FFB Bancorp Earns $7.79 million, or $2.46 per Diluted Share, for First Quarter 2024

FRESNO, Calif., April 17, 2024 (GLOBE NEWSWIRE) -- FFB Bancorp (the “Company”) (OTCQX: FFBB),  the parent company of FFB Bank (the “Bank”), today reported net income of $7.79 million, or $2.46 per diluted share, for the first quarter of 2024, compared to $7.70 million, or $2.42 per diluted share, for the first quarter of 2023, and increased 3% from $7.57 million, or $2.38 per diluted share for the fourth quarter of 2023. All results are unaudited.

First Quarter 2024 Highlights:  As of, or for the quarter ended March 31, 2024, compared to the quarter ended March 31, 2023:

• Pre-tax, pre-provision income increased 3.02% to $10.91 million.
• Net income increased 1% to $7.79 million.
• Return on average equity (“ROAE”) was 23.27%. 
• Return on average assets (“ROAA”) was 2.32%.
• Net interest margin expanded 16 basis points to 5.15% from 4.98% a year earlier.
• Gross revenue (net interest income, before the provision for credit losses, plus non-interest income) increased 22% to $23.61 million.
• Total assets increased 9% to $1.40 billion.
• Total portfolio of loans increased 8% to $926.78 million.
• Total deposits increased 9% to $1.20 billion.
• Shareholder equity increased 37% to $138.72 million. 
• Book value per common share increased 38% to $43.69.
• The Company’s tangible common equity ratio was 9.94%, while the Bank’s regulatory leverage capital ratio was 14.27% and total risk-based capital ratio was 20.79%, at March 31, 2024.  

“First quarter 2024 results reflect robust growth in gross revenues which were up 22% year-over-year and 6% from the linked quarter,” said Steve Miller, President & CEO. “Merchant services income, net of operating expenses, increased 51% year-over-year and 25% from the linked quarter.”

“Overall credit quality remains strong, although we saw an increase in nonperforming assets and loan delinquencies related to the SBA portfolio during the quarter,” said Miller. “We continue to strengthen our balance sheet and added $378,000 to our allowance for credit loss during the quarter, reflecting prudent credit risk management. Our core deposit franchise continues to give us flexibility in how we manage our balance sheet, and our strategic focus is to organically expand our customer deposit base leveraging our regional expansion and national payments franchise,” said Miller.

Results of Operations

Operating revenue, consisting of net interest income before the provision for credit losses and non-interest income, increased 22% to $23.61 million for the first quarter of 2024, compared to $19.34 million for the first quarter a year ago, and increased 6% from $22.31 million from the fourth quarter of 2023.

Net interest income, before the provision for credit losses, increased 9% to $16.14 million for the first quarter of 2024, compared to $14.78 million for the same quarter a year ago, and decreased 1% from $16.38 million for the preceding quarter. “The slight decrease in net interest income during the first quarter was driven by continued pressure on deposit rates and higher funding costs,” said Bhavneet Gill, Chief Financial Officer.

The Company’s net interest margin (“NIM”) improved by 16 basis points to 5.15% for the first quarter of 2024, compared to 4.98% for the first quarter of 2023, and decreased 5 basis points from 5.19% for the preceding quarter. “Our yield on earning assets expanded 2 basis points in the first quarter with new loan production and investment purchases at higher rates, however, that was more than offset by the 6 basis point increase in the cost of funds. Our interest-bearing deposit balances increased 1% quarter over quarter while the cost of interest-bearing deposits increased 18 basis points in the first quarter,” said Gill.

The yield on earning assets was 6.15% for the first quarter of 2024, compared to 5.57% for the first quarter a year ago, and 6.13% for the linked quarter. The cost of funds increased to 1.00% for the first quarter of 2024, as customers continue to seek higher deposit rates in the current higher rate environment. The cost of funds was 0.58% for the same quarter a year earlier, and 0.93% for the preceding quarter.

