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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 March 31, 2024

OR

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. 001-41597

 

 

First Seacoast Bancorp, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Maryland

 

92-0334805

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

633 Central Avenue, Dover, New Hampshire

 

03820

(Address of Principal Executive Offices)

 

(Zip Code)

 

(603)742-4680

(Registrant’s Telephone Number, Including Area Code)

 

 

Not Applicable

(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, $0.01 par value per share

 

FSEA

 

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 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.

 

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

As of May 3, 2024, there were 5,077,164 outstanding shares of the Registrant's common stock.


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

2

Item 1.

Consolidated Financial Statements

2

 

Consolidated Balance Sheets at March 31, 2024 (unaudited) and December 31, 2023

2

 

Consolidated Statements of (Loss) Income for the Three Months Ended March 31, 2024 and 2023 (unaudited)

3

 

Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended March 31, 2024 and 2023 (unaudited)

4

 

Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023 (unaudited)

5

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (unaudited)

6

 

Notes to Consolidated Financial Statements (unaudited)

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

34

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

42

Item 4.

Controls and Procedures

45

PART II.

OTHER INFORMATION

46

Item 1.

Legal Proceedings

46

Item 1A.

Risk Factors

46

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

46

Item 3.

Defaults Upon Senior Securities

46

Item 4.

Mine Safety Disclosures

46

Item 5.

Other Information

46

Item 6.

Exhibits

47

 

Signatures

48

 

1


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

FIRST SEACOAST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED Balance Sheets

(Dollars in thousands)

 

(Unaudited)
March 31,
2024

 

 

December 31,
2023

 

ASSETS

 

 

 

 

 

 

Cash and due from banks

 

$

6,713

 

 

$

6,069

 

Securities available-for-sale, at fair value

 

 

124,199

 

 

 

121,854

 

Federal Home Loan Bank stock

 

 

3,448

 

 

 

2,986

 

     Total loans

 

 

431,851

 

 

 

430,031

 

Less allowance for credit losses on loans

 

 

(3,420

)

 

 

(3,390

)

Net loans

 

 

428,431

 

 

 

426,641

 

Land, building and equipment, net

 

 

3,979

 

 

 

4,072

 

Bank-owned life insurance

 

 

4,683

 

 

 

4,663

 

Accrued interest receivable

 

 

2,368

 

 

 

2,294

 

Other assets

 

 

2,650

 

 

 

2,456

 

Total assets

 

$

576,471

 

 

$

571,035

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Non-interest bearing deposits

 

$

64,628

 

 

$

65,845

 

Interest bearing deposits

 

 

340,967

 

 

 

338,953

 

Total deposits

 

 

405,595

 

 

 

404,798

 

Advances from Federal Home Loan Bank

 

 

78,412

 

 

 

73,007

 

Advances from Federal Reserve Bank

 

 

20,000

 

 

 

20,000

 

Mortgagors’ tax escrow

 

 

2,079

 

 

 

640

 

Deferred compensation liability

 

 

2,117

 

 

 

2,071

 

Other liabilities

 

 

3,529

 

 

 

3,901

 

Total liabilities

 

 

511,732

 

 

 

504,417

 

Stockholders' Equity:

 

 

 

 

 

 

Preferred Stock, $.01 par value, 10,000,000 shares authorized, none issued

 

 

 

 

 

 

Common Stock, $.01 par value, 90,000,000 shares authorized; 5,192,612 issued and 5,077,164 outstanding at March 31, 2024 and December 31, 2023

 

 

52

 

 

 

52

 

Additional paid-in capital

 

 

52,698

 

 

 

52,642

 

Retained earnings

 

 

24,445

 

 

 

25,597

 

Accumulated other comprehensive loss

 

 

(6,867

)

 

 

(5,944

)

Treasury stock, at cost: 115,448 shares outstanding as of March 31, 2024 and December 31, 2023

 

 

(1,381

)

 

 

(1,381

)

Unearned stock compensation

 

 

(4,208

)

 

 

(4,348

)

Total stockholders' equity

 

 

64,739

 

 

 

66,618

 

Total liabilities and stockholders' equity

 

$

576,471

 

 

$

571,035

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

2


 

FIRST SEACOAST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF (LOSS) INCOME (UNAUDITED)

 

 

Three Months Ended
March 31,

 

(Dollars in thousands, except per share data)

 

2024

 

 

2023

 

Interest and dividend income:

 

 

 

 

 

 

Interest and fees on loans

 

$

4,710

 

 

$

3,808

 

Interest on debt securities:

 

 

 

 

 

 

Taxable

 

 

852

 

 

 

342

 

Non-taxable

 

 

440

 

 

 

422

 

Total interest on debt securities

 

 

1,292

 

 

 

764

 

Dividends

 

 

68

 

 

 

64

 

Total interest and dividend income

 

 

6,070

 

 

 

4,636

 

Interest expense:

 

 

 

 

 

 

Interest on deposits

 

 

2,030

 

 

 

586

 

Interest on borrowings

 

 

1,149

 

 

 

854

 

Total interest expense

 

 

3,179

 

 

 

1,440

 

Net interest and dividend income

 

 

2,891

 

 

 

3,196

 

(Release) provision for credit losses

 

 

(20

)

 

 

30

 

Net interest and dividend income after (release) provision for credit losses

 

 

2,911

 

 

 

3,166

 

Non-interest income:

 

 

 

 

 

 

Customer service fees

 

 

168

 

 

 

196

 

Gain on termination of interest rate swaps

 

 

 

 

 

849

 

Income from bank-owned life insurance

 

 

20

 

 

 

20

 

Loan servicing fee income

 

 

11

 

 

 

15

 

Investment services fees

 

 

89

 

 

 

71

 

Other income

 

 

9

 

 

 

10

 

Total non-interest income

 

 

297

 

 

 

1,161

 

Non-interest expense:

 

 

 

 

 

 

Salaries and employee benefits

 

 

2,314

 

 

 

2,364

 

Director compensation

 

 

105

 

 

 

100

 

Occupancy expense

 

 

179

 

 

 

186

 

Equipment expense

 

 

105

 

 

 

109

 

Marketing

 

 

81

 

 

 

89

 

Data processing

 

 

335

 

 

 

391

 

Deposit insurance fees

 

 

98

 

 

 

59

 

Professional fees and assessments

 

 

389

 

 

 

212

 

Debit card fees

 

 

30

 

 

 

49

 

Employee travel and education expenses

 

 

32

 

 

 

43

 

Other expense

 

 

330

 

 

 

221

 

Total non-interest expense

 

 

3,998

 

 

 

3,823

 

(Loss) income before income tax expense

 

 

(790

)

 

 

504

 

Income tax expense

 

 

362

 

 

 

40

 

Net (loss) income

 

$

(1,152

)

 

$

464

 

 

 

 

 

 

 

(Loss) earnings per share:

 

 

 

 

 

 

Basic

 

$

(0.24

)

 

$

0.10

 

Diluted

 

$

(0.24

)

 

$

0.10

 

 

 

 

 

 

 

Weighted Average Shares:

 

 

 

 

 

 

Basic

 

 

4,713,931

 

 

 

4,673,732

 

Diluted (1)

 

 

4,713,931

 

 

 

4,673,732

 

(1) Not adjusted for potentially dilutive shares for periods where a net loss was recognized. The three months ended March 31, 2024 excludes 66,027 stock-based awards that could potentially dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share because to do so would have been antidilutive for the periods presented.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3


 

FIRST SEACOAST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED Statements of COMPREHENSIVE (LoSS) INCOME (UNAUDITED)

 

 

Three Months Ended
March 31,

 

(Dollars in thousands)

 

2024

 

 

2023

 

Net (loss) income

 

$

(1,152

)

 

$

464

 

Other comprehensive (loss) income, net of income taxes:

 

 

 

 

 

 

       Securities available-for-sale:

 

 

 

 

 

 

            Unrealized holding (losses) gains on securities available-for-sale arising during
                     the period, net of income taxes of $(
381) and $523, respectively

 

 

(1,033

)

 

 

1,334

 

            Reclassification adjustment for net amortization of bond premiums
                     included in net (loss) income, net of income taxes of $
40 and $64, respectively

 

 

110

 

 

 

175

 

                              Total unrealized (loss) income on securities available-for-sale

 

 

(923

)

 

 

1,509

 

       Derivatives:

 

 

 

 

 

 

            Change in interest rate swaps, net of income taxes of $-0- and $(30), respectively

 

 

 

 

 

(82

)

            Reclassification adjustment for swap unwind gains and net interest expense on swaps
                     included in net (loss) income, net of income taxes of $-
0- and $(230), respectively

 

 

 

 

 

(619

)

                              Total change in interest rate swaps

 

 

 

 

 

(701

)

Other comprehensive (loss) income

 

 

(923

)

 

 

808

 

Comprehensive (loss) income

 

$

(2,075

)

 

$

1,272

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4


 

FIRST SEACOAST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED Statements of Changes in STOCKHOLDERS’ EQUITY (UNAUDITED)

 

(Dollars in thousands)

 

Shares of
Common
Stock

 

Common
Stock

 

Additional
Paid-in Capital

 

Retained Earnings

 

Accumulated
Other
Comprehensive
Loss

 

Treasury
Stock

 

Unearned Stock
Compensation

 

Total Stockholders' Equity

 

Balance December 31, 2022(1)

 

 

5,068,637

 

$

62

 

$

26,768

 

$

36,248

 

$

(9,727

)

$

(1,377

)

$

(2,637

)

$

49,337

 

Net income

 

 

 

 

 

 

 

 

464

 

 

 

 

 

 

 

 

464

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

808

 

 

 

 

 

 

808

 

Cumulative adjustment for change in accounting principle
(ASU 2016-13)

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

5

 

Reorganization: Conversion of First Seacoast Bancorp, Inc.
(net of costs of $
2.4 million)

 

 

6,598

 

 

(10

)

 

25,732

 

 

 

 

 

 

 

 

 

 

25,722

 

Purchase of 224,400 shares of common stock by the ESOP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,244

)

 

(2,244

)

Amortization of unearned stock compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

97

 

 

97

 

ESOP shares earned - 3,839 shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38

 

 

38

 

Balance March 31, 2023

 

 

5,075,235

 

$

52

 

$

52,500

 

$

36,717

 

$

(8,919

)

$

(1,377

)

$

(4,746

)

$

74,227

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2023

 

 

5,077,164

 

$

52

 

$

52,642

 

$

25,597

 

$

(5,944

)

$

(1,381

)

$

(4,348

)

$

66,618

 

Net loss

 

 

 

 

 

 

 

 

(1,152

)

 

 

 

 

 

 

 

(1,152

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

(923

)

 

 

 

 

 

(923

)

Amortization of unearned stock compensation

 

 

 

 

 

 

62

 

 

 

 

 

 

 

 

102

 

 

164

 

ESOP shares earned - 3,839 shares

 

 

 

 

 

 

(6

)

 

 

 

 

 

 

 

38

 

 

32

 

Balance March 31, 2024

 

 

5,077,164

 

$

52

 

$

52,698

 

$

24,445

 

$

(6,867

)

$

(1,381

)

$

(4,208

)

$

64,739

 

(1) Shares adjusted for conversion of the former First Seacoast Bancorp, MHC.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5


 

FIRST SEACOAST BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

Three Months Ended
March 31,

 

(Dollars in thousands)

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

Net (loss) income

$

(1,152

)

 

$

464

 

Adjustments to reconcile net (loss) income to net cash used by operating activities:

 

 

 

 

 

Cumulative change in accounting principle (ASU 2016-13)

 

 

 

 

5

 

ESOP expense

 

32

 

 

 

38

 

Stock-based compensation

 

164

 

 

 

97

 

Depreciation and amortization

 

112

 

 

 

118

 

Net amortization of bond premium

 

150

 

 

 

239

 

(Release) provision for credit losses

 

(20

)

 

 

30

 

Gain on termination of interest rate swaps

 

 

 

 

(849

)

Increase in bank-owned life insurance

 

(20

)

 

 

(20

)

Decrease (increase) in deferred costs on loans

 

36

 

 

 

(35

)

Deferred tax expense

 

342

 

 

 

18

 

(Increase) decrease in accrued interest receivable

 

(74

)

 

 

86

 

Decrease in other assets

 

636

 

 

 

618

 

Increase (decrease) in deferred compensation liability

 

46

 

 

 

(4

)

Decrease in other liabilities

 

(322

)

 

 

(1,166

)

Net cash used by operating activities

 

(70

)

 

 

(361

)

Cash flows from investing activities:

 

 

 

 

 

Proceeds from sales, maturities and principal payments received on securities available-for-sale

 

1,258

 

 

 

1,038

 

Purchase of securities available-for-sale

 

(5,166

)

 

 

(1,146

)

Purchase of property and equipment

 

(11

)

 

 

(75

)

Loan purchases

 

(774

)

 

 

(304

)

Loan originations and principal collections, net

 

(1,772

)

 

 

(4,067

)

Net (purchase) redemption of Federal Home Loan Bank stock

 

(462

)

 

 

1,108

 

Proceeds from sales of interest bearing time deposits with other banks

 

 

 

 

498

 

Proceeds from unwind of interest rate swaps

 

 

 

 

849

 

Net cash used by investing activities

 

(6,927

)

 

 

(2,099

)

Cash flows from financing activities:

 

 

 

 

 

Net (decrease) increase in NOW, demand deposits, money market and savings accounts

 

(1,757

)

 

 

28,198

 

Net increase in time deposits

 

2,554

 

 

 

4,745

 

Increase in mortgagors’ escrow accounts

 

1,439

 

 

 

1,142

 

Proceeds from sale of common stock, net

 

 

 

 

25,622

 

Common stock purchased by ESOP

 

 

 

 

(2,244

)

Return of capital from conversion of First Seacoast Bancorp, Inc.

 

 

 

 

100

 

Net proceeds (payments) from short-term FHLB advances

 

5,405

 

 

 

(41,730

)

Payments on long-term FHLB advances

 

 

 

 

(5,000

)

Net cash provided by financing activities

 

7,641

 

 

 

10,833

 

Net change in cash and cash equivalents

 

644

 

 

 

8,373

 

Cash and cash equivalents at beginning of period

 

6,069

 

 

 

8,250

 

Cash and cash equivalents at end of period

$

6,713

 

 

$

16,623

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

Cash activities:

 

 

 

 

 

Cash paid for interest

$

2,916

 

 

$

1,459

 

Cash paid for income taxes

 

 

 

 

1

 

Noncash activities:

 

 

 

 

 

Effect of change in fair value of securities available-for-sale:

 

 

 

 

 

Securities available-for-sale

 

(1,264

)

 

 

2,096

 

Deferred taxes

 

341

 

 

 

(587

)

Other comprehensive (loss) income

 

(923

)

 

 

1,509

 

Cumulative fair value hedging adjustment - loans

 

(690

)

 

 

 

Cumulative fair value hedging adjustment - securities available-for-sale

 

(149

)

 

 

 

Effect of change in fair value of interest rate swaps:

 

 

 

 

 

Interest rate swaps

 

 

 

 

(961

)

Deferred taxes

 

 

 

 

260

 

Other comprehensive loss

 

 

 

 

(701

)

Effect of the adoption of ASU 2016-13:

 

 

 

 

 

Allowance for credit losses on loans

 

 

 

 

(295

)

Other liabilities

 

 

 

 

290

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

6


 

FIRST SEACOAST BANCORP, INC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.
Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements include the accounts of First Seacoast Bancorp, Inc. (the “Company”), its wholly-owned subsidiary, First Seacoast Bank (the “Bank”), and the Bank’s wholly-owned subsidiary, FSB Service Corporation, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company were prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim consolidated financial information, general practices within the banking industry and with instructions for Form 10-Q and Regulation S-X. Accordingly, these interim financial statements do not include all the information or footnotes required by U.S. GAAP for annual financial statements. However, in the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of these consolidated financial statements have been included. The results of operations for the interim periods disclosed herein are not necessarily indicative of the results which may be expected for the entire year. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the U.S. Securities and Exchange Commission (“SEC”) on March 29, 2024.

Corporate Structure

On January 19, 2023, the conversion of First Seacoast Bancorp, MHC from mutual to stock form and the related stock offering by First Seacoast Bancorp, Inc., the new holding company for First Seacoast Bank, was completed. As a result, both First Seacoast Bancorp, MHC and First Seacoast Bancorp ceased to exist. First Seacoast Bancorp, Inc.’s common stock began trading on the Nasdaq Capital Market under the trading symbol “FSEA” on January 20, 2023. As a result of the subscription offering, the community offering and the syndicated community offering, First Seacoast Bancorp, Inc. sold a total of 2,805,000 shares of its common stock at a price of $10.00 per share, which includes 224,400 shares sold to First Seacoast Bank’s Employee Stock Ownership Plan. As part of the conversion transaction, each outstanding share of First Seacoast Bancorp (a federal corporation) common stock owned by the public stockholders of First Seacoast Bancorp (a federal corporation) (stockholders other than First Seacoast Bancorp, MHC) as of the closing date was converted into shares of First Seacoast Bancorp, Inc. common stock based on an exchange ratio of 0.8358 shares of First Seacoast Bancorp, Inc. common stock for each share of First Seacoast Bancorp (a federal corporation) common stock.

The Bank offers a full range of banking and wealth management services to its customers. The Bank focuses on four core services that center around customer needs. The core services include residential lending, commercial banking, personal banking and wealth management. The Bank offers a full range of commercial and consumer banking services through its network of five full-service branch locations.

The Bank is engaged principally in the business of attracting deposits from the public and investing those funds in various types of loans, including residential and commercial real estate loans, and a variety of commercial and consumer loans. The Bank also invests its deposits and borrowed funds in investment securities. Deposits at the Bank are insured by the Federal Deposit Insurance Corporation (“FDIC”) for the maximum amount permitted by law.

The Company has one reportable segment, “Banking Services.” All of the Company’s activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Company supports the others. For example, lending is dependent upon the ability of the Company to fund itself with deposits and other borrowings and manage interest rate and credit risk. Accordingly, all significant operating decisions are based upon analysis of the Company as one segment or unit.

Investment management services are offered through FSB Wealth Management. FSB Wealth Management is a division of First Seacoast Bank. The division currently consists of two financial advisors who are located in Dover, New Hampshire. FSB Wealth Management provides access to non-FDIC insured products that include retirement planning, portfolio management, investment and insurance strategies, business retirement plans and college planning to individuals throughout our primary market area. These investments and services are offered through a third-party registered broker-dealer and investment advisor. FSB Wealth Management receives fees from advisory services and commissions on individual investment and insurance products purchased by clients. The assets held for wealth management customers are not assets of the Company and, accordingly, are not reflected in the Company’s consolidated balance sheets.

7


 

On August 17, 2021, the Bank entered into a definitive agreement with an investment advisory and wealth management firm (the “seller”) to purchase certain of its client accounts and client relationships for a final adjusted purchase price of $324,000. The client accounts purchased are recorded as a customer list intangible asset. Identifiable intangible assets that are subject to amortization will be reviewed for impairment, at least annually, based on their fair value. Any impairment will be recognized as a charge to earnings and the adjusted carrying amount of the intangible asset will become its new accounting basis. The remaining useful life of the intangible asset will also be evaluated each reporting period to determine whether events and circumstances warrant a revision to the remaining period of amortization. The Company is amortizing the customer list intangible on a straight-line basis over a ten-year period. During the three months ended March 31, 2024 and 2023, $8,000 and $9,000 of amortization expense was recorded in other expense, respectively. Customer list intangible balances included in other assets are $239,000 and $247,000 as of March 31, 2024 and December 31, 2023, respectively.

Recent Accounting Pronouncements Yet To Be Adopted

As an “emerging growth company,” as defined in Title 1 of Jumpstart Our Business Startups (JOBS) Act, the Company has elected to use the extended transition period to delay adoption of new or reissued accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. As a result, the Company’s consolidated financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards without an extended transition period. As of March 31, 2024, there was no significant difference in the comparability of the Company’s consolidated financial statements as a result of this extended transition period. The Company’s status as an “emerging growth company” will end on the earlier of: (i) the last day of the fiscal year of the Company during which it had total annual gross revenues of $1.235 billion (as adjusted for inflation) or more; (ii) the last day of the fiscal year of the Company following the fifth anniversary of the effective date of the Company’s initial public offering; (which will be December 31, 2024 for the Company) (iii) the date on which the Company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which the Company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates).

