What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-06 compared with 2024-08-07 · 194 added, 185 removed, 1113 unchanged (25% of the section changed)

4 unchanged sentences

(In Thousands, Except Per Share Data)

SEPTEMBER 30,

Interest-bearing deposits in other financial institutions

3 unchanged sentences

Mortgage loans held for sale

Loans receivable, net of allowance for credit losses of $ 65,255 – June 2024;

Loans receivable, net of allowance for credit losses of $ 64,915 – September 2024;

$ 64,670 – December 2023

20 unchanged sentences

authorized 1,000,000 shares;

issued and outstanding June 2024 and December 2023 - - 0 - shares

issued and outstanding September 2024 and December 2023 - - 0 - shares

Common stock, $ .01 par value;

authorized 20,000,000 shares;

issued and outstanding June 2024 – 11,582,606 shares;

issued and outstanding September 2024 – 11,680,968 shares;

December 2023 – 11,804,430 shares

10 unchanged sentences

THREE MONTHS ENDED

SEPTEMBER 30,

INTEREST INCOME

9 unchanged sentences

PROVISION FOR CREDIT LOSSES ON LOANS

PROVISION (CREDIT) FOR UNFUNDED COMMITMENTS

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

CREDIT FOR UNFUNDED COMMITMENTS

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES ON LOANS AND CREDIT FOR UNFUNDED COMMITMENTS

NON-INTEREST INCOME

10 unchanged sentences

Legal, audit and other professional fees

Expense on other real estate and repossessions

Expense (income) on other real estate and repossessions

Acquired intangible asset amortization

11 unchanged sentences

(In Thousands, Except Per Share Data)

SIX MONTHS ENDED

NINE MONTHS ENDED

SEPTEMBER 30,

INTEREST INCOME

9 unchanged sentences

PROVISION FOR CREDIT LOSSES ON LOANS

PROVISION (CREDIT) FOR UNFUNDED COMMITMENTS

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

CREDIT FOR UNFUNDED COMMITMENTS

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES ON LOANS AND CREDIT FOR UNFUNDED COMMITMENTS

NON-INTEREST INCOME

3 unchanged sentences

Late charges and fees on loans

Gain (loss) on derivative interest rate products

Loss on derivative interest rate products

TOTAL NON-INTEREST INCOME

4 unchanged sentences

Legal, audit and other professional fees

Expense on other real estate and repossessions

Expense (income) on other real estate and repossessions

Acquired intangible asset amortization

12 unchanged sentences

THREE MONTHS ENDED

SEPTEMBER 30,

Unrealized appreciation (depreciation) on available-for-sale securities, net of taxes (credit) of $ 5,913 and $( 5,420 ), for 2024 and 2023, respectively

2 unchanged sentences

Change in value of active cash flow hedges, net of taxes (credit) of $ 3,123 and $( 832 ) for 2024 and 2023, respectively

Comprehensive Income

SIX MONTHS ENDED

Comprehensive Income (Loss)

NINE MONTHS ENDED

SEPTEMBER 30,

Unrealized appreciation (depreciation) on available-for-sale securities, net of taxes (credit) of $ 3,699 and $( 5,327 ), for 2024 and 2023, respectively

8 unchanged sentences

(In Thousands, Except Per Share Data)

THREE MONTHS ENDED JUNE 30, 2024

THREE MONTHS ENDED SEPTEMBER 30, 2024

Comprehensive

1 unchanged sentence

Income (Loss)

Balance, March 31, 2024

Balance, June 30, 2024

Stock issued under Stock Option Plan

2 unchanged sentences

Change in unrealized loss on held-to-maturity securities

Change in unrealized loss on available-for-sale securities

Purchase of the Company’s common stock

Change in unrealized gain on available-for-sale securities

Repurchase of the Company’s common stock

Reclassification of treasury stock per Maryland law

Balance, June 30, 2024

THREE MONTHS ENDED JUNE 30, 2023

Balance, September 30, 2024

THREE MONTHS ENDED SEPTEMBER 30, 2023

Comprehensive

1 unchanged sentence

Income (Loss)

Balance, March 31, 2023

Balance, June 30, 2023

Stock issued under Stock Option Plan

3 unchanged sentences

Change in unrealized loss on available-for-sale securities

Purchase of the Company’s common stock

Repurchase of the Company’s common stock

Reclassification of treasury stock per Maryland law

Balance, June 30, 2023

Balance, September 30, 2023

See Notes to Consolidated Financial Statements

3 unchanged sentences

(In Thousands, Except Per Share Data)

SIX MONTHS ENDED JUNE 30, 2024

NINE MONTHS ENDED SEPTEMBER 30, 2024

Comprehensive

7 unchanged sentences

Change in unrealized loss on held-to-maturity securities

Change in unrealized loss on available-for-sale securities

Purchase of the Company’s common stock

Change in unrealized gain on available-for-sale securities

Repurchase of the Company’s common stock

Reclassification of treasury stock per Maryland law

Balance, June 30, 2024

SIX MONTHS ENDED JUNE 30, 2023

Balance, September 30, 2024

NINE MONTHS ENDED SEPTEMBER 30, 2023

Comprehensive

6 unchanged sentences

Change in unrealized loss on held-to-maturity securities

Change in unrealized gain on available-for-sale securities

Purchase of the Company’s common stock

Change in unrealized loss on available-for-sale securities

Repurchase of the Company’s common stock

Reclassification of treasury stock per Maryland law

Balance, June 30, 2023

Balance, September 30, 2023

See Notes to Consolidated Financial Statements

3 unchanged sentences

(In Thousands, Except Per Share Data)

SIX MONTHS ENDED

NINE MONTHS ENDED

SEPTEMBER 30,

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

Provision for credit losses on loans

Provision (credit) for unfunded commitments

Credit for unfunded commitments

Net gain on loan sales

31 unchanged sentences

Stock options exercised

Net cash provided by (used in) financing activities

Net cash provided by financing activities

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

10 unchanged sentences

Those adjustments consist only of normal recurring adjustments.

Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the full year.

Operating results for the three and nine months ended September 30, 2024 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, 2023, has been derived from the audited consolidated statement of financial condition of the Company as of that date.

6 unchanged sentences

No other financial statements or notes thereto were impacted by these corrections.

The Company has corrected its Consolidated Statements of Cash Flows for the six months ended June 30, 2023 within this Quarterly Report on Form 10-Q for an error in classification within the operating activities section of the statements of cash flows regarding amortization of terminated hedging transactions and for an error in classification regarding investments in tax credit partnerships between the operating activities and investing activities sections of the statements of cash flows.

The Company has corrected its Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 within this Quarterly Report on Form 10-Q for an error in classification within the operating activities section of the statements of cash flows regarding amortization of terminated hedging transactions and for an error in classification regarding investments in tax credit partnerships between the operating activities and investing activities sections of the statements of cash flows.

For the item related to the terminated hedging transactions, the Company is now including the amortization from accumulated other comprehensive income and related deferred taxes recognized in interest income as an item not providing cash in accretion of deferred income, premiums, discounts and other.

2 unchanged sentences

This was previously included in net changes in prepaid expenses and other assets in the operating activities section.

The Company assessed the materiality of this change in presentation on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin No.

The Company assessed the materiality of these changes in presentation on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin No.

99, “Materiality,” (ASC Topic 250, Accounting Changes and Error Corrections ).

1 unchanged sentence

The corrections had no impact on the Consolidated Statements of Financial Condition, Consolidated Statements of Income, Consolidated Statements of Comprehensive Income or Consolidated Statements of Stockholders’ Equity, or notes to these financial statements, for any previously presented interim or annual financial statements.

Accordingly, the Company corrected the previously reported immaterial errors for the six months ended June 30, 2023 in this Quarterly Report on Form 10-Q.

Accordingly, the Company corrected the previously reported immaterial errors for the nine months ended September 30, 2023 in this Quarterly Report on Form 10-Q.

A summary of corrections reflecting the prior period impacts to the Company’s Consolidated Statements of Cash Flows are shown below (in thousands of dollars):

For the Six Months Ended June 30, 2023

For the Nine Months Ended September 30, 2023

As Previously

64 unchanged sentences

EARNINGS PER SHARE

Three Months Ended June 30,

Three Months Ended September 30,

(In Thousands, Except Per Share Data)

5 unchanged sentences

Per common share amount

Six Months Ended June 30,

Nine Months Ended September 30,

(In Thousands, Except Per Share Data)

5 unchanged sentences

Per common share amount

Options outstanding at June 30, 2024 and 2023, to purchase 741,708 and 767,479 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 price of the common stock for the three months ended June 30, 2024 and 2023, respectively.

Options outstanding at June 30, 2024 and 2023, to purchase 741,708 and 675,118 shares of common stock, respectively, were not included in the computation of diluted earnings per common share for each of the six month periods because the exercise prices of such options were greater than the average market price of the common stock for the six months ended June 30, 2024 and 2023, respectively.

Options outstanding at September 30, 2024 and 2023, to purchase 712,403 and 758,129 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 price of the common stock for the three months ended September 30, 2024 and 2023, respectively.

Options outstanding at September 30, 2024 and 2023, to purchase 712,403 and 675,768 shares of common stock, respectively, were not included in the computation of diluted earnings per common share for each of the nine month periods because the exercise prices of such options were greater than the average market price of the common stock for the nine months ended September 30, 2024 and 2023, respectively.

INVESTMENT SECURITIES

10 unchanged sentences

The amortized cost and fair values of securities were as follows:

June 30, 2024

September 30, 2024

(In Thousands)

4 unchanged sentences

Small Business Administration securities

June 30, 2024

September 30, 2024

(In Thousands)

16 unchanged sentences

States and political subdivisions

The amortized cost and fair value of available-for-sale and held-to-maturity securities at June 30, 2024, by contractual maturity, are shown below.

The amortized cost and fair value of available-for-sale and held-to-maturity securities at September 30, 2024, 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.

12 unchanged sentences

Certain available-for-sale investments in debt securities are reported in the financial statements at an amount less than their amortized cost.

Total fair value of these investments at June 30, 2024 and December 31, 2023, was approximately $ 533.5 million and $ 456.9 million, respectively, which was approximately 97.2 % and 95.5 % of the Company’s total available-for-sale investment portfolio at those dates.

Total fair value of these investments at September 30, 2024 and December 31, 2023, was approximately $ 432.9 million and $ 456.9 million, respectively, which was approximately 76.6 % and 95.5 % of the Company’s total available-for-sale investment portfolio at those dates.

A high percentage of the unrealized losses were related to the Company’s mortgage-backed securities, collateralized mortgage obligations and Small Business Administration (SBA) securities, which are issued and guaranteed by U.S.

1 unchanged sentence

The Company’s state and political subdivisions securities are investments in insured fixed rate municipal bonds for which the issuers continue to make timely principal and interest payments under the contractual terms of the securities.

Held-to-maturity investments in debt securities are reported in the financial statements at their amortized carrying value at

June 30, 2024 and December 31, 2023, which was $191.2 million and $ 195.0 million, respectively.

Total fair value of these investments at June 30, 2024 and December 31, 2023 was approximately $ 165.2 million and $ 171.2 million, respectively.

Held-to-maturity investments in debt securities are reported in the financial statements at their amortized carrying value at September 30, 2024 and December 31, 2023, which was $ 189.3 million and $ 195.0 million, respectively.

Total fair value of these investments at September 30, 2024 and December 31, 2023 was approximately $ 170.0 million and $ 171.2 million, respectively.

Held-to-maturity investment securities are evaluated for potential credit losses under ASU 2016-13.

The Company continually assesses its liquidity sources, both on-balance sheet and off-balance sheet, and believes that at June 30, 2024, it had ample liquidity sources to fund its ongoing operations.

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings of issuers, management believes the declines in fair value for these available-for-sale debt securities are not credit-related.

