FIRST NORTHERN COMMUNITY BANCORP
For the period ended Jun 30, 2025. Filed Aug 8, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 8, 2025
FNRN$17.01-4.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-09.
0001140361-25-018141
ITEM 2. – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-08.
0001140361-25-029874
ITEM 2. – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 99 previous paragraphs and 102 current paragraphs.
52 unchanged; 35 reworded; 15 added; 11 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 60 previous and 65 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
SUMMARY FINANCIAL DATA
Current report
(3) Net interest margin is computed by dividing net interest income by total average interest-earning assets.
Current report
Interest income on certificates of deposit for the six months ended June 30, 2025 was down 10.2% from the same period in 2024, decreasing from $354,000 to $318,000, and was down 8.2% for the three months ended June 30, 2025 over the same period in 2024, decreasing from $171,000 to $157,000. The decrease in interest income on certificates of deposit for the six months ended June 30, 2025 as compared to the same period a year ago was primarily due to a decrease in average balances of certificates of deposit, which was partially offset by a 16 basis point increase in yield on certificates of deposit. The decrease in interest income on certificates of deposit for the three months ended June 30, 2025 as compared to the same period a year ago was primarily due to a decrease in average balances of certificates of deposit, which was partially offset by a 14 basis point increase in yield on certificates of deposit.
Current report
Interest income on investment securities available-for-sale for the six months ended June 30, 2025 was up 43.8% from the same period in 2024, increasing from $6,446,000 to $9,269,000, and was up 35.2% for the three months ended June 30, 2025 over the same period in 2024, increasing from $3,349,000 to $4,528,000. The increase in interest income on investment securities for the six months ended June 30, 2025 as compared to the same period a year ago was primarily due to an increase in average investment securities, coupled with a 69 basis point increase in investment yields. The increase in interest income on investment securities for the three months ended June 30, 2025 as compared to the same period a year ago was primarily due to an increase in average investment securities, coupled with a 57 basis point increase in investment yields.
Current report
Interest income on other earning assets for the six months ended June 30, 2025 was down 0.2% from the same period in 2024, decreasing from $523,000 to $522,000, and was down 6.4% for the three months ended June 30, 2025 over the same period in 2024,
Current report
decreasing from $267,000 to $250,000. This income is primarily derived from dividends received from the Federal Home Loan Bank. The decrease in interest income on other earning assets for the six months ended June 30, 2025 as compared to the same period a year ago was primarily due to a 13 basis point decrease in yield on other earning assets, which was partially offset by an increase in average balances of other earning assets. The decrease in interest income on other earning assets for the three months ended June 30, 2025 as compared to the same period a year ago was due to a 93 basis point decrease in yield on other earning assets, which was partially offset by an increase in average balances of other earning assets.
Current report
Interest expense on interest-bearing liabilities for the six months ended June 30, 2025 was up 6.7% from the same period in 2024, increasing from $6,733,000 to $7,181,000, and was up 1.9% for the three months ended June 30, 2025 over the same period in 2024, increasing from $3,552,000 to $3,621,000. The increase in interest expense for the six months ended June 30, 2025 as compared to the same period a year ago was primarily due to a 6 basis point increase in average interest-bearing liabilities yield, coupled with an increase in average balance of interest-bearing liabilities. The increase in interest expense for the three months ended June 30, 2025 as compared to the same period a year ago was primarily due to an increase in average balance of interest-bearing liabilities, which was partially offset by a 1 basis point decrease in average interest-bearing deposit yield.
Current report
Provision for credit losses for the six months ended June 30, 2025 was up 13.3% from the same period in 2024, increasing from $750,000 to $850,000. There was no provision for credit losses for the three months ended June 30, 2025, compared to $1,050,000 for the same period last year. Negative trends in forecast factors coupled with an increase in loans receivable contributed to an increase in reserves for collectively evaluated loans during the quarter ended June 30, 2025. This was offset by a decrease in specific reserves due to a decrease in nonaccrual loans requiring specific reserves. Specific reserves recorded during the quarter ended March 31, 2025 were released during the quarter ended June 30, 2025 primarily due to securing additional collateral and receiving a paydown on a nonaccrual loan relationship. The provision recorded for the six months ended June 30, 2025 was primarily due to increases in loans receivable and unfunded commitments coupled with the negative trends in forecast factors.
Current report
Non-interest income was down 0.03% for the six months ended June 30, 2025 from the same period in 2024, decreasing from $2,991,000 to $2,990,000. The decrease was primarily driven by decreases in service charges on deposit accounts and mortgage brokerage income, which was partially offset by increases in gains on sales of loans held-for-sale and investment and brokerage services income.
Current report
Total non-interest expenses were up 4.5% for the six months ended June 30, 2025 from the same period in 2024, increasing from $21,526,000 to $22,483,000. The increase was primarily due to increases in salaries and employee benefits, occupancy and equipment, data processing and other expenses. The increase in salaries and employee benefits is primarily due to an increase in full-time equivalent employees. The increase in occupancy and equipment was primarily due to an increase in service contracts related to maintaining facilities. The increase in data processing was primarily due to an increase in costs of service contracts. The increase in other expenses is primarily due to increases in legal and consulting fees.
Current report
Total non-interest expenses were up 5.8% for the three months ended June 30, 2025 from the same period in 2024, increasing from $10,299,000 to $10,893,000. The increase was primarily due to increases in salaries and employee benefits, occupancy and equipment and data processing, which was partially offset by a decrease in other expenses. The increase in salaries and employee benefits is primarily due to an increase in full-time equivalent employees. The increase in occupancy and equipment was primarily due to an increase in service contracts. The increase in data processing was primarily due to an increase in costs of service contracts. The decrease in other expenses was primarily due to decreases in loan collection expenses, debit card expenses, and sundry losses.
Current report
Index
Current report
Index
Current report
Index
Current report
ITEM 3. – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Removed paragraphs (11)
Previous report
SUMMARY
Previous report
Distribution of Average Statements of Condition and Analysis of Net Interest Income
Previous report
(in thousands, except percentage amounts)
Previous report
Distribution of Average Statements of Condition and Analysis of Net Interest Income
Previous report
(in thousands, except percentage amounts)
Previous report
Interest income on certificates of deposit for the three months ended March 31, 2025 was down 12.0% from the same period in 2024, decreasing from $183,000 to $161,000. The decrease was primarily due to a decrease in average balances of certificates of deposit, which was partially offset by an 18 basis point increase in certificates of deposit yields.
Previous report
Interest income on investment securities available-for-sale for the three months ended March 31, 2025 was up 53.1% from the same period in 2024, increasing from $3,097,000 to $4,741,000. The increase was primarily due to an 80 basis point increase in yields on investment securities coupled with an increase in average balances of investment securities.
Previous report
Interest expense on deposits for the three months ended March 31, 2025 was up 11.9% from the same period in 2024, increasing from $3,181,000 to $3,560,000. The increase in interest expense was primarily due to a 12 basis point increase in average interest-bearing deposits yield coupled with an increase in average interest-bearing deposits.
Previous report
There was a provision for credit losses of $850,000 for the three months ended March 31, 2025, compared to a reversal of provision for credit losses of $300,000 for the three months ended March 31, 2024. The allowance for credit losses was approximately $16,535,000, or 1.56% of total loans, at March 31, 2025, compared to $15,885,000, or 1.49% of total loans, at December 31, 2024. During the quarter ended March 31, 2025, the levels of forecasted national unemployment remained relatively stable. The GDP forecast called for a generally slowing trend, but still positive economic growth. Forecasted median single-family home prices called for lower home price growth, slowing close to zero. During the quarter ended March 31, 2025, there was an increase in nonaccrual loans requiring specific reserves. This was partially offset by a decrease in total reserve required due to a decrease in calculated loss rates as of March 31, 2025. As a result, the Company recorded provision for credit losses of $850,000 for the three months ended March 31, 2025.
Previous report
Total non-interest expenses were up 3.2% for the three months ended March 31, 2025 from the same period in 2024, increasing from $11,227,000 to $11,590,000. The increase was primarily due to increases in consulting fees, which was partially offset by a decrease in salaries and employee benefits. The increase in consulting fees was primarily due to staffing searches. The decrease in salaries and employee benefits was primarily due to decreases in stock compensation, contingent compensation and profit sharing expense, which was partially offset by an increase in group insurance expense.
Previous report
for additional information.
Reworded paragraphs (35)
Previous wording
This overview of Management’s Discussion and Analysis highlights selected information in this report and may not contain all of the information that is important to you. For a more complete understanding of trends, events, commitments, uncertainties, liquidity, capital resources and critical accounting estimates, you should carefully read this entire report and any other reports to the Securities and Exchange Commission (“SEC”), together with our Consolidated Financial Statements and the Notes to Consolidated Financial Statements included in our 2024 Form 10-K for the year ended December 31, 2024.
Current wording
This overview of Management’s Discussion and Analysis highlights selected information in this report and may not contain all of the information that is important to you. For a more complete understanding of trends, events, commitments, uncertainties, liquidity, capital resources and critical accounting estimates, you should carefully read this entire report and our other reports to the SEC, together with our Consolidated Financial Statements and the Notes to Consolidated Financial Statements included in our 2024 Form 10-K.
Previous wording
Significant results and developments for the Company during the first quarter 2025 included:
Current wording
Significant results and developments during the second quarter and year-to-date 2025 included:
Previous wording
The Company recorded net income of $3,671,000 for the three months ended March 31, 2025, representing a decrease of $605,000 from net income of $4,276,000 for the same period in 2024.
Current wording
The Company recorded net income of $9,137,000 for the six months ended June 30, 2025, representing an increase of $437,000, or 5.0%, from net income of $8,700,000 for the same period in 2024. The Company recorded net income of $5,466,000 for the three months ended June 30, 2025, representing an increase of $1,042,000, or 23.6%, from net income of $4,424,000 for the same period in 2024.
Previous wording
The following tables present a summary of the results for the three months ended March 31, 2025 and 2024, and a summary of our financial condition at March 31, 2025 and December 31, 2024:
Current wording
The following tables present a summary of the results for the three and six months ended June 30, 2025 and 2024, and a summary of financial condition at June 30, 2025 and December 31, 2024.
Previous wording
Following is an analysis of changes in interest income and expense (dollars in thousands) for the three months ended March 31, 2025 over the three months ended March 31, 2024 and the three months ended March 31, 2025 over the three months ended December 31, 2024. Changes not solely due to interest rate or volume have been allocated proportionately to interest rate and volume.
Current wording
Following is an analysis of changes in interest income and expense (dollars in thousands) for the three months ended June 30, 2025 over the three months ended June 30, 2024, the six months ended June 30, 2025 over the six months ended June 30, 2024, and the three months ended June 30, 2025 over the three months ended March 31, 2025. Changes not solely due to interest rate or volume have been allocated proportionately to interest rate and volume.
Previous wording
The assets of the Company set forth in the Unaudited Condensed Consolidated Balance Sheets reflect a $7,731,000, or 6.5%, decrease in cash and cash equivalents, a $3,315,000, or 0.5%, increase in investment securities available-for-sale, and a $6,057,000, or 0.6%, decrease in net loans held-for-investment from December 31, 2024 to March 31, 2025. The decrease in cash and cash equivalents was primarily due to a decrease in deposit balances and increase in investment securities due to purchases of available-for-sale securities, which was partially offset by a decrease in loans due to loan payoffs. The increase in investment securities was due to purchases of available-for-sale securities, which was partially offset by paydowns and maturities of available-for-sale securities. The decrease in net loans held-for-investment was primarily due to payoffs of commercial real estate and agriculture loans, which was partially offset by originations of commercial loans.
Current wording
The assets of the Company set forth in the Unaudited Condensed Consolidated Balance Sheets reflect a $7,403,000, or 6.2%, increase in cash and cash equivalents, a $1,498,000, or 9.3%, decrease in certificates of deposit, a $40,303,000, or 6.4%, decrease in investment securities available-for-sale, and a $16,606,000, or 1.6%, increase in net loans held-for-investment from December 31, 2024 to June 30, 2025. The increase in cash and cash equivalents was primarily due to a decrease in investment securities due to net proceeds from calls, maturities, and sales of available-for-sale securities and principal repayments on available-for-sale securities, which was partially offset by an increase in loans due to net loan originations coupled with a decrease in deposit balances. The decrease in certificates of deposits was due to net maturities and repayments of certificates of deposit. The increase in loans held-for-investment was primarily due to net originations of commercial loans, which was partially offset by net payoffs of commercial real estate, agriculture, and residential mortgage loans.
Previous wording
The liabilities of the Company set forth in the Unaudited Condensed Consolidated Balance Sheets reflect a decrease in total deposits of $25,282,000, or 1.5%, from December 31, 2024 to March 31, 2025. The overall decrease in total deposits was primarily due to seasonal fluctuations due to changes in market conditions and monetary policy.
Current wording
The liabilities of the Company set forth in the Unaudited Condensed Consolidated Balance Sheets reflect a decrease in total deposits of $36,812,000, or 2.2%, from December 31, 2024 to June 30, 2025. The overall decrease in total deposits was primarily due to seasonal fluctuations due to changes in market conditions and monetary policy coupled with the payoff of brokered CDs.
Previous wording
The Federal Open Market Committee kept the Federal Reserve's benchmark rate range at 4.25% to 4.50% during the three months ended March 31, 2025.
Current wording
The Federal Open Market Committee kept the Federal Reserve's benchmark rate range at 4.25% to 4.50% during the six months ended June 30, 2025.
Previous wording
Interest income on loans for the three months ended March 31, 2025 was up 0.9% from the same period in 2024, increasing from $13,475,000 to $13,602,000. The increase in interest income on loans for the three months ended March 31, 2025 as compared to the same period a year ago was primarily due to a 13 basis point increase in yield on loans, which was partially offset by a decrease in average balance of loans.
Current wording
Interest income on loans for the six months ended June 30, 2025 was up 3.4% from the same period in 2024, increasing from $27,305,000 to $28,231,000, and was up 5.8% for the three months ended June 30, 2025 over the same period in 2024, increasing from $13,830,000 to $14,629,000. The increase in interest income on loans for the six months ended June 30, 2025 as compared to the same period a year ago was primarily due to a 20 basis point increase in yield on loans, which was partially offset by a decrease in average balance of loans. The increase in interest income on loans for the three months ended June 30, 2025 as compared to the same period a year ago was primarily due to a 28 basis point increase in yield on loans coupled with an increase in average balance of loans. The increase in yield on loans for the three and six months ended June 30, 2025 was also partially due to the payoff of a nonaccrual loan and related interest recovery.
Previous wording
Interest income on interest-bearing due from banks for the three months ended March 31, 2025 was down 52.6% from the same period in 2024, decreasing from $1,532,000 to $727,000. The decrease was primarily due to a decrease in average interest-bearing due from banks balance coupled with an 81 basis point decrease in interest-bearing due from yields.
Current wording
Interest income on interest-bearing due from banks for the six months ended June 30, 2025 was down 49.6% from the same period in 2024, decreasing from $3,445,000 to $1,737,000, and was down 47.2% for the three months ended June 30, 2025 over the same period in 2024, decreasing from $1,913,000 to $1,010,000. The decrease in interest income on interest-bearing due from banks for the six months ended June 30, 2025 as compared to the same period a year ago was primarily due to a decrease in average balances of interest-bearing due from banks, coupled with a 97 basis point decrease in yield on interest-bearing due from banks. The decrease in interest income on interest-bearing due from banks for the three months ended June 30, 2025 as compared to the same period a year ago was primarily due to a decrease in average balances of interest-bearing due from banks, coupled with a 115 basis point decrease in yield on interest-bearing due from banks.
Previous wording
The Company had no Federal Funds sold balances during the three months ended March 31, 2025 and March 31, 2024.
Current wording
The Company had no Federal Funds sold balances during the three and six months ended June 30, 2025 and June 30, 2024.
Previous wording
Non-interest income was down 3.6% for the three months ended March 31, 2025 from the same period in 2024, decreasing from $1,507,000 to $1,453,000. The decrease was primarily due to a decrease in other income, primarily bank owned life insurance income.
Current wording
Non-interest income was up 3.6% for the three months ended June 30, 2025 from the same period in 2024, increasing from $1,484,000 to $1,537,000. The increase was primarily due to increases in other income, primarily bank owned life insurance income, which was partially offset by decreases in service charges on deposit accounts.
Previous wording
The following table sets forth other non-interest expenses by category for the three months ended March 31, 2025 and 2024.
Current wording
The following table sets forth other non-interest expenses by category for the three and six months ended June 30, 2025 and 2024.
Previous wording
The Company’s tax rate, the Company’s income before taxes and the amount of tax relief provided by non-taxable earnings affect the Company’s provision for income taxes. Provision for income taxes decreased 22.9% for the three months ended March 31, 2025 from the same period in 2024, decreasing from $1,666,000 to $1,285,000 primarily due to a decrease in pre-tax income. The effective tax rate was 25.9% and 28.0% for the three months ended March 31, 2025 and March 31, 2024, respectively.
Current wording
The Company’s tax rate, the Company’s income before taxes and the amount of tax relief provided by non-taxable earnings affect the Company’s provision for income taxes. Provision for income taxes increased 1.8% for the six months ended June 30, 2025 from the same period in 2024, increasing from $3,355,000 to $3,416,000, and increased 26.2% for the three months ended June 30, 2025 from the same period in 2024, increasing from $1,689,000 to $2,131,000. The effective tax rate was 27.2% and 27.8% for the six months ended June 30, 2025 and June 30, 2024, respectively. The effective tax rate was 28.1% and 27.6% for the three months ended June 30, 2025 and June 30, 2024, respectively.
Previous wording
The reserve for unfunded lending commitments amounted to $950,000 and $700,000 as of March 31, 2025 and December 31, 2024, respectively. The reserve for unfunded lending commitments is included in other liabilities on the condensed consolidated balance sheets. See Note 7 of the notes to condensed consolidated financial statements of this Form 10-Q, "Commitments and Contingencies,"
Current wording
The reserve for unfunded lending commitments amounted to $1,150,000 and $700,000 as of June 30, 2025 and December 31, 2024, respectively. The reserve for unfunded lending commitments is included in other liabilities on the Condensed Consolidated Balance Sheets. See Note 7 of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q, "Commitments and Contingencies," for additional information.
Previous wording
The Company manages asset quality and credit risk by maintaining diversification in its loan portfolio and through review processes that include analysis of credit requests and ongoing examination of outstanding loans and delinquencies, with particular attention to portfolio dynamics and loan mix. The Company strives to identify loans experiencing difficulty early enough to correct the problems, to record charge-offs promptly based on realistic assessments of collectability and current collateral values and to maintain an adequate allowance for loan losses at all times. Asset quality reviews of loans and other non-performing assets are administered using credit risk-rating standards and criteria similar to those employed by state and federal banking regulatory agencies. The Federal bank regulatory agencies utilize the following definitions for assets adversely classified for supervisory purposes:
Current wording
The Company manages asset quality and credit risk by maintaining diversification in its loan portfolio and through review processes that include analysis of credit requests and ongoing examination of outstanding loans and delinquencies, with particular attention to portfolio dynamics and loan mix. The Company strives to identify loans experiencing difficulty early enough to correct the problems, to record charge-offs promptly based on realistic assessments of collectability and current collateral values and to maintain an adequate allowance for credit losses at all times. Asset quality reviews of loans and other non-performing assets are administered using credit risk-rating standards and criteria similar to those employed by state and federal banking regulatory agencies. The federal bank regulatory agencies utilize the following definitions for assets adversely classified for supervisory purposes:
Previous wording
The following tables summarize the Company’s non-accrual loans net of guarantees of the State of California and U.S. Government, including its agencies and its government-sponsored enterprises, by loan category at March 31, 2025 and December 31, 2024:
Current wording
The following table summarizes the Company’s non-accrual loans net of guarantees of the State of California and U.S. Government by loan category at June 30, 2025 and December 31, 2024:
Previous wording
Non-accrual loans amounted to $13,845,000 at March 31, 2025 and were comprised of one commercial loan totaling $139,000, one commercial real estate loan totaling $5,282,000, seven agriculture loans totaling $7,603,000, three residential mortgage loans totaling $196,000 and four consumer loans totaling $625,000. Non-accrual loans amounted to $11,212,000 at December 31, 2024 and were comprised of one commercial loan totaling $139,000, one commercial real estate loan totaling $7,993,000 two agriculture loans totaling $2,236,000, three residential mortgage loans totaling $202,000 and four consumer loans totaling $642,000.
Current wording
Non-accrual loans amounted to $8,896,000 at June 30, 2025 and were comprised of three commercial loans totaling $243,000, one commercial real estate loan totaling $686,000, eight agriculture loans totaling $7,169,000, three residential mortgage loans totaling $190,000 and four consumer loans totaling $608,000. Non-accrual loans amounted to $11,212,000 at December 31, 2024 and were comprised of one commercial loan totaling $139,000, one commercial real estate loan totaling $7,993,000, two agriculture loans totaling $2,336,000, three residential mortgage loans totaling $202,000 and four consumer loans totaling $642,000.
Previous wording
A loan is considered to be collateral dependent when repayment is expected to be provided substantially through the operation or sale of the collateral. The allowance for credit losses, or ACL, on collateral dependent loans is measured using the fair value of the underlying collateral, adjusted for costs to sell when applicable, less the amortized cost basis of the financial asset. It is generally the Company’s policy that if the value of the underlying collateral is determined to be less than the recorded amount of the loan, a charge-off will be taken.
Current wording
A loan is considered to be collateral dependent when repayment is expected to be provided substantially through the operation or sale of the collateral. The ACL on collateral dependent loans is measured using the fair value of the underlying collateral, adjusted for costs to sell when applicable, less the amortized cost basis of the financial asset. It is generally the Company’s policy that if the value of the underlying collateral is determined to be less than the recorded amount of the loan, a charge-off will be taken.
Previous wording
As the following table illustrates, total non-performing assets, net of guarantees of the State of California and U.S. Government, including its agencies and its government-sponsored enterprises, increased $2,882,000, or 26.0%, to $13,955,000 during the first three
Current wording
As the following table illustrates, total non-performing assets, net of guarantees of the State of California and U.S. Government, including its agencies and its government-sponsored agencies, decreased $2,140,000, or 19.3%, to $8,933,000 during the first six months of 2025. Non-performing assets, net of guarantees, represented 0.5% of total assets at June 30, 2025.
Previous wording
The Company had $73,000 and $0 loans 90 days or more past due and still accruing interest at March 31, 2025 and December 31, 2024, respectively.
Current wording
The Company had no loans that were 90 days or more past due and still accruing as of June 30, 2025 and December 31, 2024.
Previous wording
Excluding non-performing loans, loans totaling $15,958,000 and $11,643,000 were classified as substandard loans, representing potential problem loans at March 31, 2025 and December 31, 2024, respectively. Management believes that the allowance for credit losses at March 31, 2025 and December 31, 2024 appropriately reflected expected credit losses inherent in the loan portfolio at that date. The ratio of the allowance for credit losses to total loans at March 31, 2025 and December 31, 2024 was 1.56% and 1.49%, respectively.
Current wording
Excluding non-performing loans, loans totaling $17,551,000 and $11,643,000 were classified as substandard or doubtful loans, representing potential problem loans at June 30, 2025 and December 31, 2024, respectively. Management believes that the allowance for credit losses at June 30, 2025 and December 31, 2024 appropriately reflected expected credit losses in the loan portfolio at that date. The ratio of the allowance for credit losses to total loans was 1.49% at each of the periods ended June 30, 2025 and December 31, 2024.
Previous wording
Other real estate owned (“OREO”) consists of property that the Company has acquired by deed in lieu of foreclosure or through foreclosure proceedings, and property that the Company does not hold title to but is in actual control of, known as in-substance foreclosure. OREO also consists of property held by the Company that is no longer intended for future development. The estimated fair value of the property is determined prior to transferring the balance to OREO. The balance transferred to OREO is the estimated fair value of the property less estimated cost to sell. Impairment may be deemed necessary to bring the book value of the loan equal to the appraised value. Appraisals or loan officer evaluations are then conducted periodically thereafter charging any additional impairment to the appropriate expense account. The Company had OREO totaling $1,241,000 and $0 as of March 31, 2025 and December 31, 2024, respectively. OREO as of March 31, 2025 represented land, transferred from premises and equipment, that the Company determined is no longer intended for future development.
Current wording
Other real estate owned (“OREO”) consists of property that the Company has acquired by deed in lieu of foreclosure or through foreclosure proceedings, and property that the Company does not hold title to but is in actual control of, known as in-substance foreclosure. OREO also consists of property held by the Company that is no longer intended for future development. The estimated fair value of the property is determined prior to transferring the balance to OREO. The balance transferred to OREO during the six months ended June 30, 2025 was transferred at the lower of the carrying amount of the property as compared to the fair value less costs to sell. The Company had OREO totaling $1,241,000 and $0 as of June 30, 2025 and December 31, 2024, respectively. OREO as of June 30, 2025 represented land, transferred from premises and equipment, that the Company determined is no longer intended for future development and is listed for sale.
Previous wording
The following table summarizes transactions affecting the Company's ACL during the three months ended March 31, 2025 and 2024, and for the year ended December 31, 2024:
Current wording
The following table summarizes the ACL of the Company during the six months ended June 30, 2025 and 2024, and for the year ended December 31, 2024:
Previous wording
The Company obtains deposits primarily from the communities it serves. The Company believes that no material portion of its deposits has been obtained from or is dependent on any one person or industry. The Company accepts deposits in excess of $250,000 (the current FDIC insurance limit) from customers. These deposits are priced to remain competitive.
Current wording
The Company obtains deposits primarily from the communities it serves. The Company believes that no material portion of its deposits has been obtained from or is dependent on any one person or industry. The Company accepts deposits in excess of $250,000 from customers. These deposits are priced to remain competitive.
Previous wording
Maturities of time certificates of deposits of over $250,000 or more outstanding at March 31, 2025 and December 31, 2024 are summarized as follows:
Current wording
Maturities of time certificates of deposit of over $250,000 outstanding at June 30, 2025 and December 31, 2024 are summarized as follows:
Previous wording
Approximately 39% and 40% of our deposits were uninsured by the FDIC as of the periods ended March 31, 2025 and December 31, 2024, respectively.
Current wording
Approximately 41% and 40% of our deposits were uninsured as of June 30, 2025 and December 31, 2024, respectively.
Previous wording
In order to serve our market area and comply with banking regulations, the Company must maintain adequate liquidity and adequate capital. Liquidity refers to the Company’s ability to provide funds at an acceptable cost to meet loan and other credit demand and deposit withdrawals, as well as contingency plans to meet unanticipated funding needs or loss of funding sources. These objectives can be addressed from either the asset or liability side of the balance sheet.
Current wording
In order to serve our market area and comply with banking regulations, the Company must maintain adequate liquidity and adequate capital. Liquidity refers to the Company’s ability to provide funds at an acceptable cost to meet loan demand and deposit withdrawals, as well as contingency plans to meet unanticipated funding needs or loss of funding sources. These objectives can be met from either the asset or liability side of the balance sheet.
Previous wording
Asset liquidity sources consist of the repayments and maturities of loans, selling of loans, short-term money market investments, maturities of securities and sales of securities from the available-for-sale portfolio. These activities are generally summarized as investing activities in the Condensed Consolidated Statement of Cash Flows. For the three months ended March 31, 2025, net liquidity provided by investing activities totaled $15,413,000.
Current wording
Asset liquidity sources consist of the repayments and maturities of loans, selling of loans, short-term money market investments, maturities of securities and sales of securities from the available-for-sale portfolio. These activities are generally summarized as investing activities in the Condensed Consolidated Statements of Cash Flows. For the six months ended June 30, 2025, net liquidity provided by investing activities totaled $40,410,000.
Previous wording
The Company’s available-for-sale investment securities plus cash and cash equivalents in excess of reserve requirements and certificates of deposit totaled $764,466,000 on March 31, 2025, which was 40.8% of assets at that date. This was a decrease of $4,909,000 from $769,375,000 and 40.7% as of December 31, 2024. The Company’s investment securities are generally shorter term in nature to provide ongoing cash flows for liquidity needs and/or reinvestment for interest rate risk management. On March 31, 2025, the effective duration of our investment securities was 3.17 with projected principal cashflow of $129,242,000 for the remainder of 2025 available for reinvestment or liquidity needs. The Company had no held-to-maturity securities as of March 31, 2025 and December 31, 2024.
Current wording
The Company’s available-for-sale investment securities plus cash and cash equivalents in excess of reserve requirements and certificates of deposit totaled $734,977,000 on June 30, 2025, which was 39.3% of assets at that date. This was a decrease of $34,398,000 from $769,375,000 and 40.7% of assets as of December 31, 2024. The Company’s investment securities are generally shorter term in nature to provide ongoing cash flows for liquidity needs and/or reinvestment for interest rate risk management. On June 30, 2025, the effective duration of our investment securities was 3.16 with projected principal cashflow of $85,074,000 for the remainder of 2025 available for reinvestment or liquidity needs. The Company had no held-to-maturity securities as of June 30, 2025 and December 31, 2024.
Previous wording
Liquidity may also be impacted from liabilities through changes in deposits and borrowings outstanding. These activities are included under financing activities in the Condensed Consolidated Statement of Cash Flows. As of March 31, 2025, the Company had $0 in borrowings outstanding. For the three months ended March 31, 2025, net liquidity used in financing activities totaled $26,564,000 primarily as a result of a decrease in deposits. While these sources of funds are expected to continue to provide significant amounts of funds in the future, their mix, as well as the possible use of other liquidity sources, will depend on future economic and market conditions.
Current wording
Liquidity may also be impacted from liabilities through changes in deposits and borrowings outstanding. These activities are included under financing activities in the Condensed Consolidated Statements of Cash Flows. As of June 30, 2025, the Company had $0 in borrowings outstanding. For the six months ended June 30, 2025, net liquidity used in financing activities totaled $38,970,000, primarily due to a net decrease in deposits. While these sources of funds are expected to continue to provide significant amounts of funds in the future, their mix, as well as the possible use of other sources, will depend on future economic and market conditions.
Previous wording
Liquidity is also provided or used through the results of operating activities, including from net income. For the three months ended March 31, 2025, operating activities provided cash of $3,420,000.
Current wording
Liquidity is also provided or used through the results of operating activities. For the six months ended June 30, 2025, operating activities provided cash of $5,963,000.
Previous wording
Liquidity is measured by various ratios, in management’s opinion, the most common being the ratio of net loans to deposits (including loans held-for-sale). This ratio was 62.2% and 61.6% as of March 31, 2025 and December 31, 2024, respectively.
Current wording
Liquidity is measured by various ratios, in management’s opinion, the most common being the ratio of net loans to deposits (including loans held-for-sale). This ratio was 63.9% and 61.6% as of June 30, 2025 and December 31, 2024, respectively.
Previous wording
Loan demand during 2025 will depend in part on economic and competitive conditions. The Company emphasizes the solicitation of non-interest-bearing demand deposits and money market checking accounts, which are the least sensitive to interest rates. The outlook for deposit balances during 2025 is subject to policies of and actions by the Federal Reserve and heightened competition.
Current wording
Loan demand during the remainder of 2025 will depend in part on economic and competitive conditions. The Company emphasizes the solicitation of non-interest-bearing demand deposits and money market checking accounts, which are the least sensitive to interest rates. The outlook for deposit balances during the remainder of 2025 is subject to actions by the Federal Reserve and heightened competition.
Previous wording
To meet unanticipated funding requirements, the Company maintains short-term unsecured lines of credit with other banks which totaled $130,000,000 at March 31, 2025. Additionally, the Company has a line of credit with the FHLB, with a remaining borrowing capacity at March 31, 2025 of $395,974,000; credit availability from the FHLB is subject to certain collateral requirements.
Current wording
To meet unanticipated funding requirements, the Company maintains short-term unsecured lines of credit with other banks which totaled $130,000,000 at June 30, 2025. Additionally, the Company has a line of credit with the FHLB, with a remaining borrowing capacity at June 30, 2025 of $393,327,000; credit availability is subject to certain collateral requirements.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
months of 2025. Non-performing assets, net of guarantees, represented 0.7% of total assets at March 31, 2025.