0001410578-24-001784 | 10-Q | XBRL Viewer

September 30,

December 31,

Unused lines of credit

Standby letters of credit

Deposits	9 Months Ended
Sep. 30, 2024
Deposits
Deposits	Note 7—Deposits Time deposits, included in interest-bearing deposits in the condensed consolidated balance sheets, were $972,171 and $873,220 at September 30, 2024 and December 31, 2023, respectively. The Company did not have any brokered deposits at September 30, 2024 and December 31, 2023. Time deposits that meet or exceed the FDIC insurance limit of $250 were $306,041 and $255,222 at September 30, 2024 and December 31, 2023, respectively.

Deposits

9 Months Ended

Sep. 30, 2024

Note 7—Deposits

Time deposits, included in interest-bearing deposits in the condensed consolidated balance sheets, were $972,171 and $873,220 at September 30, 2024 and December 31, 2023, respectively. The Company did not have any brokered deposits at September 30, 2024 and December 31, 2023.

Time deposits that meet or exceed the FDIC insurance limit of $250 were $306,041 and $255,222 at September 30, 2024 and December 31, 2023, respectively.

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (143)	$ 1,316	$ (197)	$ 314	$ 2,539	$ (503)	$ 976	$ 2,350

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

Stock-based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Employee Stock Option
Stock-based Compensation
Maximum term of stock awards granted			10 years
Weighted Average Remaining Contractual Term
Stock-based compensation costs recognized				$ 1
Restricted Stock
Stock-based Compensation
Number of share instruments issued			499,888	1,195,838
Restricted Stock \| Key employee
Stock-based Compensation
Number of share instruments issued			439,888	1,135,838
Weighted average grant-date fair value			$ 5.10	$ 5.10
Restricted Stock \| Key employee \| Chief Executive Officer
Stock-based Compensation
Vesting period				18 months
Restricted Stock \| Non-employee directors
Stock-based Compensation
Number of share instruments issued			60,000	60,000
Weighted average grant-date fair value			$ 5.77	$ 6.09
2017 Omnibus Equity Incentive Plan \| Employee Stock Option
Stock-based Compensation
Percentage of awards vesting			50.00%
Number of Shares
Outstanding at January 1, 2024			340,395
Outstanding at September 30, 2024	340,395		340,395		340,395
Exercisable at September 30, 2024	340,395		340,395
Weighted Average Exercise Price
Outstanding at January 1, 2024			$ 4.96
Outstanding at September 30, 2024	$ 4.96		4.96		$ 4.96
Exercisable at September 30, 2024	$ 4.96		$ 4.96
Weighted Average Remaining Contractual Term
Weighted Average Remaining Contractual Term (Years)					6 years 2 months 23 days
Weighted Average Remaining Contractual Term, Exercisable			5 years 5 months 23 days
Aggregate Intrinsic Value	$ 165		$ 165		$ 531
Aggregate Intrinsic Value Exercisable	165		$ 165
2017 Omnibus Equity Incentive Plan \| Stock Options granted prior to 2020 \| Awards vesting at the end of the third year
Stock-based Compensation
Percentage of awards vesting			50.00%
2017 Omnibus Equity Incentive Plan \| Stock Options granted prior to 2020 \| Awards vesting at the end of the fourth year
Stock-based Compensation
Percentage of awards vesting			50.00%
2017 Omnibus Equity Incentive Plan \| Stock Options granted starting in 2020
Stock-based Compensation
Percentage of awards vesting			33.33%
2017 Omnibus Equity Incentive Plan \| Stock Options granted starting in 2020 \| Awards vesting on the first anniversary of the grant date
Stock-based Compensation
Vesting period			3 years
2017 Omnibus Equity Incentive Plan \| Stock Options granted starting in 2020 \| Awards vesting at the end of the second year
Stock-based Compensation
Percentage of awards vesting			33.33%
2017 Omnibus Equity Incentive Plan \| Restricted Stock
Stock-based Compensation
Vesting period			3 years
Weighted Average Remaining Contractual Term
Shares withheld in order to pay employee tax liabilities on vested awards			155,105	41,098
Stock-based compensation costs recognized	850	$ 786	$ 2,376	$ 1,308
Employee tax liability associated with restricted stock awards the vested during the period			826	235
Total unrecognized compensation cost - restricted stock awards	$ 4,937		$ 4,937
Unrecognized compensation cost related to nonvested awards, expected to be recognized over a weighted-average period			2 years 8 months 12 days
Number of Shares
Nonvested at January 1, 2024			1,364,570
Granted			499,888
Vested			(509,678)
Forfeited			(101,211)
Nonvested at September 30, 2024	1,253,569		1,253,569		1,364,570
Weighted Average Grant Date Fair Value
Nonvested at January 1, 2024			$ 5.27
Granted			5.18
Vested			5.41
Forfeited			5.21
Nonvested at September 30, 2024	$ 5.19		$ 5.19		$ 5.27
Grant Date Fair Value of Restricted Stock that Vested During the year
Fair value of restricted stock awards vested			$ 2,743	$ 879
2017 Omnibus Equity Incentive Plan \| Restricted Stock \| Awards vesting on the first anniversary of the grant date
Stock-based Compensation
Percentage of awards vesting			33.33%
2017 Omnibus Equity Incentive Plan \| Restricted Stock \| Awards vesting at the end of the second year
Stock-based Compensation
Percentage of awards vesting			33.33%
2017 Omnibus Equity Incentive Plan \| Restricted Stock \| Awards vesting at the end of the third year
Stock-based Compensation
Percentage of awards vesting			33.33%
2020 Omnibus Equity Incentive Plan
Stock-based Compensation
Number of shares authorized	3,979,661		3,979,661
Number of shares available for future grants	1,799,970		1,799,970
2020 Omnibus Equity Incentive Plan \| Restricted Stock \| Key employee \| Chief Executive Officer
Stock-based Compensation
Percentage of awards vesting				33.33%
2020 Omnibus Equity Incentive Plan \| Restricted Stock \| Key employee \| Awards vesting on the first anniversary of the grant date \| Executive Officer
Stock-based Compensation
Percentage of awards vesting			33.33%
2020 Omnibus Equity Incentive Plan \| Restricted Stock \| Key employee \| Awards vesting at the end of the second year \| Executive Officer
Stock-based Compensation
Percentage of awards vesting			33.33%
2020 Omnibus Equity Incentive Plan \| Restricted Stock \| Key employee \| Awards vesting at the end of the third year \| Executive Officer
Stock-based Compensation
Percentage of awards vesting			33.33%

Fair Value - Assets Measured at Fair Value on a Nonrecurring Basis and Fair Value of Financial Instruments (Details) $ in Thousands	Sep. 30, 2024 USD ($)	Dec. 31, 2023 USD ($)
Financial Assets
Interest-bearing time deposits with other banks	$ 4,983	$ 5,226
Nonrecurring \| Mortgage servicing rights
Fair Value
Assets measured at fair value on a nonrecurring basis	363	576
Nonrecurring \| Mortgage servicing rights \| Level 3
Fair Value
Assets measured at fair value on a nonrecurring basis	363	576
Nonrecurring \| Mortgage servicing rights \| Level 3 \| Discounted cash flow
Fair Value
Assets measured at fair value on a nonrecurring basis	$ 363	$ 576
Nonrecurring \| Mortgage servicing rights \| Maximum \| Level 3 \| Discounted cash flow \| Discount rate
Fair Value
Assets measured at fair value, measurement input	0.125	0.125
Nonrecurring \| Mortgage servicing rights \| Maximum \| Level 3 \| Discounted cash flow \| Prepayment speed
Fair Value
Assets measured at fair value, measurement input	0.228	0.227
Nonrecurring \| Mortgage servicing rights \| Maximum \| Level 3 \| Discounted cash flow \| Default rate
Fair Value
Assets measured at fair value, measurement input	0.002	0.002
Nonrecurring \| Mortgage servicing rights \| Minimum \| Level 3 \| Discounted cash flow \| Discount rate
Fair Value
Assets measured at fair value, measurement input	0.100	0.100
Nonrecurring \| Mortgage servicing rights \| Minimum \| Level 3 \| Discounted cash flow \| Prepayment speed
Fair Value
Assets measured at fair value, measurement input	0.069	0.069
Nonrecurring \| Mortgage servicing rights \| Minimum \| Level 3 \| Discounted cash flow \| Default rate
Fair Value
Assets measured at fair value, measurement input	0.001	0.001
Nonrecurring \| Mortgage servicing rights \| Weighted Average \| Level 3 \| Discounted cash flow \| Discount rate
Fair Value
Assets measured at fair value, measurement input	0.120	0.122
Nonrecurring \| Mortgage servicing rights \| Weighted Average \| Level 3 \| Discounted cash flow \| Prepayment speed
Fair Value
Assets measured at fair value, measurement input	0.173	0.185
Nonrecurring \| Mortgage servicing rights \| Weighted Average \| Level 3 \| Discounted cash flow \| Default rate
Fair Value
Assets measured at fair value, measurement input	0.002	0.001
Carrying Amount
Financial Assets
Cash and due from banks	$ 710,372	$ 577,967
Interest-bearing time deposits with other banks	4,983	5,226
Loans, net	1,198,767	1,319,568
Financial Liabilities
Time deposits	972,171	873,220
Federal Home Loan Bank borrowings		50,000
Fair value
Financial Assets
Cash and due from banks	710,372	577,967
Interest-bearing time deposits with other banks	4,983	5,226
Loans, net	1,204,106	1,313,282
Financial Liabilities
Time deposits	976,670	874,274
Federal Home Loan Bank borrowings		49,370
Fair value \| Level 1
Financial Assets
Cash and due from banks	710,372	577,967
Interest-bearing time deposits with other banks	4,983	5,226
Fair value \| Level 2
Financial Liabilities
Time deposits	976,670	874,274
Federal Home Loan Bank borrowings		49,370
Fair value \| Level 3
Financial Assets
Loans, net	$ 1,204,106	$ 1,313,282

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
Unrealized gain (loss) on investment securities, arising during the period, net of tax effect	$ 1,998	$ (1,014)	$ 1,655	$ (563)
Reclassification adjustment for gain (loss) included in net income (loss) on sale of investment securities, before tax				2
Reclassification adjustment for gain (loss) included in net gain (loss) on sale of investment securities, tax effect				$ 1

Income (Loss) Per Share

9 Months Ended

Sep. 30, 2024

Income (Loss) Per Share

Income (Loss) Per Share

Note 13—Income (Loss) Per Share

Basic income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted income per common share further includes any common shares available to be issued upon the exercise of outstanding stock options and restricted stock awards if such inclusions would be dilutive. The Company determines the potentially dilutive common shares using the treasury stock method. In periods of a net loss, basic and diluted per share information are the same.

The following table presents the computation of income (loss) per share, basic and diluted:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Numerator:
Net income (loss)	$	(143)	$	314	$	976	$	2,350

Denominator:
Weighted average common shares outstanding, basic		51,059,012		50,699,967		50,941,371		50,606,566
Weighted average effect of potentially dilutive common shares:
Stock options		—		95,066		68,873		89,380
Restricted stock		—		274,650		334,664		53,933
Weighted average common shares outstanding, diluted		51,059,012		51,069,683		51,344,908		50,749,879

Income (loss) per share, basic and diluted	$	(0.00)	$	0.01	$	0.02	$	0.05

The weighted average effect of certain stock options and nonvested restricted stock that were excluded from the computation of weighted average diluted shares outstanding, as inclusion would be anti-dilutive, are summarized as follows:


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2024	2023	2024	2023
Stock options	79,494	43,031	40,395	45,987
Restricted stock	284,000	23,566	421,208	510,472
Total	363,494	66,597	461,603	556,459

Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended
	Apr. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Shareholders' Equity
Issuance of shares of common stock to defined contribution retirement plan		$ 797	$ 1,028
Common Stock
Shareholders' Equity
Issuance of shares of common stock to defined contribution retirement plan (in shares)		397,632	184,928
Issuance of shares of common stock to defined contribution retirement plan			$ 1,028
Common Stock \| Annual matching contribution
Shareholders' Equity
Issuance of shares of common stock to defined contribution retirement plan (in shares)	184,928
Issuance of shares of common stock to defined contribution retirement plan	$ 1,028
Issue price per share	$ 5.56

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 2: http://www.xbrl.org/2003/role/recommendedDisclosureRef
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Reference 17: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479886/946-10-S99-3

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Section S99
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479886/946-10-S99-3

+ Details

Fair Value (Tables)

9 Months Ended

Sep. 30, 2024

Fair Value

Schedule of assets measured at fair value on a recurring basis categorized by level of inputs


			Fair Value Measurements
			at September 30, 2024
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Available for sale debt securities:
U.S. Treasury and Agency securities	$	182,536	$	77,548	$	104,988	$	—
Mortgage-backed securities		28,707		—		28,707		—
Collateralized mortgage obligations		225,023		—		225,023		—
Collateralized debt obligations		143		—		—		143
Equity securities		4,551		4,551		—		—


			Fair Value Measurements
			at December 31, 2023
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Available for sale debt securities:
U.S. Treasury and Agency securities	$	248,988	$	219,582	$	29,406	$	—
Mortgage-backed securities		31,927		—		31,927		—
Collateralized mortgage obligations		138,157		—		138,157		—
Collateralized debt obligations		141		—		—		141
Equity securities		4,457		4,457		—		—

Schedule of reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs


	Fair Value
	Measurements Using Significant
	Unobservable Inputs (Level 3)
	Collateralized Debt Obligations
	Nine Months Ended September 30,
	2024		2023
Balance of recurring Level 3 assets at beginning of period	$	141	$	147
Total gains or losses (realized/unrealized):
Included in other comprehensive income (loss)		7		(1)
Principal maturities/settlements		(5)		(4)
Balance of recurring Level 3 assets at end of period	$	143	$	142

Schedule of assets measured at fair value on a nonrecurring basis categorized by level of inputs

Fair Value Measurements

at September 30, 2024

Quoted Prices in

Significant Other

Significant

Active Markets for

Observable

Unobservable

Fair

Identical Assets

Inputs

Value

(Level 1)

(Level 2)

(Level 3)

Mortgage servicing rights

363

—

363

Fair Value Measurements

at December 31, 2023

Quoted Prices in

Significant Other

Significant

Active Markets for

Observable

Unobservable

Fair

Identical Assets

Inputs

Value

(Level 1)

(Level 2)

(Level 3)

Mortgage servicing rights

576

—

576

Schedule of quantitative information about nonrecurring Level 3 fair value measurements


	Quantitative Information about Level 3 Fair Value Measurements at September 30, 2024
					Range
	Fair Value		Valuation Technique	Unobservable Inputs	(Weighted Average) ⁽¹⁾
Mortgage servicing rights	$	363	Discounted cash flow	Discount rate	10.0% - 12.5%
					(12.0)%
				Prepayment speed	6.9% - 22.8%
					(17.3)%
				Default rate	0.1% - 0.2%
					(0.2)%


	Quantitative Information about Level 3 Fair Value Measurements at December 31, 2023
					Range
	Fair Value		Valuation Technique	Unobservable Inputs	(Weighted Average) ⁽¹⁾
Mortgage servicing rights	$	576	Discounted cash flow	Discount rate	10.0% - 12.5%
					(12.2)%
				Prepayment speed	6.9% - 22.7%
					(18.5)%
				Default rate	0.1% - 0.2%
					(0.1)%

(1)	The range and weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment.

Schedule of carrying amounts and estimated fair values of financial instruments not carried at fair value


	Fair Value Measurements
	at September 30, 2024
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and due from banks	$	710,372	$	710,372	$	710,372	$	—	$	—
Interest-bearing time deposits with other banks		4,983		4,983		4,983		—		—
Loans, net		1,198,767		1,204,106		—		—		1,204,106

Financial Liabilities
Time deposits		972,171		976,670		—		976,670		—


	Fair Value Measurements
	at December 31, 2023
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and due from banks	$	577,967	$	577,967	$	577,967	$	—	$	—
Interest-bearing time deposits with other banks		5,226		5,226		5,226		—		—
Loans, net		1,319,568		1,313,282		—		—		1,313,282

Financial Liabilities
Time deposits		873,220		874,274		—		874,274		—
Federal Home Loan Bank borrowings		50,000		49,370		—		49,370		—

Commitments and Contingencies - Mortgage Repurchase Liability Activity and Balances (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Mortgage repurchase liability:
Balance, beginning of period	$ 750	$ 809
Net recovery	(150)	(19)
Balance, end of period	$ 600	$ 790

Stock-based Compensation

9 Months Ended

Sep. 30, 2024

Stock-based Compensation

Stock-based Compensation

Note 10—Stock-based Compensation

The board of directors established the 2020 Omnibus Equity Incentive Plan (the “2020 Plan”), which was approved by the shareholders in December 2020. The 2020 Plan provides for the grant of up to 3,979,661 shares of common stock for stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance shares for issuance to employees, consultants and the board of directors of the Company, of which 1,799,970 shares were available for future grants as of September 30, 2024. The stock-based awards are issued at no less than the market price on the date the awards are granted.

