What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-08 compared with 2023-05-05 · 236 added, 204 removed, 1035 unchanged (30% of the section changed)

27 unchanged sentences

Less treasury stock, at cost -

at March 31, 2023

at June 30, 2023

and December 31, 2022, respectively

6 unchanged sentences

Consolidated Statements of Earnings

Quarter ended March 31,

Quarter ended June 30,

Six months ended June 30,

(Dollars in thousands, except share and per share data)

7 unchanged sentences

Net interest income

Provision for (recoveries of) credit losses

Provision for credit losses

Net interest income after provision for credit

20 unchanged sentences

Consolidated Statements of Comprehensive Income

Quarter ended March 31,

Quarter ended June 30,

Six months ended June 30,

(Dollars in thousands)

Other comprehensive income (loss), net of tax:

Unrealized net holding gain (loss) on securities

Other comprehensive income (loss)

Comprehensive income (loss)

Other comprehensive (loss) income, net of tax:

Unrealized net (loss) gain on securities

Other comprehensive (loss) income

Comprehensive (loss) income

See accompanying notes to consolidated financial statements

5 unchanged sentences

(Dollars in thousands, except share data)

income (loss)

Quarter ended March 31, 2023

(loss) income

Quarter ended June 30, 2023

Balance, March 31, 2023

Other comprehensive loss

Cash dividends paid ($

Stock repurchases

Sale of treasury stock

Balance, June 30, 2023

Quarter ended June 30, 2022

Balance, March 31, 2022

Other comprehensive loss

Cash dividends paid ($

Stock repurchases

Sale of treasury stock

Balance, June 30, 2022

Six months ended June 30,2023

Balance, December 31, 2022

4 unchanged sentences

Sale of treasury stock

Balance, March 31, 2023

Quarter ended March 31, 2022

Balance, June 30, 2023

Six months ended June 30,2022

Balance, December 31, 2021

3 unchanged sentences

Sale of treasury stock

Balance, March 31, 2022

Balance, June 30, 2022

See accompanying notes to consolidated financial statements

3 unchanged sentences

Consolidated Statements of Cash Flows

Three months ended March 31,

Six months ended June 30,

(Dollars in thousands)

2 unchanged sentences

operating activities:

Provision for (reversal of) credit losses

Provision for credit losses

Depreciation and amortization

1 unchanged sentence

Net gain on sale of loans held for sale

Net gain on other real estate owned

Loans originated for sale

12 unchanged sentences

Decrease (increase) in FHLB stock

Net cash provided by investing activities

Proceeds from sale of other real estate owned

Net cash used in investing activities

Cash flows from financing activities:

Net decrease in noninterest-bearing deposits

Net (decrease) increase in interest-bearing deposits

Net increase in interest-bearing deposits

Net (decrease) increase in federal funds purchased and securities sold

75 unchanged sentences

and interchange fees – Fees from these services are either

transaction-based, for which the performance obligations are satisfied

when the individual transaction is processed,

or set periodic service charges, for which the performance obligations are

satisfied over the period the service is

Transaction-based fees are recognized at the time

the transaction is processed, and periodic service

charges are recognized over the service period.

(i) transaction-based, for which the performance obligations are satisfied

when the individual transaction is

processed, or (ii) set periodic service charges, for which the performance

obligations are satisfied over the period

the service is provided.

Transaction-based

fees are recognized at the time the transaction is processed, and periodic

service charges are recognized over the service period.

Gains on sales of OREO

4 unchanged sentences

to which it is

In addition to the loan-to-value ratio, the analysis is based on various other factors

including the credit

quality of the borrower, the structure of the loan, and any other

factors that we believe may affect collectability.

In addition to the loan-to-value ratio, where the seller provides

the purchaser with financing, the analysis

is based on various other factors,

including the credit quality of the purchaser, the structure

of the loan, and any

other factors that we believe may affect collectability.

Subsequent Events

The Company has evaluated the effects of events and transactions through

the date of this filing that have occurred

subsequent to March 31, 2023.

The Company has evaluated the effects of events and transactions

through the date of this filing that have occurred

subsequent to June 30, 2023.

