BV Financial Inc

Previous wording

general economic conditions, either nationally or in our market areas, that are worse than expected including as a result of employment levels and labor shortages, and a potential recession or slowed economic growth;

Current wording

general economic conditions, either nationally or in our market areas, that are worse than expected, including as a result of unemployment levels and labor shortages, and any potential recession or slowed economic growth;

Previous wording

changes in the economic assumptions used to calculated the allowance for credit losses;

Current wording

changes in the economic assumptions used to calculate the allowance for credit losses;

Previous wording

changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;

Current wording

changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio;

Previous wording

The ACL is an estimate of the expected credit losses for loans held for investment and for off-balance sheet exposures. ASC 326, "Financial Instruments-Credit Losses," requires an immediate recognition of the credit loss expected to occur over the lifetime of a financial asset whether originated or purchased. Charge-offs are recorded to the ACL when management believes the loan in uncollectible. Subsequent recoveries, if any, are credited to the ACL. Management believes the ACL is maintained in accordance with GAAP and in compliance with appropriate regulatory guidelines. The ACL includes quantitative estimates of losses for collectively and individually evaluated loans. The quantitative estimate for collectively evaluated loans (other than investor commercial real estate loans) is determined using the average charge-off method that utilizes historical losses for all Maryland banks with assets less than $1 billion beginning in March 2000. The investor commercial real estate portfolio utilizes the national loss history for banks with assets less than $1 billion over the same time period. Adjustments are made to the historical loss factors under each scenario for economic conditions, portfolio concentrations, collateral values, the level and trend of delinquent and problem loans and internal changes in staffing, loan policies and monitoring of the portfolio. Loans are selected for individual evaluation primarily based on their payment status and whether the loan has been placed on non-accrual status. Loans on non-accrual status include all loans greater than 90 days delinquent and other loans with weaknesses sufficient for management to place these loans on non-accrual status. The ACL is measured on a collective basis when similar risk factors exist as determined by internal loan coding and assignment to a portfolio segment. The Company utilizes reasonable and supportable forecasts of future economic conditions when estimating the ACL on loans. The model's calculation also uses an adjustment for a 12-month forecast period utilizing the most recent 12-month economic forecast from the Board of Governors of the Federal Reserve System for national gross domestic product ("GDP"). The model compares the average history of loss rates described above to the forecasted GDP to determine the value of the forward-looking adjustment. The establishment of the allowance for credit losses is significantly affected by management's judgment and by economic and other uncertainties, and there is a likelihood that different amounts would be reported under different conditions or assumptions. The Federal Deposit Insurance Corporation and the Maryland Office of the Commissioner of Financial Regulation, as an integral part of their examination process, periodically review the allowance for credit losses for reasonableness and, as a result of such reviews, we may be required to increase our ACL or recognize loan charge-offs. The calculation of ACL excludes accrued interest…

Excerpt shortened here; the source contains the full paragraph.

Current wording

The ACL is an estimate of the expected credit losses for loans held for investment and for off-balance sheet exposures. ASC 326, "Financial Instruments-Credit Losses," requires an immediate recognition of the credit loss expected to occur over the lifetime of a financial asset whether originated or purchased. Charge-offs are recorded to the ACL when management believes a loan is uncollectible. Subsequent recoveries, if any, are credited to the ACL. Management believes the ACL is maintained in accordance with GAAP and in compliance with appropriate regulatory guidelines. The ACL includes quantitative estimates of losses for collectively and individually evaluated loans. The quantitative estimate for collectively evaluated loans (other than investor commercial real estate loans) is determined using the average charge-off method that utilizes historical losses for all Maryland banks with assets less than $1 billion beginning in March 2000. The investor commercial real estate portfolio utilizes the national loss history for banks with assets less than $1 billion over the same time period. Investor CRE loans are made nationwide, therefore, management deems it appropriate to utilize national loss rates when evaluating this portfolio. Adjustments are made to the historical loss factors under each scenario for economic conditions, portfolio concentrations, collateral values, the level and trend of delinquent and problem loans and internal changes in staffing, loan policies and monitoring of the portfolio. Loans are selected for individual evaluation primarily based on their payment status and whether the loan has been placed on non-accrual status. Loans on non-accrual status include all loans greater than 90 days delinquent and other loans with weaknesses sufficient for management to place these loans on non-accrual status. The ACL is measured on a collective basis when similar risk factors exist as determined by internal loan coding and assignment to a portfolio segment. The Company utilizes reasonable and supportable forecasts of future economic conditions when estimating the ACL on loans. The model's calculation also uses an adjustment for a 12-month forecast period utilizing the most recent 12-month economic forecast from the Federal Reserve Board for national gross domestic product ("GDP"). The model compares the average history of loss rates described above to the forecasted GDP to determine the value of the forward-looking adjustment. The establishment of the ACL is significantly affected by management's judgment and by economic and other uncertainties, and different amounts may be reported under different conditions or assumptions. The Federal Deposit Insurance Corporation and the Maryland Office of the Commissioner of Financial Regulation, as an integral part of their examination process, periodically review the ACL for reasonableness and, as a result of such reviews, we may be required to increase our ACL or recognize loan charge-offs. The calc…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

The excess purchase price over the fair value of net assets from acquisitions, or goodwill, is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates it is likely impairment has occurred. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount. In any given year the Company may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess of its carrying value. If it is not more likely than not that the fair value of the reporting unit is in excess of the carrying value, or if the Company elects to bypass the qualitative assessment, a quantitative impairment test is performed. In performing a quantitative test for impairment, the fair value of net assets is estimated based on analyses of the Company’s market value, discounted cash flows, and peer values. The determination of goodwill impairment is sensitive to market-based economics and other key assumptions used in determining or allocating fair value. Variability in the market and changes in assumptions or subjective measurements used to estimate fair value are reasonably possible and may have a material impact on our consolidated financial statements or results of operations. Our annual goodwill impairment test is performed each year as of September 30. The Company performed its 2023 goodwill impairment qualitative assessment and determined its goodwill was not considered impaired. We monitor our performance and evaluate our goodwill for impairment annually or more frequently as needed.

Current wording

The excess purchase price over the fair value of net assets from acquisitions, or goodwill, is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates it is likely impairment has occurred. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount. In any given year the Company may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess of its carrying value. If it is not more likely than not that the fair value of the reporting unit is in excess of the carrying value, or if the Company elects to bypass the qualitative assessment, a quantitative impairment test is performed. In performing a quantitative test for impairment, the fair value of net assets is estimated based on analyses of the Company’s market value, discounted cash flows, and peer values. The determination of goodwill impairment is sensitive to market-based economics and other key assumptions used in determining or allocating fair value. Variability in the market and changes in assumptions or subjective measurements used to estimate fair value are reasonably possible and may have a material impact on our consolidated financial statements or results of operations. Our annual goodwill impairment test is performed each year as of September 30. The Company performed its 2023 goodwill impairment qualitative assessment and determined its goodwill was not considered impaired.

Previous wording

At March 31, 2024, we had a net deferred tax asset totaling $8.7 million. In accordance with ASC Topic 740 “Income Taxes,” we use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If currently available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established if it is not more likely than not realizable. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting deferred tax assets and liabilities. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets are inherently subjective and are reviewed on a regular basis as regulatory or business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets. A valuation allowance that results in additional income tax expense in the period in which it is recognized would negatively affect income. Management believes, based upon current facts, that it is more likely than not that there will be sufficient taxable income in future years to realize its federal and state deferred tax asset.

Current wording

At June 30, 2024, we had a net deferred tax asset totaling $8.8 million. In accordance with ASC Topic 740 “Income Taxes,” we use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If currently available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established if it is not more likely than not realizable. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting deferred tax assets and liabilities. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets are inherently subjective and are reviewed on a regular basis as regulatory or business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets. A valuation allowance that results in additional income tax expense in the period in which it is recognized would negatively affect income. Management believes, based upon current facts, that it is more likely than not that there will be sufficient taxable income in future years to realize its federal and state deferred tax asset.

Previous wording

Cash and Cash Equivalents. Cash and cash equivalents increased $5.1 million, or 6.9%, to $78.8 million at March 31, 2024 from $73.7 million at December 31, 2023 primarily due to the increase in deposits.

Current wording

Cash and Cash Equivalents. Cash and cash equivalents increased $16.9 million, or 22.9%, to $90.6 million at June 30, 2024 from $73.7 million at December 31, 2023 primarily due to the increase in deposits and proceeds from the maturity and prepayment of securities coupled with a lower level of loan originations.

Previous wording

Net Loans Receivable. Loans receivable increased $3.9 million, or 0.56%, to $708.7 million at March 31, 2024 from $704.8 million at December 31, 2023. Increases in commercial and industrial loans of $7.0 million and investor commercial real estate loans of $4.9 million offset decreases in owner occupied one-to-four loans of $1.4 million, non-owner occupied one- to four-family loans of $4.1 million and owner occupied commercial real estate loans of $2.4 million.

Current wording

Loans. Loans receivable decreased $2.4 million, or 0.34%, to $702.4 million at June 30, 2024 from $704.8 million at December 31, 2023. Decreases in one- to four-family real estate loans of $13.2 million and owner-occupied commercial real estate loans of $16.2 million were partially offset by increases in investor commercial real estate loans and commercial loans of $26.9 million.

Previous wording

Our allowance for credit losses – loans was $8.5 million at March 31, 2024 compared to $8.55 million at December 31, 2023. The slight decrease in the required ACL resulted from lower historical loss rates and lower life of loan calculations offsetting the higher balances of loans outstanding at March 31, 2024 compared to December 31, 2023. The ratio of our allowance for credit losses to total loans was 1.20% at March 31, 2024 compared to 1.19% at March 31, 2023, while the allowance for credit losses to non-performing loans was 79.2% at March 31, 2024 compared to 176.5% at March 31, 2023.

Current wording

Our allowance for credit losses – loans was relatively unchanged at $8.5 million at June 30, 2024. The slight decrease in the ACL resulted from lower historical loss rates and lower life of loan calculations. The ratio of our allowance for credit losses to total loans was 1.22% at June 30, 2024 compared to 1.16% at June 30, 2023, while the allowance for credit losses to non-performing loans was 103.88% at June 30, 2024 compared to 179.14% at June 30, 2023.

Previous wording

Securities. Securities available for sale (“AFS”) decreased $1.0 million, or 3.0%, to $33.8 million at March 31, 2024 from $34.8 million at December 31, 2023. The decrease was due to new purchases not fully replacing maturities and paydowns in the portfolio. Securities held-to-maturity were relatively unchanged at $10.2 million.

Current wording

Securities. Securities available for sale decreased $1.9 million, or 5.5%, to $32.9 million at June 30, 2024 from $34.8 million at December 31, 2023. The decrease was due to new purchases not fully replacing maturities and paydowns in the portfolio. Securities held-to-maturity were relatively unchanged at $10.1 million.

Previous wording

Total Liabilities. Total liabilities increased $4.6 million or 0.7%, to $690.8 million at March 31, 2024 from $686.2 million at December 31, 2023. The increase was primarily due to an increase in total deposits of $5.4 million, and an increase in escrow accounts and other accrued balances offsetting the pay-off of the junior subordinated debt of $3.0 million.

Current wording

Liabilities. Liabilities increased $5.5 million, or 0.8%, to $691.7 million at June 30, 2024 from $686.2 million at December 31, 2023. The increase was primarily due to an increase in deposits of $6.2 million, and an increase in escrow accounts and other accrued balances of $1.8 million, offset by the pay-off of $3.0 million junior subordinated debt of $3.0 million that the Company had assumed in a prior transaction.

Previous wording

Deposits. Total deposits increased $5.4 million, or 0.85%, to $639.5 million at March 31, 2024 from $634.1 million at December 31, 2023. Interest-bearing deposits increased $8.3 million, or 1.7%, to $500.4 million at March 31, 2024 from $492.1 million at December 31, 2023. Noninterest bearing deposits decreased $2.9 million, or 2.1%, to $139.1 million at March 31, 2024 from $142.0 million at December 31, 2023. During the first quarter of 2024, the Company replaced $10.0 million in retail certificates of deposits with $10 million of brokered deposits at a cost lower than that would have been required to retain the retail certificates.

Current wording

Deposits. Total deposits increased $6.2 million, or 1.0%, to $640.3 million at June 30, 2024 from $634.1 million at December 31, 2023. Interest-bearing deposits increased $7.2 million, or 1.5%, to $499.3 million at June 30, 2024 from $492.1 million at December 31, 2023. Noninterest bearing deposits decreased $1.0 million, or 0.7%, to $141.0 million at June 30, 2024 from $142.0 million at December 31, 2023. During the first quarter of 2024, the Company replaced $10.0 million in retail certificates of deposit with $10.0 million of brokered deposits at a lower cost than what would have been required to retain the retail certificates.

Previous wording

Stockholders’ Equity. Stockholders’ equity increased $2.7 million, or 1.3%, to $201.8 million at March 31, 2024, primarily due to net income.

Current wording

Stockholders’ Equity. Stockholders’ equity increased $6.4 million, or 3.2%, to $205.5 million at June 30, 2024, primarily due to net income of $7.0 million.

Previous wording

Comparison of Operating Results for the Three Months Ended March 31, 2024 and 2023

Current wording

Comparison of Operating Results for the Three and Six Months Ended June 30, 2024 and 2023

Previous wording

Average Balances and Yields. The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Non-accrual loans are included in the computation of average balances only. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Average balances exclude loans held for sale, if applicable. Net deferred loan origination fees totaled $1.9 million and $1.7 million at March 31, 2024 and 2023, respectively.

Current wording

Average Balances and Yields. The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Non-accrual loans are included in the computation of average balances only. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Average balances exclude loans held for sale, if applicable. Net deferred loan origination fees totaled $2.0 million and $1.6 million at June 30, 2024 and 2023, respectively.

Previous wording

The following table sets forth the effects of changing rates and volumes on our net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by current rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume which cannot be segregated have been allocated proportionately based on the changes due to rate and volume.

Current wording

The following table sets forth the effects of changing rates and volumes on our net interest income for the three months ended June 30, 2024 and 2023. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by current rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume which cannot be segregated have been allocated proportionately based on the changes due to rate and volume.

Previous wording

Interest Income. Interest income increased $1.3 million, or 13.6%, to $11.0 million for the three months ended March 31, 2024 from $9.7 million for the three months ended March 31, 2023. The increase was due primarily to increases in interest income on loans, and interest income on cash, cash equivalents and other interest-earning assets. Interest income on loans increased $1.0 million, or 11.5%, to $9.8 million for the three months ended March 31, 2024 from $8.8 million for the three months ended March 31, 2023 due to increases in the average balance of loans and the average rate earned on loans. The average balance of loans increased $40.5 million, or 6.1%, to $708.4 million for the three months ended March 31, 2024 from $667.9 million for the three months ended March 31, 2023. The weighted average yield on loans increased 21 basis points to 5.54% for the three months ended March 31, 2024 compared to 5.33% for the three months ended March 31, 2023, as variable rate loans reset to higher interest rates and the rates on new loans exceeded the rates on paid off loans due to the higher interest rate environment. Interest income on cash, cash equivalents and other interest-earning assets increased $268,000 to $824,000 for the three months ended March 31, 2024 from $556,000 for the three months ended March 31, 2023 due to an increase in the average balance of cash, cash equivalents and other interest-earning assets and the average rate.

Current wording

Interest Income. Interest income increased $1.1 million, or 10.2%, to $11.6 million for the three months ended June 30, 2024 from $10.5 million for the three months ended June 30, 2023. The increase was due primarily to increases in interest income on loans, and interest income on cash, cash equivalents and other interest-earning assets. Interest income on loans increased $850,000 or 9.1%, to $10.2 million for the three months ended June 30, 2024 from $9.3 million for the three months ended June 30, 2023 due to increases in the average balance of loans and the average yield on loans. The average balance of loans increased $26.3 million, or 3.9%, to $705.5 million for the three months ended June 30, 2024 from $679.2 million for the three months ended June 30, 2023. The weighted average yield on loans increased 28 basis points to 5.79% for the three months ended June 30, 2024 compared to 5.51% for the three months ended June 30, 2023, as variable rate loans reset to higher interest rates and the rates on new loans exceeded the rates on paid off loans due to the higher interest rate environment. Interest income on cash, cash equivalents and other interest-earning assets increased $200,000 to $1.0 million for the three months ended June 30, 2024 from $843,000 for the three months ended June 30, 2023 due to an increase in the average balance of cash, cash equivalents and other interest-earning assets and a 10 basis point increase in the average yield.

Previous wording

The increase in interest expense on deposits was due to a 109 basis point increase in the average rate, offset by a $16.5 million decrease in the average balance of interest-bearing deposits to $492.0 million at March 31, 2024 from $508.5 million for the three months ended March 31, 2023. The average rate on interest-bearing deposits was 1.62% for the three months ended March 31, 2024 compared to 0.53% for the three months ended March 31, 2023.

Current wording

The increase in interest expense on deposits was due to a 80 basis point increase in the average rate, offset by a $9.0 million decrease in the average balance of interest-bearing deposits to $498.5 million at June 30, 2024 from $507.5 million for the three months ended June 30, 2023. The average rate on interest-bearing deposits was 1.80% for the three months ended June 30, 2024 compared to 1.00% for the three months ended June 30, 2023.

Previous wording

Interest expense on FHLB advances decreased to $0 for the three months ended March 31, 2024 from $289,000 in the three months ended March 31, 2023 as all advances were paid off.

Current wording

We had no interest expense on FHLB advances for the three months ended June 30, 2024 compared to $495,000 for the three months ended June 30, 2023 as all advances were paid off.

Previous wording

General. Net income decreased by $541,000 or 17.4% for the three months ended March 31, 2024, compared to $3.1 million for the three months ended March 31, 2023. The decrease was due primarily to the write-off (increase in interest expense) of the remaining purchase accounting fair market value adjustment of $566,000 upon the pay-off of $3.0 million in junior subordinated debt assumed in a prior acquisition.

Current wording

Interest expense on subordinated debentures decreased $76,000, or 14.0%, to $466,000 for the three months ended June 30, 2024 compared to $541,000 for the three months ended June 30, 2023. The decrease was due primarily to the pay-off of $3.0 million in junior subordinated debt assumed in a prior acquisition.

Previous wording

Interest Expense. Interest expense increased $1.5 million, or 104.4%, to $3.0 million for the three months ended March 31, 2024 compared to $1.5 million for the three months ended March 31, 2023, due to a $1.3 million increase in interest expense on deposits as rates paid increased and depositors moved money into higher cost certificate of deposit accounts, a $521,000 increase in interest expense on subordinated debt due to the write-off of the fair market value adjustment noted above somewhat offset by a $289,000 decrease in interest expense on advances from the FHLB as there were no advances outstanding in the quarter ended March 31, 2024.

Current wording

Interest expense increased $2.0 million or 51.7% to $5.7 million for the six months ended June 30, 2024 compared to $3.8 million for the six months ended June 30, 2023 primarily due to a $2.3 million increase in interest expense on deposits as rates paid increased and depositors moved money into higher-cost certificate of deposit accounts, and an increase of $445,000 in interest expense on subordinated debt, offset by a $783,000 decrease in interest expense on borrowed money as there were no advances outstanding from the FHLB during the six months ended June 30, 2024.

Previous wording

Interest expense on subordinated debentures increased $521,000, or 97.6%, to $1.1 million for the three months ended March 31, 2024 compared to $534,000 for the three months ended March 31, 2023.The increase was due primarily to the write-off (increase in interest expense) of the remaining purchase accounting fair market value adjustment of $566,000 upon the pay-off of $3.0 million in junior subordinated debt assumed in a prior acquisition.

Current wording

Interest expense on subordinated debentures increased $445,000, or 41.4%, to $1.5 million for the six months ended June 30, 2024 compared to $1.1 million for the six months ended June 30, 2023. The average rate on subordinated debentures increased 279 basis points to 8.64% for the six months ended June 30, 2024 compared to 5.85% for the six months ended June 30, 2023. The increase was due primarily to the write-off (increase in interest expense) of the remaining purchase accounting fair market value adjustment of $566,000 upon the pay-off of $3.0 million in junior subordinated debt assumed in a prior acquisition.

Previous wording

Net Interest Income. Net interest income was $8.0 million for the three months ended March 31, 2024 compared to $8.2 million in the three months ended March 31, 2023. The net interest margin for the three months ended March 31, 2024 was 3.91% compared to 4.34% for the three months ended March 31, 2023. The 125 basis point increase in the cost of interest-bearing liabilities offset the higher average balances and rates earned on loans and short-term investments. Included in interest expense is the above-mentioned write-off of the $566,000 remaining fair market value adjustment on the pay-off the $3.0 million junior subordinated debt. Additionally, the cost of interest-bearing deposits increased by 109 basis points to 1.62% in the quarter ended March 31, 2024 compared to the quarter ended March 31, 2023.

Current wording

Net Interest Income. Net interest income was $8.9 million for the three months ended June 30, 2024 compared to $8.2 million in the three months ended June 30, 2023. The net interest margin for the three months ended June 30, 2024 was 4.33% compared to 4.19% for the three months ended June 30, 2023. The increase in net interest income was due to higher average balances of interest-earning assets and higher yields on these assets offsetting the increase in interest expense due to higher rates paid on deposits.

Previous wording

Non-interest Income. For the three months ended March 31, 2024, noninterest income totaled $578,000 compared to $807,000 in the quarter ended March 31, 2023. The decrease is almost entirely due to lower income on insurance policies. In the quarter ended March 31, 2023, the Company received a $235,000 death benefit on the policies.

Current wording

Non-interest Income. For the three months ended June 30, 2024, noninterest income totaled $596,000 compared to $1.4 million for the quarter ended June 30, 2023. In the quarter ended June 30, 2023, the Company recognized a gain of $678,000 on the sale of foreclosed real estate.

Previous wording

Non-interest Expense. For the three months ended March 31, 2024, noninterest expense totaled $4.9 million compared to $4.7 million for the three months ended March 31, 2023. Compensation and benefits expenses increased by 8.7% due to increases in staffing and salary levels. Other expenses increased $116,000 or 22.7% primarily due to higher fraud losses. Professional fees decreased by $88,000 or 44.0% due to the recovery of previously expensed legal fees of $109,000 on the disposition of a problem loan. Foreclosed real estate expenses decreased by $122,000 or 96.1% due to the sale of large foreclosed real estate properties in 2023.

Current wording

Non-interest Expense. For the three months ended June 30, 2024, noninterest expense totaled $4.9 million compared to $4.5 million for the three months ended June 30, 2023. Increases in compensation and benefits increased by $232,000, or 8.1%, due to increases in staffing and salary levels, occupancy expense increased by $43,000, or 11.7%, due to higher rent and maintenance expenses, data processing expense increased by $334,000, or 10.0%, due to annual increases and project expenses and professional fees increased due to price increases and the costs of being a public company.

Previous wording

Liquidity. Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities and proceeds from maturities of securities. We also have the ability to borrow from the FHLB of Atlanta. At March 31, 2024, we had $169.1 million available under a line of credit with the FHLB of Atlanta, and had $25.0 million of FHLB in unfunded letters of credit used to secure municipal deposits outstanding against the line of credit with the FHLB of Atlanta. This resulted in additional borrowing availability from the FHLB of $144.1 million. The Company also has a short term unsecured facility from a correspondent bank in the amount of $20.0 million.

Current wording

Liquidity. Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities and proceeds from maturities of securities. We also have the ability to borrow from the FHLB of Atlanta. At June 30, 2024, we had $162.5 million available under a line of credit with the FHLB of Atlanta, and had $25.0 million of FHLB in unfunded letters of credit used to secure municipal deposits outstanding against the line of credit with the FHLB of Atlanta. This resulted in additional borrowing availability from the FHLB of $137.5 million, none of which was outstanding at June 30, 2024. The Company also has a short-term unsecured facility from a correspondent bank in the amount of $20.0 million.

Previous wording

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments including interest-bearing demand deposits. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period. Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. We are committed to maintaining a strong liquidity position.

Current wording

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments including interest-bearing demand deposits. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period. We are committed to maintaining a strong liquidity position.

Previous wording

We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained. However, if a substantial portion of these deposits is not retained, we may utilize FHLB advances, brokered deposits or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense. At March 31, 2024 and March 31, 2023, the Company had $10 million and $0 in brokered deposits, respectively. The Bank's uninsured deposits totaled $190.1 million or 27.9% of total deposits of which $57.2 million were secured using the market value of pledged collateral or letters of credit issued by FHLB, and an additional $42.5 million were deposits of BV Financial, Inc. at the Bank.

Current wording

We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained. However, if a substantial portion of these deposits is not retained, we may utilize FHLB advances, brokered deposits or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense. At June 30, 2024, the Company had $10.0 million in brokered deposits and no brokered deposits at June 30, 2023. In addition, we had $57.4 million of municipal deposits at June 30, 2024, which represented 9.0% of total deposits. The Bank's uninsured deposits totaled $198.3 million, or 29.0% of total deposits, of which $50.6 million were secured using the market value of pledged collateral or letters of credit issued by FHLB, and an additional $44.5 million were deposits of the Company at the Bank.