What changed in this filing

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Item 1. Financial Statements

2024-05-14 compared with 2023-11-13 · 217 added, 340 removed, 635 unchanged (47% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

2024 December 31,

2 unchanged sentences

Cash and cash equivalents 20,290,214 20,240,125

Interest-earning time deposits 245,000 490,000

Investment securities - available for sale 276,347,393 282,688,326

22 unchanged sentences

Authorized - 90,000,000 shares

Issued and outstanding - 11,300,075 shares and 11,784,246 shares at September 30, 2023 and December 31, 2022, respectively

Issued and outstanding - 11,115,887 shares and 11,208,500 shares at March 31, 2024 and December 31, 2023, respectively

111,159 112,085

8 unchanged sentences

Condensed Consolidated Statements of Income

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Interest Income

10 unchanged sentences

Net Interest Income After Provision for Credit Losses 9,649,647 9,700,704

Noninterest Income

Non-interest Income

Service charges on deposit accounts 272,931 280,995

Card fee income 290,186 287,258

Loan and lease servicing fees 111,480 235,973 341,195 441,912

Loan and lease servicing fees, including mortgage servicing right impairment 127,242 120,072

Net gains on loan and lease sales 119,317 155,563

Other income 319,259 252,836

Total noninterest income 1,157,118 1,183,643 3,431,964 3,474,634

Noninterest Expenses

Total non-interest income 1,128,935 1,096,724

Non-interest Expenses

Salaries and employee benefits 4,573,707 4,242,028

9 unchanged sentences

Other expenses 975,454 948,445

Total noninterest expenses 8,012,392 7,722,673 22,709,587 22,213,313

Total non-interest expenses 8,057,506 7,361,188

Income Before Income Tax Expense 2,721,076 3,436,240

6 unchanged sentences

Richmond Mutual Bancorporation, Inc.

Condensed Consolidated Statements of Comprehensive Loss

Condensed Consolidated Statements of Comprehensive (Loss) Income

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net Income $ 2,368,916 $ 2,904,046

Other Comprehensive Loss

Unrealized loss on available-for-sale securities, net of tax of $( 3,063,330 ), $( 4,245,908 ), $( 2,651,043 ), and $( 14,353,958 ), respectively.

( 11,523,955 ) ( 15,972,703 ) ( 9,972,970 ) ( 53,998,222 )

Other Comprehensive (Loss) Income

Unrealized (loss) gain on available for sale securities, net of tax benefit (expense) of $ 757,499 , and $( 1,640,117 ), respectively

( 2,849,640 ) 6,169,964

Comprehensive Loss $ ( 9,575,198 ) $ ( 12,814,475 ) $ ( 2,428,040 ) $ ( 44,337,060 )

Comprehensive (Loss) Income $ ( 480,724 ) $ 9,074,010

See Notes to Condensed Consolidated Statements.

1 unchanged sentence

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended September 30, 2023

Common Stock Additional

Capital Retained

Earnings Unearned

Shares Accumulated

Comprehensive

Outstanding Amount

Balances, June 30, 2023 11,448,621 $ 114,486 $ 103,216,869 $ 87,523,266 $ ( 11,825,384 ) $ ( 48,200,190 ) $ 130,829,047

Net income — — — 1,948,757 — — 1,948,757

Other comprehensive loss — — — — — ( 11,523,955 ) ( 11,523,955 )

ESOP shares earned — — ( 29,955 ) — 183,829 — 153,874

Stock based compensation — — 386,768 — — — 386,768

Common stock dividends ($ 0.14 per share)

— — — ( 1,470,633 ) — — ( 1,470,633 )

Repurchase of common stock ( 148,546 ) ( 1,485 ) ( 1,690,478 ) — — — ( 1,691,963 )

Balances, September 30, 2023 11,300,075 $ 113,001 $ 101,883,204 $ 88,001,390 $ ( 11,641,555 ) $ ( 59,724,145 ) $ 118,631,895

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Common Stock Additional

6 unchanged sentences

Net income — — — 2,368,916 — — 2,368,916

Other comprehensive income — — — — — ( 9,972,970 ) ( 9,972,970 )

ESOP shares earned — — ( 86,153 ) — 551,488 — 465,335

Impact of ASU 2016-13 adoption — — — ( 3,785,168 ) — — ( 3,785,168 )

Stock based compensation — — 1,149,789 — — — 1,149,789

Common stock dividends ($ 0.42 per share)

— — — ( 4,474,154 ) — — ( 4,474,154 )

Repurchase of common stock ( 484,171 ) ( 4,841 ) ( 5,269,329 ) — — — ( 5,274,170 )

Balances, September 30, 2023 11,300,075 $ 113,001 $ 101,883,204 $ 88,001,390 $ ( 11,641,555 ) $ ( 59,724,145 ) $ 118,631,895

Three Months Ended September 30, 2022

Common Stock Additional

Capital Retained

Earnings Unearned

Shares Accumulated

Comprehensive

Outstanding Amount

Balances, June 30, 2022 11,848,113 $ 118,481 $ 106,200,912 $ 84,423,594 $ ( 12,560,701 ) $ ( 39,237,530 ) $ 138,944,756

Net income — — — 3,158,228 — — 3,158,228

Other comprehensive loss — — — — — ( 2,849,640 ) ( 2,849,640 )

4 unchanged sentences

Repurchase of common stock ( 92,613 ) ( 926 ) ( 1,071,562 ) — — — ( 1,072,488 )

Balances, September 30, 2022 11,802,424 $ 118,024 $ 105,945,726 $ 86,495,710 $ ( 12,376,872 ) $ ( 55,210,233 ) $ 124,972,355

Nine Months Ended September 30, 2022

Balances, March 31, 2024 11,115,887 $ 111,159 $ 100,613,827 $ 88,834,364 $ ( 11,273,897 ) $ ( 45,894,736 ) $ 132,390,717

Three Months Ended March 31, 2023

Common Stock Additional

5 unchanged sentences

Balances, December 31, 2022 11,784,246 $ 117,842 $ 106,088,897 $ 88,122,052 $ ( 12,193,043 ) $ ( 49,751,175 ) $ 132,384,573

Impact of ASU 2016-13 adoption — — — ( 3,785,168 ) — — ( 3,785,168 )

Balances, January 1, 2023 11,784,246 117,842 106,088,897 84,336,884 ( 12,193,043 ) ( 49,751,175 ) 128,599,405

Net income — — — 2,904,046 — — 2,904,046

Other comprehensive loss — — — — — ( 53,998,222 ) ( 53,998,222 )

Other comprehensive income — — — — — 6,169,964 6,169,964

ESOP shares earned — — ( 13,318 ) — 183,829 — 170,511

3 unchanged sentences

Repurchase of common stock ( 98,553 ) ( 985 ) ( 1,149,948 ) — — — ( 1,150,933 )

Balances, September 30, 2022 11,802,424 $ 118,024 $ 105,945,726 $ 86,495,710 $ ( 12,376,872 ) $ ( 55,210,233 ) $ 124,972,355

Balances, March 31, 2023 11,685,693 $ 116,857 $ 105,305,039 $ 85,721,075 $ ( 12,009,214 ) $ ( 43,581,211 ) $ 135,552,546

See Notes to Condensed Consolidated Statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

Operating Activities

7 unchanged sentences

Net gains on loan and lease sales ( 119,317 ) ( 155,563 )

(Gain) Loss on sale of real estate owned ( 698 ) 847

Gain on sale of real estate owned ( 1,558 ) ( 1,921 )

Gain on sale of premises and equipment — ( 1,800 )

12 unchanged sentences

Investing Activities

Net change in interest-bearing time deposits 245,000 —

Purchases of securities available for sale ( 1,935,953 ) ( 7,097,933 )

5 unchanged sentences

Proceeds from sale of premises and equipment — 1,800

(Purchase) Proceeds from sale of FHLB stock ( 1,349,800 ) 90,100

Purchase of FHLB stock ( 1,260,000 ) ( 134,900 )

Net cash used in investing activities ( 30,218,339 ) ( 27,853,935 )

64 unchanged sentences

The Company has elected to comply with new or amended accounting pronouncements in the same manner as a private company.

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

2016-13, Financial Instruments-Credit Losses (Topic 326) .

The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations.

The ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates.

Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses.

Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances.

The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio.

These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements.

In May 2019, the FASB issued ASU No.

2019-05, Financial Instruments-Credit Losses (Topic 326):

Targeted Transition Relief .

This ASU provides transition relief for entities adopting the FASB’s credit losses standard, ASU 2016-13 and allows companies to irrevocably elect, upon adoption of ASU 2016-13, the fair value option for certain financial instruments.

In April 2019, the FASB issued ASU No.

2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments .

2019-04 clarifies certain aspects of accounting for credit losses, hedging activities, and financial instruments.

In October 2019, the FASB voted to extend the implementation of ASU No.

2016-13 for certain financial institutions including smaller reporting companies.

As a result, ASU 2016-13 became effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022.

The Company adopted ASU No.

2016-13 on January 1, 2023.

As a result of the change in methodology from the incurred loss methodology to the current expected credit loss methodology ("CECL"), the Company recorded a one-time cumulative-effect

adjustment of $ 2.0 million from retained earnings, net of tax, into the allowance for credit losses on loans and leases.

The allowance increased $ 2.7 million, or 21.5 %, on January 1, 2023 from December 31, 2022 as a result of adoption.

Additionally, as a part of the CECL adoption, the Company established an allowance for credit losses on unfunded commitments by recording a one-time adjustment of $ 1.8 million from retained earnings, net of tax, into the allowance for credit losses on unfunded commitments.

As of January 1, 2023, this allowance totaled $ 2.4 million, as compared to no allowance at December 31, 2022.

This allowance is reported in other liabilities on the Condensed Consolidated Balance Sheets.

In March 2022 the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures .

The ASU eliminates the accounting guidance for troubled debt restructured loans (“TDRs”) by creditors while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

Additionally, the ASU requires public business entities to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases.

This ASU became effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, upon the Company’s adoption of the CECL amendments in ASU 2016-13.

In March 2020, the FASB issued ASU No.

8 unchanged sentences

2020-04 to have a material impact on its consolidated financial statements.

In March 2023, the FASB issued ASU No.

2023-02, Investments Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method .

This ASU allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits.

2023-02 is effective for all public business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023.

The Company adopted this guidance on January 1, 2024.

Adoption of ASU 2023-02 did not have a material impact on the Company's consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

This ASU established new income tax disclosure requirements and modified existing requirements.

The ASU requires additional information be disclosed for specified categories, and reconciling items that meet a certain threshold, within the rate reconciliation on an annual basis.

Additionally, this ASU requires information be disclosed on the amount of income taxes paid (net of refunds), disaggregated by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds) disaggregated by jurisdiction based on a quantitative threshold.

2023-09 is effective for all public business entities for

annual periods beginning after December 15, 2024.

The ASU is effective for the Company beginning January 1, 2025.

The Company does not expect the adoption of ASU No.

2023-09 to have a material impact on its consolidated financial statements.

Investment Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of investment securities are as follows:

September 30, 2023

March 31, 2024

Available for sale

23 unchanged sentences

Total investment securities $ 342,124 $ 91 $ 54,606 $ 287,609

The amortized cost and fair value of investment securities at September 30, 2023, by contractual maturity, are shown below.

The amortized cost and fair value of investment securities at March 31, 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.

8 unchanged sentences

Totals $ 334,441 $ 276,347 $ 4,658 $ 4,592

Investment securities with a carrying value of $ 155,982,000 and $ 134,302,000 were pledged at September 30, 2023 and December 31, 2022, respectively, to secure certain deposits and for other purposes as permitted or required by law.

There were no sales of securities available for sale for the three and nine months ended September 30, 2023 and 2022.

Investment securities with a carrying value of $ 157,728,000 and $ 162,430,000 were pledged at March 31, 2024 and December 31, 2023, respectively, to secure certain deposits and for other purposes as permitted or required by law.

There were no sales of securities available for sale for the three months ended March 31, 2024 and 2023.

Certain investments in debt securities, as reflected in the table below, are reported in the condensed consolidated financial statements and notes at an amount less than their historical cost.

Total fair value of these investments at September 30, 2023 and December 31, 2022 was $ 268,401,000 and $ 288,846,000 , respectively, which is approximately 100 % and 99 % of the Company’s aggregated available-for-sale and held-to-maturity investment portfolio at those dates, respectively.

Total fair value of these investments at March 31, 2024 and December 31, 2023 was $ 278,077,000 and $ 279,852,000 , respectively, which is approximately 99 % and 97 % of the Company’s aggregated available for sale and held to maturity investment portfolio at those dates, respectively.

These declines primarily resulted from changes in market interest rates since their purchase.

The Company does not consider available-for-sale securities with unrealized losses to be experiencing credit losses at September 30, 2023.

Management considers it more likely than not that the Company will not be required to sell these securities before recovery of the amortized cost basis, which may be the maturity dates of the securities.

The Company does not consider available for sale securities with unrealized losses to be experiencing credit losses at March 31, 2024.

Management considers it more likely than not that the Company will not be required to sell these investments before recovery of the amortized cost basis, which may be the maturity dates of the securities.

Held to maturity securities are financial assets measured at amortized cost.

With the adoption of CECL, held to maturity securities are required to have an established allowance for credit losses that represents the portion of the amortized cost basis of a financial asset that is not expected to be collectable.

Held to maturity securities are required to have an established allowance for credit losses that represents the portion of the amortized cost basis of a financial asset that is not expected to be collectable.

The Company estimates expected credit losses on a collective basis by security type, with consideration given to historical information, credit ratings, and the statistical probability of future losses.

The Company monitors the credit quality of securities held to maturity through the use of credit ratings quarterly.

As of September 30, 2023, there was no allowance for credit losses recognized on the Company's securities held to maturity portfolio.

The following table summarizes the amortized cost of held to maturity securities by credit quality indicator as of September 30, 2023:

The Company monitors the credit quality of investment securities held to maturity through the use of credit ratings quarterly.

As of March 31, 2024, there was no allowance for credit losses recognized on the Company's securities held to maturity portfolio.

The following table summarizes the amortized cost of held to maturity securities by credit quality indicator as of March 31, 2024:

State and municipal obligations

1 unchanged sentence

The Company has elected to exclude accrued interest receivable from the calculation of the allowance for credit losses.

The following tables show the Company’s investment securities by 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 September 30, 2023 and December 31, 2022:

Description of

Securities September 30, 2023

Securities March 31, 2024

Less Than 12 Months 12 Months or More Total

12 unchanged sentences

State and municipal obligations 858 8 2,699 70 3,557 78

Total impaired securities $ 14,696 $ 507 $ 253,705 $ 75,347 $ 268,401 $ 75,854

Total $ 8,688 $ 51 $ 269,389 $ 58,147 $ 278,077 $ 58,198

Description of

14 unchanged sentences

State and municipal obligations 849 3 2,552 39 3,401 42

Total impaired securities $ 126,168 $ 17,001 $ 162,678 $ 46,092 $ 288,846 $ 63,093

Total $ 6,690 $ 167 $ 273,162 $ 54,439 $ 279,852 $ 54,606

Federal Agency Obligations.

4 unchanged sentences

SBA Pools and Mortgage-Backed Securities - GSE Residential.

The unrealized losses on the Company’s investment in mortgage-backed securities and SBA pools were caused by interest rate changes.

The unrealized losses on the Company’s investment in mortgage-backed securities and SBA pools were caused by interest rate changes and illiquidity.

The Company expects to recover the amortized cost basis over the term of the securities.

The decline in fair value is attributable to changes in interest rates and not credit quality, and the Company does not intend to sell the securities.

It is not more likely than not the Company will be required to sell the securities before recovery of their amortized cost basis, which may be maturity.

The decline in fair value is attributable to changes in interest rates and not credit quality.

The Company does not intend to sell the securities and it is not more likely than not the Company will be required to sell the securities before recovery of their amortized cost basis, which may be maturity.

State, Municipal, and Corporate Obligations.

The unrealized losses on the Company’s investments in securities of state, municipal, and corporate obligations were caused by interest rate changes.

The contractual terms of those securities do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments.

The contractual terms of those securities do not

permit the issuer to settle the securities at a price less than the amortized cost basis of the investments.

1 unchanged sentence

Loans, Leases and Allowance

The following table shows the composition of the loan and lease portfolio at September 30, 2023 and December 31, 2022:

September 30,

The following table shows the composition of the loan and lease portfolio at March 31, 2024 and December 31, 2023:

2024 December 31,

51 unchanged sentences

No material changes have been made to the risk characteristics discussed above contained in the Company's 2023 Form 10-K.

The following tables present the credit risk profile of the Company’s loan and lease portfolio based on rating category, payment activity, and origination year as of September 30, 2023 and rating category as of December 31, 2022:

The following tables present the credit risk profile of the Company’s loan and lease portfolio based on rating category, payment activity, and origination year as of March 31, 2024 and rating category as of December 31, 2023:

2024 2023 2022 2021 2020 Prior Revolving loans amortized cost basis Total

As of September 30, 2023:

As of March 31, 2024:

Commercial mortgage

Pass $ 4,094 $ 32,554 $ 83,880 $ 68,696 $ 32,560 $ 95,083 $ 15,987 $ 332,854

Special Mention — — — — 4,814 — — 4,814

Substandard — — — 246 — 520 — 766

12 unchanged sentences

Pass 205 3,733 50,088 35,305 6,336 25,479 26,846 147,992

Special Mention — — — 1,538 — — 4,189 5,727

Total Multi-family 205 3,733 50,088 36,843 6,336 25,479 31,035 153,719

6 unchanged sentences

Pass 22 — — — — — 12,124 12,146

Substandard — — — — — — 38 38

Total Home equity lines of credit 22 — — — — — 12,124 12,146

12 unchanged sentences

Total current period gross charge-offs $ 9 $ 193 $ 142 $ 80 $ 5 $ 10 $ — $ 439

For the three months ended September 30, 2023, the Company did not have any revolving loans convert to term loans.

Pass Special Mention Substandard Doubtful Loss Total

2023 2022 2021 2020 2019 Prior Revolving loans amortized cost basis Total

As of December 31, 2023:

Commercial mortgage

Pass $ 31,795 $ 83,567 $ 69,863 $ 33,226 $ 45,746 $ 60,563 $ 11,495 $ 336,255

Special Mention — — — 4,850 — — — 4,850

Substandard — — — — — 528 — 528

Total Commercial mortgage 31,795 83,567 69,863 38,076 45,746 61,091 11,495 341,633

Current period gross charge-offs — — — — — — — —

Commercial and industrial

Pass 38,721 13,509 13,390 4,348 1,727 9,430 30,287 111,412

Substandard — — — 10 — 138 3,868 4,016

Total Commercial and industrial 38,721 13,509 13,390 4,358 1,727 9,568 34,155 115,428

Current period gross charge-offs — 58 — — — — — 58

Construction and development

Multi-family 124,914 — — — — 124,914

Pass 36,868 81,715 30,383 2,981 111 847 — 152,905

Substandard — — — — 4,900 — — 4,900

Total Construction and development 36,868 81,715 30,383 2,981 5,011 847 — 157,805

Current period gross charge-offs — — — — — — — —

Pass 4,443 39,271 37,422 6,383 7,291 18,400 25,547 138,757

Total Multi-family 4,443 39,271 37,422 6,383 7,291 18,400 25,547 138,757

Current period gross charge-offs — — — — — — — —

Residential mortgage

Home equity 10,958 — 52 — — 11,010

Pass 31,352 31,447 35,174 17,651 8,812 36,118 216 160,770

Substandard — — — — 92 1,261 — 1,353

Total Residential mortgage 31,352 31,447 35,174 17,651 8,904 37,379 216 162,123

Current period gross charge-offs — — — — — — — —

Pass — — 282 — — — 10,597 10,879

Substandard — — — — — — 25 25

Total Home equity lines of credit — — 282 — — — 10,622 10,904

Current period gross charge-offs — — — — — — — —

Direct financing leases

Consumer 21,015 — 33 — — 21,048

Total $ 958,227 $ 4,034 $ 12,710 $ 29 $ — $ 975,000

The following tables present the Company’s loan and lease portfolio aging analysis of the recorded investment in loans and leases as of September 30, 2023 and December 31, 2022:

September 30, 2023

Pass 76,018 41,838 24,675 10,264 2,895 462 — 156,152

Substandard 80 184 80 21 — — — 365

Doubtful 79 — — — 2 — — 81

Total Direct financing leases 76,177 42,022 24,755 10,285 2,897 462 — 156,598

Current period gross charge-offs 105 276 459 85 11 1 — 937

Pass 9,775 8,223 3,713 840 358 279 — 23,188

Substandard 35 17 15 — 9 — — 76

Total Consumer 9,810 8,240 3,728 840 367 279 — 23,264

Current period gross charge-offs 39 69 75 25 7 — — 215

Total Loans and Leases $ 229,166 $ 299,771 $ 214,997 $ 80,574 $ 71,943 $ 128,026 $ 82,035 $ 1,106,512

Total current period gross charge-offs $ 144 $ 403 $ 534 $ 110 $ 18 $ 1 $ — $ 1,210

For the three months ended March 31, 2024 and December 31, 2023, the Company did not have any revolving loans convert to term loans.

The following tables present the Company’s loan and lease portfolio aging analysis of the recorded investment in loans and leases as of March 31, 2024 and December 31, 2023:

March 31, 2024

Delinquent Loans and Leases Current Total

27 unchanged sentences

Totals $ 2,031 $ 765 $ 6,676 $ 9,472 $ 1,097,040 $ 1,106,512 $ 1,675

The following table presents information on the Company’s nonaccrual loans and leases at September 30, 2023, and at December 31, 2022:

September 30,

The following table presents information on the Company’s nonaccrual loans and leases at March 31, 2024, and at December 31, 2023:

2024 December 31,

Nonaccrual loans and leases Nonaccrual loans and leases without an allowance for credit losses Nonaccrual loans and leases

Nonaccrual loans and leases Nonaccrual loans and leases without an allowance for credit losses Nonaccrual loans and leases Nonaccrual loans and leases without an allowance for credit losses

Commercial and industrial $ 39 $ — $ 1,241 $ 1,202

Construction 4,900 — 4,900

Construction and development 4,900 — 4,900 —

Residential mortgage 100 100 101 101

1 unchanged sentence

Total nonaccrual loans and leases $ 5,076 $ 137 $ 6,324 $ 1,385

During the three and nine months ended September 30, 2023, the Company recognized $ 12,000 and $ 15,000 , respectively, of interest income on nonaccrual loans and leases.

The following table presents the Company's amortized cost basis of collateral dependent loans, which are individually analyzed to determine expected credit losses:

September 30,

Amortized Cost Basis Allowance on Collateral Dependent Loans

During the three months ended March 31, 2024 and December 31, 2023, the Company recognized $ 1,000 and $ 42,000 of interest income on nonaccrual loans and leases, respectively.

The following tables present the Company's amortized cost basis of collateral dependent loans, and their respective collateral type, which are individually analyzed to determine expected credit losses as of March 31, 2024 and December 31, 2023:

March 31, 2024

Commercial Real Estate Multi-family Housing Residential Real Estate Other Total Allowance on Collateral Dependent Loans

Commercial mortgage $ 5,334 $ — $ — $ — $ 5,334 $ —

Commercial and industrial — — — 4,271 4,271 —

Construction 4,900 750

Construction and development 4,900 — — — 4,900 1,000

Multi-family — 1,538 — — 1,538 —

Residential mortgage — — 151 — 151 —

Total $ 10,234 $ 1,538 $ 151 $ 4,271 $ 16,194 $ 1,000

December 31, 2023

Commercial Real Estate Residential Real Estate Other Total Allowance on Collateral Dependent Loans

Commercial mortgage $ 5,377 $ — $ — $ 5,377 $ —

Commercial and industrial — — 3,868 3,868 —

Construction and development 4,900 — — 4,900 1,000

Residential mortgage — 152 — 152 —

Total $ 10,277 $ 152 $ 3,868 $ 14,297 $ 1,000

Loan Modification Disclosures under ASU 2022-02

3 unchanged sentences

If a determination is made that a modified loan has been deemed uncollectible, the loan (or portion of the loan) is charged-off, reducing the amortized cost basis of the loan and adjusting the allowance for credit losses.

During the three months ended September 30, 2023, the Company had no new modifications to borrowers experiencing financial difficulty.

There were no modified loans and leases that had a payment default during the three and nine months ended September 30, 2023 and that were modified in the twelve months prior to that default to borrowers experiencing financial difficulty.

Troubled Debt Restructuring (TDR) Disclosures Prior to the Adoption of ASU 2022-02

During the three and nine months ended September 30, 2022, there were no newly classified TDRs.

For the three and nine months ended September 30, 2022, the Company recorded no charge-offs related to TDRs.

As of December 31, 2022, TDRs had a related allowance of $ 0 .

During the three and nine months ended September 30, 2022, there were no TDRs for which there was a payment default within the first 12 months of the modification.

During the three months ended March 31, 2024 and 2023, the Company had no new modifications to borrowers experiencing financial difficulty.

There were no modified loans and leases that had a payment default during the three months ended March 31, 2024 and 2023 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty.

Other Real Estate Owned

At September 30, 2023 and December 31, 2022, the balance of real estate owned included $ 636,000 and $ 57,000 , respectively, of foreclosed real estate properties recorded as a result of obtaining physical possession of the property.

At September 30, 2023 and December 31, 2022, the recorded investment in consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process was $ 383,000 and $ 1,071,000 , respectively.

At March 31, 2024 and December 31, 2023, the balance of real estate owned included $ 82,000 and $ 136,000 , respectively, of foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property.

At March 31, 2024 and December 31, 2023, the recorded investment in consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process was $ 465,000 and $ 470,000 , respectively.

Direct Financing Leases

The following lists the components of the net investment in direct financing leases:

September 30,

2024 December 31,

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Net investment in direct finance leases $ 152,468 $ 156,598

The following table summarizes the future minimum lease payments receivable subsequent to September 30, 2023:

The following table summarizes the future minimum lease payments receivable subsequent to March 31, 2024:

Remainder of 2024 $ 48,968

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The allowance is an estimation based on management's evaluation of expected losses related to the Company's financial assets measured at amortized cost.

It considers relevant available information from internal and external sources relating to the historical loss experience, current conditions and reasonable and supportable forecasts for the Company's outstanding loan and lease balances.

The Company utilizes a cash flow analysis method of estimating expected losses, which relies on key inputs and assumptions.

It considers relevant available information from internal and external sources relating to the

historical loss experience, current conditions and reasonable and supportable forecasts for the Company's outstanding loan and lease balances.

The Company utilizes a cash flow ("CF") analysis method of estimating expected losses, which relies on key inputs and assumptions.

Significant factors affecting the calculation are the segmenting of loans and leases based upon similar risk characteristics, applied loss rates based upon reasonable and supportable forecasts, and contractual term adjustments, including prepayment and curtailment adjustments.

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The Company has elected to exclude accrued interest receivable from the calculation of the allowance for credit losses, as it is the Company's policy to write off accrued interest in a timely manner as it is deemed uncollectible by reversing interest income.

The Company categorizes its loan portfolios into eight segments based on similar risk characteristics.

Loans within each segment are collectively evaluated using either a loss-rate methodology or remaining life methodology.

The following tables summarize changes in the allowance for credit losses by segment for the three and nine months ended September 30, 2023:

Balances, June 30, 2023 Provision (reversal) for credit losses Charge-offs Recoveries Balances, September 30, 2023

The Company categorizes its loan portfolios into eight segments, as discussed above, based on similar risk characteristics.

Loans within each segment are collectively evaluated using either a CF methodology or remaining life methodology.

When estimating for credit loss, the Company forecasts the first four quarters of the credit loss estimate and reverts to a long-run average of each considered factor.

The Company developed its reasonable and supportable forecasts using economic data, such as gross domestic product and unemployment rate.

Qualitative adjustments are applied to each collectively segmented pool to appropriately capture differences in current or expected qualitative risk characteristics.

When evaluating the estimation for expected credit losses, the Company evaluates these qualitative adjustments for any changes in:

• lending policies, procedures, and strategies;

• the nature and volume of the loan and lease portfolio;

• international, national, regional, and local conditions;

• the experience, depth, and ability of lending management;

• the volume and severity of past due loans;

• the quality of the loan review system;

• the underlying collateral;

• concentration risk;

• the effect of other external factors.

The following tables summarizes changes in the allowance for credit losses by segment for the three months ended March 31, 2024 and 2023:

Balances, December 31, 2023 Provision (reversal) for credit losses Charge-offs Recoveries Balances, March 31, 2024

Commercial mortgage $ 4,655 $ ( 29 ) $ — $ — $ 4,626

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Total $ 15,663 $ 486 $ ( 439 ) $ 115 $ 15,825

Balances, December 31, 2022 Impact of adopting ASC 326 Balances, January 1, 2023 Post-ASC 326 adoption Provision (reversal) for credit losses Charge-offs Recoveries Balances, September 30, 2023

Balances, December 31, 2022 Impact of adopting ASC 326 Balances, January 1, 2023 Post-ASC 326 adoption Provision (reversal) for credit losses Charge-offs Recoveries Balances, March 31, 2023

Commercial mortgage $ 4,776 $ ( 395 ) $ 4,381 $ 337 $ — $ 10 $ 4,728

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Total $ 12,413 $ 2,664 $ 15,077 $ 340 $ ( 129 ) $ 207 $ 15,495

During the third quarter of 2023, the allowance for credit losses on loans and leases increased from $ 15.4 million at June 30, 2023, to $ 15.5 million at September 30, 2023.

The increase was attributable to additional provisions totaling $ 404,000 during the third quarter of 2023, partially offset by net charge-offs of $ 299,000 .

During the first quarter of 2024, the allowance for credit losses on loans and leases increased from $ 15.7 million at December 31, 2023, to $ 15.8 million at March 31, 2024.

The increase was attributable to additional provisions totaling $ 486,000 during the first quarter of 2024, partially offset by net charge-offs of $ 324,000 .

Multiple loan categories experienced loan growth, while a few declined slightly.

The commercial mortgage portfolio increased due to commercial construction loans being completed and termed out to permanent financing.

The construction and development category increased as loans under construction were funded during the construction process, increasing the total balance in this segment.

Consumer loans increased in both outstanding balance and allowance.

Commercial and industrial loans and multi-family loans decreased in outstanding balances, contributing to a decrease in the allowance of those respective portfolios.

• Commercial Mortgage – allowance increased due to loan balances increasing $ 4.2 million, owner-occupied and nonowner-occupied.

• Commercial & Industrial – allowance decreased due to loan balances decreasing $ 2.7 million, with net charge-offs totaling $ 40,000 .

• Commercial Mortgage – allowance decreased due to loan balances decreasing $ 3.2 million.

• Commercial & Industrial – allowance increased due to loan balances increasing $ 8.2 million.

• Construction & Development – allowance increased due to loan balances increasing $ 7.3 million.

• Multi-Family – allowance decreased due to loan balances decreasing $ 6.1 million.

• Residential Mortgage – no change to allowance.

• Home Equity – allowance decreased slightly, while balances increased $ 284,000 .

• Direct Financing Leases – allowance decreased while balances increased $ 2.3 million, due to a lower calculated reserve percentage.

Net charge-offs totaled $ 206,000 .

• Consumer – allowance increased slightly due to loan balances increasing $ 1.5 million with net charge-offs totaling $ 64,000 .

• Multi-Family – allowance increased due to balances increasing $ 15.0 million.

• Residential Mortgage – allowance increased due to balances increasing $ 8.9 million.

• Home Equity – allowance increased due to balances increasing $ 1.2 million.

• Direct Financing Leases – allowance decreased due to balances decreasing $ 4.1 million.

• Consumer – allowance decreased due to balances decreasing $ 260,000 .

Although the Company has a diversified loan and lease portfolio, our commercial loan portfolio, consisting of commercial and multi-family real estate loans, commercial and industrial loans, and construction loans, represents 68.5 % and 68.1 % of our portfolio as of March 31, 2024 and December 31, 2023, respectively.

The allowance for credit losses on loans and leases allocated to the commercial loan portfolio represents 74.7 % and 74.1 % of our total allowance at March 31, 2024 and December 31, 2023, respectively.

Economic Outlook

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Economic factors are a consequential part of these forecasts, and as such are evaluated periodically for developments that may impact the Company's allowance for credit losses and loan and lease portfolio.

As of September 30, 2023, the most significant economic factors continuing to affect the Company's loan portfolio are persistent inflation, higher interest rates, a weakened economic growth and unemployment outlook, increased geopolitical risk, and stock market volatility.

These key factors are impacting and will continue to adversely impact the Company’s loan and lease portfolio for the remainder of 2023 and potentially into 2024.

Also, recent market liquidity events continue to add unpredictability into the economic environment and the potential for tighter credit conditions could impact economic conditions in the future.

As of March 31, 2024, the primary economic factors affecting the Company's loan portfolio continue to be persistent inflation, higher interest rates, geopolitical risk, mild economic growth, and a weakened employment outlook.

These key factors will continue to influence the Company's loan and lease portfolio for the near future.

In addition, market liquidity continues to impact the economic environment and could potentially further tighten credit conditions.

The Company remains committed to three growth market regions:

Columbus, Ohio, Dayton/Springfield, Ohio, and Indianapolis, Indiana.

As high-growth areas, these market regions specialize in commercial real estate loans Their respective forecasts are described below:

• Columbus, Ohio – This market region is forecasting estimated job growth to be lower for the remainder of 2023, however job growth is expected to exceed the national average and most other market region averages.

Although the forecasted unemployment rate for the region has slightly increased, the region still remains slightly below the national unemployment rate estimate.

• Dayton/Springfield, Ohio – The economic outlook for this market region remains positive, however flatter than the prior quarter.

Although concerns about a potential recession are still present, the region continues to reflect one of the lowest unemployment rates in the state, just above the Columbus market region.

• Indianapolis, Indiana – This market region forecasts minimal economic growth for the remainder of 2023.

The forecast estimates have been lowered primarily due to inflation, rising interest rates, and unemployment forecasts which are impacting economic growth.

The Company’s assumption of future economic slowdown could potentially have an adverse impact on the loan and lease portfolio and the allowance for credit losses in the near future;

however, there are numerous potential outcomes, and the variances could be significant and volatile.

As a result, the Company’s future estimates may vary for the remainder of 2023 and beyond.

Allowance for Loan Losses under prior GAAP ("Incurred Loss Method")

Prior to the adoption of ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326) on January 1, 2023, the Company maintained an allowance for loan and lease losses in accordance with the Incurred Loss Method.

The following table summarizes changes in the allowance for loan and lease losses under the Incurred Loss Method by segment for the three and nine months ended September 30, 2022:

Balance, beginning of period Provision (reversal) for losses Charge-offs Recoveries Balance, end of period

Three Months Ended September 30, 2022:

Commercial mortgage $ 4,804 $ ( 36 ) $ — $ 7 $ 4,775

Commercial and industrial 1,504 ( 105 ) — 26 1,425

Construction and development 2,423 565 — — 2,988

Multi-family 2,046 ( 254 ) — — 1,792

Residential mortgage 196 5 ( 17 ) 6 190

Home equity 34 — — — 34

Leases 1,139 ( 59 ) ( 105 ) 112 1,087

Consumer 235 84 ( 60 ) 6 265

Total $ 12,381 $ 200 $ ( 182 ) $ 157 $ 12,556

Balance, beginning of period Provision (reversal) for losses Charge-offs Recoveries Balance, end of period

Nine Months Ended September 30, 2022:

Commercial mortgage $ 4,742 $ ( 15 ) $ — $ 48 $ 4,775

Commercial and industrial 1,639 ( 277 ) — 63 1,425

Construction and development 2,286 702 — — 2,988

Multi-family 1,875 ( 83 ) — — 1,792

Residential mortgage 263 ( 81 ) ( 17 ) 25 190

Home equity 29 5 — — 34

Leases 1,079 182 ( 304 ) 130 1,087

Consumer 195 167 ( 114 ) 17 265

Total $ 12,108 $ 600 $ ( 435 ) $ 283 $ 12,556

The following table presents the balance in the allowance for loan and lease losses and the recorded investment in loans and leases based on portfolio segment and impairment method under the incurred loss method as of December 31, 2022:

Allowance for loan and lease losses:

Loans and leases:

Individually evaluated for impairment Collectively evaluated for impairment Balance, December 31 Individually evaluated for impairment Collectively evaluated for impairment Balance, December 31

As of December 31, 2022:

Commercial mortgage $ — $ 4,776 $ 4,776 $ — $ 298,087 $ 298,087

Commercial and industrial 281 1,010 1,291 961 99,459 100,420

Construction and development 750 2,105 2,855 4,900 135,023 139,923

Multi-family — 1,955 1,955 — 124,914 124,914

Residential mortgage — 76 76 113 146,016 146,129

Home equity — 23 23 — 11,010 11,010

Leases — 1,196 1,196 — 133,469 133,469

Consumer — 241 241 — 21,048 21,048

Total $ 1,031 $ 11,382 $ 12,413 $ 5,974 $ 969,026 $ 975,000

The following table presents the Company’s impaired loans and specific valuation allowance at December 31, 2022 under the Incurred Loss Method:

December 31, 2022

Balance Unpaid

Balance Specific

Impaired loans without a specific valuation allowance

Commercial mortgage $ — $ 59 $ —

Commercial and industrial 366 567 —

Residential mortgage 113 241 —

$ 479 $ 867 $ —

Impaired loans with a specific valuation allowance

Commercial and industrial $ 595 $ 643 $ 281

Construction and development 4,900 4,900 750

$ 5,495 $ 5,543 $ 1,031

Total impaired loans

Commercial mortgage $ — $ 59 $ —

Commercial and industrial 961 1,210 281

Construction and development 4,900 4,900 750

Residential mortgage 113 241 —

Total impaired loans $ 5,974 $ 6,410 $ 1,031

The following table presents the Company’s average investment in impaired loans and leases, and interest income recognized for the three and nine months ended September 30, 2022 under the incurred loss method:

Investment in

Loans and Leases Interest

Three Months Ended September 30, 2022:

Total impaired loans

Commercial and industrial $ 967 $ 6

Construction and development 4,900 —

Residential mortgage 115 1

Total impaired loans and leases $ 5,982 $ 7

Investment in

Loans and Leases Interest

Nine Months Ended September 30, 2022:

Total impaired loans

Commercial mortgage $ 61 $ 12

Commercial and industrial 976 18

Construction and development 4,900 —

Residential mortgage 117 3

Total impaired loans and leases $ 6,054 $ 33

These market regions specialize in commercial real estate loans, and their respective forecasts are described below:

• Columbus, Ohio – The market region anticipates stable job growth in 2024, with slight increases projected in certain sectors.

Construction activity is showing signs of slowing, as speculative projects are not being pre-leased, prompting greater caution in initiating new developments.

The majority of new construction projects are built-to-suit, indicating a softening demand as parties exercise prudence amid economic uncertainties.

The region's unemployment rate has seen a slight uptick, aligning with the national average.

• Dayton/Springfield, Ohio – The economic outlook for this region remains stable.

With few new projects entering the market and a lack of ongoing construction, the real estate sector appears to be in a holding pattern.

However, there is a noticeable trend towards a decrease in the region's vacancy rate, suggesting potential shifts in demand patterns or better utilization of existing properties.

Concerns about recession are diminishing, and the economic outlook for 2024 indicates a slow but steady positive trajectory.

The relationship between Wright Patterson Air Force Base (WPAFB) and the local market is deeply interconnected, influencing all aspects of the economy.

The future economic prospects of the area are closely tied to WPAFB and the success of the military, federal government, and defense industry.

WPAFB is currently unveiling extensive plans to revamp and streamline processes across the Air Force and related sectors.

These initiatives have the potential to significantly impact the economic trajectory of the local market.

• Indianapolis, Indiana – Based upon optimistic first quarter 2024 economic results, the market region is expecting continued economic growth in 2024.

First quarter results were fueled primarily by an expanding labor market, retail sales growth, and increasing median household incomes.

Future potential economic volatility may have a significant impact on the Company's loan and lease portfolio, specifically the allowance for credit losses.

There are a myriad of potential outcomes, and the variances may be significant and unpredictable.

As a result, the Company's future estimates may fluctuate for the remainder of 2024.

Allowance for Credit Losses on Unfunded Commitments

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Additional provisions applied to the allowance are recognized in the provision for credit losses on the Condensed Consolidated Statements of Income.

The following table details activity in the allowance for credit losses on unfunded commitments during the three and nine months ended September 30, 2023:

Three Months Ended September 30, 2023

Balance, June 30, 2023 $ 2,101

Recovery of provision for credit losses ( 354 )

Balance, September 30, 2023 $ 1,747

Nine Months Ended September 30, 2023

Balance, December 31, 2022 $ —

The following table details activity in the allowance for credit losses on unfunded commitments during the three months ended March 31, 2024 and 2023:

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

Beginning balance $ 1,642 $ —

Impact of adopting ASC 326 — 2,374

Recovery of provision for credit losses ( 627 )

Balance, September 30, 2023 $ 1,747

Provision (reversal) for credit losses ( 303 ) ( 170 )

Ending balance $ 1,339 $ 2,204

Fair Value of Financial Instruments

8 unchanged sentences

Recurring Measurements

The following tables present the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2023 and December 31, 2022:

Fair Value Measurements Using

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(Level 2) Significant

September 30, 2023

March 31, 2024

Available for sale securities

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$ 282,688 $ 2,976 $ 279,712 $ —

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, 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 nine months ended September 30, 2023.

the valuation hierarchy.

There have been no significant changes in the valuation techniques during the three months ended March 31, 2024.

Available for Sale Securities

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Nonrecurring Measurements

The following table presents the fair value measurement of assets and liabilities measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2022.

As of September 30, 2023, there were no assets or liabilities measured at fair value on a nonrecurring basis.

Fair Value Measurements Using

Value Quoted Prices

(Level 1) Significant

(Level 2) Significant

December 31, 2022

Impaired loans, collateral-dependent $ 314 $ — $ — $ 314

Mortgage-servicing rights 2,012 — — 2,012

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy.

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

Collateral-Dependent Loans, Net of Allowance for Credit Losses

The estimated fair value of collateral-dependent loans is based on the appraised fair value of the collateral, less estimated cost to sell.

Collateral-dependent loans are classified within Level 3 of the fair value hierarchy.

The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value.

Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by management.

Appraisals are reviewed for accuracy and consistency by management.

Appraisers are selected from the list of approved appraisers maintained by management.

The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral.

These discounts and estimates are developed by management by comparison to historical results.

Mortgage-Servicing Rights

Mortgage-servicing rights do not trade in an active, open market with readily observable prices.

Accordingly, fair value is estimated using discounted cash flow models having significant inputs of discount rate, prepayment speed and default rate.

Due to the nature of the valuation inputs, mortgage-servicing rights are classified within Level 3 of the hierarchy.

Mortgage-servicing rights are tested for impairment on a quarterly basis based on an independent valuation.

The valuation is reviewed by management for accuracy and for potential impairment.

Unobservable (Level 3) Inputs

The following table presents the fair value measurement of assets recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2022.

As of September 30, 2023, there were no assets measured at fair value on a nonrecurring basis.

Fair Value at December 31,

2022 Valuation

Technique Unobservable

Impaired loans, collateral-dependent $ 314 Appraisal Marketability discount 0 - 42 %

Mortgage-servicing rights $ 2,012 Discounted cash flow Discount rate 10 %

As of March 31, 2024 and December 31, 2023, there were no assets or liabilities measured at fair value on a nonrecurring basis.

Fair Value of Financial Instruments

The following tables present estimated fair values of the Company’s financial instruments at September 30, 2023 and December 31, 2022:

The following tables present estimated fair values of the Company’s financial instruments at March 31, 2024 and December 31, 2023:

Fair Value Measurements Using

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(Level 2) Significant

September 30, 2023

March 31, 2024

Financial assets

Cash and cash equivalents $ 20,290 $ 20,290 $ — $ —

Interest-earning time deposits 245 — 244 —

Available for sale securities 276,347 4,916 271,431 —

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Cash and cash equivalents $ 20,240 $ 20,240 $ — $ —

Interest-earning time deposits 490 — 490 —

Available for sale securities 282,688 2,976 279,712 —

2 unchanged sentences

Loans and leases receivable, net 1,090,073 — — 985,976

Federal Reserve and FHLB stock 9,947 — 9,947 —

FHLB stock 12,647 — 12,647 —

Interest receivable 5,844 — 5,844 —

8 unchanged sentences

The following table presents the computation of basic and diluted EPS for the periods indicated:

Three Months Ended September 30, 2023 Three Months Ended September 30, 2022

Net income $ 1,949 $ 3,158

Shares outstanding for Basic EPS:

Average shares outstanding 11,403,229 11,823,889

average restricted stock award shares not vested 174,192 261,291

average unearned ESOP Shares 870,048 924,154

Shares outstanding for Basic EPS 10,358,989 10,638,444

Additional Dilutive Shares 23,170 197,173

Shares outstanding for Diluted EPS 10,382,159 10,835,617

Basic Earnings Per Share $ 0.19 $ 0.30

Diluted Earnings Per Share $ 0.19 $ 0.29

Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

Net income $ 2,369 $ 2,904

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The Company matches employees' contributions at the rate of 50 percent for the first six percent of base salary contributed by participants.

The Company’s expense for the plan was $ 93,000 , $ 196,000 , $ 62,000 and $ 170,000 for the three and nine months ended September 30, 2023 and 2022, respectively.

The Company’s expense for the plan was $ 68,000 and $ 37,000 for the three months ended March 31, 2024 and 2023, respectively.

Employee Stock Ownership Plan

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Unearned ESOP shares which have not yet been allocated to ESOP participants are excluded from the computation of average shares outstanding for earnings per share calculation.

Accordingly, $ 11,641,555 and $ 12,193,043 of common stock acquired by the ESOP was shown as a reduction of stockholders’ equity at September 30, 2023 and December 31, 2022, respectively.

Accordingly, 829,616 and 843,142 shares of common stock acquired by the ESOP were shown as a reduction of stockholders’ equity at March 31, 2024 and December 31, 2023, respectively.

Shares are released to participants proportionately as the loan is repaid.

ESOP expense for the three and nine months ended September 30, 2023 and 2022 was approximately $ 154,000 , $ 465,000 , $ 188,000 , and $ 622,000 , respectively.

September 30,

ESOP expense for the three months ended March 31, 2024 and 2023 was $ 154,000 and $ 171,000 , respectively.

2024 December 31,

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Forfeited shares may be awarded to other eligible recipients in future grants until the 2020 EIP terminates in September 2030.

The following table summarizes the restricted stock activity in the 2020 EIP during the nine months ended September 30, 2023.

Nine Months Ended September 30, 2023

The following table summarizes the restricted stock award activity in the 2020 EIP during the three months ended March 31, 2024.

Three Months Ended March 31, 2024

Number of Restricted Shares Weighted Average Grant Date Fair Value

Non-vested, beginning of period 167,158 $ 10.56

Vested ( 87,099 ) 10.56

Forfeited — —

Non-vested, September 30, 2023 174,192 10.56

Total compensation cost recognized in the income statement for restricted stock awards during the three and nine months ended September 30, 2023 was $ 231,000 and $ 687,000 , and the related tax benefit recognized was $ 49,000 and $ 144,000 ,

respectively.

As of September 30, 2023, unrecognized compensation expense related to restricted stock awards was $ 1.6 million.

Non-vested, March 31, 2024 167,158 10.56

Total compensation cost recognized in the income statement for restricted stock awards during the three months ended March 31, 2024 and 2023 was $ 219,000 and $ 227,000 , and the related tax benefit recognized was $ 46,000 and $ 48,000 , respectively.

As of March 31, 2024, unrecognized compensation expense related to restricted stock awards was $ 1.1 million.

Stock Option Plan.

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Forfeited options may be awarded to other eligible recipients in future grants until the 2020 EIP terminates in September 2030.

The following table summarizes the stock option activity in the 2020 EIP during the nine months ended September 30, 2023.

Nine Months Ended September 30, 2023

The following table summarizes the stock option activity in the 2020 EIP during the three months ended March 31, 2024.

Three Months Ended March 31, 2024

Number of Shares Weighted-Average Exercise Price

2 unchanged sentences

Forfeited/expired — —

Balance, September 30, 2023 1,050,961 10.56

Balance, March 31, 2024 1,050,961 10.56

Exercisable at end of period 641,969 $ 10.55

5 unchanged sentences

Expected life of options 6.1 years

A summary of the status of the Company stock option shares as of September 30, 2023 is presented below.

A summary of the status of the Company stock option shares as of March 31, 2024 is presented below.

Shares Weighted Average Grant Date Fair Value

Non-vested, beginning of year 408,992 $ 2.91

Vested ( 212,617 ) 2.91

Forfeited — —

Non-vested, September 30, 2023 425,224 $ 2.91

Total compensation cost recognized in the income statement for option-based payment arrangements for the three and nine months ended September 30, 2023 was $ 156,000 and $ 462,000 , and the related tax benefit recognized was $ 17,000 and

$ 51,000 , respectively.

As of September 30, 2023, unrecognized compensation expense related to the stock option awards was $ 1.1 million.

Non-vested, March 31, 2024 408,992 $ 2.91

Total compensation cost recognized in the income statement for option-based payment arrangements for the three months ended March 31, 2024 and 2023 was $ 148,000 and $ 153,000 , and the related tax benefit recognized was $ 16,000 and $ 17,000 , respectively.

As of March 31, 2024, unrecognized compensation expense related to the stock option awards was $ 742,000 .

Qualified Affordable Housing Investments

The Company has investments in certain limited partnerships that fund affordable housing projects, which provide the Company with low income housing tax credits ("LIHTC").

At both March 31, 2024 and December 31, 2023, the balance of these investments in LIHTC totaled $ 1.1 million.

These balances are reflected in the other assets line of the Condensed Consolidated Balance Sheet.

The assets are amortized as a component of the provision for income taxes.

The following table summarizes the amortization expense and tax credits recognized for the Company's LIHTC investments for the three months ended March 31, 2024 and 2023.

Three Months Ended March 31,

Amortization expense $ 44 $ 44

Tax credits recognized 47 47

Subsequent Event

Subsequent to September 30, 2023 through November 13, 2023, the Company purchased 55,406 shares of the Company's common stock pursuant to the existing stock repurchase program, leaving 904,205 shares available for future repurchase.

Subsequent to March 31, 2024 through May 14, 2024, the Company purchased 50,428 shares of the Company's common stock pursuant to the existing stock repurchase program, leaving 724,995 shares available for future repurchase.

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