The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on the Company’s consolidated financial statements.

In March 2024, the FASB issued ASU 2024-02, “Codification Improvements,” amends the Codification to remove references to various concepts statements and impacts a variety of topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities. ASU 2024-02 is effective January 1, 2025 and is not expected to have a material impact on the Company's consolidated financial statements.

8


 

2.
Securities Available-for-Sale

The amortized cost and fair value of securities available-for-sale, and the corresponding amounts of gross unrealized gains and losses for which an allowance for credit losses has not been recorded, are as follows as of March 31, 2024 and December 31, 2023:

 

 

March 31, 2024

 

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

 

 

(Dollars in thousands)

 

U.S. Government-sponsored enterprises obligations

 

$

1,662

 

 

$

 

 

$

(282

)

 

$

1,380

 

U.S. Government agency small business administration
   pools guaranteed by SBA

 

 

15,659

 

 

 

18

 

 

 

(895

)

 

 

14,782

 

Collateralized mortgage obligations issued by the
   FHLMC, FNMA and GNMA

 

 

6,012

 

 

 

 

 

 

(538

)

 

 

5,474

 

Residential mortgage-backed securities

 

 

42,743

 

 

 

534

 

 

 

(3,954

)

 

 

39,323

 

Municipal bonds

 

 

56,926

 

 

 

787

 

 

 

(4,219

)

 

 

53,494

 

Corporate debt

 

 

500

 

 

 

 

 

 

(7

)

 

 

493

 

Corporate subordinated debt

 

 

10,095

 

 

 

82

 

 

 

(924

)

 

 

9,253

 

 

 

$

133,597

 

 

$

1,421

 

 

$

(10,819

)

 

$

124,199

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

 

 

(Dollars in thousands)

 

U.S. Government-sponsored enterprises obligations

 

$

1,668

 

 

$

 

 

$

(270

)

 

$

1,398

 

U.S. Government agency small business administration
   pools guaranteed by SBA

 

 

16,410

 

 

 

36

 

 

 

(863

)

 

 

15,583

 

Collateralized mortgage obligations issued by the
   FHLMC, FNMA and GNMA

 

 

2,958

 

 

 

 

 

 

(484

)

 

 

2,474

 

Residential mortgage-backed securities

 

 

41,186

 

 

 

653

 

 

 

(3,618

)

 

 

38,221

 

Municipal bonds

 

 

57,192

 

 

 

1,087

 

 

 

(3,587

)

 

 

54,692

 

Corporate debt

 

 

500

 

 

 

 

 

 

(8

)

 

 

492

 

Corporate subordinated debt

 

 

10,074

 

 

 

3

 

 

 

(1,083

)

 

 

8,994

 

 

 

$

129,988

 

 

$

1,779

 

 

$

(9,913

)

 

$

121,854

 

The amortized cost and fair values of securities available-for-sale at March 31, 2024 by contractual maturity are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

 

March 31, 2024

 

 

 

Amortized
Cost

 

 

Fair Value

 

 

 

(Dollars in thousands)

 

Due in one year or less

 

$

1,784

 

 

$

1,789

 

Due after one year through five years

 

 

500

 

 

 

493

 

Due after five years through ten years

 

 

10,917

 

 

 

9,734

 

Due after ten years

 

 

55,982

 

 

 

52,604

 

Total U.S. Government-sponsored enterprises obligations,
   municipal bonds, corporate debt and corporate subordinated debt

 

 

69,183

 

 

 

64,620

 

U.S. Government agency small business pools guaranteed
   by SBA
(1)

 

 

15,659

 

 

 

14,782

 

Collateralized mortgage obligations issued by the FHLMC,
   FNMA, and GNMA
(1)

 

 

6,012

 

 

 

5,474

 

Residential mortgage-backed securities(1)

 

 

42,743

 

 

 

39,323

 

Total

 

$

133,597

 

 

$

124,199

 

(1) Actual maturities for these debt securities are dependent upon the interest rate environment and prepayments on the underlying loans.

9


 

The following is a summary of gross unrealized losses and fair value for those investments with unrealized losses for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position, at