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What changed in Bridgewater Bancshares Inc's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Bridgewater Bancshares Inc's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+507 added−514 removedSource: 10-K (2025-03-06) vs 10-K (2024-03-07)

Top changes in Bridgewater Bancshares Inc's 2024 10-K

507 paragraphs added · 514 removed · 422 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

155 edited+41 added−26 removed55 unchanged
Biggest changeAs a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should eliminate, defer or significantly reduce dividends to shareholders if: (i) the company’s net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) the prospective rate of earnings retention is inconsistent with the company’s capital needs and overall current and prospective financial condition; or (iii) the company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.
Biggest changeAs a Minnesota corporation, the Company is subject to the Minnesota Business Corporation Act, as 15 Table of Contents amended, which prohibits the Company from paying a dividend if, after giving effect to the dividend the Company would not be able to pay its debts as the debts become due in the ordinary course of business, or the Company’s total assets would be less than the sum of its total liabilities plus, the amount that would be needed, if the Company were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution. ​ As a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should eliminate, defer or significantly reduce dividends to shareholders if: (i) the company’s net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) the prospective rate of earnings retention is inconsistent with the company’s capital needs and overall current and prospective financial condition; or (iii) the company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.
The interagency Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices guidance, or CRE Guidance, provides supervisory criteria, including the following numerical indicators, to assist bank examiners in identifying banks with potentially significant commercial real estate loan concentrations that may warrant greater supervisory scrutiny: (i) CRE loans exceeding 300% of capital and increasing 50% or more in the preceding three years; or (ii) construction and land development loans exceeding 100% of capital.
The interagency Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices guidance, or CRE Guidance, provides supervisory criteria, including the following numerical indicators, to assist bank examiners in identifying banks with potentially significant CRE loan concentrations that may warrant greater supervisory scrutiny: (i) CRE loans exceeding 300% of capital and increasing 50% or more in the preceding three years; or (ii) construction and land development loans exceeding 100% of capital.
The Bank also offers consumers traditional retail deposit products through its branch network, along with online, mobile and direct banking channels. Many of the deposits do not require a branch visit, creating efficiencies across the Bank’s branch network. Deposits continue to be the primary funding source for the Bank’s lending activities, both core and non-core deposits.
The Bank also offers consumers traditional retail deposit products through its branch network, along with online, mobile and direct banking channels. Many of the deposits do not require a branch visit, creating efficiencies across the Bank’s branch network. Deposits continue to be the primary funding source for the Bank’s lending activities, including both core and non-core deposits.
The Bank’s pace of loan growth slowed in 2023 from historical levels as market loan demand declined due to the rising interest rate environment. Deposits. The Bank has developed a suite of deposit products targeted at commercial clients, including a variety of remote deposit and cash management products, along with commercial transaction accounts.
The Bank’s pace of loan growth slowed in 2023 and 2024 from historical levels as market loan demand declined due to the rising interest rate environment. Deposits. The Bank has developed a suite of deposit products targeted at commercial clients, including a variety of remote deposit and cash management products, along with commercial transaction accounts.
If an FDIC-insured institution fails to submit an acceptable compliance plan, or fails in any material respect to implement a compliance plan that has been accepted by its primary federal regulator, the regulator is required to issue an order directing the institution to cure the deficiency.
If an FDIC-insured institution fails to submit an acceptable compliance plan, or fails in any material respect to implement a compliance plan that has been accepted by its primary federal regulator, the agency is required to issue an order directing the institution to cure the deficiency.
The accords recognized that bank assets for the purpose of the capital ratio calculations needed to be risk weighted (the theory being that riskier assets should require more capital) and that off-balance sheet exposures needed to be factored in the calculations.
These accords recognized that bank assets for the purpose of the capital ratio calculations needed to be risk weighted (the theory being that riskier assets should require more capital) and that off-balance sheet exposures needed to be factored in the calculations.
One test, referred to as the Liquidity Coverage Ratio, or LCR, is designed to ensure that the banking entity has an adequate stock of unencumbered high-quality liquid assets that can be converted easily and immediately in private markets into cash to meet liquidity needs for a 30-calendar day liquidity stress scenario.
One test, referred to as the Liquidity Coverage Ratio, or LCR, is designed to ensure that the banking organization has an adequate stock of unencumbered high-quality liquid assets that can be converted easily and immediately in private markets into cash to meet liquidity needs for a 30-calendar day liquidity stress scenario.
Since inception, the Company has grown significantly and profitably, with a focus on organic growth, driven primarily by commercial real estate lending.
Since inception, the Company has grown significantly and profitably, with a focus on organic growth, driven primarily by commercial real estate (“CRE”) lending.
Due to their market knowledge and understanding of clients’ businesses, the lenders are well positioned to provide timely and relevant feedback to clients. Management believes the responsive credit culture separates the Company from its competitors. Multifamily Lending Expertise. The Company specializes in multifamily lending, which has historically represented a large portion of the total loan portfolio.
Due to their market knowledge and understanding of clients’ businesses, the bankers are well positioned to provide timely and relevant feedback to clients. Management believes the responsive credit culture separates the Company from its competitors. Multifamily Lending Expertise. The Company specializes in multifamily lending, which has historically represented a large portion of the total loan portfolio.
It is possible under the Basel III Rule to be well-capitalized while remaining out of compliance with the capital conservation buffer discussed above. As of December 31, 2023: (i) the Bank was not subject to a directive from MDOC or FDIC to increase its capital and (ii) the Bank was well-capitalized, as defined by FDIC regulations.
It is possible under the Basel III Rule to be well-capitalized, while remaining out of compliance with the capital conservation buffer discussed above. ​ As of December 31, 2024: (i) the Bank was not subject to a directive from MDOC or FDIC to increase its capital and (ii) the Bank was well-capitalized, as defined by FDIC regulations.
Well-Capitalized Requirements . The ratios described above are minimum standards for banking organizations to be considered “adequately capitalized.” Bank regulatory agencies uniformly encourage banks to hold more capital and be “well-capitalized” and, to that end, federal law and regulations provide various incentives for banking organizations to maintain regulatory capital at levels in excess of minimum regulatory requirements.
The capital ratios described above are minimum standards for banking organizations to be considered “adequately capitalized.” Banking agencies uniformly encourage banks to hold more capital and be “well-capitalized” and, to that end, federal law and regulations provide various incentives for banking organizations to maintain regulatory capital at levels in excess of minimum regulatory requirements.
The principal exception allows bank holding companies to engage in, and to own shares of companies engaged in, certain businesses found by the Federal Reserve prior to November 11, 1999 to be “so closely related to banking ... as to be a proper incident thereto.” This authority permits the Company to engage in a variety of banking-related businesses, including the ownership and operation of a savings association, or any 14 Table of Contents entity engaged in consumer finance, equipment leasing, the operation of a computer service bureau (including software development) and mortgage banking and brokerage services.
The principal exception allows bank holding companies to engage in, and to own shares of companies engaged in, certain businesses found by the Federal Reserve prior to November 11, 1999 to be “so closely related to banking ... as to be a proper incident thereto.” This authority permits the Company to engage in a variety of banking-related businesses, including the ownership and operation of a savings association, or any entity engaged in consumer finance, equipment leasing, the operation of a computer service bureau (including software development) and mortgage banking and brokerage services.
In addition, the Company serves its clients through a strategically positioned “branch-light” model of just seven branches, as well as through online, mobile and direct banking channels, and is not dependent on a traditional branch network with a large number of locations. Hard-Working and Entrepreneurial Culture.
In addition, the Company serves its clients through a strategically positioned “branch-light” model of just nine branches, as well as through online, mobile and direct banking channels, and is not dependent on a traditional branch network with a large number of locations. Hard-Working and Entrepreneurial Culture.
As described above, the Bank exceeded its capital requirements under applicable guidelines as of December 31, 2023. Notwithstanding the availability of funds for dividends, however, the FDIC and the MDOC may prohibit the payment of dividends by the Bank if either or both determine such payment would constitute an unsafe or unsound practice.
As described above, the Bank exceeded its capital requirements under applicable guidelines as of December 31, 2024. Notwithstanding the availability of funds for dividends, however, the FDIC and the MDOC may prohibit the payment of dividends by the Bank if either or both determine such payment would constitute an unsafe or unsound practice.
Following the global financial crisis, the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, announced agreement on a strengthened set of capital requirements for banking organizations around the world, known as Basel III, to address deficiencies recognized in connection with the global financial crisis. The Basel III Rule .
Following the global financial crisis, the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, announced an agreement on a strengthened set of capital requirements for banking organizations around the world, known as the Basel III accords, to address deficiencies recognized in connection with the global financial crisis. ​ The Basel III Rule .
As a Minnesota-chartered FDIC-insured bank, the Bank is subject to the examination, supervision, reporting and enforcement requirements of the MDOC, the chartering authority for Minnesota banks, and the FDIC, designated by federal law as the primary federal regulator of insured state banks that, like the Bank, are not members of the Federal Reserve. Deposit Insurance .
As a Minnesota-chartered FDIC-insured bank, the Bank is subject to the examination, supervision, reporting and enforcement requirements of the MDOC, the chartering authority for Minnesota banks, and the FDIC, designated by federal law as the primary federal regulator of insured state banks that, like the Bank, are not members of the Federal Reserve System (nonmember banks). ​ Deposit Insurance .
These tests provide an incentive for banks and holding companies to increase their holdings in Treasury securities and other sovereign debt as a component of assets, increase the use of long-term debt as a funding source and rely on stable funding like core deposits (in lieu of brokered deposits). ​ Although these tests do not, and will not, apply to the Bank, the Company continues to review its liquidity risk management policies in light of regulatory requirements and industry developments. ​ Dividend Payments.
These tests provide an incentive for banks and bank holding companies to increase their holdings in Treasury securities and other sovereign debt as a component of assets, increase the use of long-term debt as a funding source and rely on stable funding like core deposits (in lieu of brokered deposits). ​ Although these tests do not apply to the Bank, the Company continues to review its liquidity risk management policies in light of regulatory requirements and industry developments.
The regulatory agencies generally have broad discretion to impose restrictions and limitations on the operations of a regulated entity where the agencies determine, among other things, that such operations are unsafe or unsound, fail to comply with applicable law or are otherwise inconsistent with laws and regulations.
The banking agencies generally have broad discretion to impose restrictions and limitations on the operations of a regulated entity where the agencies determine, among other things, that such operations are unsafe or unsound, fail to comply with applicable law or are otherwise inconsistent with laws and regulations.
Basel III includes a liquidity framework that requires the largest insured institutions to measure their liquidity against specific liquidity tests.
The Basel III Rule includes a liquidity framework that requires the largest insured institutions to measure their liquidity against specific liquidity tests.
The management-level enterprise risk management committee, comprised of the strategic leadership team, the Chief Risk Officer and senior representatives from all departments, meets quarterly to identify, assess, measure, monitor, and manage the Company’s overall enterprise risk position and to discuss how the Company’s strategic initiatives may impact the Company’s risk profile.
The management-level enterprise risk management committee, comprised of the strategic leadership team and senior representatives from all departments, meets quarterly to identify, assess, measure, monitor, and manage the Company’s overall enterprise risk position and to discuss how the Company’s strategic initiatives may impact the Company’s risk profile.
These laws, and the regulations of the bank regulatory agencies issued under them, affect, among other things, the scope of the Company’s business, the kinds and amounts of investments the Company and the Bank may make, reserve requirements, required capital levels relative to assets, the nature and amount of collateral for loans, the establishment of branches, the ability to merge, consolidate and acquire, dealings with the Company’s and the Bank’s insiders and affiliates and the Company’s payment of dividends.
These laws, and the regulations of the banking agencies issued under them, affect, among other things, the scope of the Company’s business, the kinds and amounts of investments that the Company and the Bank may make, reserve requirements, required capital levels relative to assets, the nature and amount of collateral for loans, the establishment of branches, the ability of the Company and the Bank to merge, consolidate and acquire, dealings with the Company’s and the Bank’s insiders and affiliates and the Company’s payment of dividends.
Enterprise risk management reports are provided to the full Company board on a quarterly basis. The Company also has a comprehensive Commercial Real Estate Portfolio Risk Management Policy which implements formal processes and procedures designed to manage and mitigate risk within the commercial real estate portfolio.
Enterprise risk management reports are provided to the full board of directors on a quarterly basis. The Company also has a comprehensive Commercial Real Estate Portfolio Risk Management Policy which implements formal processes and procedures designed to manage and mitigate risk within the commercial real estate portfolio.
Management believes that there will be further bank consolidation in the Twin Cities MSA and that the Company is well positioned to be a preferred partner for smaller institutions looking to exit through a sale to a strong buyer.
Management believes that there will be further bank consolidation in the Twin Cities MSA and in the surrounding markets and that the Company is well positioned to be a preferred partner for smaller institutions looking to exit through a sale to a strong buyer.
Banks are generally required to maintain capital levels in excess of other businesses. For a discussion of capital requirements, see “—The Role of Capital” above. 16 Table of Contents Liquidity Requirements. Liquidity is a measure of the ability and ease with which bank assets may be converted to meet financial obligations such as deposits or other funding sources.
Banks are generally required to maintain capital levels in excess of other businesses. For a discussion of capital requirements, see “–The Role of Capital” above. ​ Liquidity Requirements. Liquidity is a measure of the ability and ease with which bank assets may be converted to meet financial obligations such as deposits or other funding sources.
After accessing the website, the filings are available free of charge upon selecting “Investor Relations/SEC Filings/Documents.” Reports available include the Company’s proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after the documents and reports are electronically filed with or furnished to the SEC.
After accessing the website, the filings are available free of charge upon selecting “SEC Filings/Documents.” Reports available include the Company’s proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after the documents and reports are electronically filed with or furnished to the SEC.
Bureau of Labor Statistics, the population in the Twin Cities MSA was approximately 3.7 million as of December 31, 2023, making it the third largest MSA in the Midwest and 16th largest MSA in the United States.
Bureau of Labor Statistics, the population in the Twin Cities MSA was approximately 3.7 million as of December 31, 2024, making it the third largest MSA in the Midwest and 16th largest MSA in the United States.
The Company’s ESG priorities are to: 1) Leverage its unconventional corporate culture to leave a positive, lasting impact on its team members, clients and communities; 2) Create a diverse, equitable and inclusive work environment and community; 10 Table of Contents 3) Ensure strong corporate governance oversight including an effective risk management framework to support a growing organization; and 4) Contribute to a healthier natural environment in the communities in which employees live and work.
The Company’s ESG priorities are to: 1) Leverage its unconventional corporate culture to leave a positive, lasting impact on its team members, clients and communities; 2) Create a diverse, equitable and inclusive work environment and community; 3) Ensure strong corporate governance oversight including an effective risk management framework to support a growing organization; and 4) Contribute to a healthier natural environment in the communities in which employees live and work.
More specifically, the bank regulatory agencies described the goals of the CRA Rule as follows: (i) to expand access to credit, investment, and basic banking services in low and moderate income communities; (ii) to adapt to changes in the banking industry, including mobile and internet banking by modernizing assessment areas while maintaining a focus on branch based areas; (iii) to provide greater clarity, consistency, and transparency in the application of the regulations through the use of standardized metrics as part of CRA evaluation and clarifying eligible CRA activities focused on low and moderate income communities and underserved rural communities; (iv) to tailor CRA rules and data collection to bank size and business model; and (v) to maintain a unified approach among the regulators.
More specifically, the federal banking agencies described the goals of the CRA Rule as follows: (i) to expand access to credit, investment, and basic banking services in low and moderate income communities; (ii) to adapt to changes in the banking industry, including mobile and internet banking by modernizing assessment areas while maintaining a focus on branch-based areas; (iii) to provide greater clarity, consistency, and transparency in the application of the regulations through the use of standardized metrics as part of CRA evaluation and clarifying eligible CRA activities focused on low- and moderate-income communities and underserved rural communities; (iv) to tailor CRA rules and data collection to bank size and business model; and (v) to maintain a unified approach among the regulators. ​ Anti-Money Laundering/Sanctions.
Management believes the Company has earned the reputation as one of the prominent commercial real estate lenders in the Twin Cities MSA due in large part to the strength of the lending team.
Management believes the Company has earned the reputation as one of the prominent commercial real estate lenders in the Twin Cities MSA due in large part to the strength of the banking team.
The Company is required to file with the Federal Reserve periodic reports of the Company’s operations and such additional information regarding the Company and its subsidiaries as the Federal Reserve may require. Acquisitions, Activities and Financial Holding Company Election . The primary purpose of a bank holding company is to control and manage banks.
The Company is required to file with the Federal Reserve periodic reports of the Company’s operations and such additional information regarding the Company and its subsidiaries as the Federal Reserve may require. ​ 14 Table of Contents Acquisitions, Activities and Financial Holding Company Election . The primary purpose of a bank holding company is to control and manage banks.
In addition, institutions that want to make capital distributions (including for dividends and repurchases of stock) and pay discretionary bonuses to executive officers without restriction must also maintain 2.5% in Common Equity Tier 1 Capital attributable to a capital conservation buffer.
In addition, banking organizations that want to make capital distributions (including for dividends and repurchases of stock) and pay discretionary bonuses to executive officers without restriction must also maintain 2.5% in Common Equity Tier 1 Capital attributable to a capital conservation buffer.
Although capital has historically been one of the key measures of the financial health of both bank holding companies and banks, its role became fundamentally more important in the wake of the global financial crisis, as the banking regulators recognized that the amount and quality of capital held by banks prior to the crisis was insufficient to absorb losses during periods of severe stress.
Although capital has historically been one of the key measures of the financial health of both bank holding companies and banks, its role became fundamentally more important in the wake of the global financial crisis, as the banking agencies recognized that the amount and quality of capital held by banking organizations prior to that crisis was insufficient to absorb losses during periods of severe stress. ​ Capital Levels.
The agencies have identified a spectrum of risks facing a banking institution including, but not limited to, credit, market, liquidity, operational, legal and reputational risk.
The agencies have identified a spectrum of risks facing a banking organization including, but not limited to, credit, market, liquidity, operational, legal and reputational risk.
Properly managing risks has been identified as critical to the conduct of safe and sound banking activities and has become even more important as new technologies, product innovation, and the size and speed of financial transactions have changed the nature of banking markets.
Properly managing risks has been identified as critical to the conduct of safe and sound banking activities and has become even more important as new technologies, product innovation, third party relationships, and the size and speed of financial transactions have changed the nature of banking markets.
The Dodd-Frank Act permits well-capitalized and well-managed banks to establish new interstate branches or acquire individual branches 18 Table of Contents of a bank in another state (rather than the acquisition of an out-of-state bank in its entirety) without impediments.
The Dodd-Frank Act permits well-capitalized and well-managed banks to establish new interstate branches or acquire individual branches of a bank in another state (rather than the acquisition of an out-of-state bank in its entirety) without impediments.
These laws require the Bank to periodically disclose its privacy policies and practices relating to sharing such information and permit consumers to opt out of their ability to share information with unaffiliated third parties under certain circumstances.
These laws require the Bank to periodically disclose its privacy policies and practices relating to sharing such 19 Table of Contents information and permit consumers to opt out of their ability to share information with unaffiliated third parties under certain circumstances.
The Company has an experienced, professional team of 25 lenders, and believes the ability to drive quality commercial loan growth is a result of being able to provide each client with access to a knowledgeable, experienced, responsive and dedicated banker.
The Company has an experienced, professional team of bankers, and believes the ability to drive quality commercial loan growth is a result of being able to provide each client with access to a knowledgeable, experienced, responsive and dedicated banker.
Depending upon the capital category to which an institution is assigned, the regulators’ corrective powers include: (i) requiring the institution to submit a capital restoration plan; (ii) limiting the institution’s asset growth and restricting its activities; (iii) requiring the institution to issue additional capital stock (including additional voting stock) or to sell itself; (iv) restricting transactions between the institution and its affiliates; (v) restricting the interest rate that the institution may pay on deposits; (vi) ordering a new election of directors of the institution; (vii) requiring that senior executive officers or directors be dismissed; (viii) prohibiting the institution from accepting deposits from correspondent banks; (ix) requiring the institution to divest certain subsidiaries; (x) prohibiting the payment of principal or interest on subordinated debt; and (xi) ultimately, appointing a receiver for the institution.
Depending upon the capital category to which a banking organization is assigned, the banking agencies’ corrective powers include: (i) requiring the institution to submit a capital restoration plan; (ii) limiting the institution’s asset growth and restricting its activities; (iii) requiring the institution to issue additional capital stock (including additional voting stock) or to sell itself; (iv) restricting transactions between the institution and its affiliates; (v) restricting the interest rate that the institution may pay on deposits; (vi) ordering a new election of directors of the institution; (vii) requiring that senior executive officers or directors be dismissed; (viii) prohibiting the institution from accepting deposits from correspondent banks; (ix) requiring the institution to divest certain subsidiaries; (x) prohibiting the payment of principal or interest on subordinated debt; and (xi) ultimately, appointing a receiver for the institution. ​ Community Bank Capital Simplification .
The Company considers the relationship with its employees to be good and has not experienced interruptions of operations due to labor disagreements. 9 Table of Contents The Company believes embracing and understanding diversity, equity and inclusion has and will continue to make the Company stronger.
The Company considers the relationship with its employees to be good and has not experienced interruptions of operations due to labor disagreements. The Company believes embracing and understanding diversity, equity and inclusion has and will continue to make the Company stronger.
All Minnesota-chartered banks are required to pay supervisory assessments to the MDOC to fund the operations of that agency. The amount of the assessment is calculated on the basis of the Bank’s total assets. During the year ended December 31, 2023, the Bank paid supervisory assessments to the MDOC totaling approximately $150,800. Capital Requirements.
All Minnesota-chartered banks are required to pay supervisory assessments to the MDOC to fund the operations of that agency. The amount of the assessment is calculated on the basis of the Bank’s total assets. During the year ended December 31, 2024, the Bank paid supervisory assessments to the MDOC totaling approximately $150,700. ​ Capital Requirements.
The concept of an institution being “well-capitalized” is part of a regulatory enforcement regime that provides the federal banking regulators with broad power to take “prompt corrective action” to resolve the problems of undercapitalized depository institutions based on the capital level of each particular institution.
The concept of a banking organization being “well-capitalized” is part of a regulatory enforcement regime that provides the federal banking agencies with broad power to take “prompt corrective action” to resolve the problems of undercapitalized depository institutions based on the capital level of each particular institution.
Banks are required to implement liquidity risk management frameworks that ensure they maintain sufficient liquidity, including a cushion of unencumbered, high quality liquid assets, to withstand a range of stress events.
Banks are required to implement liquidity risk management frameworks that ensure they maintain sufficient liquidity, including a cushion of 17 Table of Contents unencumbered, high-quality liquid assets, to withstand a range of stress events.
In addition, under the Basel III Rule, institutions that want to pay unrestricted dividends have to maintain 2.5% in Common Equity Tier 1 Capital attributable to the capital conservation buffer. See “—The Role of Capital” above. State Bank Investments and Activities.
In addition, under the Basel III Rule, banking organizations that want to pay unrestricted dividends have to maintain 2.5% in Common Equity Tier 1 Capital attributable to the capital conservation buffer. See “–The Role of Capital” above. ​ State Bank Investments, Activities and Acquisitions.
The extent of the regulators’ powers depends on whether the institution in question is “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized,” in each case as defined by regulation.
The extent of the banking agencies’ powers depends on whether the institution in question is “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized,” in each case as defined by regulation.
The Bank has two wholly-owned subsidiaries: BWB Holdings, LLC, which was formed for the purpose of holding repossessed property; and Bridgewater Investment Management, Inc., which was formed for the purposes of holding certain municipal securities and engaging in municipal lending activities. The Bank has seven full-service offices located in Bloomington, Greenwood, Minneapolis (2), St. Louis Park, Orono, and St.
The Bank has two wholly-owned subsidiaries: BWB Holdings, LLC, which was formed for the purpose of holding repossessed property; and Bridgewater Investment Management, Inc., which was formed for the purposes of holding certain municipal securities and engaging in municipal lending activities. The Bank has nine full-service offices located in Bloomington, Greenwood, Minneapolis (2), Minnetonka (2), Orono, St.
Section 201 of the Regulatory Relief Act instructed the federal banking regulators to establish a single “Community Bank Leverage Ratio”, or CBLR, of between 8 and 10%.
Section 201 of the Regulatory Relief Act specifically instructed the federal banking agencies to establish a single “Community Bank Leverage Ratio”, or CBLR, of between 8 and 10%.
As a result, the Company’s growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by the requirements of federal and state statutes and by the regulations and policies of various bank regulatory agencies, including the Company’s primary regulator, the Federal Reserve, and the Bank’s primary federal regulator, the FDIC and primary state regulator, the Minnesota Department of Commerce, Financial Institutions Division, or MDOC, and the Consumer Financial Protection Bureau, or CFPB, as the regulator of consumer financial services and their providers.
As a result, the Company’s growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by the requirements of federal and state statutes and by the regulations and policies of various banking agencies, including the Company’s primary regulator, the Federal Reserve Board of Governors (the “Federal Reserve”) and the Bank’s primary federal regulator, the FDIC, and primary state regulator, the Minnesota Department of Commerce, Financial Institutions Division, or MDOC, and the Consumer Financial Protection Bureau, or CFPB, as the regulator of consumer financial services and their providers.
As of December 31, 2023, the Company’s market ranked first in median household income in the Midwest and seventh in the nation, when compared to the top 20 MSAs by population size in each area, based on data available on S&P Global Market Intelligence. According to the U.S.
As of December 31, 2024, the Twin Cities ranked first in median household income in the Midwest and seventh in the nation, when compared to the top 20 MSAs by population size in each area, based on data available on S&P Global Market Intelligence. According to the U.S.
The deposit accounts of the Bank are insured by the FDIC’s Deposit Insurance Fund, or DIF, to the maximum extent provided under federal law and FDIC regulations, currently $250,000 per insured depositor category.
The Bank is a Minnesota-chartered bank. The deposit accounts of the Bank are insured by the FDIC’s Deposit Insurance Fund, or DIF, to the maximum extent provided under federal law and FDIC regulations, currently $250,000 per insured depositor category.
Until the deficiency cited in the regulator’s order is cured, the regulator may restrict the FDIC-insured institution’s rate of growth, require the FDIC-insured institution to increase its capital, restrict the rates that the institution pays on deposits or require the institution to take any action that the regulator deems appropriate under the circumstances.
Until the deficiency cited in the banking agency’s order is cured, the agency may restrict the FDIC-insured institution’s rate of growth, require the FDIC-insured institution to increase its capital, restrict the rates that the institution pays on deposits or require the institution to take any action that the agency deems appropriate under the circumstances.
The Twin Cities MSA had an unemployment rate of 2.4%, which was lower than the national average of 3.7%, as of December 31, 2023. These strong labor market fundamentals can be attributed to the significant presence of national and international businesses across diverse industries operating within the Twin Cities MSA.
The Twin Cities MSA had an unemployment rate of 2.5%, which was lower than the national average of 4.1%, as of December 31, 2024. These strong labor market fundamentals can be attributed to the significant presence of national and international businesses across diverse industries operating within the Twin Cities MSA.
As of December 31, 2023, the Company had regulatory capital in excess of the Federal Reserve’s requirements and met the Basel III Rule requirements to be well-capitalized. The Company was also in compliance with the capital conservation buffer as of December 31, 2023. 13 Table of Contents Prompt Corrective Action .
As of December 31, 2024, the Company had regulatory capital in excess of the Federal Reserve’s requirements and met the Basel III Rule requirements to be well-capitalized. As of December 31, 2024, the Company was also in compliance with the capital conservation buffer. ​ Prompt Corrective Action .
Federal law prohibits any person or company from acquiring “control” of an FDIC-insured depository institution or its holding company without prior notice to the appropriate federal bank regulator.
Federal law prohibits any person or company from acquiring “control” of an FDIC-insured depository institution or its holding company without prior notice to the appropriate federal banking agency.
Furthermore, taxation laws administered by the Internal Revenue Service, or IRS, and state taxing authorities, accounting rules developed by the Financial Accounting Standards Board, or FASB, securities laws administered by the SEC and state securities authorities, and anti-money laundering laws enforced by the U.S. Department of the Treasury, or Treasury, have an impact on the Company’s business.
Furthermore, taxation laws administered by the Internal Revenue Service (“IRS”), and state taxing authorities, accounting rules developed by the FASB, securities laws administered by the SEC and state securities authorities, and anti-money laundering and sanctions laws enforced by the U.S. Department of the Treasury, or Treasury, have an impact on the Company’s business.