The Company does not believe there were any material subsequent events during this

period that would have required

further recognition or disclosure in the unaudited consolidated financial statements

included in this report except as

reported in Note 8, Subsequent Events.

that would have required further recognition or disclosure in the unaudited

consolidated financial statements included in

Reclassifications

11 unchanged sentences

CECL requires

estimate of credit losses for the remaining estimated life of the financial asset using historical

experience, current

estimate of credit losses for the remaining estimated life of the financial asset using

historical experience, current

conditions, and reasonable and supportable forecasts and generally applies to

21 unchanged sentences

million, which is recorded within other liabilities.

recorded a net decrease to retained earnings of $0.8 million as of January 1, 2023

for the cumulative effect of adopting

recorded a net decrease to retained earnings of $0.8 million as of January 1, 2023 for the cumulative

effect of adopting

CECL, which reflects the transition adjustments noted above, net of the applicable deferred

65 unchanged sentences

Under the cost-recovery

method, interest income is not recognized until the loan balance is reduced to

method, interest income is not recognized until the loan balance is reduced to zero.

Loans are returned to accrual status

22 unchanged sentences

procedures to appropriately consider the unique characteristics of

loan segments (commercial and industrial, construction and land development,

commercial real estate, multifamily,

residential real estate, and consumer loans).

These segments are further disaggregated into loan classes, the level at which

credit quality is monitored.

See Note 5, Loans and Allowance for Credit Losses for additional information about our loan

respective loan segments (commercial and industrial, construction and land development,

commercial real estate,

multifamily, residential real estate,

and consumer loans).

These segments are further disaggregated into loan classes, the

level at which credit quality is monitored.

See Note 5, Loans and Allowance for Credit Losses, for additional information

about our loan portfolio.

Credit loss assumptions are estimated using a discounted cash flow ("DCF") model

11 unchanged sentences

The forecasted Alabama

unemployment rate is considered in the model for commercial and industrial,

construction and land development,

unemployment rate is considered in the model for commercial and industrial, construction

and land development,

commercial real estate,

24 unchanged sentences

made (which is 4 quarters for the Company), the

Company reverts, on a straight-line basis back to the historical rates over an 8 quarter

reversion period.

Company reverts, on a straight-line basis back to the historical rates over an 8 quarter reversion

The weighted average remaining life method was deemed most appropriate

6 unchanged sentences

The average annual

charge-off rate is applied to the contractual term adjusted for prepayments.

charge-off rate is applied to the contractual term adjusted for

Additionally, the allowance

6 unchanged sentences

and risk tolerance, loan

review and audit results, asset quality and portfolio trends, loan portfolio growth, industry concentrations,

review and audit results, asset quality and portfolio trends, loan portfolio growth, industry

concentrations, trends in

underlying collateral, external factors and economic conditions not already captured.

30 unchanged sentences

thousand for the adoption of

For the quarter ended March 31, 2023, the Company recorded a provision

for credit losses for unfunded

commitments of $

At March 31, 2023, the liability for credit losses on off-balance-sheet

credit exposures

included in other liabilities was $

At June 30, 2023, the liability for credit losses on off-balance-sheet credit exposures included

in other liabilities

Provision for Credit Losses

The composition of the provision for (recoveries of) credit losses for the respective periods

is presented below.

Quarter ended June 30,

Six months ended June 30,

(Dollars in thousands)

Provision for credit losses:

Reserve for unfunded commitments (1)

Total provision for credit

Reserve requirements for unfunded commitments were reported as a component of other

noninterest expense prior

to the adoption of ASC 326.

BASIC AND DILUTED NET EARNINGS PER SHARE

1 unchanged sentence

common shares outstanding for

the quarters ended March 31, 2023 and 2022, respectively.

Diluted net earnings per share reflect the potential dilution that

could occur upon exercise of securities or other rights for,

or convertible into, shares of the Company’s common

March 31, 2023 and 2022, respectively,

the Company had no such securities or rights issued or outstanding, and

no dilutive effect to consider for the diluted net earnings per share calculation.

the respective period.

Diluted net earnings per share reflect the potential dilution that could occur

upon exercise of

securities or other rights for, or convertible into, shares of the

Company’s common stock.

At June 30, 2023 and 2022,

respectively, the Company

had no such securities or rights issued or outstanding, and therefore, no dilutive effect

consider for the diluted net earnings per share calculation.

The basic and diluted net earnings per share computations for the respective periods

are presented below

Quarter ended March 31,

Quarter ended June 30,

Six months ended June 30,

(Dollars in thousands, except share and per share data)

9 unchanged sentences

resources for the entity to support its activities.

At March 31, 2023, the Company did not have any consolidated VIEs to disclose but did

At June 30, 2023, the Company did not have any consolidated VIEs to disclose but did

have one nonconsolidated VIE,

8 unchanged sentences

during such period.

At March 31, 2023 and December 31, 2022, respectively,

At June 30, 2023 and December 31, 2022, respectively,

the Company had one such investment in the

13 unchanged sentences

New Markets Tax Credit investment

At March 31, 2023 and December 31, 2022, respectively,

At June 30, 2023 and December 31, 2022, respectively,

all securities within the scope of ASC 320,

Investments – Debt

and Equity Securities,

Investments – Debt and

Equity Securities,

were classified as available-for-sale.

The fair value and amortized cost for securities available-for-

sale by contractual maturity at March 31, 2023 and December 31, 2022,

respectively, are presented below.

The fair value and amortized cost for securities available-for-sale

by contractual maturity at June 30, 2023 and December 31, 2022, respectively,

are presented below.

Gross Unrealized

(Dollars in thousands)

March 31, 2023

June 30, 2023

Agency obligations (a)

11 unchanged sentences

million and $

million at March 31, 2023 and December 31, 2022,

million at June 30, 2023 and December 31, 2022,

respectively, were pledged to

5 unchanged sentences

carrying amounts of non-marketable equity investments were $

million at March 31, 2023 and December 31, 2022,

million at June 30, 2023 and December 31, 2022,

respectively.

3 unchanged sentences

Gross Unrealized Losses and Fair Value

The fair values and gross unrealized losses on securities at March 31, 2023

and December 31, 2022, respectively,

segregated by those securities that have been in an unrealized loss position for

less than 12 months and 12 months or

longer, are presented below.

The fair values and gross unrealized losses on securities at June 30, 2023

and December 31, 2022, respectively, segregated

by those securities that have been in an unrealized loss position for less than 12

months and 12 months or longer, are

presented below.

Less than 12 Months

1 unchanged sentence

(Dollars in thousands)

March 31, 2023:

June 30, 2023:

Agency obligations

8 unchanged sentences

Because the Company currently does not intend to sell those securities that have an

unrealized loss at March 31, 2023 and it

unrealized loss at June 30, 2023 and it

is not more-likely-than-not that the Company will be required

1 unchanged sentence

bases, which may be maturity,

the Company has determined that no credit loss is necessary.

In addition, the Company

evaluates whether any portion of the decline in fair value of available-for-sale

securities is the result of credit deterioration,

which would require the recognition of a provision to increase the allowance

for credit losses.

Such evaluations consider the

extent to which the amortized cost of the security exceeds its fair value, changes in credit ratings

and any other known

adverse conditions related to the specific security.

The unrealized losses associated with available-for-sale

the Company has determined that no provision for credit loss is necessary.

In addition, the

Company evaluates whether any portion of the decline in fair value of available-for-sale

securities is the result of credit

deterioration, which would require the recognition of a provision to increase

the allowance for credit losses.

evaluations consider the extent to which the amortized cost of the security exceeds its

fair value, changes in credit ratings

and any other known adverse conditions related to the specific security.

The unrealized losses associated with available-for-

sale securities at June 30, 2023 are driven by changes in market interest rates and are

not due to the credit quality of the

securities, and accordingly, no

allowance for credit losses is considered necessary related to available-for-sale

securities at

March 31, 2023 are driven by changes in market interest rates and are not due to the credit quality of the

securities, and

accordingly, no allowance

for credit losses is considered necessary related to available-for-sale

securities at March 31,

These securities will continue to be monitored as a part of the Company's ongoing

evaluation of credit quality.