The following table shows the Company’s available-for-sale and held-to-maturity securities’ gross unrealized losses and fair values, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2024 and December 31, 2023:

June 30, 2024

The Company continually assesses its liquidity sources, both on-balance sheet and off-balance sheet, and believes that at September 30, 2024, it had ample liquidity sources to fund its ongoing operations without selling investment securities in its portfolio.

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings of issuers, management believes the declines in fair value for the Company’s available-for-sale debt securities are not credit-related.

September 30, 2024

Less than 12 Months

25 unchanged sentences

States and political subdivisions securities

There were no sales of available-for-sale securities during the three or six months ended June 30, 2024 and 2023, respectively.

There were no sales of available-for-sale securities during the three or nine months ended September 30, 2024 and 2023, respectively.

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 as of June 30, 2024 were issued by U.S.

All of the mortgage-backed, collateralized mortgage, and SBA securities held by the Company as of September 30, 2024 were issued by U.S.

government-sponsored entities and agencies.

28 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 June 30, 2024 and December 31, 2023 were as follows:

Classes of loans at September 30, 2024 and December 31, 2023 were as follows:

September 30,

(In Thousands)

16 unchanged sentences

The following tables present the classes of loans by aging as of the dates indicated.

June 30, 2024

September 30, 2024

> 90 Days Past

36 unchanged sentences

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

Non-accruing loans are summarized as follows:

Nonaccruing loans are summarized as follows:

September 30,

(In Thousands)

12 unchanged sentences

Home equity lines of credit

Total non-accruing loans

No interest income was recorded on nonaccrual loans for the three or six months ended June 30, 2024 and 2023, respectively.

Nonaccrual loans for which there is no related allowance for credit losses as of June 30, 2024 and December 31, 2023, had an amortized cost of $ 2.4 million and $ 792,000 , respectively.

Total nonaccruing loans

No interest income was recorded on nonaccrual loans for the three or nine months ended September 30, 2024 and 2023, respectively.

Nonaccrual loans for which there is no related allowance for credit losses as of September 30, 2024 and December 31, 2023, had an amortized cost of $ 6.7 million and $ 792,000 , respectively.

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

1 unchanged sentence

Collateral-dependent loans are identified primarily by a classified risk rating with 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 tables present the activity in the allowance for credit losses by portfolio segment for the three and six months ended June 30, 2024 and 2023.

During the three months ended June 30, 2024, the Company did not record a provision expense on its portfolio of outstanding loans and during the six months ended June 30, 2024, recorded provision expense of $ 500,000 on its portfolio of outstanding loans.

During the three months ended June 30, 2023, the Company did not record a provision expense on its portfolio of outstanding loans and during the six months ended June 30, 2023, recorded provision expense of $ 1.5 million on its portfolio of outstanding loans.

The following tables present the activity in the allowance for credit losses by portfolio segment for the three and nine months ended September 30, 2024 and 2023.

During the three months ended September 30, 2024, the Company recorded provision expense of $ 1.2 million on its portfolio of outstanding loans and during the nine months ended September 30, 2024, recorded provision expense of $ 1.7 million on its portfolio of outstanding loans.

During the three months ended September 30, 2023, the Company did no t record a provision expense on its portfolio of outstanding loans and during the nine months ended September 30, 2023, recorded provision expense of $ 1.5 million on its portfolio of outstanding loans.

One- to Four-

2 unchanged sentences

Allowance for credit losses

Balance, March 31, 2023

Balance, July 1, 2023

Provision (credit) charged to expense

Losses charged off

Balance, June 30, 2023

Balance, September 30, 2023

Allowance for credit losses

Balance, March 31, 2024

Balance, July 1, 2024

Provision (credit) charged to expense

Losses charged off

Balance, June 30, 2024

Balance, September 30, 2024

One- to Four-

5 unchanged sentences

Losses charged off

Balance, June 30, 2023

Balance, September 30, 2023

Allowance for credit losses

2 unchanged sentences

Losses charged off

Balance, June 30, 2024

The following tables present the activity in the allowance for unfunded commitments by portfolio segment for the three and six months ended June 30, 2024 and 2023.

The provision for losses on unfunded commitments for the three months ended June 30, 2024 was a credit (negative expense) of $ 607,000 , compared to a credit (negative expense) of $ 1.6 million for the three months ended June 30, 2023.

The provision for losses on unfunded commitments for the six months ended June 30, 2024 was a credit (negative expense) of $ 477,000 , compared to a credit (negative expense) of $ 2.4 million for the six months ended June 30, 2023.

Balance, September 30, 2024

The following tables present the activity in the allowance for unfunded commitments by portfolio segment for the three and nine months ended September 30, 2024 and 2023.

The provision for losses on unfunded commitments for the three months ended September 30, 2024 was a credit (negative expense) of $ 63,000 , compared to a credit (negative expense) of $ 1.2 million for the three months ended September 30, 2023.

The provision for losses on unfunded commitments for the nine months ended September 30, 2024 was a credit (negative expense) of $ 540,000 , compared to a credit (negative expense) of $ 3.6 million for the nine months ended September 30, 2023.

One- to Four-

2 unchanged sentences

Allowance for unfunded commitments

Balance, March 31, 2023

Balance, July 1, 2023

Provision (credit) charged to expense

Balance, June 30, 2023

Balance, September 30, 2023

Allowance for unfunded commitments

Balance, March 31, 2024

Balance, July 1, 2024

Provision (credit) charged to expense

Balance, June 30, 2024

Balance, September 30, 2024

One- to Four-

4 unchanged sentences

Provision (credit) charged to expense

Balance, June 30, 2023

Balance, September 30, 2023

Allowance for unfunded commitments

1 unchanged sentence

Provision (credit) charged to expense

Balance, June 30, 2024

Balance, September 30, 2024

The portfolio segments used in the preceding tables correspond to the loan classes used in all other tables in Note 6 as follows:

6 unchanged sentences

The following table presents the amortized cost basis of collateral-dependent loans by class of loans:

June 30, 2024

September 30, 2024

December 31, 2023

24 unchanged sentences

For modifications to loans made to borrowers experiencing financial difficulty that are adversely classified, the Company determines the allowance for credit losses on an individual basis, using the same process that it utilizes for other adversely classified loans.

