What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-05 compared with 2021-05-06 · 320 added, 143 removed, 943 unchanged (33% of the section changed)

8 unchanged sentences

Mortgage loans held for sale

Loans receivable, net of allowance for credit losses of $ 67,702 – March 2021;

Loans receivable, net of allowance for credit losses of $ 66,602 – June 2021;

net of allowance for loan losses of $ 55,743 – December 2020

20 unchanged sentences

authorized 1,000,000 shares;

issued and outstanding March 2021 and December 2020 - - 0 - shares

issued and outstanding June 2021 and December 2020 - - 0 - shares

Common stock, $ .01 par value;

authorized 20,000,000 shares;

issued and outstanding March 2021 – 13,693,644 shares;

issued and outstanding June 2021 – 13,659,357 shares;

December 2020 – 13,752,605 shares

19 unchanged sentences

NET INTEREST INCOME

PROVISION FOR CREDIT LOSSES ON LOANS

PROVISION (CREDIT) FOR CREDIT LOSSES ON LOANS

PROVISION (CREDIT) FOR UNFUNDED COMMITMENTS

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES AND PROVISION (CREDIT) FOR UNFUNDED COMMITMENTS

NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR CREDIT LOSSES AND PROVISION (CREDIT) FOR UNFUNDED COMMITMENTS

NON-INTEREST INCOME

Service charges, debit card and ATM fees

Overdraft and Insufficient funds fees

Point-Of-Sale and ATM fee income and service charges

Net gains on loan sales

1 unchanged sentence

Gain (loss) on derivative interest rate products

Net realized gains on sales of available-for-sale securities

TOTAL NON-INTEREST INCOME

5 unchanged sentences

Expense on other real estate and repossessions

Partnership tax credit investment amortization

Acquired deposit intangible asset amortization

10 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

SIX MONTHS ENDED

INTEREST INCOME

Investment securities and other

TOTAL INTEREST INCOME

INTEREST EXPENSE

Short-term borrowings and repurchase agreements

Subordinated debentures issued to capital trust

Subordinated notes

TOTAL INTEREST EXPENSE

NET INTEREST INCOME

PROVISION (CREDIT) FOR CREDIT LOSSES ON LOANS

PROVISION (CREDIT) FOR UNFUNDED COMMITMENTS

NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR CREDIT LOSSES AND PROVISION (CREDIT) FOR UNFUNDED COMMITMENTS

NON-INTEREST INCOME

Overdraft and Insufficient funds fees

Point-Of-Sale and ATM fee income and service charges

Net gains on loan sales

Late charges and fees on loans

Gain (loss) on derivative interest rate products

Net realized gains on sales of available-for-sale securities

TOTAL NON-INTEREST INCOME

NON-INTEREST EXPENSE

Salaries and employee benefits

Net occupancy and equipment expense

Office supplies and printing

Legal, audit and other professional fees

Expense on other real estate and repossessions

Acquired deposit intangible asset amortization

Other operating expenses

TOTAL NON-INTEREST EXPENSE

INCOME BEFORE INCOME TAXES

PROVISION FOR INCOME TAXES

NET INCOME AND NET INCOME AVAILABLE TO COMMON STOCKHOLDERS

Basic Earnings Per Common Share

Diluted Earnings Per Common Share

Dividends Declared Per Common Share

See Notes to Consolidated Financial Statements

GREAT SOUTHERN BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

THREE MONTHS ENDED MARCH 31,

THREE MONTHS ENDED

Unrealized appreciation on available-for-sale securities, net of taxes of $ 1,806 and $ 1,602 , for 2021 and 2020, respectively

Reclassification adjustment for gains included in net income, net of taxes of $ 0 and $ 18 , for 2021 and 2020, respectively

Amortization of realized gain on termination of cash flow hedge, net of taxes (credit) of $( 461 ) and $( 461 ), for 2021 and 2020, respectively

Comprehensive Income

SIX MONTHS ENDED

Unrealized appreciation (depreciation) on available-for-sale securities, net of taxes (credit) of $( 2,303 ) and $ 5,013 , for 2021 and 2020, respectively

Reclassification adjustment for gains included in net income, net of taxes of $ 0 and $ 18 , for 2021 and 2020, respectively

Change in fair value of cash flow hedge, net of taxes of $ 0 and $ 3,519 , for 2021 and 2020, respectively

6 unchanged sentences

(In thousands, except per share data)

THREE MONTHS ENDED MARCH 31, 2020

THREE MONTHS ENDED JUNE 30, 2020

Comprehensive

1 unchanged sentence

Income (Loss)

Balance, March 31, 2020

Stock issued under Stock Option Plan

Common dividends declared, $ 0.34 per share

Other comprehensive gain

Reclassification of treasury stock per Maryland law

Balance, June 30, 2020

THREE MONTHS ENDED JUNE 30, 2021

Comprehensive

Paid-in Capital

Income (Loss)

Balance, March 31, 2021

Stock issued under Stock Option Plan

Common dividends declared, $ 0.34 per share

Other comprehensive gain

Purchase of the Company’s common stock

Reclassification of treasury stock per Maryland law

Balance, June 30, 2021

See Notes to Consolidated Financial Statements

GREAT SOUTHERN BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share data)

SIX MONTHS ENDED JUNE 30, 2020

Comprehensive

Paid-in Capital

Income (Loss)

Balance, January 1, 2020

4 unchanged sentences

Reclassification of treasury stock per Maryland law

Balance, March 31, 2020

THREE MONTHS ENDED MARCH 31, 2021

Balance, June 30, 2020

SIX MONTHS ENDED JUNE 30, 2021

Comprehensive

8 unchanged sentences

Reclassification of treasury stock per Maryland law

Balance, March 31, 2021

Balance, June 30, 2021

See Notes to Consolidated Financial Statements

3 unchanged sentences

(In thousands)

