FIRST CAPITAL INC

Previous wording

The discussion and analysis of the Company's financial condition and results of operations are based upon the Company's consolidated financial statements that have been prepared in accordance with GAAP. The preparation of the Company's financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, income and expenses. These estimates are based upon historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The estimates and judgments that management believes involve the most complex and subjective estimates and judgments and have the most effect on the Company's reported financial position and results of operations are described as critical accounting policies in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. During the six months ended June 30, 2024, there was no significant change in the Company’s critical account policies or the application of critical accounting policies as disclosed in the Company’s Annual report on Form 10-K for the year ended December 31, 2023.

Current wording

The discussion and analysis of the Company's financial condition and results of operations are based upon the Company's consolidated financial statements that have been prepared in accordance with GAAP. The preparation of the Company's financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, income and expenses. These estimates are based upon historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The estimates and judgments that management believes involve the most complex and subjective estimates and judgments and have the most effect on the Company's reported financial position and results of operations are described as critical accounting policies in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. During the nine months ended September 30, 2024, there was no significant change in the Company’s critical account policies or the application of critical accounting policies as disclosed in the Company’s Annual report on Form 10-K for the year ended December 31, 2023.

Previous wording

Total assets increased $5.7 million but remained at $1.16 billion at December 31, 2023 and June 30, 2024.

Current wording

Total assets increased $31.4 million from $1.16 billion at December 31, 2023 to $1.19 billion at September 30, 2024.

Previous wording

Net loans receivable (excluding loans held for sale) increased $15.6 million from $614.4 million at December 31, 2023 to $630.0 million at June 30, 2024. Commercial real estate, other construction, development and land loan and 1-4 family residential mortgage loan increases of $8.7 million, $6.6 million and $3.7 million, respectively, were partially offset by decreases of $3.5 million and $2.7 million in commercial business and multifamily residential loans, respectively, during the six months ended June 30, 2024.

Current wording

Net loans receivable (excluding loans held for sale) increased $16.2 million from $614.4 million at December 31, 2023 to $630.6 million at September 30, 2024. Commercial real estate, 1-4 family residential mortgage, and other construction, development and land loan increases of $7.8 million, $7.6 million, and $6.4 million, respectively, were partially offset by decreases of $4.8 million and $3.6 million in commercial business and 1-4 family residential construction, respectively, during the nine months ended September 30, 2024.

Previous wording

Cash and cash equivalents increased from $38.7 million at December 31, 2023 to $50.6 million at June 30, 2024 as maturities of available for sale securities and increased borrowings under the FRB’s BTFP were partially offset by net deposit outflows at the Bank.

Current wording

Cash and cash equivalents increased from $38.7 million at December 31, 2023 to $89.9 million at September 30, 2024 primarily due to maturities of available for sale securities, increased borrowings under the FRB’s BTFP and net deposit inflows at the Bank.

Previous wording

Securities available for sale decreased $23.0 million from $437.3 million at December 31, 2023 to $414.3 million at June 30, 2024. Purchases of $35.4 million of securities classified as available for sale were made during the six months ended June 30, 2024 and consisted primarily of U.S. government agency CMOs and municipal bonds. Principal payments and maturities of available for sale securities totaled $11.2 million and $22.5 million, respectively, during the six months ended June 30, 2024. Securities classified as available for sale totaling $19.2 million were sold during the six months ended June 30, 2024 and consisted primarily of municipal bonds. There was also an unrealized loss of $1.9 million on the securities available for sale portfolio during the six month period ended June 30, 2024 due primarily to increasing market interest rates during the period.

Current wording

Securities available for sale decreased $28.8 million from $437.3 million at December 31, 2023 to $408.5 million at September 30, 2024. Purchases of $47.8 million of securities classified as available for sale were made during the nine months ended September 30, 2024 and consisted primarily of U.S. government agency CMOs and municipal bonds. Principal payments and maturities of available for sale securities totaled $17.8 million and $46.2 million, respectively, during the nine months ended September 30, 2024. Securities classified as available for sale totaling $19.2 million were sold during the nine months ended September 30, 2024 and consisted primarily of municipal bonds. In addition, there was an unrealized gain of $7.3 million on the securities available for sale portfolio during the nine month period ended September 30, 2024 due primarily to decreasing market interest rates.