These events have further underscored the importance of liquidity risk management and contingency funding planning by insured depository institutions like the Bank. ​ The primary role of liquidity risk management is to: (i) prospectively assess the need for funds to meet financial obligations; and (ii) ensure the availability of cash or collateral to fulfill those needs at the appropriate time by coordinating the various sources of funds available to the institution under normal and stressed conditions.
These events have further underscored the importance of liquidity risk management and contingency funding planning by insured depository institutions like the Bank, as highlighted in a 2023 addendum to existing interagency guidance on funding and liquidity risk management. ​ The primary role of liquidity risk management is to: (i) prospectively assess the need for funds to meet financial obligations; and (ii) ensure the availability of cash or collateral to fulfill those needs at the appropriate time by coordinating the various sources of funds available to the institution under normal and stressed conditions.
The key risk themes identified for 2024 are discussed under “—Risk Factors.” The Bank is expected to have active board and senior management oversight; adequate policies, procedures and limits; adequate risk measurement, monitoring and management information systems; and comprehensive internal controls. Privacy and Cybersecurity .
The key risk themes identified for 2025 are discussed under “-Risk Factors.” ​ The Bank is expected to have active board of directors and senior management oversight; adequate policies, procedures and limits; adequate risk measurement, monitoring and management information systems; and comprehensive internal controls.
On December 18, 2015, the federal banking agencies issued a statement to reinforce prudent risk-management practices related to CRE lending, having observed substantial growth in many CRE asset and lending markets, increased competitive pressures, rising CRE concentrations in banks, and an easing of CRE underwriting standards.
On December 18, 2015, and again in recent years, the federal banking agencies have issued statements to reinforce prudent risk-management practices related to CRE lending, having observed substantial growth in many CRE asset and lending markets, increased competitive pressures, rising CRE concentrations in banks, and an easing of CRE underwriting standards.
Not only did the Basel III Rule increase most of the required minimum capital ratios in effect prior to January 1, 2015, but, in requiring that forms of capital be of higher quality to absorb loss, it introduced the concept of Common Equity Tier 1 Capital, which consists primarily of common stock, related surplus (net of Treasury stock), retained 12 Table of Contents earnings, and Common Equity Tier 1 minority interests subject to certain regulatory adjustments.
The Company and the Bank are each subject to the Basel III Rule as described below. ​ Not only did the Basel III Rule increase most of the required minimum capital ratios in effect prior to January 1, 2015, but, in requiring that forms of capital be of higher quality to absorb loss, it introduced the concept of Common Equity Tier 1 Capital, which consists primarily of common stock, related surplus (net of Treasury stock), retained earnings, and Common Equity Tier 1 minority interests subject to certain regulatory adjustments.
Federal law permits state and national banks to merge with banks in other states subject to: (i) regulatory approval; (ii) federal and state deposit concentration limits; and (iii) state law limitations requiring the merging bank to have been in existence for a minimum period of time (not to exceed five years) prior to the merger. Community Reinvestment Act Requirements.
In addition, federal law permits state and national banks to merge with banks in other states subject to: (i) regulatory approval; (ii) federal and state deposit concentration limits; and (iii) state law limitations requiring the merging bank to have been in existence for a minimum period of time (not to exceed five years) prior to the merger. ​ Federal Home Loan Bank System.
The Company has elected to operate as a financial holding company. In order to maintain its status as a financial holding company, the Company and the Bank must be well-capitalized, well-managed, and the Bank must have a least a satisfactory CRA rating.
The Company has elected to operate as a financial holding company. In order to maintain its status as a financial holding company, the Company and the Bank must be well-capitalized, well-managed, and the Bank must have a least a satisfactory Community Reinvestment Act (the “CRA”) rating.
The Company recognizes that different perspectives enhance its thinking and improve its employees’ experience by bringing together unique backgrounds, beliefs, cultures, and experiences at the Company. As of December 31, 2023, women and people of color comprised 52% and 20% of the Company’s total workforce, respectively.
The Company recognizes that different perspectives enhance its thinking and improve its employees’ experience by bringing together unique backgrounds, beliefs, cultures, and 9 Table of Contents experiences at the Company. As of December 31, 2024, women and people of color comprised 52% and 22% of the Company’s total workforce, respectively.
Basel III, or the Basel III Rule, established capital standards for banks and bank holding companies that are meaningfully more stringent than those in place previously: it increased the required quantity and quality of capital; and it required a more complex, detailed and calibrated assessment of risk in the calculation of risk weightings.
The Basel III Rule established capital standards for banks and bank holding companies that are meaningfully more stringent than those established previously and are still in effect today. The Basel III Rule increased the required quantity and quality of capital and required a more complex, detailed and calibrated assessment of risk in the calculation of risk weightings for bank assets.
On the lending side, the Company intends to rely on the expertise of the lenders, and believes the Company is well-positioned to continue to organically grow commercial loans based on the favorable market demographics in the Twin Cities MSA. Leverage Entrepreneurial Culture and Talent.
On the lending side, the Company intends to rely on the expertise of the bankers, and believes the Company is well-positioned to continue to organically grow commercial loans based on the favorable market demographics in the Twin Cities MSA.
Additionally, bank holding companies that meet certain eligibility requirements prescribed by the BHCA and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including securities and insurance underwriting and sales, merchant banking and any other activity that the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature or incidental to any such financial activity or that the Federal Reserve determines by order to be complementary to any such financial activity, as long as the activity does not pose a substantial risk to the safety or soundness of FDIC-insured institutions or the financial system generally.
In addition to approval from the Federal Reserve that may be required in certain circumstances, prior approval for acquisitions by the Company may be required from other agencies, such as the MDOC or other agencies that regulate the target company of an acquisition. ​ Additionally, bank holding companies that meet certain eligibility requirements prescribed by the BHCA and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including securities and insurance underwriting and sales, merchant banking and any other activity that the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature or incidental to any such financial activity or that the Federal Reserve determines by order to be complementary to any such financial activity, as long as the activity does not pose a substantial risk to the safety or soundness of FDIC-insured institutions or the financial system generally.
Assets have grown at a compounded annual growth rate of 31.1% since 2005, surpassing total asset milestones of $500 million in 2013, $1.0 billion in 2016, $2.0 billion in 2019, $3.0 billion in 2021, and $4.0 billion in 2022.
Assets have grown at a compounded annual growth rate of 29.9% since 2005, surpassing total asset milestones of $500 million in 2013, $1.0 billion in 2016, $2.0 billion in 2019, $3.0 4 Table of Contents billion in 2021, $4.0 billion in 2022, and $5.0 billion in 2024.
The BHCA generally prohibits the Company from acquiring direct or indirect ownership or control of more than 5% of a class of the voting shares of any company that is not a bank and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to banks and their subsidiaries.
For a discussion of the capital requirements, see “–The Role of Capital” above. ​ The BHCA generally prohibits the Company from acquiring direct or indirect ownership or control of more than 5% of a class of the voting shares of any company that is not a bank and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to banks and their subsidiaries.
In addition, under the Basel III Rule, institutions that want to pay dividends have to maintain 2.5% in Common Equity Tier 1 Capital attributable to the capital conservation buffer. See “—The Role of Capital” above. Monetary Policy.
In addition, under the Basel III Rule, banking organizations that want to pay dividends have to maintain 2.5% in Common Equity Tier 1 Capital attributable to the capital conservation buffer. See “–The Role of Capital” above. ​ Incentive Compensation.
As of December 31, 2023, the Company had 255 full-time equivalent employees, most of which are full-time employees, an increase of 4% from December 31, 2022. None of the Company’s employees are a party to a collective bargaining agreement.
As of December 31, 2024, the Company had 290 full-time equivalent employees, most of which are full-time employees, an increase of 14% from December 31, 2023. None of the Company’s employees is a party to a collective bargaining agreement.
Accordingly, pursuant to the Policy Guidance, the Bank is required to have heightened risk management practices in place to account for the heightened degree of risk associated with CRE lending. Consumer Financial Services.
Thus, the Bank is deemed to have a concentration in CRE lending. Accordingly, pursuant to the CRE Guidance, the Bank is required to have, and does have, heightened risk management practices in place to account for the heightened degree of risk associated with CRE lending. ​ Consumer Financial Services.
In addition to loans secured by improved commercial real estate properties, the Bank engages in construction lending, which includes single family residential construction loans, land development, finished lots and raw land loans, and commercial and multifamily construction. In recent years, the Bank has increased its focus on commercial and industrial lending.
In addition to loans secured by improved commercial real estate properties, the Bank engages in construction lending, which includes single family residential construction loans, land development, finished lots and raw land loans, and commercial and multifamily construction.
By comparison, as of the same date, the Company had a deposit market share of 5 Table of Contents approximately 1.5%, which ranked the Company tenth in the Twin Cities MSA overall and fourth in the Twin Cities MSA among banks headquartered in Minnesota. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Market ​ ​ ​ ​ State ​ Branch ​ Deposits ​ Share Rank ​ Institution ​ Headquarters ​ Count ​ ($000) ​ (%) 1 U.S.
By comparison, the Company had a deposit market share of approximately 1.6%, including the acquisition of FMCB completed in December 2024, which ranked the Company ninth in the Twin Cities MSA overall and fourth in the Twin Cities MSA among banks headquartered in Minnesota. 5 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Market ​ ​ ​ ​ State ​ Branch ​ Deposits ​ Share Rank ​ Institution ​ Headquarters ​ Count ​ ($000) ​ (%) 1 U.S.
Similarly, women and people of color made up 52% and 9% of manager roles, respectively. Employee retention helps the Company operate efficiently and carry out its mission of being the finest entrepreneurial bank.
Similarly, women and people of color made up 58% and 13% of manager roles, respectively. Employee retention helps the Company operate efficiently and carry out its mission of being the finest entrepreneurial bank in the Twin Cities MSA.
The United States bank regulatory agencies adopted the Basel III regulatory capital reforms, and, at the same time, effected changes required by the Dodd-Frank Act, in regulations that were effective (with certain phase-ins) in 2015.
The U.S. federal banking agencies adopted the U.S. Basel III regulatory capital reforms, and, at the same time, effected changes required by the Dodd-Frank Act, in regulations that were effective (with certain phase-ins) in 2015 (the “Basel III Rule”).
The capital guidelines for U.S. banks beginning in 1989 have been based upon international capital accords (known as “Basel” rules) adopted by the Basel Committee on Banking Supervision, a committee of central banks and bank supervisors that acts as the primary global standard-setter for prudential regulation, as implemented by the U.S. bank regulatory agencies on an interagency basis.
The minimum capital levels for banking organizations have been expressed in terms of ratios of “capital” divided by “total assets.” The capital guidelines for U.S. banking organizations beginning in 1989 have been based upon international capital accords (known as “Basel” accords) adopted by the Basel Committee on Banking Supervision, a committee of central banks and bank supervisors that acts as the primary global standard-setter for prudential regulation, as implemented by the U.S. federal banking agencies on an interagency basis.
“Control” is conclusively presumed to exist upon the acquisition of 25% or more of the outstanding voting securities of a bank or bank holding company, but may arise under certain circumstances between 10% and 24.99% ownership. Capital Requirements. The Company is subject to the complex consolidated capital requirements of the Basel III Rule, see “—the Role of Capital” above.
“Control” is conclusively presumed to exist upon the acquisition of 25% or more of the outstanding voting securities of a bank or bank holding company, but may arise under certain circumstances between 10% and 24.99% ownership. ​ Capital Requirements.
Although the reforms primarily targeted systemically important financial service providers, their influence filtered down in varying degrees to community banks over time and caused the Company’s compliance 11 Table of Contents and risk management processes, and the costs thereof, to increase.
Although the reforms primarily targeted large banking organizations and systemically important financial institutions, their influence filtered down in varying degrees to community banks over time and caused the Company’s compliance and risk management processes, and the costs thereof, to increase.
The Basel III Rule is applicable to all banking organizations that are subject to minimum capital requirements, including federal and state banks and savings and loan associations, as well as to most bank and savings and loan holding companies. The Company and the Bank are each subject to the Basel III Rule as described below.
The Basel III Rule is applicable to all banking 12 Table of Contents organizations that are subject to minimum capital requirements, including national and state banks and savings and loan associations, as well as to most bank and savings and loan holding companies.
These processes and procedures include board and management oversight, commercial real estate exposure limits, portfolio monitoring tools, management information systems, market reports, 8 Table of Contents underwriting standards, a credit risk review function and periodic stress testing to evaluate potential credit risk and the subsequent impacts on capital and earnings.
These processes and procedures include board of directors and management oversight, commercial real estate exposure limits, portfolio monitoring tools, management information systems, market reports, underwriting standards, a credit risk review function and periodic stress testing to evaluate potential credit risk and the subsequent impacts on capital and earnings. 8 Table of Contents Strategies for Growth The Company had a track record of generating consistent, robust growth over the past nineteen years.
Market Area and Competition The Company operates in the Twin Cities Metropolitan Statistical Area, or MSA, which had total deposits of $237.6 billion as of June 30, 2023, and ranks as the 14th largest metropolitan statistical area in the United States in total deposits, and the third largest metropolitan statistical area in the Midwest in total deposits, based on Federal Deposit Insurance Corporation, or FDIC, data.
Market Area and Competition The Company operates in the Twin Cities Metropolitan Statistical Area (“MSA”) which had total deposits of $248.4 billion as of June 30, 2024, and ranks as the 14th largest MSA in the United States in total deposits, and the third largest MSA in the Midwest in total deposits, based on FDIC data.
Federal and state banking laws impose a comprehensive system of supervision, regulation and enforcement on the operations of FDIC-insured institutions, their holding companies and affiliates that is intended primarily for the protection of the FDIC-insured deposits and depositors of banks, rather than shareholders.
The effect of these statutes, regulations, regulatory policies and accounting rules are significant to the Company’s operations and results. ​ Federal and state banking laws impose a comprehensive system of supervision, regulation and enforcement on the operations of FDIC-insured institutions, their holding companies and affiliates that is intended primarily for the protection of the FDIC-insured deposits and depositors of banks, rather than shareholders.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOperational, Strategic and Reputational Risks ● The ability to implement the Company’s growth strategy and manage costs effectively; ● the ability to attract and retain key personnel, including the strategic leadership team; ● talent and labor shortages and high rates of employee turnover; ● the occurrence of fraudulent activity, breaches or failures of our or our third party vendors’ information security controls or cybersecurity-related incidents, including those employing artificial intelligence; ● interruptions involving critical systems or third-party servicers; ● competition in the financial services industry, including from nonbank competitors such as credit unions and “fintech” companies; and ● severe weather, natural disasters, effects of climate change, widespread disease or pandemics, acts of war or terrorism or other adverse external events, including the Israeli-Palestinian conflict and the Russian invasion of Ukraine. 21 Table of Contents Legal, Accounting and Compliance Risks ● The effectiveness of our risk management framework and programs; ● the imposition of governmental policies impacting the value of products produced by our commercial borrowers; ● potential impairment to the goodwill recorded in connection with strategic acquisitions; ● the commencement and outcome of litigation and other legal proceedings and regulatory actions against us; ● the impact of recent and future legislative and regulatory changes, including in response to the bank failures in 2023; and ● changes to U.S. or state tax laws, regulations and guidance, including the new 1% excise tax on stock buybacks by publicly traded companies; and ● risks related to climate change and the negative impact it may have on our clients and their businesses, as well as the stability of our deposit base. ​ Market and Interest Rate Risks ● Interest rate risk, including the effects of anticipated interest rate volatility; and ● fluctuations in the values of the securities held in our securities portfolio or the values of derivative instruments held in our derivatives portfolio.
Biggest changeLegal, Accounting and Compliance Risks ● the effectiveness of the Company’s risk management fra­­mework; ● the imposition of tariffs or other governmental policies impacting the value of products produced by our commercial borrowers; ● potential impairment to the goodwill the Company recorded in connection with acquisitions; ● the commencement and outcome of litigation and other legal proceedings and regulatory actions against us; ● the impact of recent and future legislative and regulatory changes, including in response to prior bank failures; ● changes to U.S. or state tax laws, regulations and governmental policies concerning the Company’s general business, including changes in interpretation or prioritization and changes in response to prior bank failures; and ● risks related to climate change and the negative impact it may have on our customers and their businesses. ​ Market and Interest Rate Risks ● interest rate risk, including the effects of changes in interest rates; and ● fluctuations in the values of the securities held in our securities portfolio, including as the result of changes in interest rates. ​ Credit Risks Our loan portfolio has a concentration of commercial real estate loans, which involve risks specific to real estate values and the health and market dynamics of the real estate market generally.
As a result, the outcome of legal and regulatory actions could have a material adverse effect on our business, financial condition, results of operations and growth prospects. We are subject to extensive regulation, and the regulatory framework that applies to us, together with any future legislative or regulatory changes, may significantly affect our operations.
As a result, the outcome of legal and regulatory actions could have a material adverse effect on our business, reputation, financial condition, results of operations and growth prospects. We are subject to extensive regulation, and the regulatory framework that applies to us, together with any future legislative or regulatory changes, may significantly affect our operations.
Labor shortages and a failure to attract and retain qualified employees could negatively impact our business, financial condition, results of operations and growth prospects. ​ A number of factors may adversely affect the labor force available to us or increase labor costs, including high employment levels and changes in labor force size and participation rates.
Labor shortages and a failure to attract and retain qualified employees could negatively impact our business, financial condition, results of operations and growth prospects. ​ A number of factors may adversely affect the labor force available to us or increase labor costs, including employment levels and changes in labor force size and participation rates.
A failure to successfully keep pace with technological change affecting the financial services industry and failure to avoid interruptions, errors and delays could have a material adverse effect on our business, financial condition, results of operations and growth prospects. We depend on the accuracy and completeness of information about clients and counterparties.
A failure to successfully keep pace with technological change affecting the financial services industry and failure to avoid interruptions, errors and delays could have a material adverse effect on our business, reputation, financial condition, results of operations and growth prospects. We depend on the accuracy and completeness of information about clients and counterparties.
In the event that we pursue strategic acquisitions, we may have difficulty completing them and may not realize the anticipated benefits of any transaction we complete. For example, we may not be successful in realizing anticipated cost savings or in preventing disruptions in service to existing client relationships of the acquired institution.
In the event that we pursue additional strategic acquisitions, we may have difficulty completing them and may not realize the anticipated benefits of any transaction we complete. For example, we may not be successful in realizing anticipated cost savings or in preventing disruptions in service to existing client relationships of the acquired institution.
Additionally, our reputation is connected to that of the financial services and banking industry as a whole, and may be adversely affected by changes in the condition and reputation of the industry; for example, certain community banks experienced deposit outflows following some bank failures in early 2023.
Additionally, our reputation is connected to that of the financial services and banking industry as a whole, and may be adversely affected by changes in the condition and reputation of the industry; for example, certain community banks experienced deposit outflows following some bank failures in 2023.
Even the perceived lack of creditworthiness of, or questions about, a counterparty may lead to market-wide liquidity problems and losses or defaults by various institutions. For example, certain community banks experienced deposit outflows following the bank failures in early 2023.
Even the perceived lack of creditworthiness of, or questions about, a counterparty may lead to market-wide liquidity problems and losses or defaults by various institutions. For example, certain community banks experienced deposit outflows following the bank failures in 2023.
Additional factors include, but are not limited to, the intent to sell the security, rating agency downgrades of the securities or our own analysis of the value of the security, defaults by the issuer or individual mortgagors with respect to the underlying securities and instability in the credit markets.
Additional factors include, but are not limited to, the intent to sell the security, rating agency downgrades of the securities or our own analysis of the value of a security, defaults by the issuer or individual mortgagors with respect to the underlying securities and instability in the credit markets.
These factors include, among other things: ● Actual or anticipated variations in our quarterly results of operations; ● recommendations or research reports about us or the financial services industry in general published by securities analysts; ● the failure of securities analysts to cover, or continue to cover us; ● operating and stock price performance of other companies in the industry or that investors or analysts deem comparable to us; ● news reports relating to trends, concerns and other issues in the financial services industry; ● perceptions in the marketplace regarding us, our competitors or other financial institutions; ● future sales of our common stock; ● departure of members of our strategic leadership team or other key personnel; ● new technology used, or services offered, by competitors; ● significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; ● changes or proposed changes in laws or regulations, or differing interpretations of existing laws and regulations, affecting our business, or enforcement of these laws and regulations; ● litigation and governmental investigations; and ● geopolitical conditions such as acts or threats of terrorism or military conflicts.
These factors include, among other things: ● actual or anticipated variations in our quarterly results of operations; ● recommendations or research reports about us or the financial services industry in general published by securities analysts; ● the failure of securities analysts to cover, or continue to cover us; ● operating and stock price performance of other companies in the industry or that investors or analysts deem comparable to us; ● news reports relating to trends, concerns and other issues in the financial services industry; ● perceptions in the marketplace regarding us, our competitors or other financial institutions; 44 Table of Contents ● future sales of our common stock; ● departure of members of our strategic leadership team or other key personnel; ● new technology used, or services offered, by competitors; ● significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; ● changes or proposed changes in laws or regulations, or differing interpretations of existing laws and regulations, affecting our business, or enforcement of these laws and regulations; ● litigation and governmental investigations; and ● geopolitical conditions such as acts or threats of terrorism or military conflicts.
Our second amended and restated bylaws have an exclusive forum provision providing that, unless we consent in writing to an alternative forum, the state or federal courts in Hennepin County, Minnesota shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee, or agent of the Company to the Company or the Company’s shareholders, (iii) any action asserting a claim arising pursuant to any provision of the Minnesota Business Corporation Act, the articles or the bylaws of the Company, or (iv) any action asserting a claim governed by 40 Table of Contents the internal affairs doctrine, in each case subject to said courts having personal jurisdiction over the indispensable parties named as defendants therein.
Our second amended and restated bylaws have an exclusive forum provision providing that, unless we consent in writing to an alternative forum, the state or federal courts in Hennepin County, Minnesota shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee, or agent of the Company to the Company or the Company’s shareholders, (iii) any action asserting a claim arising pursuant to any provision of the Minnesota Business Corporation Act, the articles or the bylaws of the Company, or (iv) any action asserting a claim governed by the internal affairs doctrine, in each case subject to said courts having personal jurisdiction over the indispensable parties named as defendants therein.
Moreover, in recent periods, several large corporations, including financial institutions, third party partners specializing in providing services to financial institutions, and retail companies, have suffered major data breaches, in some cases exposing not only confidential and proprietary corporate information, but also sensitive financial and other personal information of their customers and employees and subjecting them to potential fraudulent activity.
Moreover, several large corporations, including financial institutions, third party partners specializing in providing services to financial institutions, and retail companies, have suffered major data breaches, in some cases exposing not only confidential and proprietary corporate information, but also sensitive financial and other personal information of their customers and employees and subjecting them to potential fraudulent activity.
These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to assess civil money penalties, to fine or remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance and place us into receivership or conservatorship.
These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to assess 39 Table of Contents civil money penalties, to fine or remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance and place us into receivership or conservatorship.
Maintenance of our reputation depends not only on our success in maintaining our service-focused culture and controlling and mitigating the various risks described in this report, but also on our success 29 Table of Contents in identifying and appropriately addressing issues that may arise in areas such as potential conflicts of interest, anti-money laundering, client personal information and privacy issues, client and other third party fraud, record-keeping, regulatory investigations and any litigation that may arise from the failure or perceived failure of us to comply with legal and regulatory requirements.
Maintenance of our reputation depends not only on our success in maintaining our service-focused culture and controlling and mitigating the various risks described in this report, but also on our success in identifying and appropriately addressing issues that may arise in areas such as potential conflicts of interest, anti-money laundering, client personal information and privacy issues, client and other third party fraud, record-keeping, regulatory investigations and any litigation that may arise from the failure or perceived failure of us to comply with legal and regulatory requirements.
In any liquidation, dissolution or winding up of the Company, our common stock would rank below all claims of debt holders against us and claims of all of our outstanding shares of preferred stock. As of December 31, 2023, we had $80.0 million of subordinated debentures outstanding and $69.0 million of preferred stock outstanding.
In any liquidation, dissolution or winding up of the Company, our common stock would rank below all claims of debt holders against us and claims of all of our outstanding shares of preferred stock. As of December 31, 2024, we had $80.0 million of subordinated debentures outstanding and $69.0 million of preferred stock outstanding.
Moreover, legislators and regulators in the United States are increasingly adopting or revising privacy, information security and data protection laws, including with respect to the use of artificial intelligence by financial institutions and their service providers, that potentially could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer or employee information and some of our current or planned business activities.
Moreover, legislators and regulators in the United States are increasingly adopting or revising privacy, information 40 Table of Contents security and data protection laws, including with respect to the use of artificial intelligence by financial institutions and their service providers, that potentially could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer or employee information and some of our current or planned business activities.
As a bank, we are susceptible to fraudulent activity, information security breaches and cybersecurity-related incidents that may be committed against us, third-parties and their subservicers, or our clients, which may result in financial losses or increased costs to us, our third party partners or our clients, disclosure or misuse of our information or our client information, misappropriation of assets, privacy breaches against our clients, litigation or damage to our reputation.
As a bank, we are susceptible to fraudulent activity, information security breaches and cybersecurity-related incidents that may be committed against us, third parties and their subservicers, or our clients, which may result in financial losses or increased costs to us, our third party partners or our clients, disclosure or misuse of our information or 31 Table of Contents our client information, misappropriation of assets, privacy breaches against our clients, litigation or damage to our reputation.
In some cases, management must select the accounting policy or method to apply from two or more alternatives, any of which may be reasonable under the circumstances, yet which may result in our reporting materially different results than would have been reported under a different alternative. Certain accounting policies are critical to presenting our financial condition and results of operations.
In some cases, management must select the accounting policy or method to apply from two or more alternatives, any of which may be reasonable under the circumstances, yet which may result in our reporting materially different results than would have been reported under a different alternative. 36 Table of Contents Certain accounting policies are critical to presenting our financial condition and results of operations.
This focus has only intensified since the financial crisis, with regulators and prosecutors focusing on a variety of financial institution practices and requirements, including foreclosure practices, compliance with applicable consumer protection laws, classification of “held for sale” assets and compliance with anti-money laundering statutes, the Bank Secrecy Act and sanctions administered by the Office of Foreign Assets Control of the U.S.
This focus has only intensified since the financial crisis, with regulators and prosecutors focusing on a variety of financial institution practices and requirements, including foreclosure practices, compliance with applicable consumer protection laws, classification of “held for sale” assets and compliance with 37 Table of Contents anti-money laundering statutes, the Bank Secrecy Act and sanctions administered by the Office of Foreign Assets Control of the U.S.
We cannot guarantee that our stock repurchase program will be fully implemented or that it will enhance long-term shareholder value. On August 17, 2022, the Company’s board of directors approved a new stock repurchase program which authorizes the Company to repurchase up to $25.0 million of its common stock, subject to certain limitations and conditions.
We cannot guarantee that our stock repurchase program will be fully implemented or that it will enhance long-term shareholder value. On August 17, 2022, the Company’s board of directors approved a stock repurchase program (the “2022 Stock Repurchase Program”) which authorizes the Company to repurchase up to $25.0 million of its common stock, subject to certain limitations and conditions.
Because 65.3% of the dollar amount of our portfolio has been originated in the past three years, the current level of delinquencies and defaults may not represent the level that may prevail as the portfolio becomes more seasoned.
Because 49.3% of the dollar amount of our portfolio has been originated in the past three years, the current level of delinquencies and defaults may not represent the level that may prevail as the portfolio becomes more seasoned.
In addition, we had $15.1 million in accruing loans that were 30-89 days delinquent as of December 31, 2023. Our nonperforming assets adversely affect our net interest income in various ways. We do not record interest income on nonaccrual loans or foreclosed assets, thereby adversely affecting our net income and returns on assets and equity.
In addition, we had $1.30 million in accruing loans that were 30-89 days delinquent as of December 31, 2024. Our nonperforming assets adversely affect our net interest income in various ways. We do not record interest income on nonaccrual loans or foreclosed assets, thereby adversely affecting our net income and returns on assets and equity.
As a result of the foregoing, our ability to conduct business may be adversely affected by any significant disruptions to us or to third parties with whom we interact. 31 Table of Contents Our use of third party vendors and our other ongoing third party business relationships is subject to increasing regulatory requirements and attention.
As a result of the foregoing, our ability to conduct business may be adversely affected by any significant disruptions to us or to third parties with whom we interact. Our use of third party vendors and our other ongoing third party business relationships is subject to increasing regulatory requirements and attention.
Our future success will depend in part upon our ability and the ability of our third party partners to address the needs of our clients by using technology to provide products and services that will satisfy client demands for convenience as well as to create additional efficiencies in our operations as we continue to grow.
Our future success will depend in part upon our ability and 33 Table of Contents the ability of our third party partners to address the needs of our clients by using technology to provide products and services that will satisfy client demands for convenience as well as to create additional efficiencies in our operations as we continue to grow.
Although our common stock is traded on the Nasdaq Stock Market, the average daily trading volume of our common stock is relatively low compared to many public companies. The desired market characteristics of depth, liquidity, and orderliness require the substantial presence of willing buyers and sellers in the marketplace at any given 42 Table of Contents time.
Although our common stock is traded on the Nasdaq Stock Market, the average daily trading volume of our common stock is relatively low compared to many public companies. The desired market characteristics of depth, liquidity, and orderliness require the substantial presence of willing buyers and sellers in the marketplace at any given time.
If we fail to maintain capital to meet regulatory requirements, or are unable to raise capital to meet our business needs, our business, financial condition, results of operations and growth prospects would be materially and adversely affected. We may be adversely affected by changes in the actual or perceived soundness or condition of other financial institutions.
If we fail to maintain capital to meet regulatory requirements, or are unable to raise capital to meet our business needs, our business, financial condition, results of operations and growth prospects would be materially and adversely affected. 29 Table of Contents We may be adversely affected by changes in the actual or perceived soundness or condition of other financial institutions.
As a result, our inability to successfully manage credit risk could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Our allowance for credit losses may prove to be insufficient to absorb potential credit losses in our loan portfolio.
As a result, our inability to successfully manage credit risk could have a material adverse effect on our business, financial condition, results of operations and growth prospects. 25 Table of Contents Our allowance for credit losses may prove to be insufficient to absorb potential credit losses in our loan portfolio.
In some cases, we could be required to apply a new or revised standard retroactively, or apply an existing standard differently, in each case resulting in our needing to revise or restate prior period financial statements. 35 Table of Contents The obligations associated with being a public company require significant resources and management attention, which may divert time and attention from our business operations.
In some cases, we could be required to apply a new or revised standard retroactively, or apply an existing standard differently, in each case resulting in our needing to revise or restate prior period financial statements. The obligations associated with being a public company require significant resources and management attention, which may divert time and attention from our business operations.
A decline in the business and economic conditions in our market could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Unlike larger banks that are more geographically diversified, we conduct our operations almost exclusively in the Twin Cities MSA.
A decline in the business and economic conditions in our market could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Unlike larger banks that are more geographically diversified, we conduct our operations primarily in the Twin Cities MSA.
Although we are increasing our efforts to reduce our reliance on non-core funding sources, we may not be able to maintain our market share of core-deposit funding in our highly competitive market area. If we are unable to do so, we may be forced to increase the amounts of wholesale funding sources.
Although we are increasing our efforts to reduce our reliance on non-core funding sources, we may not be able to maintain our market share of core-deposit funding in our highly competitive market area. If we are unable to do so, we 28 Table of Contents may be forced to increase the amounts of wholesale funding sources.
Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems, third party servicers, accounting systems, mobile and online banking platforms and financial intermediaries. We outsource to third parties many of our major systems, such as data processing and mobile and online banking.
Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems, third party servicers, accounting systems, mobile and online banking platforms and 32 Table of Contents financial intermediaries. We outsource to third parties many of our major systems, such as data processing and mobile and online banking.
We may not be able to compete successfully with other financial institutions in our markets, particularly with larger financial institutions that have significantly greater resources than us, and we may have to pay 33 Table of Contents higher interest rates to attract deposits, accept lower yields to attract loans and pay higher wages for new employees, resulting in lower net interest margins and reduced profitability.
We may not be able to compete successfully with other financial institutions in our markets, particularly with larger financial institutions that have significantly greater resources than us, and we may have to pay higher interest rates to attract deposits, accept lower yields to attract loans and pay higher wages for new employees, resulting in lower net interest margins and reduced profitability.
Reliance on inaccurate, incomplete, fraudulent or misleading financial statements, credit reports or other financial or business information, or the failure to receive such information on a timely 32 Table of Contents basis, could result in loan losses, reputational damage or other effects that could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
Reliance on inaccurate, incomplete, fraudulent or misleading financial statements, credit reports or other financial or business information, or the failure to receive such information on a timely basis, could result in loan or leases losses, reputational damage or other effects that could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
If we choose to raise capital by issuing and selling shares of our common stock for any reason, the issuance would have a dilutive effect on the holders of our common stock and could have a material negative effect on the market price of our common stock.
If we choose to raise capital by issuing and selling shares of our 45 Table of Contents common stock for any reason, the issuance would have a dilutive effect on the holders of our common stock and could have a material negative effect on the market price of our common stock.
Our access to funding sources in amounts adequate to finance or capitalize our activities or on 26 Table of Contents terms that are acceptable to us could be impaired by factors that affect us directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry.
Our access to funding sources in amounts adequate to finance or capitalize our activities or on terms that are acceptable to us could be impaired by factors that affect us directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry.
As of December 31, 2023, our advances from the FHLB were collateralized by $1.45 billion of real estate and commercial loans. If we are unable to pledge sufficient collateral to secure funding from the FHLB, we may lose access to this source of liquidity that we have historically relied upon.
As of December 31, 2024, our advances from the FHLB were collateralized by $1.54 billion of real estate and commercial loans. If we are unable to pledge sufficient collateral to secure funding from the FHLB, we may lose access to this source of liquidity that we have historically relied upon.
Even if we are able to increase our interest income, our earnings may nonetheless be reduced by 28 Table of Contents increased expenses, such as additional employee compensation or other general and administrative expenses and increased interest expense on any liabilities incurred or deposits solicited to fund increases in assets.
Even if we are able to increase our interest income, our earnings may nonetheless be reduced by increased expenses, such as additional employee compensation or other general and administrative expenses and increased interest expense on any liabilities incurred or deposits solicited to fund increases in assets.
An inability to raise funds through deposits, borrowings, the sale of loans or investment securities and from other sources could have a substantial negative effect on our liquidity.
An inability to raise funds through deposits, borrowings, the sale of loans or investment 27 Table of Contents securities and from other sources could have a substantial negative effect on our liquidity.
As such, we need to continue to attract and retain key personnel and to recruit qualified individuals who fit our culture to succeed existing key personnel to ensure the continued growth and successful operation of our business.
As such, we need to continue to attract and retain key personnel and to recruit qualified individuals who fit our culture to 30 Table of Contents succeed existing key personnel to ensure the continued growth and successful operation of our business.
We compete with national commercial banks, regional banks, private banks, savings banks, credit unions, non-bank financial services companies and other financial institutions operating within or near the areas we serve, many of whom target the same clients we do in the Twin Cities MSA.
We compete with national commercial banks, regional banks, private banks, savings banks, credit unions, non-bank financial services companies, fintech companies, digital asset providers, and other financial institutions operating within or near the areas we serve, many of whom target the same clients we do in the Twin Cities MSA.
Compliance with these reporting requirements and other rules and regulations, including periodic revisions to and additional rules and regulations, of the SEC could increase our legal and financial compliance costs and make some activities more time consuming and costly, which could negatively affect our efficiency ratio.
Compliance with these reporting requirements and other rules and regulations, including periodic revisions to and additional rules and regulations, of the SEC could increase our legal and financial compliance costs and make some activities more time consuming and costly, which could negatively affect our efficiency ratio (a non-GAAP financial measure).
The loss of these revenue streams and the lower cost deposits as a source of funds could have a material adverse effect on our business, financial condition and results of operations.
The loss of these revenue streams and the lower cost deposits as a source of funds could have a material adverse effect on our business, financial 35 Table of Contents condition and results of operations.
In recent periods, there continues to be a rise in electronic fraudulent activity, security breaches and cyber-attacks within the financial services industry, especially in the commercial banking sector due to cyber criminals targeting commercial bank accounts and as a result of increasingly sophisticated methods of conducting cyber attacks, including those employing artificial intelligence.
In recent periods, there continues to be a rise in electronic fraudulent activity, security breaches and cyber-attacks within the financial services industry, especially in the commercial banking sector due to cyber criminals targeting commercial bank accounts and as a result of increasingly sophisticated methods of conducting cyber attacks, including those employing artificial intelligence or resulting from insider fraud.
The market value of real estate can fluctuate significantly in a short period of time as a result of interest rates and market conditions in the area in which the 22 Table of Contents real estate is located.
The market value of real estate can fluctuate significantly in a short period of time as a result of interest rates and market conditions in the area in which the real estate is located.
As of December 31, 2023, approximately 24% of our deposits were uninsured and we rely on these deposits for liquidity. A failure to maintain adequate liquidity could have a material adverse effect on our business, financial condition and results of operations.
As of December 31, 2024, approximately 28% of our deposits were uninsured and we rely on these deposits for liquidity. A failure to maintain adequate liquidity could have a material adverse effect on our business, financial condition and results of operations.
In the event of a bank holding company’s bankruptcy, the bankruptcy trustee will assume any 39 Table of Contents commitment by the holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank.
In the event of a bank holding company’s bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank.
The Federal Reserve is mandated to pursue the goals of maximum employment and price stability, and throughout 2022 and 2023 made a series of significant increases to the target Federal Funds rate as part of an effort to combat elevated levels of inflation affecting the U.S. economy, which may continue in 2024.
The Federal Reserve is mandated to pursue the goals of maximum employment and price stability, and throughout 2022 and 2023 made a series of significant increases to the target Federal Funds rate as part of an effort to combat elevated levels of inflation affecting the U.S. economy.
While we endeavor to maintain safe banking practices and controls beyond the regulatory requirements applicable to us, our internal controls may not match those of larger banking institutions that are subject to increased regulatory oversight. Financial institutions generally have also been subjected to increased scrutiny from regulatory authorities, including in the wake of the bank failures in early 2023.
While we endeavor to maintain safe banking practices and controls beyond the regulatory requirements applicable to us, our internal controls may not match those of larger banking institutions that are subject to increased regulatory oversight. Financial institutions have generally been subjected to increased scrutiny from regulatory authorities, especially following the bank failures in 2023.
The allowance contains provisions for expected credit losses that 23 Table of Contents have been identified relating to specific borrowing relationships, as well as expected credit losses inherent in the loan portfolio that are not specifically identified.
The allowance contains provisions for expected credit losses that have been identified relating to specific borrowing relationships, as well as expected credit losses inherent in the loan portfolio that are not specifically identified.
If we pursue strategic acquisitions, it may expose us to financial, execution and operational risks. We plan to grow our business organically but remain open to considering potential bank or other acquisition opportunities that fit within our overall strategy and that we believe make financial and strategic sense.
If we pursue strategic acquisitions, it may expose us to financial, execution and operational risks. We plan to grow our business organically but remain open to considering potential bank or other acquisition opportunities that fit within our overall strategy and that we believe make financial and strategic sense, such as the recent acquisition of FMCB.
As of December 31, 2023, the Bank had the capacity to pay the Company a dividend of up to $28.1 million without the need to obtain prior regulatory approval. Also, the Company’s right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors.
As of December 31, 2024, the Bank had the capacity to pay the Company a dividend of up to $21.6 million without the need to obtain prior regulatory approval. Also, the Company’s right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors.
Adverse changes affecting real estate values, such as decreases in office occupancy, and the liquidity of real estate in one or more of our markets could increase the credit risk associated with our loan portfolio, significantly impair the value of property pledged as collateral on loans and affect our ability to sell the collateral upon foreclosure without a loss or additional losses, which could result in losses that would adversely affect our profitability.
Adverse changes affecting real estate values, such as decreases in office occupancy (including as a result of the shift to remote work environments following the COVID-19 pandemic), and the liquidity of real estate in one or more of our markets could increase the credit risk associated with our loan portfolio, significantly impair the value of property pledged as collateral on loans and affect our ability to sell the collateral upon foreclosure without a loss or additional losses, which could result in losses that would adversely affect our profitability.
At December 31, 2023, approximately 87.3% of our total gross loan portfolio was comprised of loans with real estate as a primary component of collateral. As a result, adverse developments affecting real estate values in our market area could increase the credit risk associated with our real estate loan portfolio.
At December 31, 2024, approximately 85.7% of our total gross loan portfolio was comprised of loans with real estate as a primary component of collateral. As a result, adverse developments affecting real estate values in our market area could increase the credit risk associated with our real estate loan portfolio.
We have developed relationships with certain individuals and businesses that have resulted in a concentration of large deposits from a small number of clients. As of December 31, 2023, our 10 largest depositor relationships accounted for approximately 13.0% of our total deposits.
We have developed relationships with certain individuals and businesses that have resulted in a concentration of large deposits from a small number of clients. As of December 31, 2024, our 10 largest depositor relationships accounted for approximately 17.3% of our total deposits.
As of December 31, 2023, our commercial real estate secured loans represented 482.4% of the Bank’s total risk-based capital. As a result, we are deemed to have a concentration in commercial real estate lending under applicable regulatory guidelines.
As of December 31, 2024, our commercial real estate secured loans represented 462.0% of the Bank’s total risk-based capital. As a result, we are deemed to have a concentration in commercial real estate lending under applicable regulatory guidelines.
The resolution of nonperforming assets requires significant time commitments from management, which increases our loan 25 Table of Contents administration costs and adversely affects our efficiency ratio and can be detrimental to the performance of their other responsibilities, and may also involve additional financial resources.
The resolution of nonperforming assets requires significant time commitments from management, which increases our loan administration costs and adversely affects our efficiency ratio (a non-GAAP financial measure) and can be detrimental to the performance of their other responsibilities, and may also involve additional financial resources.
The Bank Secrecy Act and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and to file reports such as suspicious activity reports and currency transaction reports.
The Bank Secrecy Act and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and to file reports such as suspicious activity reports and currency transaction reports. We are required to comply with these and other anti-money laundering requirements.
As of December 31, 2023, our nonperforming loans (which consist of nonaccrual loans and loans past due 90 days or more) totaled $919,000, or 0.02% of our total gross loan portfolio, and our nonperforming assets totaled $919,000, or 0.02% of total assets.
As of December 31, 2024, our nonperforming loans (which consist of nonaccrual loans and loans past due 90 days or more) totaled $301,000, or 0.01% of our total gross loan portfolio, and our nonperforming assets totaled $301,000, or 0.01% of total assets.
In line with the foregoing, we have experienced and may continue to experience an increase in the cost of interest-bearing liabilities primarily due to raising the rates we pay on some of our deposit products to stay competitive within our market and an increase in borrowing costs from increases in the federal funds rate. ​ At December 31, 2023, we had $31.7 million of unrealized losses, net of tax, in our securities portfolio.
In line with the foregoing, we have experienced and may continue to experience an elevated level of the cost of interest-bearing liabilities, primarily due to higher rates we pay on some of our deposit products to stay competitive within our market and higher borrowing costs from the elevated level of the federal funds rate. ​ 43 Table of Contents At December 31, 2024, we had $27.7 million of unrealized losses, net of tax, in our securities portfolio.
Continued elevated levels of inflation could adversely impact our business, financial condition, results of operations and growth prospects. The United States has experienced elevated levels of inflation, with an annual increase in the consumer price index of approximately 3.4% as of the end of 2023.
Continued elevated levels of inflation could adversely impact our business, financial condition, results of operations and growth prospects. The United States has experienced elevated levels of inflation in recent years, with an annual increase in the consumer price index of approximately 2.9% as of the end of 2024.
The Company is subject to regulation and supervision by the Federal Reserve, and the Bank is subject to regulation and supervision by the FDIC and the MDOC. 36 Table of Contents The laws and regulations applicable to us govern a variety of matters, including permissible types, amounts and terms of loans and investments we may make, the maximum interest rate that may be charged, the amount of reserves we must hold against deposits we take, the types of deposits we may accept, maintenance of adequate capital and liquidity, changes in the control of us and our bank, restrictions on dividends and establishment of new offices.
The laws and regulations applicable to us govern a variety of matters, including permissible types, amounts and terms of loans and investments we may make, the maximum interest rate that may be charged, the amount of reserves we must hold against deposits we take, the types of deposits we may accept, maintenance of adequate capital and liquidity, changes in the control of us and our bank, restrictions on dividends and establishment of new offices.
Higher interest rates can also negatively affect our clients’ businesses and financial condition, and the value of collateral securing loans in our portfolio. ​ Given the complex factors affecting the strength of the U.S. economy, including uncertainties regarding the persistence of inflation, geopolitical developments such as current conflicts between Israel and Palestine and between Russia and Ukraine and tight labor market conditions and supply chain issues, there is a meaningful risk that the Federal Reserve and other central banks may keep interest rates elevated, thereby limiting economic growth and potentially causing an economic recession or other political instability.
Higher interest rates can also negatively affect our clients’ businesses and financial condition, and the value of collateral securing loans in our portfolio. ​ Given the complex factors affecting the strength of the U.S. economy, including uncertainties regarding the persistence of inflation, geopolitical developments such as ongoing conflicts in the Middle East and between Russia and Ukraine, changing labor market conditions as well as fiscal policy and new presidential administration priorities, there is a meaningful risk that the Federal Reserve and other central banks may keep interest rates at or near their current elevated levels, thereby limiting economic growth and potentially causing an economic recession or other political instability.
Additionally, we had $199.0 million in loans whose purpose was to finance commercial real estate projects, but were secured by other types of collateral. Commercial real estate secured loans represented 71.8% of our total gross loan portfolio and 482.4% of the Bank’s total risk-based capital at December 31, 2023.
Additionally, we had $196.6 million in loans whose purpose was to finance commercial real estate projects, but were secured by other types of collateral. Commercial real estate secured loans represented 68.5% of our total gross loan portfolio and 462.0% of the Bank’s total risk-based capital at December 31, 2024.
This has resulted in a significant increase and structure change in prevailing interest rates and, while this had a negative effect on our net interest income, it also harmed the value of our securities portfolio, which had $31.7 million in unrealized losses, net of tax, in our available for sale investment securities portfolio at December 31, 2023.
Monetary policy in recent years has resulted in a significant structural change in prevailing interest rates and, while this has had a negative effect on our net interest income, it also harmed the value of our securities portfolio, which had $27.7 million in unrealized losses, net of tax, in our available for sale investment securities portfolio as of December 31, 2024.
This increased regulatory burden has resulted and may continue to result in increased costs of doing business and may in the future result in decreased revenues and net income, reduce our ability to compete effectively to attract and retain clients, or make it less attractive for us to continue providing certain products and services.
This increased regulatory burden has resulted in higher costs of doing business and may continue to do so. It may also lead to decreases in our revenues and net income, reductions in our ability to compete effectively to attract and retain clients, or may make it less attractive for us to continue providing certain products and services.
As of December 31, 2023, we had approximately $1.02 billion of brokered deposits, which represented approximately 27.6% of our total deposits and $319.5 million of FHLB advances. Unlike traditional deposits from our local clients, there is a higher likelihood that the wholesale deposits will not remain with us after maturity.
As of December 31, 2024, we had approximately $825.8 million of brokered deposits, which represented approximately 20.2% of our total deposits and $359.5 million of FHLB advances. Unlike traditional deposits from our local clients, there is a higher likelihood that the wholesale deposits will not remain with us after maturity.
As of December 31, 2023, we had $2.67 billion of commercial real estate loans, consisting of $987.3 million of loans secured by nonowner occupied nonfarm nonresidential properties, $1.39 billion of loans secured by multifamily residential properties, $65.1 million of 1-4 family construction loans and $232.8 million of construction and land development loans.
As of December 31, 2024, we had $2.65 billion of commercial real estate loans, consisting of $1.1 billion of loans secured by nonowner occupied nonfarm nonresidential properties, $1.43 billion of loans secured by multifamily residential properties, $42.0 million of 1-4 family construction loans and $97.3 million of construction and land development loans.
The new stock repurchase program will expire on August 16, 2024. The repurchase program does not obligate the Company to repurchase any shares of its common stock, and other than repurchases that have been completed to date, there is no assurance that the Company will do so or that the Company will repurchase shares at favorable prices.
The 2022 Stock Repurchase Program does not obligate the Company to repurchase any shares of its common stock, and other than repurchases that have been completed to date, there is no assurance that the Company will do so.
If any one of these borrowers becomes unable to repay its loan obligations as a result of business, economic or market conditions, or personal circumstances, such as divorce or death, our nonaccruing loans and our provision for credit losses could increase significantly, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
If any one of these borrowers becomes unable to repay its loan obligations as a result of business, economic or market conditions, or personal circumstances, such as divorce or death, our nonaccruing loans and our provision for credit losses could increase significantly, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. 26 Table of Contents The small to midsized businesses that we lend to may have fewer resources to weather adverse business developments, which may impair their ability to repay their loans.
If the loans that are collateralized by real estate become troubled during a time when market conditions are declining or have declined, then we may not be able to realize the full value of the collateral that we anticipated at the time of originating the loan, which could force us to take charge-offs or require us to increase our provision for credit losses, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
If the loans that are collateralized by real estate become troubled during a time when market conditions are declining or have declined, then we may not be able to realize the full value of the collateral that we anticipated at the time of originating the loan, which could force us to take charge-offs or require us to increase our provision for credit losses, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. 24 Table of Contents Because a significant portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity, as well as environmental factors, could impair the value of collateral securing our real estate loans and result in loan and other losses.
We are required to comply with these and other anti-money laundering requirements. 38 Table of Contents The bank regulatory agencies and Financial Crimes Enforcement Network are authorized to impose significant civil money penalties for violations of those requirements and have recently engaged in coordinated enforcement efforts against banks and other financial services providers with the U.S.
The bank regulatory agencies and Financial Crimes Enforcement Network are authorized to impose significant civil money penalties for violations of those requirements and have recently engaged in coordinated enforcement efforts against banks and other financial services providers with the U.S. Department of Justice, Drug Enforcement Administration and IRS.
Certain banking laws and certain provisions of our third amended and restated articles of incorporation may have an anti-takeover effect. Provisions of federal banking laws, including regulatory approval requirements, could make it difficult for a third party to acquire us, even if doing so would be perceived to be beneficial to our shareholders.
Provisions of federal banking laws, including regulatory approval requirements, could make it difficult for a third party to acquire us, even if doing so would be perceived to be beneficial to our shareholders.
We may not be successful in overcoming these risks or any other problems encountered in connection with acquisitions. Our inability to overcome risks associated with acquisitions could have a material adverse effect on our business, financial condition, results of operations and growth prospects. New lines of business, products, product enhancements or services may subject us to additional risks.
Our inability to overcome risks associated with acquisitions could have a material adverse effect on our business, financial condition, results of operations and growth prospects. 34 Table of Contents New lines of business, products, product enhancements or services may subject us to additional risks.
The result of these changes to rates may cause differing spreads on interest earning assets and interest bearing liabilities. We cannot control or accurately predict changes in market rates of interest.
The result of these changes to rates may cause differing spreads on interest earning assets and interest bearing liabilities.
Even if we are able to report our financial statements accurately and in a timely manner, any failure in our efforts to implement the improvements or disclosure of material weaknesses in our future filings with the SEC could cause our reputation to be harmed and our stock price to decline significantly.
Even if we are able to report our financial statements accurately and in a timely manner, any failure in our efforts to implement the improvements or disclosure of material weaknesses in our future filings with the SEC could cause our reputation to be harmed and our stock price to decline significantly. 41 Table of Contents Certain banking laws and certain provisions of our third amended and restated articles of incorporation may have an anti-takeover effect.
Our ability to raise additional capital depends on conditions in the capital markets, economic conditions and a number of other factors, including investor perceptions regarding the banking industry, market conditions and governmental activities, and our financial condition and performance.
Importantly, regulatory capital requirements could increase from current levels, which could require us to raise additional capital or contract our operations. Our ability to raise additional capital depends on conditions in the capital markets, economic conditions and a number of other factors, including investor perceptions regarding the banking industry, market conditions and governmental activities, and our financial condition and performance.
The net deferred tax asset is measured by applying currently-enacted income tax rates to the accounting period during which the tax benefit is expected to be realized.
The net deferred tax asset is measured by applying currently-enacted income tax rates to the accounting period during which the tax benefit is expected to be realized. As of December 31, 2024, our net deferred tax asset was $21.9 million.
Our third party partners’ inability to anticipate, or failure to adequately mitigate, breaches of security could result in a number of negative events, including losses to us or our clients, loss of business or clients, damage to our reputation, the incurrence of additional expenses, disruption to our business, additional regulatory scrutiny or penalties or our exposure to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. 30 Table of Contents Issues with the use of artificial intelligence in our marketplace may result in reputational harm or liability, or could otherwise adversely affect our business. ​ Artificial intelligence, including generative artificial intelligence, is or may be enabled by or integrated into our products or those developed by our third party partners.
Our third party partners’ inability to anticipate, or failure to adequately mitigate, breaches of security could result in a number of negative events, including losses to us or our clients, loss of business or clients, damage to our reputation, the incurrence of additional expenses, disruption to our business, additional regulatory scrutiny or penalties or our exposure to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
Any of these could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Changes in accounting policies or standards could materially impact our financial statements.
Any of these could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Changes in accounting policies or standards could materially impact our financial statements. From time to time, the FASB, PCAOB, or the SEC, may change the financial accounting and reporting standards that govern the preparation of our financial statements.
Department of Justice, Drug Enforcement Administration and IRS. We are also subject to increased scrutiny of compliance with the rules enforced by the OFAC.
We are also subject to increased scrutiny of compliance with the rules enforced by the OFAC.
As of December 31, 2023, we had $757.0 million of noninterest bearing deposit accounts and $2.95 billion of interest bearing deposit accounts. We do not know what future market rates will be, and based on recent guidance from the Federal Reserve, we expect some level of moderation or perhaps a decrease in interest rates in 2024.
As of December 31, 2024, we had $800.8 million of noninterest bearing deposit accounts and $3.29 billion of interest bearing deposit accounts. We do not know what future market rates will be, and based on recent guidance from the Federal Reserve, we currently expect some level of continued moderation in the federal funds rate in 2025.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+2 added−1 removed7 unchanged
Biggest changeThe risk team provides oversight of the Company’s activities designed to identify, assess, measure, and mitigate cybersecurity risk. The Company’s Information Security Program includes training that reinforces the Company's Information Security Program policies, standards, and practices, as well as the expectation employees comply with these policies.
Biggest changeThe Company’s Information Security Program includes training that reinforces the Company's Information Security Program policies, standards, and practices, as well as the expectation employees comply with these policies. The technology team engages employees through training on how to identify potential cybersecurity risks and protect the Company’s resources and information.
To carry out those duties, Board and Audit Committee receive periodic updates on the Company’s Information Security Program, 45 Table of Contents cybersecurity policies and practices, ongoing efforts to improve security, as well as the Company’s efforts to prevent, detect, mitigate, and remediate significant cybersecurity incidents.
To carry out those duties, the board of directors and Audit Committee receive periodic updates on the Company’s Information Security Program, cybersecurity policies and practices, ongoing efforts to improve security, as well as the Company’s efforts to prevent, detect, mitigate, and remediate significant cybersecurity incidents.
The Company’s risk and technology teams, led by the Company’s CRO and CTO, respectively, are responsible for leading the incident response team, identifying technology and cybersecurity risks, utilizing management’s expertise in assessing the materiality of cybersecurity events, and are responsible for the controls to manage threats.
The Company’s risk and technology teams, led by the Company’s Chief Risk Officer (“CRO”) and Chief Technology Officer (“CTO”), respectively, are responsible for leading the incident response team, identifying technology and cybersecurity risks, utilizing management’s expertise in assessing the materiality of cybersecurity events, and are responsible for the controls to manage threats.
Additionally, the Company maintains an Information Security Program designed to prevent, detect, and respond to cyberattacks, and maintains a cybersecurity incident response plan designed to enable the Company to respond to cybersecurity incidents, coordinate such responses with law enforcement and other government agencies, and notify clients and customers, as applicable.
The Company maintains a vendor risk management program to identify and help manage any third party cybersecurity risks. 46 Table of Contents Additionally, the Company maintains an Information Security Program designed to prevent, detect, and respond to cyberattacks, and maintains a cybersecurity incident response plan designed to enable the Company to respond to cybersecurity incidents, coordinate such responses with law enforcement and other government agencies, and notify clients and customers, as applicable.
Risks from cybersecurity threats, including any previous cybersecurity events, have not materially affected the Company or its business strategy, results of operations or financial condition.
Risks from cybersecurity threats, including any previous cybersecurity events, did not materially affect the Company or its business strategy, results of operations or financial condition during the period covered by the report.
As a result, the Company engages in regular and ongoing reviews and discussions with vendors and clients regarding cybersecurity risks and opportunities to improve the Company’s cybersecurity posture. The Company maintains a vendor risk management program to identify and help manage any third party cybersecurity risks.
As a result, the Company engages in regular and ongoing reviews and discussions with vendors and clients regarding cybersecurity risks and opportunities to improve the Company’s cybersecurity posture.
In addition, our Board, as a whole and through its Audit Committee, is responsible for the oversight of cybersecurity risks. In that role, the Board and Audit Committee are responsible for ensuring that the risk management processes designed and implemented by management are adequate and functioning as designed.
In that role, the board of directors and Audit Committee are responsible for ensuring that the risk management processes designed and implemented by management are adequate and functioning as designed.
Management utilizes its Enterprise Risk Management Committee and IT Steering Committee, comprised of senior leaders including the Company’s CRO, CTO, CFO, and other leaders with cybersecurity expertise, to disseminate information and monitor information security efforts throughout the Company. Each committee’s charter, in addition to the Information Security Policy, establishes roles and responsibilities related the Company’s cybersecurity governance and program.
Management utilizes its Enterprise Risk Management Committee and IT Steering Committee, comprised of senior leaders including the Company’s CRO, CTO, Chief Financial Officer, and other leaders with cybersecurity expertise, to disseminate information and monitor information security efforts throughout the Company.
Finally, the Company provides specialized security training for certain employee roles such as system administrators and all information security training is monitored and reported on by the risk team as well as the Company’s learning and development function. The Company’s management team is responsible for the day-to-day management of cybersecurity risks faced by the Company.
This training is mandatory for all employees, and is supplemented by various testing initiatives, including social engineering testing. Finally, the Company provides specialized security training for certain employee roles such as system administrators and all information security training is monitored and reported on by the risk team as well as the Company’s learning and development function.
Removed
The technology team engages employees through training on how to identify potential cybersecurity risks and protect the Company’s resources and information. This training is mandatory for all employees, and is supplemented by various testing initiatives, including social engineering testing.
Added
Each committee’s charter, in addition to the Information Security Policy, establishes roles and responsibilities related the Company’s cybersecurity governance and program. The risk team provides oversight of the Company’s activities designed to identify, assess, measure, and mitigate cybersecurity risk.
Added
The Company’s management team is responsible for the day-to-day management of cybersecurity risks faced by the Company. In addition, our board of directors, as a whole and through its Audit Committee, is responsible for the oversight of cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn February 2023, the Company purchased a parcel of land in Lake Elmo, Minnesota, upon which it intends to construct a branch office. Additional information regarding our locations is set forth below: ​ ​ ​ Address Owned/Leased Headquarters and St. Louis Park Branch: ​ ​ 4450 Excelsior Boulevard, Suite 100, St.
Biggest changeAdditional information regarding our locations is set forth below: 47 Table of Contents ​ ​ ​ Address Owned/Leased Headquarters and St. Louis Park Branch: ​ ​ 4450 Excelsior Boulevard, Suite 100, St.
ITEM 2. PROPERTIES Our corporate headquarters is located at 4450 Excelsior Boulevard, Suite 100, St. Louis Park, Minnesota 55416. Including our corporate headquarters, we operate seven full-service branch offices located in the Twin Cities MSA. We currently own three of our branch offices located in Orono, St. Louis Park and Minneapolis (Hennepin Avenue), and lease the remaining four locations.
ITEM 2. PROPERTIES Our corporate headquarters is located at 4450 Excelsior Boulevard, Suite 100, St. Louis Park, Minnesota 55416. Including our corporate headquarters, we operate nine full-service branch offices located in the Twin Cities MSA. We currently own five of our branch offices located in Minnetonka (2), Orono, St.
Paul, Minnesota 55102 Leased 7831 East Bush Lake Road, Suite 300, Bloomington, Minnesota 55439 ​ Leased (1) Does not include the leased drive-up property located adjacent to the branch. ​
Paul, Minnesota 55102 Leased 7831 East Bush Lake Road, Suite 300, Bloomington, Minnesota 55439 ​ Leased 14550 Excelsior Boulevard., Minnetonka, Minnesota 55345 ​ Owned 11500 Highway 7, Minnetonka, Minnesota 55305 ​ Owned (1) Does not include the leased drive-up property located adjacent to the branch. ​
Added
Louis Park and Minneapolis (Hennepin Avenue), and lease the remaining four locations. In February 2023, the Company purchased a parcel of land in Lake Elmo, Minnesota, a portion of which was transferred to the Bank and upon which the Bank intends to construct a branch office.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures ​ 46 ​ ​ ​ PART II ​ ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 46 ​ ​ ​ Item 6. [Reserved] ​ 49 ​ ​ ​
Biggest changeItem 4. Mine Safety Disclosures ​ 48 ​ ​ ​ PART II ​ ​ ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 48 ​ ​ ​ Item 6. [Reserved] ​ 51 ​ ​ ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The following table presents stock purchases made during the fourth quarter of 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Total Number of Shares Purchased (1) ​ Average Price Paid Per Share ​ Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) ​ Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 1 - 31, 2023 18,435 ​ $ 9.70 ​ 18,435 ​ $ 24,821,204 November 1 - 30, 2023 230,314 ​ ​ 10.43 ​ 230,314 ​ ​ 22,418,051 December 1 - 31, 2023 223,412 ​ ​ 11.24 ​ 175,000 ​ ​ 20,458,801 Total 472,161 ​ $ 10.79 ​ 423,749 ​ $ 20,458,801 (1) The total number of shares repurchased during the periods indicated includes shares repurchased as part of the Company’s stock repurchase program and shares withheld for income tax purposes in connection with vesting of restricted stock and stock options.
Biggest changeHolders of Record As of February 24, 2025, the Company had 51 holders of record of the Company’s common stock and an estimated 4,913 additional beneficial holders of the Company’s common stock whose stock was held in street name by brokerages or fiduciaries. 48 Table of Contents Issuer Purchases of Equity Securities The following table presents stock purchases made during the fourth quarter of 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Total Number of Shares Purchased (1) ​ Average Price Paid Per Share ​ Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) ​ Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 1 - 31, 2024 — ​ $ — ​ — ​ $ 15,281,253 November 1 - 30, 2024 315 ​ ​ 14.30 ​ — ​ ​ 15,281,253 December 1 - 31, 2024 37,812 ​ ​ 15.15 ​ — ​ ​ 15,281,253 Total 38,127 ​ $ 15.14 ​ — ​ $ 15,281,253 (1) The total number of shares repurchased during the periods indicated includes shares repurchased as part of the Company’s stock repurchase program and shares withheld for income tax purposes in connection with vesting of restricted stock and stock options.
See “Supervision and Regulation—Supervision and Regulation of the Bank—Dividend Payments.” Under the terms of a loan agreement with a third party correspondent lender which the Company entered into in March of 2021 and amended in each of July 2021 and September of 2022, the Company cannot declare or pay any cash dividend or make any other distribution in respect to capital stock, except in accordance with past practices and dividends paid on its preferred stock and so long as no default has occurred and is continuing.
See “Supervision and Regulation—Supervision and Regulation of the Bank—Dividend Payments.” Under the terms of a loan agreement with a third party correspondent lender which the Company entered into in March of 2021 and amended in each of July 2021, September 2022 and September 2024, the Company cannot declare or pay any cash dividend or make any other distribution in respect to capital stock, except in accordance with past practices and dividends paid on its preferred stock and so long as no default has occurred and is continuing.
The shares were purchased or otherwise valued at the closing price of the Company’s common stock on the date of purchase and/or withholding. (2) On August 17, 2022, the Company’s board of directors approved a stock repurchase program which authorizes the Company to repurchase up to $25.0 million of its common stock, subject to certain limitations and conditions.
The shares were purchased or otherwise valued at the closing price of the Company’s common stock on the date of purchase and/or withholding. (2) On August 17, 2022, the Company’s board of directors approved the 2022 Stock Repurchase Program which authorizes the Company to repurchase up to $25.0 million of its common stock, subject to certain limitations and conditions.
Any future determination relating to the Company’s common stock dividend policy will be made by the board of directors and will depend on a number of factors, including historic and projected financial condition, liquidity and results of operations, capital levels and needs, tax considerations, any acquisitions or potential acquisitions that may be pursued, statutory and regulatory prohibitions and other limitations, the terms of any credit agreements or other borrowing arrangements that restrict the ability to pay cash dividends, general economic conditions and other factors deemed relevant by the board of 48 Table of Contents directors.
Any future determination relating to the Company’s common stock dividend policy will be made by the board of directors and will depend on a number of factors, including historic and projected financial condition, liquidity and results of operations, capital levels and needs, tax considerations, any acquisitions or potential acquisitions that may be pursued, statutory and regulatory prohibitions and other limitations, the terms of any credit agreements or other borrowing arrangements that restrict the ability to pay cash dividends, general economic conditions and other factors deemed relevant by the board of 50 Table of Contents directors.
This comparison assumes $100.00 was invested on December 31, 2018 and assumes the reinvestment of all cash dividends, if any, prior to any tax effect and retention of all stock dividends. There is no assurance that the Company's common stock performance will continue in the future with the same or similar results as shown in the graph.
This comparison assumes $100.00 was invested on December 31, 2019 and assumes the reinvestment of all cash dividends, if any, prior to any tax effect and retention of all stock dividends. There is no assurance that the Company's common stock performance will continue in the future with the same or similar results as shown in the graph.
The Company may, in its discretion, begin, suspend or terminate repurchases at any time prior to the Program’s expiration, without any prior notice. 47 Table of Contents Performance Graph The following graph compares the percentage change in the cumulative shareholder return of the Company’s common stock between December 31, 2018 and December 31, 2023, with the cumulative return of the Nasdaq Composite Index and the total return of the Nasdaq Bank Index.
The Company may, in its discretion, begin, suspend or terminate repurchases at any time prior to the program’s expiration, without any prior notice. 49 Table of Contents Performance Graph The following graph compares the percentage change in the cumulative shareholder return of the Company’s common stock between December 31, 2019 and December 31, 2024, with the cumulative return of the Nasdaq Composite Index and the total return of the Nasdaq Bank Index.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the Nasdaq Stock Market (“Nasdaq”) under the symbol “BWB.” Our depository shares, each representing a 1/100 th ownership interest in a share of our 5.875% Non-Cumulative Perpetual Preferred Stock, Series A, $0.01 par value per share (“Series A Preferred Stock”), trade on Nasdaq under the symbol “BWBBP”. 46 Table of Contents Holders of Record As of February 26, 2024, the Company had 58 holders of record of the Company’s common stock and an estimated 4,552 additional beneficial holders of the Company’s common stock whose stock was held in street name by brokerages or fiduciaries.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the Nasdaq Stock Market (“Nasdaq”) under the symbol “BWB.” Our depository shares, each representing a 1/100 th ownership interest in a share of our 5.875% Non-Cumulative Perpetual Preferred Stock, Series A, $0.01 par value per share (“Series A Preferred Stock”), trade on Nasdaq under the symbol “BWBBP”.
The stock repurchase program will expire on August 16, 2024. The stock repurchase program does not obligate the Company to repurchase any shares of its common stock, and other than repurchases that have been completed to date, there is no assurance that the Company will do so.
The program does not obligate the Company to repurchase any shares of its common stock, and other than repurchases that have been completed to date, there is no assurance that the Company will do so. Under the program, the Company may repurchase shares of common stock from time to time in open market or privately negotiated transactions.
Removed
Under the stock repurchase program, the Company may repurchase shares of common stock from time to time in open market or privately negotiated transactions.
Added
On July 23, 2024, the Company’s board of directors extended the expiration date of the 2022 Stock Repurchase Program from August 16, 2024 to August 20, 2025.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeThe following reconciliation table provides a more detailed analysis of these non-GAAP financial measures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2023 2022 ​ 2021 2020 ​ 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-Provision Net Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Income ​ $ 6,493 ​ $ 6,332 ​ $ 5,309 ​ $ 5,839 ​ $ 3,826 ​ Less: (Gain) Loss on Sales of Securities ​ ​ 33 ​ ​ (82) ​ ​ (750) ​ ​ (1,503) ​ ​ (516) ​ Less: FHLB Advance Prepayment Income ​ ​ (792) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ Total Operating Noninterest Income ​ ​ 5,734 ​ ​ 6,250 ​ ​ 4,559 ​ ​ 4,336 ​ ​ 3,310 ​ Plus: Net Interest Income ​ ​ 105,174 ​ ​ 129,698 ​ ​ 109,509 ​ ​ 87,964 ​ ​ 74,132 ​ Net Operating Revenue ​ $ 110,908 ​ $ 135,948 ​ $ 114,068 ​ $ 92,300 ​ $ 77,442 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Expense ​ $ 59,320 ​ $ 56,620 ​ $ 48,095 ​ $ 45,387 ​ $ 36,932 ​ Less: Amortization of Tax Credit Investments ​ ​ — ​ ​ (408) ​ ​ (562) ​ ​ (738) ​ ​ (3,225) ​ Less: Debt Prepayment Fees ​ ​ — ​ ​ — ​ ​ (582) ​ ​ (7,043) ​ ​ — ​ Total Operating Noninterest Expense ​ $ 59,320 ​ $ 56,212 ​ $ 46,951 ​ $ 37,606 ​ $ 33,707 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-Provision Net Revenue ​ $ 51,588 ​ $ 79,736 ​ $ 67,117 ​ $ 54,694 ​ $ 43,735 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Plus: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-Operating Revenue Adjustments ​ ​ 759 ​ ​ 82 ​ ​ 750 ​ ​ 1,503 ​ ​ 516 ​ Less: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision (Recovery of) for Credit Losses ​ ​ (175) ​ ​ 7,700 ​ ​ 5,150 ​ ​ 12,750 ​ ​ 2,700 ​ Non-Operating Expense Adjustments ​ ​ — ​ ​ 408 ​ ​ 1,144 ​ ​ 7,781 ​ ​ 3,225 ​ Provision for Income Taxes ​ ​ 12,562 ​ ​ 18,318 ​ ​ 15,886 ​ ​ 8,472 ​ ​ 6,923 ​ Net Income ​ $ 39,960 ​ $ 53,392 ​ $ 45,687 ​ $ 27,194 ​ $ 31,403 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Assets ​ $ 4,490,804 ​ $ 3,866,480 ​ $ 3,189,800 ​ $ 2,617,579 ​ $ 2,114,211 ​ Pre-Provision Net Revenue Return on Average Assets ​ ​ 1.15 % ​ 2.06 % ​ 2.10 % ​ 2.09 % ​ 2.07 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Core Net Interest Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income (Tax-Equivalent Basis) ​ $ 106,730 ​ $ 130,920 ​ $ 110,373 ​ $ 88,883 ​ $ 75,040 ​ Less: Loan Fees ​ ​ (3,604) ​ ​ (6,273) ​ ​ (5,173) ​ ​ (5,283) ​ ​ (4,562) ​ Less: PPP Interest and Fees ​ ​ NM ​ ​ (970) ​ ​ (6,441) ​ ​ (4,143) ​ ​ — ​ Core Net Interest Income ​ $ 103,126 ​ $ 123,677 ​ $ 98,759 ​ $ 79,457 ​ $ 70,478 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Interest Earning Assets ​ ​ 4,404,366 ​ ​ 3,790,291 ​ ​ 3,115,883 ​ ​ 2,565,859 ​ ​ 2,091,198 ​ Less: Average PPP Loans ​ ​ NM ​ ​ (7,441) ​ ​ (103,151) ​ ​ (122,240) ​ ​ — ​ Core Average Interest Earning Assets ​ $ 4,404,366 ​ $ 3,782,850 ​ $ 3,012,732 ​ $ 2,443,619 ​ $ 2,091,198 ​ Core Net Interest Margin ​ 2.34 % 3.27 % 3.28 % 3.25 % 3.37 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2023 2022 2021 2020 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Efficiency Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Expense ​ $ 59,320 ​ $ 56,620 ​ $ 48,095 ​ $ 45,387 ​ $ 36,932 ​ Less: Amortization of Intangible Assets ​ ​ (100) ​ ​ (191) ​ ​ (191) ​ ​ (191) ​ ​ (191) ​ Adjusted Noninterest Expense ​ $ 59,220 ​ $ 56,429 ​ $ 47,904 ​ $ 45,196 ​ $ 36,741 ​ Net Interest Income ​ ​ 105,174 ​ ​ 129,698 ​ $ 109,509 ​ $ 87,964 ​ $ 74,132 ​ Noninterest Income ​ ​ 6,493 ​ ​ 6,332 ​ ​ 5,309 ​ ​ 5,839 ​ ​ 3,826 ​ Less: (Gain) Loss on Sales of Securities ​ ​ 33 ​ ​ (82) ​ ​ (750) ​ ​ (1,503) ​ ​ (516) ​ Adjusted Operating Revenue ​ $ 111,700 ​ $ 135,948 ​ $ 114,068 ​ $ 92,300 ​ $ 77,442 ​ Efficiency Ratio ​ 53.0 % 41.5 % 42.0 % 49.0 % 47.4 % ​ ​ 77 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible Common Equity and Tangible Common Equity/Tangible Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Shareholders' Equity ​ $ 425,515 ​ $ 394,064 ​ $ 379,272 ​ $ 265,405 ​ $ 244,794 ​ Less: Preferred Stock ​ ​ (66,514) ​ ​ (66,514) ​ ​ (66,514) ​ ​ — ​ ​ — ​ Total Common Shareholders' Equity ​ ​ 359,001 ​ ​ 327,550 ​ ​ 312,758 ​ ​ 265,405 ​ ​ 244,794 ​ Less: Intangible Assets ​ ​ (2,814) ​ ​ (2,914) ​ ​ (3,105) ​ ​ (3,296) ​ ​ (3,487) ​ Tangible Common Equity ​ $ 356,187 ​ $ 324,636 ​ $ 309,653 ​ $ 262,109 ​ $ 241,307 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Assets ​ $ 4,611,990 ​ $ 4,345,662 ​ $ 3,477,659 ​ $ 2,927,345 ​ $ 2,268,830 ​ Less: Intangible Assets ​ ​ (2,814) ​ ​ (2,914) ​ ​ (3,105) ​ ​ (3,296) ​ ​ (3,487) ​ Tangible Assets ​ $ 4,609,176 ​ $ 4,342,748 ​ $ 3,474,554 ​ $ 2,924,049 ​ $ 2,265,343 ​ Tangible Common Equity/Tangible Assets ​ ​ 7.73 % 7.48 % 8.91 % 8.96 % 10.65 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible Book Value Per Share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Book Value Per Common Share ​ $ 12.94 ​ $ 11.80 ​ $ 11.09 ​ $ 9.43 ​ $ 8.45 ​ Less: Effects of Intangible Assets ​ ​ (0.10) ​ ​ (0.11) ​ ​ (0.11) ​ ​ (0.12) ​ ​ (0.12) ​ Tangible Book Value Per Common Share ​ $ 12.84 ​ $ 11.69 ​ $ 10.98 ​ $ 9.31 ​ $ 8.33 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on Average Tangible Common Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income Available to Common Shareholders ​ $ 35,906 ​ $ 49,338 ​ $ 44,516 ​ $ 27,194 ​ $ 31,403 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Shareholders' Equity ​ $ 410,478 ​ $ 384,033 ​ $ 316,237 ​ $ 258,736 ​ $ 232,539 ​ Less: Average Preferred Stock ​ ​ (66,514) ​ ​ (66,514) ​ ​ (24,915) ​ ​ — ​ ​ — ​ Average Common Equity ​ ​ 343,964 ​ ​ 317,519 ​ ​ 291,322 ​ ​ 258,736 ​ ​ 232,539 ​ Less: Effects of Average Intangible Assets ​ ​ (2,847) ​ ​ (3,012) ​ ​ (3,204) ​ ​ (3,395) ​ ​ (3,582) ​ Average Tangible Common Equity ​ $ 341,117 ​ $ 314,507 ​ $ 288,118 ​ $ 255,341 ​ $ 228,957 ​ Return on Average Tangible Common Equity ​ ​ 10.53 % ​ 15.69 % ​ 15.45 % ​ 10.65 % ​ 13.72 % ​ ​ ​ ​ ​ ­­
Biggest changeThe following reconciliation table provides a more detailed analysis of these non-GAAP financial measures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2024 2023 ​ 2022 Pre-Provision Net Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Income ​ $ 7,368 ​ $ 6,493 ​ $ 6,332 ​ Less: (Gain) Loss on Sales of Securities ​ ​ (385) ​ ​ 33 ​ ​ (82) ​ Less: FHLB Advance Prepayment Income ​ ​ — ​ ​ (792) ​ ​ — ​ Total Operating Noninterest Income ​ ​ 6,983 ​ ​ 5,734 ​ ​ 6,250 ​ Plus: Net Interest Income ​ ​ 102,193 ​ ​ 105,174 ​ ​ 129,698 ​ Net Operating Revenue ​ $ 109,176 ​ $ 110,908 ​ $ 135,948 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Expense ​ $ 63,300 ​ $ 59,320 ​ $ 56,620 ​ Less: Amortization of Tax Credit Investments ​ ​ — ​ ​ — ​ ​ (408) ​ Less: Debt Prepayment Fees ​ ​ — ​ ​ — ​ ​ — ​ Total Operating Noninterest Expense ​ $ 63,300 ​ $ 59,320 ​ $ 56,212 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-Provision Net Revenue ​ $ 45,876 ​ $ 51,588 ​ $ 79,736 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Plus: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-Operating Revenue Adjustments ​ ​ 385 ​ ​ 759 ​ ​ 82 ​ Less: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision (Recovery of) for Credit Losses ​ ​ 3,525 ​ ​ (175) ​ ​ 7,700 ​ Non-Operating Expense Adjustments ​ ​ — ​ ​ — ​ ​ 408 ​ Provision for Income Taxes ​ ​ 9,911 ​ ​ 12,562 ​ ​ 18,318 ​ Net Income ​ $ 32,825 ​ $ 39,960 ​ $ 53,392 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Assets ​ $ 4,683,144 ​ $ 4,490,804 ​ $ 3,866,480 ​ Pre-Provision Net Revenue Return on Average Assets ​ ​ 0.98 % ​ 1.15 % ​ 2.06 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Pre-Provision Net Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Operating Revenue ​ $ 109,176 ​ $ 110,908 ​ $ 135,948 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Expense ​ $ 63,300 ​ $ 59,320 ​ $ 56,620 ​ Less: Merger-related Expenses ​ ​ (712) ​ ​ — ​ ​ — ​ Less: Amortization of Tax Credit Investments ​ ​ — ​ ​ — ​ ​ (408) ​ Less: Debt Prepayment Fees ​ ​ — ​ ​ — ​ ​ — ​ Adjusted Total Operating Noninterest Expense ​ $ 62,588 ​ $ 59,320 ​ $ 56,212 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Pre-Provision Net Revenue ​ $ 46,588 ​ $ 51,588 ​ $ 79,736 ​ Adjusted Pre-Provision Net Revenue Return on Average Assets ​ ​ 0.99 % ​ 1.15 % ​ 2.06 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2024 ​ 2023 ​ 2022 ​ Core Net Interest Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income (Tax-Equivalent Basis) ​ $ 103,440 ​ $ 106,730 ​ $ 130,920 ​ Less: Loan Fees ​ ​ (3,090) ​ ​ (3,604) ​ ​ (6,273) ​ Less: PPP Interest and Fees ​ ​ NM ​ ​ NM ​ ​ (970) ​ Core Net Interest Income ​ $ 100,350 ​ $ 103,126 ​ $ 123,677 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Interest Earning Assets ​ ​ 4,579,597 ​ ​ 4,404,366 ​ ​ 3,790,291 ​ Less: Average PPP Loans ​ ​ NM ​ ​ NM ​ ​ (7,441) ​ Core Average Interest Earning Assets ​ $ 4,579,597 ​ $ 4,404,366 ​ $ 3,782,850 ​ Core Net Interest Margin ​ 2.19 % 2.34 % 3.27 % ​ 77 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2024 2023 2022 Efficiency Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Expense ​ $ 63,300 ​ $ 59,320 ​ $ 56,620 ​ Less: Amortization of Intangible Assets ​ ​ (78) ​ ​ (100) ​ ​ (191) ​ Adjusted Noninterest Expense ​ $ 63,222 ​ $ 59,220 ​ $ 56,429 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income ​ $ 102,193 ​ $ 105,174 ​ $ 129,698 ​ Noninterest Income ​ ​ 7,368 ​ ​ 6,493 ​ ​ 6,332 ​ Less: (Gain) Loss on Sales of Securities ​ ​ (385) ​ ​ 33 ​ ​ (82) ​ Adjusted Operating Revenue ​ $ 109,176 ​ $ 111,700 ​ $ 135,948 ​ Efficiency Ratio ​ 57.9 % 53.0 % 41.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Efficiency Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Expense ​ $ 63,300 ​ $ 59,320 ​ $ 56,620 ​ Less: Amortization of Intangible Assets ​ ​ (78) ​ ​ (100) ​ ​ (191) ​ Less: Amortization of Tax Credit Investments ​ ​ — ​ ​ — ​ ​ (408) ​ Less: Merger-related Expenses ​ ​ (712) ​ ​ — ​ ​ — ​ Adjusted Noninterest Expense ​ $ 62,510 ​ $ 59,220 ​ $ 56,021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income ​ $ 102,193 ​ $ 105,174 ​ $ 129,698 ​ Noninterest Income ​ ​ 7,368 ​ ​ 6,493 ​ ​ 6,332 ​ Less: (Gain) Loss on Sales of Securities ​ ​ (385) ​ ​ 33 ​ ​ (82) ​ Adjusted Operating Revenue ​ $ 109,176 ​ $ 111,700 ​ $ 135,948 ​ Adjusted Efficiency Ratio ​ 57.3 % 53.0 % 41.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2024 2023 ​ 2022 Adjusted Noninterest Expense to Average Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Expense ​ $ 63,300 ​ $ 59,320 ​ $ 56,620 ​ Less: Amortization of Tax Credit Investments ​ ​ — ​ ​ — ​ ​ (408) ​ Less: Merger-related Expenses ​ ​ (712) ​ ​ — ​ ​ — ​ Adjusted Noninterest Expense ​ $ 62,588 ​ $ 59,320 ​ $ 56,212 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Assets ​ $ 4,683,144 ​ $ 4,490,804 ​ $ 3,866,480 ​ Adjusted Noninterest Expense to Average Assets ​ ​ 1.34 % ​ 1.32 % ​ 1.45 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2024 ​ 2023 ​ 2022 ​ Tangible Common Equity and Tangible Common Equity/Tangible Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Shareholders' Equity ​ $ 457,935 ​ $ 425,515 ​ $ 394,064 ​ Less: Preferred Stock ​ ​ (66,514) ​ ​ (66,514) ​ ​ (66,514) ​ Total Common Shareholders' Equity ​ ​ 391,421 ​ ​ 359,001 ​ ​ 327,550 ​ Less: Intangible Assets ​ ​ (19,832) ​ ​ (2,814) ​ ​ (2,914) ​ Tangible Common Equity ​ $ 371,589 ​ $ 356,187 ​ $ 324,636 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Assets ​ $ 5,066,242 ​ $ 4,611,990 ​ $ 4,345,662 ​ Less: Intangible Assets ​ ​ (19,832) ​ ​ (2,814) ​ ​ (2,914) ​ Tangible Assets ​ $ 5,046,410 ​ $ 4,609,176 ​ $ 4,342,748 ​ Tangible Common Equity/Tangible Assets ​ ​ 7.36 % 7.73 % 7.48 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible Book Value Per Share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Book Value Per Common Share ​ $ 14.21 ​ $ 12.94 ​ $ 11.80 ​ Less: Effects of Intangible Assets ​ ​ (0.72) ​ ​ (0.10) ​ ​ (0.11) ​ Tangible Book Value Per Common Share ​ $ 13.49 ​ $ 12.84 ​ $ 11.69 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on Average Tangible Common Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income Available to Common Shareholders ​ $ 28,771 ​ $ 35,906 ​ $ 49,338 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Shareholders' Equity ​ $ 440,763 ​ $ 410,478 ​ $ 384,033 ​ Less: Average Preferred Stock ​ ​ (66,514) ​ ​ (66,514) ​ ​ (66,514) ​ Average Common Equity ​ ​ 374,249 ​ ​ 343,964 ​ ​ 317,519 ​ Less: Effects of Average Intangible Assets ​ ​ (3,207) ​ ​ (2,847) ​ ​ (3,012) ​ Average Tangible Common Equity ​ $ 371,042 ​ $ 341,117 ​ $ 314,507 ​ Return on Average Tangible Common Equity ​ ​ 7.75 % ​ 10.53 % ​ 15.69 % ​ ​ ​ ​ 78 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2024 ​ 2023 ​ 2022 ​ Adjusted Diluted Earnings Per Common Share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income Available to Common Shareholders ​ $ 28,771 ​ $ 35,906 ​ $ 49,338 ​ Add: Merger-related Expenses ​ ​ 712 ​ ​ — ​ ​ — ​ Less: Tax Impact ​ ​ (165) ​ ​ — ​ ​ — ​ Net Income Available to Common Shareholders, Excluding Impact of Merger-related Expenses ​ $ 29,318 ​ $ 35,906 ​ $ 49,338 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted Weighted Average Shares Outstanding ​ ​ 27,943,343 ​ ​ 28,315,587 ​ ​ 28,668,177 ​ Adjusted Diluted Earnings Per Common Share ​ $ 1.05 ​ $ 1.27 ​ $ 1.72 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Return on Average Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income ​ $ 32,825 ​ $ 39,960 ​ $ 53,392 ​ Add: Merger-related Expenses ​ ​ 712 ​ ​ — ​ ​ — ​ Less: Tax Impact ​ ​ (165) ​ ​ — ​ ​ — ​ Net Income, Excluding Impact of Merger-related Expenses ​ $ 33,372 ​ $ 39,960 ​ $ 53,392 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Assets ​ $ 4,683,144 ​ $ 4,490,804 ​ $ 3,866,480 ​ Adjusted Return on Average Assets ​ ​ 0.71 % ​ 0.89 % ​ 1.38 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Return on Average Shareholders' Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income, Excluding Impact of Merger-related Expenses ​ $ 33,372 ​ $ 39,960 ​ $ 53,392 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Shareholders' Equity ​ $ 440,763 ​ $ 410,478 ​ $ 384,033 ​ Adjusted Return on Average Shareholders' Equity ​ ​ 7.57 % ​ 9.73 % ​ 13.90 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Return on Average Tangible Common Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income Available to Common Shareholders, Excluding Impact of Merger-related Expenses ​ $ 29,318 ​ $ 35,906 ​ $ 49,338 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Tangible Common Equity ​ $ 371,042 ​ $ 341,117 ​ $ 314,507 ​ Adjusted Return on Average Tangible Common Equity ​ ​ 7.90 % ​ 10.53 % ​ 15.69 % ​ ​ ​ 79 Table of Contents ­­
The $72.7 million, or 310.8%, increase in interest expense on deposits was primarily due to the upward repricing of the deposit portfolio in the higher interest rate environment and the average balance of interest bearing deposits increasing by $523.6 million, or 23.6%.