THREE MONTHS ENDED MARCH 31,

SIX MONTHS ENDED

CASH FLOWS FROM OPERATING ACTIVITIES

3 unchanged sentences

Compensation expense for stock option grants

Provision for credit losses on loans

Provision (credit) for credit losses on loans

Provision (credit) for unfunded commitments

Net gains on loan sales

Net realized gains on sales of available-for-sale securities

Net (gains) losses on sale of premises and equipment

Net losses on sale/write-down of other real estate owned and repossessions

Net (gains) losses on sale/write-down of other real estate owned and repossessions

Accretion of deferred income, premiums, discounts and other

8 unchanged sentences

Net change in loans

Purchase of loans

Purchase of loans and loan participations

Purchase of premises and equipment

3 unchanged sentences

Proceeds from termination of interest rate derivative

Proceeds from sales of available-for-sale securities

Proceeds from maturities and calls of available-for-sale securities

2 unchanged sentences

Redemption of Federal Home Loan Bank stock and change in other interest-earning assets

Net cash used in investing activities

Net cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Net increase (decrease) in certificates of deposit

Net decrease in certificates of deposit

Net increase in checking and savings deposits

1 unchanged sentence

Advances from borrowers for taxes and insurance

Proceeds from issuance of subordinated notes

Dividends paid

14 unchanged sentences

Those adjustments consist only of normal recurring adjustments.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the full year.

Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the full year.

The consolidated statement of financial condition of the Company as of December 31, 2020, has been derived from the audited consolidated statement of financial condition of the Company as of that date.

21 unchanged sentences

The Update was set to be effective for the Company on January 1, 2020.

During March 2020, pursuant to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and guidance from the SEC and FASB, we elected to delay adoption of the new accounting standard under the Update that is referred to as the current expected credit loss (“CECL”) methodology.

During March 2020, pursuant to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and guidance from the SEC and FASB, we elected to delay adoption of the new accounting standard under the Update, which is referred to as the current expected credit loss (“CECL”) methodology.

In December 2020, additional legislation was enacted that amended certain provisions of the CARES Act.

One of the provisions that was affected by this new legislation allowed for the election to further delay the adoption of the CECL accounting standard to January 1, 2022.

One of the provisions that was affected by this additional legislation allowed for the election to further delay the adoption of the CECL accounting standard to January 1, 2022.

An adoption date of January 1, 2021, was also an acceptable option and we elected January 1, 2021 as our adoption date for the CECL standard.

As a result, our 2020 financial statements were prepared under the existing incurred loss methodology standard for accounting for loan losses.

As a result, our 2020 financial statements were prepared under the incurred loss methodology standard for accounting for loan losses.

The adoption of the CECL model during the first quarter of 2021 required us to recognize a one-time cumulative adjustment to our allowance for credit losses and a liability for potential losses related to the unfunded portion of our loans and commitments in order to fully transition from the incurred loss model to the CECL model.

6 unchanged sentences

After 2021, certain LIBOR rates may no longer be published.

As a result, LIBOR could be discontinued as a reference rate.

As a result, LIBOR is expected to be discontinued as a reference rate.

Other interest rates used globally could also be discontinued for similar reasons.

11 unchanged sentences

EARNINGS PER SHARE

Three Months Ended March 31,

Three Months Ended June 30,

(In Thousands, Except Per Share Data)

3 unchanged sentences

Average common shares outstanding

Net effect of dilutive stock options – based on the treasury stock method using average market price

Net effect of dilutive stock options – based on the treasury stock method

using average market price

Diluted common shares

1 unchanged sentence

Per common share amount

Options outstanding at March 31, 2021 and 2020, to purchase 352,488 and 568,551 shares of common stock, respectively, were not included in the computation of diluted earnings per common share for each of the three month periods because the exercise prices of such options were greater than the average market prices of the common stock for the three months ended March 31, 2021 and 2020, respectively.

Six Months Ended June 30,

(In Thousands, Except Per Share Data)

Average common shares outstanding

Net income and net income available to common stockholders

Per common share amount

Average common shares outstanding

Net effect of dilutive stock options – based on the treasury stock method

using average market price

Diluted common shares

Net income and net income available to common stockholders

Per common share amount

Options outstanding at June 30, 2021 and 2020, to purchase 452,918 and 653,794 shares of common stock, respectively, were not included in the computation of diluted earnings per common share for each of the three month periods because the exercise prices of such options were greater than the average market prices of the common stock for the three months ended June 30, 2021 and 2020, respectively.

Options outstanding at June 30, 2021 and 2020, to purchase 452,918 and 565,401 shares of common stock, respectively, were not included in the computation of diluted earnings per common share for the six month periods because the exercise prices of such options were greater than the average market prices of the common stock for the six months ended June 30, 2021 and 2020, respectively.

INVESTMENT SECURITIES

The amortized cost and fair values of securities classified as available-for-sale were as follows:

March 31, 2021

June 30, 2021

(In Thousands)

11 unchanged sentences

Small Business Administration securities

The amortized cost and fair value of available-for-sale securities at March 31, 2021, by contractual maturity, are shown below.

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

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

5 unchanged sentences

Securities not due on a single maturity date

There were no securities classified as held to maturity at March 31, 2021 or December 31, 2020.

There were no securities classified as held to maturity at June 30, 2021 or December 31, 2020.

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost.

Total fair value of these investments at March 31, 2021 and December 31, 2020, was approximately $ 134.5 million and $ 24.2 million, respectively, which is approximately 29.4 % and 5.8 % of the Company’s available-for-sale investment portfolio, respectively.

Total fair value of these investments at June 30, 2021 and December 31, 2020, was approximately $ 93.1 million and $ 24.2 million, respectively, which is approximately 20.7 % and 5.8 % of the Company’s available-for-sale investment portfolio, respectively.

Based on an evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes any declines in fair value for these debt securities are temporary.

The following table shows the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2021 and December 31, 2020:

March 31, 2021

June 30, 2021

Less than 12 Months

14 unchanged sentences

States and political subdivisions securities

There were no sales of available-for-sale securities during the three months ended March 31, 2021 or March 31, 2020.

There were no sales of available-for-sale securities during the three or six months ended June 30, 2021.

Gross gains of $ 78,000 resulting from sales of available-for-sale securities were realized during the three and six months ended June 30, 2020.