Total non-interest income was $7.47 million for the first quarter of 2024, compared to $4.56 million for the first quarter of 2023, and $5.92 million for the preceding quarter. The increase in non-interest income from the preceding quarter was driven by merchant services revenue and a reduction in loss on sale of investment securities.

Merchant services revenue increased 64% to $6.07 million for the first quarter of 2024, compared to $3.70 million from the first quarter a year earlier, and increased 26% from $4.83 million for the preceding quarter. The increase in merchant service income from the preceding quarter was primarily due to an increase in revenue related to FFB Payments, our own organic ISO.

“We continue to see revenue growth across our ISO partner sponsorships and from our own organic ISO, FFB Payments,” said Miller. “Our team continues to build a solid pipeline of payment related partners to support further revenue expansion for both ISO partner sponsorship, FFB Payments and new payment rail use cases. Our strategic initiatives for 2024 and beyond are focused on providing our customers access to all payment rails and growing our deposit franchise through the payment ecosystem. We realized a significant decrease in ISO Partner Sponsorship volume in the first quarter related to one ISO partner, however, that reduction in volume did not make a meaningful impact to revenue.”

Merchant ISO Processing Volumes (in thousands)
Source	Q1 2023				Q2 2023				Q3 2023				Q4 2023				Q1 2024
ISO Partner Sponsorship	$	3,486,203			$	3,891,828			$	3,491,321			$	3,812,386			$	2,763,289
FFB Payments- Sub-ISO Merchants		19,683				13,665				12,382				20,992				21,478
FFB Payments - Direct Merchants		42,725				119,948				61,987				93,443				78,851
Total volume	$	3,548,611			$	4,025,441			$	3,565,690			$	3,926,821			$	2,863,618

Merchant ISO Processing Revenues (in thousands)
Source of Revenue	Q1 2023				Q2 2023				Q3 2023				Q4 2023				Q1 2024
Net Revenue*:
ISO Partner Sponsorship	$	1,961			$	2,116			$	2,169			$	1,916			$	2,183
Gross Revenue:
FFB Payments- Sub-ISO Merchants		223				496				466				539				672
FFB Payments - Direct Merchants		1,513				4,761				2,078				2,693				3,213
		1,736				5,257				2,544				3,232				3,885
Gross Expense:
FFB Payments- Sub-ISO Merchants		149				321				361				455				518
FFB Payments - Direct Merchants		1,095				2,468				1,428				1,720				1,842
		1,244				2,789				1,789				2,175				2,360
Net Revenue:
FFB Payments- Sub-ISO Merchants		74				175				105				84				154
FFB Payments - Direct Merchants		418				2,293				650				973				1,371
FFB Payments Net Revenue		492				2,468				755				1,057				1,525
Net Merchant Services Income:	$	2,453			$	4,584			$	2,924			$	2,973			$	3,708

*ISO Partnership Sponsorship is recognized net of expense in Merchant Services Income. FFB Payments revenues are recognized gross in Merchant Services Income and Merchant Services expenses are recognized in Non-Interest Expense.

Total deposit fee income increased 22% to $796,000 for the first quarter of 2024, compared to $655,000 for the first quarter of 2023, and increased 2% from $783,000 for the preceding quarter.

There was a $451,000 gain on sale of loans during the first quarter of 2024, compared to a gain on sale of loans of $904,000 during the first quarter 2023, and a gain on sale of loans of $464,000 in the linked quarter. There was a loss on sale of investments of $373,000 during the first quarter of 2024, compared to a loss of $1.32 million during the first quarter 2023, and $1.11 million loss in the linked quarter. “We monitor the sale of loans and investment securities and manage concentrations accordingly. During the first quarter, we sold $1.75 million in bank subordinated debt securities and another $3.20 million in non-agency CMOs to further reduce credit exposure in the investment portfolio,” added Gill.