The $72.7 million, or 310.8%, increase in interest expense on deposits was primarily due to the upward repricing of the deposit portfolio in the higher rate environment and the average balance of interest bearing deposits increasing by $523.6 million, or 23.6%.
The investment securities portfolio consists primarily of U.S. government agency mortgage-backed securities, municipal securities, and corporate securities comprised primarily of subordinated debentures of banks and financial holding companies. In addition, the Company also holds other mortgage backed and other debt securities, all with varying contractual maturities.
The investment securities portfolio consists primarily of U.S. treasury securities, U.S. government agency mortgage-backed securities, municipal securities, and corporate securities comprised primarily of subordinated debentures of banks and financial holding companies. In addition, the Company also holds other mortgage backed and other debt securities, all with varying contractual maturities.
The allowance for credit losses on loans is measured on a collective basis for portfolios of loans when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation.
The allowance for credit losses on loans and leases is measured on a collective basis for portfolios of loans when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation.
Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct material effect on the Company’s and Bank’s business. Management believes the Company and the Bank met all capital adequacy requirements to which they were subject as of December 31, 2023.
Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct material effect on the Company’s and Bank’s business. Management believes the Company and the Bank met all capital adequacy requirements to which they were subject as of December 31, 2024.
If management believes that a loan will not be collected in full, an increase to the allowance for credit losses on loans is recorded to reflect management’s estimate of any potential exposure or loss. Generally, payments received on nonaccrual loans are applied directly to principal.
If management believes that a loan will not be collected in full, an increase to the allowance for credit losses on loans and leases is recorded to reflect management’s estimate of any potential exposure or loss. Generally, payments received on nonaccrual loans are applied directly to principal.
At December 31, 2023, the ratios for the Company and the Bank were sufficient to meet the conservation buffer. Off-Balance Sheet Arrangements In the normal course of business, the Company enters into various transactions to meet the financing needs of clients, which, in accordance with GAAP, are not included in the consolidated balance sheets.
At December 31, 2024, the ratios for the Company and the Bank were sufficient to meet the conservation buffer. Off-Balance Sheet Arrangements In the normal course of business, the Company enters into various transactions to meet the financing needs of clients, which, in accordance with GAAP, are not included in the consolidated balance sheets.
Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are required to be designated “watch.” The following table presents information on loan classifications at December 31, 2023.
Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are required to be designated “watch.” The following table presents information on loan classifications at December 31, 2024.
See “Note 8 – Leases” of the Company’s Consolidated Financial Statements included as part of this report for additional information. ​ The Company believes that it will be able to meet all contractual obligations as they come due through the maintenance of adequate cash levels.
See “Note 9 – Leases” of the Company’s Consolidated Financial Statements included as part of this report for additional information. ​ The Company believes that it will be able to meet all contractual obligations as they come due through the maintenance of adequate cash levels.
As of December 31, 2023, the Company was in compliance with all established liquidity guidelines in the policy. 75 Table of Contents GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures Some of the financial data included in this report are not measures of financial performance recognized by GAAP.
As of December 31, 2024, the Company was in compliance with all established liquidity guidelines in the policy. 75 Table of Contents GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures Some of the financial data included in this report are not measures of financial performance recognized by GAAP.
Assets classified as “doubtful” have all 66 Table of Contents of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted.
Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted.
The tax-effected impact of these two items totaled $3.9 million and was recorded as an adjustment to retained earnings as of January 1, 2023. ​ 59 Table of Contents The allowance for credit losses on loans increased $2.5 million as of December 31, 2023, compared to December 31, 2022, reflecting the impact of adopting CECL of $650,000, a provision for credit losses of $2.1 million and net charge-offs of $202,000 during 2023.
The tax-effected impact of these two items totaled $3.9 million and was recorded as an adjustment to retained earnings as of January 1, 2023. ​ The allowance for credit losses on loans increased $2.5 million as of December 31, 2023, compared to December 31, 2022, reflecting the impact of adopting CECL of $650,000, a provision for credit losses of $2.1 million and net charge-offs of $202,000 during 2023.
ITEM 6. [RESERVED] ​ Not Applicable. ​ ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General The following discussion and analysis of the Company’s results of operations and financial condition should be read in conjunction with the Company’s consolidated financial statements and related notes included elsewhere in this report.
ITEM 6. [RESERVED] ​ ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General The following discussion and analysis of the Company’s results of operations and financial condition should be read in conjunction with the Company’s consolidated financial statements and related notes included elsewhere in this report.
Allowance for Credit Losses The allowance for credit losses on loans is a reserve established through charges to earnings in the form of a provision for credit losses. The Company maintains an allowance for credit losses at a level management considers adequate to provide for expected lifetime losses in the portfolio.
Allowance for Credit Losses The allowance for credit losses on loans and leases is a reserve established through charges to earnings in the form of a provision for credit losses. The Company maintains an allowance for credit losses at a level management considers adequate to provide for expected lifetime losses in the portfolio.
Responsive service, local decision making, and an efficient turnaround time from application to closing have been significant factors in growing the loan portfolio. The Company manages concentrations of credit exposure through a risk management program which implements formalized processes and procedures specifically for managing and mitigating risk within the loan portfolio.
Responsive service, local decision making, and an efficient turnaround time from application to closing have been significant factors in growing the loan portfolio. 64 Table of Contents The Company manages concentrations of credit exposure through a risk management program which implements formalized processes and procedures specifically for managing and mitigating risk within the loan portfolio.
The Company remains committed to maintaining strong capital levels while enhancing shareholder value as it strategically executes its stock repurchase program based on various factors including valuation, capital levels and other uses of capital. ​ Regulatory Capital. The Company and the Bank are subject to various regulatory capital requirements administered by federal banking regulators.
The Company remains committed to maintaining strong capital levels while enhancing shareholder value as it strategically executes its stock repurchase program based on various factors, including valuation, capital levels and other uses of capital. ​ 72 Table of Contents Regulatory Capital. The Company and the Bank are subject to various regulatory capital requirements administered by federal banking regulators.
Most of these commitments mature within two years and the standby letters of credit are expected to expire without being drawn upon. All off-balance sheet commitments are included in the determination of the amount of risk-based capital that the Company and the Bank are required to hold.
Most of these commitments mature within two years and the standby letters of credit are expected to expire 73 Table of Contents without being drawn upon. All off-balance sheet commitments are included in the determination of the amount of risk-based capital that the Company and the Bank are required to hold.
The increase was primarily due to the upward repricing of the deposit portfolio in the higher interest rate environment. ​ Interest expense on borrowings was $10.6 million for the year ended December 31, 2022, an increase of $5.1 million, compared to $5.5 million for the year ended December 31, 2021.
The increase was primarily due to the upward repricing of the deposit portfolio in the higher interest rate environment. ​ Interest expense on borrowings was $21.1 million for the year ended December 31, 2023, an increase of $10.5 million, compared to $10.6 million for the year ended December 31, 2022.
The allowance for credit losses on loans to total loans was 1.36% at December 31, 2023, compared to 1.34% at December 31, 2022. ​ The provision for credit losses for off-balance sheet credit exposures was a negative provision of $2.2 million for the year ended December 31, 2023, compared to $-0- for the year ended December 31, 2022.
The allowance for credit losses on loans to total loans was 1.36% at December 31, 2023, compared to 1.34% at December 31, 2022. ​ 60 Table of Contents The provision for credit losses for off-balance sheet credit exposures was a negative provision of $2.2 million for the year ended December 31, 2023, compared to $-0- for the year ended December 31, 2022.
Federal regulations and internal policies require the use of an asset classification system as a means of managing and reporting problem and potential problem assets. The Company has incorporated an internal asset classification system, substantially consistent with federal banking regulations, as a part of the credit monitoring system.
Federal regulations and internal policies require the use of an asset classification system as a means of managing and reporting problem and potential problem assets. The Company has incorporated an internal asset classification system, substantially consistent 66 Table of Contents with federal banking regulations, as a part of the credit monitoring system.
The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit, standby letters of credit, and commercial letters of credit is represented by 73 Table of Contents the contractual or notional amount of those instruments.
The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit, standby letters of credit, and commercial letters of credit is represented by the contractual or notional amount of those instruments.
Management uses these non-GAAP financial measures in the analysis of performance: ​ ● “Pre-Provision Net Revenue” is defined as net interest income plus total noninterest income (excluding all gains and losses on sales of assets or extinguishments or prepayments of liabilities) minus total noninterest expense, excluding the amortization of tax credit investments and debt prepayment fees. ● “Core Net Interest Margin” is defined as the ratio of net interest income (on a fully tax-equivalent basis), reduced by loan fees and PPP interest and fees, divided by interest earning assets, excluding average PPP loans. ● “Efficiency ratio” is defined as noninterest expense less the amortization of intangibles divided by our operating revenue, which is equal to net interest income plus noninterest income excluding gains and losses on sales of assets.
Management uses these non-GAAP financial measures in the analysis of performance: ​ ● “Pre-Provision Net Revenue” is defined as net interest income plus total noninterest income (excluding all gains and losses on sales of assets or extinguishments or prepayments of liabilities) minus total noninterest expense, excluding the amortization of tax credit investments and debt prepayment fees. ● “Adjusted Pre-Provision Net Revenue” is defined as net interest income plus total noninterest income (excluding all gains and losses on sales of assets or extinguishments or prepayments of liabilities) minus total noninterest expense, excluding the amortization of tax credit investments, debt prepayment fees and one-time merger-related expenses. ● “Core Net Interest Margin” is defined as the ratio of net interest income (on a fully tax-equivalent basis), reduced by loan fees and PPP interest and fees, divided by interest earning assets, excluding average PPP loans. ● “Efficiency ratio” is defined as noninterest expense less the amortization of intangibles divided by our operating revenue, which is equal to net interest income plus noninterest income excluding gains and losses on sales of assets.
The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. ​ The Company had outstanding letters of credit with the FHLB in the amount of $114.4 million and $78.4 million at December 31, 2023 and 2022, respectively, on behalf of customers and to secure public deposits. ​ Liquidity Liquidity is the Company’s capacity to meet cash and collateral obligations at a reasonable cost.
The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. ​ The Company had outstanding letters of credit with the FHLB in the amount of $103.2 million and $114.4 million at December 31, 2024 and 2023, respectively, on behalf of customers and to secure public deposits. ​ Liquidity Liquidity is the Company’s capacity to meet cash and collateral obligations at a reasonable cost.
Interest income on the investment securities portfolio on a fully-tax equivalent basis increased $9.5 million, or 55.5%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to an $85.2 million, or 16.4%, increase in average balances between the two periods and higher rates earned on securities.
Interest income on the investment securities portfolio on a fully-tax equivalent basis increased $9.5 million, or 55.5%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to an $85.2 million, or 16.4%, increase in average balances between the two periods and higher rates earned on securities. ​ Interest income on loans, on a fully-tax equivalent basis, for the year ended December 31, 2023 was $192.7 million, compared to $146.8 million for the year ended December 31, 2022.
The impact of the noninterest bearing sources of funds is captured in the net interest margin, which is calculated as net 53 Table of Contents interest income divided by average earning assets.
The impact of the noninterest bearing sources of funds is captured in the net interest margin, which is calculated as net interest income divided by average earning assets.
Readers of the Company’s Annual Report on Form 10-K should consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on forward-looking statements. 49 Table of Contents ​ The following consolidated selected financial data is derived from the Company’s audited consolidated financial statements as of and for the five years ended December 31, 2023.
Readers of the Company’s Annual Report on Form 10-K should consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on forward-looking statements. ​ 51 Table of Contents The following consolidated selected financial data is derived from the Company’s audited consolidated financial statements as of and for the three years ended December 31, 2024.
The Company’s future effective income tax rate will fluctuate based on the mix of taxable and tax-free investments and loans, the recognition and availability of tax credit investments, and overall taxable income. 2023 Compared to 2022 Income tax expense was $12.6 million for the year ended December 31, 2023, compared to $18.3 million for the year ended December 31, 2022.
The Company’s future effective income tax rate will fluctuate based on the mix of taxable and tax-free investments and loans, the recognition and availability of tax credit investments, and overall taxable income. 2024 Compared to 2023 Income tax expense was $9.9 million for the year ended December 31, 2024, compared to $12.6 million for the year ended December 31, 2023.
Loans that warranted a substandard risk rating at December 31, 2023 totaled $35.9 million, compared to $28.0 million at December 31, 2022. Management continues to actively work with these borrowers and closely monitor substandard credits. Nonperforming Assets Nonperforming loans include loans accounted for on a nonaccrual basis and loans 90 days past due and still accruing.
Loans that warranted a substandard risk rating at December 31, 2024 totaled $21.8 million, compared to $35.9 million at December 31, 2023. Management continues to actively work with these borrowers and closely monitor substandard credits. Nonperforming Assets Nonperforming loans include loans accounted for on a nonaccrual basis and loans 90 days past due and still accruing.
Due to the low levels of nonaccrual loans, gross income that would have been recorded on nonaccrual loans during the years ended December 31, 2023 and 2022 was approximately $79,000 and $60,000, respectively.
Due to the low levels of nonaccrual loans, gross income that would have been recorded on nonaccrual loans during the years ended December 31, 2024 and 2023 was approximately $163,000 and $79,000, respectively.
The Company had additional borrowing capacity under this credit facility of $498.7 million and $390.9 million at December 31, 2023 and 2022, respectively. The Company has an outstanding Loan and Security Agreement and revolving note with a third party correspondent lender, which is secured by 100% of the issued and outstanding stock of the Bank.
The Company had additional borrowing capacity under this credit facility of $483.2 million and $498.7 million at December 31, 2024 and 2023, respectively. The Company has an outstanding Loan and Security Agreement and revolving note with a third party correspondent lender, which is secured by 100% of the issued and outstanding stock of the Bank.
The regulatory capital ratios for the Company and the Bank to meet the minimum capital adequacy standards and for the Bank to be considered well capitalized under the prompt corrective action 72 Table of Contents framework are set forth in the following tables.
The regulatory capital ratios for the Company and the Bank to meet the minimum capital adequacy standards and for the Bank to be considered well capitalized under the prompt corrective action framework are set forth in the following tables.
Allowance for Credit Losses In accordance with ASC 326, Financial Instruments - Credit Losses , the allowance for credit losses on loans is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be 51 Table of Contents collected on the loans.
Allowance for Credit Losses In accordance with ASC 326, Financial Instruments - Credit Losses , the allowance for credit losses on loans and leases is a valuation account that is deducted from the amortized cost basis of loans and leases to present the net amount expected to be collected on the loans and leases.
Management believes this non-GAAP financial measure provides a meaningful comparison of operational performance and facilitates investors’ assessments of business performance and trends in comparison to peers in the banking industry. The efficiency ratio was 53.0% for the year ended December 31, 2023, compared to 41.5% for the year ended December 31, 2022.
Management believes this non-GAAP financial measure provides a meaningful comparison of operational performance and facilitates investors’ assessments of business performance and trends in comparison to peers in the banking industry. The efficiency ratio was 57.9% for the year ended December 31, 2024, compared to 53.0% for the year ended December 31, 2023.
ROE was 13.90% and 14.45% for the years ended December 31, 2022 and 2021, respectively. ​ Net Interest Income The Company’s primary source of revenue is net interest income, which is impacted by the level of interest earning assets and related funding sources, as well as changes in the level of interest rates.
ROE was 9.73% and 13.90% for the years ended December 31, 2023 and 2022, respectively. ​ Net Interest Income The Company’s primary source of revenue is net interest income, which is impacted by the level of interest earning assets and related funding sources, as well as changes in interest rates.
Although management strives to maintain an allowance it deems adequate, future economic changes, deterioration of borrowers’ creditworthiness, and the impact of examinations by regulatory agencies, among other factors, all could cause changes to the allowance for credit losses on loans. ​ At December 31, 2023 the allowance for credit losses on loans was $50.5 million, an increase of $2.5 million from $48.0 million at December 31, 2022.
Although management strives to maintain an allowance it deems adequate, future economic changes, deterioration of borrowers’ creditworthiness, and the impact of examinations by regulatory agencies, among other factors, all could cause changes to the allowance for credit losses on loans and leases. ​ At December 31, 2024, the allowance for credit losses on loans and leases was $52.3 million, an increase of $1.8 million from $50.5 million at December 31, 2023.
The Company had $-0- and $287.0 million federal funds purchased as of December 31, 2023 and 2022, respectively. Other Borrowings At December 31, 2023, the Company had outstanding FHLB advances of $319.5 million, compared to $97.0 million at December 31, 2022. The Company’s borrowing capacity at the FHLB is determined based on collateral pledged, generally consisting of loans.
The Company had no outstanding federal funds purchased as of each of December 31, 2024 and 2023. Other Borrowings At December 31, 2024, the Company had outstanding FHLB advances of $359.5 million, compared to $319.5 million at December 31, 2023. The Company’s borrowing capacity at the FHLB is determined based on collateral pledged, generally consisting of loans.
The cost of total deposits was 2.73% for the year ended December 31, 2023, a 198 basis point increase, compared to 0.75% for the year ended December 31, 2022. The increase was primarily due to the upward repricing of the deposit portfolio in the higher interest rate environment.
The cost of total deposits was 3.44% for the year ended December 31, 2024, a 71 basis point increase, compared to 2.73% for the year ended December 31, 2023. The increase was primarily due to the upward repricing of the deposit portfolio in the higher interest rate environment.
At December 31, 2023, core deposits totaled approximately $2.55 billion and represented 68.7% of total deposits. These core deposits are normally less volatile, often with customer relationships tied to other products offered by the Company, which promote long-standing relationships and stable funding sources.
At December 31, 2024, core deposits totaled approximately $3.11 billion and represented 76.0% of total deposits. These core deposits are normally less volatile, often with customer relationships tied to other products offered by the Company, which promote long-standing relationships and stable funding sources.
The processes and procedures include board and management oversight, commercial real estate exposure limits, portfolio monitoring tools, management information systems, market reports, underwriting standards, internal and external loan review, and stress testing. Total gross loans increased $154.8 million, or 4.3%, to $3.72 billion at December 31, 2023, compared to $3.57 billion at December 31, 2022.
The processes and procedures include board of directors and management oversight, commercial real estate exposure limits, portfolio monitoring tools, management information systems, market reports, underwriting standards, internal and external loan review, and stress testing. Total gross loans increased $144.2 million, or 3.9%, to $3.87 billion at December 31, 2024, compared to $3.72 billion at December 31, 2023.
Nonperforming assets consist of nonperforming loans plus foreclosed assets (i.e., real or personal property acquired through foreclosure). Nonaccrual loans totaled $919,000 at December 31, 2023 and $639,000 at December 31, 2022, an increase of $280,000. There were no loans 90 days past due and still accruing as of December 31, 2023 and 2022.
Nonperforming assets consist of nonperforming loans plus foreclosed assets (i.e., real or personal property acquired through foreclosure). Nonaccrual loans totaled $301,000 at December 31, 2024 and $919,000 at December 31, 2023, a decrease of $618,000. There were no loans 90 days past due and still accruing as of December 31, 2024 and 2023.
Investor CRE loans represented 71.8% of the total gross loan portfolio and 482.4% of the Bank’s total risk-based capital at December 31, 2023, compared to 73.4% and 514.9%, respectively, at December 31, 2022.
Investor CRE loans represented 68.4% of the total gross loan portfolio and 462.0% of the Bank’s total risk-based capital at December 31, 2024, compared to 71.8% and 482.4%, respectively, at December 31, 2023.
Net interest margin (on a fully tax-equivalent basis) for the year ended December 31, 2023 was 2.42%, a 103 basis point decline from 3.45% for the year ended December 31, 2022.
Net interest margin (on a fully tax-equivalent basis) for the year ended December 31, 2024 was 2.26%, a 16 basis point decline from 2.42% for the year ended December 31, 2023.
The cost of total deposits was 0.75% for the year ended December 31, 2022, a 24 basis point increase, compared to 0.51% for the year ended December 31, 2021.
The cost of total deposits was 2.73% for the year ended December 31, 2023, a 198 basis point increase, compared to 0.75% for the year ended December 31, 2022.
(5) Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Overview The Company is a financial holding company headquartered in St. Louis Park, Minnesota.
(4) Nonperforming assets are defined as nonaccrual loans plus loans 90 days past due plus foreclosed assets. (5) Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000. ​ Overview The Company is a financial holding company headquartered in St. Louis Park, Minnesota.
In management’s judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to the Company’s core business. ● “Tangible common equity” is defined as shareholders’ equity reduced by preferred stock, goodwill and other intangible assets.
In management’s judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to the Company’s core business. ● “Adjusted efficiency ratio” is defined as the efficiency ratio adjusted to exclude the amortization of tax credit investments and one-time merger-related expenses from noninterest expense. ● “Adjusted noninterest expense to average assets” is defined as the ratio of noninterest expense adjusted to exclude the amortization of tax credit investments and one-time merger-related expenses divided by average assets. ● “Tangible common equity” is defined as shareholders’ equity reduced by preferred stock, goodwill and other intangible assets.
Capital Total shareholders’ equity at December 31, 2023 was $425.5 million, an increase of $31.5 million, or 8.0%, over shareholders’ equity of $394.1 million at December 31, 2022, primarily due to net income retained and a decrease in unrealized losses in the securities portfolio, offset partially by a decrease in unrealized gains in the derivatives portfolio, the adoption of the CECL accounting methodology, preferred stock dividends, and stock repurchases.
Capital Total shareholders’ equity at December 31, 2024 was $457.9 million, an increase of $32.4 million, or 7.6%, over shareholders’ equity of $425.5 million at December 31, 2023, primarily due to net income retained, a decrease in unrealized losses in the securities portfolio, and an increase in unrealized gains in the derivatives portfolio, offset partially by preferred stock dividends and stock repurchases.
The following table presents credit arrangements and financial instruments whose contract amounts represent credit risk as of December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ December 31, 2022 ​ Fixed Variable Fixed Variable (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unfunded Commitments Under Lines of Credit ​ $ 164,880 ​ $ 381,752 ​ $ 444,669 ​ $ 404,065 Letters of Credit ​ 6,780 ​ 96,509 ​ 20,658 ​ 95,111 Totals ​ $ 171,660 ​ $ 478,261 ​ $ 465,327 ​ $ 499,176 ​ Commitments to extend credit beyond current funding are agreements to lend to a customer as long as there is no violation of any condition established in the contract.
The following table presents credit arrangements and financial instruments whose contract amounts represent credit risk as of December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ December 31, 2023 ​ Fixed Variable Fixed Variable (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unfunded Commitments Under Lines of Credit ​ $ 174,273 ​ $ 504,791 ​ $ 164,880 ​ $ 381,752 Letters of Credit ​ 9,012 ​ 115,385 ​ 6,780 ​ 96,509 Totals ​ $ 183,285 ​ $ 620,176 ​ $ 171,660 ​ $ 478,261 ​ Commitments to extend credit beyond current funding are agreements to lend to a customer as long as there is no violation of any condition established in the contract.
The Company e arly adopted ASU 2023-02 applying the modified retrospective method which reclassified noninterest expense to income tax expense effective January 1, 2023, impacting comparability to prior years. The Company had 255 full-time equivalent employees at December 31, 2023, compared to 246 employees at December 31, 2022. Efficiency Ratio.
The Company early adopted ASU 2023-02 applying the modified retrospective method which reclassified noninterest expense to income tax expense effective January 1, 2023, impacting comparability to prior years. 62 Table of Contents ​ The Company had 255 full-time equivalent employees at December 31, 2023, compared to 246 employees at December 31, 2022. ​ The efficiency ratio was 53.0% for the year ended December 31, 2023, compared to 41.5% for the year ended December 31, 2022.
The Company uses brokered deposits, the availability of which is uncertain and subject to competitive market forces and regulation, for liquidity and interest rate risk management purposes. At December 31, 2023, brokered deposits totaled $1.02 billion, consisting of $850.5 million of brokered time deposits and $174.0 million of non-maturity brokered money market and transaction accounts.
The Company uses brokered deposits, the availability of which is uncertain and subject to competitive market forces and regulation, for liquidity and interest rate risk management purposes. At December 31, 2024, brokered deposits totaled $825.8 million, consisting of $698.3 million of brokered time deposits and $127.4 million of non-maturity brokered money market and transaction accounts.
There were no foreclosed assets as of December 31, 2023 and 2022. 67 Table of Contents The following table presents a summary of nonperforming assets, by category, at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ (dollars in thousands) 2023 2022 ​ 2021 2020 ​ 2019 ​ Total Nonaccrual Loans ​ $ 919 ​ $ 639 ​ $ 722 ​ $ 775 ​ $ 461 ​ Total Nonperforming Loans ​ $ 919 ​ $ 639 ​ $ 722 ​ $ 775 ​ $ 461 ​ Total Nonperforming Assets (1) ​ $ 919 ​ $ 639 ​ $ 722 ​ $ 775 ​ $ 461 ​ Total Modified Accruing Loans (2) ​ 9,609 ​ 82 ​ 1,304 ​ 265 ​ 276 ​ Total Nonperforming Assets and Modified Accruing Loans (2) ​ $ 10,528 ​ $ 721 ​ $ 2,026 ​ $ 1,040 ​ $ 737 ​ Nonaccrual Loans to Total Loans ​ 0.02 % 0.02 % 0.03 % 0.03 % 0.02 % Nonperforming Loans to Total Loans ​ 0.02 ​ 0.02 ​ 0.03 ​ 0.03 ​ 0.02 ​ Nonperforming Assets to Total Loans Plus Foreclosed Assets (1) ​ 0.02 ​ 0.02 ​ 0.03 ​ 0.03 ​ 0.02 ​ (1) Nonperforming assets are defined as nonaccrual loans and loans greater than 90 days past due still accruing plus foreclosed assets.
There were also no foreclosed assets as of December 31, 2024 and 2023. 67 Table of Contents The following table presents a summary of nonperforming assets, by category, at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ (dollars in thousands) 2024 2023 ​ Total Nonaccrual Loans ​ $ 301 ​ $ 919 ​ Total Nonperforming Loans ​ $ 301 ​ $ 919 ​ Total Nonperforming Assets (1) ​ $ 301 ​ $ 919 ​ Total Modified Accruing Loans ​ — ​ 9,609 ​ Total Nonperforming Assets and Modified Accruing Loans ​ $ 301 ​ $ 10,528 ​ Nonaccrual Loans to Total Loans ​ 0.01 % 0.02 % Nonperforming Loans to Total Loans ​ 0.01 ​ 0.02 ​ Nonperforming Assets to Total Loans Plus Foreclosed Assets (1) ​ 0.01 ​ 0.02 ​ (1) Nonperforming assets are defined as nonaccrual loans and loans greater than 90 days past due still accruing plus foreclosed assets.
As of December 31, 2023, investor CRE loans totaled $2.67 billion, consisting of $987.3 million of loans secured by nonowner occupied CRE, $1.39 billion of loans secured by multifamily residential properties, $65.1 million of 1-4 family construction loans and $232.8 million of construction and land development loans.
As of December 31, 2024, investor CRE loans totaled $2.65 billion, consisting of $1.08 billion of loans secured by nonowner occupied CRE, $1.43 billion of loans secured by multifamily residential properties, $42.0 million of 1-4 family construction loans and $97.3 million of construction and land development loans.
Interest expense on interest bearing liabilities was $117.2 million for the year ended December 31, 2023, an increase of $83.2 million, or 244.7%, compared to $34.0 million for the year ended December 31, 2022. The increase was primarily due to growth and upward repricing of the deposit and FHLB advances portfolios in the higher interest rate environment.
The increase was primarily due to growth and upward repricing of the deposit and FHLB advances portfolios in the higher interest rate environment. ​ Interest expense on deposits was $96.0 million for the year ended December 31, 2023, compared to $23.4 million for the year ended December 31, 2022.
The increase was primarily due to increases in customer service fees, swap fees, bank-owned life insurance income and other income, offset partially by lower gains on sales of securities. ​ The following table presents the major components of noninterest income for the year ended December 31, 2023, compared to the year ended December 31, 2022, and for the year ended December 31, 2022, compared to the year ended December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Increase/ ​ December 31, ​ Increase/ (dollars in thousands) 2023 2022 (Decrease) 2022 2021 (Decrease) Noninterest Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer Service Fees ​ $ 1,455 ​ $ 1,236 ​ $ 219 ​ $ 1,236 ​ $ 1,007 ​ $ 229 Net Gain (Loss) on Sales of Securities ​ ​ (33) ​ ​ 82 ​ ​ (115) ​ ​ 82 ​ ​ 750 ​ ​ (668) Letter of Credit Fees ​ ​ 1,746 ​ ​ 1,592 ​ ​ 154 ​ ​ 1,592 ​ ​ 1,676 ​ ​ (84) Debit Card Interchange Fees ​ ​ 595 ​ ​ 586 ​ ​ 9 ​ ​ 586 ​ ​ 563 ​ ​ 23 Swap Fees ​ ​ — ​ ​ 557 ​ ​ (557) ​ ​ 557 ​ ​ — ​ ​ 557 Bank-Owned Life Insurance ​ ​ 992 ​ ​ 762 ​ ​ 230 ​ ​ 762 ​ ​ 316 ​ ​ 446 FHLB Prepayment Income ​ ​ 792 ​ ​ — ​ ​ 792 ​ ​ — ​ ​ — ​ ​ — Other Income ​ ​ 946 ​ ​ 1,517 ​ ​ (571) ​ ​ 1,517 ​ ​ 997 ​ ​ 520 Totals ​ $ 6,493 ​ $ 6,332 ​ $ 161 ​ $ 6,332 ​ $ 5,309 ​ $ 1,023 ​ Noninterest Expense 2023 Compared to 2022 Noninterest expense totaled $59.3 million for the year ended December 31, 2023, a $2.7 million, or 4.8%, increase from $56.6 million for the year ended December 31, 2022.
The increase was primarily due to increases in customer service fees, bank-owned life insurance income and FHLB prepayment income, offset partially by lower swap fees and other income. ​ 61 Table of Contents The following table presents the major components of noninterest income for the year ended December 31, 2024, compared to the year ended December 31, 2023, and for the year ended December 31, 2023, compared to the year ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Increase/ ​ December 31, ​ Increase/ (dollars in thousands) 2024 2023 (Decrease) 2023 2022 (Decrease) Noninterest Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer Service Fees ​ $ 1,475 ​ $ 1,455 ​ $ 20 ​ $ 1,455 ​ $ 1,236 ​ $ 219 Net Gain (Loss) on Sales of Securities ​ ​ 385 ​ ​ (33) ​ ​ 418 ​ ​ (33) ​ ​ 82 ​ ​ (115) Net Gain on Sales of Foreclosed Assets ​ ​ 62 ​ ​ — ​ ​ 62 ​ ​ ​ ​ ​ ​ ​ ​ ​ Letter of Credit Fees ​ ​ 1,976 ​ ​ 1,746 ​ ​ 230 ​ ​ 1,746 ​ ​ 1,592 ​ ​ 154 Debit Card Interchange Fees ​ ​ 593 ​ ​ 595 ​ ​ (2) ​ ​ 595 ​ ​ 586 ​ ​ 9 Swap Fees ​ ​ 547 ​ ​ — ​ ​ 547 ​ ​ — ​ ​ 557 ​ ​ (557) Bank-Owned Life Insurance ​ ​ 1,327 ​ ​ 992 ​ ​ 335 ​ ​ 992 ​ ​ 762 ​ ​ 230 FHLB Prepayment Income ​ ​ — ​ ​ 792 ​ ​ (792) ​ ​ 792 ​ ​ — ​ ​ 792 Other Income ​ ​ 1,003 ​ ​ 946 ​ ​ 57 ​ ​ 946 ​ ​ 1,517 ​ ​ (571) Totals ​ $ 7,368 ​ $ 6,493 ​ $ 875 ​ $ 6,493 ​ $ 6,332 ​ $ 161 ​ Noninterest Expense 2024 Compared to 2023 Noninterest expense totaled $63.3 million for the year ended December 31, 2024, a $4.0 million, or 6.7%, increase from $59.3 million for the year ended December 31, 2023.
On September 1, 2022, the Company entered into a second amendment to the agreement which increased the maximum principal amount of the Company’s revolving line of credit from $25.0 million to $40.0 million and extended the maturity date from February 28, 2023 to September 1, 2024.
The maximum principal amount of the Company’s revolving line of credit is $40.0 million. On September 1, 2024, the Company entered into an amendment to the agreement which extended the maturity date from September 1, 2024 to September 1, 2026.
The $45.9 million, or 31.2%, increase was primarily due to a $508.5 million, or 15.9%, increase in the average balance of loans outstanding from organic loan growth and a rising yield in the higher interest rate environment. Loan interest income and loan fees remain the primary contributing factors to the changes in yield on interest earning assets.
The $45.9 million, or 31.2%, increase was primarily due to a $508.5 million, or 15.9%, increase in the average balance of loans outstanding from continued organic loan growth and a rising yield in the higher interest rate environment. 59 Table of Contents ​ Interest Expense.
This increase was primarily due to the increased utilization of federal funds purchased and FHLB advances in the rising interest rate environment. ​ Provision for Credit Losses 2023 Compared to 2022 On January 1, 2023, the Company adopted ASU No. 2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments,” more commonly referred to as “CECL.” Upon adoption of CECL, the Company’s allowance for credit losses on loans increased $650,000 and the allowance for off-balance sheet credit exposures increased $4.9 million.
The allowance for credit losses on off-balance sheet credit exposures was $3.6 million as of December 31, 2024, compared to $3.0 million as of December 31, 2023. ​ 2023 Compared to 2022 On January 1, 2023, the Company adopted ASU No. 2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments,” more commonly referred to as “CECL.” Upon adoption of CECL, the Company’s allowance for credit losses on loans increased $650,000 and the allowance for off-balance sheet credit exposures increased $4.9 million.
The increase in total assets was primarily due to an increase in cash and cash equivalents, solid organic loan growth and purchases of investment securities. Total gross loans at December 31, 2023 were $3.72 billion, an increase of $154.8 million, or 4.3%, compared to December 31, 2022.
The increase in total assets was primarily due to an increase in cash and cash equivalents, organic loan growth, purchases of investment securities, and the addition of assets purchased in the FMCB transaction. Total gross loans at December 31, 2024 were $3.87 billion, an increase of $144.2 million, or 3.9%, compared to December 31, 2023.
All investment securities are held as available for sale. ​ Securities available for sale were $604.1 million at December 31, 2023, compared to $548.6 million at December 31, 2022, an increase of $55.5 million, or 10.1%.
All investment securities are held as available for sale. ​ Securities available for sale were $768.2 million at December 31, 2024, an increase of $164.1 million, or 27.2%, compared to $604.1 million at December 31, 2023.
These tables are presented on a tax-equivalent basis, if applicable. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ December 31, 2022 December 31, 2021 ​ ​ Average ​ Interest ​ Yield/ ​ Average ​ Interest ​ Yield/ Average ​ Interest ​ Yield/ ​ Balance & Fees Rate Balance & Fees Rate Balance & Fees Rate (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest Earning Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash Investments ​ $ 77,759 ​ $ 3,170 ​ 4.08 % $ 66,072 ​ $ 597 ​ 0.90 % $ 132,188 ​ $ 199 ​ 0.15 % Investment Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable Investment Securities ​ 577,102 ​ 25,199 ​ 4.37 ​ 448,500 ​ 13,960 ​ 3.11 ​ 317,954 ​ 7,015 ​ 2.21 ​ Tax-Exempt Investment Securities (1) ​ 29,004 ​ 1,325 ​ 4.57 ​ 72,379 ​ 3,101 ​ 4.29 ​ 75,313 ​ 3,242 ​ 4.30 ​ Total Investment Securities ​ 606,106 ​ 26,524 ​ 4.38 ​ 520,879 ​ 17,061 ​ 3.28 ​ 393,267 ​ 10,257 ​ 2.61 ​ Paycheck Protection Program Loans (2) ​ NM ​ ​ NM ​ NM ​ 7,441 ​ ​ 970 ​ 13.03 ​ 103,151 ​ ​ 6,441 ​ 6.24 ​ Loans (1)(2) ​ 3,699,252 ​ ​ 192,679 ​ 5.21 ​ 3,183,271 ​ ​ 145,857 ​ 4.58 ​ 2,481,706 ​ ​ 112,587 ​ 4.54 ​ Total Loans ​ ​ 3,699,252 ​ 192,679 ​ 5.21 ​ ​ 3,190,712 ​ 146,827 ​ 4.60 ​ ​ 2,584,857 ​ 119,028 ​ 4.60 ​ Federal Home Loan Bank Stock ​ 21,249 ​ ​ 1,538 ​ 7.24 ​ 12,628 ​ ​ 432 ​ 3.42 ​ 5,571 ​ ​ 259 ​ 4.65 ​ Total Interest Earning Assets ​ 4,404,366 ​ 223,911 ​ 5.08 % 3,790,291 ​ 164,917 ​ 4.35 % 3,115,883 ​ 129,743 ​ 4.16 % Noninterest Earning Assets ​ ​ 86,438 ​ ​ ​ ​ ​ ​ ​ 76,189 ​ ​ ​ ​ ​ ​ ​ 73,917 ​ ​ ​ ​ ​ ​ Total Assets ​ $ 4,490,804 ​ ​ ​ ​ ​ ​ $ 3,866,480 ​ ​ ​ ​ ​ ​ $ 3,189,800 ​ ​ ​ ​ ​ ​ Interest Bearing Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest Bearing Transaction Deposits ​ $ 650,028 ​ $ 23,379 ​ 3.60 % $ 524,968 ​ $ 4,336 ​ 0.83 % $ 441,528 ​ $ 2,052 ​ 0.46 % Savings and Money Market Deposits ​ 922,799 ​ 30,639 ​ 3.32 ​ 963,096 ​ 9,129 ​ 0.95 ​ 773,779 ​ 3,729 ​ 0.48 ​ Time Deposits ​ 263,161 ​ 7,064 ​ 2.68 ​ 284,868 ​ 3,264 ​ 1.15 ​ 323,638 ​ 4,099 ​ 1.27 ​ Brokered Deposits ​ 909,662 ​ 34,963 ​ 3.84 ​ 449,095 ​ 6,650 ​ 1.48 ​ 406,863 ​ 3,962 ​ 0.97 ​ Total Interest Bearing Deposits ​ ​ 2,745,650 ​ ​ 96,045 ​ 3.50 ​ ​ 2,222,027 ​ ​ 23,379 ​ 1.05 ​ ​ 1,945,808 ​ ​ 13,842 ​ 0.71 ​ Federal Funds Purchased ​ 169,645 ​ 8,521 ​ 5.02 ​ 149,608 ​ 4,507 ​ 3.01 ​ 2,479 ​ 6 ​ 0.24 ​ Notes Payable ​ 13,750 ​ 1,143 ​ 8.31 ​ 2,863 ​ 202 ​ 7.04 ​ 1,658 ​ 61 ​ 3.66 ​ FHLB Advances ​ 238,000 ​ 7,489 ​ 3.15 ​ 64,278 ​ 1,221 ​ 1.90 ​ 53,294 ​ 831 ​ 1.56 ​ Subordinated Debentures ​ 79,090 ​ 3,983 ​ 5.04 ​ 89,584 ​ 4,688 ​ 5.23 ​ 82,865 ​ 4,630 ​ 5.59 ​ Total Interest Bearing Liabilities ​ 3,246,135 ​ 117,181 ​ 3.61 % 2,528,360 ​ 33,997 ​ 1.34 % 2,086,104 ​ 19,370 ​ 0.93 % Noninterest Bearing Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Bearing Transaction Deposits ​ 768,428 ​ ​ ​ ​ ​ ​ 910,490 ​ ​ ​ ​ ​ ​ 764,087 ​ ​ ​ ​ ​ ​ Other Noninterest Bearing Liabilities ​ ​ 65,763 ​ ​ ​ ​ ​ ​ ​ 43,597 ​ ​ ​ ​ ​ ​ ​ 23,372 ​ ​ ​ ​ ​ ​ Total Noninterest Bearing Liabilities ​ 834,191 ​ ​ ​ ​ ​ ​ 954,087 ​ ​ ​ ​ ​ ​ 787,459 ​ ​ ​ ​ ​ ​ Shareholders' Equity ​ ​ 410,478 ​ ​ ​ ​ ​ ​ ​ 384,033 ​ ​ ​ ​ ​ ​ 316,237 ​ ​ ​ ​ ​ ​ Total Liabilities and Shareholders' Equity ​ $ 4,490,804 ​ ​ ​ ​ ​ ​ $ 3,866,480 ​ ​ ​ ​ ​ ​ $ 3,189,800 ​ ​ ​ ​ ​ ​ Net Interest Income / Interest Rate Spread ​ ​ ​ ​ 106,730 ​ 1.47 % ​ ​ ​ 130,920 ​ 3.01 % ​ ​ ​ 110,373 ​ 3.23 % Net Interest Margin (3) ​ ​ ​ ​ ​ ​ ​ 2.42 % ​ ​ ​ ​ ​ ​ 3.45 % ​ ​ ​ ​ ​ ​ 3.54 % Taxable Equivalent Adjustment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tax-Exempt Investment Securities and Loans ​ ​ ​ ​ (1,556) ​ ​ ​ ​ ​ ​ (1,222) ​ ​ ​ ​ ​ ​ (864) ​ ​ ​ Net Interest Income ​ ​ ​ ​ $ 105,174 ​ ​ ​ ​ ​ ​ $ 129,698 ​ ​ ​ ​ ​ ​ $ 109,509 ​ ​ ​ ​ 55 Table of Contents (1) Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%.
This table is presented on a tax-equivalent basis, if applicable. 55 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ December 31, 2023 December 31, 2022 ​ ​ Average ​ Interest ​ Yield/ ​ Average ​ Interest ​ Yield/ Average ​ Interest ​ Yield/ ​ Balance & Fees Rate Balance & Fees Rate Balance & Fees Rate (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest Earning Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash Investments ​ $ 124,205 ​ $ 5,690 ​ 4.58 % $ 77,759 ​ $ 3,170 ​ 4.08 % $ 66,072 ​ $ 597 ​ 0.90 % Investment Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable Investment Securities ​ 668,012 ​ 32,681 ​ 4.89 ​ 577,102 ​ 25,199 ​ 4.37 ​ 448,500 ​ 13,960 ​ 3.11 ​ Tax-Exempt Investment Securities (1) ​ 30,864 ​ 1,577 ​ 5.11 ​ 29,004 ​ 1,325 ​ 4.57 ​ 72,379 ​ 3,101 ​ 4.29 ​ Total Investment Securities ​ 698,876 ​ 34,258 ​ 4.90 ​ 606,106 ​ 26,524 ​ 4.38 ​ 520,879 ​ 17,061 ​ 3.28 ​ Paycheck Protection Program Loans (2) ​ NM ​ ​ NM ​ NM ​ NM ​ ​ NM ​ NM ​ 7,441 ​ ​ 970 ​ 13.03 ​ Loans (1)(2) ​ 3,738,260 ​ ​ 205,646 ​ 5.50 ​ 3,699,252 ​ ​ 192,679 ​ 5.21 ​ 3,183,271 ​ ​ 145,857 ​ 4.58 ​ Total Loans ​ ​ 3,738,260 ​ 205,646 ​ 5.50 ​ ​ 3,699,252 ​ 192,679 ​ 5.21 ​ ​ 3,190,712 ​ 146,827 ​ 4.60 ​ Federal Home Loan Bank Stock ​ 18,256 ​ ​ 1,550 ​ 8.49 ​ 21,249 ​ ​ 1,538 ​ 7.24 ​ 12,628 ​ ​ 432 ​ 3.42 ​ Total Interest Earning Assets ​ 4,579,597 ​ 247,144 ​ 5.40 % 4,404,366 ​ 223,911 ​ 5.08 % 3,790,291 ​ 164,917 ​ 4.35 % Noninterest Earning Assets ​ ​ 103,547 ​ ​ ​ ​ ​ ​ ​ 86,438 ​ ​ ​ ​ ​ ​ ​ 76,189 ​ ​ ​ ​ ​ ​ Total Assets ​ $ 4,683,144 ​ ​ ​ ​ ​ ​ $ 4,490,804 ​ ​ ​ ​ ​ ​ $ 3,866,480 ​ ​ ​ ​ ​ ​ Interest Bearing Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest Bearing Transaction Deposits ​ $ 776,768 ​ $ 34,294 ​ 4.41 % $ 650,028 ​ $ 23,379 ​ 3.60 % $ 524,968 ​ $ 4,336 ​ 0.83 % Savings and Money Market Deposits ​ 956,300 ​ 39,297 ​ 4.11 ​ 922,799 ​ 30,639 ​ 3.32 ​ 963,096 ​ 9,129 ​ 0.95 ​ Time Deposits ​ 342,582 ​ 14,585 ​ 4.26 ​ 263,161 ​ 7,064 ​ 2.68 ​ 284,868 ​ 3,264 ​ 1.15 ​ Brokered Deposits ​ 963,676 ​ 40,629 ​ 4.22 ​ 909,662 ​ 34,963 ​ 3.84 ​ 449,095 ​ 6,650 ​ 1.48 ​ Total Interest Bearing Deposits ​ ​ 3,039,326 ​ ​ 128,805 ​ 4.24 ​ ​ 2,745,650 ​ ​ 96,045 ​ 3.50 ​ ​ 2,222,027 ​ ​ 23,379 ​ 1.05 ​ Federal Funds Purchased ​ 21,493 ​ 1,201 ​ 5.59 ​ 169,645 ​ 8,521 ​ 5.02 ​ 149,608 ​ 4,507 ​ 3.01 ​ Notes Payable ​ 13,750 ​ 1,162 ​ 8.45 ​ 13,750 ​ 1,143 ​ 8.31 ​ 2,863 ​ 202 ​ 7.04 ​ FHLB Advances ​ 320,497 ​ 8,554 ​ 2.67 ​ 238,000 ​ 7,489 ​ 3.15 ​ 64,278 ​ 1,221 ​ 1.90 ​ Subordinated Debentures ​ 79,473 ​ 3,983 ​ 5.01 ​ 79,090 ​ 3,983 ​ 5.04 ​ 89,584 ​ 4,688 ​ 5.23 ​ Total Interest Bearing Liabilities ​ 3,474,539 ​ 143,705 ​ 4.14 % 3,246,135 ​ 117,181 ​ 3.61 % 2,528,360 ​ 33,997 ​ 1.34 % Noninterest Bearing Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest Bearing Transaction Deposits ​ 705,247 ​ ​ ​ ​ ​ ​ 768,428 ​ ​ ​ ​ ​ ​ 910,490 ​ ​ ​ ​ ​ ​ Other Noninterest Bearing Liabilities ​ ​ 62,595 ​ ​ ​ ​ ​ ​ ​ 65,763 ​ ​ ​ ​ ​ ​ ​ 43,597 ​ ​ ​ ​ ​ ​ Total Noninterest Bearing Liabilities ​ 767,842 ​ ​ ​ ​ ​ ​ 834,191 ​ ​ ​ ​ ​ ​ 954,087 ​ ​ ​ ​ ​ ​ Shareholders' Equity ​ ​ 440,763 ​ ​ ​ ​ ​ ​ ​ 410,478 ​ ​ ​ ​ ​ ​ 384,033 ​ ​ ​ ​ ​ ​ Total Liabilities and Shareholders' Equity ​ $ 4,683,144 ​ ​ ​ ​ ​ ​ $ 4,490,804 ​ ​ ​ ​ ​ ​ $ 3,866,480 ​ ​ ​ ​ ​ ​ Net Interest Income / Interest Rate Spread ​ ​ ​ ​ 103,439 ​ 1.26 % ​ ​ ​ 106,730 ​ 1.47 % ​ ​ ​ 130,920 ​ 3.01 % Net Interest Margin (3) ​ ​ ​ ​ ​ ​ ​ 2.26 % ​ ​ ​ ​ ​ ​ 2.42 % ​ ​ ​ ​ ​ ​ 3.45 % Taxable Equivalent Adjustment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tax-Exempt Investment Securities and Loans ​ ​ ​ ​ (1,246) ​ ​ ​ ​ ​ ​ (1,556) ​ ​ ​ ​ ​ ​ (1,222) ​ ​ ​ Net Interest Income ​ ​ ​ ​ $ 102,193 ​ ​ ​ ​ ​ ​ $ 105,174 ​ ​ ​ ​ ​ ​ $ 129,698 ​ ​ ​ ​ (1) Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a federal income tax rate of 21%.
The following table presents the average balance and average rate paid on each of the following deposit categories for the years ended December 31, 2023, 2022, and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the ​ As of and for the ​ As of and for the ​ ​ ​ Year Ended ​ Year Ended ​ Year Ended ​ ​ ​ December 31, 2023 ​ December 31, 2022 ​ December 31, 2021 ​ ​ ​ Average ​ Average ​ Average ​ Average ​ Average ​ Average ​ (dollars in thousands) Balance Rate Balance Rate ​ Balance Rate ​ Noninterest Bearing Transaction Deposits ​ $ 768,428 ​ — % $ 910,490 — % $ 764,087 ​ — % Interest Bearing Transaction Deposits ​ 650,028 ​ 3.60 ​ 524,968 0.83 ​ 441,528 ​ 0.46 ​ Savings and Money Market Deposits ​ 922,799 ​ 3.32 ​ 963,096 0.95 ​ 773,779 ​ 0.48 ​ Time Deposits ​ 179,242 ​ 2.33 ​ 215,419 1.00 ​ 255,808 ​ 1.24 ​ Time Deposits > $250,000 ​ 83,919 ​ 3.45 ​ 69,449 1.61 ​ 67,830 ​ 1.37 ​ Brokered Deposits ​ 909,662 ​ 3.84 ​ 449,095 1.48 ​ 406,863 ​ 0.97 ​ Total Deposits ​ $ 3,514,078 2.73 % $ 3,132,517 0.75 % $ 2,709,895 0.51 % ​ 70 Table of Contents The following table presents time deposits, including brokered time deposits, that are in excess of the FDIC insurance limit, currently $250,000, by time remaining until maturity: ​ ​ ​ ​ ​ ​ December 31, (dollars in thousands) ​ 2023 Three Months or Less ​ $ 32,818 Over Three Months through Six Months ​ ​ 25,057 Over Six Months through 12 Months ​ ​ 57,951 Over 12 Months ​ ​ 22,533 Totals ​ $ 138,359 ​ The Company’s total uninsured deposits, which are the amounts of deposit accounts that exceed the FDIC insurance limit, currently $250,000, were approximately $900.0 million, or 24% of total deposits, at December 31, 2023 and $1.32 billion, or 38% of total deposits, at December 31, 2022.
The following table presents the average balance and average rate paid on each of the following deposit categories for the years ended December 31, 2024, 2023, and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the ​ As of and for the ​ As of and for the ​ ​ ​ Year Ended ​ Year Ended ​ Year Ended ​ ​ ​ December 31, 2024 ​ December 31, 2023 ​ December 31, 2022 ​ ​ ​ Average ​ Average ​ Average ​ Average ​ Average ​ Average ​ (dollars in thousands) Balance Rate Balance Rate ​ Balance Rate ​ Noninterest Bearing Transaction Deposits ​ $ 705,247 ​ — % $ 768,428 ​ — % $ 910,490 — % Interest Bearing Transaction Deposits ​ 776,768 ​ 4.41 ​ 650,028 ​ 3.60 ​ 524,968 0.83 ​ Savings and Money Market Deposits ​ 956,300 ​ 4.11 ​ 922,799 ​ 3.32 ​ 963,096 0.95 ​ Time Deposits ​ 178,541 ​ 3.78 ​ 179,242 ​ 2.33 ​ 215,419 1.00 ​ Time Deposits > $250,000 ​ 164,041 ​ 4.78 ​ 83,919 ​ 3.45 ​ 69,449 1.61 ​ Brokered Deposits ​ 963,676 ​ 4.22 ​ 909,662 ​ 3.84 ​ 449,095 1.48 ​ Total Deposits ​ $ 3,744,573 3.44 % $ 3,514,078 2.73 % $ 3,132,517 0.75 % ​ 70 Table of Contents The following table presents time deposits, including brokered time deposits, that are in excess of the FDIC insurance limit, currently $250,000, by time remaining until maturity: ​ ​ ​ ​ ​ ​ December 31, (dollars in thousands) ​ 2024 Three Months or Less ​ $ 69,581 Over Three Months through Six Months ​ ​ 16,566 Over Six Months through 12 Months ​ ​ 26,046 Over 12 Months ​ ​ 42,846 Totals ​ $ 155,039 ​ The Company’s total uninsured deposits, which are the amounts of deposit accounts that exceed the FDIC insurance limit, currently $250,000, were approximately $1.14 billion, or 28% of total deposits, at December 31, 2024 and $900.0 million, or 24% of total deposits, at December 31, 2023.