Previous wording

Total deposits decreased from $1.03 billion at December 31, 2023 to $1.01 billion at June 30 2024. Interest-bearing checking accounts, non-interest-bearing checking accounts and savings accounts decreased $30.4 million, $1.6 million and $7.1 million, respectively, during the six months ended June 30, 2024, while time deposits increased $28.1 million during the period. Deposit inflows and outflows are influenced by prevailing market interest rates, competition, local and national economic conditions, and fluctuations in our customers' own liquidity needs and may also be influenced by recent developments in the financial services industry. Significant competition for deposits driven by high interest rate alternatives for depositors is currently impacting deposit fluctuations and increasing our cost of deposits.

Current wording

Total deposits increased $5.0 million but remained at $1.03 billion at December 31, 2023 and September 30 2024, respectively. Interest-bearing checking accounts, savings accounts and non-interest-bearing checking accounts decreased $19.4 million, $12.4 million and $5.7 million, respectively, during the nine months ended September 30, 2024, while time deposits increased $42.6 million during the period. Deposit inflows and outflows are influenced by prevailing market interest rates, competition, local and national economic conditions, and fluctuations in our customers' own liquidity needs and may also be influenced by recent developments in the financial services industry. Significant competition for deposits driven by high interest rate alternatives for depositors is currently impacting deposit fluctuations and increasing our cost of deposits.

Previous wording

The Company had $33.6 million and $21.5 million in borrowings outstanding from the FRB under the BTFP at June 30, 2024 and December 31, 2023, respectively. During the six months ended June 30, 2024, the Company utilized a series of short-term fixed-rate bullet and variable rate advances from the FHLB and the BTFP in order to meet daily liquidity requirements and to fund growth in earning assets.

Current wording

The Company had $33.6 million and $21.5 million in borrowings outstanding from the FRB under the BTFP at September 30, 2024 and December 31, 2023, respectively. During the nine months ended September 30, 2024, the Company utilized a series of short-term fixed-rate bullet and variable rate advances from the FHLB and the BTFP in order to meet daily liquidity requirements and to fund growth in earning assets.

Previous wording

Total stockholders' equity attributable to the Company increased from $105.2 million at December 31, 2023 to $107.8 million at June 30, 2024, due to a $4.0 million increase in retained net income partially offset by a $1.6 million net unrealized loss on available for sale securities. The net unrealized loss on available for sale securities during the period is primarily due to increases in market interest rates.

Current wording

Total stockholders' equity attributable to the Company increased from $105.2 million at December 31, 2023 to $116.8 million at September 30, 2024, due to a $5.9 million increase in retained net income as well as a $5.5 million net unrealized gain on available for sale securities. The net unrealized gain on available for sale securities during the period is primarily due to decreased market interest rates.

Previous wording

Net income. ** **Net income attributable to the Company was $2.8 million ($0.85 per diluted share) for the three months ended June 30, 2024 compared to $2.7 million ($0.82 per diluted share) for the three months ended June 30, 2023.

Current wording

Net income. ** **Net income attributable to the Company was $2.9 million ($0.87 per diluted share) for the three months ended September 30, 2024 compared to $3.1 million ($0.94 per diluted share) for the three months ended September 30, 2023.

Previous wording

Net interest income. ** **Net interest income after provision for credit losses increased $335,000 for the three months ended June 30, 2024 as compared to the same period in 2023.

Current wording

Net interest income. ** **Net interest income after provision for credit losses increased $415,000 for the three months ended September 30, 2024 as compared to the same period in 2023.

Previous wording

Total interest income increased $1.6 million when comparing the periods due to an increase in the average tax-equivalent yield on interest-earning assets from 3.88% for the second quarter of 2023 to 4.42% for the second quarter of 2024. The average balance of interest-earning assets was $1.12 billion for the second quarters of 2023 and 2024. The increase in the tax-equivalent yield was primarily due to an increase in the tax equivalent yield on loans to 5.99% for the second quarter of 2024 compared to 5.56% for the same period in 2023.

Current wording

Total interest income increased $2.0 million when comparing the periods due to an increase in the average yield on interest-earning assets from 3.96% for the third quarter of 2023 to 4.53% for the third quarter of 2024. The average balance of interest-earning assets increased from $1.13 billion for the quarter ended September 30, 2023 to $1.17 billion at September 30, 2024. The increase in the yield was primarily due to an increase in the yield on loans to 6.09% for the third quarter of 2024 compared to 5.74% for the same period in 2023. In addition, the Company’s lower yielding securities continue to mature with proceeds being reinvested in higher yielding loans or federal funds sold. When compared to the quarter ended September 30, 2023, the average balance of the Company’s securities decreased $59.0 million, while the Company’s average loans and federal funds sold balances increased $40.6 million and $58.0 million, respectively, during the quarter ended September 30, 2024.

Previous wording

Total interest expense increased $1.3 million when comparing the periods due to an increase in the average cost of interest-bearing liabilities from 1.12% for the second quarter of 2023 to 1.71% for the second quarter of 2024, in addition to an increase in the average balance of interest-bearing liabilities from $813.9 million for the second quarter of 2023 to $830.7 million for the second quarter of 2024. The Company had average outstanding advances from the FHLB of $3.6 and $4.5 million with an average rate of 5.71% and 5.19% during the quarters ended June 30, 2024 and 2023, respectively. The Company had average outstanding borrowings under the FRB’s BTFP of $33.6 million and $6.1 million with an average rate of 4.84% and 5.01% during the quarters ended June 30, 2024 and 2023, respectively. The Company’s total average outstanding balance of borrowings during the quarters ended June 30, 2024 and 2023 was $37.2 million and $10.6 million with an average rate of 4.93% and 5.09%, respectively.

Current wording

Total interest expense increased $1.5 million when comparing the periods due to an increase in the average cost of interest-bearing liabilities from 1.30% for the third quarter of 2023 to 1.87% for the third quarter of 2024, in addition to an increase in the average balance of interest-bearing liabilities from $813.2 million for the third quarter of 2023 to $875.8 million for the third quarter of 2024. The Company had no outstanding advances from the Federal Home Loan Bank (“FHLB”) during the quarter ended September 30, 2024 compared to $3.3 million with an average rate of 6.03% during the quarter ended September 30, 2023. The Company had average outstanding borrowings under the Federal Reserve Bank’s Bank Term Funding Plan (“BTFP”) of $33.6 million and $13.0 million with an average rate of 4.89% and 5.02% during the quarters ended September 30, 2024 and 2023, respectively.

Previous wording

As a result of the changes in interest-earning assets and interest-bearing liabilities, the tax-equivalent net interest margin increased from 3.06% for the quarter ended June 30, 2023 to 3.15% for the same period in 2024.

Current wording

As a result of the changes in interest-earning assets and interest-bearing liabilities, the net interest margin increased from 3.02% for the quarter ended September 30, 2023 to 3.12% for the same period in 2024.

Previous wording

Provision for credit losses. Based on management’s analysis of the ACL on loans and unfunded loan commitments, the provision for credit losses increased from $350,000 for the quarter ended June 30, 2023 to $360,000 for the quarter ended June 30, 2024. The increase was due to loan growth during the period, the increase in the nonperforming assets during the quarter, as well as management’s consideration of macroeconomic uncertainty. The Bank recognized net charge-offs of $30,000 and $158,000 for the quarters ended June 30, 2024 and 2023, respectively.

Current wording

Provision for credit losses. Based on management’s analysis of the ACL on loans and unfunded loan commitments, the provision for credit losses increased from $290,000 for the quarter ended September 30, 2023 to $463,000 for the quarter ended September 30, 2024. The increase was due to loan growth during the period, the increase in nonperforming assets during the quarter, as well as management’s consideration of macroeconomic uncertainty. The Bank recognized net charge-offs of $64,000 and $19,000 for the quarters ended September 30, 2024 and 2023, respectively.

Previous wording

**Noninterest expense.**Noninterest expense increased $334,000 for the quarter ended June 30, 2024 as compared to the same period in 2023, due primarily to increases in compensation and benefits and professional fees of $160,000 and $138,000, respectively. The increase in compensation and benefits is due to standard increases in salary and wages as well as increases in the cost of Company-provided health insurance benefits. The increase in professional fees is primarily due to increased costs associated the with Company’s annual audit and fees being accrued for the Company’s ongoing core contract negotiations.

Current wording

**Noninterest expense.**Noninterest expense increased $543,000 for the quarter ended September 30, 2024 as compared to the same period in 2023, due primarily to increases in professional fees and compensation and benefits of $213,000 and $160,000, respectively. The increase in professional fees is primarily due to increased costs associated with the Company’s annual audit and fees being accrued for the Company’s ongoing core contract negotiations. The increase in compensation and benefits is due to standard increases in salary and wages as well as increases in the cost of Company-provided health insurance benefits. In addition, data processing, advertising, and occupancy and equipment expenses increased $51,000, $45,000, and $41,000, respectively.

Previous wording

Income tax expense. Income tax expense increased $59,000 for the second quarter of 2024 as compared to the second quarter of 2023 primarily due to the initial recognition of benefits from tax credit entity investments during 2023. As a result, the effective tax rate for the quarter ended June 30, 2024 was 14.7% compared to 13.6% for the same period in 2023.

Current wording

Income tax expense. Income tax expense decreased $35,000 for the third quarter of 2024 as compared to the third quarter of 2023 primarily due to a decrease in the Company’s taxable income. As a result, the effective tax rate for the quarter ended September 30, 2024 was 15.6% compared to 15.4% for the same period in 2023.

Previous wording

Results of Operations for the Six Month Periods Ended June 30, 2024 and 2023

Current wording

Results of Operations for the Nine Month Periods Ended September 30, 2024 and 2023

Previous wording

Net income. ** **Net income attributable to the Company was $5.8 million ($1.73 per diluted share) for the six months ended June 30, 2024 compared to $6.5 million ($1.95 per diluted share) for the six months ended June 30, 2023.

Current wording

Net income. Net income attributable to the Company was $8.7 million ($2.59 per diluted share) for the nine months ended September 30, 2024 compared to $9.7 million ($2.89 per diluted share) for the nine months ended September 30, 2023.

Previous wording

Net interest income. ** **Net interest income after provision for credit losses decreased $343,000 for the six months ended June 30, 2024 compared to the same period in 2023.

Current wording

**Net interest income.**Net interest income after provision for credit losses increased $72,000 for the nine months ended September 30, 2024 compared to the same period in 2023.

Previous wording

Total interest income increased $3.3 million when comparing the two periods due to an increase in the average tax-equivalent yield on interest-earning assets from 3.81% for the six months ended June 30, 2023 to 4.36% for the same period in 2024. The increase in the tax-equivalent yield was primarily due to an increase in the tax equivalent yield on loans to 5.95% for the first six months of 2024 compared to 5.48% for the same period in 2023.

Current wording

Total interest income increased $5.3 million when comparing the two periods due to an increase in the average yield on interest-earning assets from 3.80% for the nine months ended September 30, 2023 to 4.37% for the same period in 2024. The increase in the yield was primarily due to an increase in the yield on loans to 5.99% for the first nine months of 2024 compared to 5.57% for the same period in 2023. In addition, the Company’s lower yielding securities continue to mature with proceeds being reinvested in higher yielding loans or federal funds sold. When compared to the nine months ended September 30, 2023, the average balance of the Company’s securities decreased $49.7 million, while the Company’s average loans and federal funds sold balances increased $50.8 million and $15.5 million, respectively, during the nine months ended September 30, 2024.

Previous wording

Total interest expense increased $3.5 million as the average cost of interest-bearing liabilities increased from 0.82% for the six months ended June 30, 2023 to 1.63% for the same period in 2024, in addition to an increase in the average balance of interest-bearing liabilities from $801.1 million for the first six months of 2023 to $832.2 million for the same period of 2024. The Company had average outstanding advances from the FHLB of $3.5 million and $2.3 million with an average rate of 5.67% and 5.19% during the six months ended June 30, 2024 and 2023, respectively. The Company had average outstanding borrowings under the Federal Reserve Bank’s BTFP of $32.8 million and $3.0 million with an average rate of 4.82% and 5.01% during the six months ended June 30, 2024 and 2023, respectively. The Company’s total average outstanding balance of borrowings were $36.3 million and $5.3 million with an average rate of 4.90% and 5.09% during the six months ended June 30, 2024 and 2023, respectively.

Current wording

Total interest expense increased $5.0 million as the average cost of interest-bearing liabilities increased from 0.98% for the nine months ended September 30, 2023 to 1.72% for the same period in 2024, in addition to an increase in the average balance of interest-bearing liabilities from $805.1 million for the first nine months of 2023 to $846.8 million for the same period of 2024. The Company had average outstanding advances from the FHLB of $2.3 million and $2.6 million with an average rate of 5.69% and 5.49% during the nine months ended September 30, 2024 and 2023, respectively. The Company had average outstanding borrowings under the Federal Reserve Bank’s BTFP of $33.1 million and $6.4 million with an average rate of 4.84% and 5.03% during the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

As a result of the changes in interest-earning assets and interest-bearing liabilities, the tax-equivalent net interest margin decreased from 3.22% for the six months ended June 30, 2023 to 3.15% for the six months ended June 30, 2024.

Current wording

As a result of the changes in interest-earning assets and interest-bearing liabilities, the net interest margin decreased from 3.10% for the nine months ended September 30, 2023 to 3.09% for the nine months ended September 30, 2024.

Previous wording

Provision for credit losses. Based on management’s analysis of the ACL on loans, the provision for credit losses increased from $543,000 for the six months ended June 30, 2023 to $640,000 for the six months ended June 30, 2024. The increase was due to loan growth during the period, the increase in the nonperforming assets during the second quarter, as well as management’s consideration of macroeconomic uncertainty. The Bank recognized net charge-offs of $85,000 for the six months ended June 30, 2024 compared to $361,000 for the same period in 2023.

Current wording

Provision for credit losses. Based on management’s analysis of the ACL on loans and unfunded loan commitments, the provision for credit losses increased from $833,000 for the nine months ended September 30, 2023 to $1.1 million for the nine months ended September 30, 2024. The increase was due to loan growth during the period, the increase in the nonperforming assets, as well as management’s consideration of macroeconomic uncertainty. The Bank recognized net charge-offs of $149,000 for the nine months ended September 30, 2024 compared to $380,000 for the same period in 2023.

Previous wording

**Noninterest expense.**Noninterest expense increased $690,000 for the six months ended June 30, 2024 as compared to the same period in 2023. This was primarily due to increases in compensation and benefits, professional fees and other expenses of $214,000, $211,000 and $146,000, respectively, when comparing the two periods. The increase in other expenses was primarily due to increases in fraud losses of $68,000, FDIC insurance premiums of $46,000 and the Company’s support of local communities through sponsorships and donations which increased $59,000 for the six months ended June 30, 2024 compared to the same period of 2023.

Current wording

**Noninterest expense.**Noninterest expense increased $1.2 million for the nine months ended September 30, 2024 as compared to the same period in 2023. This was primarily due to increases in professional fees, compensation and benefits, data processing, and other expenses of $424,000, $374,000, $130,000, and $179,000, respectively, when comparing the two periods. The increase in professional fees is primarily due to increased costs associated with the Company’s annual audit and fees being accrued for the Company’s ongoing core contract negotiations. The increase in compensation and benefits is due to standard increases in salary and wages as well as increases in the cost of Company-provided health insurance benefits. The increase in data processing expense is primarily due to increased debit card interchange fees. Increases in other expenses included a $77,000 increase in the Company’s support of local communities through sponsorships and donations, $26,000 in increased dues and subscriptions and $24,000 of additional FDIC insurance assessments for the nine months ended September 30, 2024 compared to the same period of 2023.