Non-interest expense increased 45% to $12.70 million for the first quarter of 2024, compared to $8.75 million for the first quarter 2023, and increased 15% from $11.05 million for the linked quarter.  “The higher operating expenses incurred from a year ago and for the three months ended March 31, 2024 were partially related to the increase in merchant operating expense, as a result of higher merchant operating revenue. Excluding the impact of merchant operating expense, operating expenses are up 38% year over year and 12% from the prior quarter,” said Miller. “In addition to an increase in merchant operating expense, operating expenses were significantly impacted by higher salaries and employee benefits as we continued to invest in key talent and technology.”

“We made strategic investments in people and technology during the first quarter to support our payment ecosystem, product development, and regional expansion initiatives. These investments included hiring a team of data engineers and individuals focused on treasury management and product development. We had the opportunity to onboard talent ahead of our original expectations, which will enable our team to accelerate several key foundational initiatives for the future of our franchise,” said Miller. Full-time employees increased to 147 at March 31, 2024, compared to 107 full-time employees a year earlier, and 139 full-time employees from the linked quarter. As a result of the increased headcount, salaries and employee benefits increased 40% to $6.58 million for the first quarter of 2024, compared to $4.72 million for the first quarter of 2023, and increased 18% from $5.60 million in the linked quarter.

Occupancy and equipment expenses increased 6% from a year ago, representing 3% of non-interest expense, and increased 22% from the preceding quarter.  Other operating expense increased 39% to $3.38 million from a year earlier and increased 3% from the preceding quarter. Increases in data processing expense, software licenses and subscriptions, professional fees, and marketing expense were all primary drivers of the year-over-year increase. Merchant operating expense totaled $2.36 million for the first quarter of 2024, compared to $1.24 million for the first quarter of 2023 and $1.85 million for the preceding quarter. The year-over-year increase in merchant operating expense is attributed to an increase in volume and revenue for the FFB Payments lines of business. Merchant operating expenses include interchange fees, chargebacks, partnership fees, and other card brand fees.

The efficiency ratio was 52.96% for the first quarter of 2024, compared to 42.35% for the same quarter a year ago, and 47.17% for the preceding quarter.  The efficiency ratio can fluctuate period over period based on changes in merchant services gross revenues and associated expenses. The Company also calculates an adjusted efficiency ratio where the merchant services gross expense, which is included in noninterest expense, is netted against merchant services revenue in noninterest income. The adjusted efficiency ratio was 47.82% for the first quarter of 2024, compared to 38.65% for the same quarter a year ago, and 42.63% for the linked quarter.

Balance Sheet Review

Total assets increased 9% to $1.40 billion at March 31, 2024, compared to $1.28 billion at March 31, 2023, and increased 2% from $1.36 billion at December 31, 2023.

The total portfolio of loans increased 8%, or $65.60 million, to $926.78 million, compared to $861.18 million at March 31, 2023, and decreased $1.56 million, from $928.34 million on a linked quarter basis. “We recorded a $451,000 gain on sale of $5.76 million in SBA loans during the first quarter,” said Gill.

Commercial real estate loans increased 6% year-over-year to $545.36 million, representing 59% of total loans at March 31, 2024.  The CRE portfolio includes approximately $237.35 million  in multi-family loans originated by the Southern California team that the Company may consider selling at some point in the future for liquidity and concentration management. The multi-family portfolio includes $58.61 million in short-term bridge loans for transitional projects of multi-family properties. The short-term bridge loans are conservatively underwritten with minimum DSCR and liquidity requirements. Approximately 49.8% of the current bridge loan portfolio will come due during the second quarter of 2024 to roll off or get refinanced and sold. The bank continues to market our bridge loan product in a more measured approach keeping to our conservative underwriting standards. Real estate construction and land development loans increased 7% from a year ago to $77.32 million, representing 8% of total loans, while residential RE 1-4 family loans totaled $16.11 million, or 2% of loans, at March 31, 2024.

The commercial and industrial (C&I) portfolio increased 12% to $224.55 million, at March 31, 2024, compared to $200.91 million a year earlier, and increased 3% from $218.90 million at December 31, 2023. C&I loans represented 24% of total loans at March 31, 2024. Agriculture loans represented 7% of the loan portfolio at March 31, 2024. At March 31, 2024, the SBA, USDA, and other government agencies guaranteed loans totaled $57.87 million, or 6.2% of the loan portfolio.

