What changed in this filing

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Item 1. Financial Statements

2024-11-13 compared with 2024-08-09 · 142 added, 119 removed, 824 unchanged (24% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

2024 December 31,

2 unchanged sentences

Cash and cash equivalents 19,570,457 20,240,125

Interest-earning time deposits 300,000 —

Investment securities - available for sale 267,251,153 282,688,326

22 unchanged sentences

Authorized - 90,000,000 shares

Issued and outstanding - 11,018,824 shares and 11,208,500 shares at June 30, 2024 and December 31, 2023, respectively

Issued and outstanding - 10,948,818 shares and 11,208,500 shares at September 30, 2024 and December 31, 2023, respectively

109,488 112,085

8 unchanged sentences

Condensed Consolidated Statements of Income

Three Months Ended June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

9 unchanged sentences

Net Interest Income 9,432,799 9,127,368 28,841,473 28,331,430

Provision for credit losses 270,472 8,210 453,606 178,316

Net Interest Income After Provision for Credit Losses 9,305,421 9,325,042 18,955,068 19,025,746

Non-interest Income

(Reversal of)/provision for credit losses ( 98,848 ) 49,700 354,758 228,016

Net Interest Income After (Reversal of)/Provision for Credit Losses 9,531,647 9,077,668 28,486,715 28,103,414

Noninterest Income

Service charges on deposit accounts 325,470 274,653 908,121 831,431

1 unchanged sentence

Loan and lease servicing fees, including mortgage servicing right impairment 122,106 111,480 381,060 341,195

Net loss on sales of securities (includes $( 62,029 ), $ 0 , $( 62,029 ), and $ 0 , respectively, related to accumulated other comprehensive income reclassifications)

Net gains (loss) on sales of securities available for sale (includes $ 11,331 , $ 0 , $( 50,698 ), and $ 0 , respectively, related to accumulated other comprehensive income reclassifications)

11,331 — ( 50,698 ) —

1 unchanged sentence

Other income 353,787 377,660 1,013,953 955,688

Total non-interest income 1,112,092 1,178,122 2,241,027 2,274,846

Non-interest Expenses

Total noninterest income 1,325,180 1,157,118 3,566,207 3,431,964

Noninterest Expenses

Salaries and employee benefits 4,580,929 4,377,159 13,826,856 12,891,376

9 unchanged sentences

Other expenses 918,246 1,153,819 2,767,545 3,019,254

Total non-interest expenses 8,051,873 7,336,007 16,109,379 14,697,195

Total noninterest expenses 8,015,534 8,012,392 24,124,913 22,709,587

Income Before Income Tax Expense 2,841,293 2,222,394 7,928,009 8,825,791

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

1 unchanged sentence

Other Comprehensive Income (Loss)

Unrealized (loss) gain on available for sale securities, net of tax (benefit) expense of $( 354,927 ), $( 1,227,830 ), $( 1,112,426 ), and $ 412,287 , respectively

Unrealized gain (loss) on available for sale securities, net of tax expense (benefit) of $ 2,184,979 , $( 3,063,330 ), $ 1,072,553 , and $( 2,651,043 ), respectively

8,219,682 ( 11,523,955 ) 4,034,841 ( 9,972,970 )

reclassification adjustment for realized losses included in net income, net of tax benefit of $ 13,026 , $ 0 , $ 13,026 , and $ 0 , respectively

reclassification adjustment for realized gains (losses) included in net income, net of tax benefit of $ 2,380 , $ 0 , $( 10,647 ), and $ 0 , respectively

8,951 — ( 40,051 ) —

4 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Common Stock Additional

4 unchanged sentences

Outstanding Amount

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

Balances, June 30, 2024 11,018,824 $ 110,188 $ 99,813,232 $ 89,457,837 $ ( 11,090,068 ) $ ( 47,180,935 ) $ 131,110,254

Net income — — — 2,471,878 — — 2,471,878

Other comprehensive loss — — — — — ( 1,286,199 ) ( 1,286,199 )

Other comprehensive income — — — — — 8,210,731 8,210,731

ESOP shares earned — — ( 17,074 ) — 183,829 — 166,755

Forfeiture of restricted stock awards ( 400 ) ( 4 ) 4 — — — —

Stock based compensation — — 371,537 — — — 371,537

3 unchanged sentences

Repurchase of common stock ( 71,306 ) ( 713 ) ( 885,162 ) — — — ( 885,875 )

Balances, June 30, 2024 11,018,824 $ 110,188 $ 99,813,232 $ 89,457,837 $ ( 11,090,068 ) $ ( 47,180,935 ) $ 131,110,254

Six Months Ended June 30, 2024

Balances, September 30, 2024 10,948,818 $ 109,488 $ 99,282,509 $ 90,511,043 $ ( 10,906,239 ) $ ( 38,970,204 ) $ 140,026,597

Nine Months Ended September 30, 2024

Common Stock Additional

6 unchanged sentences

Net income — — — 6,901,373 — — 6,901,373

Other comprehensive loss — — — — — ( 4,135,839 ) ( 4,135,839 )

Other comprehensive income — — — — — 4,074,892 4,074,892

ESOP shares earned — — ( 75,005 ) — 551,487 — 476,482

5 unchanged sentences

Repurchase of common stock ( 261,234 ) ( 2,612 ) ( 3,092,550 ) — — — ( 3,095,162 )

Balances, June 30, 2024 11,018,824 $ 110,188 $ 99,813,232 $ 89,457,837 $ ( 11,090,068 ) $ ( 47,180,935 ) $ 131,110,254

Balances, September 30, 2024 10,948,818 $ 109,488 $ 99,282,509 $ 90,511,043 $ ( 10,906,239 ) $ ( 38,970,204 ) $ 140,026,597

See Notes to Condensed Consolidated Statements.

1 unchanged sentence

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Common Stock Additional

4 unchanged sentences

Outstanding Amount

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

Balances, June 30, 2023 11,448,621 $ 114,486 $ 103,216,869 $ 86,929,536 $ ( 11,825,384 ) $ ( 48,200,190 ) $ 130,235,317

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

5 unchanged sentences

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

Balances, June 30, 2023 11,448,621 $ 114,486 $ 103,216,869 $ 86,929,536 $ ( 11,825,384 ) $ ( 48,200,190 ) $ 130,235,317

Six Months Ended June 30, 2023

Balances, September 30, 2023 11,300,075 $ 113,001 $ 101,883,204 $ 87,407,660 $ ( 11,641,555 ) $ ( 59,724,145 ) $ 118,038,165

Nine Months Ended September 30, 2023

Common Stock Additional

8 unchanged sentences

Net income — — — 7,544,930 — — 7,544,930

Other comprehensive income — — — — — 1,550,985 1,550,985

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

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

3 unchanged sentences

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

Balances, June 30, 2023 11,448,621 $ 114,486 $ 103,216,869 $ 86,929,536 $ ( 11,825,384 ) $ ( 48,200,190 ) $ 130,235,317

Balances, September 30, 2023 11,300,075 $ 113,001 $ 101,883,204 $ 87,407,660 $ ( 11,641,555 ) $ ( 59,724,145 ) $ 118,038,165

See Notes to Condensed Consolidated Statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

Operating Activities

23 unchanged sentences

Investing Activities

Net change in interest-bearing time deposits ( 300,000 ) 245,000

Purchases of securities available for sale ( 3,502,331 ) ( 9,555,258 )

49 unchanged sentences

Those adjustments consist only of normal recurring adjustments.

The results of operations for the period are not necessarily indicative of the results to be expected for the full year.

The results of operations for the periods are not necessarily indicative of the results to be expected for the full year.

Use of Estimates in Preparation of Financial Statements

19 unchanged sentences

Under the JOBS Act, a company with total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year qualifies as an “emerging growth company.” The Company qualifies as and has elected to be an emerging growth company under the JOBS Act.

This status will expire on December 31, 2024.

An emerging growth company may elect to comply with new or amended accounting pronouncements in the same manner as a private company, but must make such election when the company is first required to file a registration statement.

1 unchanged sentence

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

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2023-07, Segment Reporting:

Improvements to Reportable Segment Disclosures , requiring public entities to disclose information about significant expenses for their reportable segments on both an interim and annual basis.

Public entities must disclose significant expense categories and amounts for each reportable segment, which are derived from expenses regularly reported to the entity’s chief operating decision-maker (CODM) and included in the segment's reported measures of profit or loss.

Additionally, public entities must disclose the title and position of the CODM and explain how the CODM uses these measures to assess segment performance.

The ASU also mandates certain segment-related interim disclosures that were previously required only on an annual basis.

The ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted, and the ASU should be applied prospectively.

Adoption of the ASU is not expected to have a material impact on the Company’s consolidated financial position or results of operations.

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

19 unchanged sentences

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.

4 unchanged sentences

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

June 30, 2024

September 30, 2024

Available for sale

3 unchanged sentences

State and municipal obligations 162,709 11 26,797 135,923

Mortgage-backed securities - government-sponsored enterprises (GSE) residential 127,201 16 22,595 104,622

Mortgage-backed securities - GSE residential 120,757 — 18,399 102,358

Corporate obligations 11,500 — 2,264 9,236

17 unchanged sentences

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

The amortized cost and fair value of investment securities at June 30, 2024, by contractual maturity, are shown below.

The amortized cost and fair value of investment 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.

8 unchanged sentences

Totals $ 316,581 $ 267,251 $ 4,052 $ 4,028

Investment securities with a carrying value of $ 102,075,000 and $ 162,430,000 were pledged at June 30, 2024 and December 31, 2023, respectively, to secure certain deposits and for other purposes as permitted or required by law.

Proceeds from the sale of securities available for sale for both the three and six months ended June 30, 2024 were $ 3,789,000 .

Gross losses recognized on the sale of securities available for sale for the three and six months ended June 30, 2024 were $ 62,000 , while there were no gross gains recognized during those same periods.

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

Investment securities with a carrying value of $ 115,500,000 and $ 162,430,000 were pledged at September 30, 2024 and December 31, 2023, respectively, to secure certain deposits and for other purposes as permitted or required by law.

Proceeds from the sale of securities available for sale for the three and nine months ended September 30, 2024 were $ 3,119,000 and $ 6,908,000 , respectively.

Gross losses recognized on the sale of securities available for sale for the three and nine months ended September 30, 2024 were $ 9,000 and $ 71,000 , respectively.

Gross gains on the sale of securities available for sale were $ 21,000 for both the three and nine months ended September 30, 2024.

There were no sales of securities available for sale for the three and nine months ended September 30, 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 June 30, 2024 and December 31, 2023 was $ 269,787,000 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.

Total fair value of these investments at September 30, 2024 and December 31, 2023 was $ 267,216,000 and $ 279,852,000 , respectively, which is approximately 98 % 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 June 30, 2024.

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

3 unchanged sentences

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

As of June 30, 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 June 30, 2024:

As of September 30, 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 September 30, 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 June 30, 2024 and December 31, 2023:

Description of

Securities June 30, 2024

Securities September 30, 2024

Less Than 12 Months 12 Months or More Total

42 unchanged sentences

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.

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.

