What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-05 compared with 2022-05-10 · 297 added, 163 removed, 854 unchanged (35% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

($ in thousands) March 31,

($ in thousands) June 30,

2022 (unaudited) December 31,

36 unchanged sentences

Issued & outstanding:

none as of March 31, 2022 and December 31, 2021

none as of June 30, 2022 and December 31, 2021

Common stock, no par value per share.

1 unchanged sentence

Issued & outstanding:

35,639,889 shares and 35,629,177 shares as of March 31, 2022 and December 31, 2021, respectively

35,683,595 shares and 35,629,177 shares as of June 30, 2022 and December 31, 2021, respectively

723,956 722,671

8 unchanged sentences

Consolidated Statements of Income

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

($ in thousands, except share data - unaudited) 2022 2021 2022 2021

14 unchanged sentences

Provision for credit losses — — 3,500 —

Reversal of provision for unfunded commitments ( 1,500 ) —

Provision for (reversal of) unfunded commitments — 1,939 ( 1,500 ) 1,939

Total provision for credit losses — 1,939 2,000 1,939

2 unchanged sentences

Service charges on deposit accounts 3,700 2,824 7,241 5,557

Other service charges, commissions and fees 7,005 5,522

Other service charges and fees 7,882 6,496 14,887 12,018

Fees from presold mortgage loans 454 2,274 1,575 6,818

3 unchanged sentences

Bank-owned life insurance income 942 614 1,918 1,234

Other gains (losses), net 1,622 ( 34 )

Other gains, net 1,590 1,517 3,212 1,483

Total noninterest income 17,264 21,374 36,515 42,043

7 unchanged sentences

Intangibles amortization expense 953 845 1,970 1,742

Foreclosed property (gains) losses, net ( 80 ) 157

Foreclosed property gains, net ( 292 ) ( 173 ) ( 372 ) ( 16 )

Other operating expenses 13,255 10,910 26,579 21,267

14 unchanged sentences

Three Months Ended

June 30, Six Months Ended June 30,

($ in thousands - unaudited) 2022 2021 2022 2021

Net income $ 36,585 29,285 70,554 57,479

Other comprehensive loss:

Unrealized losses on securities available for sale:

Unrealized holding losses arising during the period, pretax ( 181,795 ) ( 24,235 )

Tax benefit 41,776 5,569

Other comprehensive (loss) income:

Unrealized (losses) gains on securities available for sale:

Unrealized holding (losses) gains arising during the period, pretax ( 109,623 ) 4,326 ( 291,418 ) ( 19,909 )

Tax benefit (expense) 25,192 ( 994 ) 66,968 4,575

Postretirement Plans:

1 unchanged sentence

Tax benefit ( 10 ) ( 77 ) ( 20 ) ( 117 )

Other comprehensive loss ( 139,985 ) ( 18,535 )

Other comprehensive (loss) income ( 84,397 ) 3,460 ( 224,382 ) ( 15,075 )

Comprehensive (loss) income $ ( 47,812 ) 32,745 ( 153,828 ) 42,404

9 unchanged sentences

Shares Amount

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Balances, April 1, 2021 28,489 $ 397,094 483,944 ( 2,256 ) 2,256 ( 4,185 ) 876,853

Net income 29,285 29,285

Cash dividends declared ($ 0.20 per common share)

( 5,698 ) ( 5,698 )

Change in Rabbi Trust obligation 328 ( 328 ) —

Stock withheld for payment of taxes ( 4 ) ( 221 ) ( 221 )

Stock-based compensation 7 831 831

Other comprehensive income 3,460 3,460

Balances, June 30, 2021 28,492 $ 397,704 507,531 ( 1,928 ) 1,928 ( 725 ) 904,510

Three Months Ended June 30, 2022

Balances, April 1, 2022 35,640 $ 723,441 559,004 ( 1,814 ) 1,814 ( 164,955 ) 1,117,490

Net income 36,585 36,585

Cash dividends declared ($ 0.22 per common share)

( 7,850 ) ( 7,850 )

Change in Rabbi Trust obligation 241 ( 241 ) —

Stock withheld for payment of taxes ( 14 ) ( 486 ) ( 486 )

Stock-based compensation 58 1,001 1,001

Other comprehensive loss ( 84,397 ) ( 84,397 )

Balances, June 30, 2022 35,684 $ 723,956 587,739 ( 1,573 ) 1,573 ( 249,352 ) 1,062,343

See accompanying notes to unaudited consolidated financial statements.

