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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2023~~2024

 TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File No. 001-40609

1895 Bancorp of Wisconsin, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Maryland		61-1993378
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

7001 West Edgerton Avenue Greenfield, Wisconsin		53220
(Address of Principal Executive Offices)		(Zip Code)

(414) 421-8200

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class

     Trading
Symbol(s)

     Name of each exchange on which registered

     Common Stock, par value $0.01 per share

     BCOW

     The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.

Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)


Large accelerated filer 		Accelerated filer 
Non-accelerated filer 		Smaller reporting company 
		Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  No 

6,~~109~~002,~~644~~335 shares of the Registrant’s common stock, par value $0.01 per share, were outstanding as of ~~October~~April 3130, ~~2023~~2024.

1895 Bancorp of Wisconsin, Inc.

Form 10-Q

Table of Contents

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets at September 30, 2023 (unaudited) and December 31, 2022	1
	Consolidated Balance Sheets at March 31, 2024 (unaudited) and December 31, 2023	1
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)	2
	Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023 (unaudited)	2
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)	3
	Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2024 and 2023 (unaudited)	3
	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)	4
	Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023 (unaudited)	4
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (unaudited)	5
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (unaudited)	5
	Notes to Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3833
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5242
Item 4.	Controls and Procedures	5242
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	5242
Item 1A.	Risk Factors	5242
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	5242
Item 3.	Defaults Upon Senior Securities	5242
Item 4.	Mine Safety Disclosures	5242
Item 5.	Other Information	5242
Item 6.	Exhibits	5343
	SIGNATURES	5444

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

1895 Bancorp of Wisconsin, Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	September 30,2023			December 31,2022
	March 31,2024			December 31,2023
	(unaudited)
Assets
Cash and due from banks	$	2314,~~241~~032		$	2611,~~029~~220
Fed funds sold		38,~~362~~970			2,~~315~~030
Cash and cash equivalents		2623,~~603~~002			2813,~~344~~250
Marketable equity securities, stated at fair value		3,~~286~~976			23,~~924~~625
Available-for-sale securities, stated at fair value		104,641			114,492
Available-for-sale securities, stated at fair value (amortized cost $116,634 and $119,055)		106,388			109,559
Loans held for sale		~~410~~826			~~125~~704
Loans, net of deferred costs		~~386~~397,~~296~~120			~~362~~398,~~777~~568
Allowance for credit losses for loans		(3,~~614~~679	)		(3,~~203~~734	)
Total loans, net of deferred loan costs and allowance for credit losses		~~382~~393,~~682~~441			~~359~~394,~~574~~834
Premises and equipment, net		5,~~240~~086			5,~~451~~182
Mortgage servicing rights, net		1,~~751~~690			1,~~860~~720
Federal Home Loan Bank (FHLB) stock, at cost		4,~~787~~564			34,~~429~~164
Accrued interest receivable		1,~~349~~521			1,~~257~~554
Cash value of life insurance		1314,~~919~~138			14,~~316~~027
Other assets		9,~~908~~617			118,~~244~~988
TOTAL ASSETS	$	~~554~~564,~~576~~249		$	~~543~~557,~~016~~607
Liabilities and Stockholders’ Equity
Deposits	$	~~386~~399,~~973~~285		$	~~387~~403,~~721~~683
Advance payments by borrowers for taxes and insurance		103,~~264~~918			1,~~029~~233
FHLB advances		7880,~~499~~014			71,~~464~~007
Accrued interest payable		1,~~099~~239			~~291~~1,106
Other liabilities		78,~~582~~283			7,~~149~~817
TOTAL LIABILITIES		~~484~~492,~~417~~739			~~467~~484,~~654~~846
Preferred stock, $0.01 par value, 10,000,000 shares authorized at September 30, 2023 and December 31, 2022		—			—
Preferred stock, $0.01 par value, 10,000,000 shares authorized at March 31, 2024 and December 31, 2023		—			—
Common stock (par value $0.01 per share) Authorized - 90,000,000 shares at September 30, 2023 and December 31, 2022; Issued – 6,154,164 at September 30, 2023 and 6,236,168 at December 31, 2022 (includes 162,690 and 211,349 unvested shares, respectively); Outstanding – 6,124,646 at September 30, 2023 and 6,206,105 at December 31, 2022 (includes 162,690 and 211,349 unvested shares, respectively)		62			62
Common stock (par value $0.01 per share) Authorized - 90,000,000 shares at March 31, 2024 and December 31, 2023; Issued – 6,041,510 at March 31, 2024 and 6,114,183 at December 31, 2023 (includes 134,263 and 144,297 unvested shares, respectively); Outstanding – 6,011,992 at March 31, 2024 and 6,084,665 at December 31, 2023 (includes 134,263 and 144,297 unvested shares, respectively)		60			61
Additional paid-in capital		49,~~907~~379			49,~~931~~778
Unallocated common stock of Employee Stock Ownership Plan (ESOP), 439,037 and 453,792 shares at September 30, 2023 and December 31, 2022, respectively		(4,167	)		(4,307	)
Unallocated common stock of Employee Stock Ownership Plan (ESOP), 429,157 and 434,062 shares at March 31, 2024 and December 31, 2023, respectively		(4,073	)		(4,120	)
Less treasury stock at cost, 29,518 shares at September 30, 2023 and 30,063 shares at December 31, 2022		(295	)		(301	)
Less treasury stock at cost, 29,518 shares at March 31, 2024 and December 31, 2023		(295	)		(295	)
Retained earnings		3633,~~175~~586			4133,~~468~~892
Accumulated other comprehensive (loss) income, net of income taxes		(11,523	)		(11,491	)
Accumulated other comprehensive loss, net of income taxes		(7,147	)		(6,555	)
Total stockholders’ equity		7071,~~159~~510			7572,~~362~~761
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	~~554~~564,~~576~~249		$	~~543~~557,~~016~~607

See accompanying notes to the unaudited consolidated financial statements.

1895 BANCORP OF WISCONSIN, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts) – Unaudited

	Three months endedSeptember 30,						Nine months endedSeptember 30,
	Three months endedMarch 31,
	2023			2022			2023			2022
	2024			2023
Interest and dividend income:
Loans, including fees	$	4,~~423~~799		$	3,~~563~~826		$	~~12,487~~		$	~~9,862~~
Securities, taxable		~~656~~1,040			~~613~~602			~~1,847~~			~~1,727~~
Other		~~292~~194			~~139~~284			~~767~~			~~279~~
Total interest and dividend income		56,~~371~~033			4,~~315~~712			~~15,101~~			~~11,868~~
Interest expense:
Interest-bearing deposits		12,~~832~~391			~~196~~982			~~4,111~~			~~551~~
Borrowed funds		~~586~~578			~~200~~493			~~1,733~~			~~550~~
Other interest-bearing funds		1			2			4			7
Total interest expense		2,~~419~~970			~~398~~1,477			~~5,848~~			~~1,108~~
Net interest income		23,~~952~~063			3,~~917~~235			~~9,253~~			~~10,760~~
Provision for credit losses		75			—75			~~225~~			~~210~~
Net interest income after provision for credit losses		2,~~877~~988			3,~~917~~160			~~9,028~~			~~10,550~~
Noninterest income:
Service charges and other fees		~~235~~219			~~229~~224			~~699~~			~~722~~
Loan servicing, net		~~172~~163			~~167~~174			~~502~~			~~515~~
Net gain on sale of loans		7367			8338			~~141~~			~~266~~
Net (loss) on sale of securities		(1,925	)		—			(1,925	)		—
Increase in cash surrender value of insurance		111			108
Increase in cash surrender value of insurance		107			108			324			317
Unrealized gain on marketable equity securities		337			220
Unrealized gain (loss) on marketable equity securities		(158	)		(159	)		287			(892	)
Other		7			6
Other		113			51			278			58
Total noninterest income		904			770
Total noninterest income		(1,383	)		479			306			986
Noninterest expense:
Noninterest expense:
Salaries and employee benefits		2,365			2,693
Salaries and employee benefits		2,264			2,687			7,792			7,738
Unrealized gain on marketable equity securities		337			220
Unrealized gain (loss) on marketable equity securities		(158	)		(159	)		287			(892	)
Advertising and promotions		8			49
Advertising and promotions		54			33			124			146
Data processing		227			225
Data processing		225			221			672			630
Occupancy and equipment		299			338
Occupancy and equipment		285			326			922			1,010
FDIC assessment		81			37
FDIC assessment		61			36			182			99
Other		981			880
Other		979			1,107			2,864			3,149
Total noninterest expense		4,298			4,442
Total noninterest expense		3,710			4,251			12,843			11,880
Loss before income taxes		(406	)		(512	)
(Loss) income before income taxes		(2,216	)		145			(3,509	)		(344	)
Income tax benefit		(100	)		(151	)
Income tax expense (benefit)		1,425			21			1,001			(172	)
Net loss	$	(306	)	$	(361	)
Net (loss) income	$	(3,641	)	$	124		$	(4,510	)	$	(172	)
Loss per share:
Loss per share:
Basic	$	(0.06	)	$	(0.07	)
Basic	$	(0.66	)	$	0.02		$	(0.81	)	$	(0.03	)
Diluted(1)	$	(0.06	)	$	(0.07	)
Diluted(1)	$	(0.66	)	$	0.02		$	(0.81	)	$	(0.03	)
Average common shares outstanding:
Average common shares outstanding:
Basic		5,467,653			5,535,489
Basic		5,534,711			5,810,185			5,538,509			5,842,184
Diluted(1)		5,467,653			5,535,489
Diluted(1)		5,534,711			5,983,241			5,538,509			5,842,184

See accompanying notes to the unaudited consolidated financial statements.

(1) Diluted loss per share and average shares outstanding excludes all common shares if their effect is anti-dilutive.

1895 Bancorp of Wisconsin, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands) - Unaudited

	Three months endedSeptember 30,						Nine months endedSeptember 30,
	Three months endedMarch 31,
	2023			2022			2023			2022
	2024			2023
Net (loss) income	$	(3,641	)	$	124		$	(4,510	)	$	(172	)
Net loss	$	(306	)	$	(361	)
Other comprehensive (loss) income:
Unrealized holding (losses) arising during the period on available-for-sale securities		(2,357	)		(4,549	)		(1,969	)		(16,483	)
Unrealized holding (losses) gains arising during the period on available-for-sale securities		(750	)		2,230
Net realized losses on available-for-sale securities included in income		1,925			—			1,925			—
Other comprehensive (loss) income before tax effect		(750	)		2,230
Other comprehensive (loss) before tax effect		(432	)		(4,549	)		(44	)		(16,483	)
Tax effect of other comprehensive (loss) income items		158			(602	)
Tax effect of other comprehensive (loss) income items		116			1,228			12			4,451
Other comprehensive (loss) income, net of tax		(592	)		1,628
Other comprehensive (loss), net of tax		(316	)		(3,321	)		(32	)		(12,032	)
Comprehensive (loss) income	$	(898	)	$	1,267
Comprehensive (loss)	$	(3,957	)	$	(3,197	)	$	(4,542	)	$	(12,204	)

See accompanying notes to the unaudited consolidated financial statements.

1895 Bancorp of Wisconsin, Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands) - Unaudited

	Common Stock			Additional Paid-In Capital			Unallocated Common Stock of ESOP			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity
Balance as of June 30, 2022	$	64		$	52,855		$	(4,401	)	$	(301	)	$	41,319		$	(8,570	)	$	80,966
Net income		—			—			—			—			124			—			124
Other comprehensive (loss)		—			—			—			—			—			(3,321	)		(3,321	)
ESOP shares committed to be released (4,892 shares)		—			2			47			—			—			—			49
Repurchase and cancellation of common stock-stock repurchase program (184,270 shares)		(1	)		(1,994	)		—			—			—			—			(1,995	)
Stock compensation expense		—			80			—			—			—			—			80
Balance as of September 30, 2022	$	63		$	50,943		$	(4,354	)	$	(301	)	$	41,443		$	(11,891	)	$	75,903
Balance as of June 30, 2023	$	62		$	49,964		$	(4,214	)	$	(295	)	$	39,816		$	(11,207	)	$	74,126
Net loss		—			—			—			—			(3,641	)		—			(3,641	)
Other comprehensive (loss)		—			—			—			—			—			(316	)		(316	)
ESOP shares committed to be released (4,973 shares)		—			(16	)		47			—			—			—			31
Repurchase and cancellation of common stock-stock repurchase program (32,107 shares)		—			(238	)		—			—			—			—			(238	)
Stock options exercised (3,159 shares)		—			19			—			—			—			—			19
Stock compensation expense		—			178			—			—			—			—			178
Balance as of September 30, 2023	$	62		$	49,907		$	(4,167	)	$	(295	)	$	36,175		$	(11,523	)	$	70,159
Balance as of January 1, 2022	$	64		$	52,805		$	(3,432	)	$	(301	)	$	41,615		$	142		$	90,893
Net loss		—			—			—			—			(172	)		—			(172	)
Other comprehensive (loss)		—			—			—			—			—			(12,033	)		(12,033	)
Reimbursement of stock offering costs		—			2			—			—			—			—			2
Purchase of 96,446 shares by ESOP		—			—			(1,062	)		—			—			—			(1,062	)
ESOP shares committed to be released (14,757 shares)		—			11			140			—			—			—			151
Repurchase and retirement of shares-stock repurchase program (184,270 shares)		(1	)		(1,994	)														(1,995	)
Purchase and retirement of common stock		—			(81	)		—			—			—			—			(81	)
Stock compensation expense		—			200			—			—			—			—			200
Balance as of September 30, 2022	$	63		$	50,943		$	(4,354	)	$	(301	)	$	41,443		$	(11,891	)	$	75,903
Balance as of January 1, 2023	$	62		$	49,931		$	(4,307	)	$	(301	)	$	41,468		$	(11,491	)	$	75,362
Net loss		—			—			—			—			(~~4,510~~361	)		—			(~~4,510~~361	)
Other comprehensive (loss)		—			—			—			—			—			(32	)		(32	)
Other comprehensive income		—			—			—			—			—			1,628			1,628
Cumulative effect of change in accounting principle due to adoption of ASU 2016-13		—			—			—			—			(783	)		—			(783	)
ESOP shares committed to be released (14,755 shares)		—			(31	)		140			—			—			—			109
ESOP shares committed to be released (4,864 shares)		—			—			47			—			—			—			47
Repurchase and cancellation of common stock-stock repurchase program (59,410 shares)		—			(470	)		—			—			—			—			(470	)
Repurchase and cancellation of shares-stock repurchase program (12,903 shares)		—			(129	)		—			—			—			—			(129	)
Sale of common stock by Rabbi Trust		—			—			—			6									6
Retirement of common stock		—			(13	)		—			—			—			—			(13	)
Purchase and retirement of common stock		—			(57	)		—			—			—			—			(57	)
Stock compensation expense		—			188			—			—			—			—			188
Stock options exercised (3,159 shares)		—			19			—			—			—			—			19
Balance as of March 31, 2023	$	62		$	49,977		$	(4,260	)	$	(301	)	$	40,324		$	(9,863	)	$	75,939
Stock compensation expense		—			515			—			—			—			—			515
Balance as of January 1, 2024	$	61		$	49,778		$	(4,120	)	$	(295	)	$	33,892		$	(6,555	)	$	72,761
Balance as of September 30, 2023	$	62		$	49,907		$	(4,167	)	$	(295	)	$	36,175		$	(11,523	)	$	70,159
Net loss		—			—			—			—			(306	)		—			(306	)
Other comprehensive loss		—			—			—			—			—			(592	)		(592	)
ESOP shares committed to be released (4,905 shares)		—			(10	)		47			—			—			—			37
Repurchase and cancellation of shares-stock repurchase program (69,648 shares)		(1	)		(547	)														(548	)
Retirement of common stock		—			(8	)		—			—			—			—			(8	)
Stock compensation expense		—			166			—			—			—			—			166
Balance as of March 31, 2024	$	60		$	49,379		$	(4,073	)	$	(295	)	$	33,586		$	(7,147	)	$	71,510

See accompanying notes to the unaudited consolidated financial statements.

1895 BANCORP OF WISCONSIN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) - Unaudited

	Nine months ended September 30,
	Three months ended March 31,
	2023			2022
	2024			2023
Cash flows from operating activities
Net loss	$	(~~4,510~~306	)	$	(~~172~~361	)
Adjustments to reconcile net loss to net cash from operating activities
Net amortization of investment securities		5434			~~121~~20
Depreciation		~~373~~118			~~464~~128
Provision for credit losses		~~225~~75			~~210~~75
Gain on sale of other real estate owned		(110	)		—
Net change in fair value of marketable equity securities		(337	)		(220	)
Net change in fair value of marketable equity securities		(287	)		892
Stock compensation expense		166			188
Net loss on sale of available for sale securities		1,925			—
Benefit from deferred income tax		(100	)		(151	)
Stock compensation expense		515			200
Originations of mortgage loans held for sale		(2,151	)		(2,300	)
Deferred income tax expense (benefit)		1,001			(172	)
Proceeds from sales of mortgage loans held for sale		2,096			2,464
Originations of mortgage loans held for sale		(8,948	)		(19,006	)
Net gain on sale of mortgage loans held for sale		(67	)		(38	)
Proceeds from sales of mortgage loans held for sale		8,804			20,416
ESOP compensation		37			47
Net gain on sale of mortgage loans held for sale		(141	)		(266	)
Net change in cash value of life insurance		(111	)		(108	)
ESOP compensation		109			151
Net change in cash value of life insurance		(324	)		(317	)
Changes in operating assets and liabilities
Net change in mortgage servicing rights		~~109~~30			~~146~~37
Accrued interest receivable and other assets		~~548~~(338	)		(~~907~~481	)
Accrued interest payable and other liabilities		~~333~~456			(6387	)
Net cash (used in) provided by operating activities		(324	)		1,754
Net cash used in operating activities		(398	)		(1,087	)
Cash flows from investing activities
Proceeds from sales of available-for-sale securities		19,495			—
Maturities, prepayments, and calls of available-for-sale securities		2,387			3,287
Maturities, prepayments, and calls of available-for-sale securities		9,747			14,561
Purchase of marketable equity securities		(14	)		(26	)
Purchases of available-for-sale securities		(21,413	)		(37,139	)
Net decrease (increase) in loans		1,461			(7,615	)
Purchase of marketable equity securities		(81	)		(71	)
Net increase in FHLB stock, net		(400	)		(1,382	)
Net (increase) in loans		(23,501	)		(31,486	)
Net capital expenditures for premises and equipment		(22	)		(80	)
Net (increase) in FHLB stock, net		(1,358	)		(174	)
Net cash provided by (used in) investing activities		3,412			(5,816	)
Proceeds from cash value life insurance death benefits		720			—
Proceeds from sale of other real estate owned		699			—
Distribution of marketable equity securities		12			—
Net capital expenditures for premises and equipment		(751	)		(162	)
Net cash used in investing activities		(16,431	)		(54,471	)
Cash flows from financing activities
Net (decrease) in deposits		(748	)		(5,203	)
Net decrease in deposits		(4,398	)		(15,755	)
Net increase in advance payments by borrowers for taxes and insurance		92,~~235~~685			82,~~365~~957
Proceeds from the issuance of Federal Home Loan Bank advances		~~100~~53,~~500~~000			1064,~~000~~500
Principal payments on Federal Home Loan Bank advances		(9343,~~465~~993	)		(843,~~491~~986	)
Reimbursement of stock offering costs		—			2
Repurchase and cancellation of common stock		(548	)		(129	)
Stock options exercised		19
Retirement of common stock		(8	)		(13	)
Repurchase and cancellation of common stock		(470	)		(1,995	)
Net cash provided by financing activities		6,738			7,574
Purchase and retirement of common stock		(57	)		—
Net increase in cash and cash equivalents		9,752			671
Purchases of ESOP shares		—			(1,062	)
Cash and cash equivalents at beginning of period		13,250			28,344
Net cash provided by financing activities		15,014			1,616
Cash and cash equivalents at end of period	$	23,002		$	29,015
Net (decrease) in cash and cash equivalents		(1,741	)		(51,101	)
Cash and cash equivalents at beginning of period		28,344			66,803
Cash and cash equivalents at end of period	$	26,603		$	15,702
Supplemental cash flow information
Cash paid during the year for interest	$	52,~~039~~837		$	1,~~075~~278
Noncash activities
Loans transferred to held for sale		—			325

See accompanying notes to the unaudited consolidated financial statements.

1895 BANCORP OF WISCONSIN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

1895 Bancorp of Wisconsin, Inc., a Maryland corporation (the “Company” or “New 1895 Bancorp”) was formed to serve as the stock holding company for PyraMax Bank, FSB (the “Bank”) as part of the mutual-to-stock conversion of 1895 Bancorp of Wisconsin, MHC. Upon completion of the conversion, which occurred on July 14, 2021, 1895 Bancorp of Wisconsin, MHC and 1895 Bancorp of Wisconsin, a federal corporation (“Old 1895 Bancorp”), ceased to exist and New 1895 Bancorp became the successor corporation to Old 1895 Bancorp. The conversion was accomplished by the merger of 1895 Bancorp of Wisconsin, MHC with and into Old 1895 Bancorp followed by the merger of Old 1895 Bancorp with and into New 1895 Bancorp. The shares of New 1895 Bancorp common stock that were offered for sale in connection with the conversion represented the majority ownership interest in Old 1895 Bancorp owned by 1895 Bancorp of Wisconsin, MHC. On July 14, 2021, public stockholders of Old 1895 Bancorp received 1.3163 shares of common stock of New 1895 Bancorp in exchange for each of their shares of Old 1895 Bancorp common stock. The shares of Old 1895 Bancorp common stock owned by 1895 Bancorp of Wisconsin, MHC were canceled at that time. The conversion and offering were completed on July 14, 2021, and New 1895 Bancorp was organized as a fully public stock holding company, with 100% of the common stock being held by the public. The consolidated financial statements and other financial information contained in these consolidated financial statements are for New 1895 Bancorp.

The cost of the reorganization and the issuing of the common stock totaling $2.0 million were deferred and deducted from the sales proceeds of the offering.

PyraMax Bank is a stock savings bank headquartered in Greenfield, Wisconsin. PyraMax Bank operates as a full-service financial institution, providing a full range of financial services, including the granting of commercial, residential, and consumer loans and acceptance of deposits from individual customers and small businesses in the metropolitan Milwaukee, Wisconsin area. PyraMax Bank is subject to competition from other financial and nonfinancial institutions providing financial products. In addition, PyraMax Bank is subject to the regulations of certain regulatory agencies and undergoes periodic examination by those regulatory agencies.

The accompanying unaudited interim consolidated financial statements and the notes thereto have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all normal recurring adjustments necessary to present fairly the financial position, results of operations, changes in stockholders' equity and cash flows as of and for the periods presented. Certain amounts from prior periods have been reclassified to conform with current period presentation.

The accompanying unaudited consolidated financial statements and related notes should be read in conjunction with the audited annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023, as filed with the Securities and Exchange Commission on March 3029, ~~2023~~2024.

In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses, mortgage servicing rights, the fair value of ~~investment securities,~~ financial instruments and ~~mortgage servicing rights, and~~ the valuation of deferred income tax assets. ~~Actual results could differ from those estimates.~~

On April 5, 2012, the Jumpstart Our Business Startups Act (the “JOBS Act”) was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies and define an “emerging growth company.” As an emerging growth company, the Company may delay adoption of new or revised financial accounting standards until such date that the standards are required to be adopted by non-issuer companies. If such standards would not apply to non-issuer companies, no deferral would be applicable. The Company intends to take advantage of the benefits of the extended transition periods allowed under the JOBS Act.

Accordingly, the Company’s financial statements may not be comparable to those of public companies that adopt new or revised financial accounting standards as of an earlier date. The effective dates of the recent accounting standards in Note 2 reflect those that relate to non-issuer companies.

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION (continued)

Subsequent Events

Management has reviewed the Company's operations for potential disclosure or financial statement impacts related to events occurring after ~~September~~March 3031, ~~2023~~2024, but prior to the release of the unaudited consolidated financial statements contained in this quarterly report on Form 10-Q were issued.

OnThere ~~November~~were 6,no ~~2023,~~additional ~~Richard~~subsequent ~~Hurd~~event ~~and~~disclosures ~~the~~or ~~Boards~~financial ofstatement ~~Directors~~impacts ofrelated ~~the~~to ~~Company~~events ~~and~~occurring ~~the~~after ~~Bank~~March ~~agreed that Mr. Hurd would step down as an Executive Vice President of each entity~~31, ~~effective immediately, but remain on the Boards of Directors. The Boards of Directors determined~~ 2024 that, aswarranted ~~part~~adjustment ~~of this arrangement and in recognition of Mr. Hurd’s long-standing contributions~~ to the Company and the Bank, Mr. Hurd would receive a lump sum payment in the fourth quarter of 2023 in an amount equal to what he otherwise would have received under his employment agreement through the remainder of its term (December 2024), or ~~$163,000. In~~disclosure ~~addition, the employment agreement between the Bank and Mr. Hurd became null and void on November 6, 2023, except for those post-termination obligations contained~~ in ~~Section~~these 11unaudited ofconsolidated ~~the~~financial ~~employment agreement~~statements.

~~There~~NOTE ~~were~~2 no– ~~additional~~RECENT ~~subsequent~~ACCOUNTING ~~event disclosures or financial statement impacts related to events occurring after September 30, 2023 that warranted adjustment to or disclosure in these unaudited consolidated financial statements.~~ STANDARDS

~~NOTE~~The 2following –Accounting ~~SIGNIFICANT~~Standards ~~ACCOUNTING~~Updates ~~POLICIES~~(“ASUs”) have been issued by the Financial Accounting Standards Board (the “FASB”) and may impact the Company’s consolidated financial statements in future reporting periods:

OnIn ~~January~~December 1, 2023, wethe ~~adopted~~FASB ~~Accounting~~issued ~~Standards~~ASU ~~Update~~2023-09, Income Taxes (~~"ASU"~~Topic 740): ~~2016-13~~Improvements to Income Tax Disclosures, ~~Financial~~that ~~Instruments—Credit~~requires ~~Losses:~~presentation ~~Measurement~~of specific categories of ~~Credit~~reconciling ~~Losses~~items, onas ~~Financial~~well ~~Instruments~~reconciling ~~("ASU~~items ~~2016-13")~~that meet a quantitative threshold, ~~using~~in the ~~modified~~reconciliation ~~retrospective~~between ~~approach,~~the asincome ~~further~~tax ~~described~~provision inand the ~~section~~income ~~below~~tax ~~titled~~provision ~~Recently~~using ~~Adopted~~statutory ~~Accounting~~tax ~~Standards~~rates. ~~Adoption~~The standard also requires disclosure of ~~the~~income ~~standard~~taxes ~~resulted~~paid indisaggregated ~~changes~~by tojurisdiction ~~our~~with ~~available-for-sale~~separate ~~securities~~disclosure ~~and~~of ~~allowance~~income ~~for~~taxes ~~credit~~paid ~~losses~~to ~~policies,~~individual asjurisdictions ~~presented~~that ~~below~~meet a quantitative threshold. ~~Refer~~The toamendments ~~Note~~in 1this toaccounting ~~the~~standard ~~Consolidated~~are ~~Financial~~effective ~~Statements~~for infiscal ~~our~~years ~~2022~~beginning ~~Annual~~after ~~Report~~December 15, 2024, on ~~Form~~a ~~10-K~~prospective ~~regarding~~basis. ~~additional~~Early ~~significant~~adoption ~~accounting~~and ~~policies,~~retrospective ~~including~~application ~~accounting~~are ~~policies~~permitted. inWe ~~effect~~do ~~prior~~not toexpect the adoption of ~~ASU~~this ~~2016-13~~accounting standard to have an impact on our Consolidated Financial Statements but will require certain additional disclosures.

~~Credit~~In ~~Losses~~November ~~for~~2023, ~~Available~~the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, that requires disclosure of significant segment expenses that are regularly reviewed by the chief operating decision maker and included within each reported measure of segment profit or loss. The standard also requires disclosure of the composition of other segment items included in the measure of segment profit or loss that are not separately disclosed. The new standard is effective for~~-Sale~~ ~~Debt~~fiscal ~~Securities~~years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We do not expect the adoption of this accounting standard to have an impact on our Consolidated Financial Statements.

For available-for-sale ("AFS") debt securities where fair value is less than amortized cost, the security is considered impaired when amounts are deemed uncollectible or when the Company intends, or more likely than not will be required, to sell the AFS debt security before recovery of the amortized cost basis.

On a quarterly basis the Company evaluates the AFS debt securities for impairment. Securities that are in an unrealized loss position are reviewed to determine if a securities credit loss exists based on certain quantitative and qualitative factors. The primary factors considered in evaluating whether an impairment exists include: (a) the extent to which the fair value is less than the amortized cost basis, (b) the financial condition, credit rating and future prospects of the issuer, (c) whether the debtor is current on contractually obligated interest and principal payments, and (d) whether the Company intends to sell the security and whether it is more likely than not that the Company will not be required to sell the security.

If a determination is made that an AFS debt security is impaired, the Company will estimate the amount of the unrealized loss that is attributable to credit and all other non-credit related factors. The credit related component will be recognized as a provision for credit losses on securities through an allowance for credit losses. The provision for credit losses on securities will be limited to the difference between the security’s amortized cost basis and fair value. Any future changes may be reversed, limited to the amount previously expensed, in the period they occur. The non-credit related component will be recorded as an adjustment to accumulated other comprehensive income, net of tax.

Allowance for Credit Losses

Under the current expected credit loss (“CECL”) model, the allowance for credit losses ("ACL") on financial assets is a valuation allowance estimated at each balance sheet date in accordance with GAAP that is deducted from the financial assets’ amortized cost basis to present the net amount expected to be collected on the financial assets. The CECL model also applies to certain off-balance sheet credit exposures.

The Company estimates the allowance for credit losses on loans based on the underlying assets’ amortized cost basis, which is the amount at which the financing receivable is originated or acquired, adjusted for applicable accretion or amortization of premium, discount, net deferred fees or costs, collection of cash, and charge-offs. In the event that collection of principal becomes uncertain, the Company has policies in place to write-off accrued interest receivable by reversing interest income at the time of this determination.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)

Therefore, the Company has made a policy election to exclude accrued interest from the amortized cost basis and therefore excludes it from the measurement of the allowance for credit losses.

Expected credit losses are reflected in the allowance for credit losses through a charge to provision for credit losses. The Company’s estimate of the allowance for credit losses reflects credit losses currently expected over the remaining contractual life of the assets. When the Company deems all or a portion of a financial asset to be uncollectible, the appropriate amount is written off and the allowance for credit losses is reduced by the same amount. The Company applies judgment to determine when a financial asset is deemed uncollectible. When available information confirms that specific financial assets, or portions thereof, are uncollectible, these amounts are charged off against the allowance for credit losses. Subsequent recoveries, if any, are credited to the allowance for credit losses when received.

