Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended March 31, 2025 ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period __________ to __________ Commission File Number: 0-26486 Auburn National Bancorporation, Inc. (Exact Name of Registrant as Specified in Its Charte ...

Financial Performance - Net earnings for Q1 2025 were $1.5 million, or $0.44 per share, compared to $1.4 million, or $0.39 per share in Q1 2024, reflecting a 7.7% year-over-year increase in earnings per share [3][8]. - Net earnings for Q1 2025 were $1,530,000, compared to $1,371,000 in Q1 2024, representing an increase of 11.6% [23]. - Basic and diluted net earnings per share for Q1 2025 were $0.44, up from $0.39 in Q1 2024, marking a growth of 12.8% [23]. - Total revenue for Q1 2025 was $7,792,000, slightly up from $7,544,000 in Q1 2024, reflecting a growth of 3.3% [23]. Interest Income and Margin - Net interest income (tax-equivalent) increased to $7.1 million in Q1 2025, a 6% increase compared to $6.7 million in Q1 2024 [5][8]. - Net interest income for Q1 2025 was $7,045,000, an increase of 5.8% compared to $6,657,000 in Q1 2024 [23]. - Net interest margin (tax-equivalent) improved to 3.20% in Q1 2025, up from 3.04% in Q1 2024, driven by a favorable asset mix and improved yields [6][8]. Asset Quality - Nonperforming assets were $0.5 million, or 0.05% of total assets, at March 31, 2025, down from $0.9 million, or 0.09% of total assets, at March 31, 2024 [7][8]. - Nonperforming loans decreased to $520,000 in Q1 2025 from $878,000 in Q1 2024, showing improved asset quality [23]. - The allowance for credit losses was $6.8 million, or 1.20% of total loans, at March 31, 2025, down from 1.27% at March 31, 2024 [9][8]. - The allowance for credit losses as a percentage of loans was 1.20% in Q1 2025, slightly down from 1.27% in Q1 2024 [23]. Deposits and Assets - Total assets increased to $996.8 million at March 31, 2025, compared to $979.0 million at March 31, 2024, reflecting growth in the bank's balance sheet [14][8]. - Total deposits rose to $910.5 million at March 31, 2025, compared to $899.7 million at March 31, 2024, indicating strong deposit growth [14][8]. - Total assets at the end of Q1 2025 were $996,786,000, up from $979,039,000 at the end of Q1 2024 [24]. - Total deposits increased to $910,503,000 in Q1 2025 from $899,673,000 in Q1 2024, reflecting a growth of 1.8% [24]. Expenses and Efficiency - Noninterest income remained stable at $0.8 million for Q1 2025, consistent with Q4 2024, but down from $0.9 million in Q1 2024 [10][8]. - Noninterest expense increased to $5.9 million in Q1 2025, up from $5.7 million in Q1 2024, primarily due to routine salary and benefit increases [11][8]. - The efficiency ratio for Q1 2025 was 75.30%, compared to 75.03% in Q1 2024, indicating a slight decline in operational efficiency [23]. Shareholder Returns - The Company paid cash dividends of $0.27 per share in Q1 2025, maintaining a consistent return to shareholders [17][8]. Return on Equity - The return on average equity (annualized) improved to 7.83% in Q1 2025 from 7.13% in Q1 2024 [23].

Deposits and Loans - The Bank had the largest share of deposits in Lee County, Alabama, with 21.3% as of June 30, 2024[22]. - As of December 31, 2024, the Bank's commercial real estate loans totaled $290.2 million, representing 51% of total loans[28]. - At December 31, 2024, the Bank had $82.8 million in construction and land development loans, representing approximately 73% of the Bank's total risk-based capital[6]. - The Bank had $324.0 million in total CRE loans, which is approximately 286% of the Bank's total risk-based capital at December 31, 2024[7]. - The company had 42% of its loan portfolio in commercial real estate (CRE) loans at year-end 2024, up from 40% at year-end 2023, which raises concerns about potential loan losses due to market volatility[213]. Economic Conditions - The unemployment rate in Lee County was 2.8% as of year-end 2024, compared to 3.3% for the State of Alabama[25]. - The Auburn-Opelika MSA population is estimated to grow by 6.6% from 2023 to 2028, with household income projected to increase by 14.25% to $69,213 during the same period[26]. - Higher interest rates and increased housing costs since 2020 have slowed housing sales, adversely affecting mortgage loan production and residential mortgage collateral values[198]. - The Tax Cuts and Jobs Act's limitations on the deductibility of residential mortgage interest could negatively impact consumer behavior and housing market activity[200]. - The concentration of commercial real estate loans poses risks of possible loss due to market conditions and regulatory scrutiny, necessitating improved underwriting and risk management policies[212]. Regulatory Environment - The Company has a "satisfactory" CRA rating as of February 28, 2022, with satisfactory ratings on both its lending and community development tests[60]. - The New CRA Regulations classify banks into categories based on asset size, with the Bank transitioning from "intermediate small bank" to "intermediate bank" due to assets of $600 million to $2.0 billion[64]. - The New CRA Regulations will become effective on January 1, 2026, with data reporting requirements starting on January 1, 2027[63]. - The Federal Reserve requires bank holding companies to act as a source of financial and managerial strength to their FDIC-insured subsidiaries[44]. - The Federal Reserve and the Alabama Superintendent must approve mergers and acquisitions by the Bank, with the FDIC and OCC also having a role in commenting on such transactions[49]. Management and Employees - The Company had 145 full-time equivalent employees as of December 31, 2024, with an average tenure of approximately 11 years[30]. - The Company successfully transitioned management in 2022, with a new President and CFO who have extensive experience in financial services[32]. - The Company offers a variety of equity and equity-based awards under its 2024 Equity and Incentive Compensation Plan to attract and retain talent[33]. Financial Performance - The Bank paid total cash dividends of approximately $3.8 million during 2024, with net profits for the year and retained net profits for the preceding two years totaling $9.7 million[118]. - As of December 31, 2024, the Bank is categorized as "well capitalized" under regulatory standards, maintaining a total risk-based capital ratio of 10% or greater[117]. - The capital conservation buffer for the Bank exceeded 2.5% at December 31, 2024, allowing for distributions from eligible retained income[116]. Competition - The East Alabama banking markets are highly competitive, served by 19 banks, including 10 headquartered outside Alabama[214]. - Competitors include national and regional banks such as J.P. Morgan Chase, Wells Fargo, and PNC, which have greater resources and broader geographic reach[214]. - The presence of fintech and non-bank competitors is increasing, posing additional challenges to customer retention[214]. - The rapid growth of nationwide lenders operating online is a significant threat to market position[214]. Risk Management - The risks associated with operational, financial, and legal factors are intertwined and could significantly affect the company's performance[189]. - Future acquisitions may disrupt business operations and dilute shareholder value, posing additional risks to financial condition[194]. - The allowance for loan losses may prove inadequate due to unanticipated adverse changes in the economy, including inflation and higher interest rates, which could materially affect the company's financial condition and results of operations[196]. - Nonperforming loans were 0.09% of total loans as of December 31, 2024, with no other real estate owned due to foreclosures, indicating a stable credit quality[197]. Compliance and Legal - The Company expects to continue spending significant amounts on compliance with SEC and FDIC rules regarding internal controls[95]. - The Company adopted the CECL accounting standard effective January 1, 2023, recognizing all effects on its regulatory capital in the year of adoption[111]. - The Company has not elected to become a financial holding company but may consider this option in the future[40]. - The Anti-Money Laundering Act of 2020 and the Corporate Transparency Act require entities to report beneficial ownership information, effective January 1, 2024[88].

Financial Performance - Net income for Q4 2024 was $1.6 million, or $0.45 per share, compared to a net loss of $(4.0) million, or $(1.14) per share in Q4 2023[4] - Full year 2024 net earnings were $6.4 million, or $1.83 per share, up from $1.4 million, or $0.40 per share in 2023[5] - Total revenue for the year ended December 31, 2024, was $30,599,000, compared to $23,347,000 in 2023, marking a 31.2% increase[26] - Net earnings for the year ended December 31, 2024, were $6,397,000, compared to $1,395,000 in 2023, reflecting a substantial increase of 358.4%[26] Interest Income and Margin - Net interest income (tax-equivalent) increased to $7.0 million in Q4 2024, a 14% increase compared to Q4 2023[7][12] - Net interest income for Q4 2024 was $6,969,000, an increase from $6,059,000 in Q4 2023, representing a 15.0% year-over-year growth[26] - Net interest margin (tax-equivalent) improved to 3.09% in Q4 2024, up 44 basis points from Q4 2023[8][12] Asset Quality - Nonperforming assets were $0.5 million, or 0.05% of total assets, at December 31, 2024, down from 0.09% at December 31, 2023[9][12] - The allowance for credit losses was $6.9 million, or 1.22% of total loans, at December 31, 2024, reflecting improved economic forecasts[11] - Nonperforming loans decreased to $503,000 in Q4 2024 from $911,000 in Q4 2023, indicating a 44.8% reduction in nonperforming assets[26] - The provision for credit losses for Q4 2024 was $(48,000), a decrease from $(127,000) in Q3 2024, indicating improved asset quality[26] Dividends and Equity - The Company paid cash dividends of $0.27 per share in Q4 2024[20] - Cash dividends declared remained stable at $0.27 per share for Q4 2024, consistent with the previous quarters[26] - Total stockholders' equity increased to $83,325,000 in Q4 2024 from $60,372,000 in Q4 2023, representing a growth of 38.1%[27] Efficiency and Management - The efficiency ratio improved to 69.86% in Q4 2024 from 71.83% in Q3 2024, demonstrating better cost management[26] - The return on average equity for Q4 2024 was 7.49%, down from 9.10% in Q3 2024, reflecting changes in profitability[26] Loan Growth - Average loans for Q4 2024 were $567.6 million, a 3% increase from Q4 2023[8][12] - Total assets were $977.3 million at December 31, 2024, compared to $975.3 million at December 31, 2023[17] - Noninterest income for Q4 2024 was $845,000, a significant recovery from a loss of $5,429,000 in Q4 2023[26]

Financial Performance - Net interest income for the quarter ended September 30, 2024, was $6,790 thousand, an increase of 8.2% compared to $6,272 thousand for the same quarter in 2023[7]. - Net earnings for the quarter ended September 30, 2024, were $1,732 thousand, up 16.4% from $1,488 thousand in the same quarter of 2023[9]. - The company reported a comprehensive income of $10,070 thousand for the quarter ended September 30, 2024, compared to a loss of $8,453 thousand in the same quarter of 2023[9]. - Basic and diluted earnings per share for the quarter were $0.50, an increase from $0.43 in the same quarter of 2023[7]. - Net earnings for the first nine months of 2024 were $4.8 million, a decrease of 11.1% compared to $5.4 million for the same period in 2023[103]. - Basic and diluted earnings per share for the first nine months of 2024 were $1.38, down from $1.54 in the first nine months of 2023, representing a decrease of 10.4%[103]. - Total revenue for the nine months ended September 30, 2024, was $22,785,000, compared to $22,717,000 for the same period in 2023, reflecting a slight increase[196]. Asset and Equity Growth - Total assets increased to $990,143 thousand as of September 30, 2024, up from $975,255 thousand at December 31, 2023, representing a growth of 1.8%[5]. - The total stockholders' equity increased to $84,336 thousand as of September 30, 2024, up from $76,507 thousand at December 31, 2023, indicating a growth of 10.5%[6]. - The Company’s consolidated stockholders' equity increased to $84.3 million as of September 30, 2024, up from $76.5 million at December 31, 2023, driven by net earnings of $4.8 million[157]. Deposits and Loans - Total deposits reached $901,724 thousand as of September 30, 2024, an increase of 0.5% from $896,243 thousand at December 31, 2023[4]. - The company reported a net decrease in noninterest-bearing deposits of $479,000 for the nine months ended September 30, 2024, contrasting with a significant decrease of $32,717,000 in the same period of 2023[12]. - Total loans as of September 30, 2024, amounted to $565.699 million, with current loans at $564.816 million and non-accrual loans at $775 thousand[50]. - The loan portfolio composition included commercial real estate (53%), residential real estate (21%), construction and land development (14%), and commercial and industrial (11%) as of September 30, 2024[131]. Credit Quality and Provisions - The provision for credit losses for the quarter was a reversal of $127 thousand, compared to a provision of $105 thousand in the same quarter of 2023[7]. - The provision for credit losses was $84,000 for the nine months ended September 30, 2024, compared to a reversal of $191,000 in the same period of 2023, indicating a shift in credit quality assessment[12]. - The total allowance for credit losses was approximately $6.9 million at both September 30, 2024, and December 31, 2023, representing 1.22% of total loans[138]. - Nonperforming loans as a percentage of total loans remained stable at 0.14% in Q3 2024, compared to 0.14% in Q2 2024[194]. Interest Income and Expenses - Net interest income (tax-equivalent) for the first nine months of 2024 was $20.2 million, a 2% decrease from $20.6 million in the first nine months of 2023[104]. - The average yield on loans was 5.18% in the first nine months of 2024, up from 4.71% in the same period of 2023[133]. - The cost of total interest-bearing liabilities increased by 78 basis points to 1.80% in the first nine months of 2024, compared to 1.02% in the same period of 2023[116]. - The average rate paid on total interest-bearing deposits increased to 1.80% in the first nine months of 2024 from 1.02% in the same period of 2023[150]. Noninterest Income and Expenses - Noninterest income for the quarter was $846 thousand, slightly down from $865 thousand in the same quarter of 2023[7]. - Noninterest income increased to $2.6 million in the first nine months of 2024, compared to $2.4 million in the first nine months of 2023[107]. - Noninterest expense decreased to $16.7 million in the first nine months of 2024, compared to $16.8 million for the same period in 2023[108]. Regulatory and Compliance - At September 30, 2024, the Bank's total risk-based capital ratio was 15.76%, well above the minimum required to be "well capitalized" under current regulatory standards[110]. - The Bank's tier 1 leverage ratio was 10.43% and total risk-based capital ratio was 15.76% at September 30, 2024, exceeding the minimum regulatory capital requirements[160]. - The Company operates primarily in East Alabama, with a focus on maintaining strong regulatory compliance and financial stability[94]. Market and Economic Conditions - Inflation and changing interest rates have impacted the Company's deposit costs and overall financial performance, with a noted increase in noninterest expenses[184]. - The Federal Reserve increased its target federal funds rate to a range of 4.75% to 5.00% on September 18, 2024, in response to moderating inflation[186].

Financial Performance - Net earnings for Q3 2024 were $1.7 million, or $0.50 per share, consistent with Q2 2024 and an increase from $1.5 million, or $0.43 per share, in Q3 2023[1] - Net earnings for Q3 2024 were $1,732,000, up from $1,488,000 in Q3 2023, reflecting a 16.4% increase[13] - Total revenue for Q3 2024 reached $7,636,000, compared to $7,137,000 in Q3 2023, marking a 7.0% increase[13] - The company declared cash dividends of $0.27 per share, consistent with the previous quarter and the same quarter last year[13] Asset Quality - Nonperforming assets were $0.8 million, or 0.08% of total assets, at September 30, 2024, down from $1.2 million, or 0.12% of total assets, at September 30, 2023[3] - Nonperforming loans as a percentage of total loans remained stable at 0.14% for Q3 2024[15] Interest Income and Margin - Net interest income for Q3 2024 was $6,790,000, an increase from $6,272,000 in Q3 2023, representing a 8.2% year-over-year growth[13] - Net interest margin (tax-equivalent) was 3.05% in Q3 2024, compared to 2.73% in Q3 2023[3] - The net interest margin for Q3 2024 was 3.05%, unchanged from Q2 2024[13] Loans and Credit Losses - Average loans increased by 8% to $571.7 million in Q3 2024 compared to Q3 2023[3] - The allowance for credit losses was $6.9 million, or 1.22% of total loans, at September 30, 2024, down from $7.1 million, or 1.24% of total loans, at June 30, 2024[4] - The allowance for credit losses was $6,876,000, down from $7,142,000 in Q2 2024[14] Equity and Return Metrics - Return on Assets (annualized) improved to 0.71% in Q3 2024, up from 0.58% in Q3 2023[1] - The return on average equity (annualized) for Q3 2024 was 9.10%, slightly down from 9.63% in Q2 2024[13] - The Company’s tangible common equity (TCE) ratio improved to 8.52% at September 30, 2024, compared to 5.96% at September 30, 2023[8] Noninterest Income and Expenses - Noninterest income was $0.8 million in Q3 2024, a decrease from $0.9 million in both Q2 2024 and Q3 2023[5] - Noninterest expense for Q3 2024 was $5,500,000, a decrease from $5,519,000 in Q2 2024[13] Total Assets - Total assets were $990.1 million at September 30, 2024, a decrease from $1.0 billion at June 30, 2024[6] - Total assets as of September 30, 2024, were $990,143,000, a decrease from $1,025,054,000 at the end of Q2 2024[14] Strategic Decisions - The Company plans to close its Corner Village branch by year-end 2024 to achieve additional cost savings starting in 2025[2]

Total Assets and Liabilities - Total assets increased to $1,025.1 million as of June 30, 2024, compared to $975.3 million as of December 31, 2023[7] - Total deposits grew to $946.4 million as of June 30, 2024, compared to $896.2 million as of December 31, 2023[7] - Loans, net of allowance for credit losses, increased to $570.9 million as of June 30, 2024, from $550.4 million as of December 31, 2023[7] - Cash and cash equivalents increased to $114.5 million as of June 30, 2024, from $71.4 million as of December 31, 2023[7] - Total assets at fair value decreased by 6.1% from $270.91 million in December 2023 to $254.36 million in June 2024[79] - Total assets increased to $1,025,054 thousand in June 2024 from $975,255 thousand in December 2023, reflecting a growth of 5.1%[7] - Total deposits grew to $946,405 thousand in June 2024 from $896,243 thousand in December 2023, an increase of 5.6%[7] - Loans, net increased to $570,926 thousand in June 2024 from $550,431 thousand in December 2023, reflecting a growth of 3.7%[7] - Cash and cash equivalents increased to $114,499 thousand in June 2024 from $71,369 thousand in December 2023, reflecting a growth of 60.4%[7] - Total stockholders' equity decreased to $75,209 thousand in June 2024 from $76,507 thousand in December 2023, a decline of 1.7%[7] Net Interest Income and Margin - Net interest income for the six months ended June 30, 2024, was $13.4 million, a decrease from $14.0 million in the same period in 2023[9] - Net interest income (tax-equivalent) decreased by 6% to $13.4 million in the first six months of 2024, compared to $14.2 million in the same period of 2023[104] - The Company's net interest margin (tax-equivalent) was 3.05% for the first six months of 2024, down from 3.10% in the first six months of 2023[104] - Net interest income (tax-equivalent) for Q2 2024 was $6.7 million, down from $7.0 million in Q2 2023, primarily due to higher deposit costs[110] - Net interest margin (tax-equivalent) increased to 3.06% in Q2 2024 from 3.03% in Q2 2023, driven by a favorable asset mix and higher yields on interest-earning assets[110] - Net interest income (tax-equivalent) for the first six months of 2024 was $13.4 million, a 6% decrease compared to $14.2 million in the same period of 2023[113] - The tax-equivalent yield on total interest-earning assets increased by 62 basis points to 4.29% in the first six months of 2024 compared to 3.67% in the same period of 2023[114] - The cost of total interest-bearing liabilities increased by 89 basis points to 1.71% in the first six months of 2024 compared to 0.82% in the same period of 2023[114] - Net interest income for Q2 2024 increased to $6,728 thousand, up from $6,677 thousand in Q1 2024[179] - Net interest income for Q2 2024 was $6.7 million, slightly down from $7.0 million in Q2 2023, with the net interest margin increasing from 3.03% to 3.06%[182] - Net interest income for the six months ended June 30, 2024, was $13.4 million, down from $14.2 million in 2023, with the net interest margin decreasing from 3.10% to 3.05%[183] - Net interest income for the six months ended June 30, 2024, was $13,366 thousand, a decrease of 4.5% compared to $13,997 thousand in the same period of 2023[9] Net Earnings and Comprehensive Income - Net earnings for the six months ended June 30, 2024, were $3.1 million, down from $3.9 million in the same period in 2023[9] - Comprehensive income for the six months ended June 30, 2024, was $0.9 million, compared to $5.7 million in the same period in 2023[13] - Net earnings per share (basic and diluted) for the six months ended June 30, 2024, were $0.89, down from $1.11 in the same period in 2023[9] - Net earnings for the six months ended June 30, 2024, were $3.105 million, compared to $3.892 million in the same period in 2023[16] - Net earnings for Q2 2024 were $1.734 million, a decrease from $1.928 million in Q2 2023[29] - Basic net earnings per share for Q2 2024 were $0.50, down from $0.55 in Q2 2023[29] - Net earnings for the first six months of 2024 were $3.1 million, a decrease from $3.9 million in the same period of 2023[103] - Basic and diluted earnings per share for the first six months of 2024 were $0.89, compared to $1.11 in the first six months of 2023[103] - Net earnings for Q2 2024 were $1.7 million, or $0.50 per share, compared to $1.9 million, or $0.55 per share, in Q2 2023[110] - Net earnings for Q2 2024 were $1,734 thousand, up from $1,371 thousand in Q1 2024[179] - Net earnings for the six months ended June 30, 2024, were $3,105 thousand, a decrease of 20.2% compared to $3,892 thousand in the same period of 2023[9] - Comprehensive income for the six months ended June 30, 2024, was $850 thousand, a significant decrease compared to $5,740 thousand in the same period of 2023[13] Noninterest Income and Expense - Noninterest income for the six months ended June 30, 2024, was $1.8 million, up from $1.6 million in the same period in 2023[9] - Total noninterest expense for the six months ended June 30, 2024, was $11.2 million, a slight decrease from $11.4 million in the same period in 2023[9] - Noninterest income increased to $1.8 million in the first six months of 2024, up from $1.6 million in the same period of 2023[106] - Noninterest expense decreased to $11.2 million in the first six months of 2024, compared to $11.4 million in the same period of 2023[107] - Noninterest income for Q2 2024 was $0.9 million, up from $0.8 million in Q2 2023[110] - Noninterest expense for Q2 2024 was $5.5 million, down from $5.8 million in Q2 2023[110] - Noninterest expense decreased to $5.5 million in Q2 2024 from $5.8 million in Q2 2023[125] - Total noninterest expense for the six months ended June 30, 2024, was $11,194 thousand, a decrease of 2.1% compared to $11,429 thousand in the same period of 2023[9] Loans and Credit Quality - Loans secured by real estate accounted for 84.8% of the company's total loan portfolio as of June 30, 2024[44] - Commercial real estate loans increased to $297.23 million as of June 30, 2024, compared to $287.31 million as of December 31, 2023[44] - Residential real estate loans rose to $119.43 million as of June 30, 2024, up from $117.46 million as of December 31, 2023[44] - Nonaccrual loans decreased to $794,000 as of June 30, 2024, down from $911,000 as of December 31, 2023[52] - Total accruing loans increased to $577.27 million as of June 30, 2024, compared to $556.38 million as of December 31, 2023[52] - Commercial and industrial loans grew to $77.63 million as of June 30, 2024, up from $73.37 million as of December 31, 2023[44] - Construction and land development loans increased to $73.69 million as of June 30, 2024, compared to $68.33 million as of December 31, 2023[44] - Consumer installment loans decreased to $10.09 million as of June 30, 2024, down from $10.83 million as of December 31, 2023[44] - The company's loan distribution is primarily concentrated in Lee County, Alabama, and surrounding areas[44] - Total owner occupied commercial real estate loans amounted to $63.384 million, with $1.185 million in special mention and $753,000 in nonaccrual status[57] - Hotel/motel loans totaled $38.542 million, all classified as pass with no special mention, substandard, or nonaccrual loans[57] - Multi-family loans as of June 30, 2024, were $44.135 million, all classified as pass with no special mention, substandard, or nonaccrual loans[58] - Other loans as of June 30, 2024, totaled $151.171 million, with $905,000 in special mention and $126,000 in substandard status[58] - Total consumer mortgage loans were $60.957 million, including $490,000 in special mention, $495,000 in substandard, and $41,000 in nonaccrual status[59] - Investment property loans amounted to $58.47 million, with $401,000 in substandard status[59] - Total loans as of December 31, 2023, were $578.068 million, with $3.436 million in special mention, $1.554 million in substandard, and $794,000 in nonaccrual status[59] - Commercial and industrial loans as of December 31, 2023, totaled $73.374 million, with $261,000 in substandard status[60] - Construction and land development loans as of December 31, 2023, were $68.329 million, all classified as pass with no special mention, substandard, or nonaccrual