The investment portfolio totaled $328.91 million at March 31, 2024, compared to $328.58 million a year earlier, and increased 1% compared to $326.01 million at December 31, 2023. The investment portfolio consists of mortgage-backed and municipal securities, both tax exempt and taxable, treasury securities as well as other domestic debt. Approximately $25.26 million in agency backed securities were purchased during the first quarter to replace portfolio balances that had paid down or paid off. The quarterly increase in the investment portfolio balance is attributed to purchases of $25.26 million in agency backed securities, partially offset by investment sales of $4.95 million and regular paydowns. At March 31, 2024, the Company had a net unrealized loss position on its investment securities portfolio of $28.50 million, compared to a net unrealized loss of $27.75 million at December 31, 2023. The Company’s investment securities portfolio had an effective duration of 5.36 years at March 31, 2024, compared to 5.41 years at December 31, 2023.

Total deposits increased 9%, or $101.22 million, to $1.20 billion at March 31, 2024, compared to $1.10 billion from a year earlier, and increased 5% from $1.15 billion at December 31, 2023. The quarter over quarter increase in deposit balances is primarily attributed to a $67.03 million increase in wholesale deposits. Non-interest bearing demand deposits decreased 1% to $751.64 million at March 31, 2024, compared to $759.42 million at March 31, 2023, and decreased 3% from $775.51 million at December 31, 2023. Non-interest bearing demand deposits represented 63% of total deposits at March 31, 2024. Included in non-interest bearing deposits are $88.2 million from ISO partners for merchant reserves, $133.5 million from ISO partners for settlement, and $6.2 million in ISO partner operating accounts.

There were no short-term borrowings at March 31, 2024, compared to $34.00 million at December 31, 2023, and $22.00 million at March 31, 2023. The following table summarizes the Company's primary and secondary sources of liquidity which were available at March 31, 2024:

Liquidity Source (in thousands)	March 31, 2024				December 31, 2023
Cash and cash equivalents	$	90,916			$	62,603
Unpledged investment securities, fair value		91,634				84,506
FHLB advance capacity		290,202				275,679
Federal Reserve discount window capacity		178,255				179,836
Correspondent bank unsecured lines of credit		91,500				91,500
	$	742,507			$	694,124

The total primary and secondary liquidity of $742.51 million at March 31, 2024 represents an increase of $48.4 million in primary and secondary liquidity quarter over quarter.

Shareholders’ equity increased 37% to $138.72 million at March 31, 2024, compared to $100.99 million from a year ago, and grew 6% from $130.70 million at December 31, 2023. Book value per common share increased 38% to $43.69, at March 31, 2024, compared to $31.77 at March 31, 2023, and increased 6% from $41.21 at December 31, 2023.

“The tangible common equity ratio was 9.94% at March 31, 2024, compared to 7.90% a year earlier, and 9.58% at December 31, 2023,” stated Gill. “Our tangible common equity and book value increased during the quarter as a result of quarterly net income, partially offset by an increase in accumulated other comprehensive income (‘AOCI’) loss related to the investment portfolio.”

At the Bank level, unrealized losses and gains reflected in AOCI are not included in regulatory capital. As a result, Tier-1 capital at the Bank for regulatory purposes was $195.01 million at quarter end excluding the unrealized loss. The regulatory leverage capital ratio was 14.27% for the current quarter, while the total risk-based capital ratio was 20.79%, exceeding regulatory minimums to be considered well-capitalized. 

Asset Quality

Nonperforming assets increased to $7.16 million, or 0.51% of total assets, at March 31, 2024, compared to $6.01 million, or 0.44% of total assets, from the preceding quarter.  Of the $7.16 million nonperforming loans, $4.73 million are covered by SBA guarantees. Total delinquent loans increased to $6.50 million at March 31, 2024, compared to $2.62 million at December 31, 2023. The increase in nonperforming assets and delinquent loans was attributed to the SBA loans originated by the Bank. Total delinquent loans as of March 31, 2024 include $2.06 million in purchased government guaranteed loans, which are guaranteed by the SBA for the full payment of the principal plus interest.

Past due loans 30-60 days were $3.22 million at March 31, 2024, compared to $1.08 million at December 31, 2023, and $148,000 at March 31, 2023.  There were $1.95 million past due loans from 60-90 days at March 31, 2024, compared to $199,000 at December 31, 2023 and $98,000 past due loans from 60-90 days a year earlier. Past due loans 90+ days at quarter end totaled $1.33 million at March 31, 2024, compared to $7.29 million, at March 31, 2023. Of the $6.50 million in past due loans at March 31, 2024, $2.06 million were purchased government guaranteed loans with an unconditional guarantee.

Delinquent Loan Summary (in thousands)	Organic				Purchased Govt. Guaranteed				Total
Delinquent accruing loans 30-59 days	$	2,722			$	498			$	3,220
Delinquent accruing loans 60-90 days		1,719				231				1950
Delinquent accruing loans 90+ days		—				1,332				1,332
Total delinquent accruing loans	$	4,441			$	2,061			$	6,502
Non-Accrual Loan Summary (in thousands)	Organic				Purchased Govt. Guaranteed				Total
Loans on non-accrual	$	7,156			$	—			$	7,156
Non-accrual loans with SBA guarantees		4,730				—				4,730
Net Bank exposure to non-accrual loans	$	2,426			$	—			$	2,426

There was a $378,000 provision for credit losses in the first quarter of 2024, compared to $217,000 provision for loan losses in the first quarter a year ago, and a $769,000 provision for credit losses booked in the fourth quarter of 2023.

“The SBA portfolio is a segment we have been watching very closely since rates have increased so rapidly over the last two years, putting pressure on borrowers. A majority of the loans within the portfolio are floating rate loans and borrowers are unlikely to see any interest rate relief until interest rates fall significantly,” added Miller. “A portion of the portfolio consists of loans guaranteed by the U.S. Government. This group of loans consists of fully guaranteed loans the Company has purchased, as well as organic SBA and USDA loans the Bank has originated. When the effect of these guarantees is considered relative to the loan portfolio, the ratio of allowance for credit losses to the total, non-guaranteed, loan portfolio was 1.20%, as of March 31, 2024, and our total unguaranteed exposure on these SBA loans is $34.28 million spread over 203 loans.”

“We incurred net recoveries of $4,000 during the current quarter, compared to $406,000 net charge offs in the first quarter a year ago, and $766,000 in net charge offs in the preceding quarter,” said Miller. “Our loan portfolio increased 8% from a year ago with commercial real estate (“CRE”) loans representing 59% of the total loan portfolio. Within the CRE portfolio, there are $41.25 million in loans for CRE office as shown in the table below. Since the majority of our CRE office exposure is concentrated in the Central Valley, we feel the volatility that the city center markets are experiencing is not as prominent in the Central Valley. Our credit metrics remain strong as we continue to maintain conservative underwriting standards.” 

(in thousands)	CRE Office Exposure of March 31, 2024
Region	Owner-Occupied				Non-Owner Occupied				Total
Central Valley	$	20,450			$	11,134			$	31,584
Southern California		2,308				358				2,666
Other California		2,330				4,129				6,459
Total California		25,088				15,621				40,709
Out of California		—				540				540
Total CRE Office	$	25,088			$	16,161			$	41,249

The ratio of allowance for credit losses to total loans was 1.12% at March 31, 2024, compared to 1.08% a year earlier and 1.07% at December 31, 2023.