The following table presents the major components of noninterest expense for the year ended December 31, 2023, compared to the year ended December 31, 2022, and for the year ended December 31, 2022, compared to the year ended December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Increase/ ​ December 31, ​ Increase/ (dollars in thousands) 2023 2022 (Decrease) 2022 2021 (Decrease) Noninterest Expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Salaries and Employee Benefits ​ $ 36,538 ​ $ 36,941 ​ $ (403) ​ $ 36,941 ​ $ 30,889 ​ $ 6,052 Occupancy and Equipment ​ ​ 4,447 ​ ​ 4,390 ​ ​ 57 ​ ​ 4,390 ​ ​ 3,916 ​ ​ 474 FDIC Insurance Assessment ​ ​ 3,690 ​ ​ 1,365 ​ ​ 2,325 ​ ​ 1,365 ​ ​ 1,305 ​ ​ 60 Data Processing ​ ​ 1,574 ​ ​ 1,396 ​ ​ 178 ​ ​ 1,396 ​ ​ 1,222 ​ ​ 174 Professional and Consulting Fees ​ ​ 3,081 ​ ​ 2,664 ​ ​ 417 ​ ​ 2,664 ​ ​ 2,520 ​ ​ 144 Derivative Collateral Fees ​ ​ 1,900 ​ ​ 687 ​ ​ 1,213 ​ ​ 687 ​ ​ 3 ​ ​ 684 Information Technology and Telecommunications ​ ​ 2,889 ​ ​ 2,495 ​ ​ 394 ​ ​ 2,495 ​ ​ 2,163 ​ ​ 332 Marketing and Advertising ​ ​ 1,129 ​ ​ 2,032 ​ ​ (903) ​ ​ 2,032 ​ ​ 1,487 ​ ​ 545 Intangible Asset Amortization ​ ​ 100 ​ ​ 191 ​ ​ (91) ​ ​ 191 ​ ​ 191 ​ ​ — Amortization of Tax Credit Investments ​ ​ — ​ ​ 408 ​ ​ (408) ​ ​ 408 ​ ​ 562 ​ ​ (154) Debt Prepayment Fees ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 582 ​ ​ (582) Other Expense ​ ​ 3,972 ​ ​ 4,051 ​ ​ (79) ​ ​ 4,051 ​ ​ 3,255 ​ ​ 796 Totals ​ $ 59,320 ​ $ 56,620 ​ $ 2,700 ​ $ 56,620 ​ $ 48,095 ​ $ 8,525 ​ Income Tax Expense The provision for income taxes includes both federal and state taxes.
The following table presents the major components of noninterest expense for the year ended December 31, 2024, compared to the year ended December 31, 2023, and for the year ended December 31, 2023, compared to the year ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Increase/ ​ December 31, ​ Increase/ (dollars in thousands) 2024 2023 (Decrease) 2023 2022 (Decrease) Noninterest Expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Salaries and Employee Benefits ​ $ 39,564 ​ $ 36,538 ​ $ 3,026 ​ $ 36,538 ​ $ 36,941 ​ $ (403) Occupancy and Equipment ​ ​ 4,399 ​ ​ 4,447 ​ ​ (48) ​ ​ 4,447 ​ ​ 4,390 ​ ​ 57 FDIC Insurance Assessment ​ ​ 2,959 ​ ​ 3,690 ​ ​ (731) ​ ​ 3,690 ​ ​ 1,365 ​ ​ 2,325 Data Processing ​ ​ 1,697 ​ ​ 1,574 ​ ​ 123 ​ ​ 1,574 ​ ​ 1,396 ​ ​ 178 Professional and Consulting Fees ​ ​ 3,879 ​ ​ 3,081 ​ ​ 798 ​ ​ 3,081 ​ ​ 2,664 ​ ​ 417 Derivative Collateral Fees ​ ​ 1,821 ​ ​ 1,900 ​ ​ (79) ​ ​ 1,900 ​ ​ 687 ​ ​ 1,213 Information Technology and Telecommunications ​ ​ 3,325 ​ ​ 2,889 ​ ​ 436 ​ ​ 2,889 ​ ​ 2,495 ​ ​ 394 Marketing and Advertising ​ ​ 1,485 ​ ​ 1,129 ​ ​ 356 ​ ​ 1,129 ​ ​ 2,032 ​ ​ (903) Intangible Asset Amortization ​ ​ 78 ​ ​ 100 ​ ​ (22) ​ ​ 100 ​ ​ 191 ​ ​ (91) Amortization of Tax Credit Investments ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 408 ​ ​ (408) Other Expense ​ ​ 4,093 ​ ​ 3,972 ​ ​ 121 ​ ​ 3,972 ​ ​ 4,051 ​ ​ (79) Totals ​ $ 63,300 ​ $ 59,320 ​ $ 3,980 ​ $ 59,320 ​ $ 56,620 ​ $ 2,700 ​ Income Tax Expense The provision for income taxes includes both federal and state taxes.
This information should be read in connection with our audited consolidated financial statements and related notes appearing elsewhere in this report. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands, except per share data) ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ Income Statement ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income ​ $ 105,174 ​ $ 129,698 ​ $ 109,509 ​ $ 87,964 ​ $ 74,132 ​ Provision for (Recovery of) Credit Losses ​ ​ (175) ​ ​ 7,700 ​ ​ 5,150 ​ ​ 12,750 ​ ​ 2,700 ​ Noninterest Income ​ ​ 6,493 ​ ​ 6,332 ​ ​ 5,309 ​ ​ 5,839 ​ ​ 3,826 ​ Noninterest Expense ​ ​ 59,320 ​ ​ 56,620 ​ ​ 48,095 ​ ​ 45,387 ​ ​ 36,932 ​ Net Income ​ ​ 39,960 ​ ​ 53,392 ​ ​ 45,687 ​ ​ 27,194 ​ ​ 31,403 ​ Net Income Available to Common Shareholders ​ ​ 35,906 ​ ​ 49,338 ​ ​ 44,516 ​ ​ 27,194 ​ ​ 31,403 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Per Common Share Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic Earnings Per Share ​ $ 1.29 ​ $ 1.78 ​ $ 1.59 ​ $ 0.95 ​ $ 1.07 ​ Diluted Earnings Per Share ​ ​ 1.27 ​ ​ 1.72 ​ ​ 1.54 ​ ​ 0.93 ​ ​ 1.05 ​ Book Value Per Share ​ ​ 12.94 ​ ​ 11.80 ​ ​ 11.09 ​ ​ 9.43 ​ ​ 8.45 ​ Tangible Book Value Per Share (1) ​ ​ 12.84 ​ ​ 11.69 ​ ​ 10.98 ​ ​ 9.31 ​ ​ 8.33 ​ Basic Weighted Average Shares Outstanding ​ ​ 27,857,420 ​ ​ 27,758,336 ​ ​ 28,027,454 ​ ​ 28,582,064 ​ ​ 29,358,644 ​ Diluted Weighted Average Shares Outstanding ​ ​ 28,315,587 ​ ​ 28,668,177 ​ ​ 28,968,286 ​ ​ 29,170,220 ​ ​ 29,996,776 ​ Shares Outstanding at Period End ​ ​ 27,748,965 ​ ​ 27,751,950 ​ ​ 28,206,566 ​ ​ 28,143,493 ​ ​ 28,973,572 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selected Performance Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on Average Assets (ROA) ​ ​ 0.89 % ​ 1.38 % ​ 1.43 % ​ 1.04 % ​ 1.49 % Pre-Provision Net Revenue Return on Average Assets (PPNR ROA) (2) ​ ​ 1.15 ​ ​ 2.06 ​ ​ 2.10 ​ ​ 2.09 ​ ​ 2.07 ​ Return on Average Shareholders' Equity (ROE) ​ ​ 9.73 ​ ​ 13.90 ​ ​ 14.45 ​ ​ 10.51 ​ ​ 13.50 ​ Return on Average Tangible Common Equity (1) ​ ​ 10.53 ​ ​ 15.69 ​ ​ 15.45 ​ ​ 10.65 ​ ​ 13.72 ​ Average Shareholders' Equity to Average Assets ​ ​ 9.14 ​ ​ 9.93 ​ ​ 9.91 ​ ​ 9.88 ​ ​ 11.00 ​ Net Interest Margin (3) ​ ​ 2.42 ​ ​ 3.45 ​ ​ 3.54 ​ ​ 3.46 ​ ​ 3.59 ​ Core Net Interest Margin (1)(3) ​ ​ 2.34 ​ ​ 3.27 ​ ​ 3.28 ​ ​ 3.25 ​ ​ 3.37 ​ Yield on Interest Earning Assets ​ ​ 5.08 ​ ​ 4.35 ​ ​ 4.16 ​ ​ 4.51 ​ ​ 5.01 ​ Yield on Total Loans, Gross ​ ​ 5.21 ​ ​ 4.60 ​ ​ 4.60 ​ ​ 4.90 ​ ​ 5.31 ​ Cost of Interest Bearing Liabilities ​ ​ 3.61 ​ ​ 1.34 ​ ​ 0.93 ​ ​ 1.53 ​ ​ 2.03 ​ Cost of Total Deposits ​ ​ 2.73 ​ ​ 0.75 ​ ​ 0.51 ​ ​ 0.93 ​ ​ 1.42 ​ Cost of Funds ​ ​ 2.92 ​ ​ 0.99 ​ ​ 0.68 ​ ​ 1.15 ​ ​ 1.58 ​ Efficiency Ratio (1) ​ ​ 53.0 ​ ​ 41.5 ​ ​ 42.0 ​ ​ 49.0 ​ ​ 47.4 ​ Noninterest Expense to Average Assets ​ ​ 1.32 ​ ​ 1.46 ​ ​ 1.51 ​ ​ 1.73 ​ ​ 1.75 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance Sheet ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Assets ​ $ 4,611,990 ​ $ 4,345,662 ​ $ 3,477,659 ​ $ 2,927,345 ​ $ 2,268,830 ​ Total Loans, Gross ​ ​ 3,724,282 ​ ​ 3,569,446 ​ ​ 2,819,472 ​ ​ 2,326,428 ​ ​ 1,912,038 ​ Deposits ​ ​ 3,709,948 ​ ​ 3,416,543 ​ ​ 2,946,237 ​ ​ 2,501,636 ​ ​ 1,823,310 ​ Total Shareholders' Equity ​ ​ 425,515 ​ ​ 394,064 ​ ​ 379,272 ​ ​ 265,405 ​ ​ 244,794 ​ Loan to Deposit Ratio ​ ​ 100.4 % ​ 104.5 % ​ 95.7 % ​ 93.0 % ​ 104.9 % Core Deposits to Total Deposits (5) ​ ​ 68.7 ​ ​ 74.6 ​ ​ 85.4 ​ ​ 78.1 ​ ​ 80.7 ​ Uninsured Deposits to Total Deposits ​ ​ 24.3 ​ ​ 38.5 ​ ​ 41.2 ​ ​ 43.3 ​ ​ 38.6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital Ratios (Consolidated) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Leverage Ratio ​ ​ 9.57 % ​ 9.55 % ​ 10.82 % ​ 9.28 % ​ 10.69 % Common Equity Tier 1 Risk-based Capital Ratio ​ ​ 9.16 ​ ​ 8.40 ​ ​ 9.36 ​ ​ 10.35 ​ ​ 11.39 ​ Tier 1 Risk-based Capital Ratio ​ ​ 10.79 ​ ​ 10.03 ​ ​ 11.43 ​ ​ 10.35 ​ ​ 11.39 ​ Total Risk-based Capital Ratio ​ ​ 13.97 ​ ​ 13.15 ​ ​ 15.55 ​ ​ 14.58 ​ ​ 12.98 ​ Tangible Common Equity to Tangible Assets (1) ​ ​ 7.73 ​ ​ 7.48 ​ ​ 8.91 ​ ​ 8.96 ​ ​ 10.65 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Growth Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage Change in Total Assets ​ ​ 6.1 % ​ 25.0 % ​ 18.8 % ​ 29.0 % ​ 15.0 % Percentage Change in Total Loans, Gross ​ ​ 4.3 ​ ​ 26.6 ​ ​ 21.2 ​ ​ 21.7 ​ ​ 14.8 ​ Percentage Change in Total Deposits ​ ​ 8.6 ​ ​ 16.0 ​ ​ 17.8 ​ ​ 37.2 ​ ​ 16.8 ​ Percentage Change in Shareholders' Equity ​ ​ 8.0 ​ ​ 3.9 ​ ​ 42.9 ​ ​ 8.4 ​ ​ 10.8 ​ Percentage Change in Net Income ​ ​ (25.2) ​ ​ 16.9 ​ ​ 68.0 ​ ​ (13.4) ​ ​ 16.7 ​ Percentage Change in Diluted Earnings Per Share ​ ​ (26.3) ​ ​ 12.0 ​ ​ 64.8 ​ ​ (10.9) ​ ​ 14.5 ​ Percentage Change in Tangible Book Value Per Share (1) ​ ​ 9.8 ​ ​ 6.5 ​ ​ 17.9 ​ ​ 11.8 ​ ​ 15.3 ​ 50 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands) ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ Selected Asset Quality Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans 30-89 Days Past Due ​ $ 15,110 ​ $ 186 ​ $ 49 ​ $ 13 ​ $ 403 ​ Loans 30-89 Days Past Due to Total Loans ​ ​ 0.41 % ​ 0.01 % ​ — % ​ — % ​ 0.02 % Nonperforming Loans ​ $ 919 ​ $ 639 ​ $ 722 ​ $ 775 ​ $ 461 ​ Nonperforming Loans to Total Loans ​ ​ 0.02 % ​ 0.02 % ​ 0.03 % ​ 0.03 % ​ 0.02 % Foreclosed Assets ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ Nonaccrual Loans to Total Loans ​ ​ 0.02 % ​ 0.02 % ​ 0.03 % ​ 0.03 % ​ 0.02 % Nonaccrual Loans and Loans Past Due 90 Days and Still Accruing to Total Loans ​ ​ 0.02 ​ ​ 0.02 ​ ​ 0.03 ​ ​ 0.03 ​ ​ 0.02 ​ Nonperforming Assets (4) ​ $ 919 ​ $ 639 ​ $ 722 ​ $ 775 ​ $ 461 ​ Nonperforming Assets to Total Assets (4) ​ ​ 0.02 % ​ 0.01 % ​ 0.02 % ​ 0.03 % ​ 0.02 % Allowance for Credit Losses on Loans to Total Loans ​ ​ 1.36 ​ ​ 1.34 ​ ​ 1.42 ​ ​ 1.50 ​ ​ 1.18 ​ Allowance for Credit Losses on Loans to Total Loans, Excluding PPP Loans ​ ​ 1.36 ​ ​ 1.35 ​ ​ 1.43 ​ ​ 1.59 ​ ​ N/A ​ Allowance for Credit Losses on Loans to Nonaccrual Loans ​ ​ 5,494.45 ​ ​ 7,511.11 ​ ​ 5,542.94 ​ ​ 4,495.61 ​ ​ 4,886.33 ​ Net Loan Charge-Offs to Average Loans ​ ​ 0.01 ​ ​ (0.01) ​ ​ 0.00 ​ ​ 0.02 ​ ​ 0.01 ​ (1) Represents a non-GAAP financial measure.
This information should be read in connection with our audited consolidated financial statements and related notes appearing elsewhere in this report. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, ​ (dollars in thousands, except per share data) ​ 2024 ​ 2023 ​ 2022 ​ Income Statement ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income ​ $ 102,193 ​ $ 105,174 ​ $ 129,698 ​ Provision for (Recovery of) Credit Losses ​ ​ 3,525 ​ ​ (175) ​ ​ 7,700 ​ Noninterest Income ​ ​ 7,368 ​ ​ 6,493 ​ ​ 6,332 ​ Noninterest Expense ​ ​ 63,300 ​ ​ 59,320 ​ ​ 56,620 ​ Net Income ​ ​ 32,825 ​ ​ 39,960 ​ ​ 53,392 ​ Net Income Available to Common Shareholders ​ ​ 28,771 ​ ​ 35,906 ​ ​ 49,338 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Per Common Share Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic Earnings Per Share ​ $ 1.05 ​ $ 1.29 ​ $ 1.78 ​ Diluted Earnings Per Share ​ ​ 1.03 ​ ​ 1.27 ​ ​ 1.72 ​ Adjusted Diluted Earnings Per Share (1) ​ ​ 1.05 ​ ​ 1.27 ​ ​ 1.72 ​ Book Value Per Share ​ ​ 14.21 ​ ​ 12.94 ​ ​ 11.80 ​ Tangible Book Value Per Share (1) ​ ​ 13.49 ​ ​ 12.84 ​ ​ 11.69 ​ Basic Weighted Average Shares Outstanding ​ ​ 27,479,764 ​ ​ 27,857,420 ​ ​ 27,758,336 ​ Diluted Weighted Average Shares Outstanding ​ ​ 27,943,342 ​ ​ 28,315,587 ​ ​ 28,668,177 ​ Shares Outstanding at Period End ​ ​ 27,552,449 ​ ​ 27,748,965 ​ ​ 27,751,950 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selected Performance Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on Average Assets (ROA) ​ ​ 0.70 % ​ 0.89 % ​ 1.38 % Pre-Provision Net Revenue Return on Average Assets (PPNR ROA) (2) ​ ​ 0.98 ​ ​ 1.15 ​ ​ 2.06 ​ Return on Average Shareholders' Equity (ROE) ​ ​ 7.45 ​ ​ 9.73 ​ ​ 13.90 ​ Return on Average Tangible Common Equity (1) ​ ​ 7.75 ​ ​ 10.53 ​ ​ 15.69 ​ Net Interest Margin (3) ​ ​ 2.26 ​ ​ 2.42 ​ ​ 3.45 ​ Core Net Interest Margin (1)(3) ​ ​ 2.19 ​ ​ 2.34 ​ ​ 3.27 ​ Yield on Interest Earning Assets ​ ​ 5.40 ​ ​ 5.08 ​ ​ 4.35 ​ Yield on Total Loans, Gross ​ ​ 5.50 ​ ​ 5.21 ​ ​ 4.60 ​ Cost of Interest Bearing Liabilities ​ ​ 4.14 ​ ​ 3.61 ​ ​ 1.34 ​ Cost of Total Deposits ​ ​ 3.44 ​ ​ 2.73 ​ ​ 0.75 ​ Cost of Funds ​ ​ 3.44 ​ ​ 2.92 ​ ​ 0.99 ​ Efficiency Ratio (1) ​ ​ 57.9 ​ ​ 53.0 ​ ​ 41.5 ​ Noninterest Expense to Average Assets ​ ​ 1.35 ​ ​ 1.32 ​ ​ 1.46 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Financial Ratios (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Return on Average Assets ​ ​ 0.71 % ​ 0.89 % ​ 1.38 % Adjusted Pre-Provision Net Revenue Return on Average Assets (2) ​ ​ 0.99 ​ ​ 1.15 ​ ​ 2.06 ​ Adjusted Return on Average Shareholders' Equity ​ ​ 7.57 ​ ​ 9.73 ​ ​ 13.90 ​ Adjusted Return on Average Tangible Common Equity ​ ​ 7.90 ​ ​ 10.53 ​ ​ 15.69 ​ Adjusted Efficiency Ratio ​ ​ 57.3 ​ ​ 53.0 ​ ​ 41.5 ​ Adjusted Noninterest Expense to Average Assets ​ ​ 1.34 ​ ​ 1.32 ​ ​ 1.46 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance Sheet ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Assets ​ $ 5,066,242 ​ $ 4,611,990 ​ $ 4,345,662 ​ Total Loans, Gross ​ ​ 3,868,514 ​ ​ 3,724,282 ​ ​ 3,569,446 ​ Deposits ​ ​ 4,086,767 ​ ​ 3,709,948 ​ ​ 3,416,543 ​ Total Shareholders' Equity ​ ​ 457,935 ​ ​ 425,515 ​ ​ 394,064 ​ Average Shareholders' Equity to Average Assets ​ ​ 9.41 % ​ 9.14 % ​ 9.93 % Loan to Deposit Ratio ​ ​ 94.7 ​ ​ 100.4 ​ ​ 104.5 ​ Core Deposits to Total Deposits (5) ​ ​ 76.0 ​ ​ 68.7 ​ ​ 74.6 ​ Uninsured Deposits to Total Deposits ​ ​ 27.7 ​ ​ 24.3 ​ ​ 38.5 ​ 52 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the year ended December 31, (dollars in thousands, except per share data) ​ 2024 ​ 2023 ​ 2022 ​ Capital Ratios (Consolidated) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 Leverage Ratio ​ ​ 9.44 % ​ 9.57 % ​ 9.55 % Common Equity Tier 1 Risk-based Capital Ratio ​ ​ 9.08 ​ ​ 9.16 ​ ​ 8.40 ​ Tier 1 Risk-based Capital Ratio ​ ​ 10.64 ​ ​ 10.79 ​ ​ 10.03 ​ Total Risk-based Capital Ratio ​ ​ 13.76 ​ ​ 13.97 ​ ​ 13.15 ​ Tangible Common Equity to Tangible Assets (1) ​ ​ 7.36 ​ ​ 7.73 ​ ​ 7.48 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Growth Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage Change in Total Assets ​ ​ 9.8 % ​ 6.1 % ​ 25.0 % Percentage Change in Total Loans, Gross ​ ​ 3.9 ​ ​ 4.3 ​ ​ 26.6 ​ Percentage Change in Total Deposits ​ ​ 10.2 ​ ​ 8.6 ​ ​ 16.0 ​ Percentage Change in Shareholders' Equity ​ ​ 7.6 ​ ​ 8.0 ​ ​ 3.9 ​ Percentage Change in Net Income ​ ​ (17.9) ​ ​ (25.2) ​ ​ 16.9 ​ Percentage Change in Diluted Earnings Per Share ​ ​ (18.8) ​ ​ (26.3) ​ ​ 12.0 ​ Percentage Change in Tangible Book Value Per Share (1) ​ ​ 5.1 ​ ​ 9.8 ​ ​ 6.5 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selected Asset Quality Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans 30-89 Days Past Due ​ $ 1,291 ​ $ 15,110 ​ $ 186 ​ Loans 30-89 Days Past Due to Total Loans ​ ​ 0.03 % ​ 0.41 % ​ 0.01 % Nonperforming Loans ​ $ 301 ​ $ 919 ​ $ 639 ​ Nonperforming Loans to Total Loans ​ ​ 0.01 % ​ 0.02 % ​ 0.02 % Nonaccrual Loans to Total Loans ​ ​ 0.01 % ​ 0.02 % ​ 0.02 % Nonaccrual Loans and Loans Past Due 90 Days and Still Accruing to Total Loans ​ ​ 0.01 ​ ​ 0.02 ​ ​ 0.02 ​ Foreclosed Assets ​ $ — ​ $ — ​ $ — ​ Nonperforming Assets (4) ​ ​ 301 ​ ​ 919 ​ ​ 639 ​ Nonperforming Assets to Total Assets (4) ​ ​ 0.01 % ​ 0.02 % ​ 0.01 % Allowance for Credit Losses on Loans and Leases to Total Loans ​ ​ 1.35 ​ ​ 1.36 ​ ​ 1.34 ​ Allowance for Credit Losses on Loans and Leases to Nonaccrual Loans ​ ​ 17,367.77 ​ ​ 5,494.45 ​ ​ 7,511.11 ​ Net Loan Charge-Offs to Average Loans ​ ​ 0.03 ​ ​ 0.01 ​ ​ (0.01) ​ (1) Represents a non-GAAP financial measure.
Critical Accounting Policies and Estimates The consolidated financial statements of the Company are prepared based on the application of certain accounting policies, the most significant of which are described in “Note 1 – Description of the Business and Summary of Significant Accounting Policies” of the notes to the consolidated financial statements included as a part of this report.
The acquisition also adds an investment advisory function that offers nondeposit investment products through a third party arrangement. 53 Table of Contents ​ ​ Critical Accounting Policies and Estimates The consolidated financial statements of the Company are prepared based on the application of certain accounting policies, the most significant of which are described in “Note 1 – Description of the Business and Summary of Significant Accounting Policies” of the notes to the consolidated financial statements included as a part of this report.
The average balances are principally daily averages and, for loans, include both performing and nonperforming balances. Interest income on loans includes the effects of net deferred loan origination fees and costs accounted for as yield adjustments.
Interest income on loans includes the effects of net deferred loan origination fees and costs accounted for as yield adjustments.
The allowance for loan losses to total loans was 1.34% at December 31, 2022, compared to 1.42% at December 31, 2021. ​ The following table presents a summary of the activity in the allowance for credit losses on loans for the years ended December 31, 2023, 2022, and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (dollars in thousands) ​ 2023 2022 2021 Balance at Beginning of Period ​ $ 47,996 ​ $ 40,020 ​ $ 34,841 Impact of Adopting CECL ​ ​ 650 ​ ​ — ​ ​ — Provision for Credit Losses ​ ​ 2,050 ​ ​ 7,700 ​ ​ 5,150 Charge-offs ​ ​ (224) ​ ​ (37) ​ ​ (74) Recoveries ​ ​ 22 ​ ​ 313 ​ ​ 103 Balance at End of Period ​ $ 50,494 ​ $ 47,996 ​ $ 40,020 ​ The following table presents a summary of the activity in the provision for credit losses for the years ended December 31, 2023, 2022, and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (dollars in thousands) ​ 2023 2022 2021 Provision for Credit Losses on Loans ​ ​ 2,050 ​ ​ 7,700 ​ ​ 5,150 Recovery of Credit Losses for Off-Balance Sheet Credit Exposures ​ ​ (2,225) ​ ​ — ​ ​ — Provision for (Recovery of) Credit Losses ​ $ (175) ​ $ 7,700 ​ $ 5,150 ​ Noninterest Income 2023 Compared to 2022 Noninterest income was $6.5 million for the year ended December 31, 2023, compared to $6.3 million for the year ended December 31, 2022, an increase of $161,000, or 2.5%.
The allowance for credit losses on off-balance sheet credit exposures was $3.0 million as of December 31, 2023, compared to $360,000 as of December 31, 2022. ​ The following table presents a summary of the activity in the allowance for credit losses on loans and leases for the years ended December 31, 2024, 2023, and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (dollars in thousands) ​ 2024 2023 2022 Balance at Beginning of Period ​ $ 50,494 ​ $ 47,996 ​ $ 40,020 Impact of Adopting CECL ​ ​ — ​ ​ 650 ​ ​ — Day 1 PCD Allowance ​ ​ 114 ​ ​ — ​ ​ — Provision for Credit Losses (1) ​ ​ 2,900 ​ ​ 2,050 ​ ​ 7,700 Charge-offs ​ ​ (1,266) ​ ​ (224) ​ ​ (37) Recoveries ​ ​ 35 ​ ​ 22 ​ ​ 313 Balance at End of Period ​ $ 52,277 ​ $ 50,494 ​ $ 47,996 (1) Include s an initial provision for credit losses for non-PCD loans acquired in the FMCB transaction of $950,000 for the year ended December 31, 2024. ​ The following table presents a summary of the activity in the provision for credit losses for the years ended December 31, 2024, 2023, and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (dollars in thousands) ​ 2024 2023 2022 Provision for Credit Losses on Loans and Leases ​ $ 2,900 ​ $ 2,050 ​ $ 7,700 Provision for (Recovery of ) Credit Losses for Off-Balance Sheet Credit Exposures ​ ​ 625 ​ ​ (2,225) ​ ​ — Provision for (Recovery of) Credit Losses ​ $ 3,525 ​ $ (175) ​ $ 7,700 ​ Noninterest Income 2024 Compared to 2023 Noninterest income was $7.4 million for the year ended December 31, 2024, compared to $6.5 million for the year ended December 31, 2023, an increase of $875,000, or 13.5%.
Net charge-offs (recoveries) totaled $202,000 during the year ended December 31, 2023 and ($276,000) during the year ended December 31, 2022.
Net charge-offs totaled $1.2 million during the year ended December 31, 2024 and $202,000 during the year ended December 31, 2023.
Interest income on the investment securities portfolio, on a fully-tax equivalent basis, increased $6.8 million, or 66.3%, for the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily due to a $127.6 million, or 32.4%, increase in average balances between the two periods and higher rates earned on securities. ​ Interest income on loans, on a fully-tax equivalent basis, for the year ended December 31, 2022 was $146.8 million, compared to $119.0 million for the year ended December 31, 2021.
Interest income on the investment securities portfolio on a fully-tax equivalent basis increased $7.7 million, or 29.2%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a $92.8 million, or 15.3%, increase in average balances between the two periods and higher rates earned on securities.
Interest income on cash investments increased $2.6 million, or 430.7%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to the interest rate increases during the year.
Interest income on cash investments increased $2.5 million, or 79.5%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to higher balances during the year.
(3) Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.
(3) Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period. 56 Table of Contents Interest Rates and Operating Interest Differential Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest earning assets and interest bearing liabilities, as well as changes in average interest rates.
Loans are charged against the allowance for credit losses on loans when management determines all or a portion of the loan balance is uncollectible. Subsequent recoveries, if any, are credited to the allowance. The allowance is increased (decreased) by provisions (or recovery of) reported in the income statement as a component of provisions for credit loss.
Loans and leases are charged against the allowance for credit losses on loans and leases when management determines all or a portion of the loan or lease balance is uncollectible. Subsequent recoveries, if any, are credited to the allowance.
Management’s ability to respond to changes in interest rates by using effective asset-liability management techniques is critical to managing the net interest margin and the Company’s primary source of earnings. The FOMC increased the targeted federal funds rate by a total of 100 basis points throughout 2023 and 425 basis points throughout 2022.
Management’s ability to respond to changes in interest rates by using effective asset-liability management techniques is critical to managing the net interest margin and the Company’s primary source of earnings.
The $59.0 million, or 35.8%, increase in total interest income, on a tax-equivalent basis, was primarily due to solid organic growth in the loan portfolio, purchases of investment securities, and higher earning asset yields in the rising interest rate environment.
The $59 million, or 35.8%, increase in total interest income on a tax-equivalent basis, was primarily due to strong organic growth in the loan portfolio, purchases of investment securities, and higher earning asset yields in the rising interest rate environment. ​ Interest income on cash investments increased $2.6 million, or 430.7%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to the interest rate increases during the year.
The $9.5 million, or 68.9%, increase in interest expense on deposits was primarily due to the upward repricing of the deposit portfolio consistent with the higher rate environment and the average balance of interest bearing deposits increasing by $276.2 million, or 14.2%.
The $32.8 million, or 34.1%, increase in interest expense on deposits was primarily due to the upward repricing of the deposit portfolio in the higher interest rate environment and the average balance of interest bearing deposits increasing by $293.7 million, or 10.7%.
ROE was 9.73% and 13.90% for the years ended December 31, 2023 and 2022, respectively. 2022 Compared to 2021 Net income was $53.4 million for the year ended December 31, 2022, compared to net income of $45.7 million for the year ended December 31, 2021.
Adjusted ROE (a non-GAAP financial measure) was 7.57% and 9.73% for the years ended December 31, 2024 and 2023, respectively. 2023 Compared to 2022 Net income was $40.0 million for the year ended December 31, 2023, compared to net income of $53.4 million for the year ended December 31, 2022.
Interest expense on borrowings was $21.1 million for the year ended December 31, 2023, an increase of $10.5 million, compared to $10.6 million for the year ended December 31, 2022.
Interest expense on borrowings was $14.9 million for the year ended December 31, 2024, compared to $21.1 million for the year ended December 31, 2023.
Interest expense on interest bearing liabilities was $34.0, an increase of $14.6 million, or 75.5%, for the year ended December 31, 2022, compared to $19.4 million for the year ended December 31, 2021.
Interest expense on interest bearing liabilities was $117.2 million, an increase of $83.2 million, or 244.7%, for the year ended December 31, 2023, compared to $34.0 million for the year ended December 31, 2022.
The Company’s and the Bank’s actual capital amounts and ratios are as of the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Required ​ For Capital Adequacy ​ To be Well Capitalized ​ ​ ​ ​ ​ ​ ​ ​ For Capital Adequacy ​ Purposes Plus Capital ​ Under Prompt Corrective ​ ​ ​ Actual ​ Purposes ​ Conservation Buffer ​ Action Regulations ​ (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio ​ Amount Ratio ​ December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company (Consolidated): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Risk-based Capital ​ $ 570,770 ​ 13.97 % $ 326,872 ​ 8.00 % $ 429,019 ​ 10.50 % ​ N/A ​ N/A ​ Tier 1 Risk-based Capital ​ ​ 440,947 ​ 10.79 ​ ​ 245,154 ​ 6.00 ​ ​ 347,301 ​ 8.50 ​ ​ N/A ​ N/A ​ Common Equity Tier 1 Capital ​ ​ 374,433 ​ 9.16 ​ ​ 183,865 ​ 4.50 ​ ​ 286,013 ​ 7.00 ​ ​ N/A ​ N/A ​ Tier 1 Leverage Ratio ​ ​ 440,947 ​ 9.57 ​ ​ 184,383 ​ 4.00 ​ ​ 184,383 ​ 4.00 ​ ​ N/A ​ N/A ​ Bank: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Risk-based Capital ​ $ 554,269 ​ 13.58 % $ 326,528 ​ 8.00 % $ 428,568 ​ 10.50 % $ 408,160 ​ 10.00 % Tier 1 Risk-based Capital ​ ​ 503,787 ​ 12.34 ​ ​ 244,896 ​ 6.00 ​ ​ 346,936 ​ 8.50 ​ ​ 326,528 ​ 8.00 ​ Common Equity Tier 1 Capital ​ ​ 503,787 ​ 12.34 ​ ​ 183,672 ​ 4.50 ​ ​ 285,712 ​ 7.00 ​ ​ 265,304 ​ 6.50 ​ Tier 1 Leverage Ratio ​ ​ 503,787 ​ 10.95 ​ ​ 184,037 ​ 4.00 ​ ​ 184,037 ​ 4.00 ​ ​ 230,047 ​ 5.00 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Required ​ For Capital Adequacy ​ To be Well Capitalized ​ ​ ​ ​ ​ ​ ​ ​ For Capital Adequacy ​ Purposes Plus Capital ​ Under Prompt Corrective ​ ​ ​ Actual ​ Purposes ​ Conservation Buffer ​ Action Regulations ​ (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio ​ Amount Ratio ​ December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company (Consolidated): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Risk-based Capital ​ $ 536,352 ​ 13.15 % $ 326,190 ​ 8.00 % $ 428,125 ​ 10.50 % ​ N/A ​ N/A ​ Tier 1 Risk-based Capital ​ ​ 409,092 ​ 10.03 ​ ​ 244,643 ​ 6.00 ​ ​ 346,577 ​ 8.50 ​ ​ N/A ​ N/A ​ Common Equity Tier 1 Capital ​ ​ 342,578 ​ 8.40 ​ ​ 183,482 ​ 4.50 ​ ​ 285,417 ​ 7.00 ​ ​ N/A ​ N/A ​ Tier 1 Leverage Ratio ​ ​ 409,092 ​ 9.55 ​ ​ 171,368 ​ 4.00 ​ ​ 171,368 ​ 4.00 ​ ​ N/A ​ N/A ​ Bank: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Risk-based Capital ​ $ 508,760 ​ 12.47 % $ 326,288 ​ 8.00 % $ 428,253 ​ 10.50 % $ 407,860 ​ 10.00 % Tier 1 Risk-based Capital ​ ​ 460,404 ​ 11.29 ​ ​ 244,716 ​ 6.00 ​ ​ 346,681 ​ 8.50 ​ ​ 326,288 ​ 8.00 ​ Common Equity Tier 1 Capital ​ ​ 460,404 ​ 11.29 ​ ​ 183,537 ​ 4.50 ​ ​ 285,502 ​ 7.00 ​ ​ 265,109 ​ 6.50 ​ Tier 1 Leverage Ratio ​ ​ 460,404 ​ 10.76 ​ ​ 171,113 ​ 4.00 ​ ​ 171,113 ​ 4.00 ​ ​ 213,891 ​ 5.00 ​ ​ The Company and the Bank are subject to the rules of the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act.
The Company’s and the Bank’s actual capital amounts and ratios are as of the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Required ​ For Capital Adequacy ​ To be Well Capitalized ​ ​ ​ ​ ​ ​ ​ ​ For Capital Adequacy ​ Purposes Plus Capital ​ Under Prompt Corrective ​ ​ ​ Actual ​ Purposes ​ Conservation Buffer ​ Action Regulations ​ (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio ​ Amount Ratio ​ December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company (Consolidated): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Risk-based Capital ​ $ 585,966 ​ 13.76 % $ 340,581 ​ 8.00 % $ 447,013 ​ 10.50 % ​ N/A ​ N/A ​ Tier 1 Risk-based Capital ​ ​ 453,049 ​ 10.64 ​ ​ 255,436 ​ 6.00 ​ ​ 361,867 ​ 8.50 ​ ​ N/A ​ N/A ​ Common Equity Tier 1 Capital ​ ​ 386,535 ​ 9.08 ​ ​ 191,577 ​ 4.50 ​ ​ 298,008 ​ 7.00 ​ ​ N/A ​ N/A ​ Tier 1 Leverage Ratio ​ ​ 453,049 ​ 9.44 ​ ​ 191,878 ​ 4.00 ​ ​ 191,878 ​ 4.00 ​ ​ N/A ​ N/A ​ Bank: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Risk-based Capital ​ $ 573,158 ​ 13.49 % $ 340,003 ​ 8.00 % $ 446,254 ​ 10.50 % $ 425,004 ​ 10.00 % Tier 1 Risk-based Capital ​ ​ 520,000 ​ 12.24 ​ ​ 255,002 ​ 6.00 ​ ​ 361,253 ​ 8.50 ​ ​ 340,003 ​ 8.00 ​ Common Equity Tier 1 Capital ​ ​ 520,000 ​ 12.24 ​ ​ 191,252 ​ 4.50 ​ ​ 297,503 ​ 7.00 ​ ​ 276,253 ​ 6.50 ​ Tier 1 Leverage Ratio ​ ​ 520,000 ​ 10.86 ​ ​ 191,593 ​ 4.00 ​ ​ 191,593 ​ 4.00 ​ ​ 239,491 ​ 5.00 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Required ​ For Capital Adequacy ​ To be Well Capitalized ​ ​ ​ ​ ​ ​ ​ ​ For Capital Adequacy ​ Purposes Plus Capital ​ Under Prompt Corrective ​ ​ ​ Actual ​ Purposes ​ Conservation Buffer ​ Action Regulations ​ (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio ​ Amount Ratio ​ December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Company (Consolidated): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Risk-based Capital ​ $ 570,770 ​ 13.97 % $ 326,872 ​ 8.00 % $ 429,019 ​ 10.50 % ​ N/A ​ N/A ​ Tier 1 Risk-based Capital ​ ​ 440,947 ​ 10.79 ​ ​ 245,154 ​ 6.00 ​ ​ 347,301 ​ 8.50 ​ ​ N/A ​ N/A ​ Common Equity Tier 1 Capital ​ ​ 374,433 ​ 9.16 ​ ​ 183,865 ​ 4.50 ​ ​ 286,013 ​ 7.00 ​ ​ N/A ​ N/A ​ Tier 1 Leverage Ratio ​ ​ 440,947 ​ 9.57 ​ ​ 184,383 ​ 4.00 ​ ​ 184,383 ​ 4.00 ​ ​ N/A ​ N/A ​ Bank: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Risk-based Capital ​ $ 554,269 ​ 13.58 % $ 326,528 ​ 8.00 % $ 428,568 ​ 10.50 % $ 408,160 ​ 10.00 % Tier 1 Risk-based Capital ​ ​ 503,787 ​ 12.34 ​ ​ 244,896 ​ 6.00 ​ ​ 346,936 ​ 8.50 ​ ​ 326,528 ​ 8.00 ​ Common Equity Tier 1 Capital ​ ​ 503,787 ​ 12.34 ​ ​ 183,672 ​ 4.50 ​ ​ 285,712 ​ 7.00 ​ ​ 265,304 ​ 6.50 ​ Tier 1 Leverage Ratio ​ ​ 503,787 ​ 10.95 ​ ​ 184,037 ​ 4.00 ​ ​ 184,037 ​ 4.00 ​ ​ 230,047 ​ 5.00 ​ ​ The Company and the Bank are subject to the rules of the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act.
The following table presents the changes in the volume and rate of interest bearing assets and liabilities for the year ended December 31, 2023, compared to the year ended December 31, 2022, and for the year ended December 31, 2022, compared to the year ended December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2023 ​ ​ Year Ended December 31, 2022 ​ ​ ​ Compared with ​ ​ Compared with ​ ​ ​ Year Ended December 31, 2022 ​ ​ Year Ended December 31, 2021 ​ ​ ​ Change Due To: ​ ​ Interest ​ ​ Change Due To: ​ ​ Interest (dollars in thousands) ​ Volume ​ Rate ​ Variance ​ Volume ​ Rate ​ Variance Interest Earning Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash Investments ​ $ 477 ​ $ 2,096 ​ $ 2,573 ​ $ (347) ​ $ 745 ​ $ 398 Investment Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable Investment Securities ​ ​ 5,615 ​ ​ 5,624 ​ ​ 11,239 ​ ​ 4,790 ​ ​ 2,155 ​ ​ 6,945 Tax-Exempt Investment Securities ​ ​ (1,980) ​ ​ 204 ​ ​ (1,776) ​ ​ (130) ​ ​ (11) ​ ​ (141) Total Securities ​ ​ 3,635 ​ ​ 5,828 ​ ​ 9,463 ​ ​ 4,660 ​ ​ 2,144 ​ ​ 6,804 Loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Paycheck Protection Program Loans ​ ​ (970) ​ ​ — ​ ​ (970) ​ ​ (10,709) ​ ​ 5,238 ​ ​ (5,471) Loans ​ ​ 26,844 ​ ​ 19,978 ​ ​ 46,822 ​ ​ 32,429 ​ ​ 841 ​ ​ 33,270 Total Loans ​ ​ 25,874 ​ ​ 19,978 ​ ​ 45,852 ​ ​ 21,720 ​ ​ 6,079 ​ ​ 27,799 Federal Home Loan Bank Stock ​ ​ 624 ​ ​ 482 ​ ​ 1,106 ​ ​ 225 ​ ​ (51) ​ ​ 173 Total Interest Earning Assets ​ $ 30,610 ​ $ 28,384 ​ $ 58,994 ​ $ 26,258 ​ $ 8,917 ​ $ 35,174 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest Bearing Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest Bearing Transaction Deposits ​ $ 4,498 ​ $ 14,545 ​ $ 19,043 ​ $ 1,093 ​ $ 1,191 ​ $ 2,284 Savings and Money Market Deposits ​ ​ (1,337) ​ ​ 22,847 ​ ​ 21,510 ​ ​ 2,703 ​ ​ 2,697 ​ ​ 5,400 Time Deposits ​ ​ (582) ​ ​ 4,382 ​ ​ 3,800 ​ ​ (543) ​ ​ (292) ​ ​ (835) Brokered Deposits ​ ​ 17,702 ​ ​ 10,611 ​ ​ 28,313 ​ ​ 1,146 ​ ​ 1,542 ​ ​ 2,688 Total Interest Bearing Deposits ​ ​ 20,281 ​ ​ 52,385 ​ ​ 72,666 ​ ​ 4,399 ​ ​ 5,138 ​ ​ 9,537 Federal Funds Purchased ​ ​ 1,006 ​ ​ 3,008 ​ ​ 4,014 ​ ​ 4,450 ​ ​ 51 ​ ​ 4,501 Notes Payable ​ ​ 905 ​ ​ 36 ​ ​ 941 ​ ​ 99 ​ ​ 42 ​ ​ 141 FHLB Advances ​ ​ 5,467 ​ ​ 801 ​ ​ 6,268 ​ ​ 254 ​ ​ 136 ​ ​ 390 Subordinated Debentures ​ ​ (528) ​ ​ (177) ​ ​ (705) ​ ​ 277 ​ ​ (219) ​ ​ 58 Total Interest Bearing Liabilities ​ ​ 27,131 ​ ​ 56,053 ​ ​ 83,184 ​ ​ 9,479 ​ ​ 5,148 ​ ​ 14,627 Net Interest Income ​ $ 3,479 ​ $ (27,669) ​ $ (24,190) ​ $ 16,779 ​ $ 3,769 ​ $ 20,547 ​ Interest Income, Interest Expense, and Net Interest Margin 2023 Compared to 2022 Net interest income was $105.2 million for the year ended December 31, 2023, a decrease of $24.5 million compared to $129.7 million for the year ended December 31, 2022.
The following table presents the changes in the volume and rate of interest bearing assets and liabilities for the year ended December 31, 2024, compared to the year ended December 31, 2023, and for the year ended December 31, 2023, compared to the year ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2024 ​ ​ Year Ended December 31, 2023 ​ ​ ​ Compared with ​ ​ Compared with ​ ​ ​ Year Ended December 31, 2023 ​ ​ Year Ended December 31, 2022 ​ ​ ​ Change Due To: ​ ​ Interest ​ ​ Change Due To: ​ ​ Interest (dollars in thousands) ​ Volume ​ Rate ​ Variance ​ Volume ​ Rate ​ Variance Interest Earning Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash Investments ​ $ 2,128 ​ $ 392 ​ $ 2,520 ​ $ 477 ​ $ 2,096 ​ $ 2,573 Investment Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable Investment Securities ​ ​ 4,448 ​ ​ 3,034 ​ ​ 7,482 ​ ​ 5,615 ​ ​ 5,624 ​ ​ 11,239 Tax-Exempt Investment Securities ​ ​ 94 ​ ​ 158 ​ ​ 252 ​ ​ (1,980) ​ ​ 204 ​ ​ (1,776) Total Securities ​ ​ 4,542 ​ ​ 3,192 ​ ​ 7,734 ​ ​ 3,635 ​ ​ 5,828 ​ ​ 9,463 Loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Paycheck Protection Program Loans ​ ​ — ​ ​ — ​ ​ — ​ ​ (970) ​ ​ — ​ ​ (970) Loans ​ ​ 2,162 ​ ​ 10,805 ​ ​ 12,967 ​ ​ 26,844 ​ ​ 19,978 ​ ​ 46,822 Total Loans ​ ​ 2,162 ​ ​ 10,805 ​ ​ 12,967 ​ ​ 25,874 ​ ​ 19,978 ​ ​ 45,852 Federal Home Loan Bank Stock ​ ​ (254) ​ ​ 266 ​ ​ 12 ​ ​ 624 ​ ​ 482 ​ ​ 1,106 Total Interest Earning Assets ​ $ 8,578 ​ $ 14,655 ​ $ 23,233 ​ $ 30,610 ​ $ 28,384 ​ $ 58,994 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest Bearing Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest Bearing Transaction Deposits ​ $ 5,595 ​ $ 5,320 ​ $ 10,915 ​ $ 4,498 ​ $ 14,545 ​ $ 19,043 Savings and Money Market Deposits ​ ​ 1,376 ​ ​ 7,282 ​ ​ 8,658 ​ ​ (1,337) ​ ​ 22,847 ​ ​ 21,510 Time Deposits ​ ​ 3,381 ​ ​ 4,140 ​ ​ 7,521 ​ ​ (582) ​ ​ 4,382 ​ ​ 3,800 Brokered Deposits ​ ​ 2,277 ​ ​ 3,389 ​ ​ 5,666 ​ ​ 17,702 ​ ​ 10,611 ​ ​ 28,313 Total Interest Bearing Deposits ​ ​ 12,629 ​ ​ 20,131 ​ ​ 32,760 ​ ​ 20,281 ​ ​ 52,385 ​ ​ 72,666 Federal Funds Purchased ​ ​ (8,278) ​ ​ 958 ​ ​ (7,320) ​ ​ 1,006 ​ ​ 3,008 ​ ​ 4,014 Notes Payable ​ ​ — ​ ​ 19 ​ ​ 19 ​ ​ 905 ​ ​ 36 ​ ​ 941 FHLB Advances ​ ​ 2,202 ​ ​ (1,137) ​ ​ 1,065 ​ ​ 5,467 ​ ​ 801 ​ ​ 6,268 Subordinated Debentures ​ ​ 19 ​ ​ (19) ​ ​ — ​ ​ (528) ​ ​ (177) ​ ​ (705) Total Interest Bearing Liabilities ​ ​ 6,572 ​ ​ 19,952 ​ ​ 26,524 ​ ​ 27,131 ​ ​ 56,053 ​ ​ 83,184 Net Interest Income ​ $ 2,006 ​ $ (5,297) ​ $ (3,291) ​ $ 3,479 ​ $ (27,669) ​ $ (24,190) ​ Interest Income, Interest Expense, and Net Interest Margin 2024 Compared to 2023 Net interest income was $102.2 million for the year ended December 31, 2024, a decrease of $3.0 million compared to $105.2 million for the year ended December 31, 2023.
The pace of loan growth moderated due to active balance sheet management to align loan growth with the funding outlook, sales of participations on larger originations, and ultimately the impact of the higher interest rate environment on the number of prospective deals that meet underwriting standards.
The Bank’s pace of loan growth moderated in 2024 compared to historical levels as the Company actively managed the balance sheet to better align loan growth with the funding outlook and ultimately the impact of the higher interest rate environment on the number of prospective deals that meet underwriting standards.
Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and PPP balances, interest, and fees, for the year ended December 31, 2022 was 3.27%, a one basis point decrease from 3.28% for the year ended December 31, 2021.
Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees, for the year ended 57 Table of Contents December 31, 2024 was 2.19%, a 15 basis point decline from 2.34% for the year ended December 31, 2023.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFinancial Statements and Supplementary Data ​ 81 ​ ​ ​ Reports of Independent Registered Public Accounting Firm (CliftonLarsonAllen LLP, Auditor Firm ID: 655) ​ 81 ​ ​ ​ Reports of Independent Registered Public Accounting Firm ( RSM US LLP , Auditor Firm ID: 49 ) ​ 82 ​ ​ ​
Biggest changeFinancial Statements and Supplementary Data ​ 82 ​ ​ ​ Reports of Independent Registered Public Accounting Firm (CliftonLarsonAllen LLP, Auditor Firm ID: 655) ​ 82 ​ ​ ​ Reports of Independent Registered Public Accounting Firm ( RSM US LLP , Auditor Firm ID: 49 ) ​ 83 ​ ​ ​
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 49 ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 78 ​ ​ ​ Item 8.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 51 ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 80 ​ ​ ​ Item 8.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFor example, the Company occasionally uses special offers on deposits to alter the interest rates and terms associated with interest bearing liabilities. 78 Table of Contents The Company has entered into certain hedging transactions including interest rate swaps and caps, which are designed to lessen elements of the Company’s interest rate exposure.
Biggest changeThe Company has entered into certain hedging transactions including fair value swaps and interest rate swaps and caps, which are designed to lessen elements of the Company’s interest rate exposure. Fair value swaps are used to mitigate the effect of changing interest rates on the fair values of fixed rate available for sale securities.
The projections assume an immediate, parallel shift downward of the yield curve of 100, 200, and 300 basis points and immediate, parallel shifts upward of the yield curve of 100, 200, 300 and 400 basis points.
The projections assume an immediate, parallel shift downward of the yield curve of 100, 200, 300, and 400 basis points and immediate, parallel shifts upward of the yield curve of 100, 200, 300 and 400 basis points.
The simulation model also incorporates various other assumptions, which the Company believes are reasonable but which may have a significant impact on results, such as: (1) the timing of changes in interest rates, (2) shifts or rotations in the yield curve, (3) re-pricing characteristics for market-rate-sensitive instruments, (4) differing sensitivities of financial instruments due to differing underlying rate indices, (5) varying loan prepayment speeds for different interest rate scenarios, (6) the effect of interest rate limitations in assets, such as floors and caps, and (7) overall growth and repayment rates and product mix of assets and liabilities.
The simulation model also can incorporate various other assumptions, which the Company believes are reasonable but which may have a significant impact on results, such as: (1) the timing of changes in interest rates, (2) shifts or rotations in the yield curve, (3) re-pricing characteristics for market-rate-sensitive instruments, (4) differing sensitivities of financial instruments due to differing underlying rate indices, (5) varying loan prepayment speeds for different interest rate scenarios, (6) the effect of interest rate limitations in assets, such as floors and caps, and (7) overall growth and repayment rates and product mix of assets and liabilities.
Finally, these simulation results do not contemplate all the actions that the Company may undertake in response to potential or actual changes in interest rates, such as changes to the Company’s loan, investment, deposit, or funding strategies. ​ 80 Table of Contents
Finally, these simulation results do not contemplate all the actions that the Company may undertake in response to potential or actual changes in interest rates, such as changes to the Company’s loan, investment, deposit, or funding strategies. ​ 81 Table of Contents
An increasing interest rate environment could reduce projected net interest income if deposits and other 79 Table of Contents short-term liabilities re-price faster than expected or re-price faster than the Company’s assets.
An increasing interest rate environment could reduce projected net interest income if deposits and other short-term liabilities re-price faster than expected or re-price faster than the Company’s assets.
In the event of an immediate 300 basis point decrease in interest rates, the Company would experience an 8.86% increase in net interest income. The results of this simulation analysis are hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted.
In the event of an immediate 400 basis point decrease in interest rates, the Company would experience an 14.47% increase in net interest income. The results of this simulation analysis are hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted.
Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions. The Company utilizes cash flow hedges to manage interest rate exposure for the brokered deposit and wholesale borrowing portfolios. At December 31, 2023 and 2022, these cash flow hedges had a total notional amount of $308.0 million and $288.0 million, respectively.
At December 31, 2024 and 2023, these fair value hedges had a total notional amount of $145.9 million and $0, respectively. Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions. The Company utilizes cash flow hedges to manage interest rate exposure for the brokered deposit and wholesale borrowing portfolios.
The Company manages the interest rate risk associated with interest bearing liabilities by managing the interest rates and terms associated with wholesale borrowings and deposits from customers which the Company relies on for funding.
The Company manages the interest rate risk associated with interest bearing liabilities by managing the interest rates and terms associated with wholesale borrowings and deposits from customers which the Company relies on for funding. For example, the Company occasionally uses special offers on deposits to alter the interest rates and terms associated with interest bearing liabilities.
Because of the limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on the results, but rather as a means to better plan and execute appropriate asset-liability management strategies and to manage interest rate risk.
Because of the limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on the results, but rather as a means to better plan and execute appropriate asset-liability management strategies and to manage interest rate risk. 80 Table of Contents Potential changes to the Company’s net interest income in hypothetical rising and declining rate scenarios calculated as of December 31, 2024 and 2023, are presented in the table below.
In the current interest rate environment, a downward shift of the yield curve of 400 basis points does not provide meaningful results and thus is not presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ December 31, 2023 ​ December 31, 2022 Change (basis points) ​ Forecasted ​ Percentage ​ Forecasted ​ Percentage in Interest Rates Net Interest ​ Change Net Interest ​ Change (12-Month Projection) ​ Income ​ from Base ​ Income ​ from Base +400 ​ $ 118,597 ​ (2.39) % ​ $ 129,621 ​ (4.84) % +300 ​ 118,983 ​ (2.08) ​ ​ 131,357 ​ (3.57) ​ +200 ​ 119,395 ​ (1.74) ​ ​ 133,089 ​ (2.30) ​ +100 ​ 119,916 ​ (1.31) ​ ​ 134,591 ​ (1.20) ​ 0 ​ 121,504 ​ — ​ ​ 136,220 ​ — ​ −100 ​ ​ 125,138 ​ 2.99 ​ ​ ​ 137,641 ​ 1.04 ​ −200 ​ ​ 128,643 ​ 5.87 ​ ​ ​ 137,968 ​ 1.28 ​ −300 ​ ​ 132,269 ​ 8.86 ​ ​ ​ 138,587 ​ 1.74 ​ ​ The table above indicates that as of December 31, 2023, in the event of an immediate and sustained 400 basis point increase in interest rates, the Company would experience a 2.39% decrease in net interest income.
In the 2023 rate environment, a downward shift of the yield curve of 400 basis points did not provide meaningful results and thus was not presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) ​ December 31, 2024 ​ December 31, 2023 Change (basis points) ​ Forecasted ​ Percentage ​ Forecasted ​ Percentage in Interest Rates Net Interest ​ Change Net Interest ​ Change (12-Month Projection) ​ Income ​ from Base ​ Income ​ from Base +400 ​ $ 130,390 ​ (6.00) % ​ $ 118,597 ​ (2.39) % +300 ​ 132,605 ​ (4.40) ​ ​ 118,983 ​ (2.08) ​ +200 ​ 134,355 ​ (3.14) ​ ​ 119,395 ​ (1.74) ​ +100 ​ 136,411 ​ (1.66) ​ ​ 119,916 ​ (1.31) ​ 0 ​ 138,708 ​ — ​ ​ 121,504 ​ — ​ −100 ​ ​ 143,038 ​ 3.12 ​ ​ ​ 125,138 ​ 2.99 ​ −200 ​ ​ 147,997 ​ 6.70 ​ ​ ​ 128,643 ​ 5.87 ​ −300 ​ ​ 153,515 ​ 10.67 ​ ​ ​ 132,269 ​ 8.86 ​ −400 ​ ​ 158,778 ​ 14.47 ​ ​ ​ NM ​ NM ​ ​ The table above indicates that as of December 31, 2024, in the event of an immediate and sustained 400 basis point increase in interest rates, the Company would experience a 6.00% decrease in net interest income.
In the event that interest rates do not change in the manner anticipated, such transactions may adversely affect the Company’s results of operations.
At December 31, 2024 and 2023, these cash flow hedges had a total notional amount of $303.0 million and $308.0 million, respectively. In the event that interest rates do not change in the manner anticipated, such transactions may adversely affect the Company’s results of operations.
Removed
Potential changes to the Company’s net interest income in hypothetical rising and declining rate scenarios calculated as of December 31, 2023 and 2022, are presented in the table below.

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