What changed in this filing

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Item 1. Financial Statements

2022-08-12 compared with 2022-05-13 · 157 added, 71 removed, 766 unchanged (23% of the section changed)

54 unchanged sentences

and Subsidiary

Three Months Ended March 31,

Three Months Ended June 30,

Consolidated Statements of Income

1 unchanged sentence

Interest and fees on loans

Interest on debt securities

Interest on taxable debt securities

Interest on tax-exempt debt securities

Interest on federal funds sold and overnight deposits

27 unchanged sentences

and Subsidiary

Consolidated Statements of Comprehensive Income

Three Months Ended March 31,

Six Months Ended June 30,

Consolidated Statements of Income

Interest income

Interest and fees on loans

Interest on taxable debt securities

Interest on tax-exempt debt securities

Interest on federal funds sold and overnight deposits

Total interest income

Interest expense

Interest on deposits

Interest on borrowed funds

Interest on repurchase agreements

Interest on junior subordinated debentures

Total interest expense

Net interest income

Provision for loan losses

Net interest income after provision for loan losses

Non-interest income

Income from sold loans

Other income from loans

Total non-interest income

Non-interest expense

Salaries and wages

Employee benefits

Occupancy expenses, net

Other expenses

Total non-interest expense

Income before income taxes

Income tax expense

Earnings per common share

Weighted average number of common shares used in computing earnings per share

Dividends declared per common share

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

Community Bancorp.

and Subsidiary

Consolidated Statements of Comprehensive (Loss) Income

Three Months Ended June 30,

Other comprehensive (loss) income, net of tax:

Unrealized holding (loss) gain on securities AFS arising during the period

( 7,031,667 )

Other comprehensive (loss) income, net of tax

( 5,555,018 )

Total comprehensive (loss) income

$ ( 2,533,866 )

Six Months Ended June 30,

Other comprehensive loss, net of tax:

4 unchanged sentences

( 14,299,655 )

( 1,311,905 )

Total comprehensive (loss) income

4 unchanged sentences

Consolidated Statements of Changes in Shareholders' Equity

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

shareholders'

1 unchanged sentence

( 2,622,777 )

$ ( 2,622,777 )

Issuance of common stock

10 unchanged sentences

( 2,622,777 )

Three Months Ended March 31, 2021

Issuance of common stock

Cash dividends declared

( 1,240,049 )

Preferred stock

Comprehensive income

Other comprehensive loss

( 5,555,018 )

June 30, 2022

$ ( 15,466,626

( 2,622,777 )

*Accumulated other comprehensive (loss) income

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

Community Bancorp.

and Subsidiary

Consolidated Statements of Changes in Shareholders' Equity

Six Months Ended June 30, 2021

shareholders'

13 unchanged sentences

$ ( 2,622,777 )

*Accumulated other comprehensive (loss) income

Issuance of common stock

Cash dividends declared

( 1,173,253 )

Preferred stock

Comprehensive income

Other comprehensive income

June 30, 2021

$ ( 2,622,777 )

*Accumulated other comprehensive income (loss)

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

2 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

Cash Flows from Operating Activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization, bank premises and equipment

2 unchanged sentences

Gain on sale of loans

Gain on sale of bank premises and equipment

(Income) loss from CFS Partners

4 unchanged sentences

( 7,127,394 )

Increase in taxes payable

Increase (decrease) in taxes payable

Increase in interest receivable

(Increase) decrease in mortgage servicing rights

Decrease in mortgage servicing rights

Decrease in right-of-use assets

5 unchanged sentences

Decrease in interest payable

Decrease in accrued expenses

(Decrease) increase in other liabilities

Increase (decrease) in accrued expenses

Increase (decrease) in other liabilities

Net cash provided by operating activities

5 unchanged sentences

Proceeds from redemption of restricted equity securities

Purchases of restricted equity securities

Decrease in limited partnership contributions payable

Increase in loans, net

( 6,998,537 )

(Increase) decrease in loans, net

( 13,648,856 )

9 unchanged sentences

Net increase in money market and savings accounts

Net increase (decrease) in time deposits

Net decrease in time deposits

( 5,275,008 )

6 unchanged sentences

Dividends paid on common stock

( 1,897,885 )

( 1,636,606 )

Net cash (used in) provided by financing activities

5 unchanged sentences

Supplemental Schedule of Cash Paid During the Period:

Income taxes, net of refunds

Supplemental Schedule of Noncash Investing and Financing Activities:

4 unchanged sentences

Dividends declared

Increase in dividends payable attributable to dividends declared

Decrease (increase) in dividends payable attributable to dividends declared

Dividends reinvested

10 unchanged sentences

The results of operations for the interim period are not necessarily indicative of the results of operations to be expected for any other interim period or the full annual period ending December 31, 2022.

There were no reclassifications to the consolidated financial statements for the periods presented.

Certain amounts disclosed in the Notes below for the 2021 annual and three- and six-month periods of 2021 have been reclassified to conform to the current year presentation.

The Company is considered a “smaller reporting company” under the disclosure rules of the SEC, as amended in 2018.

100 unchanged sentences

2020-04 and its impact on the transition away from LIBOR for its Junior Subordinated Debentures due December 15, 2037, the Company’s only financial instruments that utilize LIBOR as a reference rate.

In March and April, 2020, federal banking regulators issued interagency guidance on accounting for loan modifications in light of the economic impact of the COVID-19 pandemic.

The guidance interprets current accounting standards and indicates that a lender can conclude that a borrower is not experiencing financial difficulty if short-term (that is, six months or less) modifications are made in response to COVID-19, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant, provided that the loan is less than 30 days past due at the time a modification program is implemented.

The banking agencies confirmed with the staff of the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs under ASC No.

310-40, Receivables – Troubled Debt Restructurings by Creditors .

Additionally, a provision of the CARES Act enacted in March 2020 provides that COVID-19 related loan modifications (including modifications that are not short-term) made to a loan between March 1, 2020 and the earlier of December 31, 2020 or the sixtieth day after the end of the COVID-19 emergency declared by the President will not require the loan to be treated as a TDR under U.S.

GAAP, so long as the modified loan was not past due as of December 31, 2019.

On December 27, 2020, the Consolidated Appropriations Act 2021 (CAA) extended the date for COVID-19 related loan modifications from December 31, 2020 to January 1, 2022.

Earnings per Common Share

1 unchanged sentence

The following tables illustrate the calculation of earnings per common share for the periods presented, as adjusted for the cash dividends declared on the preferred stock:

Three Months Ended March 31,

Three Months Ended June 30,

Net income, as reported

1 unchanged sentence

Net income available to common shareholders

Weighted average number of common shares

used in calculating earnings per share

Weighted average number of common shares used in calculating earnings per share

Earnings per common share

Six Months Ended June 30,

Net income, as reported

dividends to preferred shareholders

Net income available to common shareholders

Weighted average number of common shares used in calculating earnings per share

Earnings per common share

Investment Securities

Debt securities AFS as of the balance sheet dates consisted of the following:

March 31, 2022

June 30, 2022

GSE debt securities

17 unchanged sentences

These pledged investments as of the balance sheet dates were as follows:

March 31, 2022

June 30, 2022

December 31, 2021

There were no sales of debt securities for the first three months of 2022 or 2021.

There were no sales of debt securities during the first six months of 2022 or 2021.

The scheduled maturities of debt securities as of the balance sheet dates were as follows:

March 31, 2022

June 30, 2022

Due in one year or less

15 unchanged sentences

12 months or more

March 31, 2022

June 30, 2022

GSE debt securities

19 unchanged sentences

In analyzing an issuer's financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies or other adverse developments in the status of the securities have occurred, and the results of reviews of the issuer's financial condition.

As of March 31, 2022 and December 31, 2021, there were no declines in the fair value of any of the securities reflected in the table above that were deemed by management to be OTTI.

As of June 30, 2022 and December 31, 2021, there were no declines in the fair value of any of the securities reflected in the table above that were deemed by management to be OTTI.

Loans, Allowance for Loan Losses and Credit Quality

3 unchanged sentences

$ 111,125,622

Purchased loans

Commercial real estate

7 unchanged sentences

The following is an age analysis of past due loans (including non-accrual) as of the balance sheet dates, by portfolio segment:

March 31, 2022

June 30, 2022

Commercial & industrial

1 unchanged sentence

$ 120,772,242

Purchased loans

Commercial real estate

6 unchanged sentences

$ 111,125,622

Purchased loans

Commercial real estate

5 unchanged sentences

Number of loans

March 31, 2022

June 30, 2022

December 31, 2021

14 unchanged sentences

The general component of the ALL is based on historical loss experience and various qualitative factors and is stratified by the following loan segments:

commercial and industrial, CRE, municipal, residential real estate 1st lien, residential real estate Jr lien and consumer loans.

commercial and industrial, CRE, municipal, residential real estate 1st lien, residential real estate Jr lien, purchased loans and consumer loans.

The Company does not disaggregate its portfolio segments further into classes.

3 unchanged sentences

During periods of significant expansion or contraction, the Company may appropriately shorten the historical time period.

Due primarily to the effects of COVID-19, during 2020 the Company shortened its look back period to one year, however, during the first quarter of 2022, the look back period was lengthened to two years.

Due primarily to the effects of COVID-19, during 2020 the Company shortened its look back period to one year, however, as of March 31, 2022, the look back period was changed to two years.

Qualitative factors include the levels of and trends in delinquencies and non-performing loans, levels of and trends in loan risk groups, trends in volumes and terms of loans, effects of any changes in loan related policies, experience, ability and the depth of management, documentation and credit data exception levels, national and local economic trends, external factors such as competition and regulation and lastly, concentrations of credit risk in a variety of areas, including portfolio product mix, the level of loans to individual borrowers and their related interests, loans to industry segments, and the geographic distribution of CRE loans.

8 unchanged sentences

A weakened economy, soft consumer spending, unfavorable foreign trade conditions and the rising cost of labor or raw materials are examples of issues that can impact the credit quality in this segment.

Purchased Loans – Loans in this segment are loans purchased through a loan purchasing program with Bankers Healthcare Group (BHG).

BHG originates commercial loans to medical professionals nationwide and sells them individually to a secondary market, primarily banks, through a bid process.

The Bank has established conservative credit parameters and expects a low risk of default in this portfolio.

Commercial Real Estate – Loans in this segment are principally made to businesses and are generally secured by either owner-occupied, or non-owner occupied CRE.

32 unchanged sentences

TDRs may include the transfer of assets to the Company in partial satisfaction of a troubled loan, a modification of a loan’s terms, or a combination of the two.

As described above in Note 2, under March 2020 guidance from the federal banking agencies and concurrence by the FASB, certain short-term loan accommodations made in good faith prior to January 1, 2022 for borrowers experiencing financial difficulties due to the COVID-19 health emergency are not considered TDRs.

Under March 2020 guidance from the federal banking agencies and concurrence by the FASB, certain short-term loan accommodations made in good faith prior to January 1, 2022 for borrowers experiencing financial difficulties due to the COVID-19 health emergency are not considered TDRs.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment.

4 unchanged sentences

The tables below summarize changes in the ALL and select loan information, by portfolio segment, for the periods indicated.

As of or for the three months ended March 31, 2022

As of or for the three months ended June 30, 2022

ALL beginning balance

1 unchanged sentence

ALL ending balance

As of or for the six months ended June 30, 2022

ALL beginning balance

Provision (credit)

ALL ending balance

ALL evaluated for impairment

14 unchanged sentences

$ 689,988,533

As of or for the three months ended March 31, 2021

As of or for the three months ended June 30, 2021

ALL beginning balance

1 unchanged sentence

ALL ending balance

ALL evaluated for impairment

Loans evaluated for impairment

$ 188,443,623

$ 278,483,091

$ 169,810,218

$ 729,489,639

As of or for the six months ended June 30, 2021

ALL beginning balance

Provision (credit)

ALL ending balance

Impaired loans, by portfolio segment, were as follows:

As of March 31, 2022

As of June 30, 2022

Investment(1)

Investment(1)(2)

Investment(1)(3)

Recognized (3)

8 unchanged sentences

Total impaired loans

Recorded investment in impaired loans as of March 31, 2022 includes accrued interest receivable of $ 38,479 .

For the three months ended March 31, 2022.

Recorded investment in impaired loans as of June 30, 2022 includes accrued interest receivable of $ 33,126 .

For the three months ended June 30, 2022.

For the six months ended June 30, 2022.

As of December 31, 2021

13 unchanged sentences

For the year ended December 31, 2021.

As of March 31, 2021

As of June 30, 2021

Investment(1)

Investment(1)(2)

Investment(1)(3)

Recognized(3)

8 unchanged sentences

Total impaired loans

Recorded investment in impaired loans as of March 31, 2021 includes accrued interest receivable and deferred net loan costs of $ 34,764 .

For the three months ended March 31, 2021.

Recorded investment in impaired loans as of June 30, 2021 includes accrued interest receivable and deferred net loan costs of $ 37,535 .

For the three months ended June 30, 2021.

For the six months ended June 30, 2021.

For all loan segments, the accrual of interest is discontinued when a loan is specifically determined to be impaired or when the loan is delinquent 90 days and management believes, after considering collection efforts and other factors, that the borrower's financial condition is such that collection of interest is considered by management to be doubtful.

10 unchanged sentences

Such loans carry a normal level of risk that does not require management attention beyond that warranted by the loan or loan relationship characteristics, such as loan size or relationship size.

Group A loans include commercial purpose loans that are individually risk rated and retail loans that are rated by pool.

Group A loans include commercial purpose loans that are individually risk rated, including purchased loans, and retail loans that are rated by pool.

Group A retail loans include performing consumer and residential real estate loans.

24 unchanged sentences

The risk ratings within the loan portfolio, by segment, as of the balance sheet dates were as follows:

As of March 31, 2022

As of June 30, 2022

$ 111,341,511

33 unchanged sentences

However, the Company evaluates each TDR situation on its own merits and does not foreclose the granting of any particular type of concession.

The Company has adopted the TDR guidance issued by the federal banking agencies in March and April 2020 regarding the treatment of certain short-term loan modifications relating to the COVID-19 pandemic (See Note 2).

Under this guidance, qualifying concessions and modifications are not considered TDRs.

In total, throughout the pandemic, the Company granted short term loan concessions and/or modifications within the terms of this guidance to 595 borrowers.

Of those loans, 351 remained on the books with an aggregate principal balance of $103.2 million as of March 31, 2022.

New TDRs, by portfolio segment, during the periods presented were as follows:

Three months ended March 31, 2022

Of those loans, 339 remained on the books with an aggregate principal balance of $ 93.7 million as of June 30, 2022.

None of these loans were in a deferral status as of June 30, 2022;

however these loans may bear a higher risk of default in future periods.

New TDRs, by portfolio segment, during the periods presented were as follows, there were no new TDRs for the three months ended June 30, 2022 and 2021:

Six months ended June 30, 2022

Residential real estate - 1st lien

3 unchanged sentences

Residential real estate – 1st lien

Three months ended March 31, 2021

Six months ended June 30, 2021

Commercial & industrial

The TDRs for which there was a payment default during the twelve month periods presented below were as follows:

For the twelve months ended March 31, 2022

For the twelve months ended June 30, 2022

Commercial real estate

2 unchanged sentences

Commercial real estate

For the twelve months ended March 31, 2021

For the twelve months ended June 30, 2021

Commercial & industrial

Residential real estate - 1st lien

TDRs are treated as other impaired loans and carry individual specific reserves with respect to the calculation of the ALL.

9 unchanged sentences

As of December 31, 2021, the most recent evaluation, management concluded that no impairment existed.

Management evaluates its goodwill intangible for impairment at least annually, or more frequently as circumstances warrant, including, as applicable, circumstances arising out of the COVID-19 pandemic, including the disruptions to the economy and increased volatility in the financial markets and related impacts on the Company’s business.

Management evaluates its goodwill intangible for impairment at least annually, or more frequently as circumstances warrant.

Certain assets and liabilities are recorded at fair value to provide additional insight into the Company’s quality of earnings and comprehensive income.

22 unchanged sentences

Treasury securities that are traded by dealers or brokers in active over-the-counter markets.

Level 2 securities include federal agency securities.

Level 2 securities include federal agency securities, municipal securities and other asset-backed securities.

Impaired loans:

46 unchanged sentences

The estimated fair values of the Company's financial instruments as of the balance sheet dates were as follows:

March 31, 2022

June 30, 2022

(Dollars in Thousands)

5 unchanged sentences

Commercial & industrial

Purchased loans

Commercial real estate

20 unchanged sentences

Commercial & industrial

Purchased loans

Commercial real estate

14 unchanged sentences

The following table shows the changes in the carrying amount of the MSRs, included in other assets in the consolidated balance sheets, for the periods indicated:

Three Months Ended

March 31, 2022

Six Months Ended

June 30, 2022

December 31, 2021

9 unchanged sentences

The Company has evaluated events and transactions through the date that the financial statements were issued for potential recognition or disclosure in these financial statements, as required by GAAP.

On March 16, 2022, the Company’s Board declared a cash dividend of $ 0.23 per common share, payable May 1, 2022 to shareholders of record as of April 15, 2022.

On June 15, 2022, the Company’s Board declared a cash dividend of $ 0.23 per common share, payable August 1, 2022 to shareholders of record as of July 15, 2022.

This dividend has been recorded in the Company’s consolidated financial statements as of the declaration date, including shares issuable under the DRIP.

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