Previously, the board of directors had established a 2017 Omnibus Equity Incentive Plan (the “2017 Plan”) which was approved by the shareholders. The stock-based awards were issued at no less than the market price on the date the awards were granted. Due to the adoption of the 2020 Plan, no further grants will be issued under the 2017 Plan.

Stock Options

Stock option awards are granted with an exercise price equal to the market price of the Company’s common stock on the date of grant. Beginning with grants in 2020, stock option awards vest ratably over three years (one-third per year) after the date of grant, while stock option awards granted prior to 2020 generally vest in installments of 50% in each of the third and fourth year after the date of grant. All stock option awards have a maximum term of ten years.

A summary of the Company’s stock option activity as of and for the nine months ended September 30, 2024 is as follows:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number	Exercise		Contractual	Intrinsic
	of Shares	Price		Term	Value
				(Years)
Outstanding at January 1, 2024	340,395	$	4.96	6.23	$	531
Granted	—
Exercised	—
Forfeited/expired	—
Outstanding and exercisable at September 30, 2024	340,395	$	4.96	5.48	$	165

The Company recorded stock-based compensation expense associated with stock options of $1 for the nine months ended September 30, 2023.

Restricted Stock Awards

Restricted stock awards are issued to independent directors and certain key employees. The restricted stock awards generally vest one-third per year over three years after the date of grant, unless the Executive Compensation Committee establishes a different vesting schedule for specific grants. The value of a restricted stock award is based on the market value of the Company’s common stock at the date of grant reduced by the present value of dividends per share expected to be paid during the period the shares are not vested. Upon a change in control, as defined in the 2020 Plan, the outstanding restricted stock awards will immediately vest.

During the nine months ended September 30, 2024, the board of directors approved the issuance of 499,888 shares of restricted stock, of which 60,000 were awarded to independent directors with a weighted average grant-date fair value of $5.77 and 439,888 shares were awarded to key employees with a weighted average grant-date fair value of $5.10. During the nine months ended September 30, 2023, the board of directors approved the issuance of 1,195,838 shares of restricted stock, of which 60,000 were awarded to independent directors with a weighted average grant-date fair value of $6.09 and 1,135,838 shares were awarded to key employees with a weighted average grant-date fair value of $5.10. The restricted stock awards granted to key employees for the nine months ended September 30, 2024 and 2023 include awards granted to certain executive officers that vest in one-third increments on the third, fourth and fifth anniversary date of the grant. Additionally, the restricted stock awards granted to key employees for the nine months ended September 30, 2023, include an award granted to the chief executive officer that vests in one-third increments every six months over an eighteen - month period.

During the nine months ended September 30, 2024 and 2023, the Company withheld 155,105 shares and 41,098 shares, respectively, of common stock representing a portion of the restricted stock awards that vested during the period in order to satisfy certain related employee tax withholding liabilities of $826 and $235, respectively, associated with vesting. These withheld shares are treated the same as repurchased shares for accounting purposes.

A summary of the restricted stock awards activity as of and for the nine months ended September 30, 2024 is as follows:


		Weighted Average
	Number	Grant Date
	of Shares	Fair Value
Nonvested at January 1, 2024	1,364,570	$	5.27
Granted	499,888		5.18
Vested	(509,678)		5.41
Forfeited	(101,211)		5.21
Nonvested at September 30, 2024	1,253,569	$	5.19

The fair value of the award is recorded as compensation expense on a straight-line basis over the vesting period. The Company recorded stock-based compensation expense associated with restricted stock awards of $850 and $786 for the three months ended September 30, 2024 and 2023, respectively, and $2,376 and $1,308 for the nine months ended September 30, 2024 and 2023, respectively. At September 30, 2024, there was $4,937 of total unrecognized compensation cost related to the nonvested stock granted which is expected to be recognized over a weighted-average period of 2.7 years. The total fair value of shares vested during the nine months ended September 30, 2024 and 2023 was $2,743 and $879, respectively.

Equity Securities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Equity Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Investment Securities
Fair value of equity securities	$ 4,797		$ 4,797		$ 4,703
Equity securities	4,551		4,551		4,457
Equity securities with readily determinable fair values
Net gains (losses) recorded during the period on equity securities	160	$ (137)	94	$ (137)
Unrealized gains (losses) recorded during the period on equity securities held at the reporting date	160	$ (137)	94	$ (137)
Level 3
Investment Securities
Investment in equity securities without readily determinable fair value	$ 246		$ 246		$ 246

Mortgage Servicing Rights, net

9 Months Ended

Sep. 30, 2024

Mortgage Servicing Rights, net

Mortgage Servicing Rights, net

Note 6—Mortgage Servicing Rights, net

The Company records servicing assets from the sale of residential real estate mortgage loans to the secondary market for which servicing has been retained. Residential real estate mortgage loans serviced for others are not included in the condensed consolidated balance sheets. The principal balance of these loans at September 30, 2024 and December 31, 2023 are as follows:


	September 30,		December 31,
	2024		2023
Residential real estate mortgage loan portfolios serviced for:
FNMA	$	99,672	$	105,689
FHLB		28,715		31,016
Private investors		24,264		33,044
Total	$	152,651	$	169,749

Custodial escrow balances maintained with these serviced loans were $668 and $620 at September 30, 2024 and December 31, 2023, respectively. These balances are included in noninterest-bearing deposits in the condensed consolidated balance sheets.

Activity for mortgage servicing rights and the related valuation allowance are as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Mortgage servicing rights:
Beginning of period	$	1,425	$	1,701	$	1,590	$	1,840
Amortization		(37)		(32)		(202)		(171)
End of period		1,388		1,669		1,388		1,669

Valuation allowance:
Beginning of period		33		43		48		46
Additions (recoveries)		17		(5)		2		(8)
End of period		50		38		50		38
Mortgage servicing rights, net	$	1,338	$	1,631	$	1,338	$	1,631

Servicing income, net of amortization of servicing rights and changes in the valuation allowance, was $61 and $107 for the three months ended September 30, 2024 and 2023, respectively, and $182 and $268 for the nine months ended September 30, 2024 and 2023, respectively.

The fair value of mortgage servicing rights was $1,610 and $1,857 at September 30, 2024 and December 31, 2023, respectively. The fair value of mortgage servicing rights is highly sensitive to changes in underlying assumptions. Changes in prepayment speed assumptions have the most significant impact on the estimate of the fair value of mortgage servicing rights. The fair value at September 30, 2024 was determined using discount rates ranging from 10.0% to 12.5%, prepayment speeds with a weighted average of 9.3% (depending on the stratification of the specific right), a weighted average life of the mortgage servicing right of 77 months and a weighted average default rate of 0.2%. The fair value at December 31, 2023 was determined using discount rates ranging from 10.0% to 12.5%, prepayment speeds with a weighted average of 9.8% (depending on the stratification of the specific right), a weighted average life of the mortgage servicing right of 77 months and a weighted average default rate of 0.2%.

Impairment is determined by stratifying the mortgage servicing rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type. At September 30, 2024 and December 31, 2023, the carrying amount of certain individual groupings exceeded their fair value, resulting in write-downs to fair value. Refer to Note 14—Fair Value.

- Definition

The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 860
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 1A
-Subparagraph (b)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481420/860-30-50-1A

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 860
-SubTopic 50
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-Section 50
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-Subparagraph (a)(7)
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 860
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-Subparagraph (b)(2)(i)
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Section 50
-Paragraph 4
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481229/860-50-50-4

+ Details

Subordinated Notes (Details) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended
Subordinated Notes (Details) - USD ($) $ in Thousands	Jul. 15, 2023	Sep. 30, 2023	Sep. 30, 2023
Subordinated Notes
Gain on extinguishment of Subordinated Notes			$ 234
Interest expense		$ 243	3,727
LIBOR
Subordinated Notes
Variable interest rate (as a percentage)	5.82%
Subordinated notes
Subordinated Notes
Interest rate (in percent)	7.00%
Redemption price percentage of outstanding principal amount	100.00%
Principal amount	$ 65,000
Cash payment on redemption	66,821
Gain on extinguishment of Subordinated Notes	$ 234
Interest expense		$ 243	$ 3,727

Mortgage Servicing Rights, net (Tables)

9 Months Ended

Sep. 30, 2024

Mortgage Servicing Rights, net

Schedule of principal balance of mortgage loans serviced for others


	September 30,		December 31,
	2024		2023
Residential real estate mortgage loan portfolios serviced for:
FNMA	$	99,672	$	105,689
FHLB		28,715		31,016
Private investors		24,264		33,044
Total	$	152,651	$	169,749

Schedule of activity for mortgage servicing rights and related valuation allowance


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Mortgage servicing rights:
Beginning of period	$	1,425	$	1,701	$	1,590	$	1,840
Amortization		(37)		(32)		(202)		(171)
End of period		1,388		1,669		1,388		1,669

Valuation allowance:
Beginning of period		33		43		48		46
Additions (recoveries)		17		(5)		2		(8)
End of period		50		38		50		38
Mortgage servicing rights, net	$	1,338	$	1,631	$	1,338	$	1,631

Debt Securities (Tables)

9 Months Ended

Sep. 30, 2024

Debt Securities

Summary of amortized cost and fair value of debt securities available for sale


	September 30, 2024
	Amortized		Gross Unrealized				Fair
	Cost		Gain		Loss		Value
Available for sale:
U.S. Treasury and Agency securities	$	184,507	$	229	$	(2,200)	$	182,536
Mortgage-backed securities		31,748		—		(3,041)		28,707
Collateralized mortgage obligations		234,992		138		(10,107)		225,023
Collateralized debt obligations		146		—		(3)		143
Total	$	451,393	$	367	$	(15,351)	$	436,409


	December 31, 2023
	Amortized		Gross Unrealized				Fair
	Cost		Gain		Loss		Value
Available for sale:
U.S. Treasury and Agency securities	$	253,107	$	57	$	(4,176)	$	248,988
Mortgage-backed securities		35,757		—		(3,830)		31,927
Collateralized mortgage obligations		151,196		27		(13,066)		138,157
Collateralized debt obligations		151		—		(10)		141
Total	$	440,211	$	84	$	(21,082)	$	419,213

Schedule of information pertaining to sales of available for sale debt securities


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Proceeds from the sale of debt securities	$	—	$	—	$	—	$	2,977

Gross realized gains	$	—	$	—	$	—	$	1
Gross realized losses		—		—		—		(3)
Total net realized losses	$	—	$	—	$	—	$	(2)

Schedule of amortized cost and fair value of debt securities available for sale, shown by contractual maturity


	Amortized		Fair
	Cost		Value
U.S. Treasury and Agency securities:
Due less than one year	$	119,844	$	120,068
Due after one year through two years		64,663		62,468
Mortgage-backed securities		31,748		28,707
Collateralized mortgage obligations		234,992		225,023
Collateralized debt obligations		146		143
Total	$	451,393	$	436,409

Summary of available for sale debt securities, at fair value, continuous unrealized loss position


	September 30, 2024
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and Agency securities	$	—	$	—	$	77,463	$	(2,200)	$	77,463	$	(2,200)
Mortgage-backed securities		4,155		(28)		24,552		(3,013)		28,707		(3,041)
Collateralized mortgage obligations		92,182		(412)		100,450		(9,695)		192,632		(10,107)
Collateralized debt obligations		—		—		143		(3)		143		(3)
Total	$	96,337	$	(440)	$	202,608	$	(14,911)	$	298,945	$	(15,351)


	December 31, 2023
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and Agency securities	$	49,836	$	(1)	$	125,183	$	(4,175)	$	175,019	$	(4,176)
Mortgage-backed securities		—		—		31,927		(3,830)		31,927		(3,830)
Collateralized mortgage obligations		10,297		(221)		111,554		(12,845)		121,851		(13,066)
Collateralized debt obligations		—		—		141		(10)		141		(10)
Total	$	60,133	$	(222)	$	268,805	$	(20,860)	$	328,938	$	(21,082)

Nature of Operations and Basis of Presentation

9 Months Ended

Sep. 30, 2024

Nature of Operations and Basis of Presentation

Nature of Operations and Basis of Presentation

Note 1—Nature of Operations and Basis of Presentation

(a)Nature of Operations

Sterling Bancorp, Inc. (unless stated otherwise or the context otherwise requires, together with its subsidiaries, the “Company”) is a unitary thrift holding company that was incorporated in 1989 and the parent company of its wholly owned subsidiary, Sterling Bank and Trust, F.S.B. (the “Bank”), which was formed in 1984. The Company’s business is conducted through the Bank. The Bank originates commercial real estate loans and commercial and industrial loans, and provides deposit products, consisting primarily of checking, savings and term certificate accounts. Historically, the Company’s largest asset class has been residential mortgage loans. In 2023, the Bank discontinued originating residential mortgage loans. The Bank also engages in mortgage banking activities and, as such, acquires, sells and services residential mortgage loans. The Bank operates through a network of 27 branches of which 25 branches are located in the San Francisco and Los Angeles, California metropolitan areas with the remaining branches located in New York, New York and Southfield, Michigan. In February 2024, the Company closed one of its branches in San Francisco and consolidated the operations into a nearby branch office. The Company is headquartered in Southfield, Michigan.

The Company is subject to regulation, examination and supervision by the Board of Governors of the Federal Reserve System (the “FRB” or the “Federal Reserve”). The Bank is a federally chartered stock savings bank that elected to operate as a covered savings association, effective August 9, 2023. As a covered savings association, the Bank generally functions as a commercial bank without the constraints applicable to a thrift institution. Prior to the election becoming effective, the Bank was subject to the Qualified Thrift Lender test. Under the Qualified Thrift Lender test, a savings institution is required to maintain at least 65% of its portfolio assets in certain qualified thrift investments (primarily residential mortgages and related investments, including certain mortgage-backed and related securities) in at least nine months out of each 12-month period. The Bank is subject to regulation, supervision and examination by the Office of the Comptroller of the Currency (“OCC”) of the U.S. Department of Treasury and the Federal Deposit Insurance Corporation (“FDIC”) and is a member of the FRB system and Federal Home Loan Bank (“FHLB”) system.

(b)Proposed Sale of the Bank and Dissolution of the Company

On September 15, 2024, the Company and the Bank entered into a definitive stock purchase agreement (the “Stock Purchase Agreement”) with EverBank Financial Corp, a Delaware corporation (“EverBank”), which provides for the Company to sell all of the issued and outstanding shares of capital stock of the Bank to EverBank for a fixed purchase price of $261,000 to be paid in cash to the Company (the “Transaction”). Following the completion of the Transaction, EverBank will cause the Bank to merge with and into EverBank, National Association, the bank subsidiary of EverBank, with EverBank, National Association as the surviving bank and following the bank merger, the separate corporate existence of the Bank will cease.

The Transaction is subject to customary closing conditions, among which include the approval of the Stock Purchase Agreement, the Transaction and the plan of dissolution (“Plan of Dissolution”) by the Company’s shareholders and the receipt of required regulatory approvals. In addition, EverBank’s obligation to complete the Transaction is also subject to the following conditions: (i) the sale by the Bank of its portfolio of residential tenant-in-common loans (with an aggregate principal balance of approximately $359,600 at September 30, 2024) and receipt by the Bank of the purchase price specified in such agreement and (ii) the average daily closing balance of the Bank’s deposits for the monthly period ending on the last day of the month before closing is not less than 85% of the average daily closing balance of such deposits for the monthly period ending on July 31, 2024.

Simultaneously with the execution of the Stock Purchase Agreement, the Bank entered into the mortgage loan purchase agreement (the “Mortgage Loan Purchase Agreement”) with Bayview Acquisitions LLC, a Delaware limited liability company (“Bayview”). The Mortgage Loan Purchase Agreement provides that Bayview will purchase the Bank’s residential tenant-in-common loans for an aggregate purchase price equal to 87% of the aggregate unpaid principal balance of the loans on the agreed upon purchase date plus all accrued and unpaid interest. The Bank’s obligation to consummate the sale contemplated by the Mortgage Loan Purchase Agreement is subject to certain conditions, including the receipt by the Bank of evidence of the shareholder and regulatory approvals required for the Transaction. As of September 30, 2024, the residential tenant-in-common loans were not held for sale as the Bank’s intent to liquidate its tenant-in-common loan portfolio is based upon its ability to close the Transaction and receipt of the required approvals for the Transaction. The closing of the loan sale is to occur immediately prior to the closing of the Transaction.

