Bank First Corp

Previous wording

Net interest and dividend income increased by $1.1 million to $33.3 million for the three months ended March 31, 2024 comparedto $32.2 million for three months ended March 31, 2023. The increase in net interest income was primarily due to growth in interest earning assets over the last twelve months. Total average interest-earning assets were $3.74 billion for the three months ended March 31, 2024, up from $3.52 billion for the same period in 2023. Net interest margin and net interest income are influenced by internal and external factors. Internal factors include balance sheet changes on both volume and mix and pricing decisions, and external factors include changes in market interest rates, competition and the shape of the interest rate yield curve.

Current wording

Net interest and dividend income decreased by $1.3 million to $33.0 million for the three months ended June 30, 2024 comparedto $34.3 million for three months ended June 30, 2023. The decrease in net interest income was primarily due to increased cost of funding liabilities. The momentum of these increases has begun to slow while average rates on earned on interest-earning assets continued a steady move higher. Total average interest-earning assets were $3.70 billion for the three months ended June 30, 2024, up from $3.68 billion for the same period in 2023. Net interest margin and net interest income are influenced by internal and external factors. Internal factors include balance sheet changes on both volume and mix and pricing decisions, and external factors include changes in market interest rates, competition and the shape of the interest rate yield curve.

Previous wording

Interest Income. Total interest income increased $8.4 million, or 20.5%, to $49.3 million for the three months ended March 31, 2024 compared to $40.9 million for the same period in 2023. The increase in total interest income was primarily due to the aforementioned growth in interest earnings assets over the last twelve months along with an increase in the average interest rate earned on these assets. The average balance of interest-earning assets increased by $216.8 million during the three months ended March 31, 2024 compared to the same period in 2023 and the average interest rate earned on these assets increased by 0.59% in the year-over-year first quarters.

Current wording

Interest Income. Total interest income increased $3.4 million, or 7.4%, to $49.3 million for the three months ended June 30, 2024 compared to $45.9 million for the same period in 2023. The increase in total interest income was primarily due to an increase in the average interest rate earned on interest-earning assets. The average balance of interest-earning assets increased by $13.0 million during the three months ended June 30, 2024 compared to the same period in 2023 and the average interest rate earned on these assets increased by 0.36% in the year-over-year second quarters.

Previous wording

Interest Expense. Interest expense increased $7.2 million, or 83.7%, to $15.9 million for the three months ended March 31, 2024 compared to $8.7 million for the same period in 2023. The increase in interest expense was primarily due to elevated interest-bearing liabilities and higher crediting interest rates on those liabilities.

Current wording

Interest Expense. Interest expense increased $4.7 million, or 40.2%, to $16.3 million for the three months ended June 30, 2024 compared to $11.7 million for the same period in 2023. The increase in interest expense was primarily due to higher crediting interest rates on interest-bearing liabilities.

Previous wording

Interest expense on interest-bearing deposits increased by $7.9 million to $15.4 million for the three months ended March 31, 2024 compared to $7.5 million for the same period in 2023. The average balance and cost of interest-bearing deposits was $2.46 billion and 2.51% for the three months ended March 31, 2024, compared to $2.24 billion and 1.35% for the same period in 2023.

Current wording

Interest expense on interest-bearing deposits increased by $5.7 million to $15.8 million for the three months ended June 30, 2024 compared to $10.1 million for the same period in 2023. The average balance and cost of interest-bearing deposits was $2.42 billion and 2.63% for the three months ended June 30, 2024, compared to $2.32 billion and 1.74% for the same period in 2023.

Previous wording

We recorded a provision of $0.2 million for credit loss during the three months ended March 31, 2024 compared to a provision of $4.2 million for the same period in 2023. A $3.6 million provision for credit losses related to the acquired loans from Hometown was the primary cause for the elevated expense during the first quarter of 2023. Economic forecasts, primarily US gross domestic product and unemployment projections, were little changed during the first quarter of 2024 resulting in consistent economic and qualitative factors in the CECL methodology. We recorded net recoveries of $0.6 million during the three months ended March 31, 2024 compared to minimal net recoveries during the three months ended March 31, 2023. Metrics regarding the credit quality of the Bank’s loan portfolio continue to show very little in terms of stress. The ACL - Loans was $44.4 million, or 1.31% of total loans, at March 31, 2024 compared to $43.3 million, or 1.30% of total loans at March 31, 2023.

Current wording

We did not record a provision for credit loss during the three months ended June 30, 2024 or 2023. Economic forecasts, primarily US gross domestic product and unemployment projections, were little changed during the second quarter of 2024 resulting in consistent economic and qualitative factors in the Current Expected Credit Losses (“CECL”) methodology. We recorded net recoveries of $0.2 million during the three months ended June 30, 2024 compared to net recoveries of $0.1 million during the three months ended June 30, 2023. Metrics regarding the credit quality of the Bank’s loan portfolio continue to show very little in terms of stress. Also, due to a reduction in unfunded loan commitments and an increase in outstanding loans, the Bank moved $0.5 million from its ACL-Unfunded Commitments to its ACL – Loans during the second quarter of 2024. While this move had no impact on the Bank’s profitability for the quarter, it did increase the allowance for potential loan credit losses to correspond with the increase in overall loan portfolio balances. The ACL - Loans was $45.1 million, or 1.32% of total loans, at June 30, 2024 compared to $43.4 million, or 1.31% of total loans at June 30, 2023.

Previous wording

Noninterest income decreased $1.4 million to $4.4 million for the three months ended March 31, 2024 compared to$5.8 million for the same period in 2023. Due to the sale of 100% of the Bank’s member interest in UFS on October 1, 2023, no income from UFS was recorded in the first quarter of 2024, compared to income of $0.9 million during the first quarter of 2023. Negative valuation adjustments to the Bank’s MSRs totaling $0.3 million during the first quarter of 2024 also compared unfavorably to $0.8 million in positive valuation adjustments during the first quarter of 2023.

Current wording

Noninterest income increased $1.3 million to $5.9 million for the three months ended June 30, 2024 compared to$4.6 million for the same period in 2023. Due to the sale of 100% of the Bank’s member interest in UFS on October 1, 2023, no income from UFS was recorded in the second quarter of 2024, compared to income of $0.8 million during the second quarter of 2023. Service charges increased by 19.0% from the prior-year second quarter primarily due to a recently negotiated vendor incentive program related to the Bank’s credit and debit card payments processing. Positive valuation adjustments to the Bank’s MSRs totaling $0.3 million during the second quarter of 2024 compared favorably to $0.5 million in negative valuation adjustments during the second quarter of 2023.

Previous wording

General**.** Net income increased $4.7 million to $15.4 million for three months ended March 31, 2024, comparedto $10.7 million for the same period in 2023. This increase was partially due to the added scale of operations resulting from the Hometown acquisition during the first quarter of 2023. The first quarter of 2023 was also negatively impacted by $1.3 million in acquisition related expenses and a $3.6 million provision for credit losses related to the acquired loans from Hometown.

Current wording

General**.** Net income increased $6.7 million to $31.5 million for six months ended June 30, 2024, comparedto $24.8 million for the same period in 2023. This increase was partially due to the added scale of operations resulting from the Hometown acquisition during the first quarter of 2023. The first six months of 2023 was also negatively impacted by $1.5 million in acquisition expenses and a $3.6 million provision for credit losses related to the acquired loans from Hometown. Offsetting these factors was the absence of income from UFS during the first six months of 2024 compared to $1.7 million in income provided by UFS during the first six months of 2023.

