Financial Position - Total assets increased by $7.2 million, or 0.82%, to $892.5 million at March 31, 2024, from $885.3 million at December 31, 2023[222] - Total liabilities increased by $4.6 million, or 0.7%, to $690.8 million at March 31, 2024, primarily due to an increase in total deposits[227] - Total deposits rose by $5.4 million, or 0.85%, to $639.5 million at March 31, 2024, with interest-bearing deposits increasing by $8.3 million, or 1.7%[228] - Stockholders' equity increased by $2.7 million, or 1.3%, to $201.8 million at March 31, 2024, primarily due to net income[229] - The company's uninsured deposits totaled $190.1 million, representing 27.9% of total deposits[251] - At March 31, 2024, the bank exceeded all regulatory capital requirements and was categorized as well capitalized[252] Loan and Credit Quality - Net loans receivable increased by $3.9 million, or 0.56%, to $708.7 million at March 31, 2024, driven by increases in commercial and industrial loans and investor commercial real estate loans[224] - The allowance for credit losses on loans was $8.5 million at March 31, 2024, slightly down from $8.55 million at December 31, 2023, with a ratio of 1.20% to total loans[225] - The allowance for credit losses to non-performing loans was 79.2% at March 31, 2024, compared to 176.5% at March 31, 2023[225] - Provision for credit losses was $18,000 for the three months ended March 31, 2024, compared to $2,000 for the same period in 2023[245] Income and Expenses - Net income decreased by $541,000, or 17.4%, to $2.6 million for the three months ended March 31, 2024, compared to $3.1 million for the same period in 2023[237] - Interest income increased by $1.3 million, or 13.6%, to $11.0 million for the three months ended March 31, 2024, driven by a $1.0 million increase in interest income on loans[238] - Interest expense increased by $1.5 million, or 104.4%, to $3.0 million for the three months ended March 31, 2024, primarily due to a $1.3 million increase in interest expense on deposits[239] - Net interest income was $8.0 million for the three months ended March 31, 2024, compared to $8.2 million for the same period in 2023[243] - The net interest margin decreased to 3.91% for the three months ended March 31, 2024, down from 4.34% for the same period in 2023[243] - Non-interest income totaled $578,000 for the three months ended March 31, 2024, down from $807,000 in the same period in 2023[246] - For the three months ended March 31, 2024, non-interest expense totaled $4.9 million, an increase of 4.3% from $4.7 million in the same period of 2023[247] Operational Changes - The company replaced $10.0 million in retail certificates of deposits with brokered deposits at a lower cost during the first quarter of 2024[228] - The company had $10 million in brokered deposits as of March 31, 2024, compared to $0 in the same period of 2023[251] - Compensation and benefits expenses rose by 8.7% due to increased staffing and salary levels[247] - Professional fees decreased by 44.0% due to the recovery of previously expensed legal fees[247] - Foreclosed real estate expenses decreased by 96.1% due to the sale of large foreclosed properties in 2023[247] Tax and Liquidity - Income tax expense for the quarter was $1.0 million, with an effective tax rate of 28.5%, compared to $1.2 million and 27.65% in the prior year[248] - As of March 31, 2024, the company had $169.1 million available under a line of credit with the FHLB of Atlanta, with additional borrowing availability of $144.1 million[249] - The company monitors its liquidity position daily and anticipates sufficient funds to meet current funding commitments[251]

Banking crises may seem catastrophic when they hit the news cycle but they have become common in the 21st Century. As significant disruptions to the financial system, these failures are characterized by a loss of banking confidence and decreasing earnings. If left unchecked, these events can have severe consequences for the broader economy and retail investors. Thus investors with holdings in certain banking corporations should look out for finance stocks to sell before the next crisis.The most common failu ...

Loan Portfolio and Credit Risk - As of December 31, 2023, 40.8% of the total loan portfolio, amounting to $287.2 million, consisted of loans secured by non-owner occupied commercial real estate[285]. - The company intends to continue increasing originations of commercial real estate loans, which involve credit risks that could adversely affect financial condition[283]. - The company faces risks related to local economic conditions, which could impact borrowers' ability to repay loans and the value of collateral securing loans[291]. - As of December 31, 2023, the allowance for credit losses was 1.21% of total loans and 81.5% of non-performing loans, indicating a potential need for future increases in the allowance due to credit deterioration[318]. - The company had outstanding commitments to extend credit of $49.4 million and $935,000 in letters of credit as of December 31, 2023[636]. Financial Performance and Capital - The company has accumulated other comprehensive losses of $1.95 million related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio as of December 31, 2023[290]. - The aggregate amount of uninsured deposits was $187.5 million as of December 31, 2023, compared to $172.1 million in 2022[296]. - Total deposits decreased by $50.5 million, or 7.4%, to $634.1 million at December 31, 2023, compared to $684.6 million at December 31, 2022[325]. - At December 31, 2023, the Bank had approximately $243.0 million in available liquidity, which is 1.9 times the uninsured and unsecured deposit balance of $129.0 million[326]. - Net cash provided by operating activities was $15.2 million for the year ended December 31, 2023, compared to $9.7 million for the year ended December 31, 2022[634]. - The company is categorized as well capitalized and exceeds all regulatory capital requirements as of December 31, 2023[635]. - The company has a common equity Tier 1 capital ratio requirement of 4.5%, with a capital conservation buffer resulting in a minimum ratio of 7.0%[302]. Business Strategy and Growth - The company’s business strategy includes growth in assets, deposits, and operations, which requires attracting customers from other financial institutions[306]. - The company continually evaluates merger and acquisition opportunities to expand market presence and improve profitability[343]. - The company established an investment real estate group in 2020, with $184.2 million, or 64.1%, of investor commercial real estate loans secured by collateral located outside of Maryland as of December 31, 2023[316]. Risk Management and Operational Challenges - The Enterprise Risk Management Committee oversees the company's overall risk framework and appetite, including strategic, credit, liquidity, and operational risks[311]. - The company has established policies to prevent or limit the impact of system failures and security breaches, although vulnerabilities remain[309]. - The company has faced significant operational risks due to reliance on technology, which may be subject to failures or security breaches[337]. Interest Rates Impact - Rising interest rates positively impacted income as short-term investments repriced immediately while deposit rates increased more slowly[325]. Regulatory Classification - The company is classified as an emerging growth company, allowing it to take advantage of exemptions from various reporting requirements[304].

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 ...