 Demand deposits $ 312,956,000 $ 289,104,000 $ 323,375,000 
 NOW deposits 651,242,000 634,543,000 683,180,000 
 Money market deposits 344,102,000 305,931,000 271,056,000 
 Savings deposits 269,092,000 299,837,000 313,160,000 
 Certificates of deposit 1,125,326,000 1,070,247,000 1,009,166,000 
 Total deposits 2,702,718,000 2,599,662,000 2,599,937,000 
 Borrowed funds – short term 56,027,000 69,652,000 82,993,000 
 Borrowed funds – long term 95,000,000 — — 
 Other liabilities 32,035,000 34,305,000 34,544,000 
 Total liabilities 2,885,780,000 2,703,619,000 2,717,474,000 
 Shareholders' equity 
 
 Common stock, one cent par value per share 
 111,000 111,000 111,000 
 Additional paid-in capital 71,389,000 70,071,000 69,649,000 
 Retained earnings 219,559,000 211,925,000 209,132,000 
 Accumulated other comprehensive income (loss) 
 Net unrealized loss on securities available-for-sale ( 34,394,000 ) ( 39,575,000 ) ( 53,852,000 ) 
 Net unrealized loss on securities transferred from available-for-sale to held-to-maturity ( 49,000 ) ( 56,000 ) ( 58,000 ) 
 Net unrealized (loss) gain on cash flow hedging derivative instruments ( 136,000 ) 300,000 1,410,000 
 Net unrealized gain on postretirement costs 303,000 303,000 273,000 
 Total shareholders' equity 256,783,000 243,079,000 226,665,000 
 Total liabilities & shareholders' equity $ 3,142,563,000 $ 2,946,698,000 $ 2,944,139,000 
 Common Stock 
 Number of shares authorized 18,000,000 18,000,000 18,000,000 
 Number of shares issued and outstanding 11,148,066 11,098,057 11,089,290 
 Book value per common share $ 23.03 $ 21.90 $ 20.44 
 Tangible book value per common share $ 20.27 $ 19.12 $ 17.66 

 See Report of Independent Registered Public Accounting Firm. The accompanying notes are an integral part of these consolidated financial statements. 
 3 

 Consolidated Statements of Income and Comprehensive Income (Loss) (Unaudited) 
 The First Bancorp, Inc. and Subsidiary 
 
 For the nine months ended September 30, For the quarter ended September 30, 
 2024 2023 2024 2023 
 Interest income 
 Interest and fees on loans (includes YTD tax-exempt income of $ 1,824,000 for September 30, 2024 and $ 1,362,000 for September 30, 2023) 
 $ 95,541,000 $ 78,860,000 $ 33,498,000 $ 28,329,000 
 Interest on deposits with other banks 190,000 300,000 56,000 211,000 
 Interest and dividends on investments (includes YTD tax-exempt income of $ 5,971,000 for September 30, 2024 and $ 6,030,000 for September 30, 2023) 
 14,102,000 14,192,000 4,733,000 4,714,000 
 Total interest income 109,833,000 93,352,000 38,287,000 33,254,000 
 Interest expense 
 Interest on deposits 59,111,000 42,384,000 20,118,000 16,992,000 
 Interest on borrowed funds 4,365,000 1,614,000 1,767,000 308,000 
 Total interest expense 63,476,000 43,998,000 21,885,000 17,300,000 
 Net interest income 46,357,000 49,354,000 16,402,000 15,954,000 
 Credit loss (reduction) expense - loans 58,000 419,000 ( 580,000 ) ( 161,000 ) 
 Credit loss (reduction) expense - debt securities HTM ( 210,000 ) ( 7,000 ) 76,000 3,000 
 Credit loss (reduction) expense - off-balance sheet credit exposures ( 487,000 ) 89,000 ( 134,000 ) ( 42,000 ) 
 Total credit loss (reduction) expense ( 639,000 ) 501,000 ( 638,000 ) ( 200,000 ) 
 Net interest income after provision for credit losses 46,996,000 48,853,000 17,040,000 16,154,000 
 Non-interest income 
 Investment management and fiduciary income 3,689,000 3,515,000 1,232,000 1,160,000 
 Service charges on deposit accounts 1,552,000 1,399,000 511,000 465,000 
 
 Mortgage origination and servicing income, net of amortization 512,000 611,000 193,000 224,000 
 Debit card income 3,884,000 3,843,000 1,365,000 1,367,000 
 Other operating income 2,282,000 1,962,000 821,000 675,000 
 Total non-interest income 11,919,000 11,330,000 4,122,000 3,891,000 
 Non-interest expense 
 Salaries and employee benefits 17,768,000 16,420,000 6,126,000 5,523,000 
 Occupancy expense 2,532,000 2,494,000 823,000 784,000 
 Furniture and equipment expense 4,182,000 4,009,000 1,416,000 1,403,000 
 FDIC insurance premiums 1,762,000 1,429,000 636,000 551,000 
 Amortization of identified intangibles 20,000 20,000 7,000 7,000 
 Other operating expense 8,747,000 8,199,000 2,992,000 2,738,000 
 Total non-interest expense 35,011,000 32,571,000 12,000,000 11,006,000 
 Income before income taxes 23,904,000 27,612,000 9,162,000 9,039,000 
 Income tax expense 4,141,000 4,773,000 1,591,000 1,565,000 
 NET INCOME $ 19,763,000 $ 22,839,000 $ 7,571,000 $ 7,474,000 
 Basic earnings per common share $ 1.79 $ 2.08 $ 0.69 $ 0.68 
 Diluted earnings per common share $ 1.78 $ 2.06 $ 0.68 $ 0.67 
 Other comprehensive income (loss) net of tax 
 Net unrealized gain (loss) on securities available for sale, net of taxes $ 5,181,000 $ ( 9,134,000 ) $ 8,975,000 $ ( 10,071,000 ) 
 Net unrealized gain on transferred securities, net of taxes 7,000 6,000 2,000 1,000 
 Net unrealized (loss) gain on hedging derivative instruments ( 436,000 ) 866,000 ( 869,000 ) 730,000 
 
 Other comprehensive gain (loss) 4,752,000 ( 8,262,000 ) 8,108,000 ( 9,340,000 ) 
 Comprehensive income (loss) $ 24,515,000 $ 14,577,000 $ 15,679,000 $ ( 1,866,000 ) 

 See Report of Independent Registered Public Accounting Firm. The accompanying notes are an integral part of these consolidated financial statements. 
 4 

 Consolidated Statements of Changes in Shareholders' Equity (Unaudited) 
 The First Bancorp, Inc. and Subsidiary 
 Nine Month Period Ended September 30, 2024 and 2023 
 
 Common stock and 
additional paid-in capital Retained
earnings Accumulated
other
comprehensive
income (loss) Total
shareholders'
equity 
 Shares Amount 
 Balance at December 31, 2022 11,045,186 $ 68,545,000 $ 204,343,000 $ ( 43,965,000 ) $ 228,923,000 
 Net income — — 22,839,000 — 22,839,000 
 Net unrealized loss on securities available for sale, net of tax — — — ( 9,134,000 ) ( 9,134,000 ) 
 Net unrealized gain on securities transferred from available for sale to held to maturity, net of tax — — — 6,000 6,000 
 Net unrealized gain on hedging derivative instruments, net of tax — — — 866,000 866,000 
 
 Comprehensive income (loss) — — 22,839,000 ( 8,262,000 ) 14,577,000 
 
 Cash dividends declared ($ 1.04 per share) 
 — — ( 11,525,000 ) — ( 11,525,000 ) 
 Equity compensation expense — 607,000 — — 607,000 
 
 Payment to repurchase common stock ( 12,629 ) — ( 248,000 ) — ( 248,000 ) 
 
 Issuance of restricted stock 33,610 — — — — 
 Proceeds from sale of common stock 23,123 608,000 — — 608,000 
 Adoption of ASU No. 2016-13 ( 6,277,000 ) ( 6,277,000 ) 
 Balance at September 30, 2023 11,089,290 $ 69,760,000 $ 209,132,000 $ ( 52,227,000 ) $ 226,665,000 
 
 Balance at December 31, 2023 11,098,057 $ 70,182,000 $ 211,925,000 $ ( 39,028,000 ) $ 243,079,000 
 Net income — — 19,763,000 — 19,763,000 
 Net unrealized gain on securities available for sale, net of tax — — — 5,181,000 5,181,000 
 Net unrealized gain on securities transferred from available for sale to held to maturity, net of tax — — — 7,000 7,000 
 Net unrealized loss on hedging derivative instruments, net of tax — — — ( 436,000 ) ( 436,000 ) 
 
 Comprehensive income — — 19,763,000 4,752,000 24,515,000 
 
 Cash dividends declared ($ 1.07 per share) 
 — — ( 11,917,000 ) — ( 11,917,000 ) 
 Equity compensation expense — 680,000 — — 680,000 
 
 Payment to repurchase common stock ( 9,081 ) — ( 212,000 ) — ( 212,000 ) 
 
 Issuance of restricted stock 32,859 — — — — 
 Proceeds from sale of common stock 26,231 638,000 — — 638,000 
 Balance at September 30, 2024 11,148,066 $ 71,500,000 $ 219,559,000 $ ( 34,276,000 ) $ 256,783,000 

 5 

 Three Month Period Ended September 30, 2024 and 2023 
 
 Common stock and 
additional paid-in capital Retained
earnings Accumulated
other
comprehensive
income (loss) Total
shareholders'
equity 
 Shares Amount 
 Balance at June 30, 2023 11,081,800 $ 69,351,000 $ 205,539,000 $ ( 42,887,000 ) $ 232,003,000 
 Net income — — 7,474,000 — 7,474,000 
 Net unrealized loss on securities available for sale, net of tax — — — ( 10,071,000 ) ( 10,071,000 ) 
 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 — — — 730,000 730,000 
 Comprehensive income (loss) — — 7,474,000 ( 9,340,000 ) ( 1,866,000 ) 
 Cash dividends declared ($ 0.35 per share) 
 — — ( 3,881,000 ) — ( 3,881,000 ) 
 Equity compensation expense — 210,000 — — 210,000 
 
 Issuance of restricted stock ( 250 ) — — — — 
 Proceeds from sale of common stock 7,740 199,000 — — 199,000 
 Balance at September 30, 2023 11,089,290 $ 69,760,000 $ 209,132,000 $ ( 52,227,000 ) $ 226,665,000 
 
 Balance at June 30, 2024 11,139,639 $ 71,053,000 $ 215,999,000 $ ( 42,384,000 ) $ 244,668,000 
 Net income — — 7,571,000 — 7,571,000 
 Net unrealized gain on securities available for sale, net of tax — — — 8,975,000 8,975,000 
 Net unrealized gain on securities transferred from available for sale to held to maturity, net of tax — — — 2,000 2,000 
 Net unrealized loss on hedging derivative instruments, net of tax — — — ( 869,000 ) ( 869,000 ) 
 
 Comprehensive income (loss) — — 7,571,000 8,108,000 15,679,000 
 
 Cash dividends declared ($ 0.36 per share) 
 — — ( 4,011,000 ) — ( 4,011,000 ) 
 Equity compensation expense — 230,000 — — 230,000 
 
 Payment to repurchase common stock ( 200 ) — — — — 
 
 Proceeds from sale of common stock 8,627 217,000 — — 217,000 
 Balance at September 30, 2024 11,148,066 $ 71,500,000 $ 219,559,000 $ ( 34,276,000 ) $ 256,783,000 

 See Report of Independent Registered Public Accounting Firm. The accompanying notes are an integral part of these consolidated financial statements. 
 6 

 Consolidated Statements of Cash Flows (Unaudited) 
 The First Bancorp, Inc. and Subsi diary 
 
 For the nine months ended September 30, 
 2024 2023 
 Cash flows from operating activities 
 Net income $ 19,763,000 $ 22,839,000 
 Adjustments to reconcile net income to net cash provided by operating activities 
 Depreciation 1,657,000 1,563,000 
 Change in deferred taxes 111,000 ( 1,283,000 ) 
 Credit loss (reduction) expense ( 639,000 ) 501,000 
 Loans originated for resale ( 3,146,000 ) ( 3,082,000 ) 
 Proceeds from sales and transfers of loans 3,231,000 3,157,000 
 Net gain on sales of loans ( 85,000 ) ( 68,000 ) 
 
 Net amortization of premiums on investments 444,000 423,000 
 Net gain on sale of other real estate owned — ( 42,000 ) 
 Provision for losses on other real estate owned 35,000 — 
 Equity compensation expense 680,000 607,000 
 
 Net increase in other assets and accrued interest ( 6,297,000 ) ( 6,858,000 ) 
 Net (decrease) increase in other liabilities ( 1,649,000 ) 8,156,000 
 Net loss on disposal of premises and equipment 9,000 33,000 
 Amortization of investment in limited partnership 504,000 227,000 
 Net acquisition amortization 20,000 20,000 
 Net cash provided by operating activities 14,638,000 26,193,000 
 Cash flows from investing activities 
 Increase in interest-bearing deposits in other banks ( 13,711,000 ) ( 34,673,000 ) 
 
 Proceeds from maturities, payments and calls of securities available for sale 20,982,000 17,037,000 
 Proceeds from maturities, payments, calls and sales of securities to be held to maturity 10,495,000 6,023,000 
 Proceeds from sales of other real estate owned — 106,000 
 Purchases of securities available for sale ( 17,762,000 ) ( 29,409,000 ) 
 Purchases of securities to be held to maturity ( 2,750,000 ) — 
 
 Change in restricted equity securities ( 3,035,000 ) — 
 Redemption of restricted equity securities — 23,000 
 
 Net increase in loans ( 178,096,000 ) ( 165,280,000 ) 
 Capital expenditures ( 496,000 ) ( 2,253,000 ) 
 Proceeds from disposal of premises and equipment — 3,000 
 Net cash used by investing activities ( 184,373,000 ) ( 208,423,000 ) 
 Cash flows from financing activities 
 Net increase in demand, savings, and money market accounts 47,977,000 79,565,000 
 Net increase in certificates of deposit 55,079,000 141,495,000 
 Net decrease in short-term borrowings ( 13,625,000 ) ( 20,490,000 ) 
 Advances on long-term borrowings 95,000,000 — 
 
 Payment to repurchase common stock ( 212,000 ) ( 248,000 ) 
 Proceeds from sale of common stock 638,000 608,000 
 Dividends paid ( 11,928,000 ) ( 11,534,000 ) 
 Net cash provided by financing activities 172,929,000 189,396,000 
 Net increase in cash and cash equivalents 3,194,000 7,166,000 
 Cash and cash equivalents at beginning of period 31,942,000 22,728,000 
 Cash and cash equivalents at end of period $ 35,136,000 $ 29,894,000 
 
 7 

 For the nine months ended September 30, 
 2024 2023 
 Interest paid $ 63,260,000 $ 43,643,000 
 Income taxes paid 3,577,000 4,500,000 
 Non-cash transactions 
 
 Change in net unrealized loss on available for sale securities, net of tax $ ( 5,181,000 ) $ 9,134,000 
 Net transfer from loans to other real estate owned 208,000 — 
 
 See Report of Independent Registered Public Accounting Firm. The accompanying notes are an integral part of these consolidated financial statements. 
 8 

 Notes to Consolidated Financial Statements 
 The First Bancorp, Inc. and Subsidiary 
 
 Note 1 – Basis of Presentation 
 The Company is a financial holding company that owns all of the common stock of the Bank. The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of Management, all adjustments (consisting of normally recurring accruals) considered necessary for a fair presentation have been included. All significant intercompany transactions and balances are eliminated in consolidation. The income reported for the 2024 period is not necessarily indicative of the results that may be expected for the year ending December 31, 2024. For further information, refer to the consolidated financial statements and notes included in the Company's annual report on Form 10-K for the year ended December 31, 2023. 
 
 The abbreviations and definitions identified below are used throughout this Form 10-Q, including Item 1 - Financial Statements and Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations. The following is provided to aid the reader and provide a reference page when reviewing these sections of the Form 10-Q. 
 
 Abbreviation Description Abbreviation Description 
 ACL Allowance for credit losses GDP Gross domestic product 
 AFS Available-for-sale GNMA Government National Mortgage Association 
 ALCO Asset/Liability Committee HTM Held-to-maturity 
 AOCI Accumulated other comprehensive income (loss) IAL Individually Analyzed Loans 
 ASC Accounting Standards Codification IRS Internal Revenue Service 
 ASU Accounting Standards Update MPF Mortgage Partnership Finance Program 
 BTFP Bank Term Funding Program OAEM Other assets especially mentioned 
 C&I Commercial and Industrial OCC Office of the Comptroller of the Currency 
 CDs Certificates of deposit OCI Other comprehensive income (loss) 
 CECL Current Expected Credit Loss OIS Overnight Indexed Swap 
 CLLD Construction, land, and land development OREO Other real estate owned 
 EPS Earnings per share POR Period of Redemption 
 FASB Financial Accounting Standards Board PSA Public Securities Association 
 FDIC Federal Deposit Insurance Corporation SEC Securities and Exchange Commission 
 FHLB Federal Home Loan Bank SOFR Secured Overnight Financing Rate 
 FHLBB Federal Home Loan Bank of Boston TDR Troubled debt restructuring 
 FHLMC Federal Home Loan Mortgage Corporation The 2020 Plan The 2020 Equity Incentive Plan 
 FNMA Federal National Mortgage Association The Bank First National Bank 
 FOMC Federal Open Market Committee The Company The First Bancorp, Inc. 
 FRB Federal Reserve Board U.S. United States of America 
 FRBB Federal Reserve Bank of Boston USD U.S. Dollar 
 GAAP Accounting principles generally accepted in the U.S. 

 Risks and Uncertainties 
 Ongoing conflicts between Russia and Ukraine, and Israel, Hamas and Hezbollah, continue to contribute to economic uncertainty and geopolitical instability. Geopolitical tensions could also result in increased threat from cyberattacks or other disruptive activity. Concern about the national commercial real estate market and the impact a downturn in this sector could have on the banking industry continues to be expressed, as does concern about the potential for a slowing economy. Any or all could have negative downstream effects on the Company's operating results, the extent of which is indeterminable at this time. 
 Subsequent Events 
 Events occurring subsequent to September 30, 2024, have been evaluated as to their potential impact to the financial statements. 
 
 9 

 Note 2 – Investment Securities 
 The following table summarizes the amortized cost and estimated fair value of investment securities at September 30, 2024: 
 
 Amortized
Cost Unrealized Gains Unrealized Losses Fair Value (Estimated) 
 Securities available for sale 
 U.S. Treasury & Agency securities $ 26,040,000 $ — $ ( 5,305,000 ) $ 20,735,000 
 Mortgage-backed securities 259,979,000 438,000 ( 33,043,000 ) 227,374,000 
 State and political subdivisions 40,254,000 42,000 ( 5,688,000 ) 34,608,000 
 Asset-backed securities 2,285,000 19,000 — 2,304,000 
 
 $ 328,558,000 $ 499,000 $ ( 44,036,000 ) $ 285,021,000 
 Securities to be held to maturity 
 U.S. Treasury & Agency securities $ 38,100,000 $ — $ ( 8,371,000 ) $ 29,729,000 
 Mortgage-backed securities 53,373,000 103,000 ( 9,378,000 ) 44,098,000 
 State and political subdivisions 252,636,000 267,000 ( 24,669,000 ) 228,234,000 
 
 Corporate securities 33,750,000 — ( 2,236,000 ) 31,514,000 
 $ 377,859,000 $ 370,000 $ ( 44,654,000 ) $ 333,575,000 
 Less allowance for credit losses ( 224,000 ) — — — 
 Net securities to be held to maturity $ 377,635,000 $ 370,000 $ ( 44,654,000 ) $ 333,575,000 
 Restricted equity securities 
 Federal Home Loan Bank Stock $ 5,383,000 $ — $ — $ 5,383,000 
 Federal Reserve Bank Stock 1,037,000 — — 1,037,000 
 $ 6,420,000 $ — $ — $ 6,420,000 

 The following table summarizes the amortized cost and estimated fair value of investment securities at December 31, 2023: 
 
 Amortized
Cost Unrealized Gains Unrealized Losses Fair Value (Estimated) 
 Securities available for sale 
 U.S. Treasury & Agency securities $ 26,033,000 $ — $ ( 6,203,000 ) $ 19,830,000 
 Mortgage-backed securities 262,823,000 265,000 ( 38,491,000 ) 224,597,000 
 State and political subdivisions 40,306,000 41,000 ( 5,702,000 ) 34,645,000 
 Asset-backed securities 2,986,000 4,000 ( 9,000 ) 2,981,000 
 
 $ 332,148,000 $ 310,000 $ ( 50,405,000 ) $ 282,053,000 
 Securities to be held to maturity 
 U.S. Treasury & Agency securities $ 40,100,000 $ — $ ( 9,601,000 ) $ 30,499,000 
 Mortgage-backed securities 56,401,000 70,000 ( 10,398,000 ) 46,073,000 
 State and political subdivisions 254,418,000 313,000 ( 24,213,000 ) 230,518,000 
 
 Corporate securities 34,750,000 — ( 3,270,000 ) 31,480,000 
 $ 385,669,000 $ 383,000 $ ( 47,482,000 ) $ 338,570,000 
 Less allowance for credit losses ( 434,000 ) — — — 
 Net securities to be held to maturity $ 385,235,000 $ 383,000 $ ( 47,482,000 ) $ 338,570,000 
 Restricted equity securities 
 Federal Home Loan Bank Stock $ 2,348,000 $ — $ — $ 2,348,000 
 Federal Reserve Bank Stock 1,037,000 — — 1,037,000 
 $ 3,385,000 $ — $ — $ 3,385,000 

 10 

 The following table summarizes the amortized cost and estimated fair value of investment securities at September 30, 2023: 
 
 Amortized
Cost Unrealized Gains Unrealized Losses Fair Value (Estimated) 
 Securities available for sale 
 U.S. Treasury & Agency securities $ 45,851,000 $ — $ ( 7,599,000 ) $ 38,252,000 
 Mortgage-backed securities 263,775,000 1,000 ( 50,930,000 ) 212,846,000 
 State and political subdivisions 40,417,000 — ( 9,637,000 ) 30,780,000 
 Asset-backed securities 3,097,000 1,000 ( 4,000 ) 3,094,000 
 
 $ 353,140,000 $ 2,000 $ ( 68,170,000 ) $ 284,972,000 
 Securities to be held to maturity 
 U.S. Treasury & Agency securities $ 40,100,000 $ — $ ( 11,996,000 ) $ 28,104,000 
 Mortgage-backed securities 57,224,000 4,000 ( 13,336,000 ) 43,892,000 
 State and political subdivisions 255,732,000 16,000 ( 46,807,000 ) 208,941,000 
 Corporate securities 34,750,000 — ( 3,823,000 ) 30,927,000 
 $ 387,806,000 $ 20,000 $ ( 75,962,000 ) $ 311,864,000 
 Less allowance for credit losses ( 432,000 ) — — — 
 Net securities to be held to maturity $ 387,374,000 $ 20,000 $ ( 75,962,000 ) $ 311,864,000 
 Restricted equity securities 
 Federal Home Loan Bank Stock $ 2,823,000 $ — $ — $ 2,823,000 
 Federal Reserve Bank Stock 1,037,000 — — 1,037,000 
 $ 3,860,000 $ — $ — $ 3,860,000 

 Allowance for Credit Losses: 
 AFS securities, as shown in the above tables, consist of securities issued by U.S. Government Agencies, U.S. Government Sponsored Entities, State or Local Municipal Governments, or are backed by collateral that is guaranteed by the U.S. Government. We monitor the credit quality of these investments through credit ratings issued by major rating providers and through substantial price changes not consistent with general market movements. Each of the AFS securities is deemed to be investment grade, and no ACL has been established for AFS securities. 
 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 $ 19,146,000 as of September 30, 2024. Corporate securities in HTM consist of 14 individual companies in the banking industry. Management reviewed the collectability of these securities taking into consideration such factors as the financial condition of the issuers, reported regulatory capital ratios of the issuers, and other performance factors. Aggregate credit risk of the private activity bonds and corporate securities is considered very low and an immaterial ACL has been established. As of September 30, 2024 and 2023, and December 31, 2023, the total ACL for HTM securities was $ 224,000 , $ 432,000 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 September 30, 2024: 
 
 Securities available for sale Securities to be held to maturity 
 Amortized
Cost Fair Value (Estimated) Amortized
Cost Fair Value (Estimated) 
 Due in 1 year or less $ 2,995,000 $ 2,949,000 $ 2,342,000 $ 2,371,000 
 Due in 1 to 5 years 403,000 402,000 20,079,000 19,573,000 
 Due in 5 to 10 years 28,275,000 25,251,000 103,834,000 98,349,000 
 Due after 10 years 296,885,000 256,419,000 251,604,000 213,282,000 
 
 $ 328,558,000 $ 285,021,000 $ 377,859,000 $ 333,575,000 

 11 

 The following table summarizes the contractual maturities of investment securities at December 31, 2023: 
 
 Securities available for sale Securities to be held to maturity 
 Amortized
Cost Fair Value (Estimated) Amortized
Cost Fair Value (Estimated) 
 Due in 1 year or less $ — $ — $ 1,674,000 $ 1,672,000 
 Due in 1 to 5 years 3,489,000 3,373,000 16,387,000 15,814,000 
 Due in 5 to 10 years 28,551,000 25,089,000 99,942,000 93,894,000 
 Due after 10 years 300,108,000 253,591,000 267,666,000 227,190,000 
 
 $ 332,148,000 $ 282,053,000 $ 385,669,000 $ 338,570,000 

 The following table summarizes the contractual maturities of investment securities at September 30, 2023: 
 
 Securities available for sale Securities to be held to maturity 
 Amortized
Cost Fair Value (Estimated) Amortized
Cost Fair Value (Estimated) 
 Due in 1 year or less $ 19,819,000 $ 19,819,000 $ 2,158,000 $ 2,151,000 
 Due in 1 to 5 years 3,640,000 3,468,000 15,780,000 14,771,000 
 Due in 5 to 10 years 28,082,000 23,360,000 92,565,000 81,812,000 
 Due after 10 years 301,599,000 238,325,000 277,303,000 213,130,000 
 
 $ 353,140,000 $ 284,972,000 $ 387,806,000 $ 311,864,000 

 At September 30, 2024, securities with a carrying value of $ 344,261,000 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 $ 383,946,000 at September 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 nine months ended September 30, 2024 and 2023. 
 As of September 30, 2024, there were 226 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 September 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 
 Fair Value (Estimated) Unrealized Losses Fair Value (Estimated) Unrealized Losses Fair Value (Estimated) Unrealized Losses 
 U.S. Treasury & Agency securities $ — $ — $ 20,735,000 $ ( 5,305,000 ) $ 20,735,000 $ ( 5,305,000 ) 
 Mortgage-backed securities 4,762,000 ( 43,000 ) 199,001,000 ( 33,000,000 ) 203,763,000 ( 33,043,000 ) 
 State and political subdivisions — — 29,256,000 ( 5,688,000 ) 29,256,000 ( 5,688,000 ) 
 
 $ 4,762,000 $ ( 43,000 ) $ 248,992,000 $ ( 43,993,000 ) $ 253,754,000 $ ( 44,036,000 ) 

 12 

 As of December 31, 2023, there were 226 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 December 31, 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 
 Fair Value (Estimated) Unrealized Losses Fair Value (Estimated) Unrealized Losses Fair Value (Estimated) Unrealized Losses 
 U.S. Treasury & Agency securities $ — $ — $ 19,830,000 $ ( 6,203,000 ) $ 19,830,000 $ ( 6,203,000 ) 
 Mortgage-backed securities 1,712,000 ( 14,000 ) 208,717,000 ( 38,477,000 ) 210,429,000 ( 38,491,000 ) 
 State and political subdivisions 2,082,000 ( 49,000 ) 27,700,000 ( 5,653,000 ) 29,782,000 ( 5,702,000 ) 
 Asset-backed securities — — 1,464,000 ( 9,000 ) 1,464,000 ( 9,000 ) 
 
 $ 3,794,000 $ ( 63,000 ) $ 257,711,000 $ ( 50,342,000 ) $ 261,505,000 $ ( 50,405,000 ) 

 As of September 30, 2023, there were 239 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 September 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 
 Fair Value (Estimated) Unrealized Losses Fair Value (Estimated) Unrealized Losses Fair Value (Estimated) Unrealized Losses 
 U.S. Treasury & Agency securities $ 9,882,000 $ ( 1,000 ) $ 18,433,000 $ ( 7,598,000 ) $ 28,315,000 $ ( 7,599,000 ) 
 Mortgage-backed securities 12,550,000 ( 304,000 ) 200,166,000 ( 50,626,000 ) 212,716,000 ( 50,930,000 ) 
 State and political subdivisions 4,771,000 ( 626,000 ) 25,643,000 ( 9,011,000 ) 30,414,000 ( 9,637,000 ) 
 Asset-backed securities — — 1,510,000 ( 4,000 ) 1,510,000 ( 4,000 ) 
 
 $ 27,203,000 $ ( 931,000 ) $ 245,752,000 $ ( 67,239,000 ) $ 272,955,000 $ ( 68,170,000 ) 

 Credit Quality Indicators: Agency-backed and government-sponsored enterprise securities have a long history with no credit losses, including during times of severe stress. The principal and interest payments on agency-guaranteed debt is backed by the U.S. Government. Government-sponsored enterprises similarly guarantee principal and interest payments and carry an implicit guarantee from the U.S. Department of the Treasury. Additionally, government-sponsored enterprise securities are exceptionally liquid, readily marketable, and provide a substantial amount of price transparency and price parity, indicating a perception of zero credit losses. HTM municipal debt holdings are comprised primarily of high credit quality (rated A- or higher) state and municipal obligations. High credit quality state and municipal obligations have a history of zero to near-zero credit loss. All of the Mortgage-backed securities owned were issued either by a U.S. Government Agency (GNMA) or a Government Sponsored Enterprise (FNMA or FHLMC). HTM municipal debt holdings also include two unrated private activity bonds issued by well known customers of the Bank. These securities are regularly monitored as part of an overall credit relationship with the issuers; both issuers were in good standing as of September 30, 2024. HTM corporate debt holdings consist of 14 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 September 30, 2024. 
 