About FFB Bancorp
FFB Bancorp, formerly Communities First Financial Corporation, a bank holding company established in 2014, is the parent company of FFB Bank, founded in 2005 in Fresno, California.  As a leading SBA Lender in California’s Central Valley and one of the few direct acquiring banks in the United States, FFB Bank offers clients a range of personal and business checking accounts, payment processes, and loan programs. Among the Bank’s awards and accomplishments, it was ranked #4 on American Banker’s list of the Top 200 Publicly Traded Banks under $2 Billion in Assets for 2022. For 2022, the Bank was also ranked by S&P Global as the #18 best performing community bank under $3 billion in assets. The Company has also received recognition as part of the OTCQX Best 50 Companies for 2019, 2023, and 2024. For additional information, you can visit the Company’s website at www.ffb.bank or by contacting a representative at 559-439-0200.

 Forward Looking Statements
This earnings release may contain forward-looking statements. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. The forward-looking statements are based on managements’ expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation, the Company’s ability to effectively execute its business plans; changes in general economic and financial market conditions; changes in interest rates; and, in particular, actions taken by the Federal Reserve to try and control inflation; changes in the competitive environment; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; losses, customer bankruptcy, claims and assessments; changes in banking regulations or other regulatory or legislative requirements affecting the Company’s business; international developments; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. The Company undertakes no obligation to release publicly the results of any revisions to the forward-looking statements included herein to reflect events or circumstances after today, or to reflect the occurrence of unanticipated events.  The Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Member FDIC

Select Financial Information and Ratios	For the Quarter Ended:
	March 31, 2024				December 31, 2023				March 31, 2023
BALANCE SHEET- ENDING BALANCES:
Total assets	$	1,395,095			$	1,364,326			$	1,278,514
Total portfolio loans		926,781				928,344				861,181
Investment securities		328,906				326,006				328,575
Total deposits		1,200,529				1,145,170				1,099,311
Shareholders equity, net		138,716				130,700				100,986
INCOME STATEMENT DATA
Gross revenue		23,610				22,305				19,337
Operating expense		12,701				11,047				8,748
Pre-tax, pre-provision income		10,909				11,258				10,589
Net income after tax		7,790				7,565				7,698
SHARE DATA
Basic earnings per share	$	2.46			$	2.39			$	2.43
Fully diluted EPS	$	2.46			$	2.38			$	2.42
Book value per common share	$	43.69			$	41.21			$	31.77
Common shares outstanding		3,175,045				3,171,690				3,178,651
Fully diluted shares		3,170,467				3,173,401				3,177,393
FFBB - Stock price	$	82.99			$	75.98			$	62.90
RATIOS
Return on average assets		2.32	%			2.24	%			2.47	%
Return on average equity		23.27	%			25.75	%			32.49	%
Efficiency ratio		52.96	%			47.17	%			42.35	%
Adjusted efficiency ratio		47.82	%			42.63	%			38.65	%
Yield on earning assets		6.15	%			6.13	%			5.57	%
Yield on investment securities		4.47	%			4.61	%			4.21	%
Yield on portfolio loans		6.68	%			6.58	%			6.10	%
Cost to fund earning assets		1.00	%			0.93	%			0.58	%
Cost of interest-bearing deposits		2.57	%			2.40	%			1.14	%
Net Interest Margin		5.15	%			5.19	%			4.98	%
Equity to assets		9.94	%			9.58	%			7.90	%
Net loan to deposit ratio		77.20	%			81.07	%			78.34	%
Full time equivalent employees		147				139				107
BALANCE SHEET- AVERAGES
Total assets		1,347,625				1,341,435				1,264,171
Total portfolio loans		925,561				917,620				845,659
Investment securities		315,820				294,060				335,662
Total deposits		1,149,117				1,150,441				1,088,664
Shareholders equity, net		134,621				116,545				96,081

