What changed in this filing

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Item 1. Financial Statements

2023-08-03 compared with 2023-05-15 · 312 added, 204 removed, 636 unchanged (45% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts) March 31, 2023 December 31, 2022

(In thousands, except share amounts) June 30, 2023 December 31, 2022

Cash and due from banks $ 28,325 $ 25,485

2 unchanged sentences

Available-for-sale debt securities, at fair value 619,759 648,825

Held-to-maturity debt securities, at amortized cost less allowance for credit losses of $684 at March 31, 2023 and $- at December 31, 2022 303,844 305,107

Held-to-maturity debt securities, at amortized cost less allowance for credit losses of $456 at June 30, 2023 and $- at December 31, 2022 303,876 305,107

Equity securities, at fair value 6,558 6,558

Loans, less allowance for credit losses of $15,257 at March 31, 2023 and $10,848 at December 31, 2022 1,270,297 1,245,456

Loans, less allowance for credit losses of $15,463 at June 30, 2023 and $10,848 at December 31, 2022 1,240,195 1,245,456

Bank premises and equipment, net 10,939 7,987

9 unchanged sentences

Short-term borrowings — 46,000

Senior debt and subordinated debentures, less debt issuance costs of $520 at March 31, 2023 and $556 at December 31, 2022 69,635 69,599

Senior debt and subordinated debentures, less debt issuance costs of $484 at June 30, 2023 and $556 at December 31, 2022 69,671 69,599

Accrued interest payable and other liabilities 32,482 32,611

Total liabilities 2,302,447 2,247,859

Commitments and contingencies ( Note 6 )

Shareholders’ equity:

4 unchanged sentences

issued and outstanding:

11,754,938 at March 31, 2023 and 11,735,291 at December 31, 2022 61,924 61,487

11,812,425 at June 30, 2023 and 11,735,291 at December 31, 2022 62,128 61,487

Retained earnings 201,100 194,400

Accumulated other comprehensive (loss) income, net of tax ( 76,101 ) ( 81,227 )

Accumulated other comprehensive loss, net of tax ( 75,868 ) ( 81,227 )

Total shareholders’ equity 187,360 174,660

4 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) 2023 2022 2023 2022

11 unchanged sentences

Total interest expense 5,782 655 8,344 1,240

Net interest income before provision for credit losses 21,581 17,597

PROVISION FOR CREDIT LOSSES 633 —

Net interest income after provision for credit losses 20,948 17,597

Net interest income before (credit) provision for credit losses 20,205 19,810 41,786 37,407

(CREDIT) PROVISION FOR CREDIT LOSSES ( 343 ) — 290 —

Net interest income after (credit) provision for credit losses 20,548 19,810 41,496 37,407

NON-INTEREST INCOME:

Service charges 367 544 755 1,083

Appreciation in cash surrender value of bank-owned life insurance

Interchange fees 446 442

Net realized (losses) gains on sales and calls of investment securities ( 219 ) 206

Federal Home Loan Bank dividends 109 85

Loan placement fees 124 299

Net realized losses on sales and calls of investment securities ( 39 ) ( 969 ) ( 257 ) ( 763 )

Other income 1,266 1,195 2,671 2,284

3 unchanged sentences

Occupancy and equipment 1,264 1,344 2,521 2,506

Professional services 353 374

Data processing 650 541

Regulatory assessments 210 222

ATM/Debit card expenses 184 195

Information technology 847 758

Directors’ expenses 163 45

Advertising 125 140

Loan related expenses 147 71

Personnel other 259 103

Amortization of core deposit intangibles 34 140

Other 4,565 3,682 8,479 7,021

13 unchanged sentences

For the Three Months

Ended March 31,

Ended June 30, For the Six Months

Ended June 30,

(In thousands) 2023 2022 2023 2022

2 unchanged sentences

Unrealized gains (losses) on securities:

Unrealized holding gains (losses) arising during the period 6,433 ( 80,603 )

Reclassification of net losses (gains) included in net income 219 ( 206 )

Unrealized holding (losses) gains arising during the period ( 282 ) ( 36,332 ) 6,152 ( 116,931 )

Reclassification of net losses included in net income 39 969 257 763

Amortization of net unrealized losses transferred 573 394 1,200 394

6 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

THREE MONTHS ENDED MARCH 31, 2023 AND 2022

THREE MONTHS ENDED JUNE 30, 2023 AND 2022

Common Stock Retained Earnings Accumulated

2 unchanged sentences

(In thousands, except share amounts) Shares Amount

Balance, December 31, 2021 11,916,651 $ 66,820 $ 173,393 $ 7,632 247,845

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

Net income — — 6,542 — 6,542

12 unchanged sentences

27,780 266 — 266

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

Balance, March 31, 2023 11,754,938 $ 61,924 $ 196,229 $ ( 76,101 ) $ 182,052

— — 6,282 — 6,282

Other comprehensive income — — — 233 233

Stock issued under employee stock purchase plan

3,649 47 — — 47

Restricted stock granted net of forfeitures

53,877 — — — —

Stock-based compensation expense

— 158 — — 158

Cash dividend

— — ( 1,411 ) — ( 1,411 )

Repurchase and retirement of common stock

( 39 ) ( 1 ) — — ( 1 )

Balance, June 30, 2023 11,812,425 $ 62,128 $ 201,100 $ ( 75,868 ) $ 187,360

See notes to unaudited consolidated financial statements.

CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Common Stock Retained Earnings Accumulated

Comprehensive Income (Loss)

(Net of Taxes) Total Shareholders’ Equity

(In thousands, except share amounts) Shares Amount

Balance, December 31, 2021 11,916,651 $ 66,820 $ 173,393 $ 7,632 247,845

Net income — — 12,628 — 12,628

Other comprehensive loss — — — ( 81,551 ) ( 81,551 )

Stock issued under employee stock purchase plan

6,556 110 — — 110

Stock awarded to employees 13,446 — — — —

Restricted stock granted net of forfeitures

42,399 — — — —

Stock-based compensation expense

— 460 — — 460

Cash dividend

— — ( 2,824 ) — ( 2,824 )

Repurchase and retirement of common stock

( 300,761 ) ( 6,814 ) — — ( 6,814 )

Stock options exercised

38,855 399 — — 399

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

Balance, December 31, 2022

11,735,291 $ 61,487 $ 194,400 $ ( 81,227 ) $ 174,660

Implementation of ASU 2016-13, Current Expected Credit Loss (CECL) Day 1 Adjustment — — ( 3,731 ) — ( 3,731 )

2 unchanged sentences

Other comprehensive income — — — 5,359 5,359

Restricted stock granted net of forfeitures

5,157 — — — —

Stock issued under employee stock purchase plan

1 unchanged sentence

Stock awarded to employees 10,347 — — — —

Restricted stock granted net of forfeitures

59,034 — — — —

Stock-based compensation expense

2 unchanged sentences

— — ( 2,821 ) — ( 2,821 )

Balance, March 31, 2023 11,754,938 $ 61,924 $ 196,229 $ ( 76,101 ) $ 182,052

Repurchase and retirement of common stock

( 39 ) ( 1 ) — — ( 1 )

Balance, June 30, 2023 11,812,425 $ 62,128 $ 201,100 $ ( 75,868 ) $ 187,360

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) 2023 2022

2 unchanged sentences

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

Net (increase) decrease in deferred loan fees ( 56 ) 208

Net decrease in deferred loan fees 94 405

Depreciation 311 403

3 unchanged sentences

Provision for credit losses 290 —

Net realized losses (gains) on sales and calls of available-for-sale investment securities 219 ( 206 )

Net realized losses on sales and calls of available-for-sale investment securities 257 763

Net change in equity securities — 584

Increase in bank-owned life insurance, net of expenses ( 503 ) ( 487 )

Net (decrease) increase in accrued interest receivable and other assets ( 2,509 ) 1,574

Net increase (decrease) in accrued interest payable and other liabilities 3,251 ( 10,249 )

Net increase in accrued interest receivable and other assets ( 2,069 ) ( 1,263 )

Net decrease in accrued interest payable and other liabilities ( 649 ) ( 11,550 )

Benefit (provision) for deferred income taxes 381 ( 564 )

Net cash provided by (used in) operating activities 10,532 ( 635 )

Net cash provided by operating activities 15,474 5,524

CASH FLOWS FROM INVESTING ACTIVITIES:

1 unchanged sentence

Proceeds from sales or calls of available-for-sale investment securities 12,376 235,370

Proceeds from calls of held-to-maturity investment securities 20 —

Proceeds from maturity and principal repayments of available-for-sale investment securities 20,166 37,974

Proceeds from maturity and principal repayments of held-to-maturity investment securities 1,180 845

Net (increase) decrease in loans ( 29,212 ) 27,125

Net decrease (increase) in loans 556 ( 96,985 )

Purchases of premises and equipment ( 3,263 ) ( 84 )

Net cash used in investing activities ( 6,203 ) ( 107,836 )

FHLB stock purchased ( 967 ) ( 574 )

Net cash provided by (used in) investing activities 30,068 ( 125,153 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Net (decrease) increase in demand, interest bearing and savings deposits ( 69,013 ) 44,891

Net decrease in demand, interest bearing and savings deposits ( 40,296 ) ( 14,300 )

Net increase (decrease) in time deposits 140,941 ( 2,500 )

Proceeds from short-term borrowings from Federal Home Loan Bank

3,346,500 1,158,602

Repayments of short-term borrowings to Federal Home Loan Bank ( 3,392,500 ) ( 1,149,278 )

Purchase and retirement of common stock — ( 4,486 )

Repurchase and retirement of common stock ( 1 ) ( 6,814 )

Proceeds from stock issued under employee stock purchase plan

1 unchanged sentence

Cash dividend payments on common stock ( 2,821 ) ( 2,824 )

Net cash provided by financing activities 28,763 33,841

Net cash provided by (used in) financing activities 51,946 ( 16,605 )

Increase (decrease) in cash and cash equivalents 97,488 ( 136,234 )

2 unchanged sentences

See notes to unaudited consolidated financial statements.

For the Three Months

Ended March 31,

For the Six Months

Ended June 30,

(In thousands) 2023 2022

4 unchanged sentences

Operating cash flows from operating leases $ 1,231 $ 1,108

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 2022 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, 2023, and the results of its operations and its cash flows for the three month interim periods ended March 31, 2023 and 2022 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, 2023, and the results of its operations and its cash flows for the three and six month interim periods ended June 30, 2023 and 2022 have been included.

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

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The Company also adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures upon the adoption of ASU 2016-13 as of January 1, 2023 on a propsective basis.

Troubled Debt Restructurings and Vintage Disclosures upon the adoption of ASU 2016-13 as of January 1, 2023 on a prospective basis.

The amendments in this update eliminated 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.

18 unchanged sentences

Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.

Changes in the allowance for credit losses are recorded as credit loss provision (or reversal).

Changes in the allowance for credit losses are recorded as credit loss provision (or credit).

Losses are charged against the allowance when management believes that the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

5 unchanged sentences

Government sponsored Entities and Agencies collateralized by Residential Mortgage Obligations, Private Label Mortgage and Asset Backed Securities, and Corporate Debt Securities.

The Company elected the practical expedient under ASC 326-20-30-5A to exclude accrued interest from the amortized cost basis when measuring potential impairment.

Additionally, management notes that due to this election, accrued interest is separately reported from the securities’ amortized cost basis.

Allowance for Credit Losses on Loans:

The allowance for credit losses (“ACL”) is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.

The allowance for credit losses (“ACL”) on loans is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.

The allowance is established through a provision for credit losses which is charged to expense.

1 unchanged sentence

Cash received on previously charged off amounts is recorded as a recovery to the allowance.

The Company elected the practical expedient under ASC 326-20-30-5A to exclude accrued interest from the amortized cost basis when measuring potential impairment.

Additionally, management notes that due to this election, accrued interest is separately reported from the loans’ amortized cost basis.

Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts.

Historical credit loss experience from national and peer data provides the basis for the estimation of expected credit losses.

Adjustments to historical loss information are made for the differences in the current loan-specific risk characteristics, such as differences in loan-to-values, portfolio mix, or term as well as for changes in environmental conditions, such as changes in unemployment rates, market interest rates, property values, or other relevant factors.

Historical credit loss experience from national and local peer data provides the basis for the estimation of expected credit losses.

values, or other relevant factors.

Management may assign qualitative factors to each loan segment if there are material risks or improvements present but not yet captured in the model environment.

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Loans evaluated individually are not included in the collective evaluation.

When management determines that foreclosure is probable or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

When management determines that

foreclosure is probable or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

When the Company measures credit losses based on the present value of expected future cash flows, management does not adjust the effective interest rate used to discount expected cash flows to incorporate expected prepayments.

1 unchanged sentence

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company.

The allowance for credit losses on unfunded commitments is

adjusted through provision for credit losses.

The allowance for credit losses on unfunded commitments is adjusted through provision for credit losses.

The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life.

Fair Value Measurements

Fair Value Hierarchy

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

There are three levels of inputs that may be used to measure fair values:

Level 1 — Quoted market prices (unadjusted) for identical instruments traded in active markets that the entity has the ability to access as of the measurement date.

Level 2 —Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by observable market data.

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

The estimated carrying and fair values of the Company’s financial instruments not carried at fair value are as follows (in thousands):

March 31, 2023

Amount Fair Value

(In thousands) Level 1 Level 2 Level 3 Total

Financial assets:

Cash and due from banks $ 25,464 $ 25,464 $ — $ — $ 25,464

Interest-earning deposits in other banks 38,798 38,798 — — 38,798

Held-to-maturity investment securities 303,844 — 276,633 — 276,633

Loans, net 1,270,297 — — 1,182,862 1,182,862

Financial liabilities:

Time Deposits 213,033 — 207,554 — 207,554

Senior debt and subordinated debentures 69,635 — — 58,944 58,944

December 31, 2022

Amount Fair Value

(In thousands) Level 1 Level 2 Level 3 Total

Financial assets:

Cash and due from banks $ 25,485 $ 25,485 $ — $ — $ 25,485

Interest-earning deposits in other banks 5,685 5,685 — — 5,685

Held-to-maturity investment securities 305,107 — 271,249 — 271,249

Loans, net 1,245,456 — — 1,113,849 1,113,849

Financial liabilities:

Time deposits 67,923 — 67,047 — 67,047

Short-term borrowings 46,000 — 46,000 — 46,000

Subordinated debentures 69,599 — — 62,504 62,504

The methods and assumptions used to estimate fair values are described as follows:

(a) Investment securities — The fair values for investment securities are determined by quoted market prices, if available (Level 1).

For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing.

rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

(b) Individually Evaluated Loans — Fair values for individually evaluated loans are estimated either using the fair value of the collateral less selling costs if collateral dependent resulting in a Level 3 classification.

Individually evaluated loan amounts are initially valued at the lower of cost or fair value.

Individually evaluated loans carried at fair value generally receive specific allocations of the allowance for credit losses.

For collateral dependent real estate loans, fair value is commonly based on recent real estate appraisals.

These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.

Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.

Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification.

Individually evaluated loans are evaluated on a quarterly basis for additional credit losses and adjusted accordingly.

The estimated fair values of financial instruments disclosed above follow the guidance in ASU 2016-01 which prescribes an “exit price” approach in estimating and disclosing fair value of financial instruments incorporating discounts for credit, liquidity, and marketability factors.

(c) Real Estate Owned — Appraisals for assets acquired through foreclosure 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 resulting fair value is compared with independent data sources such as recent market data or industry-wide statistics.

Assets Recorded at Fair Value

The Company is required or permitted to record the following assets at fair value on a recurring basis.

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022:

Fair Value Measurements Using

March 31, 2023 Fair Value Level 1 Level 2 Level 3

Available-for-sale debt securities:

Treasury securities $ 8,879 $ — $ 8,879 $ —

Government agencies 98 — 98 —

Obligations of states and political subdivisions 178,051 — 178,051 —

Government sponsored entities and agencies collateralized by residential mortgage obligations

92,631 — 92,631 —

Private label mortgage and asset backed securities

351,865 — 351,865 —

Equity securities

6,663 6,663 — —

Total assets measured at fair value on a recurring basis

$ 638,187 $ 6,663 $ 631,524 $ —

Fair Value Measurements Using

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

Available-for-sale debt securities:

Treasury securities $ 8,707 $ — $ 8,707 $ —

Government agencies 98 — 98 —

Obligations of states and political subdivisions 174,985 — 174,985 —

Government sponsored entities and agencies collateralized by residential mortgage obligations

109,493 — 109,493 —

Private label mortgage and asset backed securities

355,542 — 355,542 —

Equity securities 6,558 6,558 — —

Total assets measured at fair value on a recurring basis $ 655,383 $ 6,558 $ 648,825 $ —

There were no changes in valuation techniques used during the three months ended March 31, 2023 or the year ended December 31, 2022.

There were no assets measured on a non-recurring basis at March 31, 2023 and December 31, 2022.

The following table summarizes the amortized cost and fair value of securities available-for-sale and securities held-to-maturity at March 31, 2023 and December 31, 2022 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses (in thousands):

March 31, 2023

The following table summarizes the amortized cost and fair value of securities available-for-sale and securities held-to-maturity at June 30, 2023 and December 31, 2022 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses (in thousands):

June 30, 2023

Available-for-Sale Securities Amortized Cost Gross

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Total available-for-sale $ 704,993 $ 12 $ ( 85,246 ) $ — $ 619,759

March 31, 2023

June 30, 2023

Held-to-Maturity Securities Amortized Cost Gross

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Total held-to-maturity $ 305,107 $ 67 $ ( 33,925 ) $ 271,249

Proceeds and gross realized gains (losses) from the sales or calls of investment securities for the periods ended March 31, 2023 and 2022 are shown below (in thousands):

Proceeds and gross realized gains (losses) from the sales or calls of available-for-sale investment securities for the periods ended June 30, 2023 and 2022 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 2023 2022 2023 2022

2 unchanged sentences

Gross realized losses from sales or calls ( 39 ) ( 2,185 ) ( 257 ) ( 5,886 )

The provision for income taxes includes a $( 44,000 ) and $ 61,000 income tax (benefit)/expense from unrealized net losses and gains on securities realized through security sales for the three months ended March 31, 2023 and 2022.

The amortized cost and estimated fair value of available-for-sale and held-to maturity investment securities at March 31, 2023 by contractual maturity is shown below (in thousands).

The provision for income taxes includes a $ 76,000 and $ 226,000 income tax benefit from security sales for the six months ended June 30, 2023 and 2022.

The amortized cost and estimated fair value of available-for-sale and held-to maturity investment securities at June 30, 2023 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.

Securities not due at a single maturity date are shown separately.

March 31, 2023

June 30, 2023 December 31, 2022

Available-for-Sale Securities Amortized Cost Estimated Fair

Value Amortized Cost Estimated Fair

Within one year $ — $ — $ — $ —

9 unchanged sentences

Total available-for-sale $ 704,993 $ 619,759 $ 740,468 $ 648,825

March 31, 2023

June 30, 2023 December 31, 2022

Held-to-Maturity Securities Amortized Cost Estimated Fair

Value Amortized Cost Estimated Fair

Within one year $ — $ — $ — $ —

8 unchanged sentences

Total held-to-maturity $ 304,332 $ 273,848 $ 305,107 $ 271,249

At March 31, 2023 there were eight issuers of private label mortgage securities in which the Company had holdings of securities in amounts greater than 10% of shareholders’ equity.

At June 30, 2023 there were nine issuers of private label mortgage securities in which the Company had holdings of securities in amounts greater than 10% of shareholders’ equity.

Investments with these issuers were in senior tranches and/or were rated “AAA” or higher and there were no credit issues identified.

The following table summarizes the Company’s AFS debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

March 31, 2023

June 30, 2023

Less than 12 Months 12 Months or More Total

28 unchanged sentences

Total available-for-sale $ 237,917 $ ( 27,795 ) $ 410,654 $ ( 63,866 ) $ 648,571 $ ( 91,661 )

As of March 31, 2023, the Company had a total of 183 AFS debt securities in a gross unrealized loss position with no credit impairment, consisting of 6 U.S.

As of June 30, 2023, the Company had a total of 189 AFS debt securities in a gross unrealized loss position with no credit impairment, consisting of 6 U.S.

Treasury securities and U.S.

3 unchanged sentences

Each reporting period, the Company assesses each AFS debt security that is in an unrealized loss position to determine whether the decline in fair value below the amortized cost basis results from a credit loss or other factors.

The Company did not record an ACL on any available for sale securities at March 31, 2023 or upon adoption of ASU 2016-13 on January 1, 2023.

The Company did not record an ACL on any available for sale securities at June 30, 2023 or upon adoption of ASU 2016-13 on January 1, 2023.

As of both dates, the Company considers the unrealized losses across the classes of major security-type to be related to fluctuations in market conditions, primarily interest rates, and not reflective of a deterioration in credit value.

13 unchanged sentences

Following review of the financial metrics and ratings, management concluded that the unrealized loss position of the private label mortgage and asset backed securities related exclusively to the fluctuation in market conditions and were not reflective of any credit concerns with the tranches comprising the Company’s investments.

As of March 31, 2023 and December 31, 2022, the Company had the intent to hold the AFS debt securities with unrealized losses through the anticipated recovery period and it was more-than-likely-than-not that the Company would not be required to sell these securities.

Accordingly, there was no allowance for credit losses as of March 31, 2023 and December 31, 2022 provided against these securities.

As of June 30, 2023 and December 31, 2022, the Company had the intent to hold the AFS debt securities with unrealized losses through the anticipated recovery period and it was more-than-likely-than-not that the Company would not be required to sell these securities.

Accordingly, there was no allowance for credit losses as of June 30, 2023 and December 31, 2022 provided against these securities.

Allowance for Credit Losses on Held-to-Maturity Debt Securities

3 unchanged sentences

The Company recorded an ACL on January 1, 2023 for held-to-maturity debt securities within the corporate bond and private label mortgage securities of $ 545,000 and $ 231,000 , respectively.

The allowance for credit losses on HTM securities was $ 684,000 at March 31, 2023.

The allowance for credit losses on HTM securities was $ 456,000 at June 30, 2023.

The Company monitors credit quality of debt securities held-to-maturity through the use of credit ratings.

The Company monitors the credit ratings on a quarterly basis.

For non-rated investment securities, management receives quarterly performance updates to monitor for any credit concerns.

There were no HTM securities on nonaccrual or past due over 89 days and still on accrual.

1 unchanged sentence

Government sponsored agencies are not included in the below tables as credit ratings are not applicable.

March 31, 2023

June 30, 2023

Debt Securities Held-to-Maturity AAA/AA/A BBB/BB/B Unrated

7 unchanged sentences

The roll forward of the allowance for credit losses is presented at the portfolio segment level.

Accrued interest receivable on loans of $ 3,773,000 and $ 4,512,000 at March 31, 2023 and December 31, 2022 respectively is not included in the loan tables below and is included in other assets on the Company’s balance sheets.

Accrued interest receivable on loans of $ 3,972,000 and $ 4,512,000 at June 30, 2023 and December 31, 2022 respectively is not included in the loan tables below and is included in other assets on the Company’s balance sheets.

Outstanding loans are summarized by class as follows:

Loan Type (Dollars in thousands) March 31, 2023 December 31, 2022

Loan Type (Dollars in thousands) June 30, 2023 December 31, 2022

Commercial and industrial $ 103,490 $ 141,197

15 unchanged sentences

Total loans, net $ 1,240,195 $ 1,245,456

At March 31, 2023 and December 31, 2022, loans originated under Small Business Administration (SBA) programs totaling $ 18,964,000 and $ 19,947,000 , respectively, were included in the real estate and commercial categories, of which, $ 14,505,000 or 76 % and $ 15,333,000 or 77 %, respectively, are secured by government guarantees.

At June 30, 2023 and December 31, 2022, loans originated under Small Business Administration (SBA) programs totaling $ 18,256,000 and $ 19,947,000 , respectively, were included in the real estate and commercial categories, of which, $ 13,955,000 or 76 % and $ 15,333,000 or 77 %, respectively, are secured by government guarantees.

Allowance for Credit Losses on Loans

The measurement of the allowance for credit losses on collectively evaluated loans is based on modeled expectations of lifetime expected credit losses utilizing national and peer group historical losses, weighting of economic scenarios, and other relevant factors.

The measurement of the allowance for credit losses on collectively evaluated loans is based on modeled expectations of lifetime expected credit losses utilizing national and local peer group historical losses, weighting of economic scenarios, and other relevant factors.

The Company incorporates forward-looking information using macroeconomic scenarios, which include variables that are considered key drivers of credit losses within the portfolio.

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When a loan no longer shares similar risk characteristics with other loans, such as in the case of certain nonaccrual loans, the Company estimates the allowance for credit losses on an individual loan basis.

There were no loans on nonaccrual or individually evaluated as of March 31, 2023 or December 31, 2022.

The following table shows the summary of activities for the allowance for credit losses as of and for the three months ended March 31, 2023 and 2022 by portfolio segment (in thousands):

There were no loans on nonaccrual or individually evaluated as of June 30, 2023 or December 31, 2022.

The following table shows the summary of activities for the allowance for credit losses for the three months ended June 30, 2023 and 2022 by portfolio segment (in thousands):

Commercial Commercial Real Estate 1-4 Family Real Estate Consumer Total

Allowance for credit losses:

Beginning balance, April 1, 2023 $ 2,028 $ 10,065 $ 2,285 $ 879 $ 15,257

(Credit) provision for credit losses (1)

( 551 ) 619 198 ( 82 ) 184

Charge-offs — — — ( 3 ) ( 3 )

Recoveries — — 6 19 25

Ending balance, June 30, 2023 $ 1,477 $ 10,684 $ 2,489 $ 813 $ 15,463

(1) Represents credit losses for loans only.

The (credit) provision for credit losses on the Consolidated Statements of Income of $( 343 ) includes a $(228) credit for held-to-maturity securities and a $(299) credit for unfunded loan commitments.

Commercial Real Estate Consumer Unallocated Total

Allowance for credit losses:

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

(Credit) provision for credit losses ( 30 ) ( 54 ) 245 ( 161 ) —

Charge-offs — — — ( 16 ) — ( 16 )

Recoveries 10 — 15 — 25

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

The following table shows the summary of activities for the allowance for credit losses as of and for the six months ended June 30, 2023 and 2022 by portfolio segment (in thousands):

Commercial Commercial Real Estate 1-4 Family Real Estate Consumer Unallocated Total

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Impact of adoption of ASU 2016-13 454 1,693 1,614 489 ( 340 ) 3,910

Provision (credit) for credit losses (1)

(Credit) provision for credit losses (1)

( 791 ) 1,188 255 50 — 702

1 unchanged sentence

Recoveries 322 — 13 25 — 360

Ending balance, March 31, 2023 $ 2,028 $ 10,065 $ 2,285 $ 879 $ — $ 15,257

Ending balance, June 30, 2023 $ 1,477 $ 10,684 $ 2,489 $ 813 $ — $ 15,463

(1) Represents credit losses for loans only.

The provision for credit losses on the Consolidated Statements of Income of $ 633 includes a $(92) credit for held-to-maturity securities and a $207 provision for unfunded loan commitments.

The provision for credit losses on the Consolidated Statements of Income of $ 290 includes a $(320) credit for held-to-maturity securities and a $(92) credit for unfunded loan commitments.

Commercial Real Estate Consumer Unallocated Total

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

Provision (credit) for credit losses ( 356 ) 307 31 18 —

(Credit) provision for credit losses ( 387 ) 253 277 ( 143 ) —

Charge-offs ( 17 ) — — ( 100 ) — ( 117 )

Recoveries 366 — 24 — 390

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

During the three and six month periods ended June 30, 2023, the provision for credit losses was primarily driven by weakening economic scenario forecasts in commercial real estate and increases in commercial real estate loan balances, partially offset by lower loan balances in the commercial loan segment.

Management believes that the allowance for credit losses at June 30, 2023 appropriately reflected expected credit losses in the loan portfolio at that date.

The following table shows the loan portfolio by class, net of deferred fees, allocated by management’s internal risk ratings for the period indicated (in thousands):

Term Loans Amortized Cost Basis by Origination Year - As of March 31, 2023

Term Loans Amortized Cost Basis by Origination Year - As of June 30, 2023

2023 2022 2021 2020 2019 Prior Revolving Loans Revolving Converted to Term Total

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Current period gross write-offs $ 7 $ — $ — $ — $ 27 $ — $ — $ — $ 34

Total loans outstanding (risk rating):

Pass/Watch $ 74,073 $ 280,566 $ 200,923 $ 123,283 $ 71,069 $ 349,647 $ 102,780 $ 9,788 $ 1,212,129

Special mention — 600 163 2,405 1,244 4,464 9,218 — 18,094

Substandard — 2,108 1,625 219 15,655 5,828 — — 25,435

Grand Total $ 74,073 $ 283,274 $ 202,711 $ 125,907 $ 87,968 $ 359,939 $ 111,998 $ 9,788 $ 1,255,658

Current period total gross write-offs $ 7 $ — $ 323 $ — $ 27 $ — $ — $ — $ 357

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

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Total $ 1,197,497 $ 31,024 $ 27,783 $ — $ 1,256,304

The following table shows an aging analysis of the loan portfolio by class at March 31, 2023 (in thousands):

The following table shows an aging analysis of the loan portfolio by class at June 30, 2023 (in thousands):

Past Due 60-89

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Total $ 5,895 $ — $ — $ 5,895 $ 1,250,409 $ 1,256,304 $ — $ —

As of March 31, 2023 and December 31, 2022 there were no collateral dependent loans.

Foregone interest on nonaccrual loans totaled $ 0 and $ 4,000 for the three month period ended March 31, 2023 and 2022, respectively.

As of June 30, 2023 and December 31, 2022 there were no collateral dependent loans.

Foregone interest on nonaccrual loans totaled $ 53,000 and $ 57,000 for the three and six month periods ended June 30, 2022, respectively.

There was no foregone interest on nonaccrual loans for the three and six month periods ended June 30, 2023.

Occasionally, the Company modifies loans to borrowers in financial distress by providing reductions of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk.

There were no loan modifications granted to borrowers experiencing financial difficulty during the quarter ended March 31, 2023 or during 2022.

There were no loan modifications granted to borrowers experiencing financial difficulty during the quarter ended June 30, 2023 or during 2022.

As of December 31, 2022, the Company had a recorded investment in troubled debt restructurings (“TDR”) of $ 2,372,000 .

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Borrowing Arrangements

As of March 31, 2023 the Company had no Federal Home Loan Bank (“FHLB”) of San Francisco advances as compared to $ 46,000,000 at December 31, 2022.

Approximately $ 577,589,000 in loans and $ 21,743,000 in securities were pledged under a blanket lien as collateral to the FHLB resulting in borrowing capacity of $ 318,365,000 as of March 31, 2023.

As of June 30, 2023 the Company had no Federal Home Loan Bank (“FHLB”) of San Francisco advances as compared to $ 46,000,000 at December 31, 2022.

Approximately $ 607,860,000 in loans and $ 21,626,000 in securities were pledged under a blanket lien as collateral to the FHLB resulting in borrowing capacity of $ 347,510,000 as of June 30, 2023.

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, 2023, and December 31, 2022 the Company had no Federal funds purchased.

As of June 30, 2023, and December 31, 2022 the Company had no Federal funds purchased.

Senior Debt and Subordinated Debentures

The following table summarizes the Company’s long-term debt:

(Dollars in thousands) March 31, 2023 December 31, 2022

(Dollars in thousands) June 30, 2023 December 31, 2022

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, 2023, all of the trust preferred securities that have been issued qualify as Tier 1 capital.

At June 30, 2023, 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 SOFR plus 1.60 %.

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Holders of the trust preferred securities are entitled to a cumulative cash distribution on the liquidation amount of $ 1,000 per security.

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, 2023, the rate was 6.43 %.

Interest expense recognized by the Company for the twelve months ended March 31, 2023 and 2022 was $ 81,000 and $ 333,000 , respectively.

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

As of June 30, 2023, the rate was 6.86 %.

Interest expense recognized by the Company for the three months ended June 30, 2023 and 2022 was $ 89,000 and $ 24,000 , respectively.

Interest expense recognized by the Company for the six months ended June 30, 2023 and 2022 was $ 170,000 and $ 47,000 , respectively.

Subordinated Debentures

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The Subordinated Debt is treated as Tier 2 Capital for regulatory purposes.

Interest expense recognized by the Company for the Subordinated and Senior Debt for the three months ended June 30, 2023 and 2022 was $ 310,000 .

Interest expense recognized by the Company for the Subordinated and Senior Debt for the six months ended June 30, 2023 and 2022 was $ 619,000 .

On September 15, 2022, the Company entered into a $ 30,000,000 loan agreement with Bell Bank.

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The loan contains customary representations, covenants, and events of default.

Interest expense recognized by the Company for the Subordinated and Senior Debt for the three months ended March 31, 2023 and 2022 was $ 816,000 and $ 310,000 , respectively.

Interest expense recognized by the Company for the Subordinated and Senior Debt for the three and six months ended June 30, 2023 was $ 512,000 and $ 1,018,000 , respectively.

Commitments and Contingencies

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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 $ 318,046,000 and $ 288,141,000 were outstanding at March 31, 2023 and December 31, 2022, respectively.

Commitments to extend credit amounting to $ 266,410,000 and $ 288,141,000 were outstanding at June 30, 2023 and December 31, 2022, 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 $ 316,063,000 and $ 286,925,000 at March 31, 2023 and December 31, 2022, respectively.

Included in commitments to extend credit are undisbursed lines of credit totaling $ 264,427,000 and $ 286,925,000 at June 30, 2023 and December 31, 2022, 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 $ 48,305,000 and $ 45,604,000 as of March 31, 2023 and December 31, 2022, respectively.

Included in undisbursed lines of credit are commitments for the undisbursed portions of construction loans totaling $ 38,183,000 and $ 45,604,000 as of June 30, 2023 and December 31, 2022, 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 $ 1,983,000 and $ 1,216,000 were outstanding at March 31, 2023 and December 31, 2022, respectively.

Standby letters of credit and financial guarantees amounting to $ 1,983,000 and $ 1,216,000 were outstanding at June 30, 2023 and December 31, 2022, 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.

1 unchanged sentence

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, 2023 or December 31, 2022.

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, 2023 or December 31, 2022.

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

1 unchanged sentence

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, 2023 and December 31, 2022, the allowance for credit losses of unfunded commitments was $ 928,000 and $ 110,000 , respectively.

At June 30, 2023 and December 31, 2022, the allowance for credit losses of unfunded commitments was $ 629,000 and $ 110,000 , respectively.

The allowance for credit losses of unfunded commitments is calculated by management using an appropriate, systematic, and consistently applied process.

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In the opinion of management, the amount of ultimate liability with respect to such actions will not materially affect the consolidated financial position or consolidated results of operations of the Company.

Other Income and Expense

The following table shows significant components of other non-interest income for the periods indicated:

For the Three Months

Ended June 30, For the Six Months

Ended June 30,

(Dollars in thousands) 2023 2022 2023 2022

Appreciation in cash surrender value of bank owned life insurance $ 254 $ 245 $ 503 $ 487

Loan placement fees 172 268 296 567

Interchange Fees 458 478 903 920

Federal Home Loan Bank dividends 106 82 215 167

Other 276 122 754 143

Total other non-interest income $ 1,266 $ 1,195 $ 2,671 $ 2,284

The following table shows significant components of other non-interest expense for the periods indicated:

For the Three Months

Ended June 30, For the Six Months

Ended June 30,

(Dollars in thousands) 2023 2022 2023 2022

Regulatory assessments $ 356 $ 194 $ 566 $ 416

Data processing expense 618 548 1,269 1,089

ATM/Debit card expenses 193 217 377 412

Internet banking 47 48 82 69

Advertising 124 138 249 278

Professional Services 883 464 1,235 838

Information technology 935 828 1,782 1,586

Directors’ expenses 151 48 314 93

Loan related expenses 51 68 198 139

Personnel other 63 59 323 162

Amortization of core deposit intangibles 34 140 68 280

Other 1,110 930 2,016 1,659

Total other non-interest expense $ 4,565 $ 3,682 $ 8,479 $ 7,021

Earnings Per Share

3 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) 2023 2022 2023 2022

3 unchanged sentences

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) 2023 2022 2023 2022

5 unchanged sentences

Diluted earnings per share $ 0.54 $ 0.56 $ 1.13 $ 1.07

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

There were no outstanding options at March 31, 2023.

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

There were no outstanding options at June 30, 2023.

Share-Based Compensation

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

Share-based compensation cost recognized for those plans was $ 140,000 and $ 97,000 for the three months ended March 31, 2023 and 2022, respectively.

The recognized tax benefit for the share-based compensation expense, forfeitures of restricted stock, and exercise of stock options, resulted in the recognition of $ 0 and $ 22,000 , respectively, for the three months ended March 31, 2023 and 2022.

Share-based compensation cost recognized for those plans was $ 158,000 and $ 298,000 for the three and six months ended June 30, 2023, respectively, and $ 84,000 and $ 181,000 for the three and six months ended June 30, 2022, respectively.

The recognized tax benefit for the share-based compensation expense, forfeitures of restricted stock, and exercise of stock options, resulted in the recognition of $ 0 for the three and six months ended June 30, 2023, and $ 48,000 and $ 69,000 for the three and six months ended June 30, 2022, respectively.

The Central Valley Community Bancorp 2015 Omnibus Incentive Plan (2015 Plan) was adopted in May 2015.

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Effective June 2, 2017, the Company adopted an Employee Stock Purchase Plan (ESPP) whereby our employees may purchase Company common stock through payroll deductions of between one percent and 15 percent of pay in each pay period.

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 427,913 shares available for future purchase under the plan as of March 31, 2023.

Restricted and Performance Common Stock Awards

The 2015 Plan provides for the issuance of restricted common stock to directors and officers.

In addition, performance awards may be granted in the form of cash or shares.

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 424,264 shares available for future purchase under the plan as of June 30, 2023.

Restricted and Common Stock Awards

The 2015 Plan provides for the issuance of restricted common stock to directors and officers and performance-based common stock awards.

Restricted common stock grants typically vest over a one to five-year period.

1 unchanged sentence

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, 2023 as follows:

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.

Common stock awards vest immediately.

The Company has two forms of outstanding common stock:

fully vested common stock and unvested restricted stock awards.

Holders of restricted stock awards receive non-forfeitable dividends at the same rate as common stockholders and they both share equally in undistributed earnings.

Therefore, under the two-class method the difference in EPS is not significant for these participating securities.

The following table summarizes restricted stock and performance award activity for the six months ended June 30, 2023 as follows:

Shares Weighted Average

4 unchanged sentences

Forfeited ( 311 ) $ 16.08

Nonvested outstanding shares at March 31, 2023 50,715 $ 18.01

Performance common stock awards vest immediately.

As of March 31, 2023, there were 50,715 shares of restricted stock that are nonvested and expected to vest.

As of March 31, 2023, there was $ 502,000 of total unrecognized compensation cost related to nonvested restricted common stock awards.

Nonvested outstanding shares at June 30, 2023 75,953 $ 15.64

As of June 30, 2023, there were 75,953 shares of restricted stock that are nonvested and expected to vest.

As of June 30, 2023, there was $ 1,097,779 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 2.37 years and will be adjusted for subsequent changes in estimated forfeitures.

Restricted common stock awards had an intrinsic value of $ 4,179,000 at March 31, 2023.

Restricted common stock awards had an intrinsic value of $ 4,333,000 at June 30, 2023.

Fair Value Measurements

Fair Value Hierarchy

There are three levels of inputs that may be used to measure fair values:

Level 1 — Quoted market prices (unadjusted) for identical instruments traded in active markets that the entity has the ability to access as of the measurement date.

Level 2 —Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by observable market data.

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

The estimated carrying and fair values of the Company’s financial instruments not carried at fair value are as follows (in thousands):

June 30, 2023

Amount Fair Value

(In thousands) Level 1 Level 2 Level 3 Total

Financial assets:

Cash and due from banks $ 28,325 $ 28,325 $ — $ — $ 28,325

Interest-earning deposits in other banks 100,333 100,333 — — 100,333

Held-to-maturity investment securities 303,876 — 273,849 — 273,849

Loans, net 1,240,195 — — 1,155,413 1,155,413

Financial liabilities:

Time deposits 208,864 — 207,351 — 207,351

Senior debt and subordinated debentures 69,671 — — 59,106 59,106

December 31, 2022

Amount Fair Value

(In thousands) Level 1 Level 2 Level 3 Total

Financial assets:

Cash and due from banks $ 25,485 $ 25,485 $ — $ — $ 25,485

Interest-earning deposits in other banks 5,685 5,685 — — 5,685

Held-to-maturity investment securities 305,107 — 271,249 — 271,249

Loans, net 1,245,456 — — 1,113,849 1,113,849

Financial liabilities:

Time deposits 67,923 — 67,047 — 67,047

Short-term borrowings 46,000 — 46,000 — 46,000

Subordinated debentures 69,599 — — 62,504 62,504

The methods and assumptions used to estimate fair values are described as follows:

(a) Investment securities — The fair values for investment securities are determined by quoted market prices, if available (Level 1).

For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing.

Matrix pricing is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).