First Bancorp and Subsidiaries

Consolidated Statements of Shareholders’ Equity

($ in thousands, except share data - unaudited) Common Stock Retained

Earnings Stock in

Acquisition Rabbi

Obligation Accumulated

Comprehensive

Shareholders’

Shares Amount

Six Months Ended June 30, 2021

Balances, January 1, 2021 28,579 $ 400,582 478,489 ( 2,243 ) 2,243 14,350 893,421

Adoption of new accounting standard ( 17,051 ) ( 17,051 )

Net income 57,479 57,479

Adoption of new accounting standard ( 17,051 ) ( 17,051 )

Cash dividends declared ($ 0.40 per common share)

2 unchanged sentences

Stock repurchases ( 107 ) ( 4,036 ) ( 4,036 )

Stock withheld for payment of taxes ( 7 ) ( 324 ) ( 324 )

Stock-based compensation 27 1,482 1,482

Other comprehensive loss ( 15,075 ) ( 15,075 )

Balances, March 31, 2021 28,489 $ 397,094 483,944 ( 2,256 ) 2,256 ( 4,185 ) 876,853

Three Months Ended March 31, 2022

Balances, June 30, 2021 28,492 $ 397,704 507,531 ( 1,928 ) 1,928 ( 725 ) 904,510

Six Months Ended June 30, 2022

Balances, January 1, 2022 35,629 722,671 532,874 ( 1,803 ) 1,803 ( 24,970 ) 1,230,575

6 unchanged sentences

Other comprehensive loss ( 224,382 ) ( 224,382 )

Balances, March 31, 2022 35,640 $ 723,441 559,004 ( 1,814 ) 1,814 ( 164,955 ) 1,117,490

Balances, June 30, 2022 35,684 $ 723,956 587,739 ( 1,573 ) 1,573 ( 249,352 ) 1,062,343

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

($ in thousands-unaudited) 2022 2021

2 unchanged sentences

Reconciliation of net income to net cash provided by operating activities:

Provision for credit losses 2,000 —

Provision for credit losses and unfunded commitments, net 2,000 1,939

Net security premium amortization 6,579 6,342

1 unchanged sentence

Other purchase accounting accretion and amortization, net ( 276 ) 61

Foreclosed property (gains) losses and write-downs, net ( 80 ) 157

Other (gains) losses, net ( 1,622 ) 34

Foreclosed property gains and write-downs, net ( 372 ) ( 16 )

Other gains, net ( 3,212 ) ( 1,483 )

(Decrease) increase in net deferred loan fees ( 901 ) 1,084

5 unchanged sentences

Amortization of intangible assets 1,970 1,742

Amortization of SBA servicing assets 626 470

Amortization and impairment of SBA servicing assets 1,531 1,014

Fees/gains from sale of presold mortgages and SBA loans ( 5,677 ) ( 12,144 )

4 unchanged sentences

Decrease in accrued interest receivable ( 604 ) ( 85 )

Decrease (increase) in other assets 3,509 ( 5,242 )

(Increase) decrease in other assets ( 24,857 ) 2,467

Decrease (increase) in net deferred income tax asset 26,341 ( 44 )

Decrease in accrued interest payable ( 31 ) ( 163 )

(Decrease) increase in other liabilities ( 2,816 ) 639

Increase (decrease) in accrued interest payable 41 ( 194 )

Decrease in other liabilities ( 7,561 ) ( 4,826 )

Net cash provided by operating activities 130,517 81,098

5 unchanged sentences

(Purchases) redemptions of FRB and FHLB stock, net ( 7,838 ) 1,836

Net decrease in loans 29,927 110,212

Net increase in loans ( 143,223 ) ( 40,288 )

Proceeds from sales of foreclosed properties 2,904 2,462

1 unchanged sentence

Proceeds from sales of premises and equipment 359 218

Net cash paid from sale of insurance operations — ( 555 )

Bank-owned life insurance death benefits 5,827 —

7 unchanged sentences

Net cash provided by financing activities 219,890 881,931

Increase in cash and cash equivalents 104,597 162,776

(Decrease) increase in cash and cash equivalents ( 27,059 ) 107,936

Cash and cash equivalents, beginning of period 461,162 367,290

Cash and cash equivalents, end of period $ 434,103 475,226

First Bancorp and Subsidiaries

Consolidated Statements of Cash Flows

Six Months Ended June 30,

($ in thousands-unaudited) 2022 2021

Supplemental Disclosures of Cash Flow Information:

5 unchanged sentences

Initial recognition of operating lease right-of-use assets and operating lease liabilities — 444

Receivable recorded related to sale of insurance operations — 12,955

Derecognition of intangible assets related to sale of insurance operations — ( 10,229 )

See accompanying notes to consolidated financial statements.