Consolidated Balance Sheet (unaudited) (in thousands)	March 31, 2024				December 31, 2023				March 31, 2023
ASSETS
Cash and due from banks	$	37,360			$	30,147			$	27,696
Interest bearing deposits in banks		53,556				32,456				22,972
CDs in other banks		1,693				1,673				2,877
Investment securities		328,906				326,006				328,575
Loans held for sale		—				—				—
Construction & land development		77,318				75,773				72,090
Residential RE 1-4 family		16,114				17,355				15,783
Commercial real estate		545,358				556,239				513,613
Agriculture		63,281				59,961				58,735
Commercial and industrial		224,551				218,896				200,909
Consumer and other		159				120				51
Portfolio loans		926,781				928,344				861,181
Deferred fees & discounts		(4,181	)			(3,631	)			(3,220	)
Allowance for credit losses		(10,407	)			(9,966	)			(9,271	)
Loans, net		912,193				914,747				848,690
Non-marketable equity investments		7,357				7,125				5,592
Cash value of life insurance		12,119				12,029				8,641
Accrued interest and other assets		41,911				40,143				33,471
Total assets	$	1,395,095			$	1,364,326			$	1,278,514
LIABILITIES AND EQUITY
Non-interest bearing deposits	$	751,636			$	775,507			$	759,417
Interest checking		54,659				52,203				32,637
Savings		52,090				51,880				71,542
Money market		220,559				160,205				163,995
Certificates of deposits		121,585				105,375				71,720
Total deposits		1,200,529				1,145,170				1,099,311
Short-term borrowings		—				34,000				22,000
Long-term debt		39,638				39,599				39,481
Other liabilities		16,212				14,857				16,736
Total liabilities		1,256,379				1,233,626				1,177,528
Common stock		36,910				36,178				35,073
Retained earnings		121,780				113,991				88,167
Accumulated other comprehensive loss		(19,974	)			(19,469	)			(22,254	)
Shareholders' equity		138,716				130,700				100,986
Total liabilities and shareholders' equity	$	1,395,095			$	1,364,326			$	1,278,514

Consolidated Income Statement (unaudited)	Quarter ended:
(in thousands)	March 31, 2024				December 31, 2023				March 31, 2023
INTEREST INCOME:
Loan interest income	$	15,372			$	15,208			$	12,729
Investment income		3,512				3,418				3,484
Int. on fed funds & CDs in other banks		255				583				228
Dividends from non-marketable equity		129				118				75
Total interest income		19,268				19,327				16,516
INTEREST EXPENSE:
Int. on deposits		2,518				2,359				957
Int. on short-term borrowings		149				123				313
Int. on long-term debt		464				464				464
Total interest expense		3,131				2,946				1,734
Net interest income		16,137				16,381				14,782
PROVISION FOR CREDIT LOSSES		378				769				217
Net interest income after provision		15,759				15,612				14,565
NON-INTEREST INCOME:
Total deposit fee income		796				783				655
Debit / credit card interchange income		167				161				141
Merchant services income		6,068				4,825				3,697
Gain on sale of loans		451				464				904
Loss on sale of investments		(373	)			(1,114	)			(1,320	)
Other operating income		364				805				478
Total non-interest income		7,473				5,924				4,555
NON-INTEREST EXPENSE:
Salaries & employee benefits		6,582				5,598				4,716
Occupancy expense		383				313				362
Merchant services operating expense		2,360				1,852				1,244
Other operating expense		3,376				3,284				2,426
Total non-interest expense		12,701				11,047				8,748
Income before provision for income tax		10,531				10,489				10,372
PROVISION FOR INCOME TAXES		2,741				2,924				2,674
Net income	$	7,790			$	7,565			$	7,698

ASSET QUALITY (in thousands)	March 31, 2024				December 31, 2023				March 31, 2023
Delinquent accruing loans 30-60 days	$	3,220			$	1,076			$	148
Delinquent accruing loans 60-90 days		1,950				199				98
Delinquent accruing loans 90+ days		1,332				1,345				7,288
Total delinquent accruing loans	$	6,502			$	2,620			$	7,534
Loans on non-accrual	$	7,156			$	6,006			$	6,323
Other real estate owned		—				—				—
Nonperforming assets	$	7,156			$	6,006			$	6,323
Delinquent 30-60 / Total Loans		0.35	%			0.12	%			0.02	%
Delinquent 60-90 / Total Loans		0.21	%			0.02	%			0.01	%
Delinquent 90+ / Total Loans		0.14	%			0.14	%			0.85	%
Delinquent Loans / Total Loans		0.70	%			0.28	%			0.87	%
Non-accrual / Total Loans		0.77	%			0.65	%			0.73	%
Nonperforming assets to total assets		0.51	%			0.44	%			0.49	%
Year-to-date charge-off activity
Charge-offs	$	—			$	1,445			$	409
Recoveries		4				73				3
Net (recoveries) charge-offs	$	(4	)		$	1,372			$	406
Annualized net loan losses to average loans		—	%			0.15	%			0.19	%
CREDIT LOSS RESERVE RATIOS:
Allowance for credit losses	$	10,407			$	9,966			$	9,271
Total loans	$	926,781			$	928,344			$	861,181
Purchased govt. guaranteed loans	$	19,642			$	20,276			$	28,224
Originated govt. guaranteed loans	$	38,228			$	36,371			$	34,090
ACL / Total loans		1.12	%			1.07	%			1.08	%
ACL / Loans less 100% govt. gte. loans (Purchased)		1.15	%			1.10	%			1.11	%
ACL / Loans less all govt. guaranteed loans		1.20	%			1.14	%			1.16	%
ACL / Total assets		0.75	%			0.73	%			0.73	%

	For the Quarter Ended:
SELECT FINANCIAL TREND INFORMATION	Mar. 31, 2024				Dec. 31, 2023				Sept. 30, 2023				June 30, 2023				Mar. 31, 2023
BALANCE SHEET- PERIOD END
Total assets	$	1,395,095			$	1,364,326			$	1,308,866			$	1,303,909			$	1,278,514
Loans held for sale		—				—				—				—				—
Loans held for investment		926,781				928,344				897,746				875,180				861,181
Investment securities		328,906				326,006				290,011				304,043				328,575
Non-interest bearing deposits		751,636				775,507				737,366				723,007				759,417
Interest bearing deposits		448,893				369,663				394,679				356,032				339,894
Total deposits		1,200,529				1,145,170				1,132,045				1,079,039				1,099,311
Short-term borrowings		—				34,000				—				55,000				22,000
Long-term debt		39,638				39,599				39,560				39,520				39,481
Total equity		158,690				150,169				142,301				133,006				123,240
Accumulated other comprehensive income		(19,974	)			(19,469	)			(29,409	)			(23,450	)			(22,254	)
Shareholders' equity		138,716				130,700				112,892				109,556				100,986
QUARTERLY INCOME STATEMENT
Interest income	$	19,268			$	19,327			$	18,434			$	18,377			$	16,516
Interest expense		3,131				2,946				2,457				1,985				1,734
Net interest income		16,137				16,381				15,977				16,392				14,782
Non-interest income		7,473				5,924				6,449				8,117				4,555
Gross revenue		23,610				22,305				22,426				24,509				19,337
Provision for credit losses		378				769				152				612				217
Non-interest expense		12,701				11,047				10,107				10,704				8,748
Net income before tax		10,531				10,489				12,167				13,193				10,372
Tax provision		2,741				2,924				3,295				3,770				2,674
Net income after tax		7,790				7,565				8,872				9,423				7,698
BALANCE SHEET- AVERAGE BALANCE
Total assets	$	1,347,625			$	1,341,435			$	1,293,998			$	1,361,187			$	1,264,171
Loans held for sale		—				—				—				59				1,132
Loans held for investment		925,561				917,620				871,931				885,590				845,659
Investment securities		315,820				294,060				300,285				325,002				335,662
Non-interest bearing deposits		755,603				760,153				757,118				853,044				748,111
Interest bearing deposits		393,514				390,288				361,758				341,269				340,553
Total deposits		1,149,117				1,150,441				1,118,876				1,194,313				1,088,664
Short-term borrowings		9,562				9,805				1,571				4,231				25,384
Long-term debt		39,620				39,580				39,541				39,502				39,462
Shareholders' equity		134,621				116,545				111,530				104,083				96,081

Contact: Steve Miller - President & CEO
Bhavneet Gill – EVP & CFO
[phone]