 13 

 The following table presents the activity in the ACL for HTM debt securities by major security type for the periods ended September 30, 2024 and 2023: 
 
 For the nine months ended September 30, 2024 For the nine months ended September 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 $ — $ — $ — 
 Impact of adopting ASC 326 — — — 229,000 209,000 438,000 
 Credit loss (reduction) 1 expense 
 ( 84,000 ) ( 126,000 ) ( 210,000 ) ( 17,000 ) 11,000 ( 6,000 ) 
 Securities charged-off — — — — — — 
 Recoveries — — — — — — 
 Total ending allowance balance $ 138,000 $ 86,000 $ 224,000 $ 212,000 $ 220,000 $ 432,000 

 1 September 30, 2023 total of ( 6,000 ) will not tie to Consolidated Statement of Income Credit loss (reduction) expense - debt securities HTM due to rounding. 
 
 There was no ACL on U.S. Government-sponsored enterprise, agency securities, or mortgage-backed securities as of September 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 September 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. The net unrealized loss, net of taxes, on these securities at the date of the transfer was $ 15,000 . The net unrealized holding loss at the time of transfer continues to be reported in AOCI, net of tax and is amortized over the remaining lives of the securities as an adjustment of the yield. 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 $ 49,000 , net of taxes, at September 30, 2024. This compares to $ 56,000 and $ 58,000 , net of taxes, at December 31, 2023 and September 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. As a requirement of membership in the FHLBB, the Bank must own a minimum required amount of FHLBB stock, calculated periodically based primarily on its level of borrowings from the FHLBB. The Bank uses the FHLBB for a portion of its wholesale funding needs. As of September 30, 2024 and 2023, and December 31, 2023, the Bank's investment in FHLBB stock totaled $ 5,383,000 , $ 2,823,000 and $ 2,348,000 , respectively. FHLBB stock is a non-marketable equity security and therefore is reported at cost, which equals par value. 
 The Bank is also a member of the FRBB. As a requirement for membership in the FRBB, the Bank must own a minimum required amount of FRBB stock. 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 September 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 September 30, 2024. The Bank will continue to monitor its investment in these restricted equity securities. 
 14 

 Note 3 – Loans 
 The Company periodically reviews and updates the segmentation of its loan portfolio. Updates performed in conjunction with adoption of ASC 326 in 2023 consisted of reporting what had been a single class, commercial real estate loans, as three classes - commercial real estate owner occupied, commercial real estate non-owner occupied, and commercial multi-family. 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 first quarter of 2024, a new segment was established for Agriculture loans; certain prior period information of these loans continues to be included in 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 September 30, 2024 and 2023 and at December 31, 2023: 
 
 September 30, 2024 December 31, 2023 September 30, 2023 
 Commercial 
 Real estate owner occupied $ 348,287,000 15.1 % $ 314,819,000 14.8 % $ 299,943,000 14.4 % 
 Real estate non-owner occupied 408,361,000 17.7 % 390,167,000 18.3 % 393,531,000 18.9 % 
 Construction 87,992,000 3.8 % 88,673,000 4.2 % 72,424,000 3.5 % 
 C&I 368,415,000 16.0 % 315,026,000 14.8 % 306,583,000 14.7 % 
 Multifamily 110,472,000 4.8 % 93,476,000 4.4 % 91,041,000 4.4 % 
 Agriculture 51,274,000 2.2 % 45,230,000 2.1 % 47,506,000 2.3 % 
 Municipal 62,944,000 2.7 % 51,423,000 2.4 % 58,447,000 2.8 % 
 Residential 
 Term 698,068,000 30.2 % 674,855,000 31.7 % 660,049,000 31.8 % 
 Construction 34,628,000 1.5 % 32,358,000 1.5 % 28,986,000 1.4 % 
 Home Equity 
 Revolving and term 117,028,000 5.1 % 104,026,000 4.9 % 101,980,000 4.9 % 
 Consumer 19,784,000 0.9 % 19,401,000 0.9 % 19,370,000 0.9 % 
 Total $ 2,307,253,000 100.0 % $ 2,129,454,000 100.0 % $ 2,079,860,000 100.0 % 

 Loan balances include net deferred loan costs of $ 12,266,000 as of September 30, 2024, $ 11,479,000 as of December 31, 2023, and $ 11,213,000 as of September 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 $ 2,462,000 to the loan balances as of September 30, 2024, added $ 2,149,000 to the loan balances as of December 31, 2023 and subtracted $ 705,000 from the loan balances as of September 30, 2023. 
 Pursuant to collateral agreements, qualifying first mortgage loans and commercial real estate loans, which totaled $ 622,370,000 at September 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 $ 525,904,000 at September 30, 2023. In addition, commercial, residential construction and home equity loans totaling $ 364,068,000 at September 30, 2024, $ 320,083,000 at December 31, 2023, and $ 332,657,000 at September 30, 2023, were used to collateralize a standby line of credit at the FRBB. 
 15 

 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 September 30, 2024, is presented in the following table: 
 
 30-59 Days
Past Due 60-89 Days
Past Due 90+ Days
Past Due All
Past Due Current Total 90+ Days
& Accruing 
 Commercial 
 Real estate owner occupied $ — $ 64,000 $ 98,000 $ 162,000 $ 348,125,000 $ 348,287,000 $ — 
 Real estate non-owner occupied — — — — 408,361,000 408,361,000 — 
 Construction — — — — 87,992,000 87,992,000 — 
 C&I 318,000 708,000 44,000 1,070,000 367,345,000 368,415,000 — 
 Multifamily — — — — 110,472,000 110,472,000 — 
 Agriculture 210,000 — — 210,000 51,064,000 51,274,000 — 
 Municipal — — — — 62,944,000 62,944,000 — 
 Residential 
 Term 70,000 166,000 500,000 736,000 697,332,000 698,068,000 144,000 
 Construction — — — — 34,628,000 34,628,000 — 
 Home equity 
 Revolving and term 508,000 — 4,000 512,000 116,516,000 117,028,000 — 
 Consumer 343,000 13,000 261,000 617,000 19,167,000 19,784,000 261,000 
 Total $ 1,449,000 $ 951,000 $ 907,000 $ 3,307,000 $ 2,303,946,000 $ 2,307,253,000 $ 405,000 

 Information on the past-due status of loans by class of financing receivable as of December 31, 2023, is presented in the following table: 
 
 30-59 Days
Past Due 60-89 Days
Past Due 90+ Days
Past Due All
Past Due Current Total 90+ Days
& Accruing 
 Commercial 
 Real estate owner occupied $ — $ — $ — $ — $ 314,819,000 $ 314,819,000 $ — 
 Real estate non-owner occupied — — — — 393,636,000 393,636,000 — 
 Construction — 9,000 8,000 17,000 88,656,000 88,673,000 — 
 C&I 714,000 35,000 120,000 869,000 355,918,000 356,787,000 10,000 
 Multifamily — — — — 93,476,000 93,476,000 — 
 Municipal 31,000 — — 31,000 51,392,000 51,423,000 — 
 Residential 
 Term 254,000 818,000 728,000 1,800,000 673,055,000 674,855,000 360,000 
 Construction — — — — 32,358,000 32,358,000 — 
 Home equity 
 Revolving and term 495,000 95,000 26,000 616,000 103,410,000 104,026,000 — 
 Consumer 475,000 22,000 58,000 555,000 18,846,000 19,401,000 59,000 
 Total $ 1,969,000 $ 979,000 $ 940,000 $ 3,888,000 $ 2,125,566,000 $ 2,129,454,000 $ 429,000 

 16 

 Information on the past-due status of loans by class of financing receivable as of September 30, 2023, is presented in the following table: 
 
 30-59 Days
Past Due 60-89 Days
Past Due 90+ Days
Past Due All
Past Due Current Total 90+ Days
& Accruing 
 Commercial 
 Real estate owner occupied $ — $ — $ — $ — $ 299,943,000 $ 299,943,000 $ — 
 Real estate non-owner occupied — — — — 397,024,000 397,024,000 — 
 Construction — 7,000 8,000 15,000 72,409,000 72,424,000 — 
 C&I 349,000 100,000 221,000 670,000 349,926,000 350,596,000 — 
 Multifamily — — — — 91,041,000 91,041,000 — 
 Municipal — — — — 58,447,000 58,447,000 — 
 Residential 
 Term 39,000 106,000 578,000 723,000 659,326,000 660,049,000 — 
 Construction — 62,000 — 62,000 28,924,000 28,986,000 — 
 Home equity 
 Revolving and term 79,000 — 179,000 258,000 101,722,000 101,980,000 — 
 Consumer 210,000 39,000 11,000 260,000 19,110,000 19,370,000 11,000 
 Total $ 677,000 $ 314,000 $ 997,000 $ 1,988,000 $ 2,077,872,000 $ 2,079,860,000 $ 11,000 

 Non-Accrual Loans: For all classes, loans are placed on non-accrual status when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement or when principal and interest is 90 days or more past due unless the loan is both well secured and in the process of collection (in which case the loan may continue to accrue interest in spite of its past due status). A loan is "well secured" if it is secured (1) by collateral in the form of liens on or pledges of real or personal property, including securities, that have a realizable value sufficient to discharge the debt (including accrued interest) in full, or (2) by the guarantee of a financially responsible party. A loan is "in the process of collection" if collection of the loan is proceeding in due course either (1) through legal action, including judgment enforcement procedures, or, (2) in appropriate circumstances, through collection efforts not involving legal action which are reasonably expected to result in repayment of the debt or in its restoration to a current status in the near future. 
 Cash payments received on non-accrual loans are applied to reduce the loan's principal balance until the remaining principal balance is deemed collectible, after which interest is recognized when collected. 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. 
 
 17 

 The following table presents the amortized costs basis of loans on nonaccrual status as of September 30, 2024, December 31, 2023 and September 30, 2023: 
 
 September 30, 2024 December 31, 2023 September 30, 2023 
 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 
 Commercial 
 Real estate owner occupied $ — $ 367,000 $ 367,000 $ — $ — $ — $ — $ — $ — 
 Real estate non-owner occupied — — — — — — — — — 
 Construction — 19,000 19,000 — 29,000 29,000 — 29,000 29,000 
 C&I — 129,000 129,000 354,000 184,000 538,000 363,000 351,000 714,000 
 Multifamily — — — — — — — — — 
 Agriculture — 31,000 31,000 — — — — — — 
 Municipal — — — — — — — — — 
 Residential 
 Term — 1,686,000 1,686,000 304,000 1,011,000 1,315,000 304,000 1,016,000 1,320,000 
 Construction — — — — — — — — — 
 Home equity 
 Revolving and term — 265,000 265,000 — 296,000 296,000 — 490,000 490,000 
 Consumer — — — — — — — — — 
 Total $ — $ 2,497,000 $ 2,497,000 $ 658,000 $ 1,520,000 $ 2,178,000 $ 667,000 $ 1,886,000 $ 2,553,000 

 Individually Analyzed Loans: IAL include loans with balances of $250,000 or more that have either been placed into non-accrual or are loans identified by management as having characteristics that may impact ultimate collectibility and therefore 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 September 30, 2024, December 31, 2023 and September 30, 2023, by collateral type: 
 
 September 30, 2024 December 31, 2023 September 30, 2023 
 Collateral Type Collateral Type Collateral Type 
 Dollars in thousands Commercial Real Estate Residential Real Estate Total Commercial Real Estate Residential Real Estate Total Commercial Real Estate Residential Real Estate Total 
 Commercial 
 Real estate owner occupied $ 270,000 $ — $ 270,000 $ — $ — $ — $ — $ — $ — 
 Real estate non-owner occupied — — — — — — — — — 
 Construction — — — — — — — — — 
 C&I — — — — — — — — — 
 Multifamily — — — — — — — — — 
 Agriculture — — — — — — — — — 
 Municipal — — — — — — — — — 
 Residential 
 Term — 566,000 566,000 — 685,000 685,000 — 687,000 687,000 
 Construction — — — — — — — — — 
 Home equity 
 Revolving and term — — — — — — — — — 
 Consumer — — — — — — — — — 
 Total $ 270,000 $ 566,000 $ 836,000 $ — $ 685,000 $ 685,000 $ — $ 687,000 $ 687,000 

 18 

 Loan Modifications to Borrowers Experiencing Financial Difficulty: Loan modifications to borrowers experiencing financial difficulty may include interest rate reduction, term extension, payment deferral, principle forgiveness or a combination thereof. It is the intent to minimize future losses while providing borrowers with financial relief. 
 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 September 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 
 Commercial 
 Real estate owner occupied $ — $ — $ — $ — $ — — % 
 Real estate non-owner occupied — — — — — — % 
 Construction — — — — — — % 
 C&I — — — — 55,000 0.01 % 
 Multifamily — — — — — — % 
 Agriculture — — — — — — % 
 Municipal — — — — — — % 
 Residential 
 Term — — — — — — % 
 Construction — — — — — — % 
 Home Equity 
 Revolving and term — — — — — — % 
 Consumer — — — — — — % 
 Total $ — $ — $ — $ — $ 55,000 0.002 % 

 The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty for the three months ended September 30, 2024: 
 
 Payment Deferral & Term Extension 
 Financial Effect 
 Commercial 
 C&I Temporary payment accommodation, extended term 90 days. 
 