Previous wording

Income Tax Expense. We recorded a provision for income taxes of $1.8 million for the three months ended March 31, 2024 compared to a provision of $3.6 million for the same period during 2023, reflecting effective tax rates of 10.5% and 25.0%, respectively. On July 5, 2023, Wisconsin passed its 2023 state budget which included a provision exempting income earned from certain commercial loans of $5.0 million or less from state taxability. As a result of this legislation, income from a significant portion of the Company’s loans will no longer be subject to taxation in its home state. Final rules relating to qualifying loans under this legislation were not published until the first quarter of 2024. Based on these final rules, the Company was able to further reduce its estimated tax liability from 2023 by $1.3 million, resulting in the lower provision for income taxes and effective tax rate during the first quarter of 2024. The effective tax rates were further reduced from the statutory federal and state income tax rates during both periods as a result of tax-exempt interest income produced by certain qualifying loans and investments in the Bank’s portfolios.

Current wording

Income Tax Expense. We recorded a provision for income taxes of $5.6 million for the six months ended June 30, 2024 compared to a provision of $8.3 million for the same period during 2023, reflecting effective tax rates of 15.1% and 25.1%, respectively. On July 5, 2023, Wisconsin passed its 2023 state budget which included a provision exempting income earned from certain commercial loans of $5.0 million or less from state taxability. As a result of this legislation, income from a significant portion of the Company’s loans will no longer be subject to taxation in its home state. Final rules relating to qualifying loans under this legislation were not published until the first quarter of 2024. Based on these final rules, the Company was able to further reduce its estimated tax liability from 2023 by $1.3 million, resulting in the lower provision for income taxes and effective tax rate during the first half of 2024. The effective tax rates were reduced from the statutory federal and state income tax rates during both periods as a result of tax-exempt interest income produced by certain qualifying loans and investments in the Bank’s portfolios.

Previous wording

Total Assets. Total assets decreased $121.9 million, or 2.9%, to $4.10 billion at March 31, 2024, from $4.22 billion at December 31, 2023.

Current wording

Total Assets. Total assets decreased $76.0 million, or 1.8%, to $4.15 billion at June 30, 2024, from $4.22 billion at December 31, 2023.

Previous wording

Cash and Cash Equivalents. Cash and cash equivalents decreased by $164.1 million to $83.4 million at March 31, 2024, from $247.5 million at December 31, 2023. This decline was primarily the result of funds being invested in growth in the loan portfolio as well as a reduction in securities sold under repurchase agreements. Securities sold under repurchase agreements reported in prior periods related to one customer who discontinued this arrangement during the first quarter of 2024.

Current wording

Cash and Cash Equivalents. Cash and cash equivalents decreased by $148.5 million to $99.0 million at June 30, 2024, from $247.5 million at December 31, 2023. This decline was primarily the result of funds being invested in growth in the Bank’s loan portfolio as well as a reduction in deposits and securities sold under repurchase agreements. Securities sold under repurchase agreements reported in prior periods related to one customer who discontinued this arrangement during the first quarter of 2024. These declines were partially offset by increases in notes payable through the first half of 2024.

Previous wording

Investment Securities. The carrying value of total investment securities increased by $4.6 million to $250.2 million at March 31, 2024, from $245.5 million at December 31, 2023.

Current wording

Investment Securities. The carrying value of total investment securities decreased by $6.9 million to $238.6 million at June 30, 2024, from $245.5 million at December 31, 2023.

Previous wording

Loans. Net loans increased by $39.6 million, totaling $3.34 billion at March 31, 2024 compared to $3.30 billion at December 31, 2023.

Current wording

Loans. Net loans increased by $84.2 million, totaling $3.38 billion at June 30, 2024 compared to $3.30 billion at December 31, 2023.

Previous wording

Borrowings. At March 31, 2024, borrowings consisted of advances from the FHLB of Chicago and subordinated debt to other banks and an individual. FHLB borrowings and subordinated debt remained stable at $35.3 million and $12.0 million, respectively, at March 31, 2024 and December 31, 2023. A junior subordinated debenture totaling $4.1 million, which was part of the acquisition of Hometown, was repaid in full during the first quarter of 2024.

Current wording

Borrowings. At June 30, 2024, borrowings consisted of advances from the FHLB of Chicago and subordinated debt to other banks and an individual. FHLB borrowings increased $55.1 million, or 156.1%, to $90.3 million at June 30, 2024 from $35.3 million at December 31, 2023. These additional borrowings are intended to provide liquidity to support near-term loan growth. Subordinated debt remained stable at $12.0 million at June 30, 2024 and December 31, 2023. A junior subordinated debenture totaling $4.1 million, which was part of the acquisition of Hometown, was repaid in full during the first quarter of 2024.

Previous wording

Stockholders’ Equity. Total stockholders’ equity decreased $10.5 million, or 1.7%, to $609.3 million at March 31, 2024, from $619.8 million at December 31, 2023. Repurchases of the Company’s common stock totaling $22.3 million and dividends declared totaling $3.5 million offset the positive impact of earnings totaling $15.4 million during the quarter.

Current wording

Stockholders’ Equity. Total stockholders’ equity decreased $5.2 million, or 0.8%, to $614.6 million at June 30, 2024 from $619.8 million at December 31, 2023. Repurchases of the Company’s common stock totaling $30.2 million and dividends declared totaling $7.1 million offset the positive impact of earnings totaling $31.5 million during the first six months of the year.

Previous wording

Our loan portfolio is our most significant earning asset, comprising 82.5% and 79.2% of our total assets as of March 31, 2024 and December 31, 2023, respectively. Our strategy is to grow our loan portfolio by originating quality commercial and consumer loans that comply with our credit policies and that produce revenues consistent with our financial objectives. We believe our loan portfolio is well-balanced, which provides us with the opportunity to grow while monitoring our loan concentrations.

Current wording

Our loan portfolio is our most significant earning asset, comprising 82.7% and 79.2% of our total assets as of June 30, 2024 and December 31, 2023, respectively. Our strategy is to grow our loan portfolio by originating quality commercial and consumer loans that comply with our credit policies and that produce revenues consistent with our financial objectives. We believe our loan portfolio is well-balanced, which provides us with the opportunity to grow while monitoring our loan concentrations.

Previous wording

Loans increased $40.4 million, or 1.2%, to $3.38 billion as of March 31, 2024 as compared to $3.34 billion as of December 31, 2023. This increase during the first three months of 2024 was primarily driven by solid demand for new credit from our existing customer relationships. This growth was comprised of an increase of $22.5 million or 4.6% in commercial and industrial loans, an decrease of $2.3 million or 0.3% in owner occupied commercial real estate loans, an increase of $30.1 million or 6.4% in non-owner occupied commercial real estate loans, a decrease of $9.7 million or 2.9% in multi-family loans an increase of $7.0 million or 3.5% in construction and development loans, a decrease of $8.4 million or 0.9% in residential 1-4 family loans and an increase of $1.2 million in consumer and other loans.

Current wording

Loans increased $85.7 million, or 2.6%, to $3.43 billion as of June 30, 2024 as compared to $3.34 billion as of December 31, 2023. This increase during the first six months of 2024 was primarily driven by solid demand for new credit from our existing customer relationships. This growth was comprised of an increase of $19.5 million or 4.0% in commercial and industrial loans, an increase of $25.9 million or 2.9% in owner occupied commercial real estate loans, stable non-owner occupied commercial real estate and multi-family loans, an increase of $29.1 million or 14.5% in construction and development loans, an increase of $8.4 million or 1.0% in residential 1-4 family loans and an increase of $2.0 million in consumer and other loans.

Previous wording

Our directors and officers and their associates are customers of, and have other transactions with, the Bank in the normal course of business. All loans and commitments included in such transactions were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than normal risk of collection or present other unfavorable features. At March 31, 2024 and December 31, 2023, total loans outstanding to such directors and officers and their associates were $62.1 million and $63.9 million, respectively. During the three months ended March 31, 2024, $3.2 million of additions and $5.0 million of repayments were made to these loans. At March 31, 2024 and December 31, 2023, all of the loans to directors and officers were performing according to their original terms.

Current wording

Our directors and officers and their associates are customers of, and have other transactions with, the Bank in the normal course of business. All loans and commitments included in such transactions were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than normal risk of collection or present other unfavorable features. At June 30, 2024 and December 31, 2023, total loans outstanding to such directors and officers and their associates were $75.7 million and $63.9 million, respectively. During the six months ended June 30, 2024, $16.4 million in additions due to director and officer updates, $5.5 million of additions and $10.1 million of repayments were made to these loans. At June 30, 2024 and December 31, 2023, all of the loans to directors and officers were performing according to their original terms.

Previous wording

Commercial and Industrial (C&I). Our C&I portfolio totaled $510.4 million and $487.9 million at March 31, 2024 and December 31, 2023, respectively, and represented 15% of our total loans at both of those dates.

Current wording

Commercial and Industrial (C&I). Our C&I portfolio totaled $507.4 million and $487.9 million at June 30, 2024 and December 31, 2023, respectively, and represented 15% of our total loans at both of those dates.

Previous wording

Commercial Real Estate (CRE). Our CRE loan portfolio totaled $1.72 billion and $1.70 billion at March 31, 2024 and December 31, 2023, respectively, and represented 51% of our total loans at both of those dates.

Current wording

Commercial Real Estate (CRE). Our CRE loan portfolio totaled $1.73 billion and $1.70 billion at June 30, 2024 and December 31, 2023, respectively, and represented 51% of our total loans at both of those dates. The growth in our CRE loan portfolio through the first six months of 2024 consisted primarily of owner occupied commercial real estate while nonowner occupied commercial real estate and multi-family real estate, typically perceived as containing a higher risk of credit losses, remained stable. Management views owner occupied CRE as an extension of C&I lending as typically the primary repayment source on these loans is operating profits from the underlying business.

Previous wording

Construction and Development (C&D). Our C&D loan portfolio totaled $207.9 million and $200.8 million at March 31, 2024 and December 31, 2023, respectively, and represented 6% of our total loans at both of those dates.

Current wording

Construction and Development (C&D). Our C&D loan portfolio totaled $229.9 million and $200.8 million at June 30, 2024 and December 31, 2023, respectively, and represented 7% and 6% of our total loans at June 30, 2024 and December 31, 2023, respectively. It is typical for our C&D loans to increase through the middle of each year as this represents the primary construction season in our operating markets.

Previous wording

Residential 1 – 4 Family. Residential 1 – 4 family loans held in portfolio amounted to $880.2 million and $888.6 million at March 31, 2024 and December 31, 2023, respectively, and represented 26% and 27% of our total loans at those dates. The reduction in residential 1 – 4 family loans during the quarter was the result of scheduled amortizing loan payments.

Current wording

Residential 1 – 4 Family. Residential 1 – 4 family loans held in portfolio amounted to $897.1 million and $888.6 million at June 30, 2024 and December 31, 2023, respectively, and represented 26% and 27% of our total loans at those dates.

Previous wording

We were servicing mortgage loans sold to others without recourse of approximately $1.17 billion at March 31, 2024 and $1.18 billion at December 31, 2023.

Current wording

We were servicing mortgage loans sold to others without recourse of approximately $1.16 billion at June 30, 2024 and $1.18 billion at December 31, 2023.

Previous wording

Loans sold with the retention of servicing assets result in the capitalization of servicing rights. Loan servicing rights are carried at fair value. The net balance of capitalized servicing rights amounted to $13.4 million and $13.7 million at March 31, 2024 and December 31, 2023, respectively.

Current wording

Loans sold with the retention of servicing assets result in the capitalization of servicing rights. Loan servicing rights are carried at fair value. The net balance of capitalized servicing rights amounted to $13.7 million at June 30, 2024 and December 31, 2023.

Previous wording

Consumer Loans. Our consumer loan portfolio totaled $52.3 million and $51.0 million at March 31, 2024 and December 31, 2023, respectively, and represented 2% and 1% of our total loans at those dates. Consumer loans include secured and unsecured loans, lines of credit and personal installment loans.

Current wording

Consumer Loans. Our consumer loan portfolio totaled $53.2 million and $51.0 million at June 30, 2024 and December 31, 2023, respectively, and represented 1% of our total loans at those dates. Consumer loans include secured and unsecured loans, lines of credit and personal installment loans.

Previous wording

Loans are typically placed on nonaccrual status when any payment of principal and/or interest is 90 days or more past due, unless the collateral is sufficient to cover both principal and interest and the loan is in the process of collection. Loans are also placed on nonaccrual status when management believes, after considering economic and business conditions, that the principal or interest will not be collectible in the normal course of business. We monitor closely the performance of our loan portfolio. In addition to the monitoring and review of loan performance internally, we have also contracted with an independent organization to review our commercial and retail loan portfolios. The status of delinquent loans, as well as situations identified as potential problems, is reviewed on a regular basis by senior management. The increase in nonaccrual loans during the first quarter of 2024 primarily related to one customer relationship, acquired as part of the Hometown acquisition, that was moved from accrual status during the quarter.

Current wording

Loans are typically placed on nonaccrual status when any payment of principal and/or interest is 90 days or more past due, unless the collateral is sufficient to cover both principal and interest and the loan is in the process of collection. Loans are also placed on nonaccrual status when management believes, after considering economic and business conditions, that the principal or interest will not be collectible in the normal course of business. We monitor closely the performance of our loan portfolio. In addition to the monitoring and review of loan performance internally, we have also contracted with an independent organization to review our commercial and retail loan portfolios. The status of delinquent loans, as well as situations identified as potential problems, is reviewed on a regular basis by senior management. The increase in nonaccrual loans during the first six months of 2024 primarily related to one customer relationship, acquired as part of the Hometown acquisition, that was moved from accrual status during the first quarter.

Previous wording

At March 31, 2024, the ACL - Loans was $44.4 million (representing 1.31% of period end loans). The ACL – Loans has remained consistent over recent quarters as economic conditions and the Company’s overall asset quality remain strong. The Company recorded net recoveries totaling $0.6 million during the first quarter of 2024.

Current wording

At June 30, 2024, the ACL - Loans was $45.1 million (representing 1.32% of period end loans). The ACL – Loans has remained consistent over recent quarters as economic conditions and the Company’s overall asset quality remain strong. The Company recorded net recoveries totaling $0.8 million during the first half of 2024.

Previous wording

Deposits. Our current deposit products include non-interest bearing and interest-bearing checking accounts, savings accounts, money market accounts, and certificate of deposits. As of March 31, 2024, deposit liabilities accounted for approximately 83.3% of our total liabilities and equity. We accept deposits primarily from customers in the communities in which our branches and offices are located, as well as from small businesses and other customers throughout our lending area. We rely on our competitive pricing and products, quality customer service, and convenient locations and hours to attract and retain deposits. Deposit rates and terms are based primarily on current business strategies, market interest rates, liquidity requirements and our deposit growth goals.

Current wording

Deposits. Our current deposit products include non-interest bearing and interest-bearing checking accounts, savings accounts, money market accounts, and certificate of deposits. As of June 30, 2024, deposit liabilities accounted for approximately 82.0% of our total liabilities and equity. We accept deposits primarily from customers in the communities in which our branches and offices are located, as well as from small businesses and other customers throughout our lending area. We rely on our competitive pricing and products, quality customer service, and convenient locations and hours to attract and retain deposits. Deposit rates and terms are based primarily on current business strategies, market interest rates, liquidity requirements and our deposit growth goals.

Previous wording

Total deposits were $3.42 billion and $3.43 billion as of March 31, 2024 and December 31, 2023, respectively. Noninterest-bearing deposits at March 31, 2024 and December 31, 2023, were $990.5 million and $1.05 billion, respectively, while interest-bearing deposits were $2.43 billion and $2.38 billion at March 31, 2024 and December 31, 2023, respectively.

Current wording

Total deposits were $3.40 billion and $3.43 billion as of June 30, 2024 and December 31, 2023, respectively. Noninterest-bearing deposits at June 30, 2024 and December 31, 2023, were $975.8 million and $1.05 billion, respectively, while interest-bearing deposits were $2.42 billion and $2.38 billion at June 30, 2024 and December 31, 2023, respectively. Like most in the banking industry, the Bank has seen a shift in its deposit portfolio from noninterest-bearing deposits to interest-bearing deposits as prevailing interest rates have increased over the last several quarters.

Previous wording

At March 31, 2024, we had a total of $598.3 million in certificates of deposit, including $0.7 million of brokered deposits. Based on historical experience and our current pricing strategy, we believe we will retain a majority of these accounts upon maturity, although our long-term strategy is to minimize reliance on certificates of deposits by increasing relationship deposits in lower earning savings and demand deposit accounts.

Current wording

At June 30, 2024, we had a total of $612.5 million in certificates of deposit, including $0.7 million of brokered deposits. Based on historical experience and our current pricing strategy, we believe we will retain a majority of these accounts upon maturity, although our long-term strategy is to minimize reliance on certificates of deposits by increasing relationship deposits in lower earning savings and demand deposit accounts.

Previous wording

The Company’s borrowings have historically consisted primarily of FHLB of Chicago advances collateralized by a blanket pledge agreement on the Company’s FHLB capital stock and retail and commercial loans held in the Company’s portfolio. There were $35.3 million of advances outstanding from the FHLB at March 31, 2024 and December 31, 2023.

Current wording

The Company’s borrowings have historically consisted primarily of FHLB of Chicago advances collateralized by a blanket pledge agreement on the Company’s FHLB capital stock and retail and commercial loans held in the Company’s portfolio. There were $90.3 million and $35.3 million of advances outstanding from the FHLB at June 30, 2024 and December 31, 2023, respectively.

Previous wording

The total loans pledged as collateral were $1.49 billion at March 31, 2024 and December 31, 2023. There were no outstanding letters of credit from the FHLB at March 31, 2024 or December 31, 2023.

Current wording

The total loans pledged as collateral were $1.47 billion and $1.49 billion at June 30, 2024 and December 31, 2023. There were no outstanding letters of credit from the FHLB at June 30, 2024 or December 31, 2023.

Previous wording

Securities available for sale consist of U.S. government sponsored agencies, obligations of states and political subdivision, mortgage-backed securities, and corporate notes. Securities classified as available for sale, which management has the intent and ability to hold for an indefinite period of time, but not necessarily to maturity, are carried at fair value, with unrealized gains and losses, net of related deferred income taxes, included in stockholders’ equity as a separate component of other comprehensive income. The fair value of securities available for sale totaled $138.4 million and included $17,000 gross unrealized gains and gross unrealized losses of $13.0 million at March 31, 2024. At December 31, 2023, the fair value of securities available for sale totaled $142.2 million and included gross unrealized gains of $86,000 and gross unrealized losses of $12.2 million.

Current wording

Securities available for sale consist of U.S. government sponsored agencies, obligations of states and political subdivision, mortgage-backed securities, and corporate notes. Securities classified as available for sale, which management has the intent and ability to hold for an indefinite period of time, but not necessarily to maturity, are carried at fair value, with unrealized gains and losses, net of related deferred income taxes, included in stockholders’ equity as a separate component of other comprehensive income. The fair value of securities available for sale totaled $128.0 million and included minimal gross unrealized gains and gross unrealized losses of $12.9 million at June 30, 2024. At December 31, 2023, the fair value of securities available for sale totaled $142.2 million and included gross unrealized gains of $0.1 million and gross unrealized losses of $12.2 million.

Previous wording

Securities classified as held to maturity consist of U.S. treasury securities and obligations of states and political subdivisions. These securities, which management has the intent and ability to hold to maturity, are reported at amortized cost. Securities held to maturity totaled $111.7 million at March 31, 2024 and $103.3 million at December 31, 2023.

Current wording

Securities classified as held to maturity consist of U.S. treasury securities and obligations of states and political subdivisions. These securities, which management has the intent and ability to hold to maturity, are reported at amortized cost. Securities held to maturity totaled $110.6 million at June 30, 2024 and $103.3 million at December 31, 2023.

Previous wording

The Company had recognized net losses on sales of securities of $34,000 during the three months ended March 31, 2024. The Company had recognized net losses on sales of securities of $75,000 during the three months ended March 31, 2023.

Current wording

The Company had recognized minimal net losses on sales of securities during the six months ended June 30, 2024. The Company had recognized net losses on sales of securities of $0.1 million during the six months ended June 30, 2023.

Previous wording

Furthermore, the Company does not believe there are any expected credit losses in its HTM securities portfolio at March 31, 2024 or December 31, 2023. All U.S. Treasury securities have the full faith and credit backing of the United States government and the amount of obligations of states and political subdivisions in an unrealized loss position is immaterial to the financial statements.

Current wording

The Company does not believe there are any expected credit losses in its HTM securities portfolio at June 30, 2024 or December 31, 2023. All U.S. Treasury securities have the full faith and credit backing of the United States government and the amount of obligations of states and political subdivisions in an unrealized loss position is immaterial to the financial statements.

Previous wording

As of March 31, 2024, 214 debt securities had gross unrealized losses, with an aggregate depreciation of 5.3% from our amortized cost basis. The largest unrealized loss percentage of any single security was 24.4% (or $0.2 million) of its amortized cost. The largest unrealized dollar loss of any security was $1.0 million (or 16.6%).

Current wording

As of June 30, 2024, 211 debt securities had gross unrealized losses, with an aggregate depreciation of 5.5% from our amortized cost basis. The largest unrealized loss percentage of any single security was 22.6% (or $0.5 million) of its amortized cost. The largest unrealized dollar loss of any security was $0.9 million (or 15.2%).

Previous wording

Our liquidity is maintained through our investment portfolio, deposits, borrowings from the FHLB, and lines available from correspondent banks. Our highest priority is placed on growing noninterest bearing deposits through strong community involvement in the markets that we serve. Borrowings and brokered deposits are considered short-term supplements to our overall liquidity but are not intended to be relied upon for long-term needs. The Company currently has $1.71 billion in availability between borrowings and brokered deposits for future funding if liquidity needs were to develop. We believe that our present position is adequate to meet our current and future liquidity needs, and management knows of no trend or event that will have a material impact on the Company’s ability to maintain liquidity at satisfactory levels.

Current wording

Our liquidity is maintained through our investment portfolio, deposits, borrowings from the FHLB, and lines available from correspondent banks. Our highest priority is placed on growing noninterest bearing deposits through strong community involvement in the markets that we serve. Borrowings and brokered deposits are considered short-term supplements to our overall liquidity but are not intended to be relied upon for long-term needs. The Company currently has $1.73 billion in availability between borrowings and brokered deposits for future funding if liquidity needs were to develop. We believe that our present position is adequate to meet our current and future liquidity needs, and management knows of no trend or event that will have a material impact on the Company’s ability to maintain liquidity at satisfactory levels.

Previous wording

Capital Adequacy. Total stockholders’ equity was $609.3 million at March 31, 2024 compared to $619.8 million at December 31, 2023.

Current wording

Capital Adequacy. Total stockholders’ equity was $614.6 million at June 30, 2024 compared to $619.8 million at December 31, 2023.