The Company measures the allowance for credit losses of financial assets on a collective portfolio segment basis when the financial assets share similar risk characteristics. The Company has identified the following portfolio segments of financial assets with similar risk characteristics for measuring expected credit losses: commercial real estate, residential real estate – first mortgage, residential real estate – construction, consumer – home equity and lines of credit and other consumer loans. The Company further segments the commercial loan portfolios by risk rating and the residential and consumer loan portfolios by delinquency.

The Company utilizes the weighted average remaining maturity methodology to measure the ACL. This methodology incorporates both quantitative and qualitative information to assess lifetime expected credit losses at the portfolio segment level. The quantitative component includes the calculation of loss rates that are based on historical lookback periods. The Company calculates a loss rate based on historical loan level loss experience for portfolio segments with similar risk characteristics. The historical loss rate is adjusted for select macroeconomic variables that consider both historical trends as well as forecasted trends. The Company measures expected credit losses of these financial assets by applying loss rates to the amortized cost basis of each asset taking into consideration amortization, prepayment and default assumptions.

The Company considers qualitative adjustments to expected credit loss estimates for information not already captured in the loss estimation process. Qualitative factor adjustments may increase or decrease management’s estimate of expected credit losses. Adjustments will not be made for information that has already been considered and included in the quantitative component. Qualitative loss factors are based on management's judgment of company, market, industry or business specific data, changes in loan composition, performance trends, regulatory changes, uncertainty of macroeconomic forecasts, and other asset specific risk characteristics.

Collateral Dependent Financial Assets

For collateral dependent financial assets where the Company has determined that foreclosure of the collateral is probable and where the borrower is experiencing financial difficulty, the allowance for credit losses is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date. Fair value is generally calculated based on the value of the underlying collateral less estimated costs to sell.

Loan Commitments and Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

Financial assets include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The Company’s exposure to loan credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded.

The Company records an allowance for credit losses on off-balance sheet credit exposures through a charge to provision for credit losses for off-balance sheet credit exposures. The allowance for credit losses on off-balance sheet credit exposures is estimated by portfolio segment at each balance sheet date under the CECL model using the same methodologies as portfolio loans, taking into consideration management’s assumption of the likelihood that funding will occur, and is included in other liabilities on the Company’s Consolidated Balance Sheets.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (continued)

Recently Adopted Accounting Standards

ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326). ASU 2016-13 requires organizations to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. In March 2022, the Financial Accounting Standards Board ("FASB") issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the accounting guidance for troubled debt restructurings by creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. In addition, ASU 2022-02 requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses. The Company adopted ASU 2016-13 and ASU 2022-02 as of January 1, 2023 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. The adoption of ASU 2016-13 resulted in an initial increase of $412,000 to the allowance for credit losses for loans and the establishment of a $665,000 allowance for credit losses for unfunded loan commitments. The allowance for credit losses for unfunded loan commitments is included in other liabilities on the Company's Consolidated Balance Sheets. The after-tax cumulative-effect adjustment of $783,000 was recorded in retained earnings as of January 1, 2023.

NOTE 3 – AVAILABLE-FOR-SALE SECURITIES

The amortized costs and fair values of ~~securities~~ available-for-sale securities were as follows:

	September 30, 2023
	March 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
U.S. Treasury notes	$	8,235	$	—	$	(1,093	)	$	7,142
Obligations of states and political subdivisions	$	17,029	$	1	$	(2,916	)	$	14,114
Obligations of states and political subdivisions		19,850		—		(3,939	)		15,911
Government-sponsored mortgage-backed securities		95,504		71		(7,398	)		88,177
Government-sponsored mortgage-backed securities		87,519		—		(10,704	)		76,815
Asset-backed securities		3,356		5		(6	)		3,355
Asset-backed securities		3,827		5		(25	)		3,807
Certificates of deposit		745		—		(3	)		742
Certificates of deposit		995		—		(29	)		966
Total	$	116,634	$	77	$	(10,323	)	$	106,388
Total	$	120,426	$	5	$	(15,790	)	$	104,641

	December 31, 2022
	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
U.S. Treasury notes	$	29,597	$	—	$	(2,970	)	$	26,627
Obligations of states and political subdivisions	$	17,043	$	3	$	(2,815	)	$	14,231
Obligations of states and political subdivisions		21,379		6		(3,729	)		17,656
Government-sponsored mortgage-backed securities		97,674		305		(6,960	)		91,019
Government-sponsored mortgage-backed securities		73,235	$	—		(8,968	)		64,267
Asset-backed securities		3,593		—		(21	)		3,572
Asset-backed securities		4,563	$	—		(46	)		4,517
Certificates of deposit		745		—		(8	)		737
Certificates of deposit		1,459	$	—		(34	)		1,425
Total	$	119,055	$	308	$	(9,804	)	$	109,559
Total	$	130,233	$	6	$	(15,747	)	$	114,492

The fair value of available-for-sale securities that were pledged as collateral at ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023, were $79.83 million and $~~3.6 million~~426,000, respectively.

The amortized costs and fair values of available-for-sale securities, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. In addition, expected maturities will differ from contractual maturities for mortgage-backed securities and asset-backed securities, as the expected repayment terms may be less than the underlying mortgage pool contractual maturities. Therefore, these securities are not included in the maturity categories in the maturity summary below.

	September 30, 2023
	March 31, 2024
	Amortized Cost		Fair Value
	(in thousands)
Debt and other securities:
Due in one year or less	$	1,~~080~~560	$	1,~~064~~541
Due after one through 5 years		~~8,229~~340		~~7,312~~341
Due after 5 through 10 years		1612,~~657~~959		1310,~~352~~718
Due after 10 years		32,~~114~~915		2,~~291~~256
Total debt and other securities		2917,~~080~~774		2414,~~019~~856
Mortgage-related securities		8795,~~519~~504		7688,~~815~~177
Asset-backed securities		3,~~827~~356		3,~~807~~355
Total	$	~~120~~116,~~426~~634	$	~~104~~106,~~641~~388

108

NOTE 3 – AVAILABLE-FOR-SALE SECURITIES (continued)

Gross unrealized losses on securities available-for-sale and the fair values of the related securities, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position were as follows:

	September 30, 2023
	March 31, 2024
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(in thousands)
U.S. Treasury notes	$	—	$	—		$	7,142	$	(1,093	)	$	7,142	$	(1,093	)
Obligations of states and political subdivisions	$	—	$	—		$	13,773	$	(2,916	)	$	13,773	$	(2,916	)
Obligations of states and political subdivisions		339		(1	)		15,572		(3,938	)		15,911		(3,939	)
Government-sponsored mortgage-backed securities		31,194		(218	)		39,581		(7,180	)		70,775		(7,398	)
Government-sponsored mortgage-backed securities		20,958		(279	)		55,857		(10,425	)		76,815		(10,704	)
Asset-backed securities		—		—			1,726		(6	)		1,726		(6	)
Asset-backed securities		—		—			1,928		(25	)		1,928		(25	)
Certificates of deposit		—		—			742		(3	)		742		(3	)
Certificates of deposit		—		—			966		(29	)		966		(29	)
Total	$	31,194	$	(218	)	$	55,822	$	(10,105	)	$	87,016	$	(10,323	)
Total	$	21,297	$	(280	)	$	81,465	$	(15,510	)	$	102,762	$	(15,790	)

	December 31, 2022
	December 31, 2023
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(in thousands)
U.S. Treasury notes	$	—	$	—		$	26,627	$	(2,970	)	$	26,627	$	(2,970	)
Obligations of states and political subdivisions	$	—	$	—		$	13,889	$	(2,815	)	$	13,889	$	(2,815	)
Obligations of states and political subdivisions		5,088		(396	)		12,145		(3,333	)		17,233		(3,729	)
Government-sponsored mortgage-backed securities		—		—			40,983		(6,960	)		40,983		(6,960	)
Government-sponsored mortgage-backed securities		19,084		(1,310	)		45,183		(7,658	)		64,267		(8,968	)
Asset-backed securities		1,740		(5	)		1,832		(16	)		3,572		(21	)
Asset-backed securities		4,517		(46	)		—		—			4,517		(46	)
Certificates of deposit		—		—			737		(8	)		737		(8	)
Certificates of deposit		1,425		(34	)		—		—			1,425		(34	)
Total	$	1,740	$	(5	)	$	57,441	$	(9,799	)	$	59,181	$	(9,804	)
Total	$	30,114	$	(1,786	)	$	83,955	$	(13,961	)	$	114,069	$	(15,747	)

AtThe ~~September~~following ~~30,~~table ~~2023~~presents ~~and December 31, 2022, respectively,~~ the ~~Company~~number ~~had~~of ~~81 and 92~~ debt securities ~~with~~in an unrealized ~~losses~~loss ~~representing~~position ~~aggregate depreciation of approximately 13.3%~~ and ~~12.1%,~~the ~~respectively,~~aggregate depreciation from their ~~respective~~unamortized ~~amortized~~ cost basis., ~~These unrealized losses relate principally to changes in interest rates and were not caused~~ by ~~changes~~security ~~in the financial condition of the issuers~~type, ~~the~~as ~~quality~~ of ~~any~~March ~~underlying assets or applicable credit enhancements. In analyzing whether unrealized losses on debt securities are other-than-temporary~~31, ~~management~~2024 ~~considers whether the securities are issued by a government body or agency, whether a rating agency has downgraded the securities, industry analysts’ reports, the financial condition~~ and ~~performance~~December ~~of the issuer and the quality of any underlying assets or credit enhancements. As management has the intent and ability to hold these debt securities to projected recovery~~31, ~~none of these declines are deemed to be other-than-temporary~~2023.

On August 29, 2023, the Company executed the sale of $21.4 million in U.S. Treasury available-for-sale securities for a pre-tax loss of $1.9 million. Proceeds from the sale were used to purchase approximately $21.4 million of U.S. government sponsored mortgage-backed securities, which were classified as available-for-sale upon purchase.


	March 31, 2024					December 31, 2023
	Number of Securities		Aggregate Depreciation			Number of Securities		Aggregate Depreciation
Obligations of states and political subdivisions		16		17.5	%		16		16.9	%
Government-sponsored mortgage-backed securities		32		9.5	%		25		14.5	%
Asset-backed securities		3		0.3	%		4		0.6	%
Certificates of deposit		3		0.4	%		3		1.1	%
Total		54		10.6	%		48		14.2	%

The ~~following~~Company isdoes anot ~~summary~~consider ofthese ~~the~~unrealized ~~proceeds~~losses ~~from~~to ~~sales~~be ofattributable ~~securities~~to ~~available~~credit-~~for-sale~~related factors, as ~~well~~the unrealized losses in each category have occurred as ~~gross~~a ~~gains~~result of changes in noncredit-related factors such as changes in interest rates, market spreads and ~~losses~~market conditions subsequent to purchase, not credit deterioration. As a result, no allowance for ~~each~~credit losses on available-for-sale securities was recognized as of ~~the~~March ~~periods~~31, ~~listed~~2024 ~~below:~~or December 31, 2023.

	Three months ended September 30,					Nine months ended September 30,
	2023			2022		2023			2022
	(in thousands)					(in thousands)
Proceeds from sales of securities available-for-sale	$	19,495		$	—	$	19,495		$	—
Gross realized gains	$	—		$	—	$	—		$	—
Gross realized losses		(1,925	)		—		(1,925	)		—
Net realized loss	$	(1,925	)	$	—	$	(1,925	)	$	—

NOTE 4 – LOANS

Major classifications of loans, reported at amortized cost, are summarized as follows:

	September 30,2023			December 31,2022
	March 31,2024			December 31,2023
	(in thousands)
Commercial:
Real estate	$	~~221~~233,~~653~~861		$	~~210~~231,~~858~~893
Land development		—			—
Other		43,355			47,898
Other		45,682			43,708
Residential real estate:
First mortgage		9599,~~361~~092			8597,~~444~~747
Construction		~~2,707~~701			~~3,248~~359
Consumer:
Home equity and lines of credit		19,~~897~~216			1819,~~590~~683
Other		~~165~~83			99134
Subtotal (1)		~~385~~396,~~465~~308			~~361~~397,~~947~~714
Net deferred loan costs		~~831~~812			~~830~~854
Allowance for credit losses for loans		(3,~~614~~679	)		(3,~~203~~734	)
Loans, net	$	~~382~~393,~~682~~441		$	~~359~~394,~~574~~834

(1) Totals do not include accrued interest receivable, which was $~~987,000~~1.1 ~~and~~million ~~$874,000~~ at ~~September~~ 30both March 31, ~~2023~~2024 and December 31, ~~2022~~2023, ~~respectively,~~and which is recorded separately on the Company’s Consolidated Balance Sheets.

Deposit accounts in an overdrawn position and reclassified as loans totaled $2530,000 and $9878,000 at ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023, respectively.

The Company provides several types of loans to its customers, including commercial, residential, construction and consumer loans. Significant loan concentrations are considered to exist ~~for a financial institution~~ when there are amounts loaned to one borrower, or to multiple borrowers engaged in similar activities, that would cause them to be similarly impacted by economic or other conditions. While ~~the Company’s~~ credit risks ~~are~~tend to be geographically concentrated ~~within~~in the Company's metropolitan Milwaukee, ~~Wisconsin~~market area, and while a significant portion of the Company’s loan portfolio is secured by commercial and residential real estate, there are no significant concentrations ~~with~~whose ~~individual~~primary ~~borrowers~~sources of repayment are reliant upon an individual or ~~groups~~group of related borrowers.

The Company also purchases loan participations from other financial institutions. The outstanding balance of loans purchased are included in the totals above and totaled $3956.40 million as of ~~September~~March 3031, ~~2023~~2024 and $3150.68 million as of December 31, ~~2022~~2023. In addition, the amount available for future draws totaled $5756.50 million at ~~September~~March 3031, ~~2023~~2024. Loans purchased are primarily comprised of commercial real estate and other commercial loans.

During the normal course of business, the Company may transfer a portion of a loan as a participation loan to another financial institution in order to manage portfolio risk. In order to be eligible for sales treatment, all cash flows from the loan must be divided proportionately, and rights of each loan holder must have the same priority, the loan holders must have no recourse to the transferor other than standard representations and warranties, and no loan holder can have the right to pledge or exchange the entire loan. As of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023, respectively, the Company had transferred $2928.8 million and $3029.30 million in participation loans which were eligible for sales treatment to other financial institutions, all of which continue to be serviced by the Company.

NOTE 4 – LOANS (continued)

A summary of activity in the allowance for credit losses for loans and the allowance for credit losses for unfunded loan commitments for the three months ended March 31, 2024 and March 31, 2023, is presented below:


	Commercial			Residential			Consumer			Total
	(in thousands)
Three months ended March 31, 2024
Allowance for credit losses for loans
Beginning balance	$	2,693		$	849		$	192		$	3,734
Provision for credit losses		(49	)		(16	)		(3	)		(68	)
Loans charged-off		—			—			(1	)		(1	)
Recoveries		5			6			3			14
Ending balance	$	2,649		$	839		$	191		$	3,679

Allowance for credit losses for unfunded loan commitments(1)
Beginning balance	$	847		$	28		$	—		$	875
Provision for credit losses		140			3			—			143
Ending balance	$	987		$	31		$	—		$	1,018

Total Allowance for credit losses for loans and unfunded loan commitments	$	3,636		$	870		$	191		$	4,697

Three months ended March 31, 2023
Allowance for credit losses for loans
Beginning balance	$	1,944		$	752		$	507		$	3,203
Provision for credit losses		54			21			—			75
CECL Adoption Adjustment(2)		666			75			(329	)		412
Loans charged-off		—			—			(6	)		(6	)
Recoveries		5			—			4			9
Ending balance	$	2,669		$	848		$	176		$	3,693

Allowance for credit losses for unfunded loan commitments(1)
Beginning balance	$	—		$	—		$	—		$	—
Provision for credit losses		—			—			—			—
CECL Adoption Adjustment(2)		640			25			—			665
Ending balance	$	640		$	25		$	—		$	665

Total Allowance for credit losses for loans and unfunded loan commitments	$	3,309		$	873		$	176		$	4,358

(1) The allowance for credit losses for unfunded loan commitments is included in other liabilities on the Company's Consolidated Balance Sheets.

(2) On January 1, 2023, the Company adopted ASU 2016-13 ("CECL"). See Note 2 for additional information regarding the adoption of ASU 2016-13.

NOTE 4 – LOANS (continued)

The provision for credit losses is determined by the Company as the amount that is to be added to the ACL accounts to bring the ACL to a level that, in management's judgment, is necessary to absorb expected credit losses over the lives of the respective financial instruments. The following table presents the components of the provision for credit losses:


	Three months ended March 31,
	2024			2023
	(in thousands)
Provision for credit losses for:
Loans	$	(68	)	$	75
Unfunded loan commitments		143			—
Total	$	75		$	75

The Company regularly evaluates various attributes of loans to determine the appropriateness of the allowance for credit losses. The credit quality indicators monitored differ depending on the class of loan. The credit quality indicators for commercial real estate and other commercial loans are based on the following ratings:

•

"Pass" ratings are assigned to loans with adequate collateral and debt service ability such that collectability of the contractual loan payments is highly probable.

•

"Watch and Special Mention" ratings are assigned to loans where management has some concern that the collateral or debt service ability may not be adequate, though the collectability of the contractual loan payments is still probable.

•

"Substandard" ratings are assigned to loans that do not have adequate collateral and/or debt service ability such that collectability of the contractual loan payments is no longer probable.

•

"Doubtful" ratings are assigned to loans that do not have adequate collateral and/or debt service ability such that collectability of the contractual loan payments is unlikely.

Residential real estate and consumer loans are generally evaluated based on whether or not the loan is performing or in nonaccrual status. Refer to Note 1 to the Consolidated Financial Statements in our 2023 Annual Report on Form 10-K, filed with the SEC on March 29, 2024, for additional information on our nonaccrual policy.

NOTE 4 – LOANS (continued)

AThe ~~summary~~following oftables ~~activity~~presents in the ~~allowance~~amortized ~~for~~cost ~~credit~~basis ~~losses~~of ~~for~~our loans ~~and~~by ~~the allowance for~~ credit ~~losses~~quality ~~for~~indicator ~~unfunded loan commitments for the three~~ and ~~nine~~origination ~~months~~year, ~~ended~~at ~~September~~March 3031, ~~2023~~2024 and inDecember ~~the allowance for loan losses for the three and nine months ended September 30~~31, ~~2022, is presented below~~2023:

	Commercial			Residential			Consumer			Total
	March 31, 2024
	(in thousands)
	2024			2023			2022			2021			2020		2019 and Prior		Revolving Lines of Credit		Revolving Lines of Credit Converted to Term Loans		Total Loans
Three months ended September 30, 2023
	(in thousands)
Allowance for credit losses for loans
Commercial real estate:
Beginning balance	$	2,632		$	831		$	180		$	3,643
Pass	$	1,078		$	24,273		$	80,764		$	40,253		$	40,515	$	40,627	$	54	$	-	$	227,564
Provision for credit losses		(26	)		(8	)		(2	)		(36	)
Watch and special mention		-			-			230			-			-		2,461		-		-		2,691
Loans charged-off		—			—			(1	)		(1	)
Substandard		-			-			1,875			-			-		1,310		-		-		3,185
Recoveries		4			—			4			8
Nonperforming		-			-			78			-			-		343		-		-		421
Ending balance	$	2,610		$	823		$	181		$	3,614
Total commercial real estate		1,078			24,273			82,947			40,253			40,515		44,741		54		-		233,861
Allowance for credit losses for unfunded loan commitments(2)
Other commercial loans:
Beginning balance	$	771		$	27		$	—		$	798
Pass		2,556			15,711			10,262			4,101			713		1,180		6,898		-		41,421
Provision for credit losses		132			(21	)		—			111
Watch and special mention		-			-			-			179			16		50		741		-		986
Loans charged-off		—			—			—			—
Substandard		-			-			220			135			-		103		490		-		948
Recoveries		—			—			—			—
Total other commercial loans		2,556			15,711			10,482			4,415			729		1,333		8,129		-		43,355
Ending balance	$	903		$	6		$	—		$	909
Total commercial loans		3,634			39,984			93,429			44,668			41,244		46,074		8,183		-		277,216
Total Allowance for credit losses for loans and unfunded loan commitments	$	3,513		$	829		$	181		$	4,523
Residential real estate - first mortgage:
Three months ended September 30, 2022
Performing		2,745			13,410			14,306			33,309			15,546		19,133		-		-		98,449
Allowance for loan losses
Nonaccrual		-			-			-			-			-		643		-		-		643
Beginning balance	$	1,924		$	745		$	463		$	3,132
Total residential real estate - first mortgage		2,745			13,410			14,306			33,309			15,546		19,776		-		-		99,092
Provision for loan losses		—			—			—			—
Residential real estate - construction:
Loans charged-off		—			—			(1	)		(1	)
Performing		-			701			-			-			-		-		-		-		701
Recoveries		4			—			45			49
Nonaccrual		-			-			-			-			-		-		-		-		-
Ending balance	$	1,928		$	745		$	507		$	3,180
Total residential real estate - construction		-			701			-			-			-		-		-		-		701
Total residential real estate		2,745			14,111			14,306			33,309			15,546		19,776		-		-		99,793
Consumer - home equity and lines of credit:
Performing		-			73			46			138			65		1,375		16,250		1,239		19,186
Nonaccrual		-			-			-			-			-		30		-		-		30
Total consumer - home equity and lines of credit		-			73			46			138			65		1,405		16,250		1,239		19,216
Consumer - other
Performing		7			28			42			-			6		-		-		-		83
Nonaccrual		-			-			-			-			-		-		-		-		-
Total consumer - other		7			28			42			-			6		-		-		-		83
Total consumer		7			101			88			138			71		1,405		16,250		1,239		19,299
Total loans	$	6,386		$	54,196		$	107,823		$	78,115		$	56,861	$	67,255	$	24,433	$	1,239	$	396,308

NOTE 4 – LOANS (continued)


	December 31, 2023
	2023		2022		2021		2020		2019		2018 and Prior		Revolving Lines of Credit		Revolving Lines of Credit Converted to Term Loans		Total Loans
	(in thousands)
Commercial real estate:
Pass	$	22,486	$	78,098	$	40,597	$	40,914	$	8,881	$	34,342	$	42	$	-	$	225,360
Watch and special mention		-		232		-		-		1,706		328		-		-		2,266
Substandard		-		1,885		598		-		287		1,075		-		-		3,845
Nonaccrual		-		79		-		-		-		343		-		-		422
Total commercial real estate		22,486		80,294		41,195		40,914		10,874		36,088		42		-		231,893
Other commercial loans:
Pass		16,949		11,347		4,729		974		64		1,488		9,905		-		45,456
Watch and special mention		-		-		197		31		15		48		828		-		1,119
Substandard		-		236		411		-		-		116		560		-		1,323
Total other commercial loans		16,949		11,583		5,337		1,005		79		1,652		11,293		-		47,898
Total commercial loans		39,435		91,877		46,532		41,919		10,953		37,740		11,335		-		279,791
Residential real estate - first mortgage:
Performing		13,485		14,419		33,619		15,854		3,033		16,680		-		-		97,090
Nonaccrual		-		-		-		-		-		657		-		-		657
Total residential real estate - first mortgage		13,485		14,419		33,619		15,854		3,033		17,337		-		-		97,747
Residential real estate - construction:
Performing		359		-		-		-		-		-		-		-		359
Nonaccrual		-		-		-		-		-		-		-		-		-
Total residential real estate - construction		359		-		-		-		-		-		-		-		359
Total residential real estate		13,844		14,419		33,619		15,854		3,033		17,337		-		-		98,106
Consumer - home equity and lines of credit:
Performing		74		53		142		66		167		1,504		16,939		707		19,652
Nonaccrual		-		-		-		-		-		31		-		-		31
Total consumer - home equity and lines of credit		74		53		142		66		167		1,535		16,939		707		19,683
Consumer - other
Performing		73		46		-		7		-		8		-		-		134
Nonaccrual		-		-		-		-		-		-		-		-		-
Total consumer - other		73		46		-		7		-		8		-		-		134
Total consumer		147		99		142		73		167		1,543		16,939		707		19,817
Total loans	$	53,426	$	106,395	$	80,293	$	57,846	$	14,153	$	56,620	$	28,274	$	707	$	397,714

	Commercial			Residential			Consumer			Total
	(in thousands)
Nine months ended September 30, 2023
Allowance for credit losses for loans
Beginning balance	$	1,944		$	752		$	507		$	3,203
Provision for credit losses		(14	)		(4	)		(1	)		(19	)
CECL Adoption Adjustment(1)		666			75			(329	)	$	412
Loans charged-off		—			—			(8	)		(8	)
Recoveries		14			—			12			26
Ending balance	$	2,610		$	823		$	181		$	3,614
Allowance for credit losses for unfunded loan commitments(2)
Beginning balance	$	—		$	—		$	—		$	—
Provision for credit losses		263			(19	)		—			244
CECL Adoption Adjustment(1)		640			25			—		$	665
Loans charged-off		—			—			—			—
Recoveries		—			—			—			—
Ending balance	$	903		$	6		$	—		$	909
Total Allowance for credit losses for loans and unfunded loan commitments	$	3,513		$	829		$	181		$	4,523
Nine months ended September 30, 2022
Allowance for loan losses
Beginning balance	$	1,657		$	745		$	456		$	2,858
Provision for loan losses		210			—			—			210
Loans charged-off		—			—			(5	)		(5	)
Recoveries		61			—			56			117
Ending balance	$	1,928		$	745		$	507		$	3,180

There were no commercial loans rated Doubtful or Loss as of March 31, 2024 or December 31, 2023.

(1) On January 1, 2023, the Company adopted ASU 2016-13 ("CECL"). See Note 2 for additional information regarding the adoption of ASU 2016-13.

(2) The allowance for credit losses for unfunded loan commitments is included in other liabilities on the Company's Consolidated Balance Sheets.

NOTE 4 – LOANS (continued)

The ~~provision~~following ~~for~~tables ~~credit~~present ~~losses~~gross ischarge-offs ~~determined~~of byour ~~the~~loans ~~Company~~for aseach ~~the~~portfolio ~~amount~~class, ~~that~~by isorigination toyear, bethat ~~added~~occurred toduring the ~~ACL~~three ~~accounts~~months toended ~~bring~~March ~~the~~31, ~~ACL~~2024 toand athree ~~level~~months ~~that,~~ended inMarch ~~management's judgment~~31, is2023. Refer ~~necessary~~ to ~~absorb~~Note ~~expected~~1 ~~credit~~to ~~losses over~~ the ~~lives~~Consolidated ofFinancial ~~the~~Statements ~~respective~~in ~~financial~~our ~~instruments. The~~2023 ~~following~~Annual ~~table~~Report ~~presents~~on ~~the~~Form ~~components~~10-K offor ~~the~~additional ~~provision~~information ~~for~~on ~~credit~~our ~~losses:~~charge-off policy.

	Three months ended September 30,
	For the three months ended March 31, 2024
	2023			2022
	2024			2023		2022		2021		2020		2019 and Prior		Revolving Lines of Credit		Revolving Lines of Credit Converted to Term Loans		Total Loans
	(in thousands)
Provision for credit losses for:
Commercial:
Loans	$	(36	)	$	—
Real estate	$	-		$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Unfunded loan commitments		111		N/A
Other		-			-		-		-		-		-		-		-		-
Total	$	75		$	—
Total commercial loans		-			-		-		-		-		-		-		-		-
Residential real estate:
First mortgage		-			-		-		-		-		-		-		-		-
Construction		-			-		-		-		-		-		-		-		-
Total residential real estate		-			-		-		-		-		-		-		-		-
Consumer:
Home equity and lines of credit		-			-		-		-		-		-		-		-		-
Other		-			1		-		-		-		-		-		-		1
Total consumer		-			1		-		-		-		-		-		-		1
Total current period charge-offs	$	-		$	1	$	-	$	-	$	-	$	-	$	-	$	-	$	1

	Nine months ended September 30,
	For the three months ended March 31, 2023
	2023			2022		2021		2020		2019		2018 and Prior		Revolving Lines of Credit		Revolving Lines of Credit Converted to Term Loans		Total Loans
	(in thousands)
Provision for credit losses for:
Commercial:
Loans	$	(19	)	$	210
Real estate	$	-		$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Unfunded loan commitments		244		N/A
Other		-			-		-		-		-		-		-		-		-
Total	$	225		$	210
Total commercial loans		-			-		-		-		-		-		-		-		-
Residential real estate:
First mortgage		-			-		-		-		-		-		-		-		-
Construction		-			-		-		-		-		-		-		-		-
Total residential real estate		-			-		-		-		-		-		-		-		-
Consumer:
Home equity and lines of credit		-			-		-		-		-		-		-		-		-
Other		-			4		-		-		-		2		-		-		6
Total consumer		-			4		-		-		-		2		-		-		6
Total current period charge-offs	$	-		$	4	$	-	$	-	$	-	$	2	$	-	$	-	$	6

Pass ratings are assigned to loans with adequate collateral and debt service ability such that collectability of the contractual loan payments is highly probable.

Watch and Special Mention ratings are assigned to loans where management has some concern that the collateral or debt service ability may not be adequate, though the collectability of the contractual loan payments is still probable.

Substandard ratings are assigned to loans that do not have adequate collateral and/or debt service ability such that collectability of the contractual loan payments is no longer probable.

Doubtful ratings are assigned to loans that do not have adequate collateral and/or debt service ability such that collectability of the contractual loan payments is unlikely.

Residential real estate and consumer loans are generally evaluated based on whether or not the loan is performing or in nonaccrual status. Refer to Note 1 to the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K, filed with the SEC on March 30, 2023, for additional information on our nonaccrual policy.

NOTE 4 – LOANS (continued)

~~The~~An ~~following~~analysis ~~table~~of ~~presents~~past ~~the~~due ~~amortized~~loans, ~~cost~~net ~~basis~~ of ~~our~~amortized ~~loans by credit quality indicator and origination year~~costs, atis ~~September~~presented ~~30, 2023~~below:

	September 30, 2023
	March 31, 2024
	2023		2022		2021		2020		2019		2018 and Prior		Revolving Lines of Credit		Revolving Lines of Credit Converted to Term Loans		Total Loans
	Loans Past Due 30-89 Days		Loans Past Due 90+ Days		Total Past Due		Current Loans		Total Loans
	(in thousands)
Commercial real estate:
Commercial:
Pass	$	15,107	$	72,575	$	40,954	$	41,305	$	10,238	$	34,911	$	22	$	-	$	215,112
Real estate	$	2,145	$	421	$	2,566	$	231,295	$	233,861
Watch and special mention		-		233		-		-		452		238		-		-		923
Other		—		—		—		43,355		43,355
Substandard		-		3,286		604		-		291		1,437		-		-		5,618
Residential real estate:
Total commercial real estate		15,107		76,094		41,558		41,305		10,981		36,586		22		-		221,653
First mortgage		772		49		821		98,271		99,092
Other commercial loans:
Construction		—		—		—		701		701
Pass		14,082		13,563		5,740		1,231		138		1,684		5,586		-		42,024
Consumer:
Watch and special mention		-		-		227		184		29		56		1,868		-		2,364
Home equity and lines of credit		—		—		—		19,216		19,216
Substandard		-		252		445		-		-		130		467		-		1,294
Other		—		—		—		83		83
Total other commercial loans		14,082		13,815		6,412		1,415		167		1,870		7,921		-		45,682
Total	$	2,917	$	470	$	3,387	$	392,921	$	396,308
Total commercial loans		29,189		89,909		47,970		42,720		11,148		38,456		7,943		-		267,335
Residential real estate - first mortgage:
Performing		12,817		13,917		31,957		16,012		3,058		16,930		-		-		94,691
Nonaccrual		-		-		-		-		-		670		-		-		670
Total residential real estate - first mortgage		12,817		13,917		31,957		16,012		3,058		17,600		-		-		95,361
Residential real estate - construction:
Performing		298		736		1,673		-		-		-		-		-		2,707
Nonaccrual		-		-		-		-		-		-		-		-		-
Total residential real estate - construction		298		736		1,673		-		-		-		-		-		2,707
Total residential real estate		13,115		14,653		33,630		16,012		3,058		17,600		-		-		98,068
Consumer - home equity and lines of credit:
Performing		19		59		147		113		172		1,306		17,249		801		19,866
Nonaccrual		-		-		-		-		-		31		-		-		31
Total consumer - home equity and lines of credit		19		59		147		113		172		1,337		17,249		801		19,897
Consumer - other
Performing		106		49		-		8		2		-		-		-		165
Nonaccrual		-		-		-		-		-		-		-		-		-
Total consumer - other		106		49		-		8		2		-		-		-		165
Total consumer		125		108		147		121		174		1,337		17,249		801		20,062
Total loans	$	42,429	$	104,670	$	81,747	$	58,853	$	14,380	$	57,393	$	25,192	$	801	$	385,465


	December 31, 2023
	Loans Past Due 30-89 Days		Loans Past Due 90+ Days		Total Past Due		Current Loans		Total Loans
	(in thousands)
Commercial:
Real estate	$	79	$	343	$	422	$	231,471	$	231,893
Other		—		—		—		47,898		47,898
Residential real estate:
First mortgage		299		52		351		97,396		97,747
Construction		—		—		—		359		359
Consumer:
Home equity and lines of credit		—		—		—		19,683		19,683
Other		—		—		—		134		134
Total	$	378	$	395	$	773	$	396,941	$	397,714

There were no loans 90 days or more past due and accruing interest as of March 31, 2024 or December 31, 2023, respectively.

NOTE 4 – LOANS (continued)

AThe ~~summary~~following oftable presents the ~~credit~~amortized ~~quality~~cost ~~indicators~~of our loans on nonaccrual status as of March 31, at2024 ~~amortized~~and ~~cost~~December 31, ~~prior~~2023. toAll ~~the~~loans ~~adoption~~that were 90 days or more past due were on nonaccrual status as of March ~~CECL~~31, is2024 ~~presented~~and ~~below:~~December 31, 2023.

	December 31, 2022
	March 31,2024			December 31,2023
	Pass			Watch and Special Mention			Substandard		Total
	(in thousands)
	(in thousands)
Commercial:
Commercial:
Real estate	$	421		$	422
Real estate	$	206,655		$	2,932		$	1,271	$	210,858
Other		—			—
Land development		—			—			—		—
Residential real estate:
Other		41,569			35			2,104		43,708
First mortgage		643			657
Total	$	248,224		$	2,967		$	3,375	$	254,566
Construction		—			—
Consumer:
Home equity and lines of credit		30			31
Other		—			—
Total nonaccrual loans	$	1,094		$	1,110
Total nonaccrual loans to total loans		0.28	%		0.28	%
Total nonaccrual loans to total assets		0.19	%		0.20	%

~~There~~The ~~were~~Company nohad ~~commercial~~$1.1 million of loans ~~rated~~that ~~Doubtful~~were orin ~~Loss~~nonaccrual status as of ~~December~~ March 31, ~~2022~~2024, with no related allowance for credit losses. During the three months ended March 31, 2024, there was no interest earned on nonaccrual loans and no accrued interest was reversed on nonaccrual loans.

	December 31, 2022
	Performing		Non-Performing		Total
	(in thousands)
Residential real estate:
First mortgage	$	84,730	$	714	$	85,444
Construction		3,248		—		3,248
Consumer:
Home equity and lines of credit		18,535		55		18,590
Other		99		—		99
Total	$	106,612	$	769	$	107,381

At March 31, 2024 and December 31, 2023 , the Company held loans that were individually evaluated for impairment due to financial difficulties experienced by the borrower and for which the repayment, on the basis of our assessment, is expected to be provided substantially through the sale or operation of the collateral. The ACL for these collateral dependent loans is primarily based on the fair value of the underlying collateral at the reporting date. The following describes the type of collateral that secure collateral dependent loans:

•

The following tables present gross charge-offs of our loans for each portfolio class, by origination year, that occurred during the three and nine months ended September 30, 2023. Refer to Note 1 to the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K for additional information on our charge-off policy.

	For the three months ended September 30, 2023
	2023		2022		2021		2020		2019		2018 and Prior		Revolving Lines of Credit		Revolving Lines of Credit Converted to Term Loans		Total Loans
	(in thousands)
Commercial:
Real estate	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Land development		-		-		-		-		-		-		-		-		-
Other		-		-		-		-		-		-		-		-		-
Total commercial loans		-		-		-		-		-		-		-		-		-
Residential real estate:
First mortgage		-		-		-		-		-		-		-		-		-
Construction		-		-		-		-		-		-		-		-		-
Total residential real estate		-		-		-		-		-		-		-		-		-
Consumer:
Home equity and lines of credit		-		-		-		-		-		-		-		-		-
Other		1		-		-		-		-		-		-		-		1
Total consumer		1		-		-		-		-		-		-		-		1
Total current period charge-offs	$	1	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	1

NOTE 4 – LOANS (continued)

	For the nine months ended September 30, 2023
	2023		2022		2021		2020		2019		2018 and Prior		Revolving Lines of Credit		Revolving Lines of Credit Converted to Term Loans		Total Loans
	(in thousands)
Commercial:
Real estate	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Land development		-		-		-		-		-		-		-		-		-
Other		-		-		-		-		-		-		-		-		-
Total commercial loans		-		-		-		-		-		-		-		-		-
Residential real estate:
First mortgage		-		-		-		-		-		-		-		-		-
Construction		-		-		-		-		-		-		-		-		-
Total residential real estate		-		-		-		-		-		-		-		-		-
Consumer:
Home equity and lines of credit		-		-		-		-		-		-		-		-		-
Other		1		3		1		1		-		2		-		-		8
Total consumer		1		3		1		1		-		2		-		-		8
Total current period charge-offs	$	1	$	3	$	1	$	1	$	-	$	2	$	-	$	-	$	8

NOTE 4 – LOANS (continued)

An analysis of past due loans, net of amortized costs, is presented below:

	September 30, 2023
	Loans Past Due 30-89 Days		Loans Past Due 90+ Days		Total Past Due		Current Loans		Total Loans
	(in thousands)
Commercial:
Real estate	$	—	$	—	$	—	$	221,653	$	221,653
Land development		—		—		—		—		—
Other		—		—		—		45,682		45,682
Residential real estate:
First mortgage		—		55		55		95,306		95,361
Construction		—		—		—		2,707		2,707
Consumer:
Home equity and lines of credit		—		—		—		19,897		19,897
Other		—		—		—		165		165
Total		—		55	$	55	$	385,410	$	385,465

	December 31, 2022
	Loans Past Due 30-89 Days		Loans Past Due 90+ Days		Total Past Due		Current Loans		Total Loans
	(in thousands)
Commercial:
Real estate	$	1,732	$	—	$	1,732	$	209,126	$	210,858
Land development		—		—		—		—		—
Other		—		—		—		43,708		43,708
Residential real estate:
First mortgage		181		63		244		85,200		85,444
Construction		—		—		—		3,248		3,248
Consumer:
Home equity and lines of credit		72		21		93		18,497		18,590
Other		2		—		2		97		99
Total	$	1,987	$	84	$	2,071	$	359,876	$	361,947

There were no loans 90 days or more past due and accruing interest as of September 30, 2023 or December 31, 2022, respectively.

NOTE 4 – LOANS (continued)

The following table presents the amortized cost of our loans on nonaccrual status as of September 30, 2023 and December 31, 2022. All loans that were 90 days or more past due were on nonaccrual status as of September 30, 2023 and December 31, 2022.

	September 30,2023			December 31,2022
	(in thousands)
Commercial:
Real estate	$	—		$	—
Land development		—			—
Other		—			—
Residential real estate:
First mortgage		670			714
Construction		—			—
Consumer:
Home equity and lines of credit		31			55
Other		—			—
Total nonaccrual loans	$	701		$	769
Total nonaccrual loans to total loans		0.18	%		0.21	%
Total nonaccrual loans to total assets		0.13	%		0.14	%

The Company had $701,000 of loans that were in nonaccrual status as of September 30, 2023, with no related allowance for credit losses. During the nine months ended September 30, 2023, there was no interest earned on nonaccrual loans and no accrued interest was reversed on nonaccrual loans.

At September 30, 2023, the Company held loans that were individually evaluated for impairment due to financial difficulties experienced by the borrower and for which the repayment, on the basis of our assessment, is expected to be provided substantially through the sale or operation of the collateral. The ACL for these collateral dependent loans is primarily based on the fair value of the underlying collateral at the reporting date. The following describes the type of collateral that secure collateral dependent loans:

Commercial real estate loans are primarily secured by office and industrial buildings and warehouses.

•

Commercial and industrial loans are primarily secured by accounts receivable, inventory and equipment.

•

One-to-four-family mortgages are primarily secured by first liens on residential real estate.

•

Home equity loans are primarily secured by first and junior loans on residential real estate.

The table below summarizes collateral dependent loans and the related ACL at ~~September~~ 30March 31, 2024 and December 31, 2023 and for which the borrower is experiencing financial difficulty:

	Loans		ACL
	March 31, 2024				December 31, 2023
	(in thousands)
	Loans		ACL		Loans		ACL
Commercial:
	(in thousands)
Real estate	$	5,800	$	—
Commercial:
Land development		—		—
Real estate	$	3,792	$	—	$	4,457	$	—
Other		1,293		—
Land development		—		—		—		—
Residential real estate:
Other		948		—		1,323		—
First mortgage		870		—
Residential real estate:
Construction		—		—
First mortgage		838		—		855		—
Consumer:
Construction		—		—		—		—
Home equity and lines of credit		31		—
Consumer:
Other		—		—
Home equity and lines of credit		30		—		31		—
Total	$	7,994		—
Other		—		—		—		—
Total	$	5,608	$	—	$	6,666	$	—

2017

NOTE 4 – LOANS (continued)

A summary of the allowance for loan losses for loans evaluated individually and collectively for impairment, at amortized cost, prior to the adoption of CECL is presented below:

	December 31, 2022
	Commercial		Residential		Consumer		Total
	(in thousands)
Loans:
Individually evaluated for impairment	$	3,525	$	917	$	55	$	4,497
Collectively evaluated for impairment		251,041		87,775		18,634		357,450
Total loans	$	254,566	$	88,692	$	18,689	$	361,947
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		1,944		752		507		3,203
Total allowance for loan losses	$	1,944	$	752	$	507	$	3,203

NOTE 4 – LOANS (continued)

Information regarding impaired loans, at amortized cost, prior to the adoption of CECL is presented below:

	As of and for the Year Ended December 31, 2022
	Recorded Investment		Unpaid Principal		Reserve		Average Investment		Interest Recognized
	(in thousands)
Impaired loans with reserve:
Commercial:
Real estate	$	—	$	—	$	—	$	—	$	—
Land development		—		—		—		—		—
Other		—		—		—		—		—
Residential real estate:
First mortgage		—		—		—		—		—
Construction		—		—		—		—		—
Consumer:
Home equity and lines of credit		—		—		—		—		—
Other		—		—		—		—		—
Total impaired loans with reserve	$	—	$	—	$	—	$	—	$	—
Impaired loans with no reserve:
Commercial:
Real estate	$	1,422	$	1,470	NA		$	3,952	$	177
Land development		—		—	NA			—		—
Other		2,103		2,103	NA			1,325		110
Residential real estate:
First mortgage		917		1,138	NA			1,011		55
Construction		—		—	NA			—		—
Consumer:
Home equity and lines of credit		55		60	NA			37		2
Other		—		—	NA			—		—
Total impaired loans with no reserve		4,497		4,771	NA			6,325		344
Total impaired loans	$	4,497	$	4,771	$	—	$	6,325	$	344

The adoption of ASU 2022-02 eliminated troubled debt restructurings (TDR's) recognition and measurement guidance, as well as all TDR related disclosures. Refer to Note 2 for additional information. TDRs were loan modifications where concessions were granted to borrowers experiencing financial difficulties. The Company did not modify any loans for borrowers that are experiencing financial difficulty and did not have any previous modifications that were made during the past 12 months that experienced a payment default during the three and nine months ended September 30, 2023.

At December 31, 2022, the Company had $538,000 of TDR's, of which $183,000 was on nonaccrual status. There were no loan modifications that were classified as a TDR during the year ended December 31, 2022.

NOTE 5 – MORTGAGE SERVICING RIGHTS

Loans serviced for others are not included in the Company’s consolidated balance sheets. The unpaid principal balance of mortgage loans serviced for others was $~~287~~277.34 million and $~~304~~282.32 million as of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023, respectively.

A summary of activity in the Company’s mortgage servicing rights is presented below:

	Three Months Ended September 30, 2023			Three Months Ended September 30, 2022			Nine Months Ended September 30, 2023			Nine Months Ended September 30, 2022
	Three Months Ended March 31, 2024			Three Months Ended March 31, 2023
	(in thousands)						~~(in thousands)~~
Mortgage servicing rights beginning balance	$	1,~~777~~720		$	1,~~939~~860		$	~~1,860~~		$	~~2,036~~
Additions		198			109			36			57
Amortization		(4538	)		(5946	)		~~(145~~	)		~~(203~~	)
Mortgage servicing rights ending balance	$	1,~~751~~690		$	1,~~890~~823		$	~~1,751~~		$	~~1,890~~
Fair value at beginning of period	$	3,~~317~~269		$	3,~~273~~376		$	~~3,376~~		$	~~2,477~~
Fair value at end of period	$	3,~~347~~240		$	3,~~335~~488		$	~~3,347~~		$	~~3,335~~

~~The~~There ~~estimated fair value of mortgage servicing rights~~ was ~~determined~~no ~~using a~~ valuation ~~model~~allowance ~~that~~as ~~calculates the present value~~ of ~~expected~~March ~~future~~31, ~~servicing~~2024 ~~and~~or ~~ancillary~~December ~~income~~31, ~~net of expected servicing costs~~2023. The ~~model~~Company ~~incorporates~~did ~~various~~not ~~assumptions~~sell ~~such~~any asmortgage ~~discount rates, prepayment speeds and ancillary income and~~ servicing ~~costs.~~rights Asduring ~~of September 30, 2023,~~ the ~~model~~three ~~used~~months ~~discount~~ended ~~rates~~March ~~ranging from 10.1% to 13.0%~~31, ~~and~~2024 ~~prepayment~~or ~~speeds~~March ~~ranging from 6.9% to 36.7%~~31, ~~both of which were based on market data from independent organizations~~2023. ~~As of September 30, 2022 the model used discount rates ranging from 9.5% to 13.0%, and prepayment speeds ranging from 7.7% to 38.2%.~~

The ~~following~~estimated ~~table~~fair ~~summarizes~~value ~~the~~of ~~estimated~~mortgage ~~future~~servicing ~~amortization~~rights ~~expense~~was ~~for~~determined ~~mortgage~~using ~~servicing~~a ~~rights~~valuation ~~for~~model that calculates the ~~annual~~present ~~periods~~value ~~indicated.~~of ~~The~~expected ~~projections~~future servicing and ancillary income, net of ~~amortization~~expected ~~expense~~servicing ~~are~~costs. ~~based~~The onmodel ~~existing~~incorporates ~~asset~~various ~~balances~~assumptions such as discount rates, prepayment speeds and ancillary income and servicing costs. As of ~~September~~March 3031, ~~2023~~2024, the model used discount rates ranging from 10.1% ~~The~~to ~~actual~~13.0%, ~~amortization~~and ~~expense~~prepayment ~~the~~speeds ~~Company~~ranging ~~recognizes~~from in6.9% ~~any~~to ~~given~~39.5%, ~~period~~both ~~may~~of ~~vary~~which ~~significantly~~were ~~depending~~based on ~~changes~~market indata ~~interest~~from ~~rates~~independent organizations. As of March 31, ~~market~~2023 ~~conditions~~the model used discount rates ranging from 10.1% to 13.0%, and ~~regulatory~~prepayment ~~requirements~~speeds ranging from 7.0% to 38.8%.

Estimated future amortization as of September 30, 2023:	(in thousands)
2023	$	53
2024		203
2025		186
2026		181
2027		146
Thereafter		982
Total	$	1,751

The following table summarizes the estimated future amortization expense for mortgage servicing rights for the annual periods indicated. The projections of amortization expense are based on existing asset balances as of March 31, 2024. The actual amortization expense the Company recognizes in any given period may vary significantly depending on changes in interest rates, market conditions and regulatory requirements.


Estimated future amortization as of March 31, 2024:	(in thousands)
2024	$	150
2025		194
2026		174
2027		152
2028		130
Thereafter		890
Total	$	1,690

NOTE 6 – DEPOSITS

The composition of deposits is summarized below:

	September 30,2023		December 31, 2022
	March 31,2024		December 31, 2023
	(in thousands)
Non-interest bearing checking	$	7273,~~410~~093	$	9278,~~465~~476
Interest bearing checking		29,~~837~~177		3228,~~514~~899
Money market		8685,~~747~~657		~~121~~88,~~215~~687
Statement savings		4843,~~779~~894		6146,~~969~~473
Certificates of deposit		~~149~~167,~~200~~464		79161,~~558~~148
Total	$	~~386~~399,~~973~~285	$	~~387~~403,~~721~~683

Certificates of deposit that met or exceeded the FDIC insurance limit of $250,000 totaled $2935.92 million and $831.93 million as of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023, respectively. The Company did not hold any brokered deposits as of ~~September~~March 3031, ~~2023~~2024 or December 31, ~~2022~~2023.

As of ~~September~~March 3031, ~~2023~~2024, the scheduled maturities of certificates of deposit for the annual periods are presented below:

	(in thousands)
2023	$	33,186
2024	$	125,778
2024		95,170
2025		29,078
2025		8,418
2026		12,276
2026		12,061
2027		239
2027		298
2028		77
Thereafter		6716
Total	$	~~149~~167,~~200~~464

2419

NOTE 7 – FEDERAL HOME LOAN BANK ADVANCES

A summary of Federal Home Loan Bank advances follows:

	September 30, 2023					December 31, 2022
	March 31, 2024					December 31, 2023
	Rate			Amount		Rate			Amount
	(dollars in thousands)
Fixed rate, fixed term advance, maturing Feb 2023		—			—		1.62	%		6,500
Open line of credit		—			—		5.72	%		8,000
Fixed rate, fixed term advance, maturing July 2027		2.90	%		5,000		2.90	%		5,000
Putable advance, maturing July 2029, first option date January 2023		—			—		1.68	%		5,000
Putable advance, maturing January 2028, first option date January 2024		—			—		3.44	%		5,000
Putable advance, maturing February 2030, first option date February 2023		—			—		0.98	%		5,000
Putable advance, maturing February 2028, first option date February 2024		—			—		3.63	%		5,000
Putable advance, maturing October 2029, first put option date July 2023		—			—		2.96	%		5,000
Putable advance, maturing March 2028, first option date March 2024		—			—		3.47	%		5,000
Putable advance, maturing February 2028, first option date November 2023		3.82	%		5,000		—			—
Putable advance, maturing May 2026, first option date May 2024		3.92	%		2,500		3.92	%		2,500
Putable advance, maturing May 2028, first option date November 2023		3.16	%		5,000		—			—
Putable advance, maturing May 2028, first option date May 2024		3.51	%		2,500		3.51	%		2,500
Putable advance, maturing January 2028, first option date January 2024		3.44	%		5,000		—			—
Putable advance, maturing January 2029, first option date July 2024		3.32	%		5,000		—			—
Putable advance, maturing February 2028, first option date February 2024		3.63	%		5,000		—			—
Putable advance, maturing January 2029, first option date July 2024		3.67	%		5,000		—			—
Putable advance, maturing March 2028, first option date March 2024		3.47	%		5,000		—			—
Putable advance, maturing March 2029, first option date September 2024		3.79	%		2,500		—			—
Putable advance, maturing May 2026, first option date May 2024		3.92	%		2,500		—			—
Putable advance, maturing March 2029, first option date September 2024		3.52	%		5,000		—			—
Putable advance, maturing May 2028, first option date May 2024		3.51	%		2,500		—			—
Putable advance, maturing January 2029, first option date January 2025		3.70	%		5,000		—			—
Putable advance, maturing Mar 2030, first put option date March 2025		0.89	%		10,000		0.89	%		10,000
Putable advance, maturing February 2029, first option date February 2025		3.78	%		5,000		—			—
Putable advance, maturing Mar 2032, first put option date March 2027		1.74	%		10,000		1.74	%		10,000
Putable advance, maturing February 2029, first option date February 2026		3.85	%		5,000		—			—
Advance structured note, payments due monthly, maturing April 2030		1.05	%		6,701		1.05	%		7,435
Putable advance, maturing March 2030, first put option date March 2025		0.89	%		10,000		0.89	%		10,000
Advance structured note, payments due monthly, maturing May 2030		1.19	%		6,798		1.19	%		7,529
Putable advance, maturing March 2032, first put option date March 2027		1.74	%		10,000		1.74	%		10,000
SOFR Floater advance, maturing October 2023		5.56	%		5,000		4.54	%		5,000
Advance structured note, payments due monthly, maturing April 2030		1.05	%		6,208		1.05	%		6,454
SOFR Floater advance, maturing October 2024		5.61	%		5,000		4.59	%		5,000
Advance structured note, payments due monthly, maturing May 2030		1.19	%		6,306		1.19	%		6,553
Total				$	78,499				$	71,464
SOFR Floater advance, maturing October 2024		5.62	%		5,000		5.68	%		5,000
Total				$	80,014				$	71,007

The scheduled maturities and required principal payments of Federal Home Loan Bank advances are presented below:

	September 30, 2023
	March 31, 2024
	Weighted Average Rate			Amount
	(dollars in thousands)
2023		5.16	%	$	5,491
2024		4.59	%	$	6,486
2024		4.34	%		6,980
2025		1.12	%	$	2,002
2025		1.12	%		2,002
2026		2.67	%	$	4,524
2026		2.67	%		4,524
2027		2.38	%	$	7,047
2027		2.38	%		7,047
2028		2.43	%	$	4,570
Thereafter		2.4438	%	$	5255,~~455~~385
Total		2.7854	%	$	7880,~~499~~014

Actual maturities may differ from scheduled maturities due to call options on various FHLB advances.

The Company maintains a master contract agreement with the FHLB, which provides for borrowing up to the lesser of 22.22 times the value of the FHLB stock owned, a determined percentage of the book value of the Company’s qualifying real estate loans, or a determined percentage of the Company’s assets. The FHLB provides both fixed and floating rate advances. Floating rates are tied to short-term market rates of interest such as the Secured Overnight Financing Rate ("SOFR"), federal funds or Treasury bill rates. FHLB advances are subject to a prepayment penalty if they are repaid prior to maturity. The Company has pledged qualifying real estate and commercial and industrial loans with collateral values of approximately $~~170~~174.73 million at ~~September~~March 3031, ~~2023~~2024 and $~~172~~173.40 million at December 31, ~~2022~~2023. FHLB advances were also secured by approximately $4.86 million and $3.4.2 million of FHLB stock held by the Company as of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023, respectively. The Company’s available and unused portion of this borrowing agreement totaled $9193.12 million and $100.09 million as of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023, respectively. Additional borrowing would require additional stock purchase.

Additionally, at ~~September~~March 3031, ~~2023~~2024 we had a $12.0 million federal funds rate line of credit with the BMO Harris Bank, none of which was drawn at ~~September~~March 3031, ~~2023~~2024. The Company also had an $911.5 million line of credit at the Federal Reserve based on pledged commercial real estate loans of approximately $1214.71 million at ~~September~~March 3031, ~~2023~~2024. The Company had not drawn on the Federal Reserve line as of ~~September~~March 3031, ~~2023~~2024. ~~The~~ ~~Company also has the ability to participate in the Federal Reserve's new Bank Term Funding Program as needed.~~

2520

NOTE 8 – INCOME TAXES

Income tax ~~expense (~~benefit) was $~~1.4 million and $21~~100,000 ~~for the three months ended September 30, 2023~~ and ~~2022 and~~ $~~1.0 million and ($172~~151,000) for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023, respectively.

OnDeferred ~~July~~tax 5,assets ~~2023,~~are ~~the~~deferred ~~Wisconsin~~tax ~~legislature~~consequences ~~enacted~~attributable ~~2023~~to ~~Wisconsin~~deductible ~~Act~~temporary 19differences ~~(the~~and ~~"Act")~~carryforwards. ~~The~~ ~~Act~~After ~~contains~~the adeferred ~~provision~~tax ~~that~~asset ~~provides~~has ~~financial~~been ~~institutions~~measured ~~with~~using athe ~~state~~applicable enacted tax~~-exemption~~ ~~for~~rate ~~interest,~~and ~~fees~~provisions ~~and~~of ~~penalties~~the ~~earned~~enacted ontax ~~qualifying~~law, ~~loans. For~~it ~~the~~is ~~exemption~~then necessary to ~~apply,~~assess the ~~loan~~need ~~must~~for bea $5valuation ~~million~~allowance. orA ~~less,~~valuation ~~for~~allowance ~~primarily~~is aneeded ~~business~~when, orbased ~~agricultural~~on ~~purpose,~~the ~~and~~weight ~~made~~of tothe ~~borrowers~~available ~~residing~~evidence, orit ~~located~~is inmore ~~Wisconsin. The~~likely ~~exemption~~than ~~first~~not ~~applies~~that tosome ~~taxable~~portion ~~years~~of ~~beginning~~the ~~after~~deferred ~~December~~asset ~~31,~~will ~~2022,~~not ~~and~~be ~~applies~~realized. toAs ~~loans~~required onby ~~the~~generally ~~books~~accepted asaccounting ofprinciples, ~~January~~available 1,evidence ~~2023~~is ~~and~~weighted toheavily ~~new~~on ~~loans~~cumulative ~~made~~losses, ~~after~~with ~~January~~less 1,weight ~~2023,~~placed ~~that~~on ~~meet~~future ~~the~~projected ~~qualifications~~profitability. The ~~Company~~realization ~~currently~~of ~~projects~~deferred ~~that~~tax ~~its~~assets ~~Wisconsin~~is ~~state~~dependent on the existence of taxable income ~~will~~of bethe ~~significantly~~appropriate ~~reduced~~character ~~and/~~(e.g., ordinary or ~~eliminated~~capital) inwithin the ~~future~~carry-back asand acarry-forward ~~result~~periods ofavailable ~~this~~under ~~provision. Also~~tax alaw, ~~result~~which ofwould ~~this~~consider ~~provision,~~future ~~the~~reversals ~~Company~~of ~~reversed~~existing ~~$98,000~~taxable intemporary ~~income~~differences ~~tax~~and ~~benefits~~available ~~which~~tax ~~had~~planning ~~been~~strategies. ~~recorded~~As ~~during~~of ~~the~~March ~~first~~31, ~~two~~2024, ~~quarters~~and ofDecember 31, 2023, ~~and~~the ~~increased~~deferred ~~the~~tax valuation allowance ~~for~~was ~~deferred~~$3.3 ~~tax~~million ~~assets~~and by $13.81 million, ~~resulting~~respectively, inreducing aour ~~one-time~~net ~~$1.9~~deferred ~~million~~tax ~~increase~~assets into ~~tax~~$7.1 ~~expense~~million inand ~~the~~$6.9 ~~third~~million ~~quarter~~at ofeach ~~2023~~respective date.

Deferred tax assets are deferred tax consequences attributable to deductible temporary differences and carryforwards. After the deferred tax asset has been measured using the applicable enacted tax rate and provisions of the enacted tax law, it is then necessary to assess the need for a valuation allowance. A valuation allowance is needed when, based on the weight of the available evidence, it is more likely than not that some portion of the deferred asset will not be realized. As required by generally accepted accounting principles, available evidence is weighted heavily on cumulative losses, with less weight placed on future projected profitability. The realization of deferred tax assets is dependent on the existence of taxable income of the appropriate character (e.g., ordinary or capital) within the carry-back and carry-forward periods available under tax law, which would consider future reversals of existing taxable temporary differences and available tax planning strategies. As of September 30, 2023, and December 31, 2022, the deferred tax valuation allowance was $3.3 million and $934,000, respectively, reducing our net deferred tax assets to $7.6 million and $8.3 million at each respective date. The increase in the valuation allowance was primarily due to the $1.8 million increase as a result of the Act and $592,000 in tax benefits generated during the nine months ended September 30, 2023, which are not expected to be realized.

The board and management continue to assess the deferred tax assets in light of recent changes in market conditions, forecasted future projected income and available tax planning strategies. As such, there may be additional deferred tax asset impairment in subsequent periods.

2621

NOTE 9 – COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company may be involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material adverse effect on the Company’s financial statements. No ~~material~~ legal proceedings existed at ~~September~~March 3031, ~~2023~~2024, that would have a material adverse effect on the Company’s consolidated financial statements.

InThe ~~the normal course of business, the~~ Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These instruments include commitments to extend credit and commitments to sell loans. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized on the balance sheets.

The Company’s exposure to credit losses is represented by the contractual, or notional, amount of these commitments. The Company follows the same credit policies in making commitments as it does for on-balance-sheet instruments. As some of the commitments are expected to expire without being drawn upon, and some of the commitments may not be drawn upon to the total extent of the commitment, the notional amount of these commitments does not necessarily represent future cash requirements of the Company.

ASU 2016-13 requires that we establish an allowance for credit losses for off-balance sheet credit exposures, including unfunded loan commitments, that meet certain requirements. The allowance for credit losses for off-balance sheet credit exposures is estimated by portfolio segment at each balance sheet date under the CECL model using the same methodologies as portfolio loans, also taking into consideration management’s assumption of the likelihood that funding will occur. The allowance for credit losses for off-balance sheet credit exposures is included in other liabilities on the Company’s Consolidated Balance Sheets. Additional provisions for expected losses occur through a charge to the provision for credit losses. The adoption of the ASU 2016-13 resulted in the establishment of a $665,000 allowance for credit losses for unfunded loan commitments, based on $41.1 million in outstanding loan commitments that are expected to fund. At ~~September~~March 3031, ~~2023~~2024, the allowance for credit losses for unfunded commitments was $~~909,000~~1.0 million and there was $5558.25 million in outstanding commitments to extend credit that were expected to fund.

The contractual amounts of ~~off-balance-sheet~~ credit-related financial instruments are summarized below:

September 30, 2023

March 31, 2024

Fixed Rate

Variable Rate

Total

(in thousands)

Commitments to extend credit

110,~~474~~027

96100,~~768~~793

98110,~~242~~820

Standby letters of credit

—

150

Credit enhancement under the FHLB of Chicago Mortgage Partnership Finance Program

1,~~027~~099

—

1,~~027~~099

Commitments to sell loans

13,~~220~~194

—

13,~~220~~194

Overdraft protection program commitments

3,~~789~~734

—

3,~~789~~734

December 31, 2022

December 31, 2023

Fixed Rate

Variable Rate

Total

(in thousands)

Commitments to extend credit

31,~~391~~136

8086,~~631~~201

8487,~~022~~337

Standby letters of credit

—

150

Credit enhancement under the FHLB of Chicago Mortgage Partnership Finance Program

~~894~~1,095

—

~~894~~1,095

Commitments to sell loans

~~1,292~~635

—

~~1,292~~635

Overdraft protection program commitments

3,~~881~~758

—

3,~~881~~758

2722

NOTE 9 – COMMITMENTS AND CONTINGENCIES (continued)

Commitments to extend credit are agreements to lend to a customer at fixed or variable rates, as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The amount of collateral obtained upon extension of credit is based on management’s credit evaluation of the customer. Collateral held varies but may include accounts receivable; inventory; property, plant and equipment; real estate; and stocks and bonds. Commitments to sell loans represent commitments obtained by the Company from a secondary market agency to purchase mortgages from the Company at specified interest rates and within specified periods of time.

Standby letters of credit are conditional lending commitments issued by the Company to guarantee the performance of a customer to a third party. Generally, all standby letters of credit have expiration dates within one year. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company generally holds collateral supporting these commitments. Standby letters of credit are not reflected in the financial statements, since recording the fair value of these guarantees would not have a significant impact on the consolidated financial statements.

The Company participates in the Federal Home Loan Bank of Chicago Mortgage Partnership Finance Program (the “Program”). In addition to entering into forward commitments to sell mortgage loans to a secondary market agency, the Company enters into firm commitments to deliver loans to the Federal Home Loan Bank of Chicago through the Program. Under the Program, loans are funded by the Federal Home Loan Bank of Chicago, and the Company receives an agency fee reported as a component of gain on sale of loans. The Company had $1.4 million in outstanding commitments to deliver loans through the Program as of ~~September~~March 3031, ~~2023~~2024. Once delivered to the Program, the Company provides a contractually agreed-upon credit enhancement and performs servicing of the loans. Under the credit enhancement, the Company is liable for losses on loans delivered through the Program after application of any mortgage insurance and a contractually agreed-upon credit enhancement provided by the Program, subject to an agreed-upon maximum. The Company receives a fee for this credit enhancement. The Company records a liability for expected losses in excess of anticipated credit enhancement fees. As of ~~September~~March 3031, ~~2023~~2024, and December 31, ~~2022~~2023, the Company had no liability outstanding related to the Program.

Unfunded commitments under overdraft protection agreements are commitments for possible future extensions of credit to existing customers. These lines of credit may or may not require collateral and may or may not contain a specific maturity date.

2823

NOTE 10 – EMPLOYEE STOCK OWNERSHIP PLAN

The Company established a tax qualified Employee Stock Ownership Plan (“ESOP”) for the benefit of its employees, in conjunction with our 2019 reorganization. Eligible employees become 20% vested in their accounts after 1 year of service, 40% vested after 2 years of service, 60% vested after 3 years of service, 80% vested after 4 years of service, and 100% vested after 5 or more years of service, or earlier, upon death, disability or attainment of normal retirement age.

On January 8, 2019, the ESOP purchased 175,528 shares (231,047 shares adjusted for the 2021 conversion) of the Company’s common stock, which was funded by a loan from Old 1895 Bancorp. Unreleased ESOP shares collateralize the loan payable, and the cost of the shares is recorded as contra-equity account in the stockholders’ equity of the Company. Shares are to be released as debt payments are made by the ESOP to the loan. The ESOP’s sources of repayment of the loan can include dividends, if any, on the unallocated stock held by the ESOP, and discretionary contributions from the Company to the ESOP and earnings thereon.

As part of the mutual-to-stock conversion and stock offering completed on July 14, 2021, the ESOP refinanced the aforementioned loan with New 1895 Bancorp, enabling the ESOP to purchase an aggregate of 283,360 additional shares of common stock. The ESOP completed the purchase of all the additional 283,360 shares at an average price of $10.90 in the second quarter of 2022.

Compensation expense for the ESOP is recorded at an amount equal to the shares allocated by the ESOP multiplied by the average fair market value of the shares during the period. The Company recognizes compensation expense ratably over the year based upon the Company’s estimate of the number of shares expected to be allocated by the ESOP. Unearned compensation applicable to the ESOP is reflected as a reduction of stockholders’ equity in the consolidated balance sheet. The difference between the average fair market value and the cost of the shares allocated by the ESOP is recorded as an adjustment to stockholders’ equity. The Company recognized $3137,000 and $4947,000 in compensation expense for the three months ended ~~September~~March 3031, ~~2023~~2024 and ~~September~~March 3031, ~~2022, respectively, and $109,000 and $151,000 in compensation expense for the nine months ended September 30,~~ 2023 ~~and 2022~~, respectively.

The following table provides the allocated and unallocated shares of common stock associated with the ESOP.

	September 30,2023		December 31,2022
	March 31,2024		December 31,2023
	(dollars in thousands)
Shares committed to be released		144,~~755~~905		19,730
Total allocated shares		5571,~~900~~449		3651,~~170~~719
Total unallocated shares		~~439~~429,~~037~~157		~~453~~434,~~792~~062
Total ESOP shares		~~509~~505,~~692~~511		~~509~~505,~~692~~511
Fair value of unallocated shares (based on $7.05 and $10.00 share price as of September 30, 2023 and December 31, 2022, respectively)	$	3,095	$	4,538
Fair value of unallocated shares (based on $6.82 and $6.99 share price as of March 31, 2024 and December 31, 2023, respectively)	$	2,927	$	3,034

2924

NOTE 11 – RELATED PARTY TRANSACTIONS

A summary of loans to directors, executive officers, and their affiliates follows:

	September 30,2023			December 31, 2022
	March 31,2024			December 31, 2023
	(in thousands)
Beginning balance	$	~~1,015~~995		$	~~932~~1,015
Adjustments due to changes in directors, executive officers, and/or principal stockholders		~~(167~~—	)		—(167	)
New loans		~~217~~—			~~169~~218
Repayments		(5117	)		(8671	)
Ending balance	$	~~1,014~~978		$	~~1,015~~995

Deposits from directors, executive officers, and their affiliates totaled $~~681~~698,000 and $~~583~~729,000 at ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023, respectively.

The Company utilizes the services of law firms in which certain of the Company’s directors are partners. ~~Fees~~No fees were paid to ~~the~~these firms for ~~these~~ services ~~were~~during ~~immaterial~~the ~~for~~first ~~the~~quarter ~~three~~of 2024 and ~~nine~~the amounts paid during the three months ended ~~September~~March 3031, 2023 ~~and 2022~~, ~~respectively~~were immaterial.

NOTE 12 – FAIR VALUE ~~MEASUREMENTS~~

ASC Topic 820, Fair Value Measurements and Disclosures defines fair values, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This accounting standard applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements. The standard also emphasizes that fair value (i.e., the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date), among other things, is based on exit price versus entry price, should include assumptions about risk such as nonperformance risk in liability fair values, and is a market-based measurement, not an entity-specific measurement. When considering the assumptions that market participants would use in pricing an asset or liability, this accounting standard establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

The fair value hierarchy prioritizes inputs used to measure fair value into three broad levels:.

Level 1 inputs – In general, fair values determined by Level 1 inputs use quoted market prices in active markets for identical assets or liabilities that we have the ability to access.

Level 2 inputs – Fair values determined by Level 2 inputs use inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets where there are few transactions and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs – Level 3 inputs are unobservable inputs for the asset or liability and include situations where there is little, if any, market activity for the asset or liability.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Some assets and liabilities, such as securities available- for- sale, are measured at fair value on a recurring basis under ~~GAAP~~accounting principles generally accepted in the United States. Other assets and liabilities, such as collateral dependent loans, may be measured at fair value on a nonrecurring basis.

30Following is a description of the Company’s valuation methodology and significant inputs used for each asset and liability measured at fair value on a recurring or nonrecurring basis, as well as the classification of the asset or liability within the fair value hierarchy.

~~NOTE~~Securities 12 – ~~FAIR~~Marketable ~~VALUE~~equity ~~MEASUREMENTS~~securities ~~(continued)~~and securities available-for-sale may be classified as Level 1 or Level 2 measurements within the fair value hierarchy. Level 1 securities include equity securities traded on a national exchange. The fair value measurements of Level 1 securities are based on the quoted market price of those securities. Level 2 securities include U.S. Treasury notes, U.S. government and agency securities, obligations of states and political subdivisions, corporate debt securities and mortgage-related securities. The fair value

~~Following is a description of the Company’s valuation methodology and significant inputs used for each asset and liability measured at fair value on a recurring or nonrecurring basis.~~25

~~Securities~~NOTE 12 – ~~Marketable~~FAIR ~~equity~~VALUE securities and securities available-for-sale may be classified as Level 1 or Level 2 measurements within the fair value hierarchy. Level 1 securities include equity securities traded on a national exchange. The fair value measurements of Level 1 securities are based on the quoted market price of those securities. Level 2 securities include U.S. Treasury notes, U.S. government and agency securities, obligations of states and political subdivisions, corporate debt securities and mortgage-related securities. The fair value measurements of Level 2 securities are obtained from independent pricing services and are based on recent sales of similar securities and other observable market data.(continued)

~~Collateral~~measurements ~~dependent loans – The Company does not record loans at fair value on a recurring basis. However, individually evaluated loans are reported at the fair value~~ of ~~the~~Level ~~underlying~~2 ~~collateral,~~securities ~~less estimated costs to sell, if repayment is expected solely from the collateral. Independent appraisals~~ are obtained tofrom ~~determine~~independent ~~the~~pricing ~~fair~~services ~~values of underlying collateral,~~ and ~~generally~~are ~~utilize~~based ~~one~~on orrecent ~~more valuation methodologies, which typically include comparable~~ sales ~~and income approaches. Management routinely evaluates the fair value measurements~~ of ~~independent~~similar ~~appraisers~~securities and ~~adjusts~~other ~~those~~observable ~~valuations~~market ~~based on differences noted between actual selling prices of collateral and the most recently appraised value~~data. ~~Such adjustments are usually significant, which results in a Level 3 classification.~~

~~Rate~~Collateral ~~lock~~dependent ~~commitments~~loans – ~~Rate~~Loans ~~lock~~are ~~commitments~~not onmeasured ~~mortgage~~at ~~loans~~fair ~~that~~value ~~are~~on ~~intended~~a torecurring bebasis. ~~sold~~However, ~~are~~loans ~~considered~~determined to be ~~derivatives.~~collateral ~~Accordingly,~~dependent ~~such~~may ~~commitments,~~be ~~along~~measured ~~with~~at ~~any~~fair ~~related~~value ~~fees~~on ~~received~~a ~~from~~nonrecurring ~~potential~~basis. ~~borrowers,~~The ~~are recorded at~~ fair value inmeasurements ~~other~~of ~~assets~~collateral-dependent orloans ~~liabilities,~~are ~~with~~based ~~changes~~on inthe fair ~~value~~values ~~recorded~~of in the ~~net~~underlying ~~gain~~collateral. orIndependent ~~loss~~appraisals onare ~~sale~~obtained ofto ~~mortgage~~determine ~~loans.~~the ~~Fair~~fair ~~value~~values isof ~~based~~underlying oncollateral, ~~fees~~and ~~currently~~generally ~~charged~~utilize toone ~~enter~~or ~~into~~more ~~similar~~valuation ~~agreements~~methodologies, ~~for~~typically ~~fixed-rate~~includes ~~commitments~~comparable sales and ~~also~~income ~~considers~~approaches. ~~the~~Management ~~difference~~routinely ~~between~~evaluates ~~current~~the ~~levels~~fair value measurements of ~~interest~~independent ~~rates~~appraisers and ~~the~~adjusts ~~committed~~those ~~rates.~~valuations ~~While~~based ~~there~~on ~~are~~differences ~~Level~~noted 2between ~~and~~actual 3selling ~~inputs~~prices ~~used~~of incollateral ~~the~~and ~~valuation models,~~ the ~~Company~~most ~~has~~recently ~~determined~~appraised ~~that~~value. ~~one~~Such oradjustments ~~more~~are ofusually ~~the~~significant, ~~inputs~~which ~~significant~~results in ~~the~~a ~~valuation~~Level of3 ~~both~~classification. ofAll ~~the~~other ~~mortgage~~collateral ~~banking~~dependent ~~derivatives~~loan ~~fall~~measurements ~~within~~are ~~Level~~based 3on of the ~~fair~~present value ~~hierarchy.~~of ~~The~~expected ~~change~~future incash ~~fair~~flows ~~value~~discounted isat ~~recorded~~the ~~through~~applicable aneffective ~~adjustment~~interest torate ~~the~~and ~~statement~~are ofnot ~~operations,~~considered ~~within~~fair ~~mortgage~~value ~~banking income~~measurements.

Rate lock commitments—Rate lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Accordingly, such commitments, along with any related fees received from potential borrowers, are recorded at fair value in other assets or liabilities, with changes in fair value recorded in the net gain or loss on sale of mortgage loans. Fair value is based on fees currently charged to enter into similar agreements for fixed-rate commitments and also considers the difference between current levels of interest rates and the committed rates. While there are Level 2 and 3 inputs used in the valuation models, the Company has determined that one or more of the inputs significant in the valuation of both of the mortgage banking derivatives fall within Level 3 of the fair value hierarchy. The change in fair value is recorded through an adjustment to the statement of operations, within mortgage banking income.

Mortgage servicing rights – The Company utilizes an independent valuation from a third party which uses a discounted cash flow model to estimate the fair value of mortgage servicing rights. The model utilizes prepayment assumptions to project cash flows related to the mortgage servicing rights based upon the current interest rate environment, which is then discounted to estimate an expected fair value of the mortgage servicing rights. The model considers characteristics specific to the underlying mortgage portfolio, such as: contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges and costs to service. Given the significance of the unobservable inputs utilized in the estimation process, mortgage servicing rights are classified as Level 3 within the fair value hierarchy. The Company records the mortgage servicing rights at the lower of amortized cost or fair value.

Assets measured at fair value on a recurring basis are summarized below, along with the level of the fair value hierarchy of the inputs utilized to determine such fair value.

			Recurring Fair Value Measurements Using
	September 30,2023		Level 1		Level 2		Level 3
	March 31,2024		Level 1		Level 2		Level 3
	(in thousands)
Marketable equity securities	$	3,~~286~~976	$	3,~~286~~976	$	—	$	—
Securities available-for-sale:
U.S. Treasury notes		7,142		—		7,142		—
Obligations of states and political subdivisions		14,114		—		14,114		—
Obligations of states and political subdivisions		15,911		—		15,911		—
Government-sponsored mortgage-backed securities		88,177		—		88,177		—
Government-sponsored mortgage-backed securities		76,815		—		76,815		—
Asset-backed securities		3,355		—		3,355		—
Asset-backed securities		3,807		—		3,807		—
Certificates of deposit		742		—		742		—
Certificates of deposit		966		—		966		—
Total	$	110,364	$	3,976	$	106,388	$	—
Total	$	107,927	$	3,286	$	104,641	$	—


			Recurring Fair Value Measurements Using
	December 31, 2023		Level 1		Level 2		Level 3
	(in thousands)
Marketable equity securities	$	3,625	$	3,625	$	—	$	—
Securities available-for-sale:
Obligations of states and political subdivisions		14,231		—		14,231		—
Government-sponsored mortgage-backed securities		91,019		—		91,019		—
Asset-backed securities		3,572		—		3,572		—
Certificates of deposit		737		—		737		—
Total	$	113,184	$	3,625	$	109,559	$	—

~~NOTE 12 – FAIR VALUE MEASUREMENTS (continued)~~26

			Recurring Fair Value Measurements Using
	December 31,2022		Level 1		Level 2		Level 3
	(in thousands)
Marketable equity securities	$	2,924	$	2,924	$	—	$	—
Securities available-for-sale:
U.S. Treasury notes		26,627		—		26,627		—
Obligations of states and political subdivisions		17,656		—		17,656		—
Government-sponsored mortgage-backed securities		64,267		—		64,267		—
Asset-backed securities		4,517		—		4,517		—
Certificates of deposit		1,425		—		1,425		—
Total	$	117,416	$	2,924	$	114,492	$	—

NOTE 12 – FAIR VALUE (continued)

~~Individually evaluated collateral dependent loans are measured at fair value on a non-recurring basis.~~ There were no ~~individually evaluated~~ collateral dependent loans ~~with~~for which a specific valuation allowance was established as of ~~September~~March 3031, ~~2023~~2024 ~~and~~or December 31, ~~2022~~2023.

~~Mortgage servicing rights are measured at fair value on a non-recurring basis.~~ There was no impairment on mortgage servicing rights as of ~~September~~March 3031, ~~2023~~2024 ~~and~~or December 31, ~~2022~~2023.

The ~~carrying~~Company ~~values~~estimates fair value of all financial instruments regardless of whether such instruments are measured at fair value. The following methods and ~~estimated~~assumptions were used by the Company to estimate fair ~~values~~value of financial instruments ~~are~~not ~~presented~~previously ~~below:~~discussed.

	September 30, 2023
	Carrying Value		Level 1		Level 2		Level 3
	(in thousands)
Financial assets:
Cash and cash equivalents	$	26,603	$	26,603	$	—	$	—
Available-for-sale securities		104,641		—		104,641		—
Marketable equity securities		3,286		3,286		—		—
Loans held for sale		410		—		410		—
Loans, net		382,682		—		—		353,717
Rate lock commitments		6		—		—		6
Accrued interest receivable		1,349		1,349		—		—
Federal Home Loan Bank Stock		4,787		—		—		4,787
Cash value of life insurance		13,919		—		—		13,919
Financial liabilities:
Deposits		386,973		237,772		—		147,476
Advance payments by borrowers for taxes and insurance		10,264		10,264		—		—
Federal Home Loan Bank advances		78,499		—		—		74,667
Accrued interest payable		1,099		1,099		—		—

Cash and cash equivalents — Fair value approximates the carrying value.

32Loans held for sale — Fair value is based on commitments on hand from investors or prevailing market prices.

~~NOTE~~Loans — Fair 12value –of ~~FAIR~~variable ~~VALUE~~rate ~~MEASUREMENTS~~loans ~~(continued)~~that reprice frequently is based on carrying values. Fair value of other loans is estimated by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings. Fair value of collateral dependent and other non-performing loans is estimated using discounted expected future cash flows or the fair value of the underlying collateral, if applicable.

	December 31, 2022
	Carrying Value		Level 1		Level 2		Level 3
	(in thousands)
Financial assets:
Cash and cash equivalents	$	28,344	$	28,344	$	—	$	—
Available-for-sale securities		114,492		—		114,492		—
Marketable equity securities		2,924		2,924		—		—
Loans held for sale		125		—		125		—
Loans, net		359,574		—		—		335,987
Rate lock commitments		6		—		—		6
Accrued interest receivable		1,257		1,257		—		—
Federal Home Loan Bank Stock		3,429		—		—		3,429
Cash value of life insurance		14,316		—		—		14,316
Financial liabilities:
Deposits		387,721		308,162		—		78,418
Advance payments by borrowers for taxes and insurance		1,029		1,029		—		—
Federal Home Loan Bank advances		71,464		—		—		69,633
Accrued interest payable		291		291		—		—

FHLB stock — Fair value is the redeemable (carrying) value based on the redemption provisions of the Federal Home Loan Bank.

~~The~~Accrued ~~fair~~interest ~~value~~receivable ofand ~~a financial instrument is the current amount that would be exchanged between market participants, other than in a forced liquidation.~~ payable — Fair value isapproximates ~~best determined based on quoted market prices. However, in many instances, there are no quoted market prices for~~ the ~~Company’s~~carrying ~~various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present~~ value ~~or other valuation techniques~~. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Consequently, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

~~Fair~~Cash value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of alife ~~particular~~insurance — Fair ~~instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair~~ value ~~estimates~~is ~~are~~ based on ~~judgments~~reported ~~regarding~~values ~~future expected loss experience, current economic conditions, risk characteristics~~ of ~~various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters that could affect~~ the ~~estimates~~assets. ~~Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business.~~

Deposits ~~with~~and noadvance ~~stated~~payments ~~maturities~~by ~~are~~borrowers ~~defined~~for astaxes ~~having~~and ainsurance — Fair ~~fair~~ value ~~equivalent~~of todeposits ~~the~~with ~~amount~~no ~~payable~~stated onmaturity, such as demand. ~~This~~deposits, ~~prohibits~~savings, ~~adjusting~~and ~~the~~money ~~fair~~market ~~value~~accounts, ~~derived~~including ~~from~~advance ~~retaining~~payments ~~those~~by ~~deposits~~borrowers for antaxes ~~expected~~and ~~future period of time. This component~~insurance, ~~commonly~~by ~~referred to as a deposit base intangible~~definition, is ~~neither considered in~~ the ~~above~~amount ~~amounts,~~payable ~~nor~~on isdemand ~~it recorded as an intangible asset~~ on the ~~balance~~reporting ~~sheets~~date. InFair ~~addition,~~value ~~the~~of ~~tax~~fixed ~~ramifications~~rate ~~related~~time todeposits ~~the~~is ~~realization~~estimated ofusing ~~unrealized~~discounted ~~gains~~cash ~~and~~flows ~~losses~~applying ~~can~~interest ~~have~~rates acurrently ~~significant~~being ~~effect~~offered on ~~fair~~similar ~~value~~time ~~estimates and have not been considered in the estimates~~deposits.

33FHLB Advances — Fair value of fixed rate, fixed term borrowings is estimated by discounting future cash flows using the current rates at which similar borrowings would be made. Fair value of borrowings with variable rates or maturing within 90 days approximates the carrying value of those borrowings.

The carrying value and estimated fair value of financial instruments are presented below:


	March 31, 2024
	Carrying Value		Level 1		Level 2		Level 3
	(in thousands)
Financial assets:
Cash and cash equivalents	$	23,002	$	23,002	$	—	$	—
Available-for-sale securities		106,388		—		106,388		—
Marketable equity securities		3,976		3,976		—		—
Loans held for sale		826		—		826		—
Loans, net		393,441		—		—		369,403
Rate lock commitments		19		—		—		19
Accrued interest receivable		1,521		1,521		—		—
Federal Home Loan Bank Stock		4,564		—		—		4,564
Cash value of life insurance		14,138		—		—		14,138
Financial liabilities:
Deposits		399,285		231,822		—		166,738
Advance payments by borrowers for taxes and insurance		3,918		3,918		—		—
Federal Home Loan Bank advances		80,014		—		—		74,004
Accrued interest payable		1,239		1,239		—		—

NOTE 12 – FAIR VALUE (continued)


	December 31, 2023
	Carrying Value		Level 1		Level 2		Level 3
	(in thousands)
Financial assets:
Cash and cash equivalents	$	13,250	$	13,250	$	—	$	—
Available-for-sale securities		109,559		—		109,559		—
Marketable equity securities		3,625		3,625		—		—
Loans held for sale		704		—		704		—
Loans, net		394,834		—		—		368,133
Rate lock commitments		4		—		—		4
Accrued interest receivable		1,554		1,554		—		—
Federal Home Loan Bank Stock		4,164		—		—		4,164
Cash value of life insurance		14,027		—		—		14,027
Financial liabilities:
Deposits		403,683		242,535		—		160,303
Advance payments by borrowers for taxes and insurance		1,233		1,233		—		—
Federal Home Loan Bank advances		71,007		—		—		68,462
Accrued interest payable		1,106		1,106		—		—

Limitations — The fair value of a financial instrument is the current amount that would be exchanged between market participants, other than in a forced liquidation. Fair value is best determined based on quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Consequently, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters that could affect the estimates. Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business. Deposits with no stated maturities are defined as having a fair value equivalent to the amount payable on demand. This prohibits adjusting fair value derived from retaining those deposits for an expected future period of time. This component, commonly referred to as a deposit base intangible, is neither considered in the above amounts, nor is it recorded as an intangible asset on the balance sheets. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

NOTE 13 – EQUITY AND REGULATORY MATTERS

PyraMax Bank is subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities and certain off-balance-sheet items, as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about their components, risk weightings and other factors. The Company is exempt from consolidated capital requirements as those requirements do not apply to certain small bank holding companies with consolidated assets under $3 billion.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of Common Equity Tier 1, Tier 1 and Total capital to risk-weighted assets, and of Tier 1 capital to average assets. ~~The~~It is management's opinion that the Bank met all applicable capital adequacy requirements as of ~~September~~March 3031, ~~2023~~2024 and December 31, ~~2022~~2023.

As of ~~September~~March 3031, ~~2023~~2024, the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum regulatory capital ratios as set forth in the table below. There are no conditions or events since ~~September~~March 3031, ~~2023~~2024 that management believes have changed the capital category of the Bank.

The Bank’s actual and required capital amounts and ratios are presented below:

	September 30, 2023
	March 31, 2024
	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
PyraMax Bank
Leverage (Tier 1)	$	6263,~~191~~146		11.12	%	$	22,~~440~~520		4.0	%	$	28,~~051~~150		5.0	%
Risk-based:
Common Equity Tier 1		6263,~~191~~146		1514.08	%		1819,~~624~~173		4.5	%		2627,~~901~~694		6.5	%
Tier 1		6263,~~191~~146		1514.08	%		2425,~~831~~564		6.0	%		3334,~~104~~085		8.0	%
Total		6667,~~714~~843		1615.19	%		3334,~~109~~085		8.0	%		4142,~~386~~606		10.0	%

	December 31, 2022
	December 31, 2023
	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
PyraMax Bank
Leverage (Tier 1)	$	6563,~~497~~101		11.92	%	$	22,~~086~~574		4.0	%	$	2728,~~608~~217		5.0	%
Risk-based:
Common Equity Tier 1		6563,~~497~~101		1615.61	%		1718,~~711~~751		4.5	%		2527,~~583~~085		6.5	%
Tier 1		6563,~~497~~101		1615.61	%		2325,~~615~~002		6.0	%		3133,~~486~~336		8.0	%
Total		6867,~~700~~710		1716.52	%		3133,~~486~~336		8.0	%		3941,~~358~~670		10.0	%

On July 29, 2022, the Company adopted a stock repurchase program. On August 26, 2022, the Company received a non-objection letter from the Federal Reserve Bank of Chicago ("FRB") permitting the Company to repurchase 319,766 shares of its common stock, which represented 5% of the shares outstanding at the time ~~discussions were held with the FRB~~. The Company began purchasing shares on September 1, 2022 and as of June 7, 2023, the Company had repurchased all 319,766 shares for a total purchase price of $3.4 million.

On April 28, 2023, the Company adopted a second stock repurchase program. On June 9, 2023, the Company received a non-objection letter from the FRB permitting the Company to repurchase 621,522 shares of its common stock, which represented 10% of the shares outstanding at the time ~~discussions were held with the FRB~~. The Company began purchasing shares on June 15, 2023 and as of ~~September~~March 3031, ~~2023~~2024, the Company had repurchased 36140,~~562~~677 shares for a total purchase price of $~~270,000~~1.0 million.

3429

NOTE 14 – EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net (loss) income by the weighted average number of common shares outstanding, adjusted for weighted average unallocated ESOP shares, during the applicable period. Diluted earnings per share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method. Antidilutive options are disregarded in earnings per share calculations. For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024, ~~111~~56,~~145~~971 ~~and 35,507~~ shares, ~~respectively~~ were excluded, based on average share price, from the computation of diluted earnings per share ~~("EPS")~~ because the effect would be antidilutive. For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2022~~2023, ~~zero~~131,093 ~~and~~shares ~~182~~were excluded,~~457~~ based on average ~~shares,~~share ~~respectively~~price, ~~were excluded~~ from the computation of diluted ~~EPS~~earnings per share because the effect would be antidilutive.

Earnings (loss) per common share for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 and ~~2022~~2023 are presented in the following tables.

	Three months ended September 30,
	Three months ended March 31,
	2023			2022
	2024			2023
	(In thousands, except per share amounts)
Net (loss) income	$	(3,641	)	$	124
Net loss	$	(306	)	$	(361	)
Weighted shares outstanding for basic EPS
Weighted average shares outstanding		5,~~976~~899,~~208~~235			65,~~271~~986,~~370~~822
Less: Weighted average unallocated ESOP shares		~~441~~431,~~497~~582			~~461~~451,~~185~~333
Weighted average shares outstanding for basic EPS		5,~~534~~467,~~711~~653			5,~~810~~535,~~185~~489
Additional dilutive shares(1)		—			~~173,056~~—
Weighted average shares outstanding for dilutive EPS		5,~~534~~467,~~711~~653			5,~~983~~535,~~241~~489
Basic (loss) earnings per share	$	(0.66	)	$	0.02
Basic loss per share	$	(0.06	)	$	(0.07	)
Diluted (loss) earnings per share(1)	$	(0.66	)	$	0.02
Diluted loss per share(1)	$	(0.06	)	$	(0.07	)

	Nine months ended September 30,
	2023			2022
	(In thousands, except per share amounts)
Net (loss)	$	(4,510	)	$	(172	)
Weighted shares outstanding for basic EPS
Weighted average shares outstanding		5,984,897			6,278,914
Less: Weighted average unallocated ESOP shares		446,388			436,730
Weighted average shares outstanding for basic EPS		5,538,509			5,842,184

Filing Compare · 1895 Bancorp of Wisconsin, Inc. /MD/