Management evaluates the financial performance of the issuers on a quarterly basis to determine

if it is probable that the

issuers can make all contractual principal and interest payments.

June 30, 2023.

These securities will continue to be monitored as a part

of the Company's ongoing evaluation of credit

Management evaluates

the financial performance of the issuers on a quarterly basis to determine if it is probable

that the issuers can make all contractual principal and interest payments.

Realized Gains and Losses

The Company had no realized gains and losses on sale of securities during the quarters ended

March 31, 2023 and 2022,

respectively.

The Company had no realized gains and losses on sale of securities during the quarter

and six months ended June 30, 2023

and 2022, respectively.

LOANS AND ALLOWANCE

13 unchanged sentences

of the Company’s total loan portfolio

at March 31, 2023.

31, 2023, the Company’s geographic

loan distribution was concentrated primarily in Lee County,

surrounding areas.

at June 30, 2023.

2023, the Company’s geographic loan

distribution was concentrated primarily in Lee County,

Alabama, and surrounding

The loan portfolio segment is defined as the level at which an entity develops and documents a systematic

13 unchanged sentences

method for monitoring and determining credit risk.

The following describes

the risk characteristics relevant to each of the portfolio segments

The following describes the risk characteristics relevant to each of the portfolio segments

Commercial and industrial (“C&I”) —

44 unchanged sentences

The underwriting of these loans takes into consideration

the occupancy and rental rates,

the occupancy and rental

as well as the financial health of the borrower.

4 unchanged sentences

consumers that are secured by a primary residence or second home.

These loans are underwritten

in accordance

with the Bank’s general loan policies and

procedures which require, among other things, proper documentation of

These loans are underwritten in

with the Bank’s general loan policies and procedures

which require, among other things, proper documentation of

each borrower’s financial condition, satisfactory credit history

1 unchanged sentence

Investment property

– primarily includes loans

to finance income-producing 1-4 family residential properties.

– primarily includes loans to finance income-producing 1-4 family residential properties.

the primary source of repayment is dependent upon income generated

14 unchanged sentences

The following is a summary of current, accruing past due, and nonaccrual loans by portfolio

segment and class as of March

segment and class as of June

30, 2023 and December 31, 2022.

(Dollars in thousands)

March 31, 2023:

June 30, 2023:

Commercial and industrial

24 unchanged sentences

The following table presents credit quality

indicators for the loan portfolio segments and classes by year of origination as of March 31,

indicators for the loan portfolio segments and classes by year of origination as of June 30,

These categories are

16 unchanged sentences

Company may incur a loss in the future if these weaknesses are not corrected

Nonaccrual – includes loans where management has determined that full

payment of principal and interest is not

Nonaccrual – includes loans where management has determined that full payment

of principal and interest is not

(Dollars in thousands)

March 31, 2023:

June 30, 2023:

Commercial and industrial

15 unchanged sentences

(Dollars in thousands)

March 31, 2023:

June 30, 2023:

Special mention

Total multifamily

Total multi-family

Current period gross charge-offs

29 unchanged sentences

The following table is a summary of the Company’s

nonaccrual loans by major categories for the periods indicated.

nonaccrual loans by major categories as of June 30, 2023 and

December 31, 2022.

Incurred Loss

March 31, 2023

June 30, 2023

December 31, 2022

4 unchanged sentences

Residential real estate

The following table presents the amortized cost basis of collateral dependent loans,

which are individually evaluated to

The following table presents the amortized cost basis of collateral dependent loans, which

are individually evaluated to

determine expected credit losses:

1 unchanged sentence

Business Assets

March 31, 2023:

June 30, 2023:

Commercial and industrial

1 unchanged sentence

Allowance for Credit Losses

The Company adopted ASC 326 on January 1, 2023, which introduced

the CECL methodology for estimating all expected

The Company adopted ASC 326

on January 1, 2023, which introduced the CECL methodology for estimating all expected

losses over the life of a financial asset.

4 unchanged sentences

with the collectively evaluated pools, evaluations are performed on an individual

The following table details the changes in the allowance for credit losses by portfolio

segment for the respective periods.

March 31, 2023

The following table details the changes in the allowance for credit losses by portfolio segment for

the respective periods.

June 30, 2023

(Dollars in thousands)

1 unchanged sentence

Quarter ended:

Beginning balance, prior to the

adoption of ASC 326

Impact from the adoption

Beginning balance

Net recoveries (charge-offs)

1 unchanged sentence

Ending balance

March 31, 2022

Six months ended:

Beginning balance

Impact of adopting ASC 326

Net recoveries (charge-offs)

Provision for credit losses

Ending balance

June 30, 2022

(Dollars in thousands)

5 unchanged sentences

Ending balance

Six months ended:

Beginning balance

Net recoveries (charge-offs)

Provision for loan losses

Ending balance

The following table presents an analysis of the allowance for loan losses and recorded

investment in loans by portfolio

segment and impairment methodology as of March 31, 2022 as determined, prior

segment and impairment methodology as of June 30, 2022 as determined, prior

to the adoption of ASC 326.

2 unchanged sentences

(In thousands)

March 31, 2022:

June 30, 2022:

Commercial and industrial

40 unchanged sentences

Commercial and industrial

Commercial real estate:

Owner occupied

14 unchanged sentences

recognition and measurement guidance previously required for

troubled debt restructures.

As of March 31, 2023, the

Company had no loans that would have previously required disclosure as troubled debt

restructures.

troubled debt restructurings (TDRs).

As of June 30, 2023,

the Company had no loans that would have previously required disclosure as TDRs.

The following table provides the average recorded investment in impaired loans, if

3 unchanged sentences

segment and class during the quarter

ended March 31, 2022 as determined under ASC 310 prior to the adoption of ASC 326.

Quarter ended March 31, 2022

and six months ended June 30, 2023 as determined under ASC 310 prior to the adoption of ASC 326.

Quarter ended June 30, 2022

Six months ended June 30, 2022

Total interest

(Dollars in thousands)

9 unchanged sentences

corresponding mortgage loans are sold.

An estimate of the Company’s MSRs is determined

using assumptions that market

participants would use in estimating future net servicing income, including estimates

of prepayment speeds, discount rate,

default rates, cost to service, escrow account earnings, contractual servicing

fee income, ancillary income, and late fees.

An estimate of the fair value of the Company’s MSRs

is determined using

assumptions that market participants would use in estimating future net servicing

income, including estimates of

prepayment speeds, discount rates, default rates, costs to service, escrow account earnings,

contractual servicing fee

income, ancillary income, and late fees.

Subsequent to the date of transfer, the Company

has elected to measure its MSRs under the amortization method.

the amortization method, MSRs are amortized in proportion to, and over the period

has elected to measure its MSRs

under the amortization method.

Under the amortization method, MSRs are amortized in proportion to, and over

of, estimated net servicing income.

Increases in market interest rates generally increase the fair value of MSRs by reducing

prepayments and refinancings and

therefore reducing the prepayment speed.

The Company has recorded MSRs related to loans sold to Fannie Mae.

The Company generally sells conforming, fixed-

rate, closed-end, residential mortgages to Fannie Mae.

MSRs are included in other assets on the accompanying

consolidated balance sheets.

The Company generally sells, without recourse, conforming, fixed-rate, closed-end,

residential mortgages to Fannie Mae,

where the Company services the mortgages sold and records MSRs.

MSRs are included in other assets on the

accompanying consolidated balance sheets.

The Company evaluates MSRs for impairment on a quarterly basis.

5 unchanged sentences

as the fair value changes.

Changes in the valuation allowance are recognized in earnings

as a component of mortgage

Changes in the valuation allowance are recognized in earnings as a component

lending income.

The change in amortized MSRs and the related valuation allowance for the quarters

ended March 31, 2023 and 2022 are

presented below.

Quarter ended March 31,

The following table details the changes in amortized MSRs and the related valuation allowance for

the respective periods.

