It is probably fair to say that regional banks rely heavily upon the yield curve or, more specifically the slope of that curve. The slope determines the spread, or difference in rates that banks can charge for loans vs. the rate on deposits they must pay to fuel the lending. This is also known as NIM (Net Interest Margin), in some ways the Gross Margin for banks.The yield curve is a bit of shackle on demand for banking products and can tempt the typically conservative operators of regional banks to venture ...

Financial Performance - Net income for the three months ended September 30, 2023, was $3.684 million, compared to $2.612 million for the same period in 2022[285]. - Basic earnings per share for the three months ended September 30, 2023, was $0.35, compared to $0.33 for the same period in 2022[284]. - Interest income rose by $3.1 million, or 36.6%, to $11.7 million for the three months ended September 30, 2023, driven by a $1.8 million increase in loan interest income[318]. - Interest income for the nine months ended September 30, 2023, increased by $7.9 million, or 33.2%, to $31.9 million compared to $24.0 million for the same period in 2022[331]. - Noninterest income totaled $3.1 million for the nine months ended September 30, 2023, a slight decrease from $3.3 million in the same period of 2022[322]. Loan and Deposit Activity - Net loans receivable increased by $39.8 million, or 6.0%, to $698.9 million at September 30, 2023, from $659.1 million at December 31, 2022[301]. - Total deposits decreased by $38.1 million, or 5.6%, to $646.5 million at September 30, 2023, from $684.6 million at December 31, 2022[303]. - Interest-bearing deposits decreased by $14.1 million, or 2.7%, to $503.3 million at September 30, 2023, from $517.4 million at December 31, 2022[303]. - Noninterest bearing deposits decreased by $24.0 million, or 14.4%, to $143.2 million at September 30, 2023, from $167.2 million at December 31, 2022[303]. - The company reported a decrease in total deposits primarily due to a $76.7 million, or 14.3%, decrease in lower-cost transaction accounts[303]. - The average balance of loans increased by $54.6 million, or 8.5%, to $694.0 million for the three months ended September 30, 2023[318]. Expenses and Taxation - The company recorded total current income tax expense of $1.399 million for the three months ended September 30, 2023, compared to $1.035 million for the same period in 2022[286]. - Income tax expense for the three months ended September 30, 2023, was $1.4 million, with an effective tax rate of 27.5%[324]. - Noninterest expense increased to $14.3 million for the nine months ended September 30, 2023, compared to $13.6 million for the same period in 2022[323]. - For the three months ended September 30, 2023, non-interest expense totaled $5.0 million, an increase from $4.6 million for the same period in 2022, reflecting an increase of 8.7%[335]. - Compensation and benefits expenses rose by 18.1% due to increases in staffing and salary levels[335]. Asset Quality - Non-performing assets decreased to $4.4 million as of September 30, 2023, from $7.9 million at December 31, 2022, with non-performing loans at $3.8 million[305]. - The allowance for credit losses on loans increased to $8.2 million, representing 1.15% of total loans and 213.5% of non-performing loans, compared to $3.8 million (0.57% of total loans) at December 31, 2022[305]. Capital and Regulatory Compliance - Total liabilities decreased by $10.9 million, or 1.4%, to $736.3 million at September 30, 2023, from $747.2 million at December 31, 2022[302]. - The Bank exceeded all regulatory capital requirements as of September 30, 2023, and is categorized as well capitalized[336]. - The company had $178.5 million available under a line of credit with the FHLB of Atlanta as of September 30, 2023[325]. Interest Rates and Deposit Strategy - The company has been increasing interest rates paid on deposits to retain and grow these balances[304]. - Interest expense surged by $4.1 million, or 163.1%, to $6.6 million for the nine months ended September 30, 2023, primarily due to increased rates on deposits[319]. Internal Controls - There have been no changes in the Company's internal controls over financial reporting that materially affected its internal control[338].

Financial Position - Total assets increased by $75.9 million, or 8.9%, to $920.8 million as of June 30, 2023, compared to $844.9 million at December 31, 2022[212] - Total liabilities increased by $69.1 million, or 9.3%, to $816.4 million at June 30, 2023, primarily due to $54.9 million in funds collected for capital raise and a $25.5 million increase in Federal Home Loan Bank borrowings[216] - Stockholders' equity increased by $6.7 million, or 6.9%, to $104.5 million at June 30, 2023, primarily due to $7.0 million in net income[271] - The Company’s net deferred tax asset totaled $8.9 million as of June 30, 2023[204] - The balance of retained earnings as of June 30, 2023, was $91,079,000, an increase from $84,612,000 as of December 31, 2022[231] Loan and Credit Quality - Net loans receivable rose by $35.7 million, or 5.4%, to $694.8 million at June 30, 2023, driven by increases in commercial real estate and construction loans[213] - The allowance for credit losses increased by $4.4 million as part of the adoption of the new accounting standard, with $3.8 million transferred from acquisition credit marks[214] - The allowance for credit losses was $8.2 million at June 30, 2023, compared to $3.8 million at June 30, 2022, with the ratio to total loans at 1.16%[303] - Provision for credit losses recorded a recovery of ($149,000) for the three months ended June 30, 2023, compared to a provision for loan losses of $224,000 for the same period in 2022[303] Income and Earnings - Net income for the three months ended June 30, 2023, was $3,899,000, an increase of 41% compared to $2,765,000 for the same period in 2022[228] - Total interest income for the six months ended June 30, 2023, was $20,227,000, up 36% from $14,776,000 for the same period in 2022[227] - Net interest income after provision for credit losses for the six months ended June 30, 2023, was $16,585,000, compared to $13,307,000 for the same period in 2022, reflecting a 25% increase[227] - Basic earnings per share for the three months ended June 30, 2023, were $0.52, up from $0.37 for the same period in 2022[227] - Total comprehensive income for the three months ended June 30, 2023, was $3,700,000, compared to $2,193,000 for the same period in 2022, representing a 68% increase[228] Interest and Expense - Total noninterest income for the three months ended June 30, 2023, was $1,370,000, a 16% increase from $1,182,000 for the same period in 2022[227] - Total noninterest expense for the six months ended June 30, 2023, was $9,244,000, compared to $9,047,000 for the same period in 2022, indicating a slight increase of 2%[227] - Noninterest income totaled $1.4 million for the three months ended June 30, 2023, compared to $1.2 million for the same period in 2022, including a gain of $678,000 on the sale of other real estate owned[317] - Noninterest expense totaled $4.5 million for the three months ended June 30, 2023, compared to $4.7 million for the same period in 2022[319] Regulatory and Capital - As of June 30, 2023, the bank exceeded all regulatory capital requirements and was categorized as well capitalized[279] - The company anticipates sufficient funds to meet current funding commitments, with a strategy to retain a significant portion of maturing time deposits[278] Securities and Investments - Securities increased by $900,000, or 2.0%, to $46.5 million at June 30, 2023, mainly due to an increase in agency securities[215] - The company held $2.1 million and $977,000 of Federal Home Loan Bank restricted stock at June 30, 2023, and December 31, 2022, respectively[244] Interest Rates and Margins - The net interest margin for the three months ended June 30, 2023, was 4.19%, compared to 3.70% for the same period in 2022[273] - Interest income rose by $2.5 million, or 31.7%, to $10.5 million for the three months ended June 30, 2023, driven primarily by an increase in interest income on loans[307] - The interest rate spread increased by 22 basis points to 3.77% for the three months ended June 30, 2023, compared to 3.55% for the same period in 2022[300] Cash Flow - Net cash provided by operating activities for the six months ended June 30, 2023, was $60.1 million, while net cash used in investing activities was $34.5 million[277] Stock Offering - The company sold 9,798,980 shares of common stock at $10.00 per share, resulting in gross proceeds of approximately $98.0 million from a public stock offering completed on July 31, 2023[287]

| --- | --- | --- | --- | --- | --- | --- | --- | --- | |------------------------------|-------|------------------|-------|------------------------------|------------|-------------------------|-------|--------| | March 31, 2023 | | Amortized cost | | Gross unrealized gains \n(In | thousands) | Gross unrealized losses | Fair | value | | Available for sale | | | | | | | | | | Agencies | $ | 4,002 | $ | — | $ | 6 | $ | 3,996 | | Corporate securities | | 2,219 | | — | | 259 | | 1,960 | | Mortgage-backed securit ...