Bank7 Corporation (NASDAQ:BSVN) Q4 2023 Earnings Conference Call January 29, 2024 12:00 PM ET Company Participants Thomas Travis - President & CEO Jason Estes - EVP, Chief Credit Officer, President & Chief Credit Officer, the Bank Kelly Harris - CFO & EVP Conference Call Participants Brady Gailey - KBW Nathan Race - Piper Sandler Companies Matt Olney - Stephens, Inc. Operator Welcome to Bank7 Corp's fourth-quarter and full year earnings call. [Operator Instructions]. Please note this event is being recorded ...

Bank7 (BSVN) came out with quarterly earnings of $0.12 per share, beating the Zacks Consensus Estimate of a loss of $0.08 per share. This compares to earnings of $0.91 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 250%. A quarter ago, it was expected that this company would post earnings of $1.03 per share when it actually produced earnings of $0.85, delivering a surprise of -17.48%.Over the last four quarters, the company h ...

The price trend for Bank7 (BSVN) has been bearish lately and the stock has lost 7.6% over the past four weeks. However, the formation of a hammer chart pattern in its last trading session indicates that the stock could witness a trend reversal soon, as bulls might have gained significant control over the price to help it find support.While the formation of a hammer pattern is a technical indication of nearing a bottom with potential exhaustion of selling pressure, rising optimism among Wall Street analysts ...

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Bank7 Corp.'s unaudited condensed consolidated financial statements as of September 30, 2023, including Balance Sheets, Statements of Comprehensive Income, Statements of Shareholders' Equity, and Statements of Cash Flows, along with accompanying notes, highlighting a 28.2% increase in net income for the nine months ended September 30, 2023, and the adoption of the CECL accounting standard on January 1, 2023 [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets increased by **11.9%** to **$1.77 billion** as of September 30, 2023, from **$1.58 billion** at December 31, 2022, primarily driven by an increase in net loans, while total liabilities grew to **$1.60 billion** due to an **11.3%** increase in total deposits, and total shareholders' equity rose by **16.5%** to **$167.9 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$1,772,399** | **$1,584,169** | | Loans, net | $1,372,128 | $1,255,722 | | Total Deposits | $1,593,572 | $1,431,400 | | **Total Liabilities** | **$1,604,492** | **$1,440,069** | | **Total Shareholders' Equity** | **$167,907** | **$144,100** | [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) For the third quarter of 2023, net income was **$7.9 million**, a slight decrease from **$8.0 million** in Q3 2022, but for the nine months ended September 30, 2023, net income increased by **28.0%** to **$27.2 million** from **$21.2 million** in the prior-year period, driven by a significant increase in net interest income to **$61.3 million**, partially offset by a higher provision for credit losses Income Statement Highlights (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $20,746 | $19,045 | $61,250 | $49,047 | | Provision for Credit Losses | $4,159 | $2,348 | $5,645 | $2,843 | | **Net Income** | **$7,853** | **$8,041** | **$27,206** | **$21,249** | | Diluted EPS | $0.85 | $0.87 | $2.94 | $2.31 | [Unaudited Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Total shareholders' equity increased from **$135.8 million** at the end of Q3 2022 to **$167.9 million** at the end of Q3 2023, primarily driven by **$27.2 million** in net income for the nine-month period, partially offset by **$4.9 million** in cash dividends and a **$572,000** reduction to retained earnings due to CECL adoption - Retained earnings grew to **$79.8 million** as of September 30, 2023, up from **$51.1 million** a year prior, reflecting strong profitability[15](index=15&type=chunk) - Cash dividends declared increased to **$0.21 per share** in Q3 2023 from **$0.12 per share** in Q3 2022[15](index=15&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2023, net cash provided by operating activities was **$33.0 million**, net cash used in investing activities was **$130.5 million** primarily due to a net increase in loans, and net cash provided by financing activities was **$157.9 million** driven by a significant net increase in deposits, resulting in a net increase in cash of **$60.4 million** for the period Cash Flow Summary (Nine Months Ended, in thousands) | Activity | September 30, 2023 | September 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $32,967 | $29,935 | | Net cash used in investing activities | ($130,487) | ($304,107) | | Net cash provided by financing activities | $157,895 | $216,561 | | **Net Increase/(Decrease) in Cash** | **$60,375** | **($57,611)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed information on accounting policies and financial statement line items, highlighting the adoption of the CECL standard on January 1, 2023, which changed the methodology for calculating the allowance for credit losses and resulted in a **$250,000** increase to the allowance for credit losses on loans upon adoption, along with details on loan and securities portfolios, capital adequacy, and a significant nonaccrual loan customer - The company adopted the Current Expected Credit Loss (CECL) standard on January 1, 2023, replacing the incurred loss methodology with an expected loss model, which resulted in a net decrease to retained earnings of **$572,000**[62](index=62&type=chunk)[48](index=48&type=chunk) Impact of CECL Adoption on Allowance for Credit Losses (in thousands) | Loan Category | Impact of ASC 326 Adoption | | :--- | :--- | | Commercial real estate | ($262) | | Commercial & industrial | $716 | | **Total Allowance for credit losses on loans** | **$250** | | **Allowance for credit losses on off-balance sheet credit exposures** | **$500** | | **Total Impact** | **$750** | - Gross loans grew to **$1.40 billion** as of September 30, 2023, from **$1.27 billion** at year-end 2022, with the allowance for credit losses increasing to **$20.6 million** from **$14.7 million** over the same period[240](index=240&type=chunk) - During Q3 2023, a single loan customer filed for bankruptcy, leading to a **$3.0 million** ACL reserve, with the company expecting an additional reserve or charge-off in Q4 related to this customer[305](index=305&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance and condition, highlighting organic growth in its key markets, with net interest income growing **24.9%** year-over-year for the first nine months of 2023, driven by higher loan volumes and yields, partially offset by a significant increase in the provision for credit losses due to a single large commercial loan customer filing for bankruptcy, while total assets grew **11.9%** to **$1.77 billion** since year-end 2022, maintaining strong capital and liquidity positions [Results of Operations](index=41&type=section&id=Results%20of%20Operations) For the nine months ended September 30, 2023, net interest income increased by **$12.2 million (24.9%)** to **$61.3 million** compared to the prior year, driven by a **17.8%** increase in average loans and higher loan yields, while the provision for credit losses doubled to **$5.7 million** largely due to a single nonperforming loan, and noninterest income grew **12.0%** as noninterest expense rose **9.3%** primarily from higher compensation costs Net Interest Income Analysis (Nine Months Ended) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Average Interest-Earning Assets | $1,634.8M | $1,407.9M | | Average Interest-Bearing Liabilities | $1,070.4M | $868.3M | | Net Interest Income | $61.3M | $49.0M | | Net Interest Margin | 5.01% | 4.66% | - The provision for credit losses for the first nine months of 2023 was **$5.7 million**, compared to **$2.8 million** for the same period in 2022, with the increase largely attributable to a single loan customer filing for bankruptcy[360](index=360&type=chunk)[331](index=331&type=chunk) - Salaries and employee benefits for the first nine months of 2023 increased by **$2.2 million (17.7%)** year-over-year, attributed to increased compensation to remain competitive[346](index=346&type=chunk) [Financial Condition](index=48&type=section&id=Financial%20Condition) As of September 30, 2023, total assets reached **$1.77 billion**, an **11.9%** increase from year-end 2022, fueled by organic loan growth to **$1.40 billion**, while nonperforming