 19 

 The following table represents loan modifications made to borrowers experiencing financial difficulty by modification type and class of financing receivable, during the nine months ended September 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 
 Commercial 
 Real estate owner occupied $ 635,000 $ — $ — $ — $ — 0.18 % 
 Real estate non-owner occupied — — — — — — % 
 Construction 69,000 — — — — 0.08 % 
 C&I 175,000 — — — 225,000 0.11 % 
 Multifamily 1,932,000 — — — — 1.75 % 
 Agriculture — — — — — — % 
 Municipal — — — — — — % 
 Residential 
 Term 1,020,000 — — — — 0.15 % 
 Construction — — — — — — % 
 Home Equity 
 Revolving and term — — — — 68,000 0.06 % 
 Consumer — — — — — — % 
 Total $ 3,831,000 $ — $ — $ — $ 293,000 0.18 % 

 The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty for the nine months ended September 30, 2024: 
 
 Payment Deferral 
 Financial Effect 
 Commercial 
 Real estate owner occupied Temporary payment accommodation, payments deferred to end of loan. 
 Construction 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. 
 Residential 
 Term Temporary payment accommodation, payments deferred to end of loan. 

 Payment Deferral & Term Extension 
 Financial Effect 
 Commercial 
 C&I Temporary payment accommodation, extended term 90 days. 
 
 Home Equity 
 Revolving and term Temporary payment accommodation, extended term 60 days. 
 
 20 

 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 September 30, 2023: 
 
 Amortized Cost Basis 
 Payment Deferral Term Extension Interest Rate Reduction Principal Forgiveness Combination Payment Deferral and Term Extension % of Total Class of Financing Receivable 
 Commercial 
 Real estate owner occupied $ 504,000 $ — $ — $ — $ — 0.17 % 
 Real estate non-owner occupied — — — — — — % 
 Construction — — — — — — % 
 C&I 19,000 — — — — 0.01 % 
 Multifamily — — — — — — % 
 Agriculture — — — — — — % 
 Municipal — — — — — — % 
 Residential 
 Term — — — — — — % 
 Construction — — — — — — % 
 Home Equity 
 Revolving and term — — — — — — % 
 Consumer — — — — — — % 
 Total $ 523,000 $ — $ — $ — $ — 0.03 % 

 The following table describes the financial effect of the modifications made to borrowers experiencing financial difficulty for the three months ended September 30, 2023: 
 
 Payment Deferral 
 Financial Effect 
 Commercial 
 Real estate owner occupied Temporary payment accommodation, payments deferred to end of loan. 
 C&I Temporary payment accommodation, payments deferred to end of loan. 

 21 

 The following table represents loan modifications made to borrowers experiencing financial difficulty by modification type and class of financing receivable, during the nine months ended September 30, 2023: 
 
 Amortized Cost Basis 
 Payment Deferral Term Extension Interest Rate Reduction Principal Forgiveness Combination Payment Deferral and Term Extension % of Total Class of Financing Receivable 
 Commercial 
 Real estate owner occupied $ 504,000 $ — $ — $ — $ — 0.17 % 
 Real estate non-owner occupied — — — — — — % 
 Construction — — — — — — % 
 C&I 239,000 20,000 — — — 0.08 % 
 Multifamily — — — — — — % 
 Agriculture — — — — — — % 
 Municipal — — — — — — % 
 Residential 
 Term — — — — — — % 
 Construction — — — — — — % 
 Home Equity 
 Revolving and term — — — — — — % 
 Consumer — — — — — — % 
 Total $ 743,000 $ 20,000 $ — $ — $ — 0.04 % 

 The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty for the nine months ended September 30, 2023: 
 
 Payment Deferral 
 Financial Effect 
 Commercial 
 Real estate owner occupied Temporary payment accommodation, payments deferred to end of loan. 
 C&I Temporary payment accommodation, payments deferred to end of loan. 

 Term Extension 
 Financial Effect 
 Commercial 
 
 C&I Extended Term 12 months 
 
 22 

 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 as of September 30, 2024: 
 
 Payment Status (Amortized Cost Basis) 
 Current 30-59 Days
Past Due 60-89 Days
Past Due 90+ Days
Past Due 
 Commercial 
 Real estate owner occupied $ 903,000 $ — $ — $ — 
 Construction 69,000 — — — 
 C&I 230,000 — 205,000 — 
 Multifamily 1,932,000 — — — 
 
 Residential 
 Term 1,020,000 — — — 
 Home Equity 
 Revolving and term 68,000 — — — 
 Consumer 18,000 — — — 
 Total $ 4,240,000 $ — $ 205,000 $ — 

 The following table depicts the performance of loans that have been modified during the nine months ended September 30, 2023: 
 
 Payment Status (Amortized Cost Basis) 
 Current 30-59 Days
Past Due 60-89 Days
Past Due 90+ Days
Past Due 
 Commercial 
 Real estate owner occupied $ 503,000 $ — $ — $ — 
 
 C&I $ 220,000 $ 40,000 $ — $ — 
 
 Total $ 723,000 $ 40,000 $ — $ — 

 Residential Mortgage Loans in Process of Foreclosure 
 As of September 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, and four mortgage loans collateralized by residential real estate in the process of foreclosure with a total balance of $ 459,000 as of September 30, 2023. 
 23 

 Note 4. Allowance for Credit Losses 
 The ACL is a valuation amount that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. Loans, or portions thereof, are charged off against the allowance when they are deemed uncollectible. The ACL consists of three elements: (1) specific reserves for loans individually analyzed; (2) general reserves for each portfolio segment; and, (3) qualitative reserves. All outstanding loans are considered in evaluating the appropriateness of the allowance. Loans are segmented by common risk characteristics as delineated in the paragraph below. The Company provides for loan losses through the ACL which represents an estimated reserve for losses in the loan portfolio. To determine an appropriate level for general reserves, a discounted cash flow approach is applied to each portfolio segment implementing a probability of default and loss given default estimate based upon a number of factors including historical losses over an economic cycle, economic forecasts, loan prepayment speeds and curtailment rates. To determine an appropriate level for qualitative reserves, various factors are considered including underwriting policies, credit administration practices, experience, ability and depth of lending management, and economic factors not captured in the general reserve calculation. 
 
 Loan Portfolio Composition & Risk Characteristics: The loan portfolio is segmented into eleven classes and credit risk is evaluated separately in each class. Major risk characteristics relevant to each portfolio segment are as follows: 
 Commercial Real Estate Owner Occupied - commercial real estate owner occupied loans consist of mortgage loans to finance investments in real property such as retail space, offices, industrial buildings, hotels, educational facilities, and other specific or mixed use properties. Loans are typically written with amortizing payment structures. Collateral values are determined based on appraisals and evaluations in accordance with established policy and regulatory guidelines. Loans typically have a loan-to-value ratio of up to 80 % based upon current valuation information at the time the loan is made, and are primarily paid by the cash flow generated from the real property, typically the operating entity of owner occupant. Risk factors typically include competitive market forces, net operating incomes of the operating entity, and overall economic demand. Loans in the recreational and tourism sector can be affected by weather conditions, such as unseasonably low winter snowfalls. Commercial real estate lending also carries a higher degree of environmental risk than other types of lending. 
 Commercial Real Estate Non-Owner Occupied - commercial real estate loans non-owner occupied share many of the purpose, loan structure and risk characteristics of owner-occupied commercial real estate. The primary differentiating factor from Owner Occupied is that repayment is generally reliant upon cash flow generated from tenants rather than an operating entity. Risk factors are also influenced by vacancy rates, cap rates, lease renewals, and underlying financial health of lessees. 
 Commercial Construction - commercial construction loans consist of loans to finance construction in a mix of owner- and non-owner occupied commercial real estate properties. Loans typically have construction periods of less than two years , and payment structures during the construction period are typically on an interest only basis, although principal payments may be established depending on the type of construction project being financed. During the construction phase, commercial construction loans are primarily paid by cash flow generated from the construction project or other operating cash flows from the borrower or guarantors, if applicable. Commercial construction loans will typically convert to permanent financing from the Company, or loan repayment may come from a third party source in the event that the Company will not be providing permanent term financing. Collateral valuation and loan-to-value guidelines follow those for commercial real estate loans. Commercial construction loans are impacted by factors similar to those for commercial real estate loans in addition to risks related to contractor financial capacity and ability to complete a project within acceptable time frames and within budget. 
 Commercial and Industry - C&I loans consist of revolving and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and or capital investment. C&I loans may be secured or unsecured; when secured, collateral generally consists of pledges of business assets including, but not limited to, accounts receivable, inventory, equipment, and/or other tangible and intangible assets. C&I loans are primarily paid by the operating cash flow of the borrower. A weakened economy, soft consumer spending, and the rising cost of labor or raw materials are examples of issues that can impact the credit quality in this segment. 
 Commercial Multifamily - multifamily loans share structure and risk characteristics with non-owner occupied commercial real estate; underlying collateral is residential in nature rather than commercial, consisting of properties with five or more units. 
 Municipal Loans - municipal loans are comprised of loans to municipalities in Maine for capitalized expenditures, construction projects, or tax anticipation notes. All municipal loans are considered either general obligations of the municipality collateralized by the taxing ability of the municipality for repayment of debt or have a pledge of specific revenues. The overall health of the economy, including unemployment rates and housing prices, has an impact on the credit quality of this segment. 
 Agriculture - agriculture loans consist mostly of amortizing term loans and revolving lines of credit made to borrowers in agriculture related industries. For the Company, this includes loans made to land based agricultural production and to participants in the fishing industry. Collateral values are determined based on appraisals and evaluations in accordance with established policy and regulatory guidelines. 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 
 24 

 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 made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors. Borrower qualifications include favorable credit history combined with supportive income requirements and loan-to-value ratios within established policy and regulatory guidelines. Collateral values are determined based on appraisals and evaluations in accordance with established policy and regulatory guidelines. Residential loans typically have a loan-to-value ratio of up to 80 % based on appraisal information at the time the loan is made. Collateral consists of mortgage liens on one-to four-family residential properties. Loans are offered with fixed or adjustable rates with amortization terms of up to thirty years . The overall health of the economy, including unemployment rates and housing prices, has an impact on the credit quality of this segment. 
 Residential Real Estate Construction - residential construction loans typically consist of loans for the purpose of constructing single family residences to be owned and occupied by the borrower. Borrower qualifications include favorable credit history combined with supportive income requirements and loan-to-value ratios within established policy and regulatory guidelines. Residential construction loans normally have construction terms of one year or less and payment during the construction term is typically on an interest only basis from sources including interest reserves, borrower liquidity, and/or income. Residential construction loans will typically convert to permanent financing from the Company or have another financing commitment in place from an acceptable mortgage lender. Collateral valuation and loan-to-value guidelines are consistent with those for residential term loans. Residential construction loans are impacted by factors similar to those for residential real estate term loans in addition to risks related to contractor financial capacity and ability to complete a project within acceptable time frames and within budget. 
 Home Equity Revolving and Term - home equity revolving and term loans are made to qualified individuals and are secured by senior or junior mortgage liens on owner occupied one- to four-family homes, condominiums, or vacation homes. The home equity line of credit typically has a variable interest rate and is billed as interest-only payments during the draw period. At the end of the draw period, the home equity line of credit is billed as a percentage of the principal balance plus all accrued interest. Loan maturities are normally 300 months. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan-to-value ratios usually not exceeding 80 % inclusive of priority liens. Collateral valuation guidelines follow those for residential real estate loans. The overall health of the economy, including unemployment rates and housing prices, has an impact on the credit quality of this segment. 
 Consumer - consumer loans include personal lines of credit and amortizing loans made to qualified individuals for various purposes such as autos, recreational vehicles, debt consolidation, personal expenses, or overdraft protection. Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines. Consumer loans may be secured or unsecured. The overall health of the economy, including unemployment rates, has an impact on the credit quality of this segment. 
 
 Construction, land, and land development : CLLD loans, both commercial and residential, represented 43.2 % of total Bank capital as of September 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 225.9 % of total Bank capital at September 30, 2024, below the regulatory guidance of 300.0 % of total Bank capital. 
 
 25 

 Composition of the ACL: A breakdown of the ACL as of September 30, 2024, by class of financing receivable and allowance element, is presented in the following table: 
 
 As of September 30, 2024 Specific Reserves on Loans Evaluated Individually General Reserves on Loans Based on Historical Loss Experience Reserves for Qualitative Factors Total Reserves 
 Commercial 
 Real estate owner occupied $ — $ 4,484,000 $ 635,000 $ 5,119,000 
 Real estate non-owner occupied — 4,387,000 584,000 4,971,000 
 Construction — 762,000 45,000 807,000 
 C&I 223,000 3,872,000 567,000 4,662,000 
 Multifamily — 1,129,000 133,000 1,262,000 
 Agriculture — 462,000 151,000 613,000 
 Municipal — 35,000 231,000 266,000 
 Residential 
 Term 22,000 4,593,000 436,000 5,051,000 
 Construction — 411,000 14,000 425,000 
 Home Equity 
 Revolving and term — 584,000 79,000 663,000 
 Consumer — 151,000 9,000 160,000 
 
 $ 245,000 $ 20,870,000 $ 2,884,000 $ 23,999,000 

 A breakdown of the ACL as of December 31, 2023, by class of financing receivable and allowance element, is presented in the following table: 
 
 As of December 31, 2023 Specific Reserves on Loans Evaluated Individually General Reserves on Loans Based on Historical Loss Experience Reserves for Qualitative Factors Total Reserves 
 Commercial 
 Real estate owner occupied $ — $ 3,891,000 $ 742,000 $ 4,633,000 
 Real estate non-owner occupied — 3,759,000 526,000 4,285,000 
 Construction — 1,849,000 129,000 1,978,000 
 C&I 223,000 4,238,000 540,000 5,001,000 
 Multifamily — 1,237,000 81,000 1,318,000 
 
 Municipal — 307,000 27,000 334,000 
 Residential 
 Term 41,000 4,224,000 726,000 4,991,000 
 Construction — 642,000 ( 24,000 ) 618,000 
 Home Equity 
 Revolving and term — 469,000 157,000 626,000 
 Consumer — 217,000 29,000 246,000 
 $ 264,000 $ 20,833,000 $ 2,933,000 $ 24,030,000 

 26 

 A breakdown of the ACL as of September 30, 2023, by class of financing receivable and allowance element, is presented in the following table: 
 
 As of September 30, 2023 Specific Reserves on Loans Evaluated Individually General Reserves on Loans Based on Historical Loss Experience Reserves for Qualitative Factors Total Reserves 
 Commercial 
 Real estate owner occupied $ — $ 3,731,000 $ 780,000 $ 4,511,000 
 Real estate non-owner occupied — 3,855,000 574,000 4,429,000 
 Construction — 1,445,000 157,000 1,602,000 
 C&I 225,000 3,909,000 663,000 4,797,000 
 Multifamily — 1,184,000 93,000 1,277,000 
 
 Municipal — 332,000 44,000 376,000 
 Residential 
 Term 41,000 4,020,000 825,000 4,886,000 
 Construction — 602,000 ( 26,000 ) 576,000 
 Home Equity 
 Revolving and term — 442,000 175,000 617,000 
 Consumer — 219,000 32,000 251,000 
 $ 266,000 $ 19,739,000 $ 3,317,000 $ 23,322,000 

 The ACL as a percent of total loans stood at 1.04 % as of September 30, 2024, 1.13 % at December 31, 2023 and 1.12 % as of September 30, 2023. 
 
 Off-Balance Sheet Credit Exposures: In the ordinary course of business, the Company enters into commitments to extend credit, including construction lines of credit, revolving lines of credit, written commitments to provide financing, commercial letters of credit and standby letters of credit. Such financial instruments are recorded as loans when they are funded . 
 
 Allowance for Credit Losses on Off-Balance Sheet Credit Exposures: The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The ACL on off-balance sheet credit exposures is adjusted through credit loss expense and any adjustment is recognized in net income. To appropriately measure expected credit losses, management disaggregates the loan portfolio into similar risk characteristics, identical to those determined for the loan portfolio. An estimated funding rate is then applied to the qualifying unfunded loan commitments and letters of credit using the Company’s own historical experience to estimate the expected funded amount for each loan segment as of the reporting date. Once the expected funded amount for each loan segment is determined, the loss rate, which is the calculated expected loan loss as a percent of the amortized cost basis for each loan segment, is applied to calculate the ACL on off-balance sheet credit exposures as of the reporting date. 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 nine months and quarters ended September 30, 2024 and 2023: 
 
 For the nine months ended September 30, For the quarter ended September 30, 
 2024 2023 2024 2023 
 Allowance for credit losses: 
 Beginning balance $ 1,255,000 $ 100,000 $ 902,000 $ 1,528,000 
 Impact of adopting ASC 326 — 1,297,000 — — 
 Credit loss (reduction) expense ( 487,000 ) 89,000 ( 134,000 ) ( 42,000 ) 
 Total ending allowance balance $ 768,000 $ 1,486,000 $ 768,000 $ 1,486,000 

 27 

 Credit Quality Indicators: To monitor the credit quality of its loan portfolio, management applies an internal risk rating system to categorize commercial loan segments. Approximately 60 % of commercial loan outstanding balances are subject to review and validation annually by an independent consulting firm. Additionally, commercial loan relationships with exposure greater than or equal to $ 750,000 are subject to review annually by the Company's internal credit review function. 
 
 The risk rating system has eight levels, defined as follows: 
 1 Strong 
 Credits rated "1" are characterized by borrowers fully responsible for the credit with excellent capacity to pay principal and interest. Loans rated "1" may be secured with acceptable forms of liquid collateral. 
 2 Above Average 
 Credits rated "2" are characterized by borrowers that have better than average liquidity, capitalization, earnings, and/or cash flow with a consistent record of solid financial performance. 
 3 Satisfactory 
 Credits rated "3" are characterized by borrowers with favorable liquidity, profitability, and financial condition with adequate cash flow to pay debt service. 
 4 Average 
 Credits rated "4" are characterized by borrowers that present risk more than 1, 2 and 3 rated loans and merit an ordinary level of ongoing monitoring. Financial condition is on par or somewhat below industry averages while cash flow is generally adequate to meet debt service requirements. 
 5 Watch 
 Credits rated "5" are characterized by borrowers that warrant greater monitoring due to financial condition or unresolved and identified risk factors. 
 6 Other Assets Especially Mentioned 
 Loans in this category are currently protected but are potentially weak and constitute an undue and unwarranted credit risk, but not to the point of justifying a classification of substandard. OAEM have potential weaknesses which may, if not checked or corrected, weaken the asset or inadequately protect the Company's credit position at some future date. 
 7 Substandard 
 Loans in this category are inadequately protected by the paying capacity of the borrower or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Substandard loans are characterized by the distinct possibility that the Company may sustain some loss if the deficiencies are not corrected. 
 8 Doubtful 
 Loans classified "Doubtful" have the same weaknesses as those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is high, but because of certain important and reasonably specific pending factors which may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined. 
 
 Most residential real estate, home equity, and consumer loans are not assigned ratings; therefore they are categorized as performing and non-performing loans. Performing loans include loans that are current and loans that are past due less than 90 days. Loans that are past due more than 90 days are considered non-performing. 
 
 28 

 The following table summarizes the credit quality for the Company's portfolio by risk category of loans and by class by vintage as of September 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 September 30, 2024 
 Commercial 
 Real estate owner occupied 
 Pass (risk rating 1-5) $ 29,267 $ 67,088 $ 84,626 $ 39,744 $ 27,003 $ 79,134 $ 11,246 $ 960 $ 339,068 
 Special Mention (risk rating 6) — 1,903 — — — 6,276 50 — 8,229 
 Substandard (risk rating 7) 41 268 — — 162 519 — — 990 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total Real Estate Owner Occupied 29,308 69,259 84,626 39,744 27,165 85,929 11,296 960 348,287 
 Current period gross write-offs — — — — — — — — — 
 Real estate non-owner occupied 
 Pass (risk rating 1-5) 24,631 30,610 74,749 115,687 46,646 104,014 10,197 1,520 408,054 
 Special Mention (risk rating 6) — — — 46 — 261 — — 307 
 Substandard (risk rating 7) — — — — — — — — — 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total Real Estate Non-Owner Occupied 24,631 30,610 74,749 115,733 46,646 104,275 10,197 1,520 408,361 
 Current period gross write-offs — — — — — — — — — 
 Construction 
 Pass (risk rating 1-5) 24,354 22,535 29,047 7,921 1,398 2,523 — — 87,778 
 Special Mention (risk rating 6) — — — — — — — — — 
 Substandard (risk rating 7) 145 — — 69 — — — — 214 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total Construction 24,499 22,535 29,047 7,990 1,398 2,523 — — 87,992 
 Current period gross write-offs — — — — — — — — — 
 C&I 
 Pass (risk rating 1-5) 56,398 28,644 48,523 41,554 16,016 24,307 114,851 4,446 334,739 
 Special Mention (risk rating 6) 25 24,308 502 495 470 2,857 4,399 — 33,056 
 Substandard (risk rating 7) — 13 348 84 16 22 137 — 620 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total C&I 56,423 52,965 49,373 42,133 16,502 27,186 119,387 4,446 368,415 
 Current period gross write-offs — — — ( 19 ) ( 24 ) ( 45 ) — — ( 88 ) 
 Multifamily 
 Pass (risk rating 1-5) 14,874 12,392 34,069 17,458 14,657 13,028 721 — 107,199 
 Special Mention (risk rating 6) — — — — — — — — — 
 Substandard (risk rating 7) — — 1,020 1,341 912 — — — 3,273 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total Multifamily 14,874 12,392 35,089 18,799 15,569 13,028 721 — 110,472 
 Current period gross write-offs — — — — — — — — — 
 Agriculture 
 Pass (risk rating 1-5) 9,413 2,845 6,068 4,054 15,121 6,532 4,183 224 48,440 
 Special Mention (risk rating 6) — 500 706 85 — 587 600 — 2,478 
 Substandard (risk rating 7) — 87 — 31 — 238 — — 356 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total Agriculture 9,413 3,432 6,774 4,170 15,121 7,357 4,783 224 51,274 
 Current period gross write-offs — — — — — — — — — 
 
 29 

 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 September 30, 2024 
 Municipal 
 Pass (risk rating 1-5) 9,355 19,626 4,344 3,985 9,026 16,608 — — 62,944 
 Special Mention (risk rating 6) — — — — — — — — — 
 Substandard (risk rating 7) — — — — — — — — — 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total Municipal 9,355 19,626 4,344 3,985 9,026 16,608 — — 62,944 
 Current period gross write-offs — — — — — — — — — 
 Residential 
 Term 
 Performing 37,770 85,791 151,882 132,413 87,730 198,196 2,479 121 696,382 
 Non-performing — — 300 262 399 725 — — 1,686 
 Total Term 37,770 85,791 152,182 132,675 88,129 198,921 2,479 121 698,068 
 Current period gross write-offs — — — — — ( 36 ) — — ( 36 ) 
 Construction 
 Performing 15,512 17,342 1,091 — 683 — — — 34,628 
 Non-performing — — — — — — — — — 
 Total Construction 15,512 17,342 1,091 — 683 — — — 34,628 
 Current period gross write-offs — — — — — — — — — 
 Home Equity Revolving and Term 
 Performing 7,515 9,459 8,516 1,940 1,140 1,985 76,231 9,977 116,763 
 Non-performing — — — — — 98 16 151 265 
 Total Home Equity Revolving and Term 7,515 9,459 8,516 1,940 1,140 2,083 76,247 10,128 117,028 
 Current period gross write-offs — — — — — ( 7 ) — — ( 7 ) 
 Consumer 
 Performing 2,771 2,714 1,377 817 1,275 4,913 5,917 — 19,784 
 Non-performing — — — — — — — — — 
 Total Consumer 2,771 2,714 1,377 817 1,275 4,913 5,917 — 19,784 
 Current period gross write-offs ( 6 ) ( 46 ) ( 62 ) ( 37 ) ( 19 ) ( 40 ) — — ( 210 ) 
 Total loans $ 232,071 $ 326,125 $ 447,168 $ 367,986 $ 222,654 $ 462,823 $ 231,027 $ 17,399 $ 2,307,253 

 30 

 The following table summarizes the credit quality for the Company's portfolio by risk category of loans and by class by vintage as of December 31, 2023: 
 
 Term Loans Amortized Cost Basis by Origination Year 
 Dollars in thousands 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total 
 As of December 31, 2023 
 
 Commercial 
 Real estate owner occupied 
 Pass (risk rating 1-5) $ 64,693 $ 73,920 $ 40,782 $ 28,716 $ 29,856 $ 59,236 $ 8,993 $ — $ 306,196 
 Special Mention (risk rating 6) 1,903 — — — 5,605 313 — — 7,821 
 Substandard (risk rating 7) 283 — — — 503 16 — — 802 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total Real Estate Owner Occupied 66,879 73,920 40,782 28,716 35,964 59,565 8,993 — 314,819 
 Current period gross write-offs — — — — — ( 40 ) — — ( 40 ) 
 Real estate non-owner occupied 
 Pass (risk rating 1-5) 30,666 70,442 129,299 47,959 27,159 83,820 4,230 — 393,575 
 Special Mention (risk rating 6) — — — — — — — — — 
 Substandard (risk rating 7) — — — — — 61 — — 61 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total Real Estate Non-Owner Occupied 30,666 70,442 129,299 47,959 27,159 83,881 4,230 — 393,636 
 Current period gross write-offs — — — — — — — — — 
 Construction 
 Pass (risk rating 1-5) 29,781 45,130 8,705 1,581 1,034 2,373 — — 88,604 
 Special Mention (risk rating 6) — — 69 — — — — — 69 
 Substandard (risk rating 7) — — — — — — — — — 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total Construction 29,781 45,130 8,774 1,581 1,034 2,373 — — 88,673 
 Current period gross write-offs — — — — — — — — — 
 C&I 
 Pass (risk rating 1-5) 49,147 61,628 51,848 33,955 6,103 32,032 87,949 973 323,635 
 Special Mention (risk rating 6) 23,970 3,414 267 546 — 3,373 330 — 31,900 
 Substandard (risk rating 7) 126 354 35 — 180 455 102 — 1,252 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total C&I 73,243 65,396 52,150 34,501 6,283 35,860 88,381 973 356,787 
 Current period gross write-offs — ( 114 ) — — ( 16 ) ( 23 ) — — ( 153 ) 
 Multifamily 
 Pass (risk rating 1-5) 12,046 30,565 18,053 15,033 5,540 8,527 416 — 90,180 
 Special Mention (risk rating 6) — 1,020 — 912 — — — — 1,932 
 Substandard (risk rating 7) — — 1,364 — — — — — 1,364 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total Multifamily 12,046 31,585 19,417 15,945 5,540 8,527 416 — 93,476 
 Current period gross write-offs — — — — — — — — — 
 
 Municipal 
 Pass (risk rating 1-5) 20,210 4,741 3,982 9,775 5,156 7,559 — — 51,423 
 Special Mention (risk rating 6) — — — — — — — — — 
 Substandard (risk rating 7) — — — — — — — — — 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total Municipal 20,210 4,741 3,982 9,775 5,156 7,559 — — 51,423 
 Current period gross write-offs — — — — — — — — — 

 31 

 Term Loans Amortized Cost Basis by Origination Year 
 Dollars in thousands 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total 
 As of December 31, 2023 
 
 Residential 
 Term 
 Performing 65,605 156,495 140,254 93,774 39,896 174,341 3,046 129 673,540 
 Non-performing — 304 — 40 300 671 — — 1,315 
 Total Term 65,605 156,799 140,254 93,814 40,196 175,012 3,046 129 674,855 
 Current period gross write-offs — — — — — — — — — 
 Construction 
 Performing 25,007 6,012 — 1,339 — — — — 32,358 
 Non-performing — — — — — — — — — 
 Total Construction 25,007 6,012 — 1,339 — — — — 32,358 
 Current period gross write-offs — — — — — — — — — 
 Home Equity Revolving and Term 
 Performing 10,519 9,319 2,031 1,197 584 1,655 68,006 10,419 103,730 
 Non-performing — — — — — 112 19 165 296 
 Total Home Equity Revolving and Term 10,519 9,319 2,031 1,197 584 1,767 68,025 10,584 104,026 
 Current period gross write-offs — ( 50 ) — — — — — — ( 50 ) 
 Consumer 
 Performing 3,664 2,042 1,175 1,794 455 4,564 5,707 — 19,401 
 Non-performing — — — — — — — — — 
 Total Consumer 3,664 2,042 1,175 1,794 455 4,564 5,707 — 19,401 
 Current period gross write-offs ( 5 ) ( 46 ) ( 31 ) ( 30 ) ( 7 ) ( 75 ) — — ( 194 ) 
 Total loans $ 337,620 $ 465,386 $ 397,864 $ 236,621 $ 122,371 $ 379,108 $ 178,798 $ 11,686 $ 2,129,454 

 32 

 The following table summarizes the credit quality for the Company's portfolio by risk category of loans and by class by vintage as of September 30, 2023: 
 
 Term Loans Amortized Cost Basis by Origination Year 
 Dollars in thousands 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total 
 As of September 30, 2023 
 
 Commercial 
 Real estate owner occupied 
 Pass (risk rating 1-5) $ 43,022 $ 75,590 $ 41,851 $ 28,387 $ 35,696 $ 65,064 $ 9,355 $ 175 $ 299,140 
 Special Mention (risk rating 6) — — — — — — — — — 
 Substandard (risk rating 7) 283 — — — 503 17 — — 803 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total Real Estate Owner Occupied 43,305 75,590 41,851 28,387 36,199 65,081 9,355 175 299,943 
 Current period gross write-offs — — — — — ( 40 ) — — ( 40 ) 
 Real estate non-owner occupied 
 Pass (risk rating 1-5) 27,875 71,474 130,132 49,160 27,670 85,559 5,092 — 396,962 
 Special Mention (risk rating 6) — — — — — — — — — 
 Substandard (risk rating 7) — — — — — 62 — — 62 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total Real Estate Non-Owner Occupied 27,875 71,474 130,132 49,160 27,670 85,621 5,092 — 397,024 
 Current period gross write-offs — — — — — — — — — 
 Construction 
 Pass (risk rating 1-5) 16,892 41,852 8,506 1,665 1,039 2,470 — — 72,424 
 Special Mention (risk rating 6) — — — — — — — — — 
 Substandard (risk rating 7) — — — — — — — — — 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total Construction 16,892 41,852 8,506 1,665 1,039 2,470 — — 72,424 
 Current period gross write-offs — — — — — — — — — 
 C&I 
 Pass (risk rating 1-5) 43,648 66,873 53,712 37,052 6,526 38,003 90,748 11,937 348,499 
 Special Mention (risk rating 6) — 129 268 — — 8 400 — 805 
 Substandard (risk rating 7) 94 363 35 — 188 545 67 — 1,292 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total C&I 43,742 67,365 54,015 37,052 6,714 38,556 91,215 11,937 350,596 
 Current period gross write-offs — — — — ( 16 ) — — — ( 16 ) 
 Multifamily 
 Pass (risk rating 1-5) 8,435 32,082 18,172 16,103 5,553 8,796 329 207 89,677 
 Special Mention (risk rating 6) — — 1,364 — — — — — 1,364 
 Substandard (risk rating 7) — — — — — — — — — 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total Multifamily 8,435 32,082 19,536 16,103 5,553 8,796 329 207 91,041 
 Current period gross write-offs — — — — — — — — — 
 
 Municipal 
 Pass (risk rating 1-5) 24,527 6,239 4,121 10,226 5,270 8,064 — — 58,447 
 Special Mention (risk rating 6) — — — — — — — — — 
 Substandard (risk rating 7) — — — — — — — — — 
 Doubtful (risk rating 8) — — — — — — — — — 
 Total Municipal 24,527 6,239 4,121 10,226 5,270 8,064 — — 58,447 
 Current period gross write-offs — — — — — — — — — 

 33 

 Term Loans Amortized Cost Basis by Origination Year 
 Dollars in thousands 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total 
 As of September 30, 2023 
 
 Residential 
 Term 
 Performing 47,019 149,470 143,048 97,350 40,621 179,788 1,301 132 658,729 
 Non-performing — 304 — 81 340 595 — — 1,320 
 Total Term 47,019 149,774 143,048 97,431 40,961 180,383 1,301 132 660,049 
 Current period gross write-offs — — — — — — — — — 
 Construction 
 Performing 15,966 11,715 — 1,305 — — — — 28,986 
 Non-performing — — — — — — — — — 
 Total Construction 15,966 11,715 — 1,305 — — — — 28,986 
 Current period gross write-offs — — — — — — — — — 
 Home Equity Revolving and Term 
 Performing 8,154 9,472 2,073 1,214 609 1,754 67,639 10,575 101,490 
 Non-performing — — — — — 115 198 177 490 
 Total Home Equity Revolving and Term 8,154 9,472 2,073 1,214 609 1,869 67,837 10,752 101,980 
 Current period gross write-offs — — — — — — — — — 
 Consumer 
 Performing 3,072 2,338 1,296 1,951 538 4,404 5,771 — 19,370 
 Non-performing — — — — — — — — — 
 Total Consumer 3,072 2,338 1,296 1,951 538 4,404 5,771 — 19,370 
 Current period gross write-offs ( 5 ) ( 41 ) ( 30 ) ( 30 ) ( 7 ) ( 39 ) — — ( 152 ) 
 Total loans $ 238,987 $ 467,901 $ 404,578 $ 244,494 $ 124,553 $ 395,244 $ 180,900 $ 23,203 $ 2,079,860 

 34 

 Loss Recognition: Commercial loans are generally charged off when all or a portion of the principal amount is determined to be uncollectible. This determination is based on circumstances specific to a borrower including repayment ability, analysis of collateral, and other factors as applicable. Consumer loans greater than 120 days past due are generally charged off. Residential loans 90 days or more past due are placed on non-accrual status unless the loans are both well secured and in the process of collection. One- to four-family residential real estate loans and home equity loans are written down or charged-off no later than 180 days past due, or for residential real estate secured loans having a borrower in bankruptcy, within 60 days of receipt of notification of filing from the bankruptcy court, whichever is sooner. 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 nine months and quarter ended September 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 nine months ended September 30, 2024 
 Beginning balance $ 4,633 $ 4,285 $ 1,978 $ 5,001 $ 1,318 $ — $ 334 $ 4,991 $ 618 $ 626 $ 246 $ 24,030 
 Charge offs — — — ( 88 ) — — — ( 36 ) — ( 7 ) ( 210 ) ( 341 ) 
 Recoveries 100 — — 24 — — — 30 — 21 77 252 
 Credit loss (reduction) expense 386 686 ( 1,171 ) ( 275 ) ( 56 ) 613 ( 68 ) 66 ( 193 ) 23 47 58 
 Ending balance $ 5,119 $ 4,971 $ 807 $ 4,662 $ 1,262 $ 613 $ 266 $ 5,051 $ 425 $ 663 $ 160 $ 23,999 
 For the three months ended September 30, 2024 
 Beginning balance $ 5,253 $ 4,248 $ 922 $ 5,021 $ 1,567 $ 428 $ 180 $ 5,560 $ 587 $ 744 $ 183 $ 24,693 
 Charge offs — — — ( 88 ) — — — — — — ( 62 ) ( 150 ) 
 Recoveries — — — 1 — — — 1 — 3 31 36 
 Credit loss (reduction) expense ( 134 ) 723 ( 115 ) ( 272 ) ( 305 ) 185 86 ( 510 ) ( 162 ) ( 84 ) 8 ( 580 ) 
 Ending balance $ 5,119 $ 4,971 $ 807 $ 4,662 $ 1,262 $ 613 $ 266 $ 5,051 $ 425 $ 663 $ 160 $ 23,999 

 The following table presents ACL activity by class for the year ended December 31, 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 year ended December 31, 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 
 Charge offs ( 40 ) — — ( 153 ) — — — — ( 50 ) ( 194 ) — ( 437 ) 
 Recoveries 2 75 — 3 — — 14 — 13 97 — 204 
 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 

 35 

 The following table presents ACL activity by class for the nine months and quarter ended September 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 nine months ended September 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 
 Charge offs ( 40 ) — — ( 16 ) — — — — — ( 152 ) — ( 208 ) 
 Recoveries 2 75 — 3 — — 10 — 10 78 — 178 
 Credit loss (reduction) expense 119 39 ( 162 ) 68 93 82 439 ( 358 ) 34 65 — 419 
 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 $ 4,511 $ 4,429 $ 1,602 $ 4,797 $ 1,277 $ 376 $ 4,886 $ 576 $ 617 $ 251 $ — $ 23,322 
 For the three months ended September 30, 2023 
 Beginning balance $ 4,719 $ 4,492 $ 1,469 $ 4,721 $ 1,312 $ 399 $ 4,831 $ 609 $ 635 $ 278 $ — $ 23,465 
 Charge offs ( 1 ) — — ( 16 ) — — — — — ( 69 ) — ( 86 ) 
 Recoveries 2 75 — — — — 4 — 3 20 — 104 
 Credit loss (reduction) expense ( 209 ) ( 138 ) 133 92 ( 35 ) ( 23 ) 51 ( 33 ) ( 21 ) 22 — ( 161 ) 
 Ending balance $ 4,511 $ 4,429 $ 1,602 $ 4,797 $ 1,277 $ 376 $ 4,886 $ 576 $ 617 $ 251 $ — $ 23,322 

 As of September 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 : The following loss drivers for each loan segment were used to calculate the expected probability of default over the forecast and reversion period: 
 
 • Commercial Real Estate Owner Occupied: FOMC median forecast of national unemployment 
 • Commercial Real Estate Non-Owner Occupied: FOMC median forecast of national unemployment 
 • Commercial Construction: FOMC median forecasts of national unemployment and change in national real GDP 
 • Commercial & Industrial: FOMC median forecasts of national unemployment and change in national real GDP 
 • Commercial Multifamily: FOMC median forecast of national unemployment 
 • Commercial Agriculture: FOMC median forecasts of national unemployment and change in national real GDP 
 • Municipal: Probability of default is measured based upon an index supplied by a nationally recognized ratings agency 
 • Residential Real Estate Term: FOMC median forecast of national unemployment 
 • Residential Real Estate Construction: FOMC median forecast of national unemployment and change in national real GDP 
 • Home Equity Revolving & Term: FOMC median forecast of national unemployment 
 • Consumer: FOMC median forecasts of national unemployment and change in national real GDP 
 
 Reasonable and supportable forecast period: The ACL on loans estimate used a reasonable and supportable forecast period of one year. 
 Reversion period: The ACL on loans estimate used a reversion period of one year. 
 Prepayment speeds: The estimate of prepayment speed for each loan segment was derived using internally sourced prepayment data. 
 36 

 Qualitative factors: The ACL on loans estimate incorporated various qualitative factors into the calculation such as changes in lending policies, changes in the nature and volume and terms of loans, changes in the experience, depth and ability of lending management, and economic factors not captured in the quantitative model. 
 
 Note 5 – Stock-Based Compensation 
 At the 2020 Annual Meeting, shareholders approved the 2020 Equity Incentive Plan. The 2020 Plan reserves 400,000 shares of common stock for issuance in connection with stock options, restricted stock awards, and other equity based awards to attract and retain the best available personnel, provide additional incentive to officers, employees, and non-employee Directors, and promote the success of the Company. Such grants and awards will be structured in a manner that does not encourage the recipients to expose the Company to undue or inappropriate risk. Options issued under the 2020 Plan qualify for treatment as incentive stock options for purposes of Section 422 of the Internal Revenue Code. 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 September 30, 2024, 131,419 shares of restricted stock had been granted under the 2020 Plan, of which 87,218 shares remain restricted as of September 30, 2024 as detailed in the following table: 
 
 Year
Granted Vesting Term
(In Years) Shares Remaining Term
(In Years) 
 2022 3.0 23,404 0.3 
 2022 2.5 1,250 0.3 
 2023 3.0 26,859 1.3 
 2023 2.0 3,196 0.3 
 2024 3.0 27,987 2.3 
 2024 2.0 1,869 1.3 
 2024 1.0 2,653 0.3 
 87,218 1.3 

 The compensation cost related to these non-vested restricted stock grants is $ 2,538,000 and is recognized over the vesting terms of each grant. In the nine months ended September 30, 2024, $ 680,000 of expense was recognized for these restricted shares, leaving $ 1,006,000 in unrecognized expense as of September 30, 2024. In the nine months ended September 30, 2023, $ 607,000 of expense was recognized for restricted shares, leaving $ 1,069,000 in unrecognized expense as of September 30, 2023. 
 
 Note 6 – Common Stock 
 Proceeds from sale of common stock totaled $ 638,000 and $ 608,000 for the nine months ended September 30, 2024 and 2023, respectively. 
 
 37 

 Note 7 – Earnings Per Share 
 The following table sets forth the computation of basic and diluted EPS for the nine months ended September 30, 2024 and 2023: 
 
 Income (Numerator) Shares (Denominator) Per-Share Amount 
 For the nine months ended September 30, 2024 
 Net income as reported $ 19,763,000 
 
 Basic EPS: Income available to common shareholders 19,763,000 11,046,986 $ 1.79 
 Effect of dilutive securities: restricted stock 87,102 
 Diluted EPS: Income available to common shareholders plus assumed conversions $ 19,763,000 11,134,088 $ 1.78 
 For the nine months ended September 30, 2023 
 Net income as reported $ 22,839,000 
 
 Basic EPS: Income available to common shareholders 22,839,000 10,993,406 $ 2.08 
 Effect of dilutive securities: restricted stock 84,089 
 Diluted EPS: Income available to common shareholders plus assumed conversions $ 22,839,000 11,077,495 $ 2.06 

 The following table sets forth the computation of basic and diluted EPS for the quarters ended September 30, 2024 and 2023: 
 
 Income (Numerator) Shares (Denominator) Per-Share Amount 
 For the quarter ended September 30, 2024 
 Net income as reported $ 7,571,000 
 Basic EPS: Income available to common shareholders 7,571,000 11,057,872 $ 0.69 
 Effect of dilutive securities: restricted stock 87,259 
 Diluted EPS: Income available to common shareholders plus assumed conversions $ 7,571,000 11,145,131 $ 0.68 
 For the quarter ended September 30, 2023 
 Net income as reported $ 7,474,000 
 Basic EPS: Income available to common shareholders 7,474,000 11,003,987 $ 0.68 
 Effect of dilutive securities: restricted stock 83,146 
 Diluted EPS: Income available to common shareholders plus assumed conversions $ 7,474,000 11,087,133 $ 0.67 

 Note 8 – Employee Benefit Plans 
 401(k) Plan 
 The Bank has a defined contribution plan available to substantially all employees who have completed three months of service. Employees may contribute up to IRS determined limits and the Bank may match employee contributions not to exceed 3.0 % of compensation depending on contribution level. 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 $ 829,000 and $ 826,000 for the nine months ended September 30, 2024 and 2023, respectively. 
 Deferred Compensation and Supplemental Retirement Benefits 
 The Bank also provides unfunded supplemental retirement benefits for certain officers, payable in installments over 20 years upon retirement or death. The agreements consist of individual contracts with differing characteristics that, when taken together, do not constitute a postretirement plan. There are no active officers eligible for these benefits. 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 $ 137,000 and $ 57,000 for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, the associated accrued liability included in other liabilities in the balance sheet was $ 2,586,000 compared to $ 2,664,000 and $ 2,735,000 at December 31, 2023 and September 30, 2023, respectively. 
 