Previous wording

Income tax expense. Income tax expense decreased $203,000 for the six months ended June 30, 2024 as compared to the same period in 2023 resulting in an effective tax rate of 14.7% for the six months ended June 30, 2024, compared to 15.5% for the same period in 2023. The decrease in income tax expense is primarily due to the Company’s recognition of six months of benefits from tax credit entity investments during 2024 which were only initiated during the latter part of the second quarter of 2023.

Current wording

Income tax expense. Income tax expense decreased $238,000 for the nine months ended September 30, 2024 as compared to the same period in 2023 resulting in an effective tax rate of 15.0% for the nine months ended September 30, 2024, compared to 15.4% for the same period in 2023.

Previous wording

The Bank’s primary sources of funds are customer deposits, proceeds from loan repayments, maturing securities and borrowings from the FHLB or FRB. While loan repayments and maturities are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by market interest rates, general economic conditions and competition. At June 30, 2024, the Bank had cash and cash equivalents of $50.6 million and securities available-for-sale with a fair value of $414.3 million. If the Bank requires funds beyond its ability to generate them internally, it has additional borrowing capacity with the FHLB, collateral eligible for repurchase agreements and unsecured federal funds purchased lines of credit with other financial institutions.

Current wording

The Bank’s primary sources of funds are customer deposits, proceeds from loan repayments, maturing securities and borrowings from the FHLB or FRB. While loan repayments and maturities are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by market interest rates, general economic conditions and competition. At September 30, 2024, the Bank had cash and cash equivalents of $89.9 million and securities available-for-sale with a fair value of $408.5 million. If the Bank requires funds beyond its ability to generate them internally, it has additional borrowing capacity with the FHLB, FRB, collateral eligible for repurchase agreements and unsecured federal funds purchased lines of credit with other financial institutions.

Previous wording

The Bank is required to maintain specific amounts of capital pursuant to regulatory requirements. Beginning in 2020, qualifying community banks with assets of less than $10 billion are eligible to opt in to the Community Bank Leverage Ratio (“CBLR”) framework. The CBLR is the ratio of a bank’s tangible equity capital to average total consolidated assets. A qualifying community bank that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement. The federal banking agencies must set the minimum capital for the new CBLR at not less than 8% and not more than 10%, and has set the minimum ratio at 9% effective January 1, 2022. A financial institution that falls below the minimum CBLR generally has a two quarter grace period to get back into compliance as long as it maintains a minimum CBLR of 8%. A financial institution can elect to be subject to or opt out of the CBLR framework at any time. As a qualified community bank, the Bank had opted into the CBLR framework as of June 30, 2024 and December 31, 2023 and its CBLR was 10.44% and 9.92% as of those dates, respectively. Management believes that the Bank met all capital adequacy requirements to which it was subject as of June 30, 2024. At both June 30, 2024 and December 31, 2023, the Bank was considered “well-capitalized” under applicable regulatory guidelines.

Current wording

The Bank is required to maintain specific amounts of capital pursuant to regulatory requirements. Beginning in 2020, qualifying community banks with assets of less than $10 billion are eligible to opt in to the Community Bank Leverage Ratio (“CBLR”) framework. The CBLR is the ratio of a bank’s tangible equity capital to average total consolidated assets. A qualifying community bank that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement. The federal banking agencies must set the minimum capital for the new CBLR at not less than 8% and not more than 10%, and has set the minimum ratio at 9% effective January 1, 2022. A financial institution that falls below the minimum CBLR generally has a two quarter grace period to get back into compliance as long as it maintains a minimum CBLR of 8%. A financial institution can elect to be subject to or opt out of the CBLR framework at any time. As a qualified community bank, the Bank had opted into the CBLR framework as of September 30, 2024 and December 31, 2023 and its CBLR was 10.24% and 9.92% as of those dates, respectively. Management believes that the Bank met all capital adequacy requirements to which it was subject as of September 30, 2024. At both September 30, 2024 and December 31, 2023, the Bank was considered “well-capitalized” under applicable regulatory guidelines.