assets rose significantly to **$51.1 million (2.88% of total assets)** from **$18.0 million (1.13% of total assets)** at year-end, primarily due to one large nonaccrual loan, and total deposits grew to **$1.59 billion**, with the company remaining well-capitalized - Total assets increased by **$188.2 million**, or **11.9%**, to **$1.77 billion** as of September 30, 2023, compared to December 31, 2022, due to continued organic growth[99](index=99&type=chunk) Nonperforming Assets (in thousands) | Metric | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Nonaccrual loans | $41,243 | $8,039 | | **Total nonperforming assets** | **$51,099** | **$17,980** | | Ratio of nonperforming assets to total assets | 2.88% | 1.13% | - The allowance for credit losses as a percentage of total loans increased to **1.48%** at September 30, 2023, from **1.16%** at December 31, 2022[366](index=366&type=chunk) [Critical Accounting Policies and Estimates](index=58&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Management identifies the Allowance for Credit Losses, Goodwill and Intangibles, and Income Taxes as critical accounting policies, highlighting the adoption of CECL on January 1, 2023, as a significant change to an expected loss model that requires substantial management judgment regarding future economic conditions - The allowance for credit losses is a critical accounting estimate, with the methodology changing to the Current Expected Credit Loss (CECL) model effective January 1, 2023[145](index=145&type=chunk) - Goodwill is tested annually for impairment, or more frequently if indicators are present, and as of September 30, 2023, goodwill was **$8.5 million**[147](index=147&type=chunk)[396](index=396&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate volatility, which it manages through its Asset/Liability Committee (ALCO) using simulation models, and the analysis shows the company is asset-sensitive, projecting an **11.74%** increase in net interest income over a 12-month horizon with a hypothetical **+200 basis point** parallel rate shock as of September 30, 2023 - The primary component of market risk is interest rate volatility, and the company does not use derivatives, options, or futures contracts to mitigate this risk[149](index=149&type=chunk)[150](index=150&type=chunk) Interest Rate Sensitivity Analysis (Simulated Change over 12-Month Horizon) | Change in Interest Rates (bps) | % Change in Net Interest Income (Sept 30, 2023) | % Change in Fair Value of Equity (Sept 30, 2023) | | :--- | :--- | :--- | | +300 | 15.67% | 19.00% | | +200 | 11.74% | 18.05% | | +100 | 7.76% | 16.99% | | -100 | -1.33% | 14.50% | [Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation conducted by management, including the CEO and CFO, the company's disclosure controls and procedures were deemed effective as of September 30, 2023, with no material changes in internal control over financial reporting during the third quarter - Management, including the Chief Executive Officer and Chief Financial Officer, concluded that disclosure controls and procedures were effective as of September 30, 2023[197](index=197&type=chunk) - No changes occurred in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, such controls[198](index=198&type=chunk) [PART II. OTHER INFORMATION](index=61&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal actions incidental to its business, and management believes that the outcome of these proceedings, individually or in aggregate, will not have a material adverse effect on the company's financial statements - Management is of the opinion that no existing legal proceedings would have a material adverse effect on the company's financial statements if determined adversely[162](index=162&type=chunk) [Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) The report highlights a specific risk concerning the company's concentration in Commercial Real Estate (CRE) lending, noting that as of September 30, 2023, the Regulatory CRE to total Bank capital ratio was **294.00%**, which is below the **300%** regulatory guidance level that could trigger additional supervisory scrutiny, and this ratio has decreased from **304.72%** at year-end 2022 - The company has a concentration in commercial real estate (CRE) lending, which could expose it to additional supervisory analysis from regulators if certain thresholds are exceeded[164](index=164&type=chunk) CRE Concentration Ratios | Metric | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Regulatory CRE to Total Bank Capital | 294.00% | 304.72% | | Construction/Land Loans to Total Bank Capital | 74.85% | 101.20% | [Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a stock repurchase plan, approved in October 2021, authorizing the repurchase of up to **750,000** shares of its common stock, but no shares were repurchased under this plan during the nine months ended September 30, 2023 - The Board of Directors approved a repurchase plan for up to **750,000 shares** of common stock, and no shares were purchased under this plan during the nine months ended September 30, 2023[139](index=139&type=chunk) [Defaults Upon Senior Securities, Mine Safety Disclosures, and Other Information](index=62&type=section&id=Item%203,%204,%205) For the reporting period, the company reported no defaults upon senior securities, had no mine safety disclosures to make, and provided no other information under Item 5 - The company reported "None" for Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information)[140](index=140&type=chunk)[175](index=175&type=chunk) [Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, which include the CEO and CFO certifications required by the Sarbanes-Oxley Act of 2002, and the XBRL Interactive Data Files - Exhibits filed include certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1) and XBRL data files (Exhibit 101)[189](index=189&type=chunk)

Bank7 Corp. (NASDAQ:BSVN) Q3 2023 Earnings Conference Call October 26, 2023 10:00 AM ET Company Participants Tom Travis - President & Chief Executive Officer Jason Estes - Chief Credit Officer Kelly Harris - Chief Financial Officer Conference Call Participants Thomas Wendler - Stephens Nathan Race - Piper Sandler Operator Welcome to the Bank7 Corp's Third Quarter Earnings Call. Before we get started, I'd like to highlight the legal information and disclaimer on page 25 of the investor presentation. For thos ...

Financial Performance - Total assets increased to $1.772 billion, a 12.1% increase compared to Q3 2022[2] - Total loans reached $1.393 billion, a 12.9% increase compared to Q3 2022[2] - Total deposits amounted to $1.594 billion, a 10.9% increase compared to Q3 2022[2] - Net income was $10.907 million, a decrease of 2.3% compared to Q3 2022[2] - Pre-provision pre-tax earnings reached $14.37 million[2] Balance Sheet & Liquidity - Uninsured deposits represent 22.77% of total deposits[7] - Adjusted uninsured deposits represent 17.76% of total deposits[7] - Cash plus unpledged securities and undrawn lines-of-credit equals $482.29 million, providing 1.70x coverage of adjusted uninsured deposits[7] - $1.08 billion or 77.52% of loans reprice in 1 year or less[17] Loan Portfolio - Commercial & Industrial loans accounted for $343.80 million or 24.63% of the loan portfolio[74] - Hospitality loans accounted for $292.80 million or 20.97% of the loan portfolio[74] - Energy loans accounted for $223.50 million or 16.01% of the loan portfolio[74] Efficiency & Profitability - Efficiency ratio decreased to 33.61%, a 14.86% decrease compared to Q3 2022[7] - Noninterest expense to average assets was 1.71%, an 8.08% decrease compared to Q3 2022[17]

A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. During the six months ended June 30, 2023, no material amount of interest income was recognized on collateral-dependent loans subsequent to their classification as collateral-dependent. Impaired loans included nonperforming loans and also included loans modified in troubled-debt restructurings where concession ...

Bank7 Corp. (NASDAQ:BSVN) Q2 2023 Results Conference Call July 20, 2023 10:00 AM ET Company Participants Tom Travis - President, CEO Jason Estes - CCO Kelly Harris - CFO Conference Call Participants Brady Gailey - KBW Nathan Race - Piper Sandler Tom Wendler - Stephens Operator Good morning, everyone. Welcome to Bank7 Second Quarter Earnings Call. Before we get started, I'd like to highlight the legal information and disclaimer on Page 25 of the investor presentation. For those who do not have access to the ...