Quarter ended June 30,

Six months ended June 30,

(Dollars in thousands)

24 unchanged sentences

liabilities in active markets,

quoted prices for identical or similar assets or liabilities in markets that are not active, or

inputs that are observable for the

quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs that

are observable for the

asset or liability, either directly or

11 unchanged sentences

that transfers in and out of any level are expected to be infrequent.

For the three months ended

March 31, 2023, there were

no transfers between levels and no changes in valuation techniques for the Company’s

financial assets and liabilities.

For the six months

ended June 30, 2023, there were no

transfers between levels and no changes in valuation techniques for the Company’s

assets and liabilities.

Assets and liabilities measured at fair value on a recurring

5 unchanged sentences

These third party pricing services consider observable data that

include broker/dealer quotes, market spreads, cash flows, benchmark yields, reported

trades for similar securities, market

include broker/dealer quotes, market spreads, cash flows, benchmark

yields, reported trades for similar securities, market

consensus prepayment speeds, credit information, and the securities’ terms and

13 unchanged sentences

The following table presents the balances of the assets and liabilities measured at fair value

on a recurring basis as of March

on a recurring basis as of June

30, 2023 and December 31, 2022, respectively,

by caption, on the accompanying consolidated balance sheets by

by caption, on the accompanying consolidated balance sheets by ASC 820

valuation hierarchy (as described above).

3 unchanged sentences

(Dollars in thousands)

March 31, 2023:

June 30, 2023:

Securities available-for-sale:

20 unchanged sentences

depreciation and other judgmentally determined discount factors.

Collateral dependent

loans are classified within Level 3 of

dependent loans are classified within Level 3 of

the hierarchy due to the unobservable inputs used in determining their fair value such as collateral

2 unchanged sentences

Mortgage servicing rights, net

MSRs, net, included in other assets on the accompanying consolidated balance

sheets, are carried at the lower of cost or

MSRs, net, included in other assets on the accompanying consolidated balance sheets,

are carried at the lower of cost or

estimated fair value.

6 unchanged sentences

market participants would use in estimating

future net servicing income, including estimates of prepayment speeds, discount

rates, default rates, cost to service, escrow

future net servicing income, including estimates of prepayment speeds, discount rates, default

rates, costs to service, escrow

account earnings, contractual servicing fee income, ancillary income, and late

9 unchanged sentences

MSRs are classified within Level 3 of the valuation hierarchy.

The following table presents the balances of the assets and liabilities measured at fair value

on a nonrecurring basis as of

March 31, 2023 and December 31, 2022, respectively,

The following table presents the balances of the assets and liabilities measured

at fair value on a nonrecurring basis as of

June 30, 2023 and December 31, 2022, respectively,

by caption, on the accompanying consolidated balance sheets and by

5 unchanged sentences

(Dollars in thousands)

March 31, 2023:

June 30, 2023:

Total assets at fair value

10 unchanged sentences

Quantitative Disclosures for Level 3 Fair Value

At March 31, 2023 and December 31, 2022, the Company had no Level 3 assets measured

At June 30, 2023 and December 31, 2022, the Company had no Level 3 assets measured

at fair value on a recurring basis.

For Level 3 assets measured at fair value on a non-recurring basis at March 31, 2023

For Level 3 assets measured at fair value on a non-recurring basis at June 30, 2023

and and December 31, 2022, the

5 unchanged sentences

Unobservable Input

March 31, 2023:

June 30, 2023:

Collateral dependent loans

46 unchanged sentences

related estimated fair value, and placement in the fair value hierarchy of the Company’s

instruments at March 31, 2023 and December 31, 2022 are presented below.

instruments at June 30, 2023 and December 31, 2022 are presented below.

This table excludes financial instruments for

13 unchanged sentences

(Dollars in thousands)

March 31, 2023:

June 30, 2023:

Financial Assets:

10 unchanged sentences

exit price notion.

SUBSEQUENT EVENTS

Subsequent to March 31, 2023, one of the Company’s

collateral dependent loans, with a recorded investment of $

million and a corresponding valuation allowance of $

million, at March 31, 2023, was paid in full

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements