GLEN BURNIE BANCORP

Previous wording

Glen Burnie Bancorp, a Maryland corporation (the “Company”), through its subsidiary, The Bank of Glen Burnie, a Maryland banking corporation (the “Bank”), operates a commercial bank with eight offices in Anne Arundel County Maryland. The Company reported a net loss of $201,000 for the six-month period ended June 30, 2024 compared to net income of $710,000 for the same period in 2023. The decrease was primarily due to the $917,000 increase in interest expense on short-term borrowings, a $764,000 increase in interest expense on deposits and a $609,000 increase in the provision for credit losses on loans, partially offset by an increase of $517,000 in loan interest income and fees, a $402,000 increase in interest on deposits with banks and a $532,000 decrease in the provision for income taxes. The increase in interest expense on deposits was driven by the higher rate and balances in money market deposits. The increase in interest on borrowings was driven by an increase in short-term borrowings due to the elevated level of deposit runoff in 2023. The higher interest expense was partially offset by the increase in loan interest income due to higher yields on loans for the first half of 2024 and resulted in a decrease in net interest income of $935,000 for the six-months ended June 30, 2024, versus the same period last year. Total interest income increased $746,000 to $7.3 million for the six-month period ended June 30, 2024, as compared to the same period in 2023. This resulted primarily from a 0.61% increase in the yield on loans that more than offset the $2.0 million, or 1.07% decline in average total loan balances.

Current wording

Glen Burnie Bancorp, a Maryland corporation (the “Company”), through its subsidiary, The Bank of Glen Burnie, a Maryland banking corporation (the “Bank”), operates a commercial bank with eight offices in Anne Arundel County Maryland. The Company reported a net loss of $72,000 for the nine-month period ended September 30, 2024 compared to net income of $1.3 million for the same period in 2023. The decrease was primarily the result of a $460,000 decrease in interest and dividends on securities, a $1.0 million increase in interest expense on short-term borrowings, a $1.4 million increase in interest expense on deposits and a $780,000 increase in the provision for credit losses on loans, partially offset by an increase of $1.3 million in loan interest income and fees, a $535,000 increase in interest on deposits with banks, and a $569,000 decrease in the provision for income taxes. The increase in interest expense on deposits was driven by the higher rate and balances in money market deposits. The increase in interest on borrowings was driven by an increase in short-term borrowings due to the elevated level of deposit runoff in 2023. The higher interest expense was partially offset by the increase in loan interest income due to higher yields on loans for the first nine months of 2024 and resulted in a decrease in net interest income of $1.1 million for the nine-months ended September 30, 2024, versus the same period last year. Total interest income increased $1.4 million to $11.3 million for the nine-month period ended September 30, 2024, as compared to the same period in 2023. This resulted primarily from a 0.72% increase in the yield on loans and a $7.4 million increase in average total loan balances.

Previous wording

Total assets increased to $355.7 million on June 30, 2024, an increase of $3.9 million from December 31, 2023. Cash and cash equivalents increased by $1.5 million or 10.14%, during the first six months of 2024. The Bank’s loan portfolio increased by $24.7 million or 14.20% and investment securities available for sale declined by $22.2 million or 15.96% over the same period. The Company’s allowance for credit losses was $2.63 million as of June 30, 2024, compared to $2.16 million at December 31, 2023, an increase of $468,000 or 21.70%. Total deposits increased $5.8 million, or 1.93%, during the first six months of 2024 and short-term borrowings were unchanged at $30.0 million on June 30, 2024 and at year end 2023. Shareholder’s equity was $17.5 million on June 30, 2024, a $1.9 million or 9.59% decrease, as compared to $19.3 million on December 31, 2023. The decrease was primarily due to unrealized losses, net of taxes, on securities available for sale amounting to $19.5 million on June 30, 2024, compared to $18.4 million at December 31, 2023. The Company has strong liquidity and capital positions that provide ample capacity for future growth. The Bank’s total regulatory capital to risk weighted assets were 16.84% on June 30, 2024, as compared to 18.40% on December 31, 2023.

Current wording

Total assets increased to $368.4 million on September 30, 2024, an increase of $16.5 million from December 31, 2023. Cash and cash equivalents increased by $7.2 million or 47.38%, during the first nine months of 2024. The Bank’s loan portfolio increased by $30.7 million or 17.39% and investment securities available for sale declined by $19.5 million or 13.96% over the same period. The Company’s allowance for credit losses was $2.75 million as of September 30, 2024, compared to $2.16 million at December 31, 2023, an increase of $591,000 or 27.40%. Total deposits increased $14.2 million, or 4.73%, during the first nine months of 2024 and short-term borrowings were unchanged at $30.0 million on September 30, 2024 and at year end 2023. Shareholder’s equity was $21.2 million on September 30, 2024, a $1.8 million or 9.50% increase, as compared to $19.3 million on December 31, 2023. The increase was primarily due to unrealized losses, net of taxes, on securities available for sale amounting to $15.7 million on September 30, 2024, compared to $18.4 million at December 31, 2023. The Company has strong liquidity and capital positions that provide ample capacity for future growth. The Bank’s total regulatory capital to risk weighted assets were 16.72% on September 30, 2024, as compared to 18.40% on December 31, 2023.

Previous wording

Return on average assets for the three- and six-month periods ended June 30, 2024, was (0.22)% and (0.11)% compared to 0.31% and 0.39% for the three- and six-month periods ended June 30, 2023, respectively. The current period net loss and a higher average asset balance primarily drove the lower return on average assets for the three-month periods ended June 30, 2024, when compared to the same period in 2023. Return on average equity for the three-month

Current wording

Return on average assets for the three- and nine-month periods ended September 30, 2024, was 0.14% and (0.03)% compared to 0.61% and 0.46% for the three- and nine-month periods ended September 30, 2023, respectively. Lower net income and a higher average asset balance primarily drove the lower return on average assets for the three- and nine-month periods ended September 30, 2024, when compared to the same periods in 2023. Return on average

Previous wording

period ended June 30, 2024, was (4.72)% compared to 5.88% for the three-month period ended June 30, 2023. The current period net loss and a lower average equity balance primarily drove the lower return on average equity for the three-month period ended June 30, 2024, compared to the same periods in 2023.

Current wording

equity for the three- and nine month periods ended September 30, 2024, was 2.63% and (0.52%) compared to 12.47% and 9.34% for the three- and nine-month periods ended September 30, 2023, respectively. Lower net income and a higher average equity balance primarily drove the lower return on average equity for the three- and nine-month periods ended September 30, 2024, compared to the same periods in 2023.

Previous wording

The book value per share of Bancorp’s common stock was $6.04 on June 30, 2024, as compared to $6.01 per share on June 30, 2023. The increase primarily resulted from the lower unrealized losses on the Company’s available for sale securities of $19.5 million at June 30, 2024 compared to $20.2 million at June 30, 2023.

Current wording

The book value per share of Bancorp’s common stock was $7.29 on September 30, 2024, as compared to $4.57 per share on September 30, 2023. The increase primarily resulted from the lower unrealized losses on the Company’s available for sale securities of $15.7 million at September 30, 2024 compared to $24.6 million at September 30, 2023.

Previous wording

At June 30, 2024, the Bank remained above all “well-capitalized” regulatory requirement levels. The Bank’s tier 1 risk-based capital ratio was 15.59% at June 30, 2024, compared to 17.37% at December 31, 2023.

Current wording

At September 30, 2024, the Bank remained above all “well-capitalized” regulatory requirement levels. The Bank’s tier 1 risk-based capital ratio was 15.47% at September 30, 2024, compared to 17.37% at December 31, 2023.

Previous wording

Net loss attributable to common stockholders for the three-month period ended June 30, 2024, was $204,000, or $0.07 per basic and diluted common share compared to net income of $276,000, or $0.10 per basic and diluted common share for the same period of 2023. The results for the three-month period ended June 30, 2024, were lower than the same period of 2023 resulting primarily from a $485,000, or 1,276.32%, increase in interest expense on short-term borrowings, a $469,000, or 407.83%, increase in interest expense on deposits and a $399,000, or 314.17%, increase in the provision for credit losses on loans, partially offset by an increase of $390,000, or 18.27%, in loan interest income and fees, a $381,000, or 286.47%, increase in interest on deposits with banks and a $214,000, or 856.00%, decrease in the provision for income taxes. The Company’s need to defend its deposit base as well as grow interest-earning asset balances necessitated a strategic change in direction.

Current wording

Net income attributable to common stockholders for the three-month period ended September 30, 2024, was $129,000, or $0.04 per basic and diluted common share compared to net income of $551,000, or $0.19 per basic and diluted common share for the same period of 2023. The results for the three-month period ended September 30, 2024, were lower than the same period of 2023 resulting primarily from a $614,000 increase in interest expense on deposits and a $126,000 increase in interest expense on short-term borrowings, a $287,000 decrease in interest and dividends on securities, a $170,000 increase in the provision for credit losses on loans and a $197,000 increase in noninterest expenses. These decreases were partially offset by an increase of $763,000 in loan interest income and fees, and a $133,000 increase in interest on deposits with banks. The Company’s need to defend its deposit base as well as grow interest-earning asset balances necessitated a strategic change in direction that resulted in the increased interest expense.

Previous wording

Net Interest Income. The Company’s net interest income for the three-month period ended June 30, 2024 was $2.8 million, as compared to $3.1 million for the same period in 2023, a decrease of $328,000, or 10.53%. The decrease in net interest income was primarily due to the $954,000, or 623.53%, increase in the cost of interest-bearing deposits and borrowings driven by a $26.6 million, or 12.81%, increase in the average balance of interest-bearing funds and a $19.1 million, or 14.50%, decrease in the average balance of noninterest-bearing deposits. The higher expenses were partially offset by a $626,000, or 19.16%, increase in total interest income due to a $7.4 million, or 2.02%, increase in the average balance of interest earning assets.

Current wording

Net Interest Income. The Company’s net interest income for the three-month period ended September 30, 2024 was $2.8 million, as compared to $3.0 million for the same period in 2023, a decrease of $131,000, or 4.44%. The decrease in net interest income was primarily due to a $740,000 increase in the cost of interest-bearing deposits and borrowings driven by a $17.3 million increase in the average balance of interest-bearing funds and a $16.6 million decrease in the average balance of noninterest-bearing deposits. The higher expenses were partially offset by a $609,000 increase in total interest income due to a 0.66% increase in the yield on interest earning assets.

Previous wording

Net interest income for the six-month period ended June 30, 2024, totaled $5.4 million, a decrease of $935,000, or 14.86%, from the six-month period ended June 30, 2023. The decrease in net interest income was due to a $1.7 million, or 646.54%, increase in the cost of interest-bearing deposits and borrowings driven by a $17.3 million, or 8.23%, increase in the average balance of interest-bearing funds and a $21.7 million, or 15.98%, decrease in the average balance of noninterest-bearing deposits. The higher expenses were partially offset by a $746,000, or 11.38%, increase in total interest income due to a 0.44% increase in the yield of interest earning assets.

Current wording

Net interest income for the nine-month period ended September 30, 2024, totaled $8.2 million, a decrease of $1.1 million from the nine-month period ended September 30, 2023. The decrease in net interest income was due to a $2.4 million increase in the cost of interest-bearing deposits and borrowings driven by a $17.3 million increase in the average balance of interest-bearing funds and a $20.0 million decrease in the average balance of noninterest-bearing deposits. The higher expenses were partially offset by a $1.3 million increase in total interest income due to a 0.51% increase in the yield of interest earning assets.

Previous wording

Total interest income for the second quarter of 2024 increased $626,000, or 19.16% when compared to the same period in 2023, from $3.3 million in 2023 to $3.9 million in 2024. The primary driver of the increase was a $390,000, or 18.27%, increase in interest and fees on loans due to higher rates and $381,000, or 286.47%, increase in

Current wording

Total interest income for the third quarter of 2024 increased $609,000, or 18.18% when compared to the same period in 2023, from $3.4 million in 2023 to $4.0 million in 2024. The primary driver of the increase was a $763,000, or 35.57%, increase in interest and fees on loans due to higher rates and higher average balance of total loans, along with a $133,000, or 127.88%, increase in interest on deposits with banks and federal funds that were partially offset by a $287,000, or 26.07%, decrease in interest and dividends on investment securities due to maturities.

Previous wording

Total interest income increased $746,000 for the six-month period ended June 30, 2024, when compared to the same period in 2023 from $6.6 million in 2023 to $7.3 million, an increase of 11.38%. The primary driver of the increase was an increase of $517,000, or 12.24% increase in interest and fees on loans due to higher rates and $402,000, or 110.14%, increase in interest on deposits with banks and federal funds that were partially offset by a $173,000, or 8.81%, decrease in interest and dividends on investment securities due to maturities.

Current wording

Total interest income increased $1.4 million for the nine-month period ended September 30, 2024, when compared to the same period in 2023 from $9.9 million in 2023 to $11.3 million, an increase of 13.68%. The primary driver of the increase was an increase of $1.3 million, or 20.10%, increase in interest and fees on loans due to higher rates and higher average balance of total loans and $535,000, or 114.07%, increase in interest on deposits with banks and federal funds that were partially offset by a $460,000, or 15.01%, decrease in interest and dividends on investment securities due to maturities.

Previous wording

Interest expense for the second quarter of 2024 increased $954,000 from $153,000 for the same period in 2023 to $1,107,000, an increase of 623.53%. The increase was attributable to higher balances and rates on money market deposits and short-term borrowings. Interest expense increased $1.7 million for the six month period ended June 30, 2024, from $260,000 for the same period in 2023 to $1.9 million, an increase of 646.54%.

Current wording

Interest expense for the third quarter of 2024 increased $740,000 from $398,000 for the same period in 2023 to $1.1 million, an increase of 185.93%. The increase was attributable to higher balances and rates on money market deposits and a higher average balance of short-term borrowings for the third quarter of 2024. Interest expense increased $2.4 million for the nine month period ended September 30, 2024, from $657,000 for the same period in 2023 to $3.1 million, an increase of 368.65%.

Previous wording

Net interest margin for the three-month period ended June 30, 2024 was 3.02% compared to 3.44% for the three-month period ended June 30, 2023, a decrease of 0.42%. The decrease in the net interest margin is due to increases in average interest-bearing funds, lower average noninterest-bearing deposits, and higher cost of funds partially offset by higher average yields and balances on interest earning assets were the primary drivers of year-over-year results. The average balance of interest-bearing funds and noninterest-bearing funds increased $26.6 million, or 12.81%, and decreased $19.1 million, or 14.50%, respectively, and the cost of funds increased 1.11%, when comparing the three-month periods ending June 30, 2023, and 2024. The average balance of interest-earning assets increased $7.4 million, or 2.02%, while the yield increased 0.62% from 3.60% to 4.22%, when comparing the three-month periods ending June 30, 2023, and 2024, respectively.

Current wording

Net interest margin for the three-month period ended September 30, 2024 was 3.06% compared to 3.21% for the three-month period ended September 30, 2023, a decrease of 0.15%. Higher average interest-bearing funds, lower average noninterest-bearing funds, and higher cost of funds, partially offset by higher average yields and balances on interest-earning assets were the primary drivers of year-over-year results. The average balance of interest-bearing funds and noninterest-bearing funds increased $17.3 million and decreased $16.6 million, respectively, and the cost of funds increased 0.86%, when comparing the three-month periods ending September 30, 2023, and 2024. The average balance of interest-earning assets increased $0.8 million while the yield increased 0.66% from 3.64% to 4.30%, when comparing the three-month periods ending September 30, 2023, and 2024, respectively.

Previous wording

Net interest margin for the six-month period ended June 30, 2024, was 2.94%, compared to 3.42% for the same period of 2023. Higher average interest-bearing funds, lower average noninterest-bearing funds, and higher cost of funds partially offset by higher average yields on interest-earning assets were the primary drivers of year-over-year results. The average balance of interest-bearing funds and noninterest-bearing funds increased $17.3 million, or 8.23%, and decreased $21.7 million, or 15.98%, respectively, and the cost of funds increased 0.99%, when comparing the six-month periods ending June 30, 2023, and 2024. The average balance of interest-earning assets decreased $4.5 million, or 1.20%, while the yield increased 0.44% from 3.56% to 4.00%, when comparing the six-month periods ending June 30, 2023, and 2024, respectively.

Current wording

Net interest margin for the nine-month period ended September 30, 2024, was 2.98%, compared to 3.35% for the same period of 2023. Higher average interest-bearing funds, lower average noninterest-bearing funds, and higher cost of funds, partially offset by higher average yields on interest-earning assets, were the primary drivers of year-over-year results. The average balance of interest-bearing funds and noninterest-bearing funds increased $17.3 million and decreased $20.0 million, respectively, and the cost of funds increased 0.94%, when comparing the nine-month periods ending September 30, 2023, and 2024. The average balance of interest-earning assets decreased $2.7 million, while the yield increased 0.51% from 3.59% to 4.10%, when comparing the nine-month periods ending September 30, 2023, and 2024, respectively.

Previous wording

The average balance of interest-bearing deposits in banks and investment securities increased $2.4 million, or 1.32%, from $181.9 million to $184.3 million for the second quarter of 2024, compared to the same period of 2023 while the yield increased from 2.49% to 2.97% during that same period. The increase in yields is attributed to the higher interest rate environment and its positive impact on cash balances and investment yields.

Current wording

The average balance of interest-bearing deposits in banks and investment securities decreased $25.3 million from $188.2 million to $162.9 million for the third quarter of 2024, compared to the same period of 2023, while the yield remained unchanged during that same period.

Previous wording

The average balance of interest-bearing deposits in banks and investment securities decreased $2.5 million, or 1.33%, from $187.7 million to $185.2 million for the first half of 2024, compared to the same period of 2023 while the yield increased from 2.48% to 2.78% during that same period. The increase in yields is attributed to the higher interest rate environment and its positive impact on cash balances and investment yields.

Current wording

The average balance of interest-bearing deposits in banks and investment securities decreased $10.1 million from $187.9 million to $177.8 million for the first nine months of 2024, compared to the same period of 2023, while the yield increased 0.20% from 2.51% to 2.71% during that same period. The increase in yields is attributed to the higher interest rate environment and its positive impact on cash balances and investment yields.

Previous wording

Average total loan balances increased $5.0 million to $186.7 million for the three-month period ended June 30, 2024, compared to $181.7 million for the same period of 2023, while the yield increased from 4.71% to 5.44% during that same period. The increase in loan yields for the second quarter of 2024 reflected the runoff of the lower yielding loans and origination of higher yielding loans in the current higher rate environment.

Current wording

Average total loan balances increased $26.1 million to $203.3 million for the three-month period ended September 30, 2024, compared to $177.2 million for the same period of 2023, while the yield increased 0.89% from 4.80% to 5.69% during that same period. The increase in loan yields for the third quarter of 2024 reflected the runoff of the lower yielding loans and the origination of higher yielding loans in the current higher rate environment.

Previous wording

Average total loan balances decreased $1.9 million, or 1.07%, to $181.3 million for the six-month period ended June 30, 2024, compared to $183.2 million for the same period of 2023, while the yield increased from 4.65% to 5.26% during that same period. The increase in loan yields for the first half of 2024 reflected the runoff of the lower yielding loans and origination of higher yielding loans in the current higher rate environment.

Current wording

Average total loan balances increased $7.4 million to $188.6 million for the nine-month period ended September 30, 2024, compared to $181.2 million for the same period of 2023, while the yield increased 0.72% from 4.70% to 5.42% during that same period. The increase in loan yields for the first nine months of 2024 reflected the runoff of the lower yielding loans and origination of higher yielding loans in the current higher rate environment.

Previous wording

Provision for Credit Losses on Loans. The Company recognized a provision of $526,000 compared to $127,000 for the three-month period ended June 30, 2024, and 2023, respectively. The increase for the three-month period ended June 30, 2024, when compared to the three-month period ended June 30, 2023, primarily reflects a $20.9 million increase in the reservable balance of the loan portfolio and a 0.07% increase in the current expected credit loss percentage. The Company recognized a provision of allowance for credit losses on loans in the amount of $694,000 and $85,000 for the six-month periods ended June 30, 2024 and 2023, respectively. As a result, the allowance for credit loss on loans was $2.63 million on June 30, 2024, representing 1.30% of total loans, compared to $2.22 million, or 1.23% of total loans on June 30, 2023.

Current wording

Provision for Credit Losses on Loans. The Company recognized a provision of $78,000 compared to a release of allowance for credit losses of $92,000 for the three-month period ended September 30, 2024, and 2023, respectively. The increase for the three-month period ended September 30, 2024, when compared to the three-month period ended September 30, 2023, primarily reflects a $32 million increase in the reservable balance of the loan portfolio and a 0.13% increase in the current expected credit loss percentage. The Company recognized a provision of allowance for credit losses on loans in the amount of $773,000 compared to a release of allowance for credit loss of $7,000 for the nine-month periods ended September 30, 2024 and 2023, respectively. As a result, the allowance for credit loss on loans was $2.75 million on September 30, 2024, representing 1.33% of total loans, compared to $2.09 million, or 1.20% of total loans on September 30, 2023.

Previous wording

Noninterest Income. Noninterest income increased to $241,000 for the three-month period ended June 30, 2024, from $239,000 for the corresponding period in 2023, an increase of $2,000, or 0.84%. Noninterest income decreased $14,000 to $471,000 for the six-month period ended June 30, 2024, from $485,000 for the corresponding period in 2023. The decrease was primarily due to decreases in other fees and commissions.

Current wording

Noninterest Income. Noninterest income increased to $354,000 for the three-month period ended September 30, 2024, from $315,000 for the corresponding period in 2023, an increase of $39,000, or 12.38%. Noninterest income increased $25,000 to $825,000 for the nine-month period ended September 30, 2024, from $800,000 for the corresponding period in 2023. The increase was primarily due to increases in other fees and commissions.

Previous wording

Noninterest Expenses. Noninterest expenses for the three-month period ended June 30, 2024 and 2023 were $2.89 million and $2.93 million, respectively, a decrease of $31,000, or 1.06%. The primary contributors to the decrease, when compared to the three-month period ended June 30, 2023, were decreases in salary and employee benefits, and data processing and item processing services, offset by increases in occupancy and equipment expenses, legal, accounting, and other professional fees, and other expenses. Noninterest expenses decreased from $5.87 million for the six-month period ended June 30, 2023 to $5.76 million for the corresponding period in 2024, a $115,000 or 1.96% decrease. The primary contributors when comparing to the six-month period ended June 30, 2023, were decreases in salary and employee benefits costs, and data processing and item processing services, partially offset by increases in occupancy and equipment expenses, and other expenses.

Current wording

Noninterest Expenses. Noninterest expenses for the three-month period ended September 30, 2024 and 2023 were $3.02 million and $2.82 million, respectively, an increase of $197,000, or 6.98%. The primary contributors to the increase, when compared to the three-month period ended September 30, 2023, were increases in legal, accounting, and other professional fees, data processing and item processing services, advertising and marketing related expenses, and other expenses (primarily allowance for unfunded commitments), partially offset by decreases in salary and employee benefits. Noninterest expenses increased from $8.7 million for the nine-month period ended September 30, 2023 to $8.8 million for the corresponding period in 2024, an $81,000 or 0.94% increase. The primary contributors when comparing to the nine-month period ended September 30, 2023, were increases in occupancy and equipment expenses, legal, accounting, and other professional fees, advertising and marketing related expenses, and other expenses (primarily allowance for unfunded commitments), partially offset by decreases in salary and employee benefits costs.

Previous wording

Income Taxes. During the three-month period ended June 30, 2024, the Company recorded an income tax benefit of $189,000 compared to an expense of $25,000 for the same period in 2023, a $214,000, or 856.00% decrease. The current quarter’s income tax benefit includes forecasted tax benefit of $102,000 for the current period and $87,000 associated with amended Maryland tax returns for tax years 2022 and 2021. The current period benefit is the result of pre-tax loss containing a lower proportion of taxable income compared to the pre-tax income for the prior year period. For the six-month period ended June 30, 2024, the Company recorded income tax benefit of $420,000 compared to $112,000 expense for the same period in 2023, a $532,000, or 475% increase. The year-to-date income tax benefit includes forecasted tax benefit of $333,000 for the current period loss and $87,000 associated with amended Maryland tax returns for tax years 2022 and 2021. The tax benefit for year-to-date June 30, 2024 is the result of pre-tax loss containing a lower proportion of taxable income compared to the pre-tax income for the prior year period.

Current wording

Income Taxes. During the three-month period ended September 30, 2024, the Company recorded an income tax benefit of $50,000 compared to a benefit of $13,000 for the same period in 2023, a $37,000, or 284.62% increase. The current quarter’s income tax benefit includes forecasted tax benefit of $37,000 for the current period loss. The current period benefit is the result of pre-tax loss containing a lower proportion of taxable income compared to the pre-tax income for the prior year period. For the nine-month period ended September 30, 2024, the Company recorded income tax benefit of $470,000 compared to $99,000 expense for the same period in 2023, a $569,000, or 574.75% decrease. The year-to-date income tax benefit includes forecasted tax benefit of $383,000 for the current period loss and $87,000 associated with amended Maryland tax returns for tax years 2022 and 2021. The tax benefit for year-to-date September 30, 2024 is the result of pre-tax loss containing a lower proportion of taxable income compared to the pre-tax income for the prior year period.

Previous wording

Comprehensive Income (Loss). In accordance with regulatory requirements, the Company reports comprehensive income (loss) in its financial statements. Comprehensive income (loss) consists of the Company’s net income, adjusted for unrealized gains and losses on the Bank’s portfolio of investment securities. For the second quarter of 2024, the comprehensive loss, net of tax, totaled $0.4 million compared to comprehensive loss in the amount of $0.7 million for the same period in 2023. The $0.3 million decrease in comprehensive loss was due to a $0.8 million decrease in unrealized losses on securities for the period ended June 30, 2024 compared to the amount of unrealized losses on securities for the comparable prior year period which was partially offset by the $0.5 million decrease in net income for the second quarter of 2024 versus the same period of 2023. For the six months ended June 30, 2024, comprehensive loss, net of tax, totaled $1.3 million compared to comprehensive income, net of tax, in the amount of $1.7 million. The $3.0 million decline in comprehensive income for the six-months ended June 30, 2024 versus the comparable period in 2023, was attributable to the $2.1 million increase in the amount of unrealized loss on securities and the $0.9 million decline in net income for the 2024 period compared to the 2023 period.

Current wording

Comprehensive Income (Loss). In accordance with regulatory requirements, the Company reports comprehensive income (loss) in its financial statements. Comprehensive income (loss) consists of the Company’s net income, adjusted for unrealized gains and losses on the Bank’s portfolio of investment securities. For the third quarter of 2024, the comprehensive income, net of tax, totaled $3.9 million compared to comprehensive loss in the amount of $3.8 million for the same period in 2023. The $7.8 million increase in comprehensive income was due to an $8.2 million decrease in unrealized losses on securities for the quarter ended September 30, 2024 compared to the amount of unrealized losses on securities for the comparable prior year period which was partially offset by the $422,000 decrease in net income for the third quarter of 2024 versus the same period of 2023. For the nine months ended September 30, 2024, comprehensive income, net of tax, totaled $2.6 million compared to comprehensive loss, net of tax, in the amount of $2.1 million for the comparable period in 2023. The $4.7 million increase in comprehensive income for the nine-months ended September 30, 2024 versus the comparable period in 2023, was attributable to the $6.1 million decrease in the amount of unrealized loss on securities and the $1.3 million decline in net income for the 2024 period compared to the 2023 period.

Previous wording

December 31, 2023. Investment securities available for sale as of June 30, 2024, totaled $117.2** **million, a decrease of $22.2 million, or 15.96% from $139.4 million on December 31, 2023. Loans, net totaled $198.9 million at June 30, 2024, an increase of $24.7 million or 14.20%, from $174.2 million at December 31, 2023. The increase was primarily attributable to increases in construction, single-family residential, commercial real estate and commercial and industrial loans partially offset by decreases in automobile loans.

Current wording

General. The Company’s assets increased to $368.4 million at September 30, 2024 from $351.8 million at December 31, 2023, an increase of $16.5 million or 4.70%, primarily due to a $7.2 million increase in cash and cash equivalents, a $19.5 million decrease in investment securities available for sale, and a $30.1 million increase in loans, net. Cash and cash equivalents as of September 30, 2024, totaled $22.5** million, an increase of $7.2 million, or 47.38% from $15.2 million on December 31, 2023. Investment securities available for sale as of September 30, 2024, totaled $120.0 **million, a decrease of $19.5 million, or 13.96% from $139.4 million on December 31, 2023. Loans, net totaled $204.2 million at September 30, 2024, an increase of $30.1 million or 17.27%, from $174.2 million at December 31, 2023. The increase was primarily attributable to increases in construction, single-family residential, commercial real estate and commercial and industrial loans partially offset by decreases in automobile loans.

Previous wording

At June 30, 2024, impaired loans totaled $0.3 million, net of specific reserves. Included in the impaired loans total was $0.3 million in loans classified as nonaccrual loans. At June 30, 2024, impaired loans included restructured loans to borrowers with financial difficulty totaling $28,000. Borrowers under all other restructured loans are paying in accordance with the terms of the modified loan agreement and have been placed on accrual status after a period of performance with the restructured terms.

Current wording

At September 30, 2024, impaired loans totaled $0.3 million, net of specific reserves. Included in the impaired loans total was $0.3 million in loans classified as nonaccrual loans. At September 30, 2024, impaired loans included restructured loans to borrowers with financial difficulty totaling $27,000. Borrowers under all other restructured loans are paying in accordance with the terms of the modified loan agreement and have been placed on accrual status after a period of performance with the restructured terms.

Previous wording

Deposits as of June 30, 2024, totaled $305.9 million, an increase of $5.8 million, or 1.93%, from $300.1 million on December 31, 2023. Demand deposits as of June 30, 2024 totaled $109.6 million, a decrease of $7.3 million, or 6.24% from $116.9 million at December 31, 2023. Interest-bearing checking accounts as of June 30, 2024 totaled $25.3 million, a decrease of $3.3 million, or 11.54% from $28.6 million at December 31, 2023. Savings accounts as of June 30, 2024 totaled $81.6 million, a decrease of $11.5 million, or 12.40%, from $93.1 million at December 31, 2023. Money market accounts as of June 30, 2024 totaled $61.4 million, an increase of $34.6 million, or 128.97%, from $26.8 million at December 31, 2023. Time deposits of $250,000 or less totaled $26.6 million on June 30, 2024, a $5.6 million or a 17.28% decrease from $32.1 million at December 31, 2023. Time deposits over $250,000 totaled $1.4 million on June 30, 2024, a $1.1 million, or 44.78% decrease from $2.5 million at December 31, 2023.

Current wording

Deposits as of September 30, 2024, totaled $314.3 million, an increase of $14.2 million, or 4.73%, from $300.1 million on December 31, 2023. Demand deposits as of September 30, 2024 totaled $115.9 million, a decrease of $1.0 million, or 0.84% from $116.9 million at December 31, 2023. Interest-bearing checking accounts as of September 30, 2024 totaled $25.8 million, a decrease of $2.8 million, or 9.67% from $28.6 million at December 31, 2023. Savings accounts as of September 30, 2024 totaled $75.8 million, a decrease of $17.3 million, or 18.63%, from $93.1 million at December 31, 2023. Money market accounts as of September 30, 2024 totaled $70.2 million, an increase of $43.4 million, or 161.59%, from $26.8 million at December 31, 2023. Time deposits of $250,000 or less totaled $25.2 million

Previous wording

For the six months ended June 30, 2024, the Bank accrued $137,000 for its projected 401(k) match contribution as well as other profit sharing benefits.

Current wording

For the nine months ended September 30, 2024, the Bank accrued $207,000 for its projected 401(k) match contribution as well as other profit sharing benefits.

Previous wording

At June 30, 2024, the simulation analysis indicated that the Bank is in an asset sensitive position in all falling rate scenarios and the +100 bp shock scenario, and is slightly liability sensitive in the +200, +300, and +400 bp shock scenarios. Overall, rising rate scenarios indicate a fairly balanced profile. Management strives to optimize the level of higher costing fixed rate funding instruments, while seeking to increase assets that are more fluid in their repricing. An asset sensitive position, theoretically, is favorable in a rising rate environment since more assets than liabilities will re-

Current wording

At September 30, 2024, the simulation analysis indicated that the Bank is in an asset sensitive position in all falling rate scenarios and the +100 bp and +200 bp shock scenarios, but is slightly liability sensitive in the +300, and +400 bp shock scenarios. Overall, rising rate scenarios indicate a fairly balanced profile. Management strives to optimize the level of higher costing fixed rate funding instruments, while seeking to increase assets that are more fluid in their repricing. An asset sensitive position, theoretically, is favorable in a rising rate environment since more assets than

Previous wording

price in a given time frame as interest rates rise. Similarly, a liability sensitive position, theoretically, is favorable in a declining interest rate environment since more liabilities than assets will re-price in a given time frame as interest rates decline. Management works to maintain a consistent spread between yields on assets and costs of deposits and borrowings, regardless of the direction of interest rates.

Current wording

liabilities will re-price in a given time frame as interest rates rise. Similarly, a liability sensitive position, theoretically, is favorable in a declining interest rate environment since more liabilities than assets will re-price in a given time frame as interest rates decline. Management works to maintain a consistent spread between yields on assets and costs of deposits and borrowings, regardless of the direction of interest rates.

Previous wording

The Bank’s most liquid assets are cash and cash equivalents, which are cash on hand, amounts due from financial institutions, federal funds sold, certificates of deposit with other financial institutions that have an original maturity of three months or less and money market mutual funds. The levels of such assets are dependent on the Bank’s operating, financing, and investment activities at any given time. The variations in levels of cash and cash equivalents are influenced by deposit flows and anticipated future deposit flows. The Bank’s cash and cash equivalents (cash due

Current wording

The Bank’s most liquid assets are cash and cash equivalents, which are cash on hand, amounts due from financial institutions, federal funds sold, certificates of deposit with other financial institutions that have an original maturity of three months or less and money market mutual funds. The levels of such assets are dependent on the Bank’s operating, financing, and investment activities at any given time. The variations in levels of cash and cash equivalents are influenced by deposit flows and anticipated future deposit flows. The Bank’s cash and cash equivalents (cash due from banks, interest-bearing deposits in other financial institutions, and federal funds sold), as of September 30, 2024, totaled $22.5 million, an increase of $7.2 million, or 47.38% from $15.2 million at December 31, 2023.

Previous wording

As of June 30, 2024, the Bank was permitted to draw on a $92.5 million line of credit from the FHLB of Atlanta. Short-term borrowings under the line totaled $0 and $20.0 million at June 30, 2024 and December 31, 2023, respectively. Borrowings under the line are secured by a floating lien on the Bank’s residential mortgage loans and investment securities. As of June 30, 2024, the Bank had $30.0 million in outstanding short-term borrowings from the Federal Reserve Bank (“FRB”) under the Bank Term Funding Program (“BTFP”). At December 31, 2023, there was $10.0 million in short-term borrowings outstanding from the FRB. Borrowings under the line are secured by investment securities. As of June 30, 2024, no further advances are available under the BTFP as that program has been terminated by the FRB. The Bank also has an unused line of credit through the Federal Reserve Discount Window that is limited to the amount of qualifying collateral pledged, which at June 30, 2024, totaled $0.

Current wording

As of September 30, 2024, the Bank was permitted to draw on a $88.9 million line of credit from the FHLB of Atlanta. Short-term borrowings under the line totaled $0 and $20.0 million at September 30, 2024 and December 31, 2023, respectively. Borrowings under the line are secured by a floating lien on the Bank’s residential mortgage loans and investment securities. As of September 30, 2024, the Bank had $30.0 million in outstanding short-term borrowings from the Federal Reserve Bank (“FRB”) under the Bank Term Funding Program (“BTFP”). At December 31, 2023, there was $10.0 million in short-term borrowings outstanding from the FRB. Borrowings under the line are secured by investment securities. As of September 30, 2024, no further advances are available under the BTFP as that program has been terminated by the FRB. The Bank also has a line of credit through the Federal Reserve Discount Window that is limited to the amount of qualifying collateral pledged, for which the amount outstanding at September 30, 2024, totaled $0.

Previous wording

The Company’s stockholders’ equity decreased $1.9 million, or 9.59% during the six-month period ended June 30, 2024. The decrease was primarily due to an increase in the after-tax net unrealized holding loss on securities available for sale in the amount of $1.1 million, the $577,000 in dividends paid and the $201,000 net loss in the period ended June 30, 2024.

Current wording

The Company’s stockholders’ equity increased $1.8 million, or 9.50% during the nine-month period ended September 30, 2024. The increase in equity was primarily due to a 2.7 million decrease in the after-tax net unrealized holding loss on securities available for sale that was partially offset by the $866,000 in dividends paid and the $72,000 net loss in the period ended September 30, 2024.

Previous wording

risk-weighted assets. Risk-weighted assets are calculated based on regulatory requirements and include total assets, with certain exclusions, allocated by risk weight category, and certain off-balance-sheet items, among other things. The leverage ratio is calculated by dividing Tier 1 capital by adjusted quarterly average total assets, which exclude goodwill and other intangible assets, among other things.

Current wording

The rules also revised the definition and calculation of Tier 1 capital, Total Capital, and risk-weighted assets. The Common Equity Tier 1, Tier 1 and Total Capital ratios are calculated by dividing the respective capital amounts by risk-weighted assets. Risk-weighted assets are calculated based on regulatory requirements and include total assets, with certain exclusions, allocated by risk weight category, and certain off-balance-sheet items, among other things. The leverage ratio is calculated by dividing Tier 1 capital by adjusted quarterly average total assets, which exclude goodwill and other intangible assets, among other things.

Previous wording

The regulations impose several sets of capital adequacy requirements: minimum leverage rules, which require bank holding companies and banks to maintain a specified minimum ratio of capital to total assets, and risk-based capital rules, which require the maintenance of specified minimum ratios of capital to “risk-weighted” assets. In addition, there are requirements to maintain a capital conservation buffer which raised the minimum required common equity Tier 1 capital ratio to 7.00%, the Tier 1 capital ratio to 8.50% and the total capital ratio to 10.50%. At June 30, 2024, the Bank was in full compliance with these guidelines with a Tier 1 leverage ratio of 10.10%, a Tier 1 risk-based capital ratio of 15.59%, a common equity Tier 1 risk-based capital ratio of 15.59%, and a total risk-based capital ratio of 16.84%. The Company’s capital amounts and ratios at June 30, 2024 and December 31, 2023 were as follows:

Current wording

The regulations impose several sets of capital adequacy requirements: minimum leverage rules, which require bank holding companies and banks to maintain a specified minimum ratio of capital to total assets, and risk-based capital rules, which require the maintenance of specified minimum ratios of capital to “risk-weighted” assets. In addition, there are requirements to maintain a capital conservation buffer which raised the minimum required common equity Tier 1 capital ratio to 7.00%, the Tier 1 capital ratio to 8.50% and the total capital ratio to 10.50%. At September 30, 2024, the Bank was in full compliance with these guidelines with a Tier 1 leverage ratio of 10.11%, a Tier 1 risk-based capital ratio of 15.47%, a common equity Tier 1 risk-based capital ratio of 15.47%, and a total risk-based capital ratio of 16.72%. The Company’s capital amounts and ratios at September 30, 2024 and December 31, 2023 were as follows:

Previous wording

As a result of our adoption of ASC 326, our methodology for estimating the ACL changed significantly from December 31, 2020. The standard replaced the “incurred loss” approach with an “expected loss” approach known as current expected credit loss (“CECL”). The CECL methodology requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures) and it removes the incurred loss methodology’s threshold that delayed the recognition of a credit loss until it was “probable” a loss event was deemed to be “incurred.”

Current wording

As a result of our adoption of ASC 326, our methodology for estimating the ACL changed significantly from December 31, 2020. The standard replaced the “incurred loss” approach with an “expected loss” approach known as current expected credit loss (“CECL”). The CECL methodology requires an estimate of the credit losses expected over