If collection efforts have begun and the modified loan is subsequently deemed collateral-dependent, the loan is placed on non-accrual status and the allowance for credit losses is determined based on an individual evaluation.

If collection efforts have begun and the modified loan is subsequently deemed collateral-dependent, the loan is placed on nonaccrual status and the allowance for credit losses is determined based on an individual evaluation.

If necessary, the loan is charged down to fair market value less estimated sales costs.

The following tables show, as of the dates indicated, the composition of modifications made to loans to borrowers experiencing financial difficulty, by loan class and type of concession granted.

Each of the types of concessions granted comprised 1.0 % or less of their respective loan classes at June 30, 2024.

During the three and six months ended June 30, 2024, principal forgiveness of $ 241,000 and $ 255,000 , respectively, was completed on consumer loans and a land development loan.

During the three and six months ended June 30, 2023, principal forgiveness of $ 6,000 and $ 39,000 , respectively, was completed on consumer loans.

Amortized Cost Basis at June 30, 2024

Each of the types of concessions granted comprised 1.0 % or less of their respective loan classes at September 30, 2024.

During the three and nine months ended September 30, 2024, principal forgiveness of $ 20,000 and $ 275,000 , respectively, was completed on consumer loans and a land development loan.

During the three and nine months ended September 30, 2023, principal forgiveness of $ 13,000 and $ 52,000 , respectively, was completed on consumer loans.

Amortized Cost Basis at September 30, 2024

Interest Rate

16 unchanged sentences

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

The following tables depict the performance of loans (under modified terms) at June 30, 2024 and at December 31, 2023, respectively:

June 30, 2024

The following tables depict the performance of loans (under modified terms) at September 30, 2024 and at December 31, 2023, respectively:

September 30, 2024

(In Thousands)

13 unchanged sentences

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.

The analysis of the borrower’s ability to repay considers specific

information, including but not limited to current financial information, historical payment experience, industry information and collateral levels and types.

The analysis of the borrower’s ability to repay considers specific information, including but not limited to current financial information, historical payment experience, industry information and collateral levels and types.

A risk rating is assigned at loan origination and then monitored throughout the contractual term for possible risk rating changes.

6 unchanged sentences

Margins of debt service coverage may be narrow, historical patterns of financial performance may be erratic, collateral margins may be diminished or the borrower may be a new and/or thinly capitalized company.

Some management weakness may also exist, the borrower may have somewhat limited access to other financial institutions, and that access may diminish in difficult economic times.

Some management weakness on the part of the borrower may also exist, the borrower may have somewhat limited access to other financial institutions, and that access may diminish in difficult economic times.

Special Mention loans have weaknesses that deserve management’s close attention.

2 unchanged sentences

The Substandard rating is applied to loans where the borrower exhibits well-defined weaknesses that jeopardize its continued performance and are of a severity that the distinct possibility of default exists.

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

Loans are placed on “nonaccrual” 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 characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

5 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 category and risk rating separated by origination and loan class as of June 30, 2024 and December 31, 2023.

The following tables present a summary of loans by category and risk rating separated by origination and loan class as of September 30, 2024 and December 31, 2023.

Term Loans by Origination Year

June 30, 2024

September 30, 2024

(In Thousands)

100 unchanged sentences

Investments in Affordable Housing Partnerships

From time to time, the Company has invested in certain limited partnerships that were formed to develop and operate apartments and single-family houses designed as high-quality affordable housing for lower income tenants throughout Missouri and contiguous states.

At June 30, 2024, the Company had 22 such investments, with a net carrying value of $ 103.1 million.

At September 30, 2024, the Company had 23 such investments, with a net carrying value of $ 101.2 million.

At December 31, 2023, the Company had 22 such investments, with a net carrying value of $ 66.3 million.

2 unchanged sentences

If the partnerships cease to qualify during the compliance period, the credits may be denied for any period in which the projects are not in compliance and a portion of the credits previously taken may be subject to recapture with interest.

The remaining federal affordable housing tax credits to be utilized through 2034 were $ 111.7 million as of June 30, 2024, assuming no tax credit recapture events occur and all projects currently under construction are completed as planned.

The remaining federal affordable housing tax credits to be utilized through 2034 were $ 108.9 million as of September 30, 2024, assuming no tax credit recapture events occur and all projects currently under construction are completed as planned.

Amortization of the investments in partnerships is expected to be approximately $ 98.2 million, assuming all projects currently under construction are completed and funded as planned.

The Company’s usage of federal affordable housing tax credits approximated $ 2.8 million and $ 1.9 million during the three months ended June 30, 2024 and June 30, 2023, respectively.

Investment amortization was $ 2.5 million for the three months ended June 30, 2024, compared to $ 1.7 million for the three months ended June 30, 2023.

The Company’s usage of federal affordable housing tax credits approximated $ 5.6 million and $ 3.8 million during the six months ended June 30, 2024 and June 30, 2023, respectively.

Investment amortization was $ 5.1 million for the six months ended June 30, 2024, compared to $ 3.5 million for the six months ended June 30, 2023.

The Company’s usage of federal affordable housing tax credits approximated $ 2.8 million and $ 1.9 million during the three months ended September 30, 2024 and September 30, 2023, respectively.

Investment amortization was $ 2.5 million for the three months ended September 30, 2024, compared to $ 1.7 million for the three months ended September 30, 2023.

The Company’s usage of federal affordable housing tax credits approximated $ 8.4 million and $ 5.7 million during the nine months ended September 30, 2024 and September 30, 2023, respectively.

Investment amortization was $ 7.6 million for the nine months ended September 30, 2024, compared to $ 5.2 million for the nine months ended September 30, 2023.

Investments in Community Development Entities

From time to time, the Company has invested in certain limited partnerships that were formed to develop and operate business and real estate projects located in low-income communities.

At June 30, 2024, the Company had one such investment, with a net carrying value of $ 249,000 .

At September 30, 2024, the Company had one such investment, with a net carrying value of $ 224,000 .

At December 31, 2023, the Company had one such investment, with a net carrying value of $ 361,000 .

5 unchanged sentences

The investments in the Community Development Entities cannot be redeemed before the end of the seven-year period.

The Company’s usage of federal New Market Tax Credits approximated $ 30,000 and $ 25,000 during the three months ended June 30, 2024 and 2023, respectively.

Investment amortization amounted to $ 25,000 and $ 21,000 for the three months ended June 30, 2024 and 2023, respectively.

The Company’s usage of federal New Market Tax Credits approximated $ 60,000 and $ 50,000 during the six months ended June 30, 2024 and 2023, respectively.

Investment amortization amounted to $ 25,000 and $ 42,000 for the six months ended June 30, 2024 and 2023, respectively.

The Company’s usage of federal New Market Tax Credits approximated $ 30,000 and $ 25,000 during the three months ended September 30, 2024 and 2023, respectively.

Investment amortization amounted to $ 25,000 and $ 21,000 for the three months ended September 30, 2024 and 2023, respectively.

The Company’s usage of federal New Market Tax Credits approximated $ 90,000 and $ 75,000 during the nine months ended September 30, 2024 and 2023, respectively.

Investment amortization amounted to $ 50,000 and $ 62,000 for the nine months ended September 30, 2024 and 2023, respectively.

Upon adoption of ASU 2023-02 on January 1, 2024, the Company recorded a reduction in the investment in these New Market Tax Credits, with a corresponding reduction in retained earnings, of $ 62,000 .

1 unchanged sentence

From time to time, the Company has invested in certain limited partnerships that were formed to provide certain federal rehabilitation/historic tax credits.

At June 30, 2024, the Company had one such investment, with a net carrying value of $ 127,000 .

At September 30, 2024, the Company had one such investment, with a net carrying value of $ 64,000 .

At December 31, 2023, the Company had one such investment, with a net carrying value of $ 415,000 .

Under prior tax law, the Company utilized these credits in their entirety in the year the project was placed in service and the impact to the Consolidated Statements of Income has not been material.

Under prior tax law, the Company utilized these credits in their entirety in the year the project was placed in service and the impact to the Consolidated Statements of Income was not material.

Currently, such partnerships provide federal rehabilitation/historic tax credits over a five-year credit allowance period.

The Company’s usage of certain federal rehabilitation/historic tax credits approximated $ 76,000 and $ 64,000 during the three months ended June 30, 2024 and 2023, respectively.

Investment amortization amounted to $ 64,000 and $ 53,000 for the three months ended June 30, 2024 and 2023, respectively.

The Company’s usage of certain federal rehabilitation/historic tax credits approximated $ 152,000 and $ 129,000 during the six months ended June 30, 2024 and 2023, respectively.

Investment amortization amounted to $ 127,000 and $ 107,000 for the six months ended June 30, 2024 and 2023, respectively.

The Company’s usage of certain federal rehabilitation/historic tax credits approximated $ 76,000 and $ 64,000 during the three months ended September 30, 2024 and 2023, respectively.

Investment amortization amounted to $ 64,000 and $ 53,000 for the three months ended September 30, 2024 and 2023, respectively.

The Company’s usage of certain federal rehabilitation/historic tax credits approximated $ 228,000 and $ 193,000 during the nine months ended September 30, 2024 and 2023, respectively.

Investment amortization amounted to $ 191,000 and $ 160,000 for the nine months ended September 30, 2024 and 2023, respectively.

Upon adoption of ASU 2023-02 on January 1, 2024, the Company recorded a reduction in the investment in these Rehabilitation/Historic Tax Credits, with a corresponding reduction in retained earnings, of $ 161,000 .

4 unchanged sentences

Major classifications of other real estate owned were as follows:

September 30,

(In Thousands)

11 unchanged sentences

Other real estate owned and repossessions

At June 30, 2024 and December 31, 2023, residential mortgage loans totaling $ 32,000 and $- 0 -, respectively, were in the process of foreclosure.

At September 30, 2024 and December 31, 2023, no residential mortgage loans were in the process of foreclosure.

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

Three Months Ended

September 30,

(In Thousands)

2 unchanged sentences

Operating expenses, net of rental income

Six Months Ended

Nine Months Ended

September 30,

(In Thousands)

4 unchanged sentences

Major classifications of premises and equipment, stated at cost, were as follows:

September 30,

(In Thousands)

6 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 June 30, 2024, the lease right of use asset value was $ 6.9 million and the corresponding lease liability was $ 7.1 million.

As of September 30, 2024, the lease right of use asset value was $6.6 million and the corresponding lease liability was $ 6.9 million.

As of December 31, 2023, the lease right of use asset value was $ 6.6 million and the corresponding lease liability was $ 6.9 million.

At June 30, 2024, expected lease terms ranged from 3.1 years to 14.4 years with a weighted-average lease term of 7.2 years.

The weighted-average discount rate at June 30, 2024 was 4.02 %.

For the three months ended June 30, 2024 and 2023, lease expense was $ 413,000 and $ 433,000 , respectively.

For the six months ended June 30, 2024 and 2023, lease expense was $ 895,000 and $ 843,000 , respectively.

At September 30, 2024, expected lease terms ranged from 2.8 years to 14.2 years with a weighted-average lease term of 7.1 years.

The weighted-average discount rate at September 30, 2024 was 4.03 %.

For the three months ended September 30, 2024 and 2023, lease expense was $ 408,000 and $ 446,000 , respectively.

For the nine months ended September 30, 2024 and 2023, lease expense was $ 1.3 million and $ 1.3 million, respectively.

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.

The total lease expense related to ATMs for the three months ended June 30, 2024 and 2023 was $ 90,000 and $ 78,000 , respectively.

The total lease expense related to ATMs for the six months ended June 30, 2024 and 2023 was $ 171,000 and $ 150,000 , respectively.

The total lease expense related to ATMs for the three months ended September 30, 2024 and 2023 was $ 87,000 and $ 84,000 , respectively.

The total lease expense related to ATMs for the nine months ended September 30, 2024 and 2023 was $ 258,000 and $ 234,000 , respectively.

The Company does not sublease any of its leased facilities;

1 unchanged sentence

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

In the three months ended June 30, 2024 and 2023, income recognized from these lease agreements was $ 339,000 and $ 325,000 , respectively, and was included in occupancy and equipment expense.

In the six months ended June 30, 2024 and 2023, income recognized from these lease agreements was $ 680,000 and $ 649,000 , respectively, and was included in occupancy and equipment expense.

June 30, 2024

In the three months ended September 30, 2024 and 2023, income recognized from these lease agreements was $ 303,000 and $ 326,000 , respectively, and was included in occupancy and equipment expense.

In the nine months ended September 30, 2024 and 2023, income recognized from these lease agreements was $ 984,000 and $ 975,000 , respectively, and was included in occupancy and equipment expense.

September 30, 2024

December 31, 2023

4 unchanged sentences

For the Three Months Ended

June 30, 2024

June 30, 2023

September 30, 2024

September 30, 2023

(In Thousands)

6 unchanged sentences

Operating leases

For the Six Months Ended

June 30, 2024

June 30, 2023

For the Nine Months Ended

September 30, 2024

September 30, 2023

(In Thousands)

6 unchanged sentences

Operating leases

At June 30, 2024, future expected lease payments for leases with terms exceeding one year were as follows (In Thousands):

At September 30, 2024, future expected lease payments for leases with terms exceeding one year were as follows (In Thousands):

Future lease payments expected

2 unchanged sentences

Weighted Average

September 30,

Interest Rate

13 unchanged sentences

The Bank utilizes brokered deposits as an additional funding source.

The aggregate amount of brokered deposits was approximately $ 670.0 million and $ 661.5 million at June 30, 2024 and December 31, 2023, respectively.

At June 30, 2024 and December 31, 2023, brokered deposits included $ 300.0 million of purchased funds through the IntraFi Financial network.

The aggregate amount of brokered deposits was approximately $ 810.4 million and $ 661.5 million at September 30, 2024 and December 31, 2023, respectively.

At September 30, 2024 and December 31, 2023, brokered deposits included $ 300.0 million of purchased funds through the IntraFi Financial network.

These IntraFi Financial deposits have a rate of interest that floats daily with an index of effective federal funds rate plus a spread.

At June 30, 2024, there were brokered deposits totaling $ 185.1 million that had fixed rates of interest but were callable at the Bank’s discretion.

At June 30, 2024, approximately 32 % of the Company’s total deposits were uninsured, when including deposit accounts of consolidated subsidiaries of

the Company and collateralized deposits of unaffiliated entities.

Excluding deposit accounts of the Company’s consolidated subsidiaries, approximately 14 % of the Company’s total deposits were uninsured at June 30, 2024.

At September 30, 2024, there were brokered deposits totaling $ 185.0 million that had fixed rates of interest but were callable at the Bank’s discretion.

At September 30, 2024, approximately 32 % of the Company’s total deposits were uninsured, when including deposit accounts of consolidated subsidiaries of the Company and collateralized deposits of unaffiliated entities.

Excluding deposit accounts of the Company’s consolidated subsidiaries, approximately 14 % of the Company’s total deposits were uninsured at September 30, 2024.

ADVANCES FROM FEDERAL HOME LOAN BANK

At June 30, 2024 and December 31, 2023, there were no outstanding term advances from the Federal Home Loan Bank of Des Moines.

At June 30, 2024 and December 31, 2023, there were outstanding overnight borrowings from the Federal Home Loan Bank of Des Moines, which are included in Note 12 below.

At September 30, 2024 and December 31, 2023, there were no outstanding term advances from the Federal Home Loan Bank of Des Moines.

At September 30, 2024 and December 31, 2023, there were outstanding overnight borrowings from the Federal Home Loan Bank of Des Moines, which are included in Note 12 below.

SECURITIES SOLD UNDER REVERSE REPURCHASE AGREEMENTS AND SHORT-TERM BORROWINGS

September 30,

(In Thousands)

3 unchanged sentences

Overnight borrowings from the Federal Home Loan Bank

Borrowings from the Federal Reserve Bank at June 30, 2024, were part of the Federal Reserve Bank’s Bank Term Funding Program (BTFP).

Short-term borrowings from the Federal Reserve Bank at September 30, 2024, were part of the Federal Reserve Bank’s Bank Term Funding Program (BTFP).

The BTFP borrowing, which matures in January 2025 and has a fixed interest rate of 4.83 %, may be repaid in full or in part without penalty prior to its stated maturity date.

The line is secured primarily by the Bank’s held-to-maturity investment securities, with assets pledged totaling approximately $ 191.3 million as of June 30, 2024.

The line is secured primarily by the Bank’s held-to-maturity investment securities, with assets pledged totaling approximately $ 189.5 million as of September 30, 2024.

The Bank enters into sales of securities under agreements to repurchase (reverse repurchase agreements).

5 unchanged sentences

These securities contractually mature daily.

June 30, 2024

September 30, 2024

December 31, 2023

7 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 .

Amortization of the debt issuance costs during the three months ended June 30, 2024 and 2023, totaled $ 74,000 and $ 75,000 , respectively.

Amortization of the debt issuance costs during the six months ended June 30, 2024 and 2023, totaled $ 148,000 and $ 149,000 , respectively.

Amortization of the debt issuance costs during the three months ended September 30, 2024 and 2023, totaled $ 74,000 and $ 74,000 , respectively.

