WILSON BANK HOLDING CO

Deposits

The increases in assets in 2023 and 2022 were funded primarily by increases in deposits and the Company’s earnings. Total deposits, which are the principal source of funds for the Company, totaled $4,367,106,000 at December 31, 2023 compared to $3,892,705,000 at December 31, 2022, an increase of 12.19%. Included in deposits at December 31, 2023 were $69,135,000 in brokered deposits, compared to $35,024,000 at December 31, 2022. The increase in brokered deposits from December 31, 2022 to December 31, 2023 was the result of management's decision to increase liquidity to fund anticipated loan growth during 2023. The increase in total deposits since December 31, 2022 was primarily attributable to growth in market share which resulted in the opening of new deposit accounts, a targeted effort to increase customer time deposits and the increase in brokered deposits mentioned above. The Company has targeted local consumers, professionals and small businesses as its central clientele; therefore, deposit instruments in the form of demand deposits, savings accounts, money market demand accounts, certificates of deposits and individual retirement accounts are offered to customers. Management believes the markets in which it operates are attractive economic markets offering growth opportunities for the Company; however, the Company competes with several larger banks and community banks that have bank offices in these areas which may negatively impact market growth or maintenance of current market share. Even though the Company is in a very competitive market, management currently believes that its deposit market share can be maintained or expanded, though, as discussed below, such competition may force the Company to further increase the rates it pays on deposits.

The $474,401,000, or 12.19%, growth in deposits in 2023 was due to a $788,958,000, or 112.44%, increase in certificates of deposits and a $9,860,000, or 15.12%, increase in individual retirement accounts. This was partially offset by a $144,655,000, or 11.12%, decrease in money market accounts, a $135,920,000, or 12.70%, decrease in NOW accounts, a $25,180,000, or 6.07%, decrease in demand deposit accounts, and a $18,662,000, or 5.51%, decrease in savings accounts. The increase in time deposits is due to the Bank increasing rates to remain competitive in our market areas and customers shifting to these products from lower earning and non-interest earning accounts to take advantage of higher rates. The average rate paid on average total interest-bearing deposits was 2.27% for 2023 compared to 0.49% for 2022. The average rate paid in 2021 was 0.40%. Competitive pressure from other banks in our market area relating to deposit pricing could adversely affect the rates paid on deposit accounts as it limits our ability to lower deposit rates should short-term interest rates fall. It’s these same competitive pressures that may cause our deposit rates to continue to rise in an elevated rate environment. If either of these scenarios were to happen, our net interest margin would experience compression and our results of operations would be negatively impacted. As noted above, we raised rates on deposits to maintain liquidity levels and offer competitive rates in our markets. The ratio of average loans to average deposits was 83.2% in 2023, 75.5% in 2022, and 73.6% in 2021.

The average amounts and average interest rates for deposits for 2023 and 2022 are detailed in the following schedule:

At December 31, 2023 and 2022, we estimate that we had approximately $1.2 billion in uninsured deposits, which are the portion of deposit amounts that exceed the FDIC insurance limit. Approximately 28% of our total deposits exceeded the FDIC deposit insurance limits at December 31, 2023 while approximately 31% exceeded the FDIC deposit insurance limits at December 31, 2022. However, we offer large depositors access to the Certificate of Deposit Account Registry Service (“CDARS”) and the Insured Cash Sweep (“ICS Product”), which allows us to divide customers' deposits that exceed the FDIC insurance limits into smaller amounts, below the FDIC insurance limits, and place those excess deposits in other participating FDIC insured institutions with the convenience of managing all deposit accounts through our Bank. Our total deposits in CDARS and the ICS Products increased to $104,204,000, or 2.39% of total deposits, at December 31, 2023, compared to $4,730,000, or 0.12% of total deposits, at December 31, 2022.

The following schedule details the maturities of estimated uninsured time deposits greater than $250,000 at December 31, 2023: