What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-04 · 282 added, 147 removed, 739 unchanged (37% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts) March 31, 2022 December 31, 2021

(In thousands, except share amounts) June 30, 2022 December 31, 2021

Cash and due from banks $ 26,579 $ 29,412

1 unchanged sentence

Total cash and cash equivalents 27,233 163,467

Available-for-sale debt securities 1,161,756 1,109,208

Available-for-sale investment securities 710,481 1,109,208

Held-to-maturity investment securities 305,902 —

Equity securities 6,832 7,416

Loans, less allowance for credit losses of $9,864 at March 31, 2022 and $9,600 at December 31, 2021 1,002,178 1,029,511

Loans, less allowance for credit losses of $9,873 at June 30, 2022 and $9,600 at December 31, 2021 1,126,091 1,029,511

Bank premises and equipment, net 8,060 8,380

9 unchanged sentences

Total deposits 2,105,997 2,122,797

Short-term borrowings 9,324 —

Subordinated debentures 39,526 39,454

8 unchanged sentences

issued and outstanding:

11,752,623 at March 31, 2022 and 11,916,651 at December 31, 2021 62,893 66,820

11,717,146 at June 30, 2022 and 11,916,651 at December 31, 2021 60,975 66,820

Retained earnings 183,197 173,393

6 unchanged sentences

For the Three Months

Ended March 31,

Ended June 30, For the Six Months

Ended June 30,

(In thousands, except share and per-share amounts) 2022 2021 2022 2021

8 unchanged sentences

Interest on deposits 231 252 483 520

Interest on junior subordinated deferrable interest debentures 333 24

Interest on subordinated debentures and borrowings 424 22 757 46

Total interest expense 655 274 1,240 566

5 unchanged sentences

Appreciation in cash surrender value of bank-owned life insurance

245 176 487 349

Interchange fees 478 471 920 841

Net realized gains on sales and calls of investment securities 206 —

Net realized losses on sales and calls of investment securities ( 969 ) ( 79 ) ( 763 ) ( 79 )

Federal Home Loan Bank dividends 82 83 167 153

29 unchanged sentences

For the Three Months

Ended March 31,

Ended June 30, For the Six Months

Ended June 30,

(In thousands) 2022 2021 2022 2021

Net income $ 6,542 $ 7,563 $ 12,628 15,042

Other Comprehensive Loss:

Other Comprehensive (Loss) Income:

Unrealized losses on securities:

Unrealized holding losses arising during the period ( 80,603 ) ( 13,621 )

Reclassification of net gains included in net income ( 206 ) —

Other comprehensive loss, before tax ( 80,809 ) ( 13,621 )

Unrealized holding (losses) gains arising during the period ( 36,332 ) 10,729 ( 116,931 ) ( 2,892 )

Reclassification of net losses included in net income 969 79 763 79

Amortization of net unrealized losses transferred 394 — 394 —

Other comprehensive (loss) income, before tax ( 34,969 ) 10,808 ( 115,774 ) ( 2,813 )

Tax effect 10,337 ( 3,196 ) 34,223 831

Total other comprehensive loss ( 56,919 ) ( 9,594 )

Comprehensive loss $ ( 50,833 ) $ ( 2,115 )

Total other comprehensive (loss) income ( 24,632 ) 7,612 ( 81,551 ) ( 1,982 )

Comprehensive (loss) income $ ( 18,090 ) $ 15,175 $ ( 68,923 ) $ 13,060

See notes to unaudited consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

THREE MONTHS ENDED MARCH 31, 2022 AND 2021

THREE MONTHS ENDED JUNE 30, 2022 AND 2021

Common Stock Accumulated

Comprehensive Income (Loss)

(Net of Taxes) Total Shareholders’ Equity

Retained Earnings

(In thousands, except share amounts) Shares Amount

Balance, March 31, 2021 12,524,609 $ 79,732 $ 156,851 $ 5,262 $ 241,845

Net income — — 7,563 — 7,563

Other comprehensive income — — — 7,612 7,612

Restricted stock granted net of forfeitures

20,967 — — — —

Stock issued under employee stock purchase plan

3,292 54 — — 54

Stock-based compensation expense

— 109 — — 109

Cash dividend

— — ( 1,504 ) — ( 1,504 )

Stock options exercised

19,900 212 — — 212

Repurchase and retirement of common stock

( 239,679 ) ( 4,842 ) — — ( 4,842 )

Balance, June 30, 2021 12,329,089 $ 75,265 $ 162,910 $ 12,874 $ 251,049

Balance, March 31, 2022 11,752,623 $ 62,893 $ 178,054 $ ( 49,287 ) $ 191,660

— — 6,542 — 6,542

Other comprehensive loss — — — ( 24,632 ) ( 24,632 )

Restricted stock granted net of forfeitures

37,781 — — — —

Stock issued under employee stock purchase plan

3,550 54 — — 54

Stock awarded to employees 300 6 — — 6

Stock-based compensation expense

Cash dividend

— — ( 1,399 ) — ( 1,399 )

Stock options exercised

27,780 266 — — 266

Repurchase and retirement of common stock

( 104,888 ) ( 2,328 ) — — ( 2,328 )

Balance, June 30, 2022 11,717,146 $ 60,975 $ 183,197 $ ( 73,919 ) $ 170,253

CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

SIX MONTHS ENDED JUNE 30, 2022 AND 2021

Common Stock Retained Earnings Accumulated

14 unchanged sentences

— — ( 2,881 ) — ( 2,881 )

Repurchase and retirement of common stock

( 239,679 ) ( 4,842 ) — — ( 4,842 )

Stock options exercised

Balance, March 31, 2021 12,524,609 $ 79,732 $ 156,851 $ 5,262 $ 241,845

20,000 213 — — 213

Balance, June 30, 2021 12,329,089 $ 75,265 $ 162,910 $ 12,874 $ 251,049

Balance, January 1, 2022 11,916,651 $ 66,820 $ 173,393 $ 7,632 $ 247,845

7 unchanged sentences

Stock-based compensation expense

— 181 — — 181

Cash dividend

4 unchanged sentences

( 300,761 ) ( 6,814 ) — — ( 6,814 )

Balance, March 31, 2022 11,752,623 $ 62,893 $ 178,054 $ ( 49,287 ) $ 191,660

Balance, June 30, 2022 11,717,146 $ 60,975 $ 183,197 $ ( 73,919 ) $ 170,253

See notes to unaudited consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months

Ended March 31,

For the Six Months

Ended June 30,

(In thousands) 2022 2021

1 unchanged sentence

Net income $ 12,628 $ 15,042

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

Net decrease (increase) in deferred loan fees 208 ( 559 )

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

Net decrease in deferred loan fees 405 1,222

Depreciation 403 467

3 unchanged sentences

(Reversal of) provision for credit losses — ( 3,300 )

Net realized gains on sales and calls of available-for-sale investment securities ( 206 ) —

Net realized losses on sales and calls of available-for-sale investment securities 763 79

Net gain on disposal of premises and equipment — ( 8 )

1 unchanged sentence

Increase in bank-owned life insurance, net of expenses ( 487 ) ( 349 )

Net decrease (increase) in accrued interest receivable and other assets 1,574 ( 504 )

Net increase in accrued interest receivable and other assets ( 1,263 ) ( 3,767 )

Net (decrease) increase in accrued interest payable and other liabilities ( 11,271 ) 14,199

(Provision) benefit for deferred income taxes ( 564 ) 983

Net cash (used in) provided by operating activities ( 635 ) 6,379

Net cash provided by operating activities 5,524 27,775

CASH FLOWS FROM INVESTING ACTIVITIES:

2 unchanged sentences

Proceeds from maturity and principal repayments of available-for-sale investment securities 37,974 23,660

Net decrease in loans 27,125 13,507

Proceeds from maturity and principal repayments of held-to-maturity investment securities 845 —

Net (increase) decrease in loans ( 96,985 ) 32,004

Purchases of premises and equipment ( 84 ) ( 704 )

Purchases of bank-owned life insurance — ( 10,000 )

FHLB stock purchased ( 574 ) —

Proceeds from sale of premises and equipment — 9

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES:

Net increase in demand, interest bearing and savings deposits 44,891 200,112

Net (decrease) increase in demand, interest bearing and savings deposits ( 14,300 ) 256,426

Net decrease in time deposits ( 2,500 ) ( 42 )

Proceeds from short-term borrowings from Federal Home Loan Bank

Repayments of short-term borrowings to Federal Home Loan Bank ( 1,149,278 ) —

Purchase and retirement of common stock ( 6,814 ) ( 4,842 )

2 unchanged sentences

Cash dividend payments on common stock ( 2,824 ) ( 2,881 )

Net cash provided by financing activities 33,841 198,373

Net cash (used in) provided by financing activities ( 16,605 ) 248,984

(Decrease) increase in cash and cash equivalents ( 136,234 ) 50,388

1 unchanged sentence

CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 27,233 $ 120,666

For the Three Months

Ended March 31,

For the Six Months

Ended June 30,

(In thousands) 2022 2021

2 unchanged sentences

Interest $ 1,159 $ 576

Income taxes $ 4,914 $ 6,105

Operating cash flows from operating leases $ 1,108 $ 1,124

Non-cash investing and financing activities:

Transfer of securities from available-for-sale to held-to-maturity $ 331,230 $ —

Transfer of unrealized loss on securities from available-for-sale to held-to-maturity $ ( 25,328 ) $ —

See notes to unaudited consolidated financial statements.

6 unchanged sentences

These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2021 Annual Report to Shareholders on Form 10-K.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position at March 31, 2022, and the results of its operations and its cash flows for the three-month interim periods ended March 31, 2022 and 2021 have been included.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position at June 30, 2022, and the results of its operations and its cash flows for the six month interim periods ended June 30, 2022 and 2021 have been included.

The results of operations for interim periods are not necessarily indicative of results for the full year.

24 unchanged sentences

Further, the Company has begun developing internal controls around the CECL process, data, calculations and implementation.

The Company presently plans to generate and evaluate model scenarios under CECL in tandem with its current reserving processes for interim and annual reporting periods during third quarter of 2022 due to the fact the Company

elected to delay implementation of the CECL process as allowed by FASB.

Company elected to delay implementation of the CECL process as allowed by FASB.

While the Company is currently unable to reasonably estimate the impact of adopting this new guidance, management expects the impact of adoption will be significantly influenced by the composition and quality of the Company’s loans as well as the economic conditions as of the date of adoption.

5 unchanged sentences

The Company is in the process of evaluating the provisions of this ASU and its effects on our consolidated financial statements.

The Company believes the adoption of this guidance on activities subsequent to March 31, 2022 through December 31, 2022 will not have a material impact on the consolidated financial statements.

The Company believes the adoption of this guidance on activities subsequent to June 30, 2022 through December 31, 2022 will not have a material impact on the consolidated financial statements.

FASB Accounting Standards Update (ASU) 2022-02 - Financial Instruments-Credit Losses (Subtopic 326).

Troubled Debt Restructurings and Vintage Disclosures, was issued March 2022.

The amendments in this update eliminate the accounting guidance for troubled debt restructurings (“TDRs”) by creditors in Subtopic 310-40, Receivables-Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity must apply the loan refinancing and restructuring guidance in paragraphs 310-20-35-9 through 35-11 to determine whether a modification results in a new loan or a continuation of an existing loan.

Additionally, for public business entities, the amendments in this Update require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments-Credit Losses-Measured at Amortized Cost in the vintage disclosures required by paragraph 326-20-50-6.

The guidance is effective for the Corporation upon the adoption of ASU 2016-13, January 1, 2023.

The Company is currently assessing the impact of ASU 2022-02 on its disclosures and control structure;

however, the Company does not expect the adoption of this standard to have a material impact on the consolidated financial statements.

In April 2020, various regulatory agencies, including the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation, (“the agencies”) issued a revised interagency statement encouraging financial institutions to work with customers affected by the COVID-19 pandemic and providing additional information regarding loan modifications.

21 unchanged sentences

The estimated carrying and fair values of the Company’s financial instruments are as follows (in thousands):

March 31, 2022

June 30, 2022

Amount Fair Value

4 unchanged sentences

Available-for-sale debt securities 710,481 — 710,481 — 710,481

Held-to-maturity investment securities 305,902 — 284,262 — 284,262

Equity securities 6,832 6,832 — — 6,832

54 unchanged sentences

Assets Recorded at Fair Value

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of March 31, 2022 and December 31, 2021:

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of June 30, 2022 and December 31, 2021:

Recurring Basis

1 unchanged sentence

Fair Value Measurements Using

March 31, 2022 Fair Value Level 1 Level 2 Level 3

June 30, 2022 Fair Value Level 1 Level 2 Level 3

Available-for-sale debt securities:

6 unchanged sentences

385,336 — 385,336 —

Corporate debt securities 45,908 — 45,908 —

Equity securities

19 unchanged sentences

Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings.

During the periods ended March 31, 2022 and December 31, 2021, no transfers between levels occurred.

There were no Level 3 assets measured at fair value on a recurring basis at or during the periods ended March 31, 2022 and December 31, 2021.

Also there were no liabilities measured at fair value on a recurring basis at March 31, 2022 or December 31, 2021.

During the periods ended June 30, 2022 and December 31, 2021, no transfers between levels occurred.

There were no Level 3 assets measured at fair value on a recurring basis at or during the periods ended June 30, 2022 and December 31, 2021.

Also there were no liabilities measured at fair value on a recurring basis at June 30, 2022 or December 31, 2021.

Non-recurring Basis

1 unchanged sentence

These include assets and liabilities that are measured at the lower of cost or fair value that were recognized at

fair value which was below cost at March 31, 2022 and December 31, 2021 (in thousands):

March 31, 2022 Fair Value Level 1 Level 2 Level 3

Impaired loans:

Real estate-construction and other land loans $ 262 $ — $ — $ 262

Total assets measured at fair value on a non-recurring basis $ 262 $ — $ — $ 262

fair value which was below cost at June 30, 2022 and December 31, 2021.

As of June 30, 2022, there were no impaired loans measured for impairment using the fair value.

Those measured at December 31, 2021 were (in thousands):

December 31, 2021 Fair Value Level 1 Level 2 Level 3

13 unchanged sentences

The discounted cash flow methods as prescribed by ASC Topic 310 is not a fair value measurement since the discount rate utilized is the loan’s effective interest rate which is not necessarily a market rate.

There were no changes in valuation techniques used during the three months ended March 31, 2022 or the year ended December 31, 2021.

There were no changes in valuation techniques used during the six months ended June 30, 2022 or the year ended December 31, 2021.

Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.

Once received, the assumptions and approaches utilized in the appraisal as well as the overall resultin g fair value is compared with independent data sources such as recent market data or industry-wide statistics.

Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans had a principal balance of $ 280,000 with a valuation allowance of $ 18,000 at March 31, 2022, and a resulting fair value of $ 262,000 .

The valuation allowance represent specific allocations for the allowance for credit losses for impaired loans.

Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans

1 unchanged sentence

The valuation allowance represents specific allocations for the allowance for credit losses for impaired loans.

There were no charge-offs related to loans carried at fair value during the three months ended March 31, 2022 and 2021.

Activity related to changes in the allowance for loan losses related to impaired loans for the three months ended March 31, 2022 and 2021 was not considered significant for disclosure purposes.

There were no liabilities measured at fair value on a non-recurring basis at March 31, 2022 or December 31, 2021.

There were no charge-offs related to loans carried at fair value during the six months ended June 30, 2022 and 2021.

Activity related to changes in the allowance for loan losses related to impaired loans for the three months ended June 30, 2022 and 2021 was not considered significant for disclosure purposes.

There were no liabilities measured at fair value on a non-recurring basis at June 30, 2022 or December 31, 2021.

The investm ent portfolio consists primarily of U.S.

Government sponsored entity and agency securities collateralized by residential mortgage obligations, private label mortgage and asset backed securities (PLMABS), corporate debt securities, and obligations of states and political subdivisions securities.

As of March 31, 2022, $ 223,954,000 of these securities were held as collateral for borrowing arrangements, pub lic funds, and for other purposes.

The fair value of the available-for-sale investment portfolio reflected a net unrealized loss of $( 69,974,000 ) at March 31, 2022 compared to an unrealized gain of $ 10,835,000 at December 31, 2021.

The unrealized (loss)/gain recorded is net of $( 20,687,000 ) and $ 3,203,000 in tax (benefits) liabilities as accumulated other comprehensive income (loss) within shareholders’ equity at March 31, 2022 and December 31, 2021, respectively.

As of June 30, 2022, $ 185,061,000 of these securities were held as collateral for borrowing arrangements, pub lic funds, and for other purposes.

The fair value of the available-for-sale investment portfolio reflected a net unrealized loss of $( 80,011,000 ) at June 30, 2022 compared to an unrealized gain of $ 10,835,000 at December 31, 2021.

The following table sets forth the carrying values and estimated fair values of our investment securities portfolio at the dates indicated (in thousands):

March 31, 2022

June 30, 2022

Available-for-Sale Securities Amortized Cost Gross

8 unchanged sentences

430,405 168 ( 45,237 ) 385,336

Corporate debt securities 47,500 205 ( 1,797 ) 45,908

Total available-for-sale $ 790,492 $ 226 $ ( 80,237 ) $ 710,481

June 30, 2022

Held-to-Maturity Securities Amortized Cost Gross

Losses Estimated

Debt securities:

Obligations of states and political subdivisions $ 191,951 $ 26 $ ( 16,663 ) $ 175,314

Government sponsored entities and agencies collateralized by residential mortgage obligations

10,269 — ( 752 ) 9,517

Private label mortgage and asset backed securities

57,750 — ( 3,319 ) 54,431

Corporate debt securities 45,932 1 ( 933 ) 45,000

Total held-to-maturity $ 305,902 $ 27 $ ( 21,667 ) $ 284,262

December 31, 2021

11 unchanged sentences

Total available-for-sale $ 1,098,373 $ 20,373 $ ( 9,538 ) $ 1,109,208

Proceeds and gross realized gains (losses) from the sales or calls of investment securities for the periods ended March 31, 2022 and 2021 are shown below (in thousands):

Proceeds and gross realized gains (losses) from the sales or calls of investment securities for the periods ended June 30, 2022 and 2021 are shown below (in thousands):

For the Three Months

Ended March 31,

Ended June 30, For the Six Months

Ended June 30,

Available-for-Sale Securities 2022 2021 2022 2021

2 unchanged sentences

Gross realized losses from sales or calls ( 2,185 ) ( 79 ) ( 5,886 ) ( 79 )

As market interest rates or risks associated with a security’s issuer continue to change and impact the actual or perceived values of investment securities, the Company may determine that selling these securities and using proceeds to purchase securities that fit with the Company’s current risk profile is appropriate and beneficial to the Company.

The provision for income taxes includes $ 61,000 income tax impact from the reclassification of unrealized net gains on securities to realized net gains on securities for the three months ended March 31, 2022.

During the second quarter of 2022, the Company re-designated certain securities previously classified as available-for-sale to the held-to-maturity classification.

The securities re-designated consisted of obligations of states and political subdivision securities, U.S.

Government sponsored entity and agency securities collateralized by residential mortgage obligations, private label mortgage and asset backed securities, and corporate debt securities with a total carrying value of $ 306.7 million at April 1, 2022.

At the time of re-designation the securities included $ 25.3 million of pretax unrealized losses in other comprehensive income which is being amortized over the remaining life of the securities in a manner consistent with the amortization of a premium or discount.

As market interest rates or risks associated with an available-for-sale security’s issuer continue to change and impact the actual or perceived values of investment securities, the Company may determine that selling these securities and using proceeds to purchase securities that fit with the Company’s current risk profile is appropriate and beneficial to the Company.

The provision for income taxes includes a $ 226,000 and $ 23,000 income tax benefit from unrealized net losses on securities realized through security sales for the six months ended June 30, 2022 and 2021.

Investment securities, aggregated by investment category, with unrealized losses as of the dates indicated are summarized and classified according to the duration of the loss period as follows (in thousands):

March 31, 2022

June 30, 2022

Less than 12 Months 12 Months or More Total

12 unchanged sentences

326,168 ( 41,336 ) 54,095 ( 3,901 ) 380,263 ( 45,237 )

Corporate debt securities 36,703 ( 1,797 ) — — 36,703 ( 1,797 )

Total available-for-sale $ 632,428 $ ( 74,074 ) $ 71,847 $ ( 6,163 ) $ 704,275 $ ( 80,237 )

June 30, 2022

Less than 12 Months 12 Months or More Total

Fair Unrealized Fair Unrealized Fair Unrealized

Held-to-Maturity Securities Value Losses Value Losses Value Losses

Debt securities:

Obligations of states and political subdivisions $ 146,938 $ ( 14,670 ) $ 25,849 $ ( 1,993 ) $ 172,787 $ ( 16,663 )

Government sponsored entities and agencies collateralized by residential mortgage obligations 9,518 ( 752 ) — — 9,518 ( 752 )

Private label mortgage and asset backed securities

45,280 ( 3,069 ) 9,167 ( 250 ) 54,447 ( 3,319 )

Corporate debt securities 39,357 ( 806 ) 2,756 ( 127 ) 42,113 ( 933 )

Total held-to-maturity $ 241,093 $ ( 19,297 ) $ 37,772 $ ( 2,370 ) $ 278,865 $ ( 21,667 )

December 31, 2021

16 unchanged sentences

The discount rate in this analysis is the original yield expected at time of purchase.

As of March 31, 2022, the Company performed an analysis of the investment portfolio to determine whether any of the investments held in the portfolio had an other-than-temporary impairment (OTTI).

The Company evaluated all individual available-for-sale investment securities with an unrealized loss at March 31, 2022 and identified those that had an unrealized loss for at least a consecutive 12 month period, which had an unrealized loss at March 31, 2022 greater than 10 % of the recorded book value on that date, or which had an unrealized loss of more than $ 75,000 .

As of June 30, 2022, the Company performed an analysis of the investment portfolio to determine whether any of the investments held in the portfolio had an other-than-temporary impairment (OTTI).

The Company evaluated all individual available-for-sale investment securities with an unrealized loss at June 30, 2022 and identified those that had an unrealized loss for at least a consecutive 12 month period, which had an unrealized loss at June 30, 2022 greater than 10 % of the recorded book value on that date, or which had an unrealized loss of more than $ 75,000 .

The Company also analyzed any securities that may have been downgraded by credit rating agencies.

For those investment securities that met the evaluation criteria, management obtained and reviewed the most recently published national credit ratings for those investment securities.

There were no OTTI losses recorded during the three months ended March 31, 2022.

There were no OTTI losses recorded during the six months ended June 30, 2022.

Treasury Securities

At March 31, 2022, the Company held one U.S.

At June 30, 2022, the Company held one U.S.

Treasury security which was in a loss position for less than 12 months.

Government Agencies

At March 31, 2022, the Company held one U.S.

At June 30, 2022, the Company held one U.S.

Government agency security which was in a loss position for less than 12 months.

Obligations of States and Political Subdivisions

At March 31, 2022, the Company held 114 obligations of states and political subdivision securities of which 83 were in a loss position for less than 12 months and four have been in a loss position for more than 12 months.

At June 30, 2022, the Company held 98 obligations of states and political subdivision securities of which 86 were in a loss position for less than 12 months and ten have been in a loss position for more than 12 months.

The unrealized losses on the Company’s investments in obligations of states and political subdivision securities were caused by interest rate changes.

Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at March 31, 2022.

Government Sponsored Entities and Agencies Collateralized by Residential Mortgage Obligations

At March 31, 2022, the Company held 108 U.S.

Government sponsored entity and agency securities collateralized by residential mortgage obligations of which 33 were in a loss position for less than 12 months and ten have been in a loss position for more than 12 months.

At June 30, 2022, the Company held 88 U.S.

Government sponsored entity and agency securities collateralized by residential mortgage obligations of which 41 were in a loss position for less than 12 months and four have been in a loss position for more than 12 months.

The unrealized losses on the Company’s investments in U.S.

1 unchanged sentence

The contractual cash flows of those investments are guaranteed or supported by an agency or sponsored entity of the U.S.

Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company’s investment.

Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability to hold and does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at March 31, 2022.

Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company’s

Private Label Mortgage and Asset Backed Securities

At March 31, 2022, the Company had a total of 100 Private Label Mortgage and Asset Backed Securities (PLMABS).

73 of the PLMABS securities were in a loss position for less than 12 months and 13 have been in loss for more than 12 months at March 31, 2022.

Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability and intent to hold, and it is more likely than not that it will not be required to sell, those investments until a recovery of fair value, which may be the maturity date, the Company does not consider those investments to be other-than-temporarily impaired at March 31, 2022.

At June 30, 2022, the Company had a total of 96 Private Label Mortgage and Asset Backed Securities (PLMABS).

80 of the PLMABS securities were in a loss position for less than 12 months and 11 have been in loss for more than 12 months at June 30, 2022.

The Company continues to monitor these securities for indications that declines in value, if any, may be other-than-temporary.

Corporate Debt Securities

At March 31, 2022, the Company held 13 corporate debt securities of which 11 were in a loss position for less than 12 months.

At June 30, 2022, the Company held 13 corporate debt securities of which 11 were in a loss position for less than 12 months and one has been in a loss position for more than 12 months.

The unrealized loss on the Company’s investments in corporate debt security was caused by interest rate changes.

The amortized cost and estimated fair value of available-for-sale investment securities at March 31, 2022 by contractual maturity is shown below (in thousands).

The amortized cost and estimated fair value of available-for-sale investment securities at June 30, 2022 by contractual maturity is shown below (in thousands).

Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.

March 31, 2022

June 30, 2022

Available-for-Sale Securities Amortized Cost Estimated Fair

9 unchanged sentences

Private label mortgage and asset backed securities 430,405 385,336

Corporate debt securities 47,500 45,908

Total available-for-sale $ 790,492 $ 710,481

June 30, 2022

Held-to-Maturity Securities Amortized Cost Estimated Fair

Within one year $ — $ —

After one year through five years — —

After five years through ten years 42,868 40,540

After ten years 149,083 134,774

191,951 175,314

Investment securities not due at a single maturity date:

Government sponsored entities and agencies collateralized by residential mortgage obligations 10,269 9,517

Private label mortgage and asset backed securities 57,750 54,431

Corporate debt securities 45,932 45,000

Total held-to-maturity $ 305,902 $ 284,262

Loans and Allowance for Credit Losses

Outstanding loans are summarized as follows:

Loan Type (Dollars in thousands) March 31, 2022 % of Total

Loan Type (Dollars in thousands) June 30, 2022 % of Total

Loans December 31, 2021 % of Total

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Total loans $ 1,126,091 $ 1,029,511

At March 31, 2022 and December 31, 2021, loans originated under Small Business Administration (SBA) programs totaling $ 20,625,000 and $ 23,024,000 , respectively, were included in the real estate and commercial categories, of which, $ 15,922,000 or 77 % and $ 17,720,000 or 77 %, respectively, are secured by government guarantees.

At June 30, 2022 and December 31, 2021, loans originated under Small Business Administration (SBA) programs totaling $ 21,074,000 and $ 23,024,000 , respectively, were included in the real estate and commercial categories, of which, $ 16,153,000 or 77 % and $ 17,720,000 or 77 %, respectively, are secured by government guarantees.

In addition, the Company participated in the SBA Paycheck Protection Program (PPP) to help provide loans to our business customers to provide them with additional working capital.

At March 31, 2022, 23 PPP loans totaling $ 3,554,000 were outstanding and included in the commercial and industrial line item above.

At June 30, 2022, 7 PPP loans totaling $ 1,137,000 were outstanding and included in the commercial and industrial line item above.

At December 31, 2021, 70 PPP loans totaling $ 18,553,000 were outstanding and included in the commercial and industrial line item above.

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For all portfolio segments, the determination of the general reserve for loans that are not impaired is based on estimates made by management, including but not limited to, consideration of historical losses by portfolio segment (and in certain cases peer data) over the most recent 54 quarters, and qualitative factors including economic trends in the Company’s service areas, industry experience and trends, geographic concentrations, estimated collateral values, the Company’s underwriting policies, the character of the loan portfolio, and probable losses inherent in the portfolio taken as a whole.

The following table shows the summary of activities for the Allowance as of and for the three months ended March 31, 2022 and 2021 by portfolio segment (in thousands):

The following table shows the summary of activities for the Allowance as of and for the three months ended June 30, 2022 and 2021 by portfolio segment (in thousands):

Commercial Real Estate Consumer Unallocated Total

Allowance for credit losses:

Beginning balance, January 01, 2022 $ 2,011 $ 6,741 $ 568 $ 280 $ 9,600

Beginning balance, April 01, 2022 $ 1,993 $ 7,048 $ 525 $ 298 $ 9,864

(Reversal) provision charged to operations ( 30 ) ( 54 ) 245 ( 161 ) —

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Recoveries 10 — 15 — 25

Ending balance, March 31, 2022 $ 1,993 $ 7,048 $ 525 $ 298 $ 9,864

Ending balance, June 30, 2022 $ 1,973 $ 6,994 $ 769 $ 137 $ 9,873

Allowance for credit losses:

Beginning balance, January 1, 2021 $ 2,019 $ 9,174 $ 1,091 $ 631 $ 12,915

Beginning balance, April 1, 2021 $ 2,483 $ 8,352 $ 888 $ 333 $ 12,056

Reversal charged to operations ( 307 ) ( 1,302 ) 91 18 ( 1,500 )

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Recoveries 34 — 20 — 54

Ending balance, March 31, 2021 $ 2,483 $ 8,352 $ 888 $ 333 $ 12,056

The following is a summary of the Allowance by impairment methodology and portfolio segment as of March 31, 2022 and December 31, 2021 (in thousands):

Ending balance, June 30, 2021 $ 2,210 $ 7,050 $ 828 $ 351 $ 10,439

The following table shows the summary of activities for the Allowance as of and for the six months ended June 30, 2022 and 2021 by portfolio segment (in thousands):

Commercial Real Estate Consumer Unallocated Total

Allowance for credit losses:

Ending balance, March 31, 2022 $ 1,993 $ 7,048 $ 525 $ 298 $ 9,864

Beginning balance, January 1, 2022 $ 2,011 $ 6,741 $ 568 $ 280 $ 9,600

Reversal charged to operations ( 387 ) 253 277 ( 143 ) —

Losses charged to allowance ( 17 ) — ( 100 ) — ( 117 )

Recoveries 366 — 24 — 390

Ending balance, June 30, 2022 $ 1,973 $ 6,994 $ 769 $ 137 $ 9,873

Allowance for credit losses:

Beginning balance, January 1, 2021 $ 2,019 $ 9,174 $ 1,091 $ 631 $ 12,915

Provision (reversal) charged to operations ( 439 ) ( 2,443 ) ( 138 ) ( 280 ) ( 3,300 )

Losses charged to allowance ( 31 ) — ( 197 ) — ( 228 )

Recoveries 661 319 72 — 1,052

Ending balance, June 30, 2021 $ 2,210 $ 7,050 $ 828 $ 351 $ 10,439

The following is a summary of the Allowance by impairment methodology and portfolio segment as of June 30, 2022 and December 31, 2021 (in thousands):

Commercial Real Estate Consumer Unallocated Total

Allowance for credit losses:

Ending balance, June 30, 2022 $ 1,973 $ 6,994 $ 769 $ 137 $ 9,873

Ending balance:

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collectively evaluated for impairment $ 1,404 $ 6,703 $ 564 $ 280 $ 8,951

The following table shows the ending balances of loans as of March 31, 2022 and December 31, 2021 by portfolio segment and by impairment methodology (in thousands):

The following table shows the ending balances of loans as of June 30, 2022 and December 31, 2021 by portfolio segment and by impairment methodology (in thousands):

Commercial Real Estate Consumer Total

Ending balance, March 31, 2022 $ 148,972 $ 772,460 $ 89,531 $ 1,010,963

Ending balance, June 30, 2022 $ 156,076 $ 886,987 $ 91,625 $ 1,134,688

Ending balance:

8 unchanged sentences

$ 170,621 $ 767,464 $ 91,569 $ 1,029,654

The following table shows the loan portfolio by class allocated by management’s internal risk ratings at March 31, 2022 (in thousands):

The following table shows the loan portfolio by class allocated by management’s internal risk ratings at June 30, 2022 (in thousands):

Pass Special Mention Sub-Standard Doubtful Total

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Total $ 988,855 $ 40,845 $ 8,540 $ — $ 1,038,240

The following table shows an aging analysis of the loan portfolio by class and the time past due at March 31, 2022 (in thousands):

The following table shows an aging analysis of the loan portfolio by class and the time past due at June 30, 2022 (in thousands):

Past Due 60-89

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Total $ 80 $ — $ — $ 80 $ 1,038,160 $ 1,038,240 $ — $ 946

The following table shows information related to impaired loans by class at March 31, 2022 (in thousands):

The following table shows information related to impaired loans by class at June 30, 2022 (in thousands):

Investment Unpaid

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Commercial and industrial 2,261 2,310 533

Real estate construction and other land loans 280 280 18

Commercial real estate 131 132 2

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Total real estate 152 153 7

Equity loans and lines of credit 908 908 2

Total consumer 908 908 2

Total with an allowance recorded 2,413 2,463 540

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The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.

The following tables present by class, information related to the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2022 and 2021 (in thousands).

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021

The following tables present by class, information related to the average recorded investment and interest income recognized on impaired loans for the three months ended June 30, 2022 and 2021 (in thousands).

Three Months Ended June 30, 2022 Three Months Ended June 30, 2021

Investment Interest

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With no related allowance recorded:

Real estate construction and other land loans $ — $ — $ 333 $ 5

Commercial real estate — — 490 —

Total real estate — — 823 5

Equity loans and lines of credit 1,036 16 142 3

Total with no related allowance recorded 1,036 16 965 8

With an allowance recorded:

Commercial and industrial 2,270 28 5,831 67

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Total commercial 2,270 28 7,159 67

Real estate construction and other land loans — — 746 —

Commercial real estate 132 2 144 2

Agricultural real estate 21 — 30 1

Total real estate 153 2 920 3

Equity loans and lines of credit — — 928 14

Total consumer — — 928 14

Total with an allowance recorded 2,423 30 9,007 84

Total $ 3,459 $ 46 $ 9,972 $ 92

Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

Investment Interest

Recognized Average

Investment Interest

With no related allowance recorded:

Commercial and industrial $ 82 $ — $ 9 $ —

Agricultural land and production 47 — — —

Total commercial 129 — 9 —

Owner occupied — — 103 —

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Commercial and industrial 2,875 55 6,475 153

Agricultural production 158 — 717 —

Agricultural land and production 91 — 969 —

Total commercial 2,966 55 7,444 153

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Total $ 4,455 $ 92 $ 10,605 $ 203

Foregone interest on nonaccrual loans totaled $ 4,000 and $ 56,000 for the three month period ended March 31, 2022 and 2021, respectively.

Foregone interest on nonaccrual loans totaled $ 57,000 and $ 72,000 for the six month period ended June 30, 2022 and 2021, respectively.

Foregone interest on nonaccrual loans totaled 53,000 and 34,000 for the three month period ended June 30, 2022 and 2021, respectively.

Troubled Debt Restructurings:

As of March 31, 2022 and December 31, 2021, the Company has a recorded investment in troubled debt restructurings (“TDR”) of $ 3,467,000 and $ 7,640,000 , respectively.

The Company has allocated $ 543,000 and $ 538,000 of specific reserves to loans whose terms have been modified in troubled debt restructurings as of March 31, 2022 and December 31, 2021, respectively.

For the three months ended March 31, 2022 and 2021, the terms of certain loans were modified as TDRs.

As of June 30, 2022 and December 31, 2021, the Company has a recorded investment in troubled debt restructurings (“TDR”) of $ 3,447,000 and $ 7,640,000 , respectively.

The Company has allocated $ 540,000 and $ 538,000 of specific reserves to loans whose terms have been modified in troubled debt restructurings as of June 30, 2022 and December 31, 2021, respectively.

For the six months ended June 30, 2022 and 2021, the terms of certain loans were modified as TDRs.

The modification of the terms of such loans included one or a combination of the following:

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In accordance with such guidance, during 2020 and throughout 2021 the Company offered short-term modifications in response to COVID-19 to borrowers who were current and otherwise not past due.

As of March 31, 2022, there were no such loans remaining on deferral.

During the three months ended March 31, 2022, no loans were modified as troubled debt restructuring.

As of June 30, 2022, there were no such loans remaining on deferral.

During the six months ended June 30, 2022, no loans were modified as troubled debt restructuring.

Troubled Debt Restructurings:

The following table presents loans by class modified as troubled debt restructurings that occurred during the three months ended March 31, 2021 (in thousands):

The following table presents loans by class modified as troubled debt restructurings that occurred during the six months ended June 30, 2021 (in thousands):

Troubled Debt Restructurings:

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A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

There were no defaults on troubled debt restructurings, within twelve months following the modification, during the three months ended March 31, 2022 or March 31, 2021.

There were no defaults on troubled debt restructurings, within twelve months following the modification, during the six months ended June 30, 2022 or June 30, 2021.

Business combinations involving the Company’s acquisition of the equity interests or net assets of another enterprise give rise to goodwill.

Total goodwill at March 31, 2022, was $ 53,777,000 consisting of $ 8,934,000 , $ 14,643,000 , $ 6,340,000 , $ 10,394,000 , and $ 13,466,000 representing the excess of the cost of Bank of Madera County, Service 1st Bancorp, Visalia Community Bank, Sierra Vista Bank, and Folsom Lake Bank, respectively, over the net of the amounts assigned to assets acquired and liabilities assumed in the transactions accounted for under the acquisition method of accounting.

Total goodwill at June 30, 2022, was $ 53,777,000 consisting of $ 8,934,000 , $ 14,643,000 , $ 6,340,000 , $ 10,394,000 , and $ 13,466,000 representing the excess of the cost of Bank of Madera County, Service 1st Bancorp, Visalia Community Bank, Sierra Vista Bank, and Folsom Lake Bank, respectively, over the net of the amounts assigned to assets acquired and liabilities assumed in the transactions accounted for under the acquisition method of accounting.

The value of goodwill is ultimately derived from the Company’s ability to generate net earnings after the acquisitions and is not deductible for tax purposes.

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Goodwill is also tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the Company below its carrying amount.

No such events or circumstances arose during the first three months of 2022.

No such events or circumstances arose during the first six months of 2022.

Borrowing Arrangements

As of March 31, 2022 and December 31, 2021, the Company had no Federal Home Loan Bank (“FHLB”) of San Francisco advances.

Approximately $ 493,500,000 in loans were pledged under a blanket lien as collateral to the FHLB for the Bank’s remaining borrowing capacity of $ 284,114,000 as of March 31, 2022.

FHLB advances are also secured by investment securities with amortized costs totaling $ 106,000 and $ 112,000 and market values totaling $ 111,000 and $ 117,000 at March 31, 2022 and December 31, 2021, respectively.

As of June 30, 2022 and , the Company had $ 9,324,000 Federal Home Loan Bank (“FHLB”) of San Francisco advances as compared to none at December 31, 2021.

Approximately $ 490,366,000 in loans were pledged under a blanket lien as collateral to the FHLB for the Bank’s remaining borrowing capacity of $ 260,052,000 as of June 30, 2022.

FHLB advances are also secured by investment securities with amortized costs totaling $ 95,000 and $ 112,000 and market values totaling $ 101,000 and $ 117,000 at June 30, 2022 and December 31, 2021, respectively.

The Bank’s credit limit varies according to the amount and composition of the investment and loan portfolios pledged as collateral.

As of March 31, 2022, and December 31, 2021 the Company had no Federal funds purchased.

As of June 30, 2022, and December 31, 2021 the Company had no Federal funds purchased.

Subordinated Debentures

The following table summarizes the Company’s subordinated debentures:

(Dollars in thousands) March 31, 2022 December 31, 2021

(Dollars in thousands) June 30, 2022 December 31, 2021

Fixed - floating rate subordinated debentures, due 2031 $ 35,000 $ 35,000

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Under applicable regulatory guidance, the amount of trust preferred securities that is eligible as Tier 1 capital is limited to 25 % of the Company’s Tier 1 capital on a pro forma basis.

At March 31, 2022, all of the trust preferred securities that have been issued qualify as Tier 1 capital.

At June 30, 2022, all of the trust preferred securities that have been issued qualify as Tier 1 capital.

The trust preferred securities mature on October 7, 2036, are redeemable at the Company’s option, and require quarterly distributions by the Trust to the holder of the trust preferred securities at a variable interest rate which will adjust quarterly to equal the three month LIBOR plus 1.60 %.

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For each January 7, April 7, July 7 or October 7 of each year, the rate will be adjusted to equal the three month LIBOR plus 1.60 %.

As of March 31, 2022, the rate was 1.84 %.

Interest expense recognized by the Company for the three months ended March 31, 2022 and 2021 was $ 333,000 and $ 24,000 , respectively.

As of June 30, 2022, the rate was 2.64 %.

Interest expense recognized by the Company for the six months ended June 30, 2022 and 2021 was $ 47,000 and $ 46,000 , respectively.

Subordinated Debentures

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The Company uses the same credit policies in making commitments and conditional obligations as it does for loans.

Commitments to extend credit amounting to $ 346,752,000 and $ 326,108,000 were outstanding at March 31, 2022 and December 31, 2021, respectively.

Commitments to extend credit amounting to $ 325,400,000 and $ 326,108,000 were outstanding at June 30, 2022 and December 31, 2021, respectively.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract unless waived by the Bank.

Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.

Included in commitments to extend credit are undisbursed lines of credit totaling $ 346,140,000 and $ 325,674,000 at March 31, 2022 and December 31, 2021, respectively.

Included in commitments to extend credit are undisbursed lines of credit totaling $ 324,490,000 and $ 325,674,000 at June 30, 2022 and December 31, 2021, respectively.

Undisbursed lines of credit include credits whereby customers can repay principal and request principal advances during the term of the loan at their discretion and most expire between one and 12 months.

Included in undisbursed lines of credit are commitments for the undisbursed portions of construction loans totaling $ 88,584,000 and $ 93,263,000 as of March 31, 2022 and December 31, 2021, respectively.

Included in undisbursed lines of credit are commitments for the undisbursed portions of construction loans totaling $ 75,027,000 and $ 93,263,000 as of June 30, 2022 and December 31, 2021, respectively.

These commitments are agreements to lend to customers, subject to meeting certain construction progress requirements established in the contracts.

The underlying construction loans have fixed expiration dates.

Standby letters of credit and financial guarantees amounting to $ 611,000 and $ 434,000 were outstanding at March 31, 2022 and December 31, 2021, respectively.

Standby letters of credit and financial guarantees amounting to $ 910,000 and $ 434,000 were outstanding at June 30, 2022 and December 31, 2021, respectively.

Standby letters of credit and financial guarantees are conditional commitments issued by the Company to guarantee the performance of a customer to a third party.

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Standby letters of credit and guarantees carry a one year term or less, many have auto-renewal features.

The fair value of the liability related to these standby letters of credit, which represents the fees received for their issuance, was not significant at March 31, 2022 or December 31, 2021.

The fair value of the liability related to these standby letters of credit, which represents the fees received for their issuance, was not significant at June 30, 2022 or December 31, 2021.

The Company recognizes these fees as revenue over the term of the commitment or when the commitment is used.

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Management does not anticipate any material loss will result from the outstanding commitments to extend credit, standby letters of credit and financial guarantees.

At March 31, 2022 and December 31, 2021, the balance of a contingent allocation for probable loan loss experience on unfunded obligations was $ 115,000 .

At June 30, 2022 and December 31, 2021, the balance of a contingent allocation for probable loan loss experience on unfunded obligations was $ 115,000 .

The contingent allocation for probable loan loss experience on unfunded obligations is calculated by management using an appropriate, systematic, and consistently applied process.

1 unchanged sentence

In 2018, the Company sold its credit card portfolio to a third party vendor.

Part of the sale of the portfolio was to provide a guarantee of certain accounts which, as of March 31, 2022, was $ 2,144,500 .

Part of the sale of the portfolio was to provide a guarantee of certain accounts which, as of June 30, 2022, was $ 2,294,500 .

The Company is subject to legal proceedings and claims which arise in the ordinary course of business.

5 unchanged sentences

Basic Earnings Per Share For the Three Months

Ended March 31,

Ended June 30, For the Six Months

Ended June 30,

(In thousands, except share and per share amounts) 2022 2021 2022 2021

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Diluted Earnings Per Share For the Three Months

Ended March 31,

Ended June 30, For the Six Months

Ended June 30,

(In thousands, except share and per share amounts) 2022 2021 2022 2021

5 unchanged sentences

Diluted earnings per share $ 0.56 $ 0.60 $ 1.07 $ 1.20

No outstanding options awards were anti-dilutive for the three months ended March 31, 2022 and 2021.

No outstanding options awards were anti-dilutive for the six months ended June 30, 2022 and 2021.

Share-Based Compensation

The Company has four share-based compensation plans as described below.

Share-based compensation cost recognized for those plans was $ 97,000 and $ 101,000 for the three months ended March 31, 2022 and 2021, respectively.

The recognized tax (benefit) expense for the share-based compensation expense, forfeitures of restricted stock, and exercise of stock options, resulted in the recognition of $( 22,000 ) and $ 1,000 , respectively, for the three months ended March 31, 2022 and 2021.

The Company has three share-based compensation plans as described below.

Share-based compensation cost recognized for those plans was $ 181,000 and $ 210,000 for the six months ended June 30, 2022 and 2021, respectively.

The recognized tax (benefit) expense for the share-based compensation expense, forfeitures of restricted stock, and exercise of stock options, resulted in the recognition of $ 69,000 and $ 46,000 , respectively, for the six months ended June 30, 2022 and 2021.

The Central Valley Community Bancorp 2005 Omnibus Incentive Plan (2005 Plan) was adopted in May 2005 and expired March 16, 2015.

In October 2017, the Company assumed the Folsom Lake Bank 2007 Equity Incentive Plan (2007 Plan).

While outstanding arrangements to issue shares under these plans, including options, continue in force until their expiration, no new options will be granted under these plans.

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Shares are purchased at the end of each of the three-month offering periods at a 10 percent discount from the lower of the closing market price on the Offering Date (first trading day of each offering period) or the Investment Date (last trading day of each offering period).

The Company reserved 500,000 common shares to be set aside for the ESPP, and there were 442,401 shares available for future purchase under the plan as of March 31, 2022.

The Company reserved 500,000 common shares to be set aside for the ESPP, and there were 438,851 shares available for future purchase under the plan as of June 30, 2022.

Stock Option Plan

5 unchanged sentences

The compensation cost for stock options granted is based on the weighted average grant date fair value per share.

No options to purchase shares of the Company’s common stock were granted during the three months ended March 31, 2022 and 2021.

A summary of the combined activity of the Company’s stock option compensation plans for the three months ended March 31, 2022 follows (in thousands, except per share amounts):

No options to purchase shares of the Company’s common stock were granted during the six months ended June 30, 2022 and 2021.

A summary of the combined activity of the Company’s stock option compensation plans for the six months ended June 30, 2022 follows (in thousands, except per share amounts):

Shares Weighted

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Options forfeited ( 1,800 ) $ 12.50

Options outstanding at March 31, 2022 39,930 $ 9.12 0.38 $ 566

Options vested or expected to vest at March 31, 2022 39,930 $ 9.12 0.38 $ 566

Options exercisable at March 31, 2022 39,930 $ 9.12 0.38 $ 566

Options outstanding at June 30, 2022 12,150 $ 8.02 0.22 $ 79

Options vested or expected to vest at June 30, 2022 12,150 $ 8.02 0.22 $ 79

Options exercisable at June 30, 2022 12,150 $ 8.02 0.22 $ 79

Information related to the stock option plan is as follows (in thousands):

For the Three Months

Ended March 31,

Ended June 30, For the Six Months

Ended June 30,

2022 2021 2022 2021

Intrinsic value of options exercised $ 185 $ 204 $ 388 $ 206

1 unchanged sentence

Excess tax benefit realized for option exercises $ 48 $ 46 $ 69 $ 46

As of March 31, 2022, there was no remaining unrecognized compensation cost related to stock options granted under all plans.

As of June 30, 2022, there was no remaining unrecognized compensation cost related to stock options granted under all plans.

Restricted and Performance Common Stock Awards

4 unchanged sentences

The cost of these awards is recognized over the vesting period of the awards based on the fair value of our common stock on the date of the grant.

The following table summarizes restricted stock and performance award activity for the three months ended March 31, 2022 as follows:

The following table summarizes restricted stock and performance award activity for the six months ended June 30, 2022 as follows:

Shares Weighted

4 unchanged sentences

Forfeited ( 244 ) $ 20.50

Nonvested outstanding shares at March 31, 2022 28,586 $ 20.86

Nonvested outstanding shares at June 30, 2022 49,468 $ 17.26

The shares awarded to employees and directors under the restricted stock agreements vest on applicable vesting dates only to the extent the recipient of the shares is then an employee or a director of the Company or one of its subsidiaries, and each recipient will forfeit all of the shares that have not vested on the date his or her employment or service is terminated.

Performance common stock awards vest immediately.

As of March 31, 2022, there were 28,586 shares of restricted stock that are nonvested and expected to vest.

As of March 31, 2022, there was $ 284,000 of total unrecognized compensation cost related to nonvested restricted common stock awards.

As of June 30, 2022, there were 49,468 shares of restricted stock that are nonvested and expected to vest.

As of June 30, 2022, there was $ 813,000 of total unrecognized compensation cost related to nonvested restricted common stock awards.

Restricted stock compensation expense is recognized on a straight-line basis over the vesting period.

This cost is expected to be recognized over a weighted-average remaining period of 2.18 years and will be adjusted for subsequent changes in estimated forfeitures.

Restricted common stock awards had an intrinsic value of $ 3,432,000 at March 31, 2022.

Restricted common stock awards had an intrinsic value of $ 3,517,000 at June 30, 2022.

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