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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2024

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

For the transition period from _______________ to _______________

Commission File No. 001-40609

1895 Bancorp of Wisconsin, Inc.

(Exact Name of Registrant as Specified in Its Charter)


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

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

(414) 421-8200

(Registrant’s Telephone Number, Including Area Code)

N/A

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

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

     Title of each class

     Trading
Symbol(s)

     Name of each exchange on which registered

     Common Stock, par value $0.01 per share

     BCOW

     The NASDAQ Stock Market, LLC

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

Yes  No 

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

Yes  No 

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


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

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

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

Yes  No 

6,002,335 shares of the Registrant’s common stock, par value $0.01 per share, were outstanding as of April 30, 2024.

1895 Bancorp of Wisconsin, Inc.

Form 10-Q

Table of Contents


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Consolidated Balance Sheets at March 31, 2024 (unaudited) and December 31, 2023	1

	Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023 (unaudited)	2

	Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2024 and 2023 (unaudited)	3

	Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023 (unaudited)	4

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (unaudited)	5

	Notes to Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42

Item 4.	Controls and Procedures	42

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	42

Item 1A.	Risk Factors	42

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	42

Item 3.	Defaults Upon Senior Securities	42

Item 4.	Mine Safety Disclosures	42

Item 5.	Other Information	42

Item 6.	Exhibits	43

	SIGNATURES	44

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

1895 Bancorp of Wisconsin, Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	March 31, 2024			December 31, 2023
	(unaudited)
Assets
Cash and due from banks	$	14,032		$	11,220
Fed funds sold		8,970			2,030
Cash and cash equivalents		23,002			13,250

Marketable equity securities, stated at fair value		3,976			3,625
Available-for-sale securities, stated at fair value (amortized cost $116,634 and $119,055)		106,388			109,559
Loans held for sale		826			704
Loans, net of deferred costs		397,120			398,568
Allowance for credit losses for loans		(3,679	)		(3,734	)
Total loans, net of deferred loan costs and allowance for credit losses		393,441			394,834
Premises and equipment, net		5,086			5,182
Mortgage servicing rights, net		1,690			1,720
Federal Home Loan Bank (FHLB) stock, at cost		4,564			4,164
Accrued interest receivable		1,521			1,554
Cash value of life insurance		14,138			14,027
Other assets		9,617			8,988
TOTAL ASSETS	$	564,249		$	557,607
Liabilities and Stockholders’ Equity
Deposits	$	399,285		$	403,683
Advance payments by borrowers for taxes and insurance		3,918			1,233
FHLB advances		80,014			71,007
Accrued interest payable		1,239			1,106
Other liabilities		8,283			7,817
TOTAL LIABILITIES		492,739			484,846
Preferred stock, $0.01 par value, 10,000,000 shares authorized at March 31, 2024 and December 31, 2023		—			—
Common stock (par value $0.01 per share) Authorized - 90,000,000 shares at March 31, 2024 and December 31, 2023; Issued – 6,041,510 at March 31, 2024 and 6,114,183 at December 31, 2023 (includes 134,263 and 144,297 unvested shares, respectively); Outstanding – 6,011,992 at March 31, 2024 and 6,084,665 at December 31, 2023 (includes 134,263 and 144,297 unvested shares, respectively)		60			61
Additional paid-in capital		49,379			49,778
Unallocated common stock of Employee Stock Ownership Plan (ESOP), 429,157 and 434,062 shares at March 31, 2024 and December 31, 2023, respectively		(4,073	)		(4,120	)
Less treasury stock at cost, 29,518 shares at March 31, 2024 and December 31, 2023		(295	)		(295	)
Retained earnings		33,586			33,892
Accumulated other comprehensive loss, net of income taxes		(7,147	)		(6,555	)
Total stockholders’ equity		71,510			72,761
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	564,249		$	557,607

See accompanying notes to the unaudited consolidated financial statements.

1895 BANCORP OF WISCONSIN, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts) – Unaudited


	Three months ended March 31,
	2024			2023
Interest and dividend income:
Loans, including fees	$	4,799		$	3,826
Securities, taxable		1,040			602
Other		194			284
Total interest and dividend income		6,033			4,712
Interest expense:
Interest-bearing deposits		2,391			982
Borrowed funds		578			493
Other interest-bearing funds		1			2
Total interest expense		2,970			1,477
Net interest income		3,063			3,235
Provision for credit losses		75			75
Net interest income after provision for credit losses		2,988			3,160
Noninterest income:
Service charges and other fees		219			224
Loan servicing, net		163			174
Net gain on sale of loans		67			38
Increase in cash surrender value of insurance		111			108
Unrealized gain on marketable equity securities		337			220
Other		7			6
Total noninterest income		904			770
Noninterest expense:
Salaries and employee benefits		2,365			2,693
Unrealized gain on marketable equity securities		337			220
Advertising and promotions		8			49
Data processing		227			225
Occupancy and equipment		299			338
FDIC assessment		81			37
Other		981			880
Total noninterest expense		4,298			4,442
Loss before income taxes		(406	)		(512	)
Income tax benefit		(100	)		(151	)
Net loss	$	(306	)	$	(361	)
Loss per share:
Basic	$	(0.06	)	$	(0.07	)
Diluted(1)	$	(0.06	)	$	(0.07	)
Average common shares outstanding:
Basic		5,467,653			5,535,489
Diluted(1)		5,467,653			5,535,489

See accompanying notes to the unaudited consolidated financial statements.

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

1895 Bancorp of Wisconsin, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands) - Unaudited


	Three months ended March 31,
	2024			2023
Net loss	$	(306	)	$	(361	)
Other comprehensive (loss) income:
Unrealized holding (losses) gains arising during the period on available-for-sale securities		(750	)		2,230
Other comprehensive (loss) income before tax effect		(750	)		2,230
Tax effect of other comprehensive (loss) income items		158			(602	)
Other comprehensive (loss) income, net of tax		(592	)		1,628
Comprehensive (loss) income	$	(898	)	$	1,267

See accompanying notes to the unaudited consolidated financial statements.

1895 Bancorp of Wisconsin, Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands) - Unaudited


	Common Stock			Additional Paid-In Capital			Unallocated Common Stock of ESOP			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity

Balance as of January 1, 2023	$	62		$	49,931		$	(4,307	)	$	(301	)	$	41,468		$	(11,491	)	$	75,362
Net loss		—			—			—			—			(361	)		—			(361	)
Other comprehensive income		—			—			—			—			—			1,628			1,628
Cumulative effect of change in accounting principle due to adoption of ASU 2016-13		—			—			—			—			(783	)		—			(783	)
ESOP shares committed to be released (4,864 shares)		—			—			47			—			—			—			47
Repurchase and cancellation of shares-stock repurchase program (12,903 shares)		—			(129	)		—			—			—			—			(129	)
Retirement of common stock		—			(13	)		—			—			—			—			(13	)
Stock compensation expense		—			188			—			—			—			—			188
Balance as of March 31, 2023	$	62		$	49,977		$	(4,260	)	$	(301	)	$	40,324		$	(9,863	)	$	75,939

Balance as of January 1, 2024	$	61		$	49,778		$	(4,120	)	$	(295	)	$	33,892		$	(6,555	)	$	72,761
Net loss		—			—			—			—			(306	)		—			(306	)
Other comprehensive loss		—			—			—			—			—			(592	)		(592	)
ESOP shares committed to be released (4,905 shares)		—			(10	)		47			—			—			—			37
Repurchase and cancellation of shares-stock repurchase program (69,648 shares)		(1	)		(547	)														(548	)
Retirement of common stock		—			(8	)		—			—			—			—			(8	)
Stock compensation expense		—			166			—			—			—			—			166
Balance as of March 31, 2024	$	60		$	49,379		$	(4,073	)	$	(295	)	$	33,586		$	(7,147	)	$	71,510

See accompanying notes to the unaudited consolidated financial statements.

1895 BANCORP OF WISCONSIN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) - Unaudited


	Three months ended March 31,
	2024			2023
Cash flows from operating activities
Net loss	$	(306	)	$	(361	)
Adjustments to reconcile net loss to net cash from operating activities
Net amortization of investment securities		34			20
Depreciation		118			128
Provision for credit losses		75			75
Net change in fair value of marketable equity securities		(337	)		(220	)
Stock compensation expense		166			188
Benefit from deferred income tax		(100	)		(151	)
Originations of mortgage loans held for sale		(2,151	)		(2,300	)
Proceeds from sales of mortgage loans held for sale		2,096			2,464
Net gain on sale of mortgage loans held for sale		(67	)		(38	)
ESOP compensation		37			47
Net change in cash value of life insurance		(111	)		(108	)
Changes in operating assets and liabilities
Net change in mortgage servicing rights		30			37
Accrued interest receivable and other assets		(338	)		(481	)
Accrued interest payable and other liabilities		456			(387	)
Net cash used in operating activities		(398	)		(1,087	)
Cash flows from investing activities
Maturities, prepayments, and calls of available-for-sale securities		2,387			3,287
Purchase of marketable equity securities		(14	)		(26	)
Net decrease (increase) in loans		1,461			(7,615	)
Net increase in FHLB stock, net		(400	)		(1,382	)
Net capital expenditures for premises and equipment		(22	)		(80	)
Net cash provided by (used in) investing activities		3,412			(5,816	)
Cash flows from financing activities
Net decrease in deposits		(4,398	)		(15,755	)
Net increase in advance payments by borrowers for taxes and insurance		2,685			2,957
Proceeds from the issuance of Federal Home Loan Bank advances		53,000			64,500
Principal payments on Federal Home Loan Bank advances		(43,993	)		(43,986	)
Repurchase and cancellation of common stock		(548	)		(129	)
Retirement of common stock		(8	)		(13	)
Net cash provided by financing activities		6,738			7,574
Net increase in cash and cash equivalents		9,752			671
Cash and cash equivalents at beginning of period		13,250			28,344
Cash and cash equivalents at end of period	$	23,002		$	29,015
Supplemental cash flow information
Cash paid during the year for interest	$	2,837		$	1,278

See accompanying notes to the unaudited consolidated financial statements.

1895 BANCORP OF WISCONSIN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

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

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

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

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

The accompanying unaudited consolidated financial statements and related notes should be read in conjunction with the audited annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission on March 29, 2024.

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

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

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

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

Subsequent Events

Management has reviewed the Company's operations for potential disclosure or financial statement impacts related to events occurring after March 31, 2024, but prior to the release of the unaudited consolidated financial statements contained in this quarterly report on Form 10-Q were issued.

There were no additional subsequent event disclosures or financial statement impacts related to events occurring after March 31, 2024 that warranted adjustment to or disclosure in these unaudited consolidated financial statements.

NOTE 2 – RECENT ACCOUNTING STANDARDS

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

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, that requires presentation of specific categories of reconciling items, as well reconciling items that meet a quantitative threshold, in the reconciliation between the income tax provision and the income tax provision using statutory tax rates. The standard also requires disclosure of income taxes paid disaggregated by jurisdiction with separate disclosure of income taxes paid to individual jurisdictions that meet a quantitative threshold. The amendments in this accounting standard are effective for fiscal years beginning after December 15, 2024, on a prospective basis. Early adoption and retrospective application are permitted. We do not expect the adoption of this accounting standard to have an impact on our Consolidated Financial Statements but will require certain additional disclosures.

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

NOTE 3 – AVAILABLE-FOR-SALE SECURITIES

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


	March 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Obligations of states and political subdivisions	$	17,029	$	1	$	(2,916	)	$	14,114
Government-sponsored mortgage-backed securities		95,504		71		(7,398	)		88,177
Asset-backed securities		3,356		5		(6	)		3,355
Certificates of deposit		745		—		(3	)		742
Total	$	116,634	$	77	$	(10,323	)	$	106,388


	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Obligations of states and political subdivisions	$	17,043	$	3	$	(2,815	)	$	14,231
Government-sponsored mortgage-backed securities		97,674		305		(6,960	)		91,019
Asset-backed securities		3,593		—		(21	)		3,572
Certificates of deposit		745		—		(8	)		737
Total	$	119,055	$	308	$	(9,804	)	$	109,559

The fair value of available-for-sale securities that were pledged as collateral at March 31, 2024 and December 31, 2023, were $9.3 million and $426,000, respectively.

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


	March 31, 2024
	Amortized Cost		Fair Value
	(in thousands)
Debt and other securities:
Due in one year or less	$	1,560	$	1,541
Due after one through 5 years		340		341
Due after 5 through 10 years		12,959		10,718
Due after 10 years		2,915		2,256
Total debt and other securities		17,774		14,856
Mortgage-related securities		95,504		88,177
Asset-backed securities		3,356		3,355
Total	$	116,634	$	106,388

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

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


	March 31, 2024
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(in thousands)
Obligations of states and political subdivisions	$	—	$	—		$	13,773	$	(2,916	)	$	13,773	$	(2,916	)
Government-sponsored mortgage-backed securities		31,194		(218	)		39,581		(7,180	)		70,775		(7,398	)
Asset-backed securities		—		—			1,726		(6	)		1,726		(6	)
Certificates of deposit		—		—			742		(3	)		742		(3	)
Total	$	31,194	$	(218	)	$	55,822	$	(10,105	)	$	87,016	$	(10,323	)


	December 31, 2023
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(in thousands)
Obligations of states and political subdivisions	$	—	$	—		$	13,889	$	(2,815	)	$	13,889	$	(2,815	)
Government-sponsored mortgage-backed securities		—		—			40,983		(6,960	)		40,983		(6,960	)
Asset-backed securities		1,740		(5	)		1,832		(16	)		3,572		(21	)
Certificates of deposit		—		—			737		(8	)		737		(8	)
Total	$	1,740	$	(5	)	$	57,441	$	(9,799	)	$	59,181	$	(9,804	)

The following table presents the number of debt securities in an unrealized loss position and the aggregate depreciation from their unamortized cost basis, by security type, as of March 31, 2024 and December 31, 2023.


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

The Company does not consider these unrealized losses to be attributable to credit-related factors, as the unrealized losses in each category have occurred as a result of changes in noncredit-related factors such as changes in interest rates, market spreads and market conditions subsequent to purchase, not credit deterioration. As a result, no allowance for credit losses on available-for-sale securities was recognized as of March 31, 2024 or December 31, 2023.

NOTE 4 – LOANS

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


	March 31, 2024			December 31, 2023
	(in thousands)
Commercial:
Real estate	$	233,861		$	231,893
Other		43,355			47,898
Residential real estate:
First mortgage		99,092			97,747
Construction		701			359
Consumer:
Home equity and lines of credit		19,216			19,683
Other		83			134
Subtotal (1)		396,308			397,714
Net deferred loan costs		812			854
Allowance for credit losses for loans		(3,679	)		(3,734	)
Loans, net	$	393,441		$	394,834

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

Deposit accounts in an overdrawn position and reclassified as loans totaled $30,000 and $78,000 at March 31, 2024 and December 31, 2023, respectively.

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

The Company also purchases loan participations from other financial institutions. The outstanding balance of loans purchased are included in the totals above and totaled $56.0 million as of March 31, 2024 and $50.8 million as of December 31, 2023. In addition, the amount available for future draws totaled $56.0 million at March 31, 2024. Loans purchased are primarily comprised of commercial real estate and other commercial loans.

During the normal course of business, the Company may transfer a portion of a loan as a participation loan to another financial institution in order to manage portfolio risk. In order to be eligible for sales treatment, all cash flows from the loan must be divided proportionately, and rights of each loan holder must have the same priority, the loan holders must have no recourse to the transferor other than standard representations and warranties, and no loan holder can have the right to pledge or exchange the entire loan. As of March 31, 2024 and December 31, 2023, respectively, the Company had transferred $28.8 million and $29.0 million in participation loans which were eligible for sales treatment to other financial institutions, all of which continue to be serviced by the Company.

NOTE 4 – LOANS (continued)

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


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

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

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

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

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

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

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

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

NOTE 4 – LOANS (continued)

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


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

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

•

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

•

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

•

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

•

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

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

NOTE 4 – LOANS (continued)

The following tables presents the amortized cost basis of our loans by credit quality indicator and origination year, at March 31, 2024 and December 31, 2023:


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


	December 31, 2023
	2023		2022		2021		2020		2019		2018 and Prior		Revolving Lines of Credit		Revolving Lines of Credit Converted to Term Loans		Total Loans
	(in thousands)
Commercial real estate:
Pass	$	22,486	$	78,098	$	40,597	$	40,914	$	8,881	$	34,342	$	42	$	-	$	225,360
Watch and special mention		-		232		-		-		1,706		328		-		-		2,266
Substandard		-		1,885		598		-		287		1,075		-		-		3,845
Nonaccrual		-		79		-		-		-		343		-		-		422
Total commercial real estate		22,486		80,294		41,195		40,914		10,874		36,088		42		-		231,893
Other commercial loans:
Pass		16,949		11,347

1895 Bancorp of Wisconsin, Inc. /MD/ 10-Q