GLEN BURNIE BANCORP
For the period ended Dec 31, 2024. Filed Apr 8, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Apr 8, 2025
GLBZ$4.57+0.4%Stored close · as of Jul 8, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-22.
0001558370-24-003766
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-04-08.
0001558370-25-004608
Item 7. 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 133 previous paragraphs and 132 current paragraphs.
69 unchanged; 49 reworded; 9 added; 10 removed; 5 previous and 5 current paragraphs rearranged.
Tables are not compared: 50 previous and 53 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 (9)
Current report
Noninterest Expenses. Noninterest expenses increased from $11.6 million in 2023 to $11.9 million in 2024, a $253,000 or 2.2% increase. Legal, accounting and other professional fees increased by $122,000, or 12.3 %, to $1.1 million at December 31, 2024, compared to $1.0 million at December 31, 2023. Other expenses rose by $195,000, or 16.2% to $1.4 million while salary and employee benefits decreased from $6.7 million at December 31, 2023 to $6.6 million at December 31, 2024, a decrease of $130,000 or 1.9%.
Current report
The following table reflects net charge-offs (recoveries) as a percent of average loans by category:
Current report
The foregoing analysis assumes that the Company’s assets and liabilities move with rates at their earliest repricing opportunities based on final maturity, while considering optionality such as call features, where applicable. Certificates of deposit and IRA accounts are presumed to be repriced at maturity. NOW and savings accounts are assumed to be repriced within three months although it is the Company’s experience that such accounts may be less sensitive to changes in market rates.
Current report
The following table sets forth the Company’s interest-rate sensitivity at December 31, 2024, as measured by the Gap analysis.
Current report
In a decreasing interest rate environment, the Company’s interest income changes at a rate consistent with changes in its total interest expense, thereby resulting in a balanced profile, with net interest income exhibiting minor changes in falling rate scenarios. Conversely, in an increasing interest rate environment the increases in the Company’s interest income will be less than increases in its interest expense, thereby resulting in lower net interest income. In a rising interest rate environment, the Company is positioned to generate less economic value of equity as the duration of the assets is longer than the duration of the liabilities, with liabilities repricing more quickly than our assets. Conversely, the Company’s economic value of equity increases in a falling interest rate environment as the longer initial duration of the assets benefits the Company in falling rate scenarios. Thus, the economic value of equity increases compared to the base case. The measured change in EVE in the +100 bps shock as of December 31, 2024 of -11% is slightly outside of the policy limit of -10%. This is due in part to a shift in the deposit mix during the 4th quarter of 2024, with balances in demand deposits accounts decreasing and balances in money market accounts increasing. Going forward, the Company acknowledges that reducing long term mortgages off the balance sheet will help mitigate this position.
Current report
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) and follow general practices within the industries in which we operate. All intercompany transactions are eliminated in consolidation and certain reclassifications are made when necessary, in order to conform the previous year’s financial statements to the current year’s presentation. The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Since future events and their effects cannot be determined with absolute certainty, the determination of estimates requires the exercise of judgment. Management has used the best information available to make the estimations necessary to value the related assets and liabilities based on historical experience and on various assumptions which are believed to be reasonable under the circumstances. Actual results could differ from those estimates, and such differences may be material to the financial statements. The Company reevaluates these variables as facts and circumstances change. Historically, actual results have not differed significantly from the Company’s estimates. The following is a summary of the more judgmental accounting estimates and principles involved in the preparation of the Company’s financial statements, including the identification of the most important variables in the estimation process:
Current report
Allowance for Credit Losses. The allowance for credit losses (“ACL”) consists of the allowance for credit losses and the reserve for unfunded commitments. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (“ASC 326”). The ASC, as amended, is intended to provide financial statement users with more decision useful information about the expected credit losses on financial instruments that are not accounted for at fair value through net income.
Current report
Management’s determination of the amount of the ACL is a critical accounting estimate as it requires significant reliance on the credit risk we ascribe to individual borrowers, the use of estimates and significant judgment as to the amount and timing of expected future cash flows on criticized loans, significant reliance on historical loss rates on homogenous portfolios, consideration of our quantitative and qualitative evaluation of past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts.
Current report
Going forward, the impact of utilizing the CECL methodology to calculate the ACL will be significantly influenced by the composition, characteristics, and quality of our loan portfolio, as well as the prevailing economic conditions and forecasts utilized. Material changes to these and other relevant factors may result in greater volatility to the allowance for credit losses, and therefore, greater volatility in our reported earnings. For further information regarding the Bank’s allowance for credit losses, see “Allowance for Credit Losses,” in Note 4 to the consolidated financial statements.
Removed paragraphs (10)
Previous report
Noninterest Expenses. Noninterest expenses increased from $11.3 million in 2022 to $11.6 million in 2023, a $298,000 or 2.63% increase. Salary and employee benefits increased by $0.3 million, or 4.75%, to $6.7 million at December 31, 2023, compared to $6.4 million at December 31, 2022. FDIC insurance costs rose by $51,000, or 45.74% to $0.2 million while other expenses decreased from $1.3 million at December 31, 2022 to $1.2 million at December 31, 2023, a decrease of $100,000 or 7.67%.
Previous report
The EVE at risk declines at December 31, 2023 when compared to December 31, 2022 in the up interest rate shock levels but increases in the down interest rate shock levels. In a rising interest rate environment, the Company is positioned to generate less economic value of equity as asset values fall faster than funding sources because the liabilities reprice much slower than our assets, especially considering our interest earning assets are much greater than our interest-bearing liabilities. The Company’s economic value of equity improves in declining interest rate environments as the majority of our liabilities cannot continue to decrease much from their current low levels thus the economic value of liabilities and assets both worsen.
Previous report
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) and follow general practices within the industries in which we operate. All intercompany transactions are eliminated in consolidation and certain reclassifications are made when necessary in order to conform the previous year’s financial statements to the current year’s presentation. Application of these principles requires management to make estimates or judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates or judgments reflect management’s view of the most appropriate manner in which to record and report our overall financial performance. Because these estimates or judgments are based on current circumstances, they may change over time or prove to be inaccurate based on actual experience. As such, changes in these estimates, judgments, and/or assumptions may have a significant impact on our financial statements. All accounting policies are important, and all policies described in Part II, Item 8, Financial Statements and Supplementary Data, Note 1, should be reviewed for a greater understanding of how our financial performance is recorded and reported.
Previous report
We have identified the following three policies as being critical because they require management to make particularly difficult, subjective, and/or complex estimates or judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions. These policies relate to the determination of the allowance for credit losses - loans, fair value measurements and the accounting for income taxes. Management believes it has used the best information available to make the estimations or judgments necessary to value the related assets and liabilities. Actual performance that differs from estimates or judgments and future changes in the key variables could change future valuations and impact net income. Management has reviewed the application of these policies with the Audit Committee of the Board of Directors. Following is a discussion of the areas we view as our most critical accounting policies, including the identification of the variables most important in the estimation process.
Previous report
Allowance for Credit Losses - Loans
Previous report
Fair Value Measurements
Previous report
We use fair value measurements to record certain financial instruments and to determine fair value disclosures. Available for sale securities and interest rate swap agreements are financial instruments recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record at fair value other financial assets on a nonrecurring basis. These nonrecurring fair value adjustments typically involve write-downs of, or specific reserves against, individual assets. GAAP establishes a three-level hierarchy for disclosure of assets and liabilities recorded at fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used in the measurement are observable or unobservable. Observable inputs reflect market-driven or market-based information obtained from independent sources, while unobservable inputs reflect our estimates about market data.
Previous report
The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted market prices or observable market data. For financial instruments that trade actively and have quoted market prices or observable market data, there is minimal subjectivity involved in measuring fair value. When observable market prices and data are not fully available, management judgment is necessary to estimate fair value. In addition, changes in the market conditions may reduce the availability of quoted prices or observable data. For example, reduced liquidity in the capital markets or changes in secondary market activities could result in observable market inputs becoming unavailable. Therefore, when market data is not available, we use valuation techniques that require more management judgment to estimate the appropriate fair value measurement. Fair value is discussed further in Note 1 under the heading “Fair Value Measurements” and in Note 15, “Fair Value of Financial Instruments”.
Previous report
Accounting for Income Taxes
Previous report
We use the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities (i.e., temporary differences) and are measured at the enacted rates in effect when these differences reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. We exercise significant judgment in the evaluation of the amount and timing of the recognition of the resulting tax assets and liabilities. The judgments and estimates required for the evaluation are updated based upon changes in business factors and the tax laws. If actual results differ from the assumptions and other considerations used in estimating the amount and timing of tax recognized, there can be no assurance that additional expenses will not be required in future periods. Realization of deferred tax assets is dependent on generating sufficient taxable income in the future.
Reworded paragraphs (49)
Previous wording
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include projections, predictions, expectations or statements as to beliefs or future events or results, or refer to other matters that are not purely statements of historical facts. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking statements contained in this Annual Report are based on various factors and were derived using numerous assumptions. In some cases, you can identify these forward-looking statements by words like “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “intend”, “believe”, “estimate”, “predict”, “potential”, or “continue” or the negative of those words and other comparable words. You should be aware that those statements reflect only our predictions. If known or unknown risks or uncertainties should materialize, or if underlying assumptions should prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. Further, factors or events that could cause our actual results to differ from our forward-looking statements may emerge from time to time, and it is not possible for us to predict all of them. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Factors that might cause such differences include, but are not limited to:
Current wording
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include projections, predictions, expectations or statements as to beliefs or future events or results, or refer to other matters that are not purely statements of historical facts. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking statements contained in this Annual Report are based on various factors and were derived using numerous assumptions. In some cases, you can identify these forward-looking statements by words like “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “intend”, “believe”, “estimate”, “predict”, “potential”, or “continue” or the negative of those words and other comparable words. You should be aware that those statements reflect only our predictions. If known or unknown risks or uncertainties should materialize, or if underlying assumptions should prove inaccurate, actual results
Previous wording
Net interest income was $12.1 million for the year ended December 31, 2023, and $11.9 million for the year ended December 31, 2022. Total interest income increased from $12.7 million in 2022 to $13.3 million in 2023, a 4.92% increase. Interest expense for 2023 totaled $1.2 million, a 40.91% increase from $0.9 million in 2022. Net income for 2023 was $1.4 million, and for 2022 was $1.7 million.
Current wording
Net interest income was $10.9 million for the year ended December 31, 2024, and $12.1 million for the year ended December 31, 2023. Total interest income increased from $13.3 million in 2023 to $15.2 million in 2024, a 14.1% increase. Interest expense for 2024 totaled $4.3 million, a 255.3% increase from $1.2 million in 2023. Net loss for 2024 was $0.1 million, and net income for 2023 was $1.4 million.
Previous wording
General. For the year ended December 31, 2023, the Company reported consolidated net income of $1.4 million ($0.50 per basic and diluted earnings per share) compared to consolidated net income of $1.7 million ($0.61** per **basic and diluted earnings per share) for the year ended December 31, 2022. The $316,000 decrease in the 2023 consolidated net income as compared to 2022 was primarily due to a $208,000 increase in the provision of credit loss allowance, a $206,000 decrease in gain on swap contract termination and a $304,000 increase in salary and employee benefits expense that were partially offset by a $276,000 increase in net interest income and a $168,000 reduction in income tax expense for 2023.
Current wording
General. For the year ended December 31, 2024, the Company reported consolidated net loss of $0.1 million ($ (0.04) per basic and diluted loss per share) compared to consolidated net income of $1.4 million ($0.50** per **basic and diluted earnings per share) for the year ended December 31, 2023. The $1.5 million decrease in the 2024 consolidated net income as compared to 2023 was primarily due to a $1.2 million decrease in net interest income, a $748,000 increase in the provision of credit loss allowance, and a $253,000 increase in noninterest expenses, that were partially offset by a $597,000 reduction in income tax expense for 2024.
Previous wording
Annualized return on average assets was 0.40% at December 31, 2023 compared to 0.41% at December 31, 2022. Annualized return on average equity was 8.35% and 7.26% at December 31, 2023 and 2022, respectively. The dividend payout ratio was 80% for December 31, 2023 and 65% for December 31, 2022. The equity to asset ratio was 5.49% and 4.21% at December 31, 2023 and 2022, respectively.
Current wording
Annualized return on average assets was (0.03)% at December 31, 2024 compared to 0.40% at December 31, 2023. Annualized return on average equity was (0.58)% and 8.35% at December 31, 2024 and 2023, respectively. The dividend payout ratio was -750% for December 31, 2024 and 80% for December 31, 2023. The equity to asset ratio was 5.0% and 5.5% at December 31, 2024 and 2023, respectively.
Previous wording
Consolidated net interest income for the year ended December 31, 2023 was $12.1 million and $11.9 million for the year ended December 31, 2022. Total interest income increased from $12.7 million in 2022 to $13.3 million in 2023, a $625,000, or 4.92% increase, primarily due to a $744,000 increase in interest and dividends on securities and a $122,000 increase in interest and fees on loans that were partially offset by a $241,000 decrease in interest on deposits with banks and federal funds sold.
Current wording
Consolidated net interest income for the year ended December 31, 2024 was $10.9 million and $12.1 million for the year ended December 31, 2023. Total interest income increased from $13.3 million in 2023 to $15.2 million in 2024, a $1.9 million, or 14.1% increase, primarily due to a $1.9 million increase in interest and fees on loans and a $704,000 increase in interest on deposits with banks and federal funds sold that were partially offset by a $768,000 decrease in interest and dividends on securities.
Previous wording
Total interest expense increased from $0.9 million in 2022 to $1.2 million in 2023, a $349,000 or 40.91%** **increase, primarily due to a $341,000 increase in interest on short-term borrowings and a $42,000 increase in interest on deposits that were partially offset by a $34,000 decrease in long-term borrowings. Net interest margin for the year ended December 31, 2023 was 3.31% compared to 2.81% for the year ended December 31, 2022.
Current wording
Total interest expense increased from $1.2 million in 2023 to $4.3 million in 2024, a $3.1 million, or 255.3%** **increase, primarily due to a $1.1 million increase in interest on short-term borrowings and a $2.0 million increase in interest on deposits. Net interest margin for the year ended December 31, 2024 was 2.98% compared to 3.31% for the year ended December 31, 2023.
Previous wording
During the year ended December 31, 2023, the Company recognized a credit loss provision - loans of $0.1 million, compared to a release of $0.1 million for the year ended December 31, 2022. The increase was primarily driven by a change in the loan portfolio mix combined with higher loss rates. The allowance for credit losses - loans was $2.2 million, or 1.22% of total loans at December 31, 2023, compared to $2.2 million, or 1.16% of total loans at December 31, 2022. At December 31, 2023, the allowance for credit losses - loans equaled 409.5% of nonaccrual and past due loans compared to 434.0% at December 31, 2022. During the year ended December 31, 2023, the Company recorded net charge offs of $0.1 million compared to net charge offs of $0.2 million during the year ended December 31, 2022.
Current wording
During the year ended December 31, 2024, the Company recognized a credit loss provision - loans of $0.8 million, compared to $0.1 million for the year ended December 31, 2023. The increase was primarily driven by a $61,000 increase in net charge offs, a $28.2 million increase in the reservable balance of the loan portfolio and a 0.16% increase in the current expected credit loss percentage. The allowance for credit losses - loans was $2.8 million, or 1.4% of total loans at December 31, 2024, compared to $2.2 million, or 1.2% of total loans at December 31, 2023. At December 31, 2024, the allowance for credit losses - loans equaled 788.6% of nonaccrual loans and loans past due by 90+ days compared to 409.5% at December 31, 2023. During the year ended December 31, 2024, the Company recorded net charge offs of $0.2 million compared to net charge offs of $0.1 million during the year ended December 31, 2023.
Previous wording
Noninterest Income. Noninterest income includes service charges on deposit accounts, other fees and commissions, net gains/losses on investment securities sold, income on life insurance policies and gain on unwind of derivative contracts. Noninterest income decreased from $1.4 million in 2022 to $1.1 million in 2023, a $254,000, or 18.76% decrease.** **The decrease was primarily due to a $0.2 million gain on unwind of derivative swap contracts that was recognized in 2022 and a $54,000 decline in other fees and commissions earned in 2023 compared to 2022.
Current wording
Noninterest Income. Noninterest income includes service charges on deposit accounts, other fees and commissions, and income on life insurance policies. Noninterest income increased from $1.1 million in 2023 to $1.2 million in 2024, a $57,000, or 5.2% increase. The increase was primarily due to a $52,000 increase in other fees and commissions earned in 2024 compared to 2023.
Previous wording
**Income Taxes.**During the year ended December 31, 2023, the Company recorded an income tax expense of $72,000, compared to $240,000 for the year ended December 31, 2022, a $168,000 or 70.16% decrease. This decrease was primarily due to $484,000, or 24.41% lower income before taxes in 2023.
Current wording
**Income Taxes.**During the year ended December 31, 2024, the Company recorded an income tax benefit of $525,000, compared to an expense of $72,000 for the year ended December 31, 2023, a $597,000 or 829.2% decrease in expense. This decrease was primarily due to $2.1 million, or 142.5% lower income before taxes in 2024 compared to 2023.
Previous wording
Total assets decreased by $29.6 million, or 7.77% to $351.8 million at December 31, 2023, compared to $381.4 million at December 31, 2022. The decrease was primarily a result of decreases in interest-bearing deposits in other financial institutions, in the loan portfolio and the investment securities available for sale portfolio.
Current wording
Total assets increased by $7.1 million, or 2.0% to $359.0 million at December 31, 2024, compared to $351.8 million at December 31, 2023. The increase was primarily a result of increases in interest-bearing deposits in other financial institutions and the loan portfolio, offset by declines in the investment securities available for sale portfolio.
Previous wording
Cash and cash equivalents at December 31, 2023 were $15.2 million compared to $30.1 million at December 31, 2022. Loans, net at December 31, 2023 were $174.2 million compared to $184.3 million at December 31, 2022, a decrease of $10.1 million or 5.50%. At year-end 2023, investment securities had decreased $4.7 million, or 3.27% to $139.4 million compared to year end 2022. At December 31, 2023, total deposits were $300.1 million compared to $362.9 million at the end of 2022, a 17.32% decrease during the period. Total borrowings were $30.0 million at December 31, 2023 compared to $0 at December 31, 2022.
Current wording
Cash and cash equivalents at December 31, 2024 were $24.5 million compared to $15.2 million at December 31, 2023. Loans, net at December 31, 2024 were $202.4 million compared to $174.2 million at December 31, 2023, a decrease of $28.2 million or 16.2%. At year-end 2024, investment securities had decreased $31.5 million, or 22.6% to $107.9 million compared to year end 2023. At December 31, 2024, total deposits were $309.2 million compared to $300.1 million at the end of 2023, a 3.0% increase during the period. Total borrowings were $30.0 million at December 31, 2024 unchanged from December 31, 2023.
Previous wording
Cash and cash equivalents decreased by $14.9 million primarily due to a $62.9 million decrease in deposit balances that was partially offset by a $30.0 million increase in borrowings and a $10.1 million decrease in loans net of deferred fees and costs and a $4.7 million decrease in investment securities.
Current wording
Cash and cash equivalents increased by $9.2 million primarily due to a $9.1 million increase in deposit balances and a $30.6 million decrease in investment securities that was partially offset by a $28.9 million increase in loans net of deferred fees and costs.
Previous wording
The investment portfolio consists primarily of U.S. Agency mortgage-backed securities, U.S. Government agency securities, municipal obligations and U.S. Treasury securities. The income from state and municipal obligations may be taxable or tax-exempt from federal and state income tax. State and municipal obligations from the State of Maryland are exempt from federal and state income taxes. We use the investment portfolio as a source of both liquidity and earnings. Management continuously evaluates investment options that will produce income without assuming significant credit or interest rate risk and looks for opportunities to use liquidity from maturing investments to reduce our use of high-cost time deposits and borrowed funds.
Current wording
The investment portfolio consists primarily of U.S. Agency mortgage-backed securities, U.S. Government agency securities, and municipal obligations. The income from state and municipal obligations may be taxable or tax-exempt from federal and state income tax. State and municipal obligations from the State of Maryland are exempt from federal and state income taxes. We use the investment portfolio as a source of both liquidity and earnings. Management continuously evaluates investment options that will produce income without assuming significant credit or interest rate risk and looks for opportunities to use liquidity from maturing investments to reduce our use of high-cost time deposits and borrowed funds.
Previous wording
During 2023, the Company’s investment securities portfolio totaled $139.4 million, a $4.7 million, or 3.27% decrease from $144.1 million at December 31, 2022. This decrease was primarily driven by $18.5 million of paydowns and redemptions of investment securities, offset by $9.7 million of purchases of available for sale securities and a $4.0 million decrease in the unrealized loss on available for sale securities during 2023.
Current wording
During 2024, the Company’s investment securities portfolio totaled $107.9 million, a $31.5 million, or 22.58% decrease from $139.4 million at December 31, 2023. This decrease was primarily driven by $30.5 million of paydowns and redemptions of investment securities, and a $0.9 million increase in the unrealized loss on available for sale securities during 2024.
Previous wording
At December 31, 2023, the Company had municipal securities from seven single issuers that, individually, were more than 10% of stockholders’ equity, which totaled $28.6 million.
Current wording
At December 31, 2024, the Company had municipal securities from eight single issuers that, individually, were more than 10% of stockholders’ equity, which totaled $30.4 million.
Previous wording
Restricted equity securities were $1.2 million and $0.2 million at December 31, 2023 and 2022, respectively.
Current wording
Restricted equity securities were $1.7 million and $1.2 million at December 31, 2024 and 2023, respectively.
Previous wording
The Company’s net loan receivables decreased by $10.1 million to $174.2 million at December 31, 2023 from $184.3 million at December 31, 2022 primarily due to $35.3 million in pay downs outpacing $25.2 million in new originations. This change in the composition of the loan portfolio resulted primarily from a $15.2 million decrease in automobile loans and a $3.7 million decrease in commercial real estate loans.
Current wording
The Company’s net loan receivables increased by $28.2 million to $202.4 million at December 31, 2024 from $174.2 million at December 31, 2023 primarily due to $67.4 million in new originations outpacing $39.2 million in pay downs. This change in the composition of the loan portfolio resulted primarily from a $4.2 million increase in construction and land loans, a $12.1 million increase in single-family loans, a $9.5 million increase in commercial real estate loans, and a $5.9 million increase in commercial and industrial loans, offset by a $3.2 million decrease in automobile loans.
Previous wording
telephone and/or letter before the account becomes 30 days past due. If a consumer loan becomes more than 30 days past due, the Bank will continue its collection efforts and will move to repossession or foreclosure by the 45th day if the Bank has reason to believe that the collateral may be in jeopardy or the borrower has failed to respond to prior communications. The Bank may move to repossess or foreclose in all instances in which a consumer loan becomes more than 60 days delinquent. After repossession of a motor vehicle, the borrower has a 15-day statutory right to redeem the vehicle and is entitled to 10 days’ notice before the sale of a repossessed vehicle. The Bank sells the vehicle as promptly as feasible after the expiration of these periods. If the amount realized from the sale of the vehicle is less than the loan amount, the Bank may seek a deficiency judgment against the borrower. The Bank follows similar collection procedures with respect to commercial loans.
Current wording
The Bank seeks to control delinquencies through diligent collection efforts. For consumer loans, the Bank sends out payment reminders on the seventh and twelfth days after a payment is due. If a consumer loan becomes 15 days past due, the account is transferred to the Bank’s collections department, which will contact the borrower by telephone and/or letter before the account becomes 30 days past due. If a consumer loan becomes more than 30 days past due, the Bank will continue its collection efforts and will move to repossession or foreclosure by the 45th day if the Bank has reason to believe that the collateral may be in jeopardy or the borrower has failed to respond to prior communications. The Bank may move to repossess or foreclose in all instances in which a consumer loan becomes more than 60 days delinquent. After repossession of a motor vehicle, the borrower has a 15-day statutory right to redeem the vehicle and is entitled to 10 days’ notice before the sale of a repossessed vehicle. The Bank sells the vehicle as promptly as feasible after the expiration of these periods. If the amount realized from the sale of the vehicle is less than the loan amount, the Bank may seek a deficiency judgment against the borrower. The Bank follows similar collection procedures with respect to commercial loans.
Previous wording
The Bank experienced a $29,000 or 5.8% increase in the total nonperforming loans in 2023. The following table presents details of our nonperforming loans and nonperforming assets, as these asset quality metrics are evaluated by management, for the years indicated:
Current wording
The Bank experienced a $167,000 or 31.7% decrease in the total nonperforming loans in 2024. The following table presents details of our nonperforming loans and nonperforming assets, as these asset quality metrics are evaluated by management, for the years indicated:
Previous wording
Nonperforming assets, which consist of nonaccrual loans, loans to borrowers experiencing financial difficulty, accruing loans past due 90 days or more, and real estate acquired through foreclosure, remained essentially unchanged at $0.5 million at December 31, 2023 and December 31, 2022. Nonperforming assets represented 0.15% of total assets at
Current wording
Nonperforming assets, which consist of nonaccrual loans, loans to borrowers experiencing financial difficulty, accruing loans past due 90 days or more, and real estate acquired through foreclosure, decreased to $0.4 million at December 31, 2024 from $0.5 million at December 31, 2023. Nonperforming assets represented 0.10% of total assets at December 31, 2024, compared to 0.15% at December 31, 2023. Management has worked diligently to identify borrowers that may be facing difficulties in order to restructure terms where appropriate, secure additional collateral or pursue foreclosure and other secondary sources of repayment.
Previous wording
Credit risk is the risk of loss arising from the inability of a borrower to meet his or her obligations and entails both general risks, which are inherent in the process of lending, and risks specific to individual borrowers. Credit risk is mitigated through portfolio diversification, which limits exposure to any single customer, industry, or collateral type. Residential mortgage and home equity loans and lines generally have the lowest credit loss experience. Loans secured by personal property, such as auto loans, generally experience medium credit losses. Unsecured loan products, such as personal revolving credit, have the highest credit loss experience and for that reason, the Bank has chosen not to engage in a significant amount of this type of lending. Credit risk in commercial lending can vary significantly, as losses as a percentage of outstanding loans can shift widely during economic cycles and are particularly sensitive to changing economic conditions. Generally, improving economic conditions result in improved operating results on the part of commercial customers, enhancing their ability to meet their particular debt service requirements. Improvements, if any, in operating cash flows can be offset by the impact of rising interest rates that may occur during improved economic times. Inconsistent economic conditions may have an adverse effect on the operating results of commercial customers, reducing their ability to meet debt service obligations.
Current wording
Residential mortgage and home equity loans and lines generally have the lowest credit loss experience. Loans secured by personal property, such as automobile loans, generally experience medium credit losses. Unsecured loan products, such as personal revolving credit, have the highest credit loss experience and for that reason, the Bank has chosen not to engage in a significant amount of this type of lending. Credit risk in commercial lending can vary significantly, as losses as a percentage of outstanding loans can shift widely during economic cycles and are particularly sensitive to changing economic conditions. Generally, improving economic conditions result in improved operating results on the part of commercial customers, enhancing their ability to meet their particular debt service requirements. Improvements, if any, in operating cash flows can be offset by the impact of rising interest rates that may occur during improved economic times. Inconsistent economic conditions may have an adverse effect on the operating results of commercial customers, reducing their ability to meet debt service obligations.
Previous wording
The allowance was $2.2 million at December 31, 2023, compared to $2.2 million at December 31, 2022. The allowance as a percentage of total portfolio loans was 1.22% at December 31, 2023 and 1.16% at December 31, 2022.
Current wording
The allowance was $2.8 million at December 31, 2024, compared to $2.2 million at December 31, 2023. The allowance as a percentage of total portfolio loans was 1.4% at December 31, 2024 and 1.2% at December 31, 2023.
Previous wording
During the year ended December 31, 2023, the Company recorded net charge offs of $0.1 million compared to $0.2 million during the year ended December 31, 2022.
Current wording
During the year ended December 31, 2024, the Company recorded net charge offs of $0.2 million compared to $0.1 million during the year ended December 31, 2023.
Previous wording
The funds needed by the Bank to make loans are primarily generated by deposit accounts solicited from the communities in Anne Arundel County. The Bank’s deposit products include savings accounts, money market deposit accounts, demand deposit accounts, NOW checking accounts, IRA and SEP accounts and certificates of deposit. The Bank does not solicit brokered deposits. Variations in service charges, terms and interest rates are used to target specific markets. Ancillary products and services for deposit customers include safe deposit boxes, night depositories, automated clearinghouse transactions, wire transfers, ATMs, electronic banking (telephone banking, online banking, bill pay, card management and control, mobile app, merchant source capture, mobile deposit capture, Zelle®, etc.). The Bank is a member of the Accel(R) and MoneyPass(R) ATM networks.
Current wording
The funds needed by the Bank to make loans are primarily generated by deposit accounts solicited from the communities in Anne Arundel County. The Bank’s deposit products include savings accounts, money market deposit accounts, demand deposit accounts, NOW checking accounts, IRA and SEP accounts and certificates of deposit. The Bank does not solicit brokered deposits. Variations in service charges, terms and interest rates are used to target specific markets. Ancillary products and services for deposit customers include safe deposit boxes, night depositories, automated clearinghouse transactions, wire transfers, ATMs, electronic banking (telephone banking, online banking, bill
Previous wording
Total deposits were $300.1 million at December 31, 2023, a decrease of $62.9 million, or 17.3%, when compared to the $362.9 million recorded at December 31, 2022. Within the deposit base, noninterest-bearing deposit balances decreased $26.3 million, or 18.4%, interest-bearing checking account balances decreased $11.5 million, or 28.7%, interest-bearing savings account balances decreased by $20.0 million, or 17.7%, money market balances increased $11.0 million, or 69.9%, and time deposit balances decreased by $16.1 million, or 31.7%, when compared to the amounts at December 31, 2022.
Current wording
Total deposits were $309.2 million at December 31, 2024, an increase of $9.1 million, or 3.0%, when compared to $300.1 million recorded at December 31, 2023. Within the deposit base, noninterest-bearing deposit balances decreased $16.2 million, or 13.8%, interest-bearing checking account balances decreased $3.1 million, or 10.8%, interest-bearing savings account balances decreased by $17.7 million, or 19.0%, money market balances increased $54.7 million, or 203.7%, and time deposit balances decreased by $8.6 million, or 24.9%, when compared to the amounts at December 31, 2023.
Previous wording
The following table presents the maturity distribution for time deposits of $100,000 or more at December 31, 2023:
Current wording
The following table presents the maturity distribution for time deposits of $250,000 or more at December 31, 2024:
Previous wording
The Bank uses borrowings from the Federal Home Loan Bank (“FHLB”) of Atlanta, of which it is a member, to supplement funding from deposits. The Bank’s total credit availability is $88.8 million at December 31, 2023 and it may draw $29.4 million which is secured by a floating lien on the Bank’s residential first mortgage loans.
Current wording
The Bank uses borrowings from the Federal Home Loan Bank (“FHLB”) of Atlanta, of which it is a member, to supplement funding from deposits. The Bank’s total credit availability is $92.1 million at December 31, 2024 and it may draw $52.3 million which is secured by a floating lien on the Bank’s residential first mortgage loans and pledged securities.
Previous wording
As of December 31, 2023, the Bank was permitted to draw on a line of credit from the Federal Reserve Bank under the Bank Term Funding Program (“BTFP”). Credit is available up to the total value of investment securities pledged as collateral. Borrowings under the line are secured by investment securities of $13.2 million at December 31, 2023 and the outstanding loan balance is $10.0 million.
Current wording
As of December 31, 2024, the Bank was permitted to draw on a line of credit from the Federal Reserve Bank’s discount window. Credit is available up to the total value of investment securities pledged as collateral. Borrowings under the line are secured by investment securities of $45.4 million at December 31, 2024 and there were no outstanding loan balances.
Previous wording
Stockholders’ equity increased to $19.3 million at December 31, 2023, compared to $16.1 million at December 31, 2022. The $3.3 million, or 20.37%, increase for the year ended December 31, 2023, resulted primarily from a $2.9 million decrease in net unrealized losses on the available for sale bond portfolio, $1.4 million in net income and $120,000 stock issuances under the dividend reinvestment program that were partially offset by $1.1 million in dividends paid. The book value of the Company’s common stock was $6.70 at December 31, 2023 and $5.60 at December 31, 2022.
Current wording
Stockholders’ equity decreased to $17.8 million at December 31, 2024, compared to $19.3 million at December 31, 2023. The $1.5 million, or 7.8%, decrease for the year ended December 31, 2024, resulted primarily from a $622,000 increase in net unrealized losses on the available for sale bond portfolio, a $112,000 net loss and $865,000 in dividends paid that were partially offset by $91,000 stock issuances under the dividend reinvestment program. The book value of the Company’s common stock was $6.14 at December 31, 2024 and $6.70 at December 31, 2023.
Previous wording
capital, in addition to certain overall limits on net deferred tax assets as a percentage of common equity Tier 1 capital. At December 31, 2023, none of the Bank’s net deferred tax asset was excluded from common equity Tier 1, Tier 1 and total regulatory capital. We will continue to evaluate the realizability of our net deferred tax asset on a quarterly basis for both financial reporting and regulatory capital purposes. This evaluation may result in the inclusion of a deferred tax asset in regulatory capital in an amount that is different from the amount determined under GAAP.
Current wording
For regulatory capital purposes, deferred tax assets that arise from net operating loss and tax credit carryforwards (net of any related valuations allowances and net of deferred tax liabilities) are excluded from regulatory capital, in addition to certain overall limits on net deferred tax assets as a percentage of common equity Tier 1 capital. At December 31, 2024, none of the Bank’s net deferred tax asset was excluded from common equity Tier 1, Tier 1 and total regulatory capital. We will continue to evaluate the realizability of our net deferred tax asset on a quarterly basis for both financial reporting and regulatory capital purposes. This evaluation may result in the inclusion of a deferred tax asset in regulatory capital in an amount that is different from the amount determined under GAAP.
Previous wording
Our liquidity is derived primarily from our deposit base, scheduled amortization and prepayments of loans and investment securities, funds provided by operations and capital. Additionally, liquidity is provided through our portfolios of cash and interest-bearing deposits in other banks, federal funds sold and securities available for sale. While scheduled principal repayments on loans are a relatively predictable source of funds, deposit flows and loan
Current wording
Our liquidity is derived primarily from our deposit base, scheduled amortization and prepayments of loans and investment securities, funds provided by operations and capital. Additionally, liquidity is provided through our portfolios of cash and interest-bearing deposits in other banks, federal funds sold and securities available for sale.
Previous wording
prepayments are greatly influenced by market interest rates, economic conditions, and rates offered by the Bank’s competitors.
Current wording
While scheduled principal repayments on loans are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and rates offered by the Bank’s competitors.
Previous wording
The borrowing requirements of customers include commitments to extend credit and the unused portion of lines of credit, which totaled $33.2 million at December 31, 2023. Management notes that, historically, a small percentage of unused lines of credit are actually drawn down by customers within a 12-month period.
Current wording
The borrowing requirements of customers include commitments to extend credit and the unused portion of lines of credit, which totaled $31.6 million at December 31, 2024. Management notes that, historically, a small percentage of unused lines of credit are actually drawn down by customers within a 12-month period.
Previous wording
Our most liquid assets are cash and assets that can be readily converted into cash, including interest-bearing deposits with banks and federal funds sold, and investment securities. At December 31, 2023, we had $1.9 million in cash and due from banks, $13.3 million in interest-bearing deposits with banks and federal funds sold, and $139.4 million in investment securities available for sale.
Current wording
Our most liquid assets are cash and assets that can be readily converted into cash, including interest-bearing deposits with banks and federal funds sold, and investment securities. At December 31, 2024, we had $2.0 million in cash and due from banks, $22.5 million in interest-bearing deposits with banks and federal funds sold, and $107.9 million in investment securities available for sale.
Previous wording
The Bank also has external sources of funds through the FHLB, Federal Reserve Discount Window and newly formed Bank Term Funding Program which can be drawn upon when required. The Bank has a line of credit totaling approximately $88.8 million with the FHLB of which $68.8 million was available to be drawn on December 31, 2023, subject to qualifying loans and securities pledged as collateral. The lines of credit with the Federal Reserve are limited to the amount of qualifying collateral pledged.
Current wording
The Bank also has external sources of funds through the FHLB, and Federal Reserve Discount Window which can be drawn upon when required. The Bank has a line of credit totaling approximately $92.1 million with the FHLB of which $62.1 million was available to be drawn on December 31, 2024, subject to qualifying loans and securities pledged as collateral. The lines of credit with the Federal Reserve are limited to the amount of qualifying collateral pledged which totaled $33.4 million at December 31, 2024.
Previous wording
To further aid in managing liquidity, the Bank’s Board of Directors has approved and formed an Asset/Liability Management Committee (“ALCO”) and Investment Committee to review and discuss recommendations for the use of available cash and to maintain an investment portfolio. By limiting the maturity of securities and maintaining a conservative investment posture, management can rely on the investment portfolio to help meet any short-term funding needs.
Current wording
To further aid in managing liquidity, the Bank’s Board of Directors has approved and formed an Asset/Liability Management Committee (“ALCO”) to review and discuss recommendations for the use of available cash and to maintain an investment portfolio. By limiting the maturity of securities and maintaining a conservative investment posture, management can rely on the investment portfolio to help meet any short-term funding needs.
Previous wording
Loan commitments, lines of credit, and letters of credit are made on the same terms, including collateral, as outstanding loans. As of December 31, 2023, the Bank has accrued $473,000 as a reserve for credit losses on unfunded commitments, a decrease of $4,000 from the $477,000 accrued as of December 31, 2022. Unfunded commitments related to these financial instruments with off balance sheet risk, are included in “other liabilities”. The additional provision amount is included in ‘other expense’.
Current wording
Loan commitments, lines of credit, and letters of credit are made on the same terms, including collateral, as outstanding loans. As of December 31, 2024, the Bank has accrued $584,000 as a reserve for credit losses on unfunded commitments, an increase of $111,000 from the $473,000 accrued as of December 31, 2023. Unfunded commitments related to these financial instruments with off balance sheet risk, are included in “other liabilities”. The additional provision amount is included in ‘other expense’.
Previous wording
Our primary market risk is interest rate fluctuation. Interest rate risk results primarily from the traditional banking activities in which the Bank engages, such as gathering deposits and extending loans. Many factors, including economic and financial conditions, movements in interest rates and consumer preferences affect the difference between the interest earned on our assets and the interest paid on liabilities. Our interest rate risk represents the level of exposure we have to fluctuations in interest rates and is primarily measured as the change in earnings and the theoretical market value of equity that results from changes in interest rates. The Investment Committee oversees our management of interest rate risk. The objective of the management of interest rate risk is to maximize stockholder value, enhance profitability and increase capital, serve customer and community needs, and protect us from any material financial consequences associated with changes in interest rate risk.
Current wording
Our primary market risk is interest rate fluctuation. Interest rate risk results primarily from the traditional banking activities in which the Bank engages, such as gathering deposits and extending loans. Many factors, including economic and financial conditions, movements in interest rates and consumer preferences affect the difference between the interest earned on our assets and the interest paid on liabilities. Our interest rate risk represents the level of exposure we have to fluctuations in interest rates and is primarily measured as the change in earnings and the theoretical market value of equity that results from changes in interest rates. The Asset Liability Committee (“ALCO”) oversees our management of interest rate risk. The objective of the management of interest rate risk is to maximize stockholder value, enhance profitability and increase capital, serve customer and community needs, and protect the Company from any adverse material financial consequences associated with changes in interest rate risk.
Previous wording
Interest rate risk is that risk to earnings or capital arising from movement of interest rates. It arises from differences between the timing of rate changes and the timing of cash flows (repricing risk); from changing rate relationships across yield curves that affect bank activities (basis risk); from changing rate relationships across the spectrum of maturities (yield curve risk); and from interest rate related options embedded in certain bank products (option risk). Changes in interest rates may also affect a bank’s underlying economic value. The value of a bank’s assets, liabilities, and interest-rate related, off-balance sheet contracts is affected by a change in rates because the present value of future cash flows, and in some cases the cash flows themselves, is changed.
Current wording
Interest rate risk is that risk to earnings or capital arising from movement of interest rates. It arises from differences between the timing of rate changes and the timing of cash flows (repricing risk); from changing rate relationships across yield curves that affect bank activities (basis risk); from changing rate relationships across the spectrum of maturities (yield curve risk); and from interest rate related options embedded in certain bank products (option risk). Changes in interest rates may also affect a bank’s underlying economic value. The value of a bank’s assets, liabilities, and interest-rate related, off-balance sheet contracts are affected by a change in rates because they represent the value of future cash flows, and in some cases the cash flows themselves, is changed.
Previous wording
We believe that accepting some level of interest rate risk is necessary in order to achieve realistic profit goals. Management and the Board have chosen an interest rate risk profile that is consistent with our strategic business plan.
Current wording
We believe that accepting some level of interest rate risk is necessary in order to achieve realistic profit goals. Management and the Board of Directors have chosen an interest rate risk profile that is consistent with our strategic business plan.
Showing the first 40 of 49 pairs. Open the source sections for the rest.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
could differ materially from past results and those anticipated, estimated or projected. Further, factors or events that could cause our actual results to differ from our forward-looking statements may emerge from time to time, and it is not possible for us to predict all of them. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Factors that might cause such differences include, but are not limited to:
Current report — wording carried from elsewhere
Credit risk is the risk of loss arising from the inability of a borrower to meet his or her obligations and entails both general risks, which are inherent in the process of lending, and risks specific to individual borrowers. Credit risk is mitigated through portfolio diversification, which limits exposure to any single customer, industry, or collateral type.
Current report — wording carried from elsewhere
pay, card management and control, mobile app, merchant source capture, mobile deposit capture, Zelle®, etc.). The Bank is a member of the Accel(R) and MoneyPass(R) ATM networks.
Current report — wording carried from elsewhere
The consolidated financial statements and notes thereto presented herein have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars without considering the changes in the relative purchasing power of money over time due to
Current report — wording carried from elsewhere
The estimate of expected credit losses under the CECL methodology is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. We then consider whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was based. Finally, we consider forecasts about future economic conditions or changes in collateral values that are reasonable and supportable.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
The Bank seeks to control delinquencies through diligent collection efforts. For consumer loans, the Bank sends out payment reminders on the seventh and twelfth days after a payment is due. If a consumer loan becomes 15 days past due, the account is transferred to the Bank’s collections department, which will contact the borrower by
Previous report — wording carried elsewhere
December 31, 2023, compared to 0.13% at December 31, 2022. Management has worked diligently to identify borrowers that may be facing difficulties in order to restructure terms where appropriate, secure additional collateral or pursue foreclosure and other secondary sources of repayment.
Previous report — wording carried elsewhere
For regulatory capital purposes, deferred tax assets that arise from net operating loss and tax credit carryforwards (net of any related valuations allowances and net of deferred tax liabilities) are excluded from regulatory
Previous report — wording carried elsewhere
present value of assets and liabilities. The difference between these discounted values of the assets and liabilities is the economic value of equity, which, in theory, approximates the fair value of the Company’s net assets.
Previous report — wording carried elsewhere
The Company maintains an allowance for credit losses (“ACL”) for the expected credit losses of the loan portfolio as well as unfunded loan commitments. The amount of ACL is based on ongoing, quarterly assessments by management. The CECL methodology requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures) and replaces the incurred loss methodology’s threshold that delayed the recognition of a credit loss until it was probable a loss event was incurred. The Company also considers qualitative adjustments to the historical loss rate for each loan portfolio class. The qualitative adjustments for each loan class consider the conditions over the 20-year look-back period from which historical loss experience was based and are split into two components: 1) asset or class specific risk characteristics or current conditions at the reporting date related to portfolio credit quality, remaining payments, volume and nature, credit culture and management, business environment or other management factors; and 2) reasonable and supportable forecast of future economic conditions and collateral values. Our accounting policy related to the reserve is disclosed in Note 1 under the heading “Allowance for Credit Losses - Loans.”