9 unchanged sentences

Accordingly, they do not include all information and notes necessary for complete financial statements in accordance with GAAP.

In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of the Company as of March 31, 2022, the consolidated results of operations for the three months ended March 31, 2022 and 2021, and the consolidated cash flows for the three months ended March 31, 2022 and 2021.

In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of the Company as of June 30, 2022, the consolidated results of operations for the three and six months ended June 30, 2022 and 2021, and the consolidated cash flows for the six months ended June 30, 2022 and 2021.

Any such adjustments were of a normal, recurring nature.

2 unchanged sentences

Reference is made to Note 1 of the 2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) for a discussion of accounting policies and other relevant information with respect to the financial statements.

To maintain consistency and comparability, certain amounts from prior periods have been reclassified to conform to current period presentation with no effect on net income or shareholders' equity as previously reported.

To maintain consistency and comparability, certain amounts from prior periods may have been reclassified to conform to current period presentation with no effect on net income or shareholders' equity as previously reported.

The Company has evaluated all subsequent events through the date the financial statements were issued.

1 unchanged sentence

Our market areas and local economies continue to show signs of recovery from the impact of the COVID-19 pandemic.

However, the current pandemic is ongoing and dynamic in nature, and there are many related uncertainties, including, among other things, its severity and new variants that may arise;

However, the current pandemic is ongoing and dynamic in nature, and there are many related uncertainties, including, among other things, its severity and new variants that have and may continue to arise;

its ultimate duration and infection spikes that may occur;

the impact on our customers, employees and vendors;

the impact on the financial services and banking industry;

its impact on our customers, employees and vendors;

its impact on the financial services and banking industry;

and the ongoing impact on the economy as a whole.

2 unchanged sentences

Accounting Standards Adopted in 2022

The Company did not adopt any accounting standards during the first three months of 2022.

The Company did not adopt any accounting standards during the first six months of 2022.

Accounting Standards Pending Adoption

ASU 2022-02, "Financial Instruments-Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures." This Accounting Standards Update ("ASU") eliminates the accounting guidance for troubled debt restructurings by creditors, while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty.

Troubled Debt Restructurings and Vintage Disclosures." The amendments contained in this Accounting Standards Update ("ASU") eliminate the accounting guidance for troubled debt restructurings by creditors, while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty.

This ASU also requires entities to disclose current period gross write-offs by year of origination for financing receivables and net investment in leases.

1 unchanged sentence

The entity must have adopted the amendments in ASU 2016-13 ("CECL") to adopt the amendments in this ASU.

The Company is currently evaluating the impact of

adopting the new guidance on the consolidated financial statements but does not expect it to have a material effect on its financial statements.

The Company is

currently evaluating the impact of adopting the new guidance on the consolidated financial statements but does not expect it to have a material effect on its financial statements.

ASU 2022-03, "Fair Value Measurements (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions." This ASU clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security, and, therefore, is not considered in measuring fair value.

The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance.

The Company is currently evaluating this ASU for impact on the consolidated financial statements but does not expect it to have a material effect on its financial statements.

Note 3 – Securities

The book values and approximate fair values of investment securities at March 31, 2022 and December 31, 2021 are summarized as follows:

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

The book values and approximate fair values of investment securities at June 30, 2022 and December 31, 2021 are summarized as follows:

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

Value Unrealized Amortized

2 unchanged sentences

Securities available for sale:

US Treasuries $ 149,534 149,391 — ( 143 ) $ — — — —

Treasuries $ 174,236 172,195 — ( 2,041 ) — — — —

Government-sponsored enterprise securities 71,954 60,917 — ( 11,037 ) 71,951 69,179 — ( 2,772 )

6 unchanged sentences

Total held to maturity $ 546,410 452,658 10 ( 93,762 ) 513,825 511,699 3,540 ( 5,666 )

All of the Company’s mortgage-backed securities were issued by government-sponsored enterprises, except for private mortgage-backed securities with a fair value of $ 0.9 million and $ 0.9 million as of March 31, 2022 and December 31, 2021, respectively.

The following table presents information regarding securities with unrealized losses at March 31, 2022:

All of the Company’s mortgage-backed securities were issued by government-sponsored enterprises, except for private mortgage-backed securities with a fair value of $ 0.8 million and $ 0.9 million as of June 30, 2022 and December 31, 2021, respectively.

The following table presents information regarding securities with unrealized losses at June 30, 2022:

Securities in an Unrealized

6 unchanged sentences

Losses Fair Value Unrealized

US Treasuries $ 149,391 143 — — 149,391 143

Treasuries $ 172,195 2,041 — — 172,195 2,041

Government-sponsored enterprise securities 18,850 3,109 42,067 7,928 60,917 11,037

17 unchanged sentences

Total unrealized loss position $ 2,023,736 30,297 487,570 18,031 2,511,306 48,328

As of March 31, 2022 and December 31, 2021, the Company's security portfolio held 600 securities of which 371 securities were in an unrealized loss position.

In the above tables, all of the securities that were in an unrealized loss position at March 31, 2022 and December 31, 2021 are bonds that the Company has determined are in a loss position due primarily to interest rate factors and not credit quality concerns.

As of June 30, 2022, the Company's securities portfolio held 669 securities of which 616 securities were in an unrealized loss position.

As of December 31, 2021, the Company's securities portfolio held 648 securities of which 371 securities were in an unrealized loss position.

In the above tables, all of the securities that were in an unrealized loss position at June 30, 2022 and December 31, 2021 are bonds that the Company has determined are in a loss position due primarily to interest rate factors and not credit quality concerns.

In arriving at this conclusion, the Company reviewed third-party credit ratings and considered the severity of the impairment.

The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell these securities before recovery of the amortized cost.

At March 31, 2022 and December 31, 2021, the Company determined that expected credit losses associated with held to maturity debt securities was insignificant.

The book values and approximate fair values of investment securities at March 31, 2022, by contractual maturity, are summarized in the table below.

At June 30, 2022 and December 31, 2021, the Company determined that expected credit losses associated with held to maturity debt securities were insignificant.

The book values and approximate fair values of investment securities at June 30, 2022, by contractual maturity, are summarized in the table below.

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

8 unchanged sentences

Total securities $ 2,856,109 2,532,624 546,410 452,658

At March 31, 2022 and December 31, 2021 investment securities with carrying values of $ 852.8 million and $ 951.4 million, respectively, were pledged as collateral for public deposits.

At March 31, 2022 and December 31, 2021, there were no holdings of securities of any one issuer, other than US Government and its agencies or government sponsored enterprises, in an amount greater than 10% of shareholders equity.

Included in “Other assets” in the Consolidated Balance Sheets are investments in Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank of Richmond (“FRB”) stock totaling $ 32.2 million and $ 22.3 million at March 31, 2022 and December 31, 2021, respectively.

At June 30, 2022 and December 31, 2021 investment securities with carrying values of $ 812.7 million and $ 951.4 million, respectively, were pledged as collateral for public deposits.

At June 30, 2022 and December 31, 2021, there were no holdings of securities of any one issuer, other than U.S.

Government and its agencies or government-sponsored enterprises, in an amount greater than 10% of shareholders equity.

Included in “Other assets” in the Consolidated Balance Sheets are investments in Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank of Richmond (“FRB”) stock totaling $ 30.2 million and $ 22.3 million at June 30, 2022 and December 31, 2021, respectively.

These investments do not have readily determinable fair values.

The FHLB stock had a cost and fair value of $ 5.3 million and $ 4.6 million at March 31, 2022 and December 31, 2021, respectively, and serves as part of the collateral for the Company’s line of credit with the FHLB and is also a requirement for membership in the FHLB system.

The FRB stock had a cost and fair value of $ 26.8 million and $ 17.8 million at March 31, 2022 and December 31, 2021, respectively, and is a requirement for FRB member bank qualification.

Periodically, both the FHLB and FRB recalculate the Company’s required level of holdings, and the Company either buys more stock or redeems a portion of the stock at cost.

