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].

SECURITIES AND EXCHANGE COMMISSION 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 June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from_______to________ Commission File Number: 001-41764 Not applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant ( ...

| --- | --- | --- | --- | --- | --- | --- | --- | --- | |------------------------------|-------|------------------|-------|------------------------------|------------|-------------------------|-------|--------| | 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 ...