loans[60] - Multi-family loans as of December 31, 2023, were $45.841 million, all classified as pass with no special mention, substandard, or nonaccrual loans[62] - Total loans amounted to $557.294 million, with pass loans making up $553.961 million, special mention loans at $841 thousand, substandard loans at $1.581 million, and nonaccrual loans at $911 thousand[63] - The provision for credit losses in Q2 2024 was a reversal of $123 thousand, compared to a reversal of $362 thousand in Q2 2023[65] - The allowance for credit losses for loans ended at $7.142 million in Q2 2024, down from $7.215 million at the beginning of the quarter[66] - Nonaccrual loans totaled $794 thousand as of June 30, 2024, with $753 thousand in commercial real estate and $41 thousand in residential real estate[69] - The company adopted ASC 326 on January 1, 2023, introducing the CECL methodology for estimating expected credit losses[64] - Mortgage servicing rights (MSRs) are measured under the amortization method, with impairment evaluated quarterly based on fair value[70][71] - MSRs, net ending balance for Q2 2024 was $942 thousand, compared to $1,050 thousand in Q2 2023, reflecting a decrease of 10.3%[72] - Loans, net fair value decreased by 2.0% from $526.37 million in December 2023 to $536.97 million in June 2024[91] - Collateral dependent loans fair value decreased by 3.8% from $783 thousand in December 2023 to $753 thousand in June 2024[83] - Mortgage servicing rights, net fair value decreased by 5.0% from $992 thousand in December 2023 to $942 thousand in June 2024[83] - Loans held for sale remained stable at $30 thousand from December 2023 to June 2024[83] - The allowance for credit losses was $7.1 million, or 1.24% of total loans, at June 30, 2024, compared to $6.9 million, or 1.23% of total loans, at December 31, 2023[105] - Total loans increased to $578.1 million at June 30, 2024, a 4% increase compared to $557.3 million at December 31, 2023[126] - Commercial real estate loans accounted for 51% of the total loan portfolio at June 30, 2024[126] - The average yield on loans and loans held for sale was 5.12% in the first six months of 2024, compared to 4.68% in the same period of 2023[127] - The allowance for credit losses was $7.1 million at June 30, 2024, representing 1.24% of total loans, compared to $6.9 million (1.23%) at December 31, 2023[131] - Nonperforming assets decreased to $0.8 million at June 30, 2024 from $0.9 million at December 31, 2023[135] - Net recoveries (charge-offs) were $(9) thousand in Q2 2024, compared to $67 thousand in Q1 2024[134] - Nonperforming loans as a percentage of total loans decreased to 0.14% in Q2 2024 from 0.15% in Q1 2024[179] Deposits and Funding - Total deposits increased to $946.4 million at June 30, 2024, up from $896.2 million at December 31, 2023[139] - Money market deposits increased significantly to $205.7 million at June 30, 2024 from $148.0 million at December 31, 2023[139] - Total deposits increased to $946.4 million at June 30, 2024, compared to $896.2 million at December 31, 2023, primarily due to a decrease in reciprocal customer deposits[140] - Noninterest-bearing deposits were $263.1 million, or 28% of total deposits, at June 30, 2024, down from $270.7 million, or 30% of total deposits, at December 31, 2023[140] - The average rate paid on total interest-bearing deposits was 1.72% in the first six months of 2024, compared to 0.81% in the first six months of 2023[140] - Estimated uninsured deposits totaled $364.9 million, or 39% of total deposits, at June 30, 2024, compared to $356.3 million, or 40% of total deposits, at December 31, 2023[141] - The Bank had $293.7 million of available credit from the FHLB and $61.0 million of available federal funds lines with no borrowings outstanding as of June 30, 2024[162] - The Bank had outstanding standby letters of credit of $0.5 million and unfunded loan commitments of $63.8 million as of June 30, 2024[164] - The aggregate unpaid principal balance of residential mortgage loans originated and sold, but with retained servicing rights, was $212.1 million as of June 30, 2024[166] - 99% of the residential mortgage loans serviced for Fannie Mae were current as of June 30, 2024[169] - Net increase in interest-bearing deposits for the six months ended June 30, 2024, was $57.780 million, compared to $13.297 million in 2023[16] Capital and Regulatory Ratios - The Bank's total risk-based capital ratio was 15.49%, tier 1 leverage ratio was 10.39%, and CET1 ratio was 14.47% at June 30, 2024[109] - The Bank's tier 1 leverage ratio was 10.39%, CET1 risk-based capital ratio was 14.47%, tier 1 risk-based capital ratio was 14.47%, and total risk-based capital ratio was 15.49% at June 30, 2024, all exceeding regulatory minimums[150] - The Bank's capital conservation buffer was 7.49% at June 30, 2024, sufficient to meet the fully phased-in conservation buffer[150] - CET1 risk-based capital ratio stood at 14.47% in Q2 2024, slightly down from 14.62% in Q1 2024[179] Cash Flows and Financing Activities - Cash flows from operating activities for the six months ended June 30, 2024, were $6.126 million, down from $7.375 million in 2023[16] - Net cash used in investing activities for the six months ended June 30, 2024, was $9.785 million, compared to $3.125 million in 2023[16] - Net cash provided by financing activities for the six months ended June 30, 2024, was $46.789 million, a significant increase from a net cash used of $1.968 million in 2023[16] - Cash and

Financial Performance - Net earnings for Q2 2024 were $1.7 million, or $0.50 per share, an increase from $1.4 million, or $0.39 per share in Q1 2024[1] - Total revenue for Q2 2024 was $7,605,000, slightly down from $7,679,000 in Q2 2023, indicating a decrease of 1.0%[13] - Net earnings for Q2 2024 increased to $1,734,000, up from $1,928,000 in Q2 2023, representing a decline of 10.1%[13] - Noninterest income rose to $896,000 in Q2 2024, compared to $791,000 in Q2 2023, marking an increase of 13.3%[13] - The return on average equity (annualized) improved to 9.63% in Q2 2024, compared to 10.37% in Q2 2023[13] Revenue and Income - Total revenue increased by 1% compared to the previous quarter[1] - Net interest income for Q2 2024 was $6,709,000, compared to $6,888,000 in Q2 2023, reflecting a decrease of 2.6% year-over-year[13] Assets and Equity - Total assets were $1.0 billion at June 30, 2024, compared to $979.0 million at March 31, 2024[6] - Total assets as of June 30, 2024, were $1,025,054,000, compared to $1,026,130,000 at the end of Q2 2023[14] - The company's consolidated stockholders' equity increased to $75.2 million, or $21.53 per share, from $74.5 million, or $21.32 per share at March 31, 2024[7] Loan and Credit Quality - Average loans grew by 9% on an annualized basis, reaching $573.4 million, a 2% increase from Q1 2024 and a 12% increase from Q2 2023[3] - Nonperforming assets decreased to $0.8 million, or 0.08% of total assets, down from $0.9 million, or 0.09% in Q1 2024[3] - The allowance for credit losses was $7,142,000 as of June 30, 2024, compared to $6,634,000 in Q2 2023[14] - The provision for credit losses was $(123,000) in Q2 2024, a significant improvement compared to $(362,000) in Q2 2023[13] - The company recorded a negative provision for credit losses of $0.1 million in Q2 2024, compared to a provision of $0.3 million in Q1 2024[4] Expenses - Noninterest expense decreased by 3% to $5.5 million in Q2 2024, primarily due to reductions in occupancy expenses[5] Tax and Dividends - Cash dividends paid were $0.27 per share in Q2 2024, with regulatory capital ratios well above the minimum required[8] - The effective income tax rate for Q2 2024 was 21.50%, up from 13.00% in Q2 2023[13] Interest Margin - Net interest margin improved by 2 basis points to 3.06% in Q2 2024, up from 3.04% in Q1 2024[3] - The net interest margin for Q2 2024 was 3.06%, slightly up from 3.03% in Q2 2023[13]

Financial Performance - Net interest income for the quarter ended March 31, 2024, was $6,657 thousand, a decrease of 6.34% from $7,109 thousand in the same quarter of 2023[9] - Net earnings for the quarter were $1,371 thousand, down 30.06% from $1,964 thousand year-over-year[9] - Comprehensive loss for the quarter was $813 thousand, a decline from a comprehensive income of $7,427 thousand in the same quarter of the previous year[13] - Net earnings for the quarter ended March 31, 2024, were $1,371,000, a decrease of 30% compared to $1,964,000 for the same period in 2023[17] - Basic and diluted earnings per share were $0.39 for Q1 2024, down from $0.56 in Q1 2023, reflecting a 30% decline[102] - Net interest income (tax-equivalent) decreased by 7% to $6.7 million in Q1 2024 from $7.2 million in Q1 2023, primarily due to a smaller balance sheet and decreased net interest margin[103] - The company's net interest margin (tax-equivalent) was 3.04% in Q1 2024, down from 3.17% in Q1 2023, attributed to increased cost of funds[103] - Total revenue for Q1 2024 was $7,544,000, up from $630,000 in Q4 2023, indicating a significant increase[178] Asset and Deposit Growth - Total assets increased to $979,039 thousand as of March 31, 2024, compared to $975,255 thousand at December 31, 2023, reflecting a growth of 0.08%[7] - Total deposits rose to $899,673 thousand as of March 31, 2024, compared to $896,243 thousand at the end of 2023, marking a slight increase of 0.16%[7] - Total deposits increased to $899.7 million at March 31, 2024, from $896.2 million at December 31, 2023[140] - Total assets as of March 31, 2024, were $976,930,000, a decrease from $1,022,938,000 as of December 31, 2023[180] Credit Losses and Provisions - Provision for credit losses increased to $334 thousand in Q1 2024, compared to $66 thousand in Q1 2023, indicating a significant rise in credit risk assessment[9] - The allowance for credit losses stood at $7,215 thousand as of March 31, 2024, compared to $6,863 thousand at December 31, 2023, indicating a proactive approach to potential loan defaults[7] - The provision for credit losses increased significantly to $334,000 from $66,000 year-over-year[17] - The total provision for credit losses for loans was $285 million for the quarter ended March 31, 2024, compared to $40 million for the same quarter in 2023[68] - The allowance for credit losses was $7.2 million, or 1.27% of total loans, compared to $6.8 million, or 1.35% of total loans, in Q1 2023[104] Noninterest Income and Expenses - Noninterest income for the quarter was $887 thousand, up 11.98% from $792 thousand in the same quarter of 2023[9] - Total noninterest expense increased to $5,675 thousand in Q1 2024, compared to $5,604 thousand in Q1 2023, reflecting a rise of 1.27%[9] - Noninterest income was $0.9 million in Q1 2024, slightly up from $0.8 million in Q1 2023[105] - Noninterest expense rose to $5.7 million in Q1 2024 from $5.6 million in Q1 2023, primarily due to routine salary and benefits increases[106] Loan Portfolio - Total loans increased to $567.5 million as of March 31, 2024, up from $557.3 million at December 31, 2023, representing a growth of approximately 2.1%[45] - Loans secured by real estate constituted approximately 84.2% of the total loan portfolio as of March 31, 2024[45] - The commercial real estate segment totaled $300,484,000 as of March 31, 2024, up from $287,307,000 at December 31, 2023, reflecting an increase of approximately 4.2%[53] - The residential real estate loans reached $118,240,000 as of March 31, 2024, compared to $117,457,000 at the end of 2023, showing a growth of about 0.7%[53] - The commercial and industrial loans increased to $78,920,000 as of March 31, 2024, from $73,374,000 at December 31, 2023, marking a growth of about 7.6%[53] Dividends and Stockholder Equity - The company declared cash dividends of $0.27 per share, totaling $943 thousand for the quarter ended March 31, 2024[14] - The Company's consolidated stockholders' equity decreased to $74.5 million as of March 31, 2024, from $76.5 million at December 31, 2023[147] - The Company paid cash dividends of $0.27 per share for both the first quarter of 2024 and the first quarter of 2023[148] Liquidity and Capital Ratios - The Company believes it has adequate sources of liquidity to meet all known contractual obligations and unfunded commitments over the next twelve months[163] - The Bank's capital conservation buffer was 7.69% at March 31, 2024, indicating a strong capital position[150] - The Company's total risk-based capital ratio was 15.69% at March 31, 2024, well above the minimum required to be "well capitalized"[107] Market Conditions and Economic Factors - The yield curve was inverted as of March 31, 2024, affecting the spread between costs of funds and interest income[172] - The Federal Reserve raised the target federal funds rate to 5.25-5.50% as of July 26, 2023, with potential further increases if inflation remains elevated[173]

Financial Performance - Net income for Q1 2024 was $1.4 million, or $0.39 per share, compared to a net loss of $(4.0) million, or $(1.14) per share, in Q4 2023[1] - Noninterest income for Q1 2024 was $0.9 million, a significant recovery from a loss of $(5.4) million in Q4 2023[5] - Total revenue for the first quarter of 2024 was $7,544,000, compared to $6,300,000 in the previous quarter and $7,901,000 in the same quarter last year[13] - Basic and diluted net earnings per share for the first quarter of 2024 were $0.39, recovering from a loss of $(1.14) in the previous quarter and down from $0.56 in the same quarter last year[13] - The return on average equity for the first quarter of 2024 was 7.13%, a significant recovery from (26.40%) in the previous quarter and an increase from 11.44% in the same quarter last year[13] Asset and Deposit Growth - Total assets increased to $979.0 million as of March 31, 2024, compared to $975.3 million at December 31, 2023[6] - Total deposits rose by $3.4 million to $899.7 million, reflecting a slight increase from $896.2 million at the end of Q4 2023[6] - Total assets at the end of the first quarter of 2024 were $979,039,000, a slight increase from $975,255,000 in the previous quarter but a decrease from $1,017,746,000 in the same quarter last year[14] Loan and Credit Quality - Annualized loan growth was reported at 7%, with average loans reaching $560.8 million, a 2% increase from Q4 2023[3] - Nonperforming assets remained low at $0.9 million, or 0.09% of total assets, down from $2.7 million, or 0.26%, a year earlier[3] - The allowance for credit losses was $7.2 million, or 1.27% of total loans, up from $6.9 million, or 1.23%, at the end of Q4 2023[4] - Nonperforming loans were $878,000, a decrease from $911,000 in the previous quarter and a significant decrease from $2,679,000 in the same quarter last year[13] - The provision for credit losses was $334,000, slightly up from $326,000 in the previous quarter and significantly higher than $66,000 in the same quarter last year[13] Interest Income and Margin - Net interest income (tax-equivalent) increased by 8% to $6.7 million in Q1 2024, driven by a net interest margin rise of 39 basis points to 3.04%[3] - Net interest income for the first quarter of 2024 was $6,657,000, an increase from $6,059,000 in the previous quarter and a decrease from $7,109,000 in the same quarter last year[13] - The net interest margin for the first quarter of 2024 was 3.04%, up from 2.65% in the previous quarter and down from 3.17% in the same quarter last year[13] Equity and Dividends - Total stockholders' equity at the end of the first quarter of 2024 was $74,489,000, down from $76,507,000 in the previous quarter and up from $73,640,000 in the same quarter last year[14] - Cash dividends paid were $0.27 per share in Q1 2024, with no share repurchases during the quarter[8] - The tangible common equity ratio was 7.63% at March 31, 2024, compared to 7.84% at December 31, 2023[8] Efficiency Metrics - The efficiency ratio improved to 75.03% in the first quarter of 2024, compared to 80.04% in the previous quarter and 69.97% in the same quarter last year[13]