Gains and losses on sales of securities are determined on the specific-identification method.

Allowance for Credit Losses Beginning January 1, 2021, the Company evaluates all securities quarterly to determine if any securities in a loss position require a provision for credit losses in accordance with ASC 326, Measurement of Credit Losses on Financial Instruments .

Allowance for Credit Losses On January 1, 2021, the Company began evaluating all securities quarterly to determine if any securities in a loss position require a provision for credit losses in accordance with ASC 326, Measurement of Credit Losses on Financial Instruments .

All of the mortgage-backed, collateralized mortgage, and SBA securities held by the Company are issued by U.S.

10 unchanged sentences

Amounts Reclassified Out of Accumulated Other Comprehensive Income.

There were no amounts reclassified from accumulated other comprehensive income during the three months ended March 31, 2021 and 2020.

There were no amounts reclassified from accumulated other comprehensive income during the three or six months ended June 30, 2021 and 2020.

LOANS AND ALLOWANCE FOR CREDIT LOSSES

20 unchanged sentences

The allocated component relates to loans that are classified as impaired.

For loans classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.

For loans classified as impaired, an allowance is established when the present value of expected future cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.

The general component covers non-classified loans and is based on historical charge-off experience and expected loss given default derived from the Company’s internal risk rating process.

12 unchanged sentences

The forecast-adjusted loss rate is applied to the amortized cost of loans over the remaining contractual lives, adjusted for expected prepayments.

The contractual term excludes expected extensions, renewals and modifications unless there is a reasonable expectation that a troubled debt restructuring will be executed.

The contractual term excludes expected extensions, renewals and modifications unless there is a reasonable expectation that a troubled debt restructuring (“TDR”) will be executed.

Additionally, the allowance for credit losses considers other qualitative factors not included in historical loss rates or macroeconomic forecasts such as changes in portfolio composition, underwriting practices, or significant unique events or conditions.

5 unchanged sentences

however, the liability for unfunded lending commitments incorporates assumptions for the portion of unfunded commitments that are expected to be funded.

Classes of loans at March 31, 2021 and December 31, 2020 were as follows:

Classes of loans at June 30, 2021 and December 31, 2020 were as follows:

(In Thousands)

17 unchanged sentences

Weighted average interest rate

(1) Loans acquired and accounted for under ASC 310-30 of $ 91.9 million have been included in the totals by loan class as of March 31, 2021.

At the date of CECL adoption, the Company did not reassess whether purchased credit impaired loans met the criteria of purchased credit deteriorated loans.

(1) Loans acquired and accounted for under ASC 310-30 of $ 84.4 million have been included in the totals by loan class as of June 30, 2021.

At the date of CECL adoption, the Company did not reassess whether PCI loans met the criteria of PCD loans.

The following tables present the classes of loans by aging.

Loans acquired and accounted for under ASC 310-30 of $91.9 million have been included in the totals by loan class as of March 31, 2021.

March 31, 2021

Loans originally acquired and accounted for under ASC 310-30 of $ 84.4 million have been included in the totals by loan class as of June 30, 2021.

June 30, 2021

> 90 Days Past

39 unchanged sentences

Consumer loans are charged-off at specified delinquency dates consistent with regulatory guidelines.

Non-accruing loans as of December 31, 2020 shown below exclude $ 3.8 million in loans acquired and accounted for under ASC 310-30, while the non-accruing loans as of March 31, 2021 include $ 3.6 million in the loans acquired through various FDIC-assisted transactions in the loan classes listed.

Non-accruing loans as of December 31, 2020 shown below exclude $ 3.8 million in loans acquired and accounted for under ASC 310-30, while the non-accruing loans as of June 30, 2021 shown below include $ 2.4 million in loans acquired through various FDIC-assisted transactions in the loan classes listed.

(In Thousands)

15 unchanged sentences

Total non-accruing loans net of FDIC-acquired loans

No interest income was recorded on these loans for the three months ended March 31, 2021 and 2020, respectively.

Nonaccrual loans for which there is no related allowance for credit losses as of March 31, 2021 had an amortized cost of $ 3.5 million.

These loans are individually assessed and do not hold an allowance due to being adequately collateralized under the collateral-dependent valuation method.

No interest income was recorded on these loans for the three and six months ended June 30, 2021 and 2020, respectively.

Nonaccrual loans for which there is no related allowance for credit losses as of June 30, 2021 had an amortized cost of $ 3.2 million.

These loans are individually assessed and do not require an allowance due to being adequately collateralized under the collateral-dependent valuation method.

A collateral-dependent loan is a financial asset for which the repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty based on the Company’s assessment as of the reporting date.

Collateral-dependent loans are identified by either a classified risk rating or TDR status and a loan balance equal to or greater than $ 100,000 , including, but not limited to, any loan in process of foreclosure or repossession.

The following table presents the activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2021.

On January 1, 2021, the Company adopted the CECL methodology, which added $ 11.6 million to the total Allowance for Credit Loss, which included $ 1.9 million remaining discount on loans that were previously accounted for as purchased credit impaired.

Under the CECL methodology, the Company recorded a $ 300,000 provision for credit losses on loans during the three months ended

March 31, 2021, compared to a $ 3.9 million provision for loan losses in the three months ended March 31, 2020, under the incurred loss method.

The following tables present the activity in the allowance for credit losses by portfolio segment for the three and six months ended June 30, 2021.

During the three months ended June 30, 2021, the Company recorded a negative provision expense of $ 1 .0 million on its portfolio of outstanding loans, compared to a $ 6 .0 million provision expense recorded for the quarter ended June 30, 2020.

During the six months ended June 30, 2021, the Company recorded a negative provision expense of $ 700,000 on its portfolio of outstanding loans, compared to a $ 9.9 million provision expense recorded for the six months ended June 30, 2020.

One- to Four-

2 unchanged sentences

Allowance for credit losses

Balance, March 31, 2021

Provision charged to expense

Losses charged off

Balance, June 30, 2021

Allowance for credit losses

Balance, December 31, 2020

3 unchanged sentences

Losses charged off

Balance, March 31, 2021

The following table presents the activity in the allowance for unfunded commitments by portfolio segment for the three months ended March 31, 2021.

Balance, June 30, 2021

The following table presents the activity in the allowance for unfunded commitments by portfolio segment for the three and six months ended June 30, 2021.

On January 1, 2021, the Company adopted the CECL methodology, which created an $ 8.7 million allowance for unfunded commitments.

Under the CECL methodology, the Company recorded a $ 674,000 benefit for unfunded loan commitments during the three months ended March 31, 2021.

The provision for losses on unfunded commitments for the three and six months ended June 30, 2021 was a credit of $ 307,000 and $ 981,000 , respectively, as the level and mix of unfunded commitments resulted in a decrease in the required reserve for such potential losses.

One- to Four-

2 unchanged sentences

Allowance for unfunded commitments

Balance, March 31, 2021

Provision (benefit) charged to expense

Balance, June 30, 2021

Allowance for unfunded commitments

Balance, December 31, 2020

2 unchanged sentences

Provision (benefit) charged to expense

Balance, March 31, 2021

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2020, prepared using the previous GAAP incurred loss method prior to the adoption of ASU 2016-13.

Balance, June 30, 2021

The following table presents the activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2020, prepared using the previous GAAP incurred loss method prior to the adoption of ASU 2016-13.

One- to Four-

1 unchanged sentence

(In Thousands)

Allowance for loan losses

Balance, April 1, 2020

Provision (benefit) charged to expense

Losses charged off

Balance, June 30, 2020

Allowance for loan losses

Balance, January 1, 2020

1 unchanged sentence

Losses charged off

Balance March 31, 2020

Balance, June 30, 2020

The following table presents the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of December 31, 2020, prepared using the previous GAAP incurred loss method prior to the adoption of ASU 2016-13.

16 unchanged sentences

● The consumer segment includes the consumer auto, consumer other and home equity lines of credit classes.

The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of March 31, 2021:

March 31, 2021

The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of June 30, 2021:

June 30, 2021

(In Thousands)

13 unchanged sentences

The following table presents information pertaining to impaired loans as of December 31, 2020, in accordance with previous GAAP prior to the adoption of ASU 2016-13.

A loan is considered impaired, in accordance with the impairment accounting guidance (FASB ASC 310-10-35-16), when based on current information and events, it is probable the Company will be unable to collect all amounts

due from the borrower in accordance with the contractual terms of the loan.

Impaired loans include not only nonperforming loans but also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties.

Impaired loans include not only nonperforming loans but also loans modified in TDRs where concessions have been granted to borrowers experiencing financial difficulties.

At or for the Year Ended December 31, 2020

13 unchanged sentences

Home equity lines of credit

At or for the Three Months Ended March 31, 2020

June 30, 2020

(In Thousands)

12 unchanged sentences

Home equity lines of credit

Three Months Ended

Six Months Ended

June 30, 2020

(In Thousands)

One- to four-family residential construction

Subdivision construction

Land development

Commercial construction

Owner occupied one- to four-family residential

Non-owner occupied one- to four-family residential

Commercial real estate

Other residential

Commercial business

Industrial revenue bonds

Consumer auto

Consumer other

Home equity lines of credit

At December 31, 2020, $ 4.8 million of impaired loans had specific valuation allowances totaling $ 713,000 .

Troubled debt restructurings (“TDRs”) by class is presented below as of March 31, 2021 and December 31, 2020.

The December 31, 2020 table excludes $ 1.7 million of FDIC-acquired loans accounted for under ASC 310-30, while the March 31, 2021 table includes the loans acquired through various FDIC-assisted transactions in the loan classes listed.

March 31, 2021

TDRs by class are presented below as of June 30, 2021 and December 31, 2020.

The December 31, 2020 table excludes $ 1.7 million of FDIC-acquired loans accounted for under ASC 310-30, while the June 30, 2021 table includes the loans acquired through various FDIC-assisted transactions in the loan classes listed.

June 30, 2021

Accruing TDR Loans

14 unchanged sentences

Other residential

The following tables present newly restructured loans, which were considered TDRs, during the three months ended March 31, 2021 and 2020, respectively, by type of modification:

Three Months Ended March 31, 2021

The following tables present newly restructured loans, which were considered TDRs, during the three and six months ended June 30, 2021 and 2020, respectively, by type of modification:

Three Months Ended June 30, 2021

Interest Only

(In Thousands)

One- to four-family residential

Three Months Ended June 30, 2020

Interest Only

(In Thousands)

Six Months Ended June 30, 2021

Interest Only

(In Thousands)

Commercial Real Estate

Three Months Ended March 31, 2020

One- to four-family residential

Six Months Ended June 30, 2020

Interest Only

1 unchanged sentence

One- to four-family residential

At March 31, 2021, of the $ 4 .0 million in TDRs, $ 3.3 million were classified as substandard using the Company’s internal grading system, which is described below.

The Company had no TDRs that were modified in the previous 12 months and subsequently defaulted during the three months ended March 31, 2021.

At June 30, 2021, of the $ 4 .0 million in TDRs, $ 3.1 million were classified as substandard using the Company’s internal grading system, which is described below.

The Company had no TDRs that were modified in the previous 12 months and subsequently defaulted during the six months ended June 30, 2021.

At December 31, 2020, of the $ 3.3 million in TDRs, $ 1.6 million were classified as substandard using the Company’s internal grading system.

The Company had no TDRs that were modified in the previous 12 months and subsequently defaulted during the year ended December 31, 2020.

During the three months ended March 31, 2021, there were four loans designated as TDRs, totaling $ 27,000 , which met the criteria for placement back on accrual status.

During the three and six months ended June 30, 2021, $ 310,000 and $ 337,000 of loans, respectively, met the criteria for placement back on accrual status.

The criteria are generally a minimum of six months of consistent and timely payment performance under original or modified terms.

During the three months ended March 31, 2020, there were no loans designated as TDRs that met the criteria for placement back on accrual status.

In addition to the above loans considered TDRs, at March 31, 2021, the Company had remaining 19 modified commercial loans with an aggregate principal balance outstanding of $ 141 million and 92 modified consumer and mortgage loans with an aggregate principal balance outstanding of $ 5 million.

At March 31, 2021, the largest total modified loans by collateral type were in the following categories:

During the three and six months ended June 30, 2020, there were no loans designated as TDRs that met the criteria for placement back on accrual status.

In addition to the above loans considered TDRs, at June 30, 2021, the Company had remaining 15 modified commercial loans with an aggregate principal balance outstanding of $ 91 million and 30 modified consumer and mortgage loans with an aggregate principal balance outstanding of $ 876,000 .

At June 30, 2021, the largest total modified loans by collateral type were in the following categories:

hotel/motel - $ 29 million;

healthcare - $ 28 million;

retail - $ 22 million;

healthcare - $ 18 million;

multifamily - $ 11 million.

2 unchanged sentences

therefore, they are not considered troubled debt restructurings.

A portion of the loans modified at March 31, 2021, may be further modified, and new loans may be modified, within the guidance provided by the CARES Act (and subsequent legislation enacted in December 2020), the federal banking regulatory agencies, the SEC and the FASB if a more severe or lengthier deterioration in economic conditions occurs in future periods.

A portion of the loans modified at June 30, 2021, may be further modified, and new loans may be modified, within the guidance provided by the CARES Act (and subsequent legislation enacted in December 2020), the federal banking regulatory agencies, the SEC and the FASB if a more severe or lengthier deterioration in economic conditions occurs in future periods.

The Company utilizes an internal risk rating system comprised of a series of grades to categorize loans according to perceived risk associated with the expectation of debt repayment.

14 unchanged sentences

Loans are placed on “non-accrual” when management does not expect to collect payments consistent with acceptable and agreed upon terms of repayment.

Doubtful loans have all the weaknesses inherent to those classified Substandard with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

Doubtful loans have all the weaknesses inherent to those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

Loans considered loss are uncollectable and no longer included as an asset.

4 unchanged sentences

In addition to the regular monitoring performed by the lending personnel and credit committees, loans are subject to review by the credit review department, which verifies the appropriateness of the risk ratings for the loans chosen as part of its risk-based review plan.

The following tables present a summary of loans by risk category and past due status separated by origination and loan class as of March 31, 2021.

The March 31, 2021 table was prepared using the CECL methodology and includes $ 91.9 million in FDIC-assisted acquired loans included in the loan class categories.

The remaining accretable discount of $ 1.3 million has not been included in this table.

The following tables present a summary of loans by risk category and past due status separated by origination and loan class as of June 30, 2021.

The first table, which is as of June 30, 2021, was prepared using the CECL methodology and includes $ 84.4 million in FDIC-assisted acquired loans included in the loan class categories.

The remaining accretable discount of $ 885,000 has not been included in this table.

See Note 7 for further discussion of the FDIC-acquired loans and related discount.

The December 31, 2020 table was prepared using the previous GAAP incurred loss methodology prior to the adoption of ASU 2016-13.

The second table, which is as of December 31, 2020, was prepared using the previous GAAP incurred loss methodology prior to the adoption of ASU 2016-13.

The $ 98.6 million in FDIC-assisted acquired loans are shown as a total, not within the loan class categories.

71 unchanged sentences

Based upon the acquisition date fair values of the net assets acquired, no goodwill was recorded.

The following table presents the balances of the acquired loans related to the various FDIC-assisted transactions at March 31, 2021 and December 31, 2020.

The following table presents the balances of the acquired loans related to the various FDIC-assisted transactions at June 30, 2021 and December 31, 2020.

(In Thousands)

March 31, 2021

June 30, 2021

Gross loans receivable

7 unchanged sentences

Fair Value and Expected Cash Flows .

At the time of these acquisitions, the Company determined the fair value of the loan portfolios based on several assumptions.

At the times of these acquisitions, the Company determined the fair value of the loan portfolios based on several assumptions.

Factors considered in the valuations were projected cash flows for the loans, type of loan and related collateral, classification status, fixed or variable interest rate, term of loan, current discount rates and whether or not the loan was amortizing.

6 unchanged sentences

Because the balance of these adjustments to accretable yield will be recognized generally over the remaining lives of the loan pools, they will impact future periods as well.

As of March 31, 2021, the remaining accretable yield adjustment that will affect interest income is $ 1.3 million.

As of June 30, 2021, the remaining accretable yield adjustment that will affect interest income was $ 885,000 .

Of the remaining adjustments affecting interest income, we expect to recognize approximately $ 453,000 of interest income during the remainder of 2021.

As of January 1, 2021, we adopted the new accounting standard related to accounting for credit losses.

With the adoption of this standard, there will be no further reclassification of discounts from non-accretable to accretable.

With the adoption of this standard, discounts are no longer reclassified from non-accretable to accretable.

All adjustments made prior to January 1, 2021 will continue to be accreted to interest income.

2 unchanged sentences

Three Months Ended

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

(In Thousands, Except Per Share Data and Basis Points Data)

4 unchanged sentences

Impact to diluted earnings per share

Six Months Ended

June 30, 2021

June 30, 2020

(In Thousands, Except Per Share Data and Basis Points Data)

Impact on net interest income/

net interest margin (in basis points)

Net impact to pre-tax income

Net impact net of taxes

Impact to diluted earnings per share

OTHER REAL ESTATE OWNED AND REPOSSESSIONS

14 unchanged sentences

Other real estate owned and repossessions

At March 31, 2021 other real estate owned not acquired through foreclosure included five properties, all of which were branch locations that were closed and held for sale.

One property that was held for sale at March 31, 2021 was under contract for sale.

The sale was completed in April 2021, with no additional loss to the Company.

At June 30, 2021 other real estate owned not acquired through foreclosure included three properties, all of which were branch locations that were closed and held for sale.

At December 31, 2020, other real estate owned not acquired through foreclosure included seven properties, all of which were branch locations that were closed and held for sale.

At March 31, 2021, residential mortgage loans totaling $ 220,000 were in the process of foreclosure, $ 161,000 of which were acquired loans related to FDIC-assisted transactions.

At June 30, 2021, residential mortgage loans totaling $ 283,000 were in the process of foreclosure, $ 86,000 of which were acquired loans related to FDIC-assisted transactions.

Pursuant to Section 4022 of the CARES Act, the Company has suspended all foreclosure proceedings.

Under this provision, no mortgage servicer of any federally-backed mortgage loan is permitted to initiate any foreclosure process, whether judicial or non-judicial, move for a foreclosure judgment or order of sale, or execute a foreclosure- related eviction or foreclosure sale for a 60-day period, beginning March 18, 2020.

This provision was subsequently extended through June 30, 2021.

At December 31, 2020, residential mortgage loans totaling $ 602,000 were in the process of foreclosure, $ 518,000 million of which were acquired loans related to FDIC-assisted transactions.

This provision was subsequently extended through July 31, 2021.

At December 31, 2020, residential mortgage loans totaling $ 602,000 were in the process of foreclosure, $ 518,000 of which were acquired loans related to FDIC-assisted transactions.

Expenses applicable to other real estate owned and repossessions included the following:

4 unchanged sentences

Operating expenses, net of rental income

Six Months Ended

(In Thousands)

Net gains on sales of other real estate owned and repossessions

Valuation write-downs

Operating expenses, net of rental income

PREMISES AND EQUIPMENT

9 unchanged sentences

The amount of the right of use asset and corresponding lease liability will fluctuate based on the Company’s lease terminations, new leases and lease modifications and renewals.

As of March 31, 2021, the lease right of use asset value was $ 8.3 million and the corresponding lease liability was $ 8.5 million.

As of June 30, 2021, the lease right of use asset value was $ 8.2 million and the corresponding lease liability was $ 8.3 million.

As of December 31, 2020, the lease right of use asset value was $ 8.5 million and the corresponding lease liability was $ 8.7 million.

12 unchanged sentences

The Company’s short-term leases related to offsite ATMs have both fixed and variable lease payment components, based on the number of transactions at the various ATMs.

The variable portion of these lease payments is not material and the total lease expense related to ATMs for the three months ended March 31, 2021 and 2020 was $ 66,000 and $ 62,000 , respectively.

The variable portion of these lease payments is not material and the total lease expense related to ATMs for the three months ended June 30, 2021 and 2020 was $ 86,000 and $ 65,000 , respectively.

The total lease expense related to ATMs for the six months ended June 30, 2021 and 2020, was $ 151,000 and $ 126,000 , respectively.

The calculated amounts of the right of use assets and lease liabilities in the table below are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments.

8 unchanged sentences

At or For the Three Months Ended

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

(In Thousands)

3 unchanged sentences

Statement of Income

Operating lease costs classified as occupancy and equipment expense

(includes short-term lease costs and amortization of right of use asset)

Operating lease costs classified as occupancy and equipment expense (includes short-term lease costs and amortization of right of use asset)

Supplemental Cash Flow Information

1 unchanged sentence

Operating cash flows from operating leases

For the three months ended March 31, 2021 and 2020, lease expense was $ 374,000 and $ 385,000 , respectively.

At March 31, 2021, future expected lease payments for leases with terms exceeding one year were as follows (In Thousands):

Right of use assets obtained in exchange for lease obligations:

Operating leases

At or For the Six Months Ended

June 30, 2021

June 30, 2020

(In Thousands)

Statement of Financial Condition

Operating leases right of use asset

Operating leases liability

Statement of Income

Operating lease costs classified as occupancy and equipment expense (includes short-term lease costs and amortization of right of use asset)

Supplemental Cash Flow Information

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Right of use assets obtained in exchange for lease obligations:

Operating leases

For the three months ended June 30, 2021 and 2020, lease expense was $ 394,000 and $ 400,000 , respectively.

For the six months ended June 30, 2021 and 2020, lease expense was $ 768,000 and $ 785,000 , respectively.

At June 30, 2021, future expected lease payments for leases with terms exceeding one year were as follows (In Thousands):

Future lease payments expected

2 unchanged sentences

The Company does not sublease any of its leased facilities;

however, it does lease to other third parties portions of facilities that it owns.

however, it does lease to other parties portions of facilities that it owns.

In terms of being the lessor in these circumstances, all of these lease agreements are classified as operating leases.

In the three months ended March 31, 2021 and 2020, income recognized from these lessor agreements was $ 291,000 and $ 299,000 , respectively, and was included in occupancy and equipment expense.

In the three months ended June 30, 2021 and 2020, income recognized from these lessor agreements was $ 290,000 and $ 271,000 , respectively, and was included in occupancy and equipment expense.

In the six months ended June 30, 2021 and 2020, income recognized from these lessor agreements was $ 580,000 and $ 570,000 , respectively, and was included in occupancy and equipment expense.

(In Thousands)

9 unchanged sentences

ADVANCES FROM FEDERAL HOME LOAN BANK

At March 31, 2021 and December 31, 2020, there were no outstanding term advances from the Federal Home Loan Bank of Des Moines (FHLBank advances).

There were no overnight funds from the Federal Home Loan Bank of Des Moines as of March 31, 2021 or December 31, 2020.

At June 30, 2021 and December 31, 2020, there were no outstanding term advances from the Federal Home Loan Bank of Des Moines (FHLBank advances).

There were no overnight funds from the Federal Home Loan Bank of Des Moines as of June 30, 2021 or December 31, 2020.

SECURITIES SOLD UNDER REVERSE REPURCHASE AGREEMENTS AND SHORT-TERM BORROWINGS

March 31, 2021

December 31, 2020

(In Thousands)

Notes payable – Community Development Equity Funds

Other interest-bearing liabilities

Securities sold under reverse repurchase agreements

5 unchanged sentences

The following table represents the Company’s securities sold under reverse repurchase agreements, by collateral type and remaining contractual maturity.

March 31, 2021

June 30, 2021

December 31, 2020

9 unchanged sentences

Total debt issuance costs of approximately $ 1.5 million were deferred and are being amortized over the expected life of the notes, which is five years .