 38 

 Postretirement Benefit Plans 
 The Bank sponsors two postretirement benefit plans. One plan currently provides a subsidy for health insurance premiums to certain retired employees; these subsidies are based on years of service and range between $ 40 and $ 1,200 per month per person. The other plan provides life insurance coverage to certain retired employees and health insurance for retired directors. None of these plans are prefunded. The Company utilizes FASB ASC Topic 712 to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its balance sheet and to recognize changes in the funded status in the year in which the changes occur through comprehensive income (loss). 
 The following table sets forth the accumulated postretirement benefit obligation and funded status: 
 
 At or for the nine months ended September 30, 
 2024 2023 
 Change in benefit obligation 
 Benefit obligation at beginning of year $ 1,091,000 $ 1,050,000 
 
 Interest cost — 14,000 
 Benefits paid ( 63,000 ) ( 66,000 ) 
 
 Benefit obligation at end of period $ 1,028,000 $ 998,000 
 Funded status 
 Benefit obligation at end of period $ ( 1,028,000 ) $ ( 998,000 ) 
 Unamortized gain ( 384,000 ) ( 345,000 ) 
 Accrued benefit cost at end of period $ ( 1,412,000 ) $ ( 1,343,000 ) 

 The following table sets forth the net periodic pension cost: 
 
 For the nine months ended September 30, For the quarter ended September 30, 
 2024 2023 2024 2023 
 Components of net periodic benefit cost 
 
 Interest cost $ — $ 14,000 $ — $ 4,000 
 
 Net periodic benefit cost $ — $ 14,000 $ — $ 4,000 

 Amounts not yet reflected in net periodic benefit cost and included in AOCI are as follows: 
 
 September 30, 2024 December 31, 2023 September 30, 2023 
 Unamortized net actuarial gain $ 384,000 $ 384,000 $ 345,000 
 
 Deferred tax expense ( 81,000 ) ( 81,000 ) ( 72,000 ) 
 Net unrecognized postretirement benefits included in AOCI $ 303,000 $ 303,000 $ 273,000 

 A weighted average discount rate of 4.67 % was used in determining the accumulated benefit obligation and the net periodic benefit cost. The assumed health care cost trend rate is 7.00 %. The measurement date for benefit obligations was as of year-end for prior years presented. The expected benefit payments for all of 2024 are $ 84,000 . Plan expense for 2024 is estimated to be $ 0 . A 1.00% change in trend assumptions would create an approximate change in the same direction of $ 100,000 in the accumulated benefit obligation, $ 7,000 in the interest cost, and $ 1,000 in the service cost. 
 
 39 

 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 nine months and quarters ended September 30, 2024 and 2023. 
 
 For the nine months ended September 30, For the quarter ended September 30, 
 2024 2023 2024 2023 
 Balance at beginning of period $ ( 39,575,000 ) $ ( 44,718,000 ) $ ( 42,816,000 ) $ ( 43,781,000 ) 
 Unrealized (losses) gains arising during the period 6,558,000 ( 11,562,000 ) 10,660,000 ( 12,748,000 ) 
 
 Related deferred taxes ( 1,377,000 ) 2,428,000 ( 2,238,000 ) 2,677,000 
 Net change 5,181,000 ( 9,134,000 ) 8,422,000 ( 10,071,000 ) 
 Balance at end of period $ ( 34,394,000 ) $ ( 53,852,000 ) $ ( 34,394,000 ) $ ( 53,852,000 ) 

 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 nine months and quarters ended September 30, 2024 and 2023. 
 
 For the nine months ended September 30, For the quarter ended September 30, 
 2024 2023 2024 2023 
 Balance at beginning of period $ ( 56,000 ) $ ( 64,000 ) $ ( 54,000 ) $ ( 59,000 ) 
 
 Amortization of net unrealized gains 9,000 7,000 6,000 1,000 
 Related deferred taxes ( 2,000 ) ( 1,000 ) ( 1,000 ) — 
 Net change 7,000 6,000 5,000 1,000 
 Balance at end of period $ ( 49,000 ) $ ( 58,000 ) $ ( 49,000 ) $ ( 58,000 ) 

 The following table presents the effect of the Company's derivative financial instruments included in OCI for the nine months and quarters ended September 30, 2024 and 2023. 
 
 For the nine months ended September 30, For the quarter ended September 30, 
 2024 2023 2024 2023 
 Balance at beginning of period $ 300,000 $ 544,000 $ 733,000 $ 680,000 
 Unrealized gains (losses) on cash flow hedging derivatives arising during the period ( 552,000 ) 1,096,000 ( 1,100,000 ) 924,000 
 
 Related deferred taxes 116,000 ( 230,000 ) 231,000 ( 194,000 ) 
 Net change ( 436,000 ) 866,000 ( 869,000 ) 730,000 
 Balance at end of period $ ( 136,000 ) $ 1,410,000 $ ( 136,000 ) $ 1,410,000 

 There was no activity in the unrealized gain or loss on postretirement benefits included in OCI for the nine months and quarters ended September 30, 2024 and 2023. 
 
 Note 10 - Financial Derivative Instruments 
 
 The Bank uses derivative financial instruments for risk management purposes and not for trading or speculative purposes. As part of its overall asset and liability management strategy, the Bank periodically uses derivative instruments to minimize 
 significant unplanned fluctuations in earnings and cash flows caused by interest rate volatility. The Bank’s interest rate risk management strategy involves modifying the re-pricing characteristics of certain assets or liabilities so that changes in interest rates do not have a significant effect on net interest income. 
 The Bank recognizes its derivative instruments in the consolidated balance sheets at fair value. On the date the derivative instrument is entered into, the Bank designates whether the derivative is part of a hedging relationship (i.e., cash flow or fair value hedge). The Bank formally documents relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking hedge transactions. The Bank also assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting the changes in 
 40 

 cash flows or fair values of hedged items. Changes in fair value of derivative instruments that are highly effective and qualify as cash flow hedges are recorded in OCI. 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 details of the Bank's swap agreements are as follows: 
 September 30, 2024 December 31, 2023 September 30, 2023 
 Effective Date Maturity Date Variable Index Received Fixed Rate Paid Presentation on Consolidated Balance Sheets Notional Amount Fair Value 
 Notional Amount Fair Value 
 Notional Amount Fair Value 
 
 Cash Flow Hedges 
 04/27/2022 10/27/2023 USD-SOFR-COMPOUND 2.498 % Other Assets $ — $ — $ — $ — $ 10,000,000 $ 20,000 
 04/27/2022 01/27/2024 USD-SOFR-COMPOUND 2.576 % Other Assets — — 10,000,000 22,000 10,000,000 92,000 
 04/27/2022 04/27/2024 USD-SOFR-COMPOUND 2.619 % Other Assets — — 10,000,000 86,000 10,000,000 159,000 
 01/10/2023 01/01/2026 USD-SOFR-OIS COMPOUND 3.836 % Other (Liabilities) Assets 75,000,000 ( 172,000 ) 75,000,000 272,000 75,000,000 1,513,000 
 $ 75,000,000 $ ( 172,000 ) $ 95,000,000 $ 380,000 $ 105,000,000 $ 1,784,000 
 Fair Value Hedges 
 03/08/2023 03/01/2026 USD-SOFR-OIS COMPOUND 4.712 % Other (Liabilities) Assets $ 40,000,000 $ ( 601,000 ) $ 40,000,000 $ ( 581,000 ) $ 40,000,000 $ 63,000 
 03/08/2023 03/01/2027 USD-SOFR-OIS COMPOUND 4.402 % Other (Liabilities) Assets 30,000,000 ( 710,000 ) 30,000,000 ( 598,000 ) 30,000,000 120,000 
 03/08/2023 03/01/2028 USD-SOFR-OIS COMPOUND 4.189 % Other (Liabilities) Assets 30,000,000 ( 858,000 ) 30,000,000 ( 678,000 ) 30,000,000 250,000 
 07/12/2023 08/01/2025 USD-SOFR-OIS COMPOUND 4.703 % Other (Liabilities) Assets 50,000,000 ( 293,000 ) 50,000,000 ( 292,000 ) 50,000,000 272,000 
 $ 150,000,000 $ ( 2,462,000 ) $ 150,000,000 $ ( 2,149,000 ) $ 150,000,000 $ 705,000 
 Total swap agreements $ 225,000,000 $ ( 2,634,000 ) $ 245,000,000 $ ( 1,769,000 ) $ 255,000,000 $ 2,489,000 

 The Company would reclassify unrealized gains or losses accounted for within AOCI into earnings if the interest rate swaps were to become ineffective or the swaps were to terminate for cash flow hedges, or would amortize the gain or loss over the remaining life of the hedged instrument for fair value hedges. Amounts paid or received under the swaps are reported in interest income or interest expense in the consolidated statements of income, and reflected in net income in the consolidated statements of cash flows. 
 Customer loan derivatives 
 The Bank will enter into interest rate swaps with qualified commercial customers. Through these arrangements, the Bank is able to provide a means for a loan customer to obtain a long-term fixed rate, while it simultaneously contracts with an approved, highly-rated, third-party financial institution as counterparty to swap the fixed rate for a variable rate. 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. 
 
 41 

 At September 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 September 30, 2023. The details of the Bank's customer loan swap arrangements are detailed below: 
 September 30, 2024 December 31, 2023 September 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 
 Pay Fixed, Receive Variable Other Assets 6 $ 34,988,000 $ 3,478,000 6 $ 36,286,000 $ 4,259,000 6 $ 36,572,000 $ 6,031,000 
 Pay Fixed, Receive Variable Other Liabilities 2 7,647,000 ( 274,000 ) 1 5,048,000 ( 89,000 ) — — — 
 8 42,635,000 3,204,000 7 41,334,000 4,170,000 6 36,572,000 6,031,000 
 Receive Fixed, Pay Variable Other Assets 2 7,647,000 274,000 1 5,048,000 89,000 — — — 
 Receive Fixed, Pay Variable Other Liabilities 6 34,988,000 ( 3,478,000 ) 6 36,286,000 ( 4,259,000 ) 6 36,572,000 ( 6,031,000 ) 
 8 42,635,000 ( 3,204,000 ) 7 41,334,000 ( 4,170,000 ) 6 36,572,000 ( 6,031,000 ) 
 Total 16 $ 85,270,000 $ — 14 $ 82,668,000 $ — 12 $ 73,144,000 $ — 

 Derivative collateral 
 The Bank has entered into a master netting arrangement with its counterparty and settles payments with the counterparty as necessary. 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 September 30, 2024, there was no collateral posted on its swap contracts or required amount to be pledged. 
 
 Note 11 – Mortgage Servicing Rights 
 FASB ASC Topic 860 "Transfers and Servicing", requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable. The Company's servicing assets and servicing liabilities are reported using the amortization method and carried at the lower of amortized cost or fair value by strata. In evaluating the carrying values of mortgage servicing rights, the Company obtains third party valuations based on loan level data including note rate, type, and term of the underlying loans. 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 September 30, 2024, the prepayment assumption using the PSA model was 127, which translates into an anticipated prepayment rate of 6.10 %. The discount rate is 9.13 %. Other assumptions include delinquency rates, foreclosure rates, servicing cost inflation, and annual unit loan cost. All assumptions are adjusted periodically to reflect current circumstances. 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 nine months ended September 30, 2024 and 2023, servicing rights capitalized totaled $ 13,000 and $ 34,000 , respectively. Servicing rights amortized for the nine-month periods ended September 30, 2024 and 2023 were $ 244,000 and $ 280,000 , respectively. The fair value of servicing rights was $ 3,074,000 , $ 3,583,000 , and $ 3,673,000 at September 30, 2024, December 31, 2023 and September 30, 2023, respectively. The Bank serviced loans for others totaling $ 302,430,000 , $ 321,178,000 , and $ 327,428,000 at September 30, 2024, December 31, 2023, and September 30, 2023, respectively. 
 Mortgage servicing rights are included in other assets and detailed in the following table: 
 
 September 30, 2024 December 31, 2023 September 30, 2023 
 Mortgage servicing rights $ 8,715,000 $ 8,702,000 $ 8,687,000 
 Accumulated amortization ( 6,770,000 ) ( 6,525,000 ) ( 6,441,000 ) 
 Amortized cost 1,945,000 2,177,000 2,246,000 
 Impairment reserve ( 5,000 ) — — 
 Carrying value $ 1,940,000 $ 2,177,000 $ 2,246,000 

 42 

 Note 12 – Income Taxes 
 FASB ASC Topic 740 "Income Taxes" defines the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company's financial statements. Topic 740 prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements. The Company is currently open to audit under the statute of limitations by the IRS for the years ended December 31, 2020 through 2023. 
 
 Note 13 - Certificates of Deposit 
 The following table represents the breakdown of certificates of deposit at September 30, 2024 and 2023, and at December 31, 2023: 
 
 September 30, 2024 December 31, 2023 September 30, 2023 
 Certificates of deposit < $100,000 $ 693,948,000 $ 646,818,000 $ 641,429,000 
 Certificates $100,000 to $250,000 251,910,000 251,192,000 234,962,000 
 Certificates $250,000 and over 179,468,000 172,237,000 132,775,000 
 $ 1,125,326,000 $ 1,070,247,000 $ 1,009,166,000 

 Note 14 – Reclassifications 
 Certain items from the prior year were reclassified in the consolidated financial statements to conform with the current year presentation. These do not have a material impact on the consolidated balance sheet or statement of income and comprehensive income presentations. 
 
 Note 15 – Fair Value 
 Certain assets and liabilities are recorded at fair value to provide additional insight into the Company's quality of earnings. Some of these assets and liabilities are measured on a recurring basis while others are measured on a nonrecurring basis, with the determination based upon applicable existing accounting pronouncements. For example, securities available for sale are recorded at fair value on a recurring basis. Other assets, such as other real estate owned and IAL, are recorded at fair value on a nonrecurring basis using the lower of cost or market methodology to determine impairment of individual assets. The Company groups assets and liabilities, which are recorded at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. A financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement (with level 1 considered highest and level 3 considered lowest). A brief description of each level follows: 
 Level 1 - Valuation is based upon quoted prices for identical instruments in active markets. 
 Level 2 - Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. 
 Level 3 - Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates that market participants would use in pricing the asset or liability. Valuation includes use of discounted cash flow models and similar techniques. 
 
 The fair value methods and assumptions for the Company's financial instruments and other assets measured at fair value are set forth below. 
 