1 unchanged sentence

Loans, Leases and Allowance

The following table shows the composition of the loan and lease portfolio at June 30, 2024 and December 31, 2023:

The following table shows the composition of the loan and lease portfolio at September 30, 2024 and December 31, 2023:

September 30,

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 June 30, 2024 and rating category as of December 31, 2023:

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, 2024 and rating category as of December 31, 2023:

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

As of June 30, 2024:

As of September 30, 2024:

Commercial mortgage

80 unchanged sentences

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

For the three months ended June 30, 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 June 30, 2024 and December 31, 2023:

June 30, 2024

For the three months ended September 30, 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 September 30, 2024 and December 31, 2023:

September 30, 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 June 30, 2024, and at December 31, 2023:

The following table presents information on the Company’s nonaccrual loans and leases at September 30, 2024, and at December 31, 2023:

September 30,

2024 December 31,

5 unchanged sentences

Total nonaccrual loans and leases $ 5,064 $ 128 $ 6,324 $ 1,385

During the three months ended June 30, 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 June 30, 2024 and December 31, 2023:

June 30, 2024

During the three months ended September 30, 2024 and December 31, 2023, the Company recognized $ 1,000 and $ 42,000 of interest income on nonaccrual loans and leases, respectively.

September 30, 2024

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

4 unchanged sentences

Residential mortgage — — 145 — 145 —

Direct financing leases — — — — — —

Total $ 10,159 $ 1,487 $ 145 $ 4,147 $ 15,938 $ 1,000

11 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 and six months ended June 30, 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 or six months ended June 30, 2024 and 2023, and that were modified in the twelve months prior to that default by borrowers experiencing financial difficulty.

During the three and nine months ended September 30, 2024, the Company modified two residential mortgage loans, both involving term extensions, to borrowers experiencing financial difficulty.

The total amortized cost basis of the loans modified at September 30, 2024 was $ 169,000 , representing 0.0 % of the Company's residential mortgage loan portfolio.

For both the three and nine months ended September 30, 2024, loan and lease modifications to borrowers experiencing financial difficulty resulted in a weighted average term extension of 20 months for the modified loans.

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

There were no modified loans and leases that had a payment default during the three or nine months ended September 30, 2024 and 2023, and that were modified in the twelve months prior to that default by borrowers experiencing financial difficulty.

Other Real Estate Owned

Other real estate owned is included in other assets on the Condensed Consolidated Balance Sheets.

At June 30, 2024 and December 31, 2023, other real estate owned included $ 43,200 and $ 136,000 , respectively, of foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property.

At June 30, 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.

At September 30, 2024, there was no other real estate owned, compared to $ 136,000 of other real estate owned at December 31, 2023, consisting of foreclosed residential real estate properties.

At September 30, 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,

4 unchanged sentences

Net investment in direct finance leases $ 147,057 $ 156,598

The following table summarizes the future minimum lease payments receivable subsequent to June 30, 2024:

The following table summarizes the future minimum lease payments receivable subsequent to September 30, 2024:

Remainder of 2024 $ 17,207

25 unchanged sentences

• the effect of other external factors.

The following tables summarize changes in the allowance for credit losses by segment for the three and six months ended June 30, 2024 and 2023, respectively:

Balances, March 31, 2024 Provision for (reversal of) credit losses Charge-offs Recoveries Balances, June 30, 2024

The following tables summarize changes in the allowance for credit losses by segment for the three and nine months ended September 30, 2024 and 2023, respectively:

Balances, June 30, 2024 Provision for (reversal of) credit losses Charge-offs Recoveries Balances, September 30, 2024

Commercial mortgage $ 4,781 $ ( 531 ) $ — $ — $ 4,250

7 unchanged sentences

Total $ 15,882 $ 337 $ ( 513 ) $ 67 $ 15,773

Balances, December 31, 2023 Provision for (reversal of) credit losses Charge-offs Recoveries Balances, June 30, 2024

Balances, December 31, 2023 Provision for (reversal of) credit losses Charge-offs Recoveries Balances, September 30, 2024

Commercial mortgage $ 4,655 $ ( 405 ) $ — $ — $ 4,250

7 unchanged sentences

Total $ 15,663 $ 1,330 $ ( 1,532 ) $ 312 $ 15,773

Balances, March 31, 2023 Provision for (reversal of) credit losses Charge-offs Recoveries Balances, June 30, 2023

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

Commercial mortgage $ 4,963 $ 215 $ — $ — $ 5,178

7 unchanged sentences

Total $ 15,391 $ 404 $ ( 353 ) $ 54 $ 15,496

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

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

Commercial mortgage $ 4,776 $ ( 395 ) $ 4,381 $ 784 $ — $ 13 $ 5,178

7 unchanged sentences

Total $ 12,413 $ 2,664 $ 15,077 $ 855 $ ( 787 ) $ 351 $ 15,496

During the second quarter of 2024, the allowance for credit losses on loans and leases increased from $ 15.8 million at March 31, 2023, to $ 15.9 million at June 30, 2024.

The increase was attributable to additional provisions totaling $ 507,000 during the second quarter of 2024, partially offset by net charge-offs of $ 450,000 .

Multiple loan categories experienced loan growth while a few declined slightly, as compared to prior quarter.

• Commercial Mortgage – allowance increased due to loan balances increasing $ 17.8 million.

• Commercial & Industrial – allowance increased due to loan balances increasing $ 3.5 million.

• Construction & Development – allowance decreased due to loan balances decreasing $ 25.5 million.

• Multi-Family – allowance increased due to balances increasing $ 20.5 million.

• Residential Mortgage – allowance increased due to balances increasing $ 4.0 million.

• Home Equity – allowance increased due to balances increasing $ 1.6 million.

• Direct Financing Leases – allowance increased while balances decreased $ 4.3 million, due to a higher calculated reserve percentage.

• Consumer – allowance increased slightly, while balances decreased $ 222,000 .

Our commercial loan portfolio, consisting of commercial and multi-family real estate loans, commercial and industrial loans, and construction loans, represented 68.9 % and 68.1 % of our portfolio as of June 30, 2024 and December 31, 2023, respectively.

The allowance for credit losses on loans and leases allocated to the commercial loan portfolio represented 74.1 % of our total allowance at both June 30, 2024 and December 31, 2023.

During the third quarter of 2024, the allowance for credit losses on loans and leases decreased from $ 15.9 million at June 30, 2024, to $ 15.8 million at September 30, 2024.

The decrease was attributable to additional provisions totaling $ 337,000 during the third quarter of 2024, offset by net charge-offs of $ 446,000 .

During the third quarter of 2024, updates were made to our allowance for credit losses calculation, including macroeconomic inputs, credit metrics, and refreshed loss driver data.

Additionally, the availability of increased details within certain loan categories allowed for more precise risk profiling.

As a result of these refinements, several loan and lease categories saw changes to their respective loss rates during the quarter.

• Commercial Mortgage – allowance decreased due to loan balances decreasing $ 7.8 million.

• Commercial & Industrial – allowance increased while loan balances decreased $ 570,000 .

• Construction & Development – allowance decreased while loan balances increased $ 1.2 million.

• Multi-Family – allowance increased due to loan balances increasing $ 9.5 million.

• Residential Mortgage – allowance increased while loan balances decreased $ 2.2 million.

• Home Equity – allowance increased due to loan balances increasing $ 1.5 million.

• Direct Financing Leases – allowance increased while loan balances decreased $ 1.1 million.

• Consumer – allowance increased while loan balances decreased $ 174,000 .

Our commercial loan portfolio, consisting of commercial and multi-family real estate loans, commercial and industrial loans, and construction loans, represented 69.1 % and 68.1 % of our portfolio as of September 30, 2024 and December 31, 2023, respectively.

The allowance for credit losses on loans and leases allocated to the commercial loan portfolio represented 68.3 % and 74.1 % of our total allowance at September 30, 2024 and December 31, 2023, respectively.

Economic Outlook

2 unchanged sentences

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 June 30, 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.

As of September 30, 2024, the primary economic factors affecting the Company's loan portfolio continued to be persistent inflation, higher interest rates, geopolitical risk, economic growth, and the unemployment 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.

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.

As high-growth areas, these market regions specialize in commercial real estate loans.

Their respective forecasts are described below:

• Columbus, Ohio – The market region continues to forecast overall job growth in 2024.

Construction activity has slowed, 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.

1 unchanged sentence

• 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.

Statistically, the market region data for the past three quarters has been constant while reflecting a certain level of market uncertainty.

Recession fears remain.

The region’s economic outlook for 2024 is mostly, slow but steady.

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

2 unchanged sentences

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

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

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

• Indianapolis, Indiana – Based upon year-to-date 2024 economic results, the market region is expecting stable economic growth throughout 2024.

The first half of 2024 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.

4 unchanged sentences

The estimate of expected losses on unfunded commitments is calculated based on the loss rate for the loan or lease segment in which the loan or lease commitments would be classified if funded, adjusted for the estimate of funding probability.

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

The following tables detail activity in the allowance for credit losses on unfunded commitments during the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30,

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

The following tables detail activity in the allowance for credit losses on unfunded commitments during the three and nine months ended September 30, 2024 and 2023:

Three Months Ended September 30,

Beginning balance $ 1,103 $ 2,101

1 unchanged sentence

Ending balance $ 667 $ 1,747

Six Months Ended June 30,

Nine Months Ended September 30,

Beginning balance $ 1,642 $ —

12 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 June 30, 2024 and December 31, 2023:

Fair Value Measurements Using

2 unchanged sentences

(Level 2) Significant

June 30, 2024

September 30, 2024

Available for sale securities

20 unchanged sentences

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 six months ended June 30, 2024.

There have been no significant changes in the valuation techniques during the nine months ended September 30, 2024.

Available for Sale Securities

5 unchanged sentences

Nonrecurring Measurements

As of June 30, 2024 and December 31, 2023, there were no assets or liabilities measured at fair value on a nonrecurring basis.

As of September 30, 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 June 30, 2024 and December 31, 2023:

The following tables present estimated fair values of the Company’s financial instruments at September 30, 2024 and December 31, 2023:

Fair Value Measurements Using

2 unchanged sentences

(Level 2) Significant

June 30, 2024

September 30, 2024

Financial assets

Cash and cash equivalents $ 19,570 $ 19,570 $ — $ —

Interest-earning time deposits 300 — 300 —

Available for sale securities 267,251 2,199 265,052 —

30 unchanged sentences

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

Three Months Ended June 30,

Three Months Ended September 30,

Net income $ 2,472 $ 1,949

8 unchanged sentences

Diluted Earnings Per Share $ 0.24 $ 0.19

Six Months Ended June 30,

Nine Months Ended September 30,

Net income $ 6,901 $ 7,545

11 unchanged sentences

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 $ 70,000 and $ 138,000 for the three and six months ended June 30, 2024, and $ 66,000 and $ 104,000 for the three and six months ended June 30, 2023, respectively.

The Company’s expense for the plan was $ 76,000 and $ 214,000 for the three and nine months ended September 30, 2024, and $ 93,000 and $ 196,000 for the three and nine months ended September 30, 2023, respectively.

Employee Stock Ownership Plan

5 unchanged sentences

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, 816,089 and 843,142 shares of common stock acquired by the ESOP were shown as a reduction of stockholders’ equity at June 30, 2024 and December 31, 2023, respectively.

Accordingly, 802,562 and 843,142 shares of common stock acquired by the ESOP were shown as a reduction of stockholders’ equity at September 30, 2024 and December 31, 2023, respectively.

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

ESOP expense was $ 156,000 and $ 310,000 for the three and six months ended June 30, 2024, and was $ 141,000 and $ 311,000 for the three and six months ended June 30, 2023, respectively.

ESOP expense was $ 167,000 and $ 476,000 for the three and nine months ended September 30, 2024, and was $ 154,000 and $ 465,000 for the three and nine months ended September 30, 2023, respectively.

September 30,

2024 December 31,

14 unchanged sentences

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 award activity in the 2020 EIP during the six months ended June 30, 2024.

Six Months Ended June 30, 2024

The following table summarizes the restricted stock award activity in the 2020 EIP during the nine months ended September 30, 2024.

Nine Months Ended September 30, 2024

Number of Restricted Shares Weighted Average Grant Date Fair Value

2 unchanged sentences

Forfeited ( 400 ) 13.86

Non-vested, June 30, 2024 83,379 10.55

Total compensation cost recognized in the income statement for restricted stock awards during the three and six months ended June 30, 2024 was $ 217,000 and $ 436,000 , and the related tax benefit recognized was $ 46,000 and $ 92,000 , respectively.

As of June 30, 2024, unrecognized compensation expense related to restricted stock awards was $ 878,000 .

Non-vested, September 30, 2024 83,379 10.55

Total compensation cost recognized in the income statement for restricted stock awards during the three and nine months ended September 30, 2024 was $ 222,000 and $ 658,000 , and the related tax benefit recognized was $ 47,000 and $ 138,000 , respectively.

As of September 30, 2024, unrecognized compensation expense related to restricted stock awards was $ 656,000 .

Stock Option Plan.

3 unchanged sentences

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 six months ended June 30, 2024.

Six Months Ended June 30, 2024

The following table summarizes the stock option activity in the 2020 EIP during the nine months ended September 30, 2024.

Nine Months Ended September 30, 2024

Number of Shares Weighted-Average Exercise Price

10 unchanged sentences

Expected life of options 6.1 years

A summary of the status of the Company stock option shares as of June 30, 2024 is presented below.

A summary of the status of the Company stock option shares as of September 30, 2024 is presented below.

Shares Weighted Average Grant Date Fair Value

2 unchanged sentences

Forfeited ( 800 ) 3.02

Non-vested, June 30, 2024 204,096 $ 2.91

Total compensation cost recognized in the income statement for option-based payment arrangements for the three and six months ended June 30, 2024 was $ 147,000 and $ 295,000 , and the related tax benefit recognized was $ 16,000 and $ 32,000 , respectively.

As of June 30, 2024, unrecognized compensation expense related to the stock option awards was $ 592,000 .

Non-vested, September 30, 2024 204,096 $ 2.91

Total compensation cost recognized in the income statement for option-based payment arrangements for the three and nine months ended September 30, 2024 was $ 150,000 and $ 445,000 , and the related tax benefit recognized was $ 16,000 and $ 48,000 , respectively.

As of September 30, 2024, unrecognized compensation expense related to the stock option awards was $ 443,000 .

Qualified Affordable Housing Investments

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

At June 30, 2024 and December 31, 2023, the balance of these investments in LIHTC totaled $ 1.0 million and $ 1.1 million, respectively.

At September 30, 2024 and December 31, 2023, the balance of these investments in LIHTC totaled $ 995,000 and $ 1.1 million, respectively.

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 and six months ended June 30, 2024 and 2023.

Three Months Ended June 30, Six Months Ended June 30,

The following table summarizes the amortization expense and tax credits recognized for the Company's LIHTC investments for the three and nine months ended September 30, 2024 and 2023.

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

2024 2023 2024 2023

2 unchanged sentences

Subsequent Event

Subsequent to June 30, 2024 through August 9, 2024, the Company purchased 26,917 shares of the Company's common stock pursuant to the existing stock repurchase program, leaving 651,191 shares available for future repurchase.

Subsequent to September 30, 2024 through November 13, 2024, the Company purchased 40,228 shares of the Company's common stock pursuant to the existing stock repurchase program, leaving 566,574 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