On June 30, 2021, the Company announced that it will redeem, on August 15, 2021, all of the Company’s outstanding 5.25 % fixed-to-floating rate subordinated notes due August 15, 2026, with an aggregate principal balance of $ 75 million.

The total redemption price will be 100 % of the aggregate principal balance of the subordinated notes plus accrued and unpaid interest.

On June 10, 2020, the Company completed the public offering and sale of $ 75 .0 million of its subordinated notes.

1 unchanged sentence

The Company may call the notes at par beginning on June 15, 2025, and on any scheduled interest payment date thereafter.

The notes were sold at par, resulting in net

proceeds, after underwriting discounts and commissions, legal, accounting and other professional fees, of approximately $ 73.5 million.

The notes were sold at par, resulting in net proceeds, after underwriting discounts and commissions, legal, accounting and other professional fees, of approximately $ 73.5 million.

Total debt issuance costs of approximately $ 1.5 million were deferred and are being amortized over the expected life of the notes, which is five years .

Amortization of the debt issuance costs during the three months ended March 31, 2021 and 2020, totaled $ 183,000 and $ 110,000 , respectively.

Amortization of the debt issuance costs during the three months ended June 30, 2021 and 2020 of both subordinated notes offerings totaled $ 183,000 and $ 134,000 , respectively.

Amortization of the debt issuance costs during the six months ended June 30, 2021 and 2020 totaled $ 366,000 and $ 242,000 , respectively.

Amortization of the debt issuance costs is included in interest expense on subordinated notes in the consolidated statements of income, resulting in an imputed interest rate of 5.91 %.

At March 31, 2021 and December 31, 2020, subordinated notes are summarized as follows:

March 31, 2021

At June 30, 2021 and December 31, 2020, subordinated notes are summarized as follows:

June 30, 2021

December 31, 2020

3 unchanged sentences

Reconciliations of the Company’s effective tax rates to the statutory corporate tax rates were as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Tax at statutory rate

Nontaxable interest and dividends

Six Months Ended June 30,

Tax at statutory rate

Nontaxable interest and dividends

The Company and its consolidated subsidiaries have not been audited recently by the Internal Revenue Service (IRS).

As a result, federal tax years through December 31, 2016 are now closed.

The Company is currently under State of Missouri income and franchise tax examinations for its 2014 and 2015 tax years.

The Company does not currently expect significant adjustments to its financial statements from these state examinations.

The Company was previously under State of Missouri income and franchise tax examinations for its 2014 and 2015 tax years.

The examinations concluded with one unresolved issue related to the exclusion of certain income in the calculation of Missouri income tax.

The Missouri Department of Revenue denied the Company’s administrative protest regarding the 2014 and 2015 tax years’ examinations.

In June 2021, the Company filed a formal protest with the Missouri Administrative Hearing Commission, which has special jurisdiction to hear tax matters and is similar to a trial court, to continue defending the Company’s rights and associated tax position.

The Company has engaged legal and tax advisors and continues to believe it will ultimately prevail on the issue;

however, if the Company does not prevail, the tax obligation to the State of Missouri could be up to $ 4.0 million.

DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

13 unchanged sentences

Recurring Measurements

The following table presents the fair value measurements of assets recognized in the accompanying statements of financial condition measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fell at March 31, 2021 and December 31, 2020:

Fair value measurements using

2 unchanged sentences

(In Thousands)

March 31, 2021

June 30, 2021

Agency mortgage-backed securities

11 unchanged sentences

Interest rate derivative liability

The following is a description of inputs and valuation methodologies used for assets recorded at fair value on a recurring basis and recognized in the accompanying statements of financial condition at March 31, 2021 and December 31, 2020, as well as the general classification of such assets pursuant to the valuation hierarchy.

There have been no significant changes in the valuation techniques during the three-month period ended March 31, 2021.

The following is a description of inputs and valuation methodologies used for assets recorded at fair value on a recurring basis and recognized in the accompanying statements of financial condition at June 30, 2021 and December 31, 2020, as well as the general classification of such assets pursuant to the valuation hierarchy.

There have been no significant changes in the valuation techniques during the six -month period ended June 30, 2021.

For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

6 unchanged sentences

Additional inputs include indicative values derived from the independent pricing service’s proprietary computerized models.

There were no recurring Level 3 securities at March 31, 2021 or December 31, 2020.

There were no recurring Level 3 securities at June 30, 2021 or December 31, 2020.

Interest Rate Derivatives.

1 unchanged sentence

Nonrecurring Measurements

The following table presents the fair value measurements of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2021 and December 31, 2020:

Fair Value Measurements Using

2 unchanged sentences

(In Thousands)

March 31, 2021

June 30, 2021

Foreclosed assets held for sale

10 unchanged sentences

The Company typically does not have commercial loans held for sale.

At March 31, 2021 and December 31, 2020, the aggregate fair value of mortgage loans held for sale exceeded their cost.

At June 30, 2021 and December 31, 2020, the aggregate fair value of mortgage loans held for sale exceeded their cost.

Accordingly, no mortgage loans held for sale were marked down and reported at fair value.

19 unchanged sentences

Foreclosed assets held for sale are classified within Level 3 of the fair value hierarchy.

The foreclosed assets represented in the table above have been re-measured during the three months ended March 31, 2021 or the year ended December 31, 2020, subsequent to their initial transfer to foreclosed assets.

The foreclosed assets represented in the table above have been re-measured during the six months ended June 30, 2021 or the year ended December 31, 2020, subsequent to their initial transfer to foreclosed assets.

Fair Value of Financial Instruments

24 unchanged sentences

Fair value is the estimated amount at which financial assets or liabilities could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Because no market exists for certain of these financial instruments and because management does not intend to sell these financial instruments, the

Company does not know whether the fair values shown below represent values at which the respective financial instruments could be sold individually or in the aggregate.

March 31, 2021

Because no market exists for certain of these financial instruments and because management does not intend to sell these financial instruments, the Company does not know whether the fair values shown below represent values at which the respective financial instruments could be sold individually or in the aggregate.

June 30, 2021

December 31, 2020

33 unchanged sentences

Five of the seven acquired loans with interest rate swaps have paid off.

The aggregate notional amount of the two remaining Valley swaps was $ 559,000 at March 31, 2021.

At March 31, 2021, excluding the Valley Bank swaps, the Company had 18 interest rate swaps totaling $ 139.3 million in notional amount with commercial customers, and 18 interest rate swaps with the same aggregate notional

amount with third parties related to its program.

The aggregate notional amount of the two remaining Valley swaps was $ 534,000 and $ 584,000 at June 30, 2021 and December 31, 2020, respectively.

At June 30, 2021, excluding the Valley Bank swaps, the Company had 14 interest rate swaps totaling $ 124.7 million in notional amount with commercial customers, and 14 interest rate swaps with the same aggregate notional amount with third parties related to its program.

In addition, the Company has four participation loans purchased totaling $ 27.5 million, in which the lead institution has an interest rate swap with its customer and the economics of the counterparty swap are passed along to the Company through the loan participation.

At December 31, 2020, excluding the Valley Bank swaps, the Company had 19 interest rate swaps totaling $ 142.8 million in notional amount with commercial customers, and 19 interest rate swaps with the same notional amount with third parties related to its program.

During the three months ended March 31, 2021 and 2020, the Company recognized net gains of $ 474,000 and net losses of $ 407,000 , respectively, in noninterest income related to changes in the fair value of these swaps.

During the three months ended June 30, 2021, the Company recognized a net loss of $ 179,000 , compared to net losses of $ 106,000 during the three months ended June 30, 2020, in noninterest income related to changes in the fair value of these swaps.

During the six months ended June 30, 2021, the Company recognized a net gain of $ 295,000 , compared to net losses of $ 514,000 during the six months ended June 30, 2020, in noninterest income related to changes in the fair value of these swaps.

Cash Flow Hedges

6 unchanged sentences

If USD-LIBOR exceeded the fixed rate of interest in future periods, the Company was required to pay net settlements to the counterparty and recorded those net payments as a reduction of interest income on loans.

The Company recorded loan interest income of $ 2.0 million and $ 1.6 million on this interest rate swap during the three months ended March 31, 2021 and 2020, respectively.

The Company recorded loan interest income of $ 2.0 million and $ 2.0 million on this interest rate swap during the three months ended June 30, 2021 and 2020, respectively.

The Company recorded loan interest income of $ 4.0 million and $ 3.6 million on this interest rate swap during the six months ended June 30, 2021 and 2020, respectively.

The effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affected earnings.

Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

During each of the three months ended March 31, 2021 and 2020, the Company recognized no noninterest income related to changes in the fair value of this derivative.

During each of the three and six months ended June 30, 2021 and 2020, the Company recognized no noninterest income related to changes in the fair value of this derivative.

On March 2, 2020, the Company and its swap counterparty mutually agreed to terminate the swap, effective on that date.

21 unchanged sentences

Recognized in AOCI

Three Months Ended March 31,

Three Months Ended June 30,

Cash Flow Hedges

1 unchanged sentence

Interest rate swap, net of income taxes

T he following table presents the effect of cash flow hedge accounting on the statements of income:

Three Months Ended March 31,

Amount of Gain (Loss)

Recognized in AOCI

Six Months Ended June 30,

Cash Flow Hedges

(In Thousands)

Interest rate swap, net of income taxes

The following table presents the effect of cash flow hedge accounting on the statements of income:

Three Months Ended June 30,

Cash Flow Hedges

(In Thousands)

Interest rate swap

Six Months Ended June 30,

Cash Flow Hedges

(In Thousands)

Interest rate swap

Agreements with Derivative Counterparties

3 unchanged sentences

Similarly, the Company could be required to settle its obligations under certain of its agreements if certain regulatory events occurred, such as the issuance of a formal directive, or if the Company’s credit rating is downgraded below a specified level.

At March 31, 2021, the termination value of derivatives with our derivative dealer counterparties (related to loan level swaps with commercial lending customers) in an overall net asset position, which included accrued interest but excluded any adjustment for nonperformance risk, related to these agreements was $ 375,000 .

At June 30, 2021, the termination value of derivatives with our derivative dealer counterparties (related to loan level swaps with commercial lending customers) in an overall net liability position, which included accrued interest but excluded any adjustment for nonperformance risk, related to these agreements was $ 1.3 million.

The Company has minimum collateral posting thresholds with its derivative dealer counterparties.

At March 31, 2021, the Company’s activity with one of its derivative counterparties met the level at which the minimum collateral posting thresholds take effect (collateral to be given by the Company) and the Company had posted collateral totaling $ 1.5 million to the derivative counterparties to satisfy the loan level agreements.

At March 31, 2021, the Company’s activity with one of its derivative counterparties met the level at which the minimum collateral posting thresholds take effect (collateral to be received by the Company) and the derivative counterparties had posted collateral of $ 1.4 million to the Company to satisfy the loan level agreements.

If the Company had breached any of these provisions at March 31, 2021 or December 31, 2020, it could have been required to settle its obligations under the agreements at the termination value.

At June 30, 2021, the Company’s activity with two of its derivative counterparties met the level at which the minimum collateral posting thresholds take effect (collateral to be given by the Company) and the Company had posted collateral totaling $ 1.5 million to the derivative counterparties to satisfy the loan level agreements.

At December 31, 2020, the termination value of derivatives with our derivative dealer counterparties (related to loan level swaps with commercial lending customers) in a net liability position, which included accrued interest but excluded any adjustment for nonperformance risk, related to these agreements was $ 391,000 .

Additionally, the Company’s activity with two of its derivative counterparties met the level at which the minimum collateral posting thresholds take effect (collateral to be given by the Company) and the Company had posted collateral of $ 5.3 million to the derivative counterparties to satisfy the loan level agreements.

If the Company had breached any of these provisions at June 30, 2021 or December 31, 2020, it could have been required to settle its obligations under the agreements at the termination value.

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

What changed 10-Q

Item 1. Financial Statements