Also on September 15, 2024, the Company’s board of directors unanimously approved a Plan of Dissolution, which provides for the dissolution of the Company under Michigan law following the closing of the Transaction. If the Plan of Dissolution is approved by the Company’s shareholders, the Company intends to complete the wind down of the Company and pay or provide for the Company’s creditors and existing and reasonably foreseeable debts, liabilities, and obligations of and claims against the Company (including all Transaction expenses and any claims or demands received by the Company on behalf of any of its shareholders) in accordance with Michigan law and the Plan of Dissolution, and distribute all remaining assets, expected to be all cash, to its shareholders according to their respective rights and interests, in one or more distributions.

(c)Basis of Presentation

The condensed consolidated balance sheet as of September 30, 2024, and the condensed consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity and cash flows for the three and nine months ended September 30, 2024 and 2023 are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, in the opinion of management, of a normal recurring nature that are necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. The financial data and other financial information disclosed in these notes to the condensed consolidated financial statements related to these periods are also unaudited. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ended December 31, 2024 or for any future annual or interim period. The condensed consolidated balance sheet at December 31, 2023 included herein was derived from the audited financial statements as of that date. The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the U.S. Securities and Exchange Commission on March 14, 2024.

Loans - Nonaccrual loans cost basis, Aging analysis of past due loans, foreclosure (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Loans
Nonaccrual Loans	$ 13,187		$ 13,187
Total	1,223,737		1,223,737		$ 1,348,972
Not Past Due
Loans
Total	1,198,112		1,198,112		1,321,060
Past Due
Loans
Total	25,625		25,625		27,912
30 - 59 Days Past Due
Loans
Total	8,612		8,612		16,634
60 - 89 Days Past Due
Loans
Total	3,799		3,799		2,305
90 Days or More Past Due
Loans
Total	13,214		13,214		8,973
Residential real estate
Loans
Payment of nonaccrual residential real estate loan			946
Principal repayment of financing receivables			1,024
Total interest income on nonaccrual loan	365	$ 96	817	$ 157
Total	904,438		904,438		1,085,776
Loans returned to accrual status			2,453
Residential real estate \| Not Past Due
Loans
Total	878,813		878,813		1,057,864
Residential real estate \| Past Due
Loans
Total	25,625		25,625		27,912
Residential real estate \| 30 - 59 Days Past Due
Loans
Total	8,612		8,612		16,634
Residential real estate \| 60 - 89 Days Past Due
Loans
Total	3,799		3,799		2,305
Residential real estate \| 90 Days or More Past Due
Loans
Total	13,214		13,214		8,973
Residential real estate \| Real estate loan, first mortgage
Loans
Nonaccrual Loans	13,187		13,187		8,942
Nonaccrual With No Allowance for Credit Losses	3,482		3,482		4,079
Past Due 90 Days or More and Still Accruing	27		27		31
Nonaccrual residential real estate loans
Loans
Loans added to nonaccrual status			8,668
Commercial real estate
Loans
Total	306,927		306,927		236,982
Commercial real estate \| Not Past Due
Loans
Total	306,927		306,927		236,982
Construction loans
Loans
Total	5,212		5,212		10,381
Construction loans \| Not Past Due
Loans
Total	5,212		5,212		10,381
Commercial and industrial
Loans
Total	7,158		7,158		15,832
Commercial and industrial \| Not Past Due
Loans
Total	7,158		7,158		15,832
Other consumer
Loans
Total	2		2		1
Other consumer \| Not Past Due
Loans
Total	$ 2		$ 2		$ 1

Commitments and Contingencies - Rollforward of the activity in the liability for unfunded commitments (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Liability for unfunded commitment, beginning of period	$ 896	$ 0
Increase (decrease) in provision for (recovery of) credit losses	508	(253)
Liability for unfunded commitment, end of period	1,404	326
ASU 2016-13
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Liability for unfunded commitment, beginning of period		579
Residential real estate
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Liability for unfunded commitment, beginning of period	1	0
Increase (decrease) in provision for (recovery of) credit losses	0	(52)
Liability for unfunded commitment, end of period	1	1
Residential real estate \| ASU 2016-13
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Liability for unfunded commitment, beginning of period		53
Commercial real estate
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Liability for unfunded commitment, beginning of period	124	0
Increase (decrease) in provision for (recovery of) credit losses	(43)	4
Liability for unfunded commitment, end of period	81	129
Commercial real estate \| ASU 2016-13
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Liability for unfunded commitment, beginning of period		125
Construction loans
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Liability for unfunded commitment, beginning of period	763	0
Increase (decrease) in provision for (recovery of) credit losses	113	(206)
Liability for unfunded commitment, end of period	876	192
Construction loans \| ASU 2016-13
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Liability for unfunded commitment, beginning of period		398
Commercial and industrial
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Liability for unfunded commitment, beginning of period	8	0
Increase (decrease) in provision for (recovery of) credit losses	438	1
Liability for unfunded commitment, end of period	$ 446	4
Commercial and industrial \| ASU 2016-13
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Liability for unfunded commitment, beginning of period		$ 3

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies

Schedule of the activity in the liability for unfunded commitments


	Residential		Commercial				Commercial
Nine Months Ended September 30, 2024	Real Estate		Real Estate		Construction		and Industrial		Total
Liability for unfunded commitments:
Balance at the beginning of the period	$	1	$	124	$	763	$	8	$	896
Increase (decrease) in provision for (recovery of) credit losses		—		(43)		113		438		508
Total ending balance	$	1	$	81	$	876	$	446	$	1,404


	Residential		Commercial				Commercial
Nine Months Ended September 30, 2023	Real Estate		Real Estate		Construction		and Industrial		Total
Liability for unfunded commitments:
Balance at the beginning of the period	$	—	$	—	$	—	$	—	$	—
Adoption of ASU 2016-13		53		125		398		3		579
Increase (decrease) in provision for (recovery of) credit losses		(52)		4		(206)		1		(253)
Total ending balance	$	1	$	129	$	192	$	4	$	326

Schedule of total amount of unfunded commitments to extend credit and standby letters of credit outstanding

Schedule of activity in the mortgage repurchase liability


	Nine Months Ended September 30,
	2024		2023
Balance, beginning of period	$	750	$	809
Net recovery		(150)		(19)
Balance, end of period	$	600	$	790

Loans - Loans Held for Investment - Major categories, accrued interest, pledged (Details) - USD ($) $ in Thousands	1 Months Ended	9 Months Ended
	Mar. 31, 2023	Sep. 30, 2023	Sep. 30, 2024	Jun. 30, 2024	Dec. 31, 2023	Jun. 30, 2023	Dec. 31, 2022
Loans
Total			$ 1,223,737		$ 1,348,972
Less: allowance for credit losses		$ (34,267)	(24,970)	$ (27,556)	(29,404)	$ (36,153)	$ (45,464)
Loans, net			1,198,767		1,319,568
Accrued interest receivable related to gross loans			6,619		6,617
Transfer of residential real estate loans to loans held for sale		34,581
Carrying value of loans held for sale		36,210
Net cash proceeds		37,930
Gain on sale of loans		1,720
Assets pledged as collateral
Loans
Loans, net			3,452		4,004
Assets pledged as collateral \| FHLB borrowings
Loans
Loans pledged as collateral			474,351		428,358
Residential real estate
Loans
Total			904,438		1,085,776
Less: allowance for credit losses		(18,216)	(12,261)	(12,971)	(14,322)	(16,909)	(27,951)
Transfer of residential real estate loans to loans held for sale	$ 41,059
Loans receivable charged off	$ 6,478
Residential real estate mortgage loans \| Assets pledged as collateral
Loans
Loans in formal foreclosure proceedings			3,452		4,004
Commercial real estate
Loans
Total			306,927		236,982
Less: allowance for credit losses		(14,246)	(11,496)	(13,605)	(13,550)	(16,728)	(11,694)
Construction loans
Loans
Total			5,212		10,381
Less: allowance for credit losses		(1,724)	(871)	(809)	(1,386)	(2,475)	(5,781)
Commercial and industrial
Loans
Total			7,158		15,832
Less: allowance for credit losses		$ (81)	(342)	$ (171)	(146)	$ (41)	$ (38)
Other consumer
Loans
Total			$ 2		$ 1

Equity Securities (Tables)

9 Months Ended

Sep. 30, 2024

Equity Securities

Summary of unrealized and realized gains and losses recognized in the condensed consolidated statements of operation


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Net gains (losses) recorded during the period on equity securities	$	160	$	(137)	$	94	$	(137)
Less: net gains (losses) recorded during the period on equity securities sold during the period		—		—		—		—
Unrealized gains (losses) recorded during the period on equity securities held at the reporting date	$	160	$	(137)	$	94	$	(137)

Equity Securities

9 Months Ended

Sep. 30, 2024

Equity Securities

Equity Securities

Note 4—Equity Securities

Equity securities consist of an investment in a qualified Community Reinvestment Act investment fund, which is a publicly-traded mutual fund and an investment in the common equity of Pacific Coast Banker’s Bank, a thinly traded restricted stock. At September 30, 2024 and December 31, 2023, equity securities totaled $4,797 and $4,703, respectively.

Equity securities with readily determinable fair values are stated at fair value with realized and unrealized gains and losses reported in non-interest income in the condensed consolidated statements of operations. At September 30, 2024 and December 31, 2023, equity securities with readily determinable fair values were $4,551 and $4,457, respectively. The following is a summary of unrealized and realized gains and losses recognized in the condensed consolidated statements of operations:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Net gains (losses) recorded during the period on equity securities	$	160	$	(137)	$	94	$	(137)
Less: net gains (losses) recorded during the period on equity securities sold during the period		—		—		—		—
Unrealized gains (losses) recorded during the period on equity securities held at the reporting date	$	160	$	(137)	$	94	$	(137)

The Company has elected to account for its investment in a thinly traded, restricted stock using the measurement alternative for equity securities without readily determinable fair values, resulting in the investment carried at cost based on no evidence of impairment or observable trading activity during the nine months ended September 30, 2024 and 2023. The investment was reported at $246 at September 30, 2024 and December 31, 2023.

Stock-based Compensation (Tables)

9 Months Ended

Sep. 30, 2024

Stock-based Compensation

Summary of stock option activity


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number	Exercise		Contractual	Intrinsic
	of Shares	Price		Term	Value
				(Years)
Outstanding at January 1, 2024	340,395	$	4.96	6.23	$	531
Granted	—
Exercised	—
Forfeited/expired	—
Outstanding and exercisable at September 30, 2024	340,395	$	4.96	5.48	$	165

Summary of the company's restricted stock awards activity


		Weighted Average
	Number	Grant Date
	of Shares	Fair Value
Nonvested at January 1, 2024	1,364,570	$	5.27
Granted	499,888		5.18
Vested	(509,678)		5.41
Forfeited	(101,211)		5.21
Nonvested at September 30, 2024	1,253,569	$	5.19

Mortgage Servicing Rights, net - Valuation techniques (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Mortgage Servicing Rights, net
Fair value of mortgage servicing rights	$ 1,610	$ 1,857
Minimum
Mortgage Servicing Rights, net
Discount rate range	10.00%	10.00%
Maximum
Mortgage Servicing Rights, net
Discount rate range	12.50%	12.50%
Weighted Average
Mortgage Servicing Rights, net
Prepayment speed range	9.30%	9.80%
Weighted average life of the mortgage servicing right	77 months	77 months
Weighted average default rate	0.20%	0.20%

Fair Value - Reconciliation and income statement classification using Level 3 inputs (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)
Fair Value, Asset, Recurring Basis, Unobservable Input Reconciliation, Asset, Gain (Loss), Statement of Other Comprehensive Income or Comprehensive Income [Extensible Enumeration]	Other Comprehensive Income (Loss), Securities, Available-for-Sale, Unrealized Holding Gain (Loss) Arising During Period, after Tax	Other Comprehensive Income (Loss), Securities, Available-for-Sale, Unrealized Holding Gain (Loss) Arising During Period, after Tax
Collateralized debt obligations \| Recurring \| Level 3
Reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)
Balance of recurring Level 3 assets at beginning of period	$ 141	$ 147
Included in other comprehensive income (loss)	7	(1)
Principal maturities/settlements	(5)	(4)
Balance of recurring Level 3 assets at end of period	$ 143	$ 142

Fair Value

9 Months Ended

Sep. 30, 2024

Fair Value

Fair Value

Note 14—Fair Value

Financial instruments include assets carried at fair value, as well as certain assets and liabilities carried at cost or amortized cost but disclosed at fair value in these condensed consolidated financial statements. Fair value is defined as the exit price, the price that would be received for an asset or paid to transfer a liability in the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date under current market conditions. The inputs to valuation techniques used to measure fair value are prioritized into a three-level hierarchy. The hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The following methods and significant assumptions are used to estimate fair value:

Investment Securities

The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar investment securities (Level 2). For investment securities where quoted prices or market prices of similar investment securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). The fair value of the collateralized debt obligations, which are categorized as Level 3, is obtained from third-party pricing information. It is determined by calculating discounted cash flows that include spreads that adjust for credit risk and illiquidity. The Company also performs an internal analysis that considers the structure and term of the collateralized debt obligations and the financial condition of the underlying issuers to corroborate the information used from the independent third party.

Mortgage Servicing Rights

Fair value of mortgage servicing rights is initially determined at the individual grouping level based on an internal valuation model that calculates the present value of estimated future net servicing income. On a quarterly basis, mortgage servicing rights are evaluated for impairment based upon third-party valuations obtained. As disclosed in Note 6—Mortgage Servicing Rights, net, the valuation model utilizes interest rate, prepayment speed and default rate assumptions that market participants would use in estimating future net servicing income (Level 3).

Assets Measured at Fair Value on a Recurring Basis

The table below presents the assets measured at fair value on a recurring basis categorized by the level of inputs used in the valuation of each asset at September 30, 2024 and December 31, 2023:


			Fair Value Measurements
			at September 30, 2024
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Available for sale debt securities:
U.S. Treasury and Agency securities	$	182,536	$	77,548	$	104,988	$	—
Mortgage-backed securities		28,707		—		28,707		—
Collateralized mortgage obligations		225,023		—		225,023		—
Collateralized debt obligations		143		—		—		143
Equity securities		4,551		4,551		—		—


			Fair Value Measurements
			at December 31, 2023
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Available for sale debt securities:
U.S. Treasury and Agency securities	$	248,988	$	219,582	$	29,406	$	—
Mortgage-backed securities		31,927		—		31,927		—
Collateralized mortgage obligations		138,157		—		138,157		—
Collateralized debt obligations		141		—		—		141
Equity securities		4,457		4,457		—		—

The table below presents a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2024 and 2023:


	Fair Value
	Measurements Using Significant
	Unobservable Inputs (Level 3)
	Collateralized Debt Obligations
	Nine Months Ended September 30,
	2024		2023
Balance of recurring Level 3 assets at beginning of period	$	141	$	147
Total gains or losses (realized/unrealized):
Included in other comprehensive income (loss)		7		(1)
Principal maturities/settlements		(5)		(4)
Balance of recurring Level 3 assets at end of period	$	143	$	142

Assets Measured at Fair Value on a Nonrecurring Basis

From time to time, the Company may be required to measure certain other assets at fair value on a nonrecurring basis in accordance with U.S. GAAP. These adjustments to fair value usually result from the application of lower of cost or fair value accounting or write-downs of individual assets. For assets measured at fair value on a nonrecurring basis that were recorded in the condensed consolidated balance sheets at September 30, 2024 and December 31, 2023, the following table provides the level of valuation assumptions used to determine each adjustment and the related carrying value:

Fair Value Measurements

at September 30, 2024

Quoted Prices in

Significant Other

Significant

Active Markets for

Observable

Unobservable

Fair

Identical Assets

Inputs

Value

(Level 1)

(Level 2)

(Level 3)

Mortgage servicing rights

363

—

363

Fair Value Measurements

at December 31, 2023

Quoted Prices in

Significant Other

Significant

Active Markets for

Observable

Unobservable

Fair

Identical Assets

Inputs

Value

(Level 1)

(Level 2)

(Level 3)

Mortgage servicing rights

576

—

576

The following tables present quantitative information about Level 3 fair value measurements for assets measured at fair value on a nonrecurring basis at September 30, 2024 and December 31, 2023:


	Quantitative Information about Level 3 Fair Value Measurements at September 30, 2024
					Range
	Fair Value		Valuation Technique	Unobservable Inputs	(Weighted Average) ⁽¹⁾
Mortgage servicing rights	$	363	Discounted cash flow	Discount rate	10.0% - 12.5%
					(12.0)%
				Prepayment speed	6.9% - 22.8%
					(17.3)%
				Default rate	0.1% - 0.2%
					(0.2)%


	Quantitative Information about Level 3 Fair Value Measurements at December 31, 2023
					Range
	Fair Value		Valuation Technique	Unobservable Inputs	(Weighted Average) ⁽¹⁾
Mortgage servicing rights	$	576	Discounted cash flow	Discount rate	10.0% - 12.5%
					(12.2)%
				Prepayment speed	6.9% - 22.7%
					(18.5)%
				Default rate	0.1% - 0.2%
					(0.1)%

(1)	The range and weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment.

Fair Value of Financial Instruments

The carrying amounts and estimated fair values of financial instruments not carried at fair value at September 30, 2024 and December 31, 2023, are as follows:


	Fair Value Measurements
	at September 30, 2024
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and due from banks	$	710,372	$	710,372	$	710,372	$	—	$	—
Interest-bearing time deposits with other banks		4,983		4,983		4,983		—		—
Loans, net		1,198,767		1,204,106		—		—		1,204,106

Financial Liabilities
Time deposits		972,171		976,670		—		976,670		—


	Fair Value Measurements
	at December 31, 2023
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and due from banks	$	577,967	$	577,967	$	577,967	$	—	$	—
Interest-bearing time deposits with other banks		5,226		5,226		5,226		—		—
Loans, net		1,319,568		1,313,282		—		—		1,313,282

Financial Liabilities
Time deposits		873,220		874,274		—		874,274		—
Federal Home Loan Bank borrowings		50,000		49,370		—		49,370		—

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Condensed Consolidated Balance Sheets (Unaudited)
Debt securities available for sale - amortized cost	$ 451,393	$ 440,211
Allowance for credit losses	$ 24,970	$ 29,404
Preferred stock, authorized (in shares)	10,000,000	10,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, authorized (in shares)	500,000,000	500,000,000
Common stock, issued (in shares)	52,313,933	52,070,361
Common stock, outstanding (in shares)	52,313,933	52,070,361

FHLB Borrowings - FHLB Overdraft Line of Credit and Letters of Credit (Details) - USD ($) $ in Thousands	1 Months Ended	9 Months Ended
	Jul. 31, 2021	Sep. 30, 2024	Dec. 31, 2023	Sep. 30, 2023
FHLB Borrowings
Borrowings outstanding on FHLB standby letters of credit		$ 0		$ 0
FHLB fixed rate advances and overdraft line of credit additional borrowing capacity		409,287
FHLB short-term overdraft line of credit expiring October, 2023
FHLB Borrowings
FHLB overdraft line of credit		$ 20,000
FHLB overdraft line of credit (as percent)		5.24%	5.76%
FHLB overdraft line of credit outstanding borrowings		$ 0	$ 0
FHLB, agreement term		1 year
FHLB, additional agreement term		1 year
Standby letters of credit expiring July 2024
FHLB Borrowings
FHLB overdraft line of credit outstanding borrowings		$ 0		$ 0
FHLB letter of credit	$ 2,000
FHLB letter of credit term	36 months

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Interest income
Interest and fees on loans	$ 20,506	$ 21,663	$ 62,095	$ 65,715
Interest and dividends on investment securities and restricted stock	4,993	3,134	13,769	8,256
Interest on interest-bearing cash deposits	8,855	8,081	25,636	19,890
Total interest income	34,354	32,878	101,500	93,861
Interest expense
Interest on deposits	20,736	16,391	58,186	39,537
Interest on Federal Home Loan Bank borrowings		250	367	743
Interest on Subordinated Notes		243		3,727
Total interest expense	20,736	16,884	58,553	44,007
Net interest income	13,618	15,994	42,947	49,854
Provision for (recovery of) credit losses	(2,338)	(1,942)	(4,376)	(4,170)
Net interest income after provision for (recovery of) credit losses	15,956	17,936	47,323	54,024
Non-interest income
Service charges and fees	$ 69	$ 97	$ 248	$ 269
Revenue, Product and Service [Extensible List]	sbt:ServiceChargesAndFeesMember	sbt:ServiceChargesAndFeesMember	sbt:ServiceChargesAndFeesMember	sbt:ServiceChargesAndFeesMember
Loss on sale of investment securities				$ (2)
Gain on sale of mortgage loans held for sale				1,695
Unrealized gain (loss) on equity securities	$ 160	$ (137)	$ 94	(137)
Net servicing income	61	107	182	268
Income earned on company-owned life insurance	84	83	251	244
Other	5	234	215	236
Total non-interest income	379	384	990	2,573
Non-interest expense
Salaries and employee benefits	8,540	8,753	25,196	27,437
Occupancy and equipment	2,019	2,110	6,108	6,273
Professional fees	3,005	4,242	7,334	10,984
FDIC insurance	260	274	784	794
Data processing	715	745	2,190	2,237
Other	1,071	1,578	4,313	5,155
Total non-interest expense	15,610	17,702	45,925	52,880
Income before income taxes	725	618	2,388	3,717
Income tax expense	868	304	1,412	1,367
Net income (loss)	$ (143)	$ 314	$ 976	$ 2,350
Income (loss) per share, basic (in dollars per share)	$ 0.00	$ 0.01	$ 0.02	$ 0.05
Income (loss) per share, diluted (in dollars per share)	$ 0.00	$ 0.01	$ 0.02	$ 0.05
Weighted average common shares outstanding:
Basic (in shares)	51,059,012	50,699,967	50,941,371	50,606,566
Diluted (in shares)	51,059,012	51,069,683	51,344,908	50,749,879

Mortgage Servicing Rights, net - Activity and Related Valuation Allowance (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Mortgage servicing rights:
Mortgage servicing rights - Beginning of period	$ 1,425	$ 1,701	$ 1,590	$ 1,840
Amortization	(37)	(32)	(202)	(171)
Mortgage servicing rights - End of period	1,388	1,669	1,388	1,669
Valuation allowance at Beginning of period	33	43	48	46
Additions (recoveries)	17	(5)	2	(8)
Valuation allowance at End of period	50	38	50	38
Mortgage servicing rights, net	1,338	1,631	1,338	1,631	$ 1,542
Net servicing income	$ 61	$ 107	$ 182	$ 268

Regulatory Capital Requirements (Tables)

9 Months Ended

Sep. 30, 2024

Regulatory Capital Requirements

Schedule of minimum requirements under prompt corrective action regulations classifications


					To be Well Capitalized Under
					Prompt Corrective Action
	Actual				Regulations (CBLR Framework)
	Amount		Ratio		Amount		Ratio
September 30, 2024
Tier 1 (core) capital to average total assets (leverage ratio)
Consolidated	$	344,376	14.18	%	$	218,511	9.00	%
Bank	$	332,738	13.72	%	$	218,216	9.00	%


					To be Well Capitalized Under
					Prompt Corrective Action
	Actual				Regulations (CBLR Framework)
	Amount		Ratio		Amount		Ratio
December 31, 2023
Tier 1 (core) capital to average total assets (leverage ratio)
Consolidated	$	342,368	13.95	%	$	220,950	9.00	%
Bank	$	328,362	13.38	%	$	220,920	9.00	%

Commitments and Contingencies - Mortgage Repurchase Liability and Offers (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Commitments and Contingencies
Mortgage repurchase liability	$ 600	$ 750	$ 790	$ 809
Advantage Loan Program
Commitments and Contingencies
Unpaid principal balance, Loans	13,206
Residential Real Estate
Commitments and Contingencies
Mortgage repurchase liability	600	750
Residential Real Estate \| Obligation to repurchase receivables sold
Commitments and Contingencies
Unpaid principal balance, Loans	29,005	49,667
Residential Real Estate \| Advantage Loan Program \| Obligation to repurchase receivables sold
Commitments and Contingencies
Unpaid principal balance, Loans	$ 24,264	$ 33,044

Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Concentration of Credit Risk
Minimum down payment percentage for Advantage Loan Program loans	35.00%
Residential real estate loans \| Loans receivables \| Residential real estate
Concentration of Credit Risk
Concentration of credit risk	74.00%	80.00%
California \| Loans receivables \| Residential real estate
Concentration of Credit Risk
Concentration of credit risk	76.00%	80.00%
Advantage Loan Program \| Loans receivables \| Residential real estate
Concentration of Credit Risk
Concentration of credit risk	54.00%	58.00%
Loans receivable	$ 485,970	$ 628,245

FHLB Borrowings - FHLB Advances (Details) - Callable Option May, 2024 $ in Thousands	May 15, 2024 USD ($)
FHLB Borrowings
Repayment of long-term fixed-rate FHLB advances	$ 50,000
FHLB interest rates (as a percent)	1.96%

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2024	Nov. 01, 2024
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Entity File Number	001-38290
Entity Registrant Name	Sterling Bancorp, Inc.
Entity Incorporation, State or Country Code	MI
Entity Tax Identification Number	38-3163775
Entity Address, Address Line One	One Towne Square
Entity Address, Address Line Two	Suite 1900
Entity Address, City or Town	Southfield
Entity Address, State or Province	MI
Entity Address, Postal Zip Code	48076
City Area Code	248
Local Phone Number	355-2400
Title of 12(b) Security	Common Stock
Trading Symbol	SBT
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		52,313,255
Entity Central Index Key	0001680379
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false

Regulatory Capital Requirements

9 Months Ended

Sep. 30, 2024

Regulatory Capital Requirements

Regulatory Capital Requirements

Note 12—Regulatory Capital Requirements

The Bank is subject to the capital adequacy requirements of the OCC. The Company, as a thrift holding company, generally is subject to the capital adequacy requirements of the Federal Reserve. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities and certain off-balance sheet items calculated under regulatory accounting practices. Prompt corrective action regulations provide five classifications for depository institutions like the Bank, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors, and the regulators, in their discretion, can require the Company to lower classifications in certain cases. Failure to meet minimum capital requirements can initiate regulatory action that could have a direct material effect on the Company’s business, financial condition and results of operations.

The federal banking agencies’ regulations provide for an optional simplified measure of capital adequacy for qualifying community banking organizations (that is, the “CBLR” framework), as implemented pursuant to the Economic Growth, Regulatory Relief and Consumer Protection Act of 2018. The CBLR framework is designed to reduce the burden of the requirements for calculating and reporting risk-based capital ratios for qualifying community banking organizations that opt into the framework. In order to qualify for the CBLR framework, a community banking organization must have (i) a Tier 1 capital to average total assets (leverage) ratio of greater than 9.0%, (ii) less than $10 billion in total consolidated assets, and (iii) limited amounts of off-balance-sheet exposure and trading assets and liabilities. A qualifying community banking organization that opts into the CBLR framework and meets all requirements under the framework will be considered to have met the capital ratio requirements for the well capitalized capital category under applicable prompt corrective action regulations and will not be required to report or calculate risk-based capital under generally applicable capital adequacy requirements. Failure to meet the qualifying criteria within the grace period of two reporting periods, or to maintain a leverage ratio of 8.0% or greater, would require the institution to comply with the generally applicable capital adequacy requirements. An eligible banking organization can opt out of the CBLR framework and revert to compliance with general capital adequacy requirements and capital measurements under prompt corrective action regulations without restriction.

The Company and the Bank have determined the organization is a qualifying community banking organization and has elected to measure capital adequacy under the CBLR framework, effective as of January 1, 2023. Management believes as of September 30, 2024, the Company and the Bank meet all capital adequacy requirements to which they are subject. The following tables present the consolidated Company’s and the Bank’s actual capital amounts and leverage ratio, and the minimum required capital amounts and leverage ratio thresholds required under the CBLR framework at September 30, 2024 and December 31, 2023:


					To be Well Capitalized Under
					Prompt Corrective Action
	Actual				Regulations (CBLR Framework)
	Amount		Ratio		Amount		Ratio
September 30, 2024
Tier 1 (core) capital to average total assets (leverage ratio)
Consolidated	$	344,376	14.18	%	$	218,511	9.00	%
Bank	$	332,738	13.72	%	$	218,216	9.00	%


					To be Well Capitalized Under
					Prompt Corrective Action
	Actual				Regulations (CBLR Framework)
	Amount		Ratio		Amount		Ratio
December 31, 2023
Tier 1 (core) capital to average total assets (leverage ratio)
Consolidated	$	342,368	13.95	%	$	220,950	9.00	%
Bank	$	328,362	13.38	%	$	220,920	9.00	%

Dividend Restrictions

As noted above, federal banking regulations require the Bank to maintain certain capital levels and may limit the dividends paid by the Bank to the holding company or by the holding company to its shareholders. The holding company’s principal source of funds for dividend payments is dividends received from the Bank. Regulatory approval is required if (i) the total capital distributions for the applicable calendar year exceed the sum of the Bank’s net income for that year to date plus the Bank’s retained net income for the preceding two years or (ii) the Bank would not be at least adequately capitalized following the distribution. In addition, the Company currently is required to obtain the prior approval of the FRB in order to pay dividends to the Company’s shareholders.

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

+ References + Details

FHLB Borrowings

9 Months Ended

Sep. 30, 2024

FHLB Borrowings

FHLB Borrowings

Note 8—FHLB Borrowings

FHLB Advances

On May 15, 2024, the FHLB exercised its call right to require repayment of the Company’s long-term fixed rate FHLB advance of $50,000 with an original maturity date of May 2029. The Company repaid the FHLB advance with its existing cash funds. The FHLB advance required monthly interest-only payments at 1.96% per annum.

FHLB Overdraft Line of Credit and Letters of Credit

The Company has established a short-term overdraft line of credit agreement with the FHLB, which provides for maximum borrowings of $20,000. The overdraft line of credit was not used during the nine months ended September 30, 2024 and 2023. Borrowings accrue interest at a variable-rate based on the FHLB’s overnight cost of funds rate, which was 5.24% and 5.76% at September 30, 2024 and December 31, 2023, respectively. At September 30, 2024 and December 31, 2023, there were no outstanding borrowings under this agreement. The overdraft line of credit was renewed in October 2023 for a one-year term and was automatically extended for an additional one-year period through October 2025.

The Company entered into irrevocable standby letters of credit arrangements with the FHLB to provide credit support for certain of its obligations related to its commitment to repurchase certain pools of Advantage Loan Program loans. The irrevocable standby letter of credit of $2,000 had a 36-month term and was not required to be renewed when it expired in July 2024. There were no borrowings outstanding on these standby letters of credit during the nine months ended September 30, 2024 and 2023.

Based on our collateral pledged with the FHLB, consisting of certain loans and investment securities, and holdings of FHLB stock, the Company had a borrowing capacity with the FHLB of $409,287 at September 30, 2024. Refer to Note 3—Debt Securities for further information on securities pledged and Note 5—Loans for further information on loans pledged.

Other Borrowings

The Company has available unsecured federal funds credit lines, which were held by two banks and reduced to $60,000 in March 2024. Previously, these unsecured federal funds credit lines were held by three banks totaling $80,000. There were no borrowings under these unsecured credit lines during the nine months ended September 30, 2024 and 2023.

Commitments and Contingencies

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies

Commitments and Contingencies

Note 15—Commitments and Contingencies

Financial Instruments with Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its customers. These financial instruments include commitments to extend credit, such as loan commitments and unused credit lines, and standby letters of credit, which are not reflected in the condensed consolidated financial statements.

The Company is required to estimate the expected credit losses for off-balance sheet credit exposures. The Company maintains an estimated liability for unfunded commitments, primarily related to commitments to extend credit, which is included in other liabilities on the condensed consolidated balance sheets. The liability for unfunded commitments is reduced in the period in which the off-balance sheet financial instruments expire, loan funding occurs or is otherwise settled. The following presents the activity in the liability for unfunded commitments for the nine months ended September 30, 2024 and 2023:


	Residential		Commercial				Commercial
Nine Months Ended September 30, 2024	Real Estate		Real Estate		Construction		and Industrial		Total
Liability for unfunded commitments:
Balance at the beginning of the period	$	1	$	124	$	763	$	8	$	896
Increase (decrease) in provision for (recovery of) credit losses		—		(43)		113		438		508
Total ending balance	$	1	$	81	$	876	$	446	$	1,404


	Residential		Commercial				Commercial
Nine Months Ended September 30, 2023	Real Estate		Real Estate		Construction		and Industrial		Total
Liability for unfunded commitments:
Balance at the beginning of the period	$	—	$	—	$	—	$	—	$	—
Adoption of ASU 2016-13		53		125		398		3		579
Increase (decrease) in provision for (recovery of) credit losses		(52)		4		(206)		1		(253)
Total ending balance	$	1	$	129	$	192	$	4	$	326

Unfunded Commitments to Extend Credit

A commitment to extend credit, such as a loan commitment, credit line and overdraft protection, is a legally binding agreement to lend funds to a customer, usually at a stated interest rate and for a specific purpose. Such commitments have fixed expiration dates and generally require a fee. The extension of a commitment gives rise to credit risk. The actual liquidity requirements or credit risk that the Company may experience is expected to be lower than the contractual amount of commitments to extend credit because a significant portion of those commitments are expected to expire without being used. Certain commitments are subject to loan agreements containing covenants regarding the financial performance of the customer that must be met before the Company is required to fund the commitment. The Company uses the same credit policies in making commitments to extend credit as it does in making loans.

Unused Lines of Credit

The Company also issues unused lines of credit to meet customer financing needs. At September 30, 2024, the unused lines of credit include residential second mortgages of $8,542, construction loans of $5,229, commercial real estate of $2,164 and commercial and industrial loans of $9,333, totaling $25,268. These unused lines of credit consisted of a fixed rate loan of $5,000 with an interest rate of 6.00% and a maturity of 17 months and variable-rate loans of $20,268 with interest rates ranging from 4.54% to 10.88% and maturities ranging from one month to 21 years. At December 31, 2023, the unused lines of credit include residential second mortgages of $9,789, construction loans of $5,714, commercial real estate of $2,165 and commercial and industrial loans of $874, totaling $18,542. These unused lines of credit consisted of a fixed rate loan of $5,000 with an interest rate of 6.00% and a maturity of two years and variable-rate loans of $13,542 with interest rates ranging from 4.72% to 10.88% and maturities ranging from five months to 22 years.

Standby Letters of Credit

Standby letters of credit are issued on behalf of customers in connection with construction contracts between the customers and third parties. Under standby letters of credit, the Company assures that the third parties will receive specified funds if customers fail to meet their contractual obligations. The credit risk to the Company arises from its obligation to make payment in the event of a customer’s contractual default. The maximum amount of potential future payments guaranteed by the Company is limited to the contractual amount of these letters. Collateral may be obtained at exercise of the commitment. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.

The following is a summary of the total amount of unfunded commitments to extend credit and standby letters of credit outstanding at September 30, 2024 and December 31, 2023:

Legal Proceedings

The Company and its subsidiaries may be subject to legal actions and claims arising from contracts or other matters from time to time in the ordinary course of business. Management is not aware of any pending or threatened legal proceedings that are considered other than routine legal proceedings. The Company believes that the ultimate disposition or resolution of its routine legal proceedings, in the aggregate, are not material to its financial position, results of operations or liquidity.

Mortgage Repurchase Liability

The Company has previously sold portfolio loans originated under the Advantage Loan Program to private investors in the secondary market. The Company also sold conventional residential real estate loans (which excludes Advantage Loan Program loans) in the secondary market primarily to Fannie Mae on an ongoing basis. In connection with these loans sold, the Company makes customary representations and warranties about various characteristics of each loan. The Company may be required pursuant to the terms of the applicable mortgage loan purchase and sale agreements to repurchase any previously sold loan or indemnify (make whole) the investor for which the representation or warranty of the Company proves to be inaccurate, incomplete or misleading. In the event of a repurchase, the Company is typically required to pay the unpaid principal balance, the proportionate premium received when selling the loan and certain expenses. As a result, the Company may incur a loss with respect to each repurchased loan.

Pursuant to the existing agreements with such investors, the Company also agreed to repurchase additional pools of Advantage Loan Program loans at the predetermined repurchase prices as stated in the agreements. At September 30, 2024, there is an outstanding agreement to repurchase an additional pool of Advantage Loan Program loans with an unpaid principal balance of $13,206 that extends to July 2025, with the final decision to effect any such repurchase, as determined by the applicable investor.

At September 30, 2024 and December 31, 2023, the mortgage repurchase liability was $600 and $750, respectively, which is included in other liabilities in the condensed consolidated balance sheets. The unpaid principal balance of residential real estate loans sold that were subject to potential repurchase obligations in the event of breach of representations and warranties totaled $29,005 and $49,667 at September 30, 2024 and December 31, 2023, respectively, including Advantage Loan Program loans totaling $24,264 and $33,044 at September 30, 2024 and December 31, 2023, respectively.

Activity in the mortgage repurchase liability was as follows:


	Nine Months Ended September 30,
	2024		2023
Balance, beginning of period	$	750	$	809
Net recovery		(150)		(19)
Balance, end of period	$	600	$	790

Regulatory Capital Requirements (Details) $ in Thousands	Sep. 30, 2024 USD ($)	Dec. 31, 2023 USD ($)
Regulatory Capital Requirements
Minimum required Tier 1 capital to average total assets (leverage) ratio for CBRL framework	9.00%
Maximum allowed total consolidated assets for CBRL framework	$ 10,000,000
Leverage ratio percentage	8.00%
Tier 1 (core) capital to average total assets, Amount
Actual	$ 344,376	$ 342,368
To be Well Capitalized	$ 218,511	$ 220,950
Tier 1 (core) capital to average total assets (leverage ratio)
Actual	0.1418	0.1395
To be Well Capitalized	0.0900	0.0900
Bank
Tier 1 (core) capital to average total assets, Amount
Actual	$ 332,738	$ 328,362
To be Well Capitalized	$ 218,216	$ 220,920
Tier 1 (core) capital to average total assets (leverage ratio)
Actual	0.1372	0.1338
To be Well Capitalized	0.0900	0.0900

Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Retained Earnings Cumulative Effect Adjustment	Retained Earnings	Accumulated Other Comprehensive Loss	Cumulative Effect Adjustment	Total
Balance at beginning of the period (ASU 2016-13) at Dec. 31, 2022			$ 778			$ 778
Balance at beginning of the period (ASU 2022-02) at Dec. 31, 2022			276			276
Balance at beginning of the period at Dec. 31, 2022	$ 83,295	$ 14,808		$ 234,049	$ (19,525)		$ 312,627
Balance at beginning of the period (in shares) at Dec. 31, 2022	50,795,871
Increase (Decrease) in Stockholders' Equity
Net Income (Loss)				(503)			(503)
Repurchase of restricted shares to pay employee tax liability		(75)					(75)
Repurchase of restricted shares to pay employee tax liability (in shares)	(12,166)
Stock-based compensation		173					173
Stock-based compensation (in shares)	24,411
Other comprehensive income					2,786		2,786
Balance at end of the period at Mar. 31, 2023	$ 83,295	14,906		234,048	(16,739)		315,510
Balance at end of the period (in shares) at Mar. 31, 2023	50,808,116
Balance at beginning of the period (ASU 2016-13) at Dec. 31, 2022			778			778
Balance at beginning of the period (ASU 2022-02) at Dec. 31, 2022			$ 276			$ 276
Balance at beginning of the period at Dec. 31, 2022	$ 83,295	14,808		234,049	(19,525)		312,627
Balance at beginning of the period (in shares) at Dec. 31, 2022	50,795,871
Increase (Decrease) in Stockholders' Equity
Net Income (Loss)							2,350
Other comprehensive income							(1,478)
Balance at end of the period at Sep. 30, 2023	$ 84,323	15,882		236,901	(21,003)		316,103
Balance at end of the period (in shares) at Sep. 30, 2023	52,072,631
Balance at beginning of the period at Mar. 31, 2023	$ 83,295	14,906		234,048	(16,739)		315,510
Balance at beginning of the period (in shares) at Mar. 31, 2023	50,808,116
Increase (Decrease) in Stockholders' Equity
Net Income (Loss)				2,539			2,539
Repurchase of restricted shares to pay employee tax liability		(158)					(158)
Repurchase of restricted shares to pay employee tax liability (in shares)	(28,826)
Issuance of shares of common stock to defined contribution retirement plan	$ 1,028						1,028
Issuance of shares of common stock to defined contribution retirement plan (in shares)	184,928
Stock-based compensation		350					350
Stock-based compensation (in shares)	1,117,668
Other comprehensive income					(1,593)		(1,593)
Balance at end of the period at Jun. 30, 2023	$ 84,323	15,098		236,587	(18,332)		317,676
Balance at end of the period (in shares) at Jun. 30, 2023	52,081,886
Increase (Decrease) in Stockholders' Equity
Net Income (Loss)				314			314
Repurchase of restricted shares to pay employee tax liability		(2)					(2)
Repurchase of restricted shares to pay employee tax liability (in shares)	(106)
Stock-based compensation		786					786
Stock-based compensation (in shares)	(9,149)
Other comprehensive income					(2,671)		(2,671)
Balance at end of the period at Sep. 30, 2023	$ 84,323	15,882		236,901	(21,003)		316,103
Balance at end of the period (in shares) at Sep. 30, 2023	52,072,631
Balance at beginning of the period at Dec. 31, 2023	$ 84,323	16,660		241,964	(15,224)		327,723
Balance at beginning of the period (in shares) at Dec. 31, 2023	52,070,361
Increase (Decrease) in Stockholders' Equity
Net Income (Loss)				(197)			(197)
Repurchase of restricted shares to pay employee tax liability		(216)					(216)
Repurchase of restricted shares to pay employee tax liability (in shares)	(38,033)
Stock-based compensation		729					729
Stock-based compensation (in shares)	14,355
Other comprehensive income					(773)		(773)
Balance at end of the period at Mar. 31, 2024	$ 84,323	17,173		241,767	(15,997)		327,266
Balance at end of the period (in shares) at Mar. 31, 2024	52,046,683
Balance at beginning of the period at Dec. 31, 2023	$ 84,323	16,660		241,964	(15,224)		327,723
Balance at beginning of the period (in shares) at Dec. 31, 2023	52,070,361
Increase (Decrease) in Stockholders' Equity
Net Income (Loss)							976
Other comprehensive income							4,360
Balance at end of the period at Sep. 30, 2024	$ 84,323	18,210		242,940	(10,864)		334,609
Balance at end of the period (in shares) at Sep. 30, 2024	52,313,933
Balance at beginning of the period at Mar. 31, 2024	$ 84,323	17,173		241,767	(15,997)		327,266
Balance at beginning of the period (in shares) at Mar. 31, 2024	52,046,683
Increase (Decrease) in Stockholders' Equity
Net Income (Loss)				1,316			1,316
Repurchase of restricted shares to pay employee tax liability		(378)					(378)
Repurchase of restricted shares to pay employee tax liability (in shares)	(72,806)
Issuance of shares of common stock to defined contribution retirement plan		797					797
Issuance of shares of common stock to defined contribution retirement plan (in shares)	397,632
Stock-based compensation					(131)		(131)
Balance at end of the period at Jun. 30, 2024	$ 84,323	17,592		243,083	(16,128)		328,870
Balance at end of the period (in shares) at Jun. 30, 2024	52,371,509
Increase (Decrease) in Stockholders' Equity
Net Income (Loss)				(143)			(143)
Repurchase of restricted shares to pay employee tax liability		(232)					(232)
Repurchase of restricted shares to pay employee tax liability (in shares)	(44,266)
Stock-based compensation		850					850
Stock-based compensation (in shares)	(13,310)
Other comprehensive income					5,264		5,264
Balance at end of the period at Sep. 30, 2024	$ 84,323	$ 18,210		$ 242,940	$ (10,864)		$ 334,609
Balance at end of the period (in shares) at Sep. 30, 2024	52,313,933

Deposits (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Deposits
Interest-bearing time deposits	$ 972,171	$ 873,220
Brokered time deposits	0	0
Time deposits that meet or exceed the FDIC insurance limit of $250	$ 306,041	$ 255,222

Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023
Numerator:
Net Income (Loss)	$ (143)	$ 1,316	$ (197)	$ 314	$ 2,539	$ (503)	$ 976	$ 2,350
Denominator:
Weighted average common shares outstanding, basic	51,059,012			50,699,967			50,941,371	50,606,566
Weighted average effect of potentially dilutive common shares:
Weighted average common shares outstanding, diluted	51,059,012			51,069,683			51,344,908	50,749,879
Income (loss) per share:
Basic (in dollars per shares)	$ 0.00			$ 0.01			$ 0.02	$ 0.05
Diluted (in dollars per shares)	$ 0.00			$ 0.01			$ 0.02	$ 0.05
Securities excluded from the computation of weighted average diluted shares outstanding as inclusion of such items would be anti-dilutive	363,494			66,597			461,603	556,459
Employee Stock Option
Income (loss) per share:
Securities excluded from the computation of weighted average diluted shares outstanding as inclusion of such items would be anti-dilutive	79,494			43,031			40,395	45,987
Restricted stock
Income (loss) per share:
Securities excluded from the computation of weighted average diluted shares outstanding as inclusion of such items would be anti-dilutive	284,000			23,566			421,208	510,472
Common Stock \| Employee Stock Option
Weighted average effect of potentially dilutive common shares:
Incremental shares from share-based compensation				95,066			68,873	89,380
Common Stock \| Restricted stock
Weighted average effect of potentially dilutive common shares:
Incremental shares from share-based compensation				274,650			334,664	53,933

Loans - Credit quality indicator by origination year (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Commercial Portfolio Segment \| Internal Noninvestment Grade \| Construction loans
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2024		$ 14
2023	$ 9
2021		1,591
2020		8,776
Prior	5,203
Total, term and revolving loans by origination year	5,212	10,381
Commercial Portfolio Segment \| Internal Noninvestment Grade \| C&I lending
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2024		14,461
2023	512	1,071
Prior	19	97
Revolving Loans Amortized Costs Basis	6,627	130
Revolving Loans Converted to Term		73
Total, term and revolving loans by origination year	7,158	15,832
Commercial Portfolio Segment \| Internal Noninvestment Grade \| Commercial Real Estate Loan
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2024	109,654	29,923
2023	22,946	82,587
2022	81,482	46,879
2021	19,315	37,872
2020	37,191	18,353
Prior	36,339	21,368
Total, term and revolving loans by origination year	306,927	236,982
Commercial Portfolio Segment \| Pass \| Construction loans
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2024		14
2023	9
2021		1,591
Total, term and revolving loans by origination year	9	1,605
Commercial Portfolio Segment \| Pass \| C&I lending
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2024		14,461
2023	512	1,071
Prior	19	97
Revolving Loans Amortized Costs Basis	6,627	130
Revolving Loans Converted to Term		73
Total, term and revolving loans by origination year	7,158	15,832
Commercial Portfolio Segment \| Pass \| Commercial Real Estate Loan
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2024	108,512	28,975
2023	22,009	79,013
2022	78,599	33,694
2021	7,515	35,148
2020	37,191	6,938
Prior	20,964	13,020
Total, term and revolving loans by origination year	274,790	196,788
Commercial Portfolio Segment \| Special Mention \| Commercial Real Estate Loan
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2024	1,142	948
2023	937	3,574
2022	2,883	1,407
2021		2,724
2020		8,610
Prior	5,373	4,253
Total, term and revolving loans by origination year	10,335	21,516
Commercial Portfolio Segment \| Substandard \| Construction loans
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2020		8,776
Prior	5,203
Total, term and revolving loans by origination year	5,203	8,776
Commercial Portfolio Segment \| Substandard \| Commercial Real Estate Loan
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022		11,778
2021	11,800
2020		2,805
Prior	10,002	4,095
Total, term and revolving loans by origination year	21,802	18,678
Residential Portfolio Segment \| Performing And Nonperforming Financial Instruments \| Residential Mortgage Loans
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2024		764
2023	757	72,840
2022	70,465	132,567
2021	123,212	99,676
2020	90,790	204,532
Prior	611,476	567,388
Revolving Loans Amortized Costs Basis	7,479	7,729
Revolving Loans Converted to Term	259	280
Total, term and revolving loans by origination year	904,438	1,085,776
Residential Portfolio Segment \| Accrual \| Residential Mortgage Loans
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2024		764
2023	757	72,840
2022	70,465	132,567
2021	123,212	99,676
2020	90,790	202,793
Prior	598,289	560,185
Revolving Loans Amortized Costs Basis	7,479	7,729
Revolving Loans Converted to Term	259	280
Total, term and revolving loans by origination year	891,251	1,076,834
Residential Portfolio Segment \| Nonaccrual \| Residential Mortgage Loans
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2020		1,739
Prior	13,187	7,203
Total, term and revolving loans by origination year	$ 13,187	8,942
Residential Portfolio Segment \| Current Period Gross Charge offs, Performance Rated \| Residential Mortgage Loans
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2020		1,858
Prior		4,601
Revolving Loans Amortized Costs Basis		19
Total, term and revolving loans by origination year		$ 6,478

Nature of Operations and Basis of Presentation (Details) $ in Thousands		9 Months Ended
	Sep. 15, 2024 USD ($)	Sep. 30, 2024 USD ($) item
Nature of Operations and Basis of Presentation
Number of branches \| item		27
Percentage of average daily closing balance	85.00%
Percentage of aggregate unpaid principal balance	87.00%
Bank
Nature of Operations and Basis of Presentation
Purchase price \| $	$ 261,000
Aggregate principal balance \| $		$ 359,600
San Francisco and Los Angeles, California
Nature of Operations and Basis of Presentation
Number of branches \| item		25

Income (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2024

Income (Loss) Per Share

Schedule of computation of income (loss) per share, basic and diluted


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Numerator:
Net income (loss)	$	(143)	$	314	$	976	$	2,350

Denominator:
Weighted average common shares outstanding, basic		51,059,012		50,699,967		50,941,371		50,606,566
Weighted average effect of potentially dilutive common shares:
Stock options		—		95,066		68,873		89,380
Restricted stock		—		274,650		334,664		53,933
Weighted average common shares outstanding, diluted		51,059,012		51,069,683		51,344,908		50,749,879

Income (loss) per share, basic and diluted	$	(0.00)	$	0.01	$	0.02	$	0.05

Schedule of anti-dilutive shares that were excluded from the computation of weighted average diluted shares outstanding


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2024	2023	2024	2023
Stock options	79,494	43,031	40,395	45,987
Restricted stock	284,000	23,566	421,208	510,472
Total	363,494	66,597	461,603	556,459

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Assets
Cash and due from banks	$ 710,372	$ 577,967
Interest-bearing time deposits with other banks	4,983	5,226
Debt securities available for sale, at fair value (amortized cost $451,393 and $440,211 at September 30, 2024 and December 31, 2023, respectively)	436,409	419,213
Equity securities	4,797	4,703
Loans, net of allowance for credit losses of $24,970 and $29,404 at September 30, 2024 and December 31, 2023, respectively	1,198,767	1,319,568
Accrued interest receivable	9,650	8,509
Mortgage servicing rights, net	1,338	1,542
Leasehold improvements and equipment, net	4,710	5,430
Operating lease right-of-use assets	10,765	11,454
Federal Home Loan Bank stock, at cost	18,423	18,923
Federal Reserve Bank stock, at cost	9,187	9,048
Company-owned life insurance	8,872	8,711
Deferred tax asset, net	15,023	16,959
Other assets	5,258	8,750
Total assets	2,438,554	2,416,003
Liabilities
Noninterest-bearing deposits	31,276	35,245
Interest-bearing deposits	2,035,917	1,968,741
Total deposits	2,067,193	2,003,986
Federal Home Loan Bank borrowings		50,000
Operating lease liabilities	11,753	12,537
Other liabilities	24,999	21,757
Total liabilities	2,103,945	2,088,280
Shareholders' equity
Preferred stock, authorized 10,000,000 shares; no shares issued and outstanding
Common stock, no par value, authorized 500,000,000 shares; issued and outstanding 52,313,933 shares and 52,070,361 shares at September 30, 2024 and December 31, 2023, respectively	84,323	84,323
Additional paid-in capital	18,210	16,660
Retained earnings	242,940	241,964
Accumulated other comprehensive loss	(10,864)	(15,224)
Total shareholders' equity	334,609	327,723
Total liabilities and shareholders' equity	$ 2,438,554	$ 2,416,003

Loans - Activity in the Allowance For Credit Losses by Portfolio Segment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Allowance for credit losses
Balance at the beginning of the period	$ 27,556	$ 36,153	$ 29,404	$ 45,464
Provision for (recovery of) credit losses	(2,596)	(1,887)	(4,884)	(3,917)
Charge offs				(6,478)
Recoveries	10	1	450	469
Total ending balance	24,970	34,267	24,970	34,267
ASU 2016-13
Allowance for credit losses
Total ending balance		(1,651)		(1,651)
ASU 2022-02
Allowance for credit losses
Total ending balance		380		380
Residential Real Estate
Allowance for credit losses
Balance at the beginning of the period	12,971	16,909	14,322	27,951
Provision for (recovery of) credit losses	(710)	1,307	(2,500)	(4,477)
Charge offs				(6,478)
Recoveries			439	366
Total ending balance	12,261	18,216	12,261	18,216
Residential Real Estate \| ASU 2016-13
Allowance for credit losses
Total ending balance		865		865
Residential Real Estate \| ASU 2022-02
Allowance for credit losses
Total ending balance		(11)		(11)
Commercial Real Estate
Allowance for credit losses
Balance at the beginning of the period	13,605	16,728	13,550	11,694
Provision for (recovery of) credit losses	(2,109)	(2,482)	(2,054)	1,301
Recoveries				100
Total ending balance	11,496	14,246	11,496	14,246
Commercial Real Estate \| ASU 2016-13
Allowance for credit losses
Total ending balance		1,151		1,151
Construction loans
Allowance for credit losses
Balance at the beginning of the period	809	2,475	1,386	5,781
Provision for (recovery of) credit losses	52	(752)	(526)	(818)
Recoveries	10	1	11	3
Total ending balance	871	1,724	871	1,724
Construction loans \| ASU 2016-13
Allowance for credit losses
Total ending balance		(3,633)		(3,633)
Construction loans \| ASU 2022-02
Allowance for credit losses
Total ending balance		391		391
Commercial and industrial
Allowance for credit losses
Balance at the beginning of the period	171	41	146	38
Provision for (recovery of) credit losses	171	40	196	77
Total ending balance	$ 342	81	$ 342	81
Commercial and industrial \| ASU 2016-13
Allowance for credit losses
Total ending balance		$ (34)		$ (34)

Debt Securities-Amortized Cost and Fair Value, Realized Gains and Losses (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Debt Securities
Amortized Cost	$ 451,393		$ 440,211
Gross Unrealized Gain	367		84
Gross Unrealized Loss	(15,351)		(21,082)
Fair Value	436,409		419,213
Accrued interest receivable on available for sale debt securities	1,857		1,535
Carrying value of debt securities held of any single issuer in excess of 10% of shareholders equity	$ 0		$ 0
Threshold percentage of total shareholders' equity above which securities of any single issuer exceed	10.00%		10.00%
Proceeds from the sale of debt securities		$ 2,977
Gross realized gains		1
Gross realized losses		(3)
Total net realized losses		(2)
Income tax expense (benefit) related to the net realized losses		$ (1)
Collateralized mortgage obligations \| US Government Corporations and Agencies Securities
Debt Securities
Fair Value	$ 278		$ 308
Debt securities \| Assets pledged as collateral \| FHLB borrowings
Debt Securities
Fair Value	77,463		61,078
U.S. Treasury and Agency securities
Debt Securities
Amortized Cost	184,507		253,107
Gross Unrealized Gain	229		57
Gross Unrealized Loss	(2,200)		(4,176)
Fair Value	182,536		248,988
Mortgage-backed securities
Debt Securities
Amortized Cost	31,748		35,757
Gross Unrealized Loss	(3,041)		(3,830)
Fair Value	28,707		31,927
Collateralized mortgage obligations
Debt Securities
Amortized Cost	234,992		151,196
Gross Unrealized Gain	138		27
Gross Unrealized Loss	(10,107)		(13,066)
Fair Value	225,023		138,157
Collateralized debt obligations
Debt Securities
Amortized Cost	146		151
Gross Unrealized Loss	(3)		(10)
Fair Value	$ 143		$ 141

Mortgage Servicing Rights, net - Principle Balance by Category (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Mortgage Servicing Rights, net
Total	$ 152,651	$ 169,749
Custodial escrow balances	668	620
FNMA
Mortgage Servicing Rights, net
Total	99,672	105,689
FHLB
Mortgage Servicing Rights, net
Total	28,715	31,016
Private investors
Mortgage Servicing Rights, net
Total	$ 24,264	$ 33,044

Loans

9 Months Ended

Sep. 30, 2024

Loans

Loans

Note 5—Loans

Loans Held for Investment

The major categories of loans held for investment and the allowance for credit losses were as follows:


	September 30,		December 31,
	2024		2023
Residential real estate	$	904,438	$	1,085,776
Commercial real estate		306,927		236,982
Construction		5,212		10,381
Commercial and industrial		7,158		15,832
Other consumer		2		1
Total loans		1,223,737		1,348,972
Less: allowance for credit losses		(24,970)		(29,404)
Loans, net	$	1,198,767	$	1,319,568

Accrued interest receivable related to total gross loans was $6,619 and $6,617 as of September 30, 2024 and December 31, 2023, respectively.

The Company has pledged loans totaling $474,351 and $428,358 at September 30, 2024 and December 31, 2023, respectively, with the FHLB as collateral on its available FHLB borrowings. Residential real estate loans collateralized by properties that were in the process of foreclosure totaled $3,452 and $4,004 at September 30, 2024 and December 31, 2023, respectively.

In March 2023, residential real estate loans held for investment with an amortized cost of $41,059 were transferred to loans held for sale due to management’s change in intent and decision to sell the loans. On the transfer, the Company recorded a $6,478 charge off applied against the allowance for credit losses to reflect these loans at their estimated fair value.

During the nine months ended September 30, 2023, the Company sold all of its loans held for sale with a carrying value of $36,210 on the date of sale to a third party for net cash proceeds of $37,930. The Company recorded a gain on the sale of loans of $1,720 which is included in gain on sale of mortgage loans held for sale in the condensed consolidated statements of operations for the nine months ended September 30, 2023.

Allowance for Credit Losses

The allowance for credit losses was estimated using the current expected credit loss model. The Company’s estimate of the allowance for credit losses reflects losses expected over the remaining contractual life of the loans. The contractual term does not consider extensions, renewals or modifications unless the Company has identified a loan where the individual borrower is experiencing financial difficulty. The following tables present the activity in the allowance for credit losses related to loans held for investment by portfolio segment for the three and nine months ended September 30, 2024 and 2023:


	Residential		Commercial				Commercial
Three Months Ended September 30, 2024	Real Estate		Real Estate		Construction		and Industrial		Total
Allowance for credit losses:
Balance at the beginning of the period	$	12,971	$	13,605	$	809	$	171	$	27,556
Provision for (recovery of) credit losses		(710)		(2,109)		52		171		(2,596)
Charge offs		—		—		—		—		—
Recoveries		—		—		10		—		10
Total ending balance	$	12,261	$	11,496	$	871	$	342	$	24,970


	Residential		Commercial				Commercial
Nine Months Ended September 30, 2024	Real Estate		Real Estate		Construction		and Industrial		Total
Allowance for credit losses:
Balance at the beginning of the period	$	14,322	$	13,550	$	1,386	$	146	$	29,404
Provision for (recovery of) credit losses		(2,500)		(2,054)		(526)		196		(4,884)
Charge offs		—		—		—		—		—
Recoveries		439		—		11		—		450
Total ending balance	$	12,261	$	11,496	$	871	$	342	$	24,970


	Residential		Commercial				Commercial
Three Months Ended September 30, 2023	Real Estate		Real Estate		Construction		and Industrial		Total
Allowance for credit losses:
Balance at the beginning of the period	$	16,909	$	16,728	$	2,475	$	41	$	36,153
Provision for (recovery of) credit losses		1,307		(2,482)		(752)		40		(1,887)
Charge offs		—		—		—		—		—
Recoveries		—		—		1		—		1
Total ending balance	$	18,216	$	14,246	$	1,724	$	81	$	34,267


	Residential		Commercial				Commercial
Nine Months Ended September 30, 2023	Real Estate		Real Estate		Construction		and Industrial		Total
Allowance for credit losses:
Balance at the beginning of the period	$	27,951	$	11,694	$	5,781	$	38	$	45,464
Adoption of ASU 2016-13		865		1,151		(3,633)		(34)		(1,651)
Adoption of ASU 2022-02		(11)		—		391		—		380
Provision for (recovery of) credit losses		(4,477)		1,301		(818)		77		(3,917)
Charge offs		(6,478)		—		—		—		(6,478)
Recoveries		366		100		3		—		469
Total ending balance	$	18,216	$	14,246	$	1,724	$	81	$	34,267

Nonaccrual Loans and Past Due Loans

Past due loans held for investment are loans contractually past due 30 days or more as to principal or interest payments. A loan held for investment is classified as nonaccrual, and the accrual of interest on such loan is discontinued, when the contractual payment of principal or interest becomes 90 days past due. In addition, a loan may be placed on nonaccrual at any other time management has serious doubts about further collectability of principal or interest according to the contractual terms, even though the loan is currently performing. A loan held for investment may remain in accrual status if it is in the process of collection and well secured. When a loan held for investment is placed in nonaccrual status, interest accrued but not received is reversed against interest income. Interest received on such loans is applied to the principal balance of the loan until qualifying for return to accrual status. Loans are returned to accrual status after all principal and interest amounts contractually due are made and future payments are reasonably assured.

The following table presents the total amortized cost basis of loans on nonaccrual status, the amortized cost basis of loans on nonaccrual status with no related allowance for credit losses and loans past due 90 days or more and still accruing at September 30, 2024 and December 31, 2023:

September 30, 2024

December 31, 2023

Nonaccrual

Past Due 90

Nonaccrual

Past Due 90

With No

Days or More

With No

Days or More

Nonaccrual

Allowance for

and Still

Nonaccrual

Allowance for

and Still

Loans

Credit Losses

Accruing

Loans

Credit Losses

Accruing

Residential real estate:

Residential first mortgage

13,187

3,482

8,942

4,079

At September 30, 2024, the Company had nonaccrual loans of $13,187 in its held for investment loan portfolio. The increase in nonaccrual loans from December 31, 2023 was due to the addition of residential loans of $8,668 on nonaccrual status which was partially offset by loans totaling $2,453 that were returned to accrual status, loans that were paid in full totaling $946 and payments of the loan principal of $1,024.

The total interest income that would have been recorded if the nonaccrual loans had been current in accordance with their original terms was $365 and $96 for the three months ended September 30, 2024 and 2023, respectively, and $817 and $157 for the nine months ended September 30, 2024 and 2023, respectively. The Company does not record interest income on nonaccrual loans.

Aging Analysis of Past Due Loans

The following table presents an aging of the amortized cost basis of contractually past due loans as of September 30, 2024 and December 31, 2023:


	30 - 59		60 - 89		90 Days
	Days		Days		or More		Total		Current
September 30, 2024	Past Due		Past Due		Past Due		Past Due		Loans		Total
Residential real estate	$	8,612	$	3,799	$	13,214	$	25,625	$	878,813	$	904,438
Commercial real estate		—		—		—		—		306,927		306,927
Construction		—		—		—		—		5,212		5,212
Commercial and industrial		—		—		—		—		7,158		7,158
Other consumer		—		—		—		—		2		2
Total	$	8,612	$	3,799	$	13,214	$	25,625	$	1,198,112	$	1,223,737


	30 - 59		60 - 89		90 Days
	Days		Days		or More		Total		Current
December 31, 2023	Past Due		Past Due		Past Due		Past Due		Loans		Total
Residential real estate	$	16,634	$	2,305	$	8,973	$	27,912	$	1,057,864	$	1,085,776
Commercial real estate		—		—		—		—		236,982		236,982
Construction		—		—		—		—		10,381		10,381
Commercial and industrial		—		—		—		—		15,832		15,832
Other consumer		—		—		—		—		1		1
Total	$	16,634	$	2,305	$	8,973	$	27,912	$	1,321,060	$	1,348,972

Collateral-Dependent Loans

Collateral-dependent loans are those for which repayment (on the basis of the Company’s assessment as of the reporting date) is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. The amortized cost basis of collateral-dependent loans was $3,452 and $4,004 at September 30, 2024 and December 31, 2023, respectively. These loans were collateralized by residential real estate property and the fair value of collateral on substantially all collateral-dependent loans were significantly in excess of their amortized cost basis.

Modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, forbearances, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. Historically, the Company has provided loan forbearances to residential borrowers when mandated and modified construction loans by providing term extensions. The Company did not have any loans held for investment to borrowers experiencing financial difficulty that were modified during the three and nine months ended September 30, 2024 and 2023. The Company did not have any loans held for investment to borrowers experiencing financial difficulty that were previously modified that subsequently defaulted during the three and nine months ended September 30, 2024 and 2023.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes homogeneous loans, such as residential real estate and other consumer loans, and non-homogeneous loans, such as commercial and industrial, construction and commercial real estate loans. This analysis is performed at least quarterly. The Company uses the following definitions for risk ratings:

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the loan. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered Pass-rated loans.

For residential and consumer loan classes, the Company evaluates credit quality based on the accrual status of the loan. The following table presents the amortized cost by year of origination and credit quality in residential loans based on accrual status:


													Revolving		Revolving
													Loans		Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
As of September 30, 2024	2024		2023		2022		2021		2020		Prior		Costs Basis		to Term		Total
Residential lending
Residential mortgage loans:
Payment performance:
Accrual	$	—	$	757	$	70,465	$	123,212	$	90,790	$	598,289	$	7,479	$	259	$	891,251
Nonaccrual		—		—		—		—		—		13,187		—		—		13,187
Total residential mortgage loans	$	—	$	757	$	70,465	$	123,212	$	90,790	$	611,476	$	7,479	$	259	$	904,438
Residential mortgage loans:
Current period gross write offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


													Revolving		Revolving
													Loans		Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
As of December 31, 2023	2023		2022		2021		2020		2019		Prior		Costs Basis		to Term		Total
Residential lending
Residential mortgage loans:
Payment performance:
Accrual	$	764	$	72,840	$	132,567	$	99,676	$	202,793	$	560,185	$	7,729	$	280	$	1,076,834
Nonaccrual		—		—		—		—		1,739		7,203		—		—		8,942
Total residential mortgage loans	$	764	$	72,840	$	132,567	$	99,676	$	204,532	$	567,388	$	7,729	$	280	$	1,085,776
Residential mortgage loans:
Current period gross write offs	$	—	$	—	$	—	$	—	$	1,858	$	4,601	$	19	$	—	$	6,478

The amortized cost basis by year of origination and credit quality indicator of the Company’s commercial loans based on the most recent analysis performed was as follows:


													Revolving		Revolving
													Loans		Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
As of September 30, 2024	2024		2023		2022		2021		2020		Prior		Costs Basis		to Term		Total
Commercial lending
Commercial real estate:
Risk rating
Pass	$	108,512	$	22,009	$	78,599	$	7,515	$	37,191	$	20,964	$	—	$	—	$	274,790
Special mention		1,142		937		2,883		—		—		5,373		—		—		10,335
Substandard		—		—		—		11,800		—		10,002		—		—		21,802
Total commercial real estate	$	109,654	$	22,946	$	81,482	$	19,315	$	37,191	$	36,339	$	—	$	—	$	306,927
Commercial real estate:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction:
Risk rating
Pass	$	—	$	9	$	—	$	—	$	—	$	—	$	—	$	—	$	9
Substandard		—		—		—		—		—		5,203		—		—		5,203
Total construction	$	—	$	9	$	—	$	—	$	—	$	5,203	$	—	$	—	$	5,212
Construction:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial:
Risk rating
Pass	$	—	$	512	$	—	$	—	$	—	$	19	$	6,627	$	—	$	7,158
Total commercial and industrial	$	—	$	512	$	—	$	—	$	—	$	19	$	6,627	$	—	$	7,158
Commercial and industrial:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


													Revolving		Revolving
													Loans		Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
As of December 31, 2023	2023		2022		2021		2020		2019		Prior		Costs Basis		to Term		Total
Commercial lending
Commercial real estate:
Risk rating
Pass	$	28,975	$	79,013	$	33,694	$	35,148	$	6,938	$	13,020	$	—	$	—	$	196,788
Special mention		948		3,574		1,407		2,724		8,610		4,253		—		—		21,516
Substandard		—		—		11,778		—		2,805		4,095		—		—		18,678
Total commercial real estate	$	29,923	$	82,587	$	46,879	$	37,872	$	18,353	$	21,368	$	—	$	—	$	236,982
Commercial real estate:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction:
Risk rating
Pass	$	14	$	—	$	—	$	1,591	$	—	$	—	$	—	$	—	$	1,605
Substandard		—		—		—		—		8,776		—		—		—		8,776
Total construction	$	14	$	—	$	—	$	1,591	$	8,776	$	—	$	—	$	—	$	10,381
Construction:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial:
Risk rating
Pass	$	14,461	$	1,071	$	—	$	—	$	—	$	97	$	130	$	73	$	15,832
Total commercial and industrial	$	14,461	$	1,071	$	—	$	—	$	—	$	97	$	130	$	73	$	15,832
Commercial and industrial:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

FHLB Borrowings - Other Borrowings (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Mar. 31, 2024	Sep. 30, 2023
Other Borrowings
Outstanding balance	$ 0		$ 0
Two bank
Other Borrowings
Maximum borrowing capacity		$ 60,000
Three Banks
Other Borrowings
Maximum borrowing capacity	$ 80,000

- Definition

The carrying value as of the balance sheet date of the current and noncurrent portions of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

+ References + Details

Fair Value - Assets measured at fair value on a recurring basis (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Available for sale debt securities:
Fair Value	$ 436,409	$ 419,213
Equity securities
Equity securities	4,551	4,457
U.S. Treasury and Agency securities
Available for sale debt securities:
Fair Value	182,536	248,988
U.S. Treasury and Agency securities \| Recurring
Available for sale debt securities:
Fair Value	182,536	248,988
U.S. Treasury and Agency securities \| Level 1 \| Recurring
Available for sale debt securities:
Fair Value	77,548	219,582
U.S. Treasury and Agency securities \| Level 2 \| Recurring
Available for sale debt securities:
Fair Value	104,988	29,406
Mortgage-backed securities
Available for sale debt securities:
Fair Value	28,707	31,927
Mortgage-backed securities \| Recurring
Available for sale debt securities:
Fair Value	28,707	31,927
Mortgage-backed securities \| Level 2 \| Recurring
Available for sale debt securities:
Fair Value	28,707	31,927
Collateralized mortgage obligations
Available for sale debt securities:
Fair Value	225,023	138,157
Collateralized mortgage obligations \| Recurring
Available for sale debt securities:
Fair Value	225,023	138,157
Collateralized mortgage obligations \| Level 2 \| Recurring
Available for sale debt securities:
Fair Value	225,023	138,157
Collateralized debt obligations
Available for sale debt securities:
Fair Value	143	141
Collateralized debt obligations \| Recurring
Available for sale debt securities:
Fair Value	143	141
Collateralized debt obligations \| Level 3 \| Recurring
Available for sale debt securities:
Fair Value	143	141
Equity securities \| Recurring
Equity securities
Equity securities	4,551	4,457
Equity securities \| Level 1 \| Recurring
Equity securities
Equity securities	$ 4,551	$ 4,457

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2024
Summary of Significant Accounting Policies
Principles of Consolidation	Principles of Consolidation The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The condensed consolidated financial statements include the results of Sterling Bancorp, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates	Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Due to the inherent uncertainty involved in making estimates, actual results reported in the future periods may be based upon amounts that could differ from those estimates.
Concentration of Credit Risk	Concentration of Credit Risk The loan portfolio consists primarily of residential real estate loans, which are collateralized by real estate. At September 30, 2024 and December 31, 2023, residential real estate loans accounted for 74% and 80% of total gross loans, respectively. In addition, most of these residential loans and other commercial loans have been made to individuals and businesses in the state of California, which are dependent on the area economy for their livelihoods and servicing of their loan obligation. At September 30, 2024 and December 31, 2023, approximately 76% and 80%, respectively, of gross loans were originated with respect to properties or businesses located in the state of California. Also, the loan portfolio consists of a loan product of one-, three-, five- or seven-year adjustable-rate mortgages that required a down payment of at least 35% (also referred to herein as “Advantage Loan Program loans”) which was terminated at the end of 2019 and continues to be the largest portion of gross residential loans. An internal review of the Advantage Loan Program and investigations conducted by the U.S. Department of Justice and the OCC indicated that certain employees engaged in misconduct in connection with the origination of a significant number of such loans, including the falsification of information with respect to verification of income, the amount of income reported for borrowers, reliance on third parties and related documentation. This former loan product totaled $485,970, or 54%, and $628,245, or 58% of gross residential loans, at September 30, 2024 and December 31, 2023, respectively.
Recently Issued Accounting Standards Not Yet Adopted	Recently Issued Accounting Standards Not Yet Adopted In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires greater disaggregation of information in a reporting entity’s effective tax rate reconciliation as well as disaggregation of income taxes paid by jurisdiction. This ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The guidance should be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-09 on its income tax disclosures. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires more disaggregated expense information about a public entity’s reportable segments if the significant segment expenses are regularly provided to the chief operating decision maker and included in each reported measure of segment profit or loss. Additionally, ASU 2023-07 allows public entities to disclose more than one measure of segment profit or loss used by the chief operating decision maker. For public entities that have one reportable segment, ASU 2023-07 confirmed that all of the disclosures required in the segment guidance, including disclosing a measure of segment profit or loss and reporting significant segment expense and other items apply to these entities. This ASU 2023-07 does not change the definition of a segment, the method of determining segments, or the criteria for aggregating operating segments into reportable segments. The ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. The ASU 2023-07 should be adopted retrospectively as of the beginning of the earliest period presented. Early adoption is permitted. Management believes the impact of ASU 2023-07 should not have a material impact on the Company’s disclosures.

Debt Securities - Amortized Cost and Fair Value By Contractual Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Available for sale, Amortized Cost
Available for sale, Amortized Cost	$ 451,393	$ 440,211
Available for sale, Fair Value
Available for sale, Fair Value	436,409	419,213
U.S. Treasury and Agency securities
Available for sale, Amortized Cost
Due less than one year	119,844
Due after one year through two years	64,663
Available for sale, Amortized Cost	184,507	253,107
Available for sale, Fair Value
Due less than one year	120,068
Due after one year through two years	62,468
Available for sale, Fair Value	182,536	248,988
Mortgage-backed securities
Available for sale, Amortized Cost
Available for sale, Amortized Cost	31,748	35,757
Available for sale, Fair Value
Available for sale, Fair Value	28,707	31,927
Collateralized mortgage obligations
Available for sale, Amortized Cost
Available for sale, Amortized Cost	234,992	151,196
Available for sale, Fair Value
Available for sale, Fair Value	225,023	138,157
Collateralized debt obligations
Available for sale, Amortized Cost
Available for sale, Amortized Cost	146	151
Available for sale, Fair Value
Available for sale, Fair Value	$ 143	$ 141

Debt Securities - Aggregated by Major Security Type and Length of Time in a Continuous Unrealized Loss Position (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($) security	Dec. 31, 2023 USD ($)
Fair Value
Less than 12 Months, Fair value	$ 96,337	$ 60,133
12 Months or More, Fair Value	202,608	268,805
Available for sale, Continuous unrealized loss position, Fair Value	298,945	328,938
Unrealized Losses
Less than 12 Months, Unrealized Losses	(440)	(222)
12 Months or More, Unrealized Losses	(14,911)	(20,860)
Available for sale, Continuous unrealized loss position, Unrealized Losses	$ (15,351)	(21,082)
Number of debt securities in portfolio \| security	40
Number of debt securities in an unrealized loss position \| security	32
U.S. Treasury and Agency securities
Fair Value
Less than 12 Months, Fair value		49,836
12 Months or More, Fair Value	$ 77,463	125,183
Available for sale, Continuous unrealized loss position, Fair Value	77,463	175,019
Unrealized Losses
Less than 12 Months, Unrealized Losses		(1)
12 Months or More, Unrealized Losses	(2,200)	(4,175)
Available for sale, Continuous unrealized loss position, Unrealized Losses	(2,200)	(4,176)
Mortgage-backed securities
Fair Value
Less than 12 Months, Fair value	4,155
12 Months or More, Fair Value	24,552	31,927
Available for sale, Continuous unrealized loss position, Fair Value	28,707	31,927
Unrealized Losses
Less than 12 Months, Unrealized Losses	(28)
12 Months or More, Unrealized Losses	(3,013)	(3,830)
Available for sale, Continuous unrealized loss position, Unrealized Losses	(3,041)	(3,830)
Collateralized mortgage obligations
Fair Value
Less than 12 Months, Fair value	92,182	10,297
12 Months or More, Fair Value	100,450	111,554
Available for sale, Continuous unrealized loss position, Fair Value	192,632	121,851
Unrealized Losses
Less than 12 Months, Unrealized Losses	(412)	(221)
12 Months or More, Unrealized Losses	(9,695)	(12,845)
Available for sale, Continuous unrealized loss position, Unrealized Losses	(10,107)	(13,066)
Collateralized debt obligations
Fair Value
12 Months or More, Fair Value	143	141
Available for sale, Continuous unrealized loss position, Fair Value	143	141
Unrealized Losses
12 Months or More, Unrealized Losses	(3)	(10)
Available for sale, Continuous unrealized loss position, Unrealized Losses	$ (3)	$ (10)

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash Flows From Operating Activities
Net income	$ 976	$ 2,350
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for (recovery of) credit losses	(4,376)	(4,170)
Deferred income taxes	281	1,601
Gain on extinguishment of Subordinated Notes		(234)
Loss on sale of investment securities		2
Unrealized (gain) loss on equity securities	(94)	137
Net accretion on debt securities	(2,963)	(1,859)
Depreciation and amortization on leasehold improvements and equipment	790	1,031
Originations, net of principal payments, of loans held for sale		(2,655)
Proceeds from sale of mortage loans held for sale		2,979
Gain on sale of loans held for sale		(1,695)
Increase in cash surrender value of company-owned life insurance, net of premiums	(161)	(157)
Valuation allowance adjustments and amortization of mortgage servicing rights	204	163
Stock-based compensation	2,376	1,309
Other	(144)	(20)
Change in operating assets and liabilities:
Accrued interest receivable	(1,141)	(1,025)
Other assets	3,486	2,187
Other liabilities	2,789	(24,308)
Net cash provided by (used in) operating activities	2,023	(24,364)
Cash Flows From Investing Activities
Purchase of interest-bearing time deposits with other banks		(240)
Maturities of interest-bearing time deposits with other banks	250
Maturities and principal receipts of debt securities	211,112	43,231
Proceeds from sale of debt securities		2,977
Purchases of debt securities	(219,330)	(101,287)
Maturities (purchases) of debt securities, net		153
Purchase of shares of Federal Reserve Bank stock	(139)	(4,501)
Proceeds received from redemptions of Federal Home Loan Bank stock	500	1,365
Net decrease in loans	125,685	205,495
Proceeds received from loans held for sale previously classified as portfolio loans		37,930
Principal payments received on loans held for sale previously classified as portfolio loans		1,959
Proceeds from the sales of equipment		46
Purchases of leasehold improvements and equipment	(77)	(326)
Net cash provided by investing activities	118,001	186,802
Cash Flows From Financing Activities
Net increase in deposits	63,207	86,621
Repayment of advance from Federal Home Loan Bank	(50,000)
Payments on redemption of Subordinated Notes		(65,000)
Cash paid for surrender of vested shares to satisfy employee tax liability	(826)	(235)
Net cash provided by financing activities	12,381	21,386
Net change in cash and due from banks	132,405	183,824
Cash and due from banks at beginning of period	577,967	379,798
Cash and due from banks at end of period	710,372	563,622
Cash paid for:
Interest	58,542	44,528
Income taxes		300
Noncash investing and financing activities:
Transfer of residential real estate loans to loans held for sale		34,581
Transfer of residential real estate loans from loans held for sale		3,906
Shares of common stock issued in satisfaction of Company's matching contribution in defined contribution retirement plan		$ 1,028
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 1,969

Commitments and Contingencies - Unfunded Commitments and Litigation (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Unused lines of credit
Commitments and Contingencies
Unused lines of credit	$ 25,268	$ 18,542
Fixed rate loans	$ 5,000	$ 5,000
Interest rate on fixed rate loans	6.00%	6.00%
Variable-rate loans	$ 20,268	$ 13,542
Unused lines of credit \| Minimum
Commitments and Contingencies
Variable interest rate (as a percentage)	4.54%	4.72%
Maturity period for variable interest loans	1 month	5 months
Unused lines of credit \| Maximum
Commitments and Contingencies
Variable interest rate (as a percentage)	10.88%	10.88%
Maturity period for variable interest loans	21 years	22 years
Unused lines of credit \| Construction loans
Commitments and Contingencies
Unused lines of credit	$ 5,229	$ 5,714
Unused lines of credit \| Commercial and industrial loans
Commitments and Contingencies
Unused lines of credit	9,333	874
Unused lines of credit \| Commercial real estate
Commitments and Contingencies
Unused lines of credit	2,164	2,165
Unused lines of credit \| Real estate loan, second mortgage
Commitments and Contingencies
Unused lines of credit	8,542	9,789
Standby letters of credit
Commitments and Contingencies
Unused lines of credit	$ 24	$ 24

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Sep. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Shareholders' Equity

9 Months Ended

Sep. 30, 2024

Shareholders' Equity

Shareholders' Equity

Note 11—Shareholders’ Equity

In April 2023, the Company issued and contributed 184,928 shares of common stock to fund the matching contribution made under the Bank’s defined contribution retirement plan. The contribution amount of $1,028 was valued using the closing market price of the stock on the date contributed or $5.56 per share.

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 505
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481004/946-505-50-6

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 815
-SubTopic 40
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480237/815-40-50-6

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480008/505-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 505
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//505/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 16
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-16

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

+ Details

Loans (Tables)

9 Months Ended

Sep. 30, 2024

Loans

Schedule of major categories of loans held for investment and allowance for credit losses


	September 30,		December 31,
	2024		2023
Residential real estate	$	904,438	$	1,085,776
Commercial real estate		306,927		236,982
Construction		5,212		10,381
Commercial and industrial		7,158		15,832
Other consumer		2		1
Total loans		1,223,737		1,348,972
Less: allowance for credit losses		(24,970)		(29,404)
Loans, net	$	1,198,767	$	1,319,568

Schedule of activity in allowance for credit losses and recorded investment by portfolio segment


	Residential		Commercial				Commercial
Three Months Ended September 30, 2024	Real Estate		Real Estate		Construction		and Industrial		Total
Allowance for credit losses:
Balance at the beginning of the period	$	12,971	$	13,605	$	809	$	171	$	27,556
Provision for (recovery of) credit losses		(710)		(2,109)		52		171		(2,596)
Charge offs		—		—		—		—		—
Recoveries		—		—		10		—		10
Total ending balance	$	12,261	$	11,496	$	871	$	342	$	24,970


	Residential		Commercial				Commercial
Nine Months Ended September 30, 2024	Real Estate		Real Estate		Construction		and Industrial		Total
Allowance for credit losses:
Balance at the beginning of the period	$	14,322	$	13,550	$	1,386	$	146	$	29,404
Provision for (recovery of) credit losses		(2,500)		(2,054)		(526)		196		(4,884)
Charge offs		—		—		—		—		—
Recoveries		439		—		11		—		450
Total ending balance	$	12,261	$	11,496	$	871	$	342	$	24,970


	Residential		Commercial				Commercial
Three Months Ended September 30, 2023	Real Estate		Real Estate		Construction		and Industrial		Total
Allowance for credit losses:
Balance at the beginning of the period	$	16,909	$	16,728	$	2,475	$	41	$	36,153
Provision for (recovery of) credit losses		1,307		(2,482)		(752)		40		(1,887)
Charge offs		—		—		—		—		—
Recoveries		—		—		1		—		1
Total ending balance	$	18,216	$	14,246	$	1,724	$	81	$	34,267


	Residential		Commercial				Commercial
Nine Months Ended September 30, 2023	Real Estate		Real Estate		Construction		and Industrial		Total
Allowance for credit losses:
Balance at the beginning of the period	$	27,951	$	11,694	$	5,781	$	38	$	45,464
Adoption of ASU 2016-13		865		1,151		(3,633)		(34)		(1,651)
Adoption of ASU 2022-02		(11)		—		391		—		380
Provision for (recovery of) credit losses		(4,477)		1,301		(818)		77		(3,917)
Charge offs		(6,478)		—		—		—		(6,478)
Recoveries		366		100		3		—		469
Total ending balance	$	18,216	$	14,246	$	1,724	$	81	$	34,267

Schedule of recorded investment in nonaccrual and loans past due over 90 days or more and still on accrual by class of loans and aging of the recorded investment in past due loans

September 30, 2024

December 31, 2023

Nonaccrual

Past Due 90

Nonaccrual

Past Due 90

With No

Days or More

With No

Days or More

Nonaccrual

Allowance for

and Still

Nonaccrual

Allowance for

and Still

Loans

Credit Losses

Accruing

Loans

Credit Losses

Accruing

Residential real estate:

Residential first mortgage

13,187

3,482

8,942

4,079

The following table presents an aging of the amortized cost basis of contractually past due loans as of September 30, 2024 and December 31, 2023:


	30 - 59		60 - 89		90 Days
	Days		Days		or More		Total		Current
September 30, 2024	Past Due		Past Due		Past Due		Past Due		Loans		Total
Residential real estate	$	8,612	$	3,799	$	13,214	$	25,625	$	878,813	$	904,438
Commercial real estate		—		—		—		—		306,927		306,927
Construction		—		—		—		—		5,212		5,212
Commercial and industrial		—		—		—		—		7,158		7,158
Other consumer		—		—		—		—		2		2
Total	$	8,612	$	3,799	$	13,214	$	25,625	$	1,198,112	$	1,223,737


	30 - 59		60 - 89		90 Days
	Days		Days		or More		Total		Current
December 31, 2023	Past Due		Past Due		Past Due		Past Due		Loans		Total
Residential real estate	$	16,634	$	2,305	$	8,973	$	27,912	$	1,057,864	$	1,085,776
Commercial real estate		—		—		—		—		236,982		236,982
Construction		—		—		—		—		10,381		10,381
Commercial and industrial		—		—		—		—		15,832		15,832
Other consumer		—		—		—		—		1		1
Total	$	16,634	$	2,305	$	8,973	$	27,912	$	1,321,060	$	1,348,972

Schedule of risk rating of loans by class of loans


													Revolving		Revolving
													Loans		Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
As of September 30, 2024	2024		2023		2022		2021		2020		Prior		Costs Basis		to Term		Total
Residential lending
Residential mortgage loans:
Payment performance:
Accrual	$	—	$	757	$	70,465	$	123,212	$	90,790	$	598,289	$	7,479	$	259	$	891,251
Nonaccrual		—		—		—		—		—		13,187		—		—		13,187
Total residential mortgage loans	$	—	$	757	$	70,465	$	123,212	$	90,790	$	611,476	$	7,479	$	259	$	904,438
Residential mortgage loans:
Current period gross write offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


													Revolving		Revolving
													Loans		Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
As of December 31, 2023	2023		2022		2021		2020		2019		Prior		Costs Basis		to Term		Total
Residential lending
Residential mortgage loans:
Payment performance:
Accrual	$	764	$	72,840	$	132,567	$	99,676	$	202,793	$	560,185	$	7,729	$	280	$	1,076,834
Nonaccrual		—		—		—		—		1,739		7,203		—		—		8,942
Total residential mortgage loans	$	764	$	72,840	$	132,567	$	99,676	$	204,532	$	567,388	$	7,729	$	280	$	1,085,776
Residential mortgage loans:
Current period gross write offs	$	—	$	—	$	—	$	—	$	1,858	$	4,601	$	19	$	—	$	6,478

The amortized cost basis by year of origination and credit quality indicator of the Company’s commercial loans based on the most recent analysis performed was as follows:


													Revolving		Revolving
													Loans		Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
As of September 30, 2024	2024		2023		2022		2021		2020		Prior		Costs Basis		to Term		Total
Commercial lending
Commercial real estate:
Risk rating
Pass	$	108,512	$	22,009	$	78,599	$	7,515	$	37,191	$	20,964	$	—	$	—	$	274,790
Special mention		1,142		937		2,883		—		—		5,373		—		—		10,335
Substandard		—		—		—		11,800		—		10,002		—		—		21,802
Total commercial real estate	$	109,654	$	22,946	$	81,482	$	19,315	$	37,191	$	36,339	$	—	$	—	$	306,927
Commercial real estate:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction:
Risk rating
Pass	$	—	$	9	$	—	$	—	$	—	$	—	$	—	$	—	$	9
Substandard		—		—		—		—		—		5,203		—		—		5,203
Total construction	$	—	$	9	$	—	$	—	$	—	$	5,203	$	—	$	—	$	5,212
Construction:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial:
Risk rating
Pass	$	—	$	512	$	—	$	—	$	—	$	19	$	6,627	$	—	$	7,158
Total commercial and industrial	$	—	$	512	$	—	$	—	$	—	$	19	$	6,627	$	—	$	7,158
Commercial and industrial:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


													Revolving		Revolving
													Loans		Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
As of December 31, 2023	2023		2022		2021		2020		2019		Prior		Costs Basis		to Term		Total
Commercial lending
Commercial real estate:
Risk rating
Pass	$	28,975	$	79,013	$	33,694	$	35,148	$	6,938	$	13,020	$	—	$	—	$	196,788
Special mention		948		3,574		1,407		2,724		8,610		4,253		—		—		21,516
Substandard		—		—		11,778		—		2,805		4,095		—		—		18,678
Total commercial real estate	$	29,923	$	82,587	$	46,879	$	37,872	$	18,353	$	21,368	$	—	$	—	$	236,982
Commercial real estate:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction:
Risk rating
Pass	$	14	$	—	$	—	$	1,591	$	—	$	—	$	—	$	—	$	1,605
Substandard		—		—		—		—		8,776		—		—		—		8,776
Total construction	$	14	$	—	$	—	$	1,591	$	8,776	$	—	$	—	$	—	$	10,381
Construction:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial:
Risk rating
Pass	$	14,461	$	1,071	$	—	$	—	$	—	$	97	$	130	$	73	$	15,832
Total commercial and industrial	$	14,461	$	1,071	$	—	$	—	$	—	$	97	$	130	$	73	$	15,832
Commercial and industrial:
Current period gross charge offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
Net income (loss)	$ (143)	$ 314	$ 976	$ 2,350
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on investment securities, arising during the period, net of tax effect of $1,998, $(1,014), $1,655 and $(563), respectively	5,264	(2,671)	4,360	(1,479)
Reclassification adjustment for loss included in net income (loss) of $-, $-, $ - and $2, respectively, included in loss on sale of investment securities, net of tax effect of $-, $- , $- and $1, respectively				1
Total other comprehensive income (loss)	5,264	(2,671)	4,360	(1,478)
Comprehensive income (loss)	$ 5,121	$ (2,357)	$ 5,336	$ 872

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2024

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 2—Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The condensed consolidated financial statements include the results of Sterling Bancorp, Inc. and its wholly-owned subsidiaries.

All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Due to the inherent uncertainty involved in making estimates, actual results reported in the future periods may be based upon amounts that could differ from those estimates.

Concentration of Credit Risk

The loan portfolio consists primarily of residential real estate loans, which are collateralized by real estate. At September 30, 2024 and December 31, 2023, residential real estate loans accounted for 74% and 80% of total gross loans, respectively. In addition, most of these residential loans and other commercial loans have been made to individuals and businesses in the state of California, which are dependent on the area economy for their livelihoods and servicing of their loan obligation. At September 30, 2024 and December 31, 2023, approximately 76% and 80%, respectively, of gross loans were originated with respect to properties or businesses located in the state of California.

Also, the loan portfolio consists of a loan product of one-, three-, five- or seven-year adjustable-rate mortgages that required a down payment of at least 35% (also referred to herein as “Advantage Loan Program loans”) which was terminated at the end of 2019 and continues to be the largest portion of gross residential loans. An internal review of the Advantage Loan Program and investigations conducted by the U.S. Department of Justice and the OCC indicated that certain employees engaged in misconduct in connection with the origination of a significant number of such loans, including the falsification of information with respect to verification of income, the amount of income reported for borrowers, reliance on third parties and related documentation. This former loan product totaled $485,970, or 54%, and $628,245, or 58% of gross residential loans, at September 30, 2024 and December 31, 2023, respectively.

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires greater disaggregation of information in a reporting entity’s effective tax rate reconciliation as well as disaggregation of income taxes paid by jurisdiction. This ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The guidance should be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-09 on its income tax disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires more disaggregated expense information about a public entity’s reportable segments if the significant segment expenses are regularly provided to the chief operating decision maker and included in each reported measure of segment profit or loss. Additionally, ASU 2023-07 allows public entities to disclose more than one measure of segment profit or loss used by the chief operating decision maker. For public entities that have one reportable segment, ASU 2023-07 confirmed that all of the disclosures required in the segment guidance, including disclosing a measure of segment profit or loss and reporting significant segment expense and other items apply to these entities. This ASU 2023-07 does not change the definition of a segment, the method of determining segments, or the criteria for aggregating operating segments into reportable segments. The ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. The ASU 2023-07 should be adopted retrospectively as of the beginning of the earliest period presented. Early adoption is permitted. Management believes the impact of ASU 2023-07 should not have a material impact on the Company’s disclosures.

Subordinated Notes

9 Months Ended

Sep. 30, 2024

Subordinated Notes

Subordinated Notes

Note 9— Subordinated Notes

On July 15, 2023, the Company redeemed all of its outstanding 7% Fixed to Floating Subordinated Notes, due April 15, 2026 (“Subordinated Notes”), at a redemption price equal to 100% of the outstanding principal amount of $65,000 plus accrued interest, for a total cash payment of $66,821. The Company recorded a gain on the extinguishment of the Subordinated Notes of $234 which equaled the remaining unamortized note premium. The gain on the extinguishment of the Subordinated Notes was recorded in other income within non-interest income in the consolidated statements of operations for the three and nine months ended September 30, 2023.

The Subordinated Notes accrued interest at a variable interest rate based on the three-month London Interbank Offered Rate (“LIBOR”) plus a margin of 5.82%, payable quarterly in arrears. Note premium costs were amortized over the contractual term of the Subordinated Notes into interest expense using the effective interest method. Interest expense on these Subordinated Notes was $243 and $3,727 for the three and nine months ended September 30, 2023, respectively.

Debt Securities

9 Months Ended

Sep. 30, 2024

Debt Securities

Debt Securities

Note 3—Debt Securities

The following tables summarize the amortized cost and fair value of available for sale debt securities at September 30, 2024 and December 31, 2023 and the corresponding amounts of gross unrealized gains and losses:


	September 30, 2024
	Amortized		Gross Unrealized				Fair
	Cost		Gain		Loss		Value
Available for sale:
U.S. Treasury and Agency securities	$	184,507	$	229	$	(2,200)	$	182,536
Mortgage-backed securities		31,748		—		(3,041)		28,707
Collateralized mortgage obligations		234,992		138		(10,107)		225,023
Collateralized debt obligations		146		—		(3)		143
Total	$	451,393	$	367	$	(15,351)	$	436,409


	December 31, 2023
	Amortized		Gross Unrealized				Fair
	Cost		Gain		Loss		Value
Available for sale:
U.S. Treasury and Agency securities	$	253,107	$	57	$	(4,176)	$	248,988
Mortgage-backed securities		35,757		—		(3,830)		31,927
Collateralized mortgage obligations		151,196		27		(13,066)		138,157
Collateralized debt obligations		151		—		(10)		141
Total	$	440,211	$	84	$	(21,082)	$	419,213

The Company has pledged investment securities with a fair value of $77,463 and $61,078 at September 30, 2024 and December 31, 2023, respectively, with the FHLB as collateral on its available FHLB borrowings.

Accrued interest receivable on available for sale debt securities totaled $1,857 and $1,535 at September 30, 2024 and December 31, 2023, respectively.

The mortgage-backed securities, and a majority of the collateralized mortgage obligations are issued and/or guaranteed by a U.S. government agency (Government National Mortgage Association) or a U.S. government-sponsored enterprise (Federal Home Loan Mortgage Corporation (“Freddie Mac”) or Federal National Mortgage Association (“Fannie Mae”)). The fair value of the private-label collateralized mortgage obligations was $278 and $308 at September 30, 2024 and December 31, 2023, respectively.

No securities of any single issuer, other than debt securities issued by the U.S. government, government agency and government-sponsored enterprises, were in excess of 10% of total shareholders’ equity as of September 30, 2024 and December 31, 2023.

Information pertaining to sales of available for sale debt securities for the three and nine months ended September 30, 2024 and 2023 is as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Proceeds from the sale of debt securities	$	—	$	—	$	—	$	2,977

Gross realized gains	$	—	$	—	$	—	$	1
Gross realized losses		—		—		—		(3)
Total net realized losses	$	—	$	—	$	—	$	(2)

The income tax benefit related to the net realized losses was $(1) for the nine months ended September 30, 2023.

The amortized cost and fair value of U.S. Treasury and Agency securities at September 30, 2024 are shown by contractual maturity in the table below. Mortgage-backed securities, collateralized mortgage obligations and collateralized debt obligations are disclosed separately as the expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.


	Amortized		Fair
	Cost		Value
U.S. Treasury and Agency securities:
Due less than one year	$	119,844	$	120,068
Due after one year through two years		64,663		62,468
Mortgage-backed securities		31,748		28,707
Collateralized mortgage obligations		234,992		225,023
Collateralized debt obligations		146		143
Total	$	451,393	$	436,409

The following table summarizes available for sale debt securities, at fair value, in an unrealized loss position for which an allowance for credit losses has not been recorded at September 30, 2024 and December 31, 2023, aggregated by major security type and length of time the individual securities have been in a continuous unrealized loss position:


	September 30, 2024
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and Agency securities	$	—	$	—	$	77,463	$	(2,200)	$	77,463	$	(2,200)
Mortgage-backed securities		4,155		(28)		24,552		(3,013)		28,707		(3,041)
Collateralized mortgage obligations		92,182		(412)		100,450		(9,695)		192,632		(10,107)
Collateralized debt obligations		—		—		143		(3)		143		(3)
Total	$	96,337	$	(440)	$	202,608	$	(14,911)	$	298,945	$	(15,351)


	December 31, 2023
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury and Agency securities	$	49,836	$	(1)	$	125,183	$	(4,175)	$	175,019	$	(4,176)
Mortgage-backed securities		—		—		31,927		(3,830)		31,927		(3,830)
Collateralized mortgage obligations		10,297		(221)		111,554		(12,845)		121,851		(13,066)
Collateralized debt obligations		—		—		141		(10)		141		(10)
Total	$	60,133	$	(222)	$	268,805	$	(20,860)	$	328,938	$	(21,082)

As of September 30, 2024, the debt securities portfolio consisted of 40 debt securities, with 32 debt securities in an unrealized loss position. For debt securities in an unrealized loss position, the Company has both the intent and ability to hold these investments and, based on the current conditions, the Company does not believe it is likely that it will be required to sell these debt securities prior to recovery of the amortized cost. As the Company had the intent and the ability to hold the debt securities in an unrealized loss position at September 30, 2024, each security with an unrealized loss position was further assessed to determine if a credit loss exists.

The Company’s debt, mortgage-backed securities and the majority of the collateralized mortgage obligations are issued and guaranteed by the U.S. government, its agencies and government-sponsored enterprises. The Company has a long history with no credit losses from issuers of U.S. government, its agencies and government-sponsored enterprises. As a result, management does not expect any credit losses on its available for sale debt securities. Accordingly, the Company has not recorded an allowance for credit losses for its available for sale debt securities at September 30, 2024 and December 31, 2023.