Amortization of the debt issuance costs during the nine months ended September 30, 2024 and 2023, totaled $ 223,000 and $ 223,000 , 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 June 30, 2024 and December 31, 2023, subordinated notes were as follows:

June 30, 2024

At September 30, 2024 and December 31, 2023, subordinated notes were as follows:

September 30, 2024

December 31, 2023

3 unchanged sentences

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

Three Months Ended June 30,

Three Months Ended September 30,

Tax at statutory rate

Nontaxable interest and dividends

Six Months Ended June 30,

Nine Months Ended September 30,

Tax at statutory rate

2 unchanged sentences

As a result, federal tax years through December 31, 2019 are now closed.

In addition, there are no pending audits by any state jurisdiction at June 30, 2024.

In addition, there are no pending audits by any state jurisdiction at September 30, 2024.

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

12 unchanged sentences

● Other observable inputs (Level 2):

for similar assets, quoted prices for securities in inactive markets and inputs derived principally from or corroborated by observable market data by correlation or other means.

Inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity including quoted prices for similar assets, quoted prices for securities in inactive markets and inputs derived principally from or corroborated by observable market data by correlation or other means.

● Significant unobservable inputs (Level 3):

5 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 June 30, 2024 and December 31, 2023:

Fair value measurements using

2 unchanged sentences

(In Thousands)

June 30, 2024

September 30, 2024

Available-for-sale securities

13 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 June 30, 2024 and December 31, 2023 as well as the general classification of such assets pursuant to the valuation hierarchy.

There were no significant changes in the valuation techniques during the six-month period ended June 30, 2024.

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 September 30, 2024 and December 31, 2023 as well as the general classification of such assets pursuant to the valuation hierarchy.

There were no significant changes in the valuation techniques during the nine-month period ended September 30, 2024.

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

5 unchanged sentences

Inputs used for valuing Level 2 securities include observable data that may include dealer quotes, benchmark yields, market spreads, live trading levels and market consensus prepayment speeds, among other things.

Additional inputs include indicative

values derived from the independent pricing service’s proprietary computerized models.

There were no recurring Level 3 securities at June 30, 2024 or December 31, 2023.

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

There were no recurring Level 3 securities at September 30, 2024 or December 31, 2023.

Interest Rate Derivatives.

1 unchanged sentence

Nonrecurring Measurements

The following table presents the measurements of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the measurements fell at June 30, 2024 and December 31, 2023:

Fair Value Measurements Using

2 unchanged sentences

(In Thousands)

June 30, 2024

September 30, 2024

Collateral-dependent loans

9 unchanged sentences

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

At June 30, 2024 and December 31, 2023, the aggregate fair value of mortgage loans held for sale was not materially different than their cost.

At September 30, 2024 and December 31, 2023, the aggregate fair value of mortgage loans held for sale was not materially different than their cost.

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

2 unchanged sentences

If a loan’s fair value as estimated by the Company is less than its carrying value, the Company either records a charge-off of the portion of the loan that exceeds the fair value or establishes a reserve within the allowance for credit losses specific to the loan.

Loans for which such charge-offs or reserves were recorded are shown in the table above (net of reserves) at June 30, 2024 and December 31, 2023.

Loans for which such charge-offs or reserves were recorded are shown in the table above (net of reserves) at September 30, 2024 and December 31, 2023.

Foreclosed Assets Held for Sale.

2 unchanged sentences

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

There were no foreclosed assets held for sale at June 30, 2024 or December 31, 2023 which had valuation write-downs subsequent to the initial recording of the assets.

There were no foreclosed assets held for sale at September 30, 2024 or December 31, 2023 which had valuation write-downs subsequent to the initial recording of the assets.

Fair Value of Financial Instruments

4 unchanged sentences

Fair values for held-to-maturity securities are estimated based on quoted market prices of similar securities.

techniques, that consider observable market data, such as interest rate volatilities, SOFR yield curve, credit spreads and prices from market makers and live trading systems.

For these securities, the Company obtains fair value measurements from an independent pricing service, which represent either quoted market prices for the identical asset or fair values determined by pricing models, or other model-based valuation techniques, that consider observable market data, such as interest rate volatilities, SOFR yield curve, credit spreads and prices from market makers and live trading systems.

These securities include U.S.

23 unchanged sentences

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, 2024

September 30, 2024

December 31, 2023

31 unchanged sentences

As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings.

At June 30, 2024, the Company had five interest rate swaps totaling $ 75.4 million in notional amount with commercial customers, and five interest rate swaps with the same aggregate notional amount with third parties related to its program.

At September 30, 2024, the Company had four interest rate swaps totaling $ 68.0 million in notional amount with commercial customers, and four interest rate swaps with the same aggregate notional amount with third parties related to its program.

In addition, the Company has one participation loan purchased totaling $ 8.5 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.

1 unchanged sentence

In addition, at December 31, 2023, the Company had one participation loan purchased totaling $ 8.6 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.

During the three months ended June 30, 2024 and 2023, the Company recognized a net loss of $ 7,000 and a net gain of $ 2,000 , respectively, in non-interest income related to changes in the fair value of these swaps.

During the six months ended June 30, 2024 and 2023, the Company recognized net losses of $ 20,000 and $ 289,000 , respectively, in non-interest income related to changes in the fair value of these swaps.

During the three months ended September 30, 2024 and 2023, the Company recognized net losses of $ 37,000 and net gains of $ 55,000 , respectively, in non-interest income related to changes in the fair value of these swaps.

During the nine months ended September 30, 2024 and 2023, the Company recognized net losses of $ 57,000 and net losses of $ 234,000 , respectively, in non-interest income related to changes in the fair value of these swaps.

Fair Value Hedges

8 unchanged sentences

The Company received a net settlement payment from the swap counterparty totaling $ 26,500 upon termination.

At the time of the early termination, the Company recorded a market value adjustment to the brokered deposits of $ 163,000 , which is being amortized as a reduction of interest expense beginning in January 2024 through February 2025.

Cash Flow Hedges

10 unchanged sentences

This has the effect of reducing Accumulated Other Comprehensive Income and increasing Net Interest Income and Retained Earnings over the period.

At June 30, 2024, the Company expected to have a sufficient amount of eligible variable rate loans to continue to accrete this interest income on the terminated swap in future periods.

At September 30, 2024, the Company expected to have a sufficient amount of eligible variable rate loans to continue to accrete this interest income on the terminated swap in future periods.

If this expectation changes and the amount of eligible variable rate loans decreases significantly, the Company may be required to recognize this interest income more rapidly.

The Company recorded $ 2.0 million of interest income related to this terminated swap in each of the three-month periods ended June 30, 2024 and 2023.

The Company recorded $ 4.1 million of interest income related to the swap in the six months ended June 30, 2024 and $ 4.0 million of interest income related to the swap in the six months ended June 30, 2023.

The Company recorded $ 2.0 million of interest income related to this terminated swap in each of the three-month periods ended September 30, 2024 and 2023.

The Company recorded $ 6.1 million of interest income related to the swap in each of the nine-month periods ended September 30, 2024 and 2023.

In March 2022, the Company entered into an interest rate swap transaction as part of its ongoing interest rate management strategies to hedge the risk of its floating rate loans.

The notional amount of the swap was $ 300 million, with a termination date of March 1, 2024.

Under the terms of the swap, the Company received a fixed rate of interest of 1.6725 % and paid a floating rate of interest equal to one-month USD-LIBOR (or the equivalent replacement USD-SOFR rate once USD-LIBOR rate ceased to be available).

The floating rate reset monthly and net settlements of interest due to/from the counterparty also occurred monthly.

2 unchanged sentences

As this interest rate swap reached its contractual termination date of March 1, 2024, there has been no further interest income impact related to this swap after the three months ended March 31, 2024.

The Company recorded a reduction of loan interest income related to this swap transaction of $ 1.9 million in the six months ended June 30, 2024.

The Company recorded a reduction of loan interest income related to this swap transaction of $ 2.6 million and $ 4.7 million, respectively, in the three and six months ended June 30, 2023.

The Company recorded a reduction of loan interest income related to this swap transaction of $ 1.9 million in the nine months ended September 30, 2024.

The Company recorded a reduction of loan interest income related to this swap transaction of $ 2.8 million and $ 7.5 million, respectively, in the three and nine months ended September 30, 2023.

In July 2022, the Company entered into two additional interest rate swap transactions as part of its ongoing interest rate management strategies to hedge the risk of its floating rate loans.

5 unchanged sentences

If the floating rate of interest exceeds the fixed rate of interest, the Company pays net settlements to the counterparty and records those net payments as a reduction of interest income on loans.

At June 30, 2024, the USD-Prime rate was 8.50 % and the one-month USD-SOFR OIS rate was 5.33643 %.

The Company recorded a reduction of loan interest income related to these swap transactions of $ 2.8 million and $ 1.7 million, respectively, in the three months ended June 30, 2024 and 2023.

The Company recorded a reduction of loan interest income related to these swap transactions totaling $ 5.5 million and $ 1.7 million, respectively, in the six months ended June 30, 2024 and 2023.

At September 30, 2024, the USD-Prime rate was 8.00 % and the one-month USD-SOFR OIS rate was 5.16334 %.

The Company recorded a reduction of loan interest income related to these swap transactions of $ 2.7 million in both the three months ended September 30, 2024 and the three months ended September 30, 2023.

The Company recorded a reduction of loan interest income related to these swap transactions totaling $ 8.3 million and $ 4.4 million, respectively, in the nine months ended September 30, 2024 and 2023.

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 and six months ended June 30, 2024 and 2023, the Company recognized no non-interest income related to changes in the fair value of these derivatives.

During each of the three and nine months ended September 30, 2024 and 2023, the Company recognized no non-interest income related to changes in the fair value of these derivatives.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Statements of Financial Condition:

Consolidated Statements

September 30,

of Financial Condition

16 unchanged sentences

Recognized in AOCI

Three Months Ended June 30,

Three Months Ended September 30,

Cash Flow Hedges

4 unchanged sentences

Recognized in AOCI

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flow Hedges

3 unchanged sentences

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

Three Months Ended June 30,

Three Months Ended September 30,

Cash Flow Hedges

4 unchanged sentences

Active interest rate swaps

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flow Hedges

9 unchanged sentences

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

At June 30, 2024, the termination value of derivatives with our derivative dealer counterparties (related to loan level swaps with commercial lending customers and interest rate swaps to hedge risk related to the Company’s variable rate loans) in an overall net asset position, which included accrued interest but excluded any adjustment for nonperformance risk, related to these agreements was $ 118,000 .

At September 30, 2024, the termination value of derivatives with our derivative dealer counterparties (related to loan level swaps with commercial lending customers and interest rate swaps to hedge risk related to the Company’s variable rate loans) in an overall net asset position, which included accrued interest but excluded any adjustment for nonperformance risk, related to these agreements was $ 80,000 .

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

At June 30, 2024, the Company had given cash collateral to one derivative counterparty of $ 13.3 million to cover its net fair value position.

At September 30, 2024, the Company had given cash collateral to one derivative counterparty of $ 2.7 million to cover its net fair value position.

This counterparty position included collateral from the counterparty of $ 6.4 million for commercial lending swaps and collateral from the Company of $ 9.4 million for interest rate swaps related to variable rate loans.

3 unchanged sentences

This counterparty position included collateral from the counterparty of $ 8.2 million for commercial lending swaps, collateral from the Company of $ 19.2 million for interest rate swaps related to variable rate loans and collateral from the Company of $ 44,000 for swaps related to brokered deposits.

If the Company had breached any of these provisions at June 30, 2024 or December 31, 2023, it could have been required to settle its obligations under the agreements at the termination value.

If the Company had breached any of these provisions at September 30, 2024 or December 31, 2023, it could have been required to settle its obligations under the agreements at the termination value.

Under the collateral agreements between the parties, either party may choose to provide cash or securities to satisfy its collateral requirements.

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