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements, management's analysis, market risk disclosures, and controls for the reporting period [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Q1 2023 report increased net income and total assets, reflecting the adoption of the CECL methodology [Unaudited Condensed Consolidated Balance Sheets](index=2&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and shareholders' equity as of March 31, 2023, and December 31, 2022 Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$1,660,539** | **$1,584,169** | | Loans, net | $1,263,911 | $1,255,722 | | Total Deposits | $1,491,559 | $1,429,300 | | **Total Liabilities** | **$1,506,533** | **$1,440,069** | | **Total Shareholders' Equity** | **$154,006** | **$144,100** | [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section outlines the company's financial performance, including net interest income, provision for credit losses, and net income for the reporting periods Statements of Comprehensive Income Highlights (in thousands, except per share data) | Metric | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Net Interest Income | $20,006 | $14,208 | | Provision for Credit Losses | $475 | $276 | | **Net Income** | **$9,607** | **$6,184** | | Earnings per common share - basic | $1.05 | $0.68 | | Earnings per common share - diluted | $1.04 | $0.67 | [Unaudited Condensed Consolidated Statements of Shareholders' Equity](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This section details changes in shareholders' equity, including net income, dividends, and the impact of accounting principle changes - Total shareholders' equity increased from **$128.6 million** at March 31, 2022, to **$154.0 million** at March 31, 2023, driven by **net income of $9.6 million**, partially offset by **cash dividends of $1.5 million** and a **CECL adoption impact of ($572,000)**[39](index=39&type=chunk) - Cash dividends declared increased to **$0.16 per share** for the quarter ended March 31, 2023, up from **$0.12 per share** for the same period in 2022[39](index=39&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $13,573 | $12,160 | | Net cash used in investing activities | ($6,168) | ($147,368) | | Net cash provided by financing activities | $60,869 | $64,642 | | **Net Increase/(Decrease) in Cash** | **$68,274** | **($70,566)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of significant accounting policies, estimates, and financial statement line items, including CECL adoption - On January 1, 2023, the Company adopted ASU 2016-13 (CECL), resulting in a **net decrease to retained earnings of $572,000**[25](index=25&type=chunk)[48](index=48&type=chunk) - The adoption of CECL increased the allowance for credit losses on loans by **$250,000** and established a new allowance for credit losses on off-balance sheet credit exposures of **$500,000** as of January 1, 2023[26](index=26&type=chunk)[49](index=49&type=chunk) - The Company's loan portfolio is segmented into Commercial & Industrial, Real Estate, Agricultural, and Consumer categories for risk assessment, utilizing both asset-specific and pooled component methodologies for credit loss estimation[54](index=54&type=chunk)[95](index=95&type=chunk)[116](index=116&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights strong Q1 2023 performance with increased pre-tax income, expanded net interest margin, and robust asset growth, while maintaining strong capital levels [Results of Operations](index=36&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, focusing on income, expenses, and key profitability metrics for the reporting period - Pre-tax income for Q1 2023 was **$12.6 million**, a significant increase from **$8.2 million** in Q1 2022, with return on average equity improving to **26.15%** from **19.26%**[236](index=236&type=chunk)[237](index=237&type=chunk) - Net interest margin expanded to **5.14%** in Q1 2023 from **4.42%** in Q1 2022, driven by a **$267.2 million** increase in average loans and a rise in loan yields to **8.09%** from **5.81%**[215](index=215&type=chunk)[240](index=240&type=chunk) - The provision for credit losses was **$475,000** for Q1 2023, compared to **$276,000** for Q1 2022[212](index=212&type=chunk) - Noninterest expense increased by **19.1%** to **$7.6 million** in Q1 2023, primarily due to a **16.2%** rise in salaries and employee benefits to remain competitive[223](index=223&type=chunk)[224](index=224&type=chunk) [Financial Condition](index=41&type=section&id=Financial%20Condition) This section reviews the company's balance sheet, including asset growth, loan portfolio composition, credit quality, and capital adequacy - Total assets increased by **4.8%** to **$1.66 billion** as of March 31, 2023, from **$1.58 billion** at year-end 2022, driven by organic growth[226](index=226&type=chunk) Loan Portfolio Composition (in thousands) | Loan Category | March 31, 2023 | % of Total | Dec 31, 2022 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Commercial real estate | $703,546 | 54.9% | $679,132 | 53.3% | | Commercial & industrial | $502,282 | 39.2% | $513,011 | 40.3% | | Agricultural | $60,870 | 4.7% | $66,145 | 5.2% | | Consumer | $15,135 | 1.2% | $14,949 | 1.2% | | **Gross loans** | **$1,281,833** | **100.0%** | **$1,273,237** | **100.0%** | - The allowance for credit losses increased to **$15.5 million** at March 31, 2023, from **$14.7 million** at December 31, 2022, representing **1.21%** of total loans at quarter-end[229](index=229&type=chunk)[246](index=246&type=chunk) - Total deposits grew to **$1.49 billion** at March 31, 2023, from **$1.43 billion** at year-end 2022, with noninterest-bearing deposits constituting **28.6%** of total deposits[266](index=266&type=chunk)[292](index=292&type=chunk) - The Company and the Bank exceeded all regulatory capital requirements and were considered "well-capitalized" as of March 31, 2023[270](index=270&type=chunk)[311](index=311&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate volatility, managed by ALCO through balance sheet structuring and simulation modeling, showing sensitivity of net interest income to rate changes - The primary component of market risk for the company is interest rate volatility, managed by the Asset/Liability Committee (ALCO) in accordance with board-approved policies[143](index=143&type=chunk)[146](index=146&type=chunk) Simulated Change in Net Interest Income & Fair Value of Equity (12-Month Horizon) | Change in Interest Rates (Basis Points) | % Change in Net Interest Income (Mar 2023) | % Change in Fair Value of Equity (Mar 2023) | | :--- | :--- | :--- | | +400 | 16.07% | 18.57% | | +300 | 12.04% | 17.77% | | +200 | 7.98% | 16.79% | | +100 | 3.88% | 15.55% | | Base | -0.50% | 14.16% | | -100 | -5.21% | 12.53% | [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting - Based on an evaluation as of March 31, 2023, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[153](index=153&type=chunk) - No changes occurred in the company's internal control over financial reporting during the first quarter of 2023 that have materially affected, or are reasonably likely to materially affect, these controls[154](index=154&type=chunk) [PART II. OTHER INFORMATION](index=52&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section addresses legal proceedings, key risk factors, equity security sales, defaults, and required exhibits [Item 1. Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) The company is party to routine legal actions incidental to its business but does not expect any to have a material adverse effect on its financial statements - The company is involved in routine legal actions incidental to its business but does not expect any to have a material adverse effect on its financial statements[155](index=155&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from its high concentration in Commercial Real Estate lending and potential adverse impacts from broader banking industry developments - The company has a significant concentration in Commercial Real Estate (CRE) lending, with Regulatory CRE representing **290.49%** of total Bank capital as of March 31, 2023, nearing the **300%** regulatory guidance threshold for additional supervisory analysis[157](index=157&type=chunk)[159](index=159&type=chunk) - Recent bank failures in the industry are cited as a risk factor, potentially decreasing customer confidence and leading to deposit outflows, which could adversely impact liquidity and results of operations[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a stock repurchase plan authorizing the buyback of up to 750,000 shares of its common stock, approved on October 28, 2021, with no shares repurchased during Q1 2023 - The company has a board-approved repurchase plan authorizing up to **750,000 shares**, but no shares were purchased under this plan during the three months ended March 31, 2023[163](index=163&type=chunk) [Item 3. Defaults Upon Senior Securities](index=53&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - None[164](index=164&type=chunk)[308](index=308&type=chunk) [Item 4. Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[164](index=164&type=chunk) [Item 5. Other Information](index=53&type=section&id=Item%205.%20Other%20Information) There was no other information to report for the period - None[164](index=164&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications pursuant to the Sarbanes-Oxley Act of 2002 and XBRL data files - The report includes required certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1) and XBRL instance documents[165](index=165&type=chunk)