 43 

 Investment Securities 
 The fair values of investment securities are estimated by independent providers using a market approach with observable inputs, including matrix pricing and recent transactions. In obtaining such valuation information from third parties, the Company has evaluated their valuation methodologies used to develop the fair values in order to determine whether the valuations are representative of an exit price in the Company's principal markets. The Company's principal markets for its securities portfolios are the secondary institutional markets, with an exit price that is predominantly reflective of bid level pricing in those markets. Fair values are calculated based on the value of one unit without regard to any premium or discount that may result from concentrations of ownership of a financial instrument, possible tax ramifications, or estimated transaction costs. If these considerations had been incorporated into the fair value estimates, the aggregate fair value could have been changed. The carrying values of restricted equity securities approximate fair values. As such, the Company classifies investment securities as Level 2. 
 Loans 
 Fair values are estimated for portfolios of loans are based on an exit pricing notion. The fair values of performing loans are calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest risk inherent in the loan. The estimates of maturity are based on the Company's historical experience with repayments for each loan classification, modified, as required, by an estimate of the effect of current economic and lending conditions, and the effects of estimated prepayments. Assumptions regarding credit risk, cash flows, and discount rates are judgmentally determined using available market information and specific borrower information. Management has made estimates of fair value using discount rates that it believes to be reasonable. However, because there is no market for many of these financial instruments, Management has no basis to determine whether the fair value presented above would be indicative of the value negotiated in an actual sale. As such, the Company classifies loans as Level 3, except for certain IAL. Fair values of IAL are based on estimated cash flows and are discounted using a rate commensurate with the risk associated with the estimated cash flows, or if collateral dependent, discounted to the appraised value of the collateral as determined by reference to sale prices of similar properties, less costs to sell. As such, the Company classifies IAL for which a specific reserve results in a fair value measure as Level 2. All other IAL are classified as Level 3. 
 Other Real Estate Owned 
 Real estate acquired through foreclosure is initially recorded at fair value. The fair value of other real estate owned is based on property appraisals and an analysis of similar properties currently available. As such, the Company records other real estate owned as nonrecurring Level 2. 
 Mortgage Servicing Rights 
 Mortgage servicing rights represent the value associated with servicing residential mortgage loans. Servicing assets and servicing liabilities are reported using the amortization method and compared to fair value for impairment. In evaluating the fair values of mortgage servicing rights, the Company obtains third party valuations based on loan level data including note rate, type, and term of the underlying loans. As such, the Company classifies mortgage servicing rights as Level 2. 
 Time Deposits 
 The fair value of maturity deposits is based on the discounted value of contractual cash flows using a replacement cost of funds approach. The discount rate is estimated using the cost of funds borrowing rate in the market. As such, the Company classifies time deposits as Level 2. 
 Borrowed Funds 
 The fair value of borrowed funds is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently available for borrowings of similar remaining maturities. As such, the Company classifies borrowed funds as Level 2. 
 Derivatives 
 The fair value of interest rate swaps is determined using inputs that are observable in the market place obtained from third parties including yield curves, publicly available volatilities, and floating indexes and, accordingly, are classified as Level 2 inputs. 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 September 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. 
 
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 Customer Loan Derivatives 
 The valuation of the Company’s customer loan derivatives is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The Company 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 Company has considered the impact of master netting arrangements and any applicable credit enhancements, such as collateral postings. 
 Limitations 
 Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These values do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on Management's judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Other significant assets and liabilities that are not considered financial instruments include the deferred tax asset, premises and equipment, and other real estate owned. In addition, tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates. 
 
 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 September 30, 2024, December 31, 2023 and September 30, 2023. 
 
 At September 30, 2024 
 Level 1 Level 2 Level 3 Total 
 Securities available for sale 
 U.S. Government-sponsored agencies $ — $ 20,735,000 $ — $ 20,735,000 
 Mortgage-backed securities — 227,374,000 — 227,374,000 
 State and political subdivisions — 34,608,000 — 34,608,000 
 Asset-backed securities — 2,304,000 — 2,304,000 
 
 Total securities available for sale — 285,021,000 — 285,021,000 
 
 Customer loan interest swap agreements — 3,752,000 — 3,752,000 
 Total interest rate swap agreements — 3,752,000 — 3,752,000 
 Total assets $ — $ 288,773,000 $ — $ 288,773,000 

 At September 30, 2024 
 Level 1 Level 2 Level 3 Total 
 Interest rate swap agreements $ — $ 2,634,000 $ — $ 2,634,000 
 Customer loan interest swap agreements — 3,752,000 — 3,752,000 
 Total liabilities $ — $ 6,386,000 $ — $ 6,386,000 

 45 

 At December 31, 2023 
 Level 1 Level 2 Level 3 Total 
 Securities available for sale 
 U.S. Government-sponsored agencies $ — $ 19,830,000 $ — $ 19,830,000 
 Mortgage-backed securities — 224,597,000 — 224,597,000 
 State and political subdivisions — 34,645,000 — 34,645,000 
 Asset-backed securities — 2,981,000 — 2,981,000 
 
 Total securities available for sale — 282,053,000 — 282,053,000 
 Interest rate swap agreements — 380,000 — 380,000 
 Customer loan interest swap agreements — 4,348,000 — 4,348,000 
 Total interest rate swap agreements — 4,728,000 — 4,728,000 
 Total assets $ — $ 286,781,000 $ — $ 286,781,000 

 At December 31, 2023 
 Level 1 Level 2 Level 3 Total 
 Interest rate swap agreements $ — $ 2,149,000 $ — $ 2,149,000 
 Customer loan interest swap agreements — 4,348,000 — 4,348,000 
 Total liabilities $ — $ 6,497,000 $ — $ 6,497,000 

 At September 30, 2023 
 Level 1 Level 2 Level 3 Total 
 Securities available for sale 
 U.S. Government-sponsored agencies $ — $ 38,252,000 $ — $ 38,252,000 
 Mortgage-backed securities — 212,846,000 — 212,846,000 
 State and political subdivisions — 30,780,000 — 30,780,000 
 Asset-backed securities — 3,094,000 — 3,094,000 
 
 Total securities available for sale — 284,972,000 — 284,972,000 
 Interest rate swap agreements — 2,489,000 — 2,489,000 
 Customer loan interest swap agreements — 6,031,000 — 6,031,000 
 Total interest swap agreements — 8,520,000 — 8,520,000 
 Total assets $ — $ 293,492,000 $ — $ 293,492,000 

 At September 30, 2023 
 Level 1 Level 2 Level 3 Total 
 
 Customer loan interest swap agreements $ — $ 6,031,000 $ — $ 6,031,000 
 Total liabilities $ — $ 6,031,000 $ — $ 6,031,000 

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 Assets Recorded at Fair Value on a Non-Recurring Basis 
 The following tables include assets measured at fair value on a nonrecurring basis that have had a fair value adjustment since their initial recognition. Mortgage servicing rights are presented at fair value with a $ 5,000 impairment reserve at September 30, 2024. There was no impairment reserve at December 31, 2023 and September 30, 2023. OREO is presented net of an allowance of $ 35,000 at September 30, 2024. There was no OREO or related allowance at December 31, 2023 and September 30, 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 September 30, 2024. IAL below are presented net of specific allowances of $ 19,000 at December 31, 2023, and September 30, 2023. 
 
 At September 30, 2024 
 Level 1 Level 2 Level 3 Total 
 Mortgage servicing rights $ — $ 3,074,000 $ — $ 3,074,000 
 
 OREO — 173,000 — 173,000 
 
 Total assets $ — $ 3,247,000 $ — $ 3,247,000 

 At December 31, 2023 
 Level 1 Level 2 Level 3 Total 
 Mortgage servicing rights $ — $ 3,583,000 $ — $ 3,583,000 
 
 Individually analyzed loans — 285,000 — 285,000 
 Total assets $ — $ 3,868,000 $ — $ 3,868,000 

 At September 30, 2023 
 Level 1 Level 2 Level 3 Total 
 Mortgage servicing rights $ — $ 3,673,000 $ — $ 3,673,000 
 
 Individually analyzed loans — 285,000 — 285,000 
 Total assets $ — $ 3,958,000 $ — $ 3,958,000 

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 Fair Value of Financial Instruments 
 FASB ASC Topic 825 "Financial Instruments" requires disclosures of fair value information about financial instruments, whether or not recognized in the balance sheet if the fair values can be reasonably determined. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques using observable inputs when available. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Topic 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company. 
 This summary excludes financial assets and liabilities for which carrying value approximates fair values and financial instruments that are recorded at fair value on a recurring basis. Financial instruments for which carrying values approximate fair value include cash equivalents, interest-bearing deposits in other banks, demand, NOW, savings, and money market deposits. The estimated fair value of demand, NOW, savings, and money market deposits is the amount payable on demand at the reporting date. 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 September 30, 2024 were as follows: 
 
 Carrying value Estimated fair value Level 1 Level 2 Level 3 
 Financial assets 
 
 Securities to be held to maturity (net of allowance for credit losses) $ 377,635,000 $ 333,575,000 $ — $ 333,575,000 $ — 
 
 Loans (net of allowance for credit losses) 
 Commercial 
 Real estate 746,558,000 714,398,000 — — 714,398,000 
 Construction 87,185,000 83,429,000 — — 83,429,000 
 Other 523,624,000 516,977,000 — — 516,977,000 
 Municipal 62,678,000 57,578,000 — — 57,578,000 
 Residential 
 Term 693,017,000 633,247,000 — — 633,247,000 
 Construction 34,203,000 33,869,000 — — 33,869,000 
 Home equity line of credit 116,365,000 116,058,000 — — 116,058,000 
 Consumer 19,624,000 17,375,000 — — 17,375,000 
 Total loans 2,283,254,000 2,172,931,000 — — 2,172,931,000 
 Mortgage servicing rights 1,940,000 3,074,000 — 3,074,000 — 
 
 Financial liabilities 
 
 Local certificates of deposit $ 377,750,000 $ 360,988,000 $ — $ 360,988,000 $ — 
 National certificates of deposit 747,576,000 768,270,000 — 768,270,000 — 
 Total certificates of deposit 1,125,326,000 1,129,258,000 — 1,129,258,000 — 
 Repurchase agreements 56,027,000 55,910,000 — 55,910,000 — 
 Federal Home Loan Bank advances 95,000,000 94,914,000 — 94,914,000 — 
 Total borrowed funds 151,027,000 150,824,000 — 150,824,000 — 
 
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 The carrying amounts and estimated fair values for financial instruments as of December 31, 2023 were as follows: 
 
 Carrying value Estimated fair value Level 1 Level 2 Level 3 
 Financial assets 
 
 Securities to be held to maturity (net of allowance for credit losses) $ 385,235,000 $ 338,570,000 $ — $ 338,570,000 $ — 
 
 Loans (net of allowance for credit losses) 
 Commercial 
 Real estate 699,537,000 658,732,000 — — 658,732,000 
 Construction 86,695,000 81,638,000 — — 81,638,000 
 Other 443,944,000 431,067,000 — — 431,067,000 
 Municipal 51,089,000 46,806,000 — — 46,806,000 
 Residential 
 Term 669,864,000 595,033,000 — 285,000 594,748,000 
 Construction 31,740,000 31,131,000 — — 31,131,000 
 Home equity line of credit 103,400,000 102,858,000 — — 102,858,000 
 Consumer 19,155,000 16,963,000 — — 16,963,000 
 Total loans 2,105,424,000 1,964,228,000 — 285,000 1,963,943,000 
 Mortgage servicing rights 2,177,000 3,583,000 — 3,583,000 — 
 
 Financial liabilities 
 
 Local certificates of deposit $ 293,466,000 $ 362,555,000 $ — $ 362,555,000 $ — 
 National certificates of deposit 776,781,000 699,919,000 — 699,919,000 — 
 Total certificates of deposit 1,070,247,000 1,062,474,000 — 1,062,474,000 — 
 Repurchase agreements 49,576,000 49,462,000 — 49,462,000 — 
 Federal Home Loan Bank advances 20,076,000 20,074,000 — 20,074,000 — 
 Total borrowed funds 69,652,000 69,536,000 — 69,536,000 — 
 
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 The carrying amount and estimated fair values for financial instruments as of September 30, 2023 were as follows: 
 
 Carrying value Estimated fair value Level 1 Level 2 Level 3 
 Financial assets 
 
 Securities to be held to maturity (net of allowance for credit losses) $ 387,374,000 $ 311,864,000 $ — $ 311,864,000 $ — 
 
 Loans (net of allowance for credit losses) 
 Commercial 
 Real estate 688,027,000 652,297,000 — — 652,297,000 
 Construction 70,822,000 67,144,000 — — 67,144,000 
 Other 435,563,000 423,464,000 — — 423,464,000 
 Municipal 58,071,000 52,196,000 — — 52,196,000 
 Residential 
 Term 655,431,000 577,982,000 — 285,000 577,697,000 
 Construction 28,410,000 27,972,000 — — 27,972,000 
 Home equity line of credit 101,363,000 102,124,000 — — 102,124,000 
 Consumer 19,119,000 16,978,000 — — 16,978,000 
 Total loans 2,056,806,000 1,920,157,000 — 285,000 1,919,872,000 
 Mortgage servicing rights 2,246,000 3,673,000 — 3,673,000 — 
 
 Financial liabilities 
 
 Local certificates of deposit $ 338,280,000 $ 319,218,000 $ — $ 319,218,000 $ — 
 National certificates of deposit 670,886,000 672,654,000 — 672,654,000 — 
 Total certificates of deposit 1,009,166,000 991,872,000 — 991,872,000 — 
 Repurchase agreements 52,915,000 52,793,000 — 52,793,000 — 
 Federal Home Loan Bank advances 30,078,000 30,074,000 — 30,074,000 — 
 Total borrowed funds 82,993,000 82,867,000 — 82,867,000 — 
 
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 Note 16 – Impact of Recently Issued Accounting Standards 
 In March 2023, the FASB issued ASU No. 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. This ASU expands the use of proportional amortization method of accounting — currently allowed only for investments in low-income housing tax credit (LIHTC) structures — to equity investments in other tax credit structures that meet certain criteria. The proportional amortization method results in (1) the tax credit investment being amortized in proportion to the allocation of tax credits and other tax benefits in each period and (2) net presentation within the income tax line item. The ASU is effective beginning in 2024 for calendar year-end public business entities. Adoption of this ASU did not have a material impact on the Company's consolidated financial statements. 
 
 In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. 
 This ASU requires public business entities, such as the Company, to provide enhanced disclosures on the amount of income taxes paid disaggregated by type and jurisdiction. Adoption is required for annual periods beginning after December 15, 2024 and is not expected to have a material impact on the Company's consolidated financial statements. 
 
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
First Bancorp, Inc /ME/ 10-Q

Item 1. Financial Statements