The FHLB stock had a cost and fair value of $ 5.3 million and $ 4.6 million at June 30, 2022 and December 31, 2021, respectively, and serves as part of the collateral for the Company’s line of credit with the FHLB and is also a requirement for membership in the FHLB system.

The FRB stock had a cost and fair value of $ 24.9 million and $ 17.8 million at June 30, 2022 and December 31, 2021, respectively, and is a requirement for FRB member bank qualification.

Periodically, both the FHLB and FRB recalculate the Company’s required level of holdings, and the

Company either buys more stock or redeems a portion of the stock at cost.

The Company determined that neither stock was impaired at either period end.

3 unchanged sentences

The Class B shares have transfer restrictions, and the conversion rate into Class A shares is periodically adjusted as Visa settles litigation.

The conversion rate at March 31, 2022 was approximately 1.62 , which means the Company would receive approximately 19,993 Class A shares if the stock had converted on that date.

The conversion rate at June 30, 2022 was approximately 1.61 , which means the Company would have received approximately 19,843 Class A shares if the stock had converted on that date.

This Class B stock does not have a readily determinable fair value and is carried at zero .

If a readily determinable fair value becomes available for the Class B shares, or upon the conversion to Class A shares, the Company will adjust the carrying value of the stock to its market value with a credit to earnings.

If a readily determinable fair value becomes available for the Class B shares, or upon their conversion to Class A shares, the Company will adjust the carrying value of the stock to its market value with a credit to earnings.

Note 4 – Loans, Allowance for Credit Losses, and Asset Quality Information

The following is a summary of the major categories of total loans outstanding:

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

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

Amount Percentage Amount Percentage

8 unchanged sentences

Total loans $ 6,243,170 $ 6,081,715

Included in the line item "Commercial, financial, and agricultural" in the table above are Paycheck Protection Program ("PPP") loans totaling $ 15.6 million and $ 39.0 million at March 31, 2022 and December 31, 2021, respectively.

PPP loans are fully guaranteed by the SBA.

Included in unamortized net deferred loan fees are approximately $ 1.3 million and $ 2.6 million at March 31, 2022 and December 31, 2021, respectively, in unamortized net deferred loan fees associated with PPP loans.

Included in the line item "Commercial, financial, and agricultural" in the table above are Paycheck Protection Program ("PPP") loans totaling $ 3.0 million and $ 39.0 million at June 30, 2022 and December 31, 2021, respectively.

PPP loans are fully guaranteed by the small business administration ("SBA").

Included in unamortized net deferred loan fees are approximately $ 0.3 million and $ 2.6 million at June 30, 2022 and December 31, 2021, respectively, in unamortized net deferred loan fees associated with these PPP loans.

These fees are being amortized under the effective interest method over the terms of the loans.

Accelerated amortization is recorded in the periods in which principal amounts are forgiven in accordance with the terms of the Program.

Included in the table above are credit card balances outstanding totaling $ 38.8 million and $ 37.9 million at March 31, 2022 and December 31, 2021, respectively.

At March 31, 2022, approximately 57 % of total credit card balances are business credit cards included in "commercial, financial and agricultural" above and the remaining 43 % are personal credit cards included in consumer loans in the table above.

Included in the table above are credit card balances outstanding totaling $ 40.8 million and $ 37.9 million at June 30, 2022 and December 31, 2021, respectively.

At June 30, 2022, approximately 54 % of total credit card balances were business credit cards included in "commercial, financial and agricultural" above and the remaining 46 % were personal credit cards included in consumer loans in the table above.

Also included in the table above are various non-PPP SBA loans, with additional information on these loans presented in the table below.

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

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

Guaranteed portions of non-PPP SBA loans included in table above $ 30,559 48,377

2 unchanged sentences

Sold portions of SBA loans with servicing retained - not included in tables above $ 408,925 414,240

At March 31, 2022 and December 31, 2021, there was a remaining unaccreted discount on the retained portion of sold non-PPP SBA loans amounting to $ 5.9 million and $ 6.0 million, respectively.

Loans in the amount of $ 5.4 billion and $ 4.3 billion were pledged as collateral for certain borrowings at March 31, 2022 and December 31, 2021, respective ly.

The loans above also include loans to executive officers and directors serving the Company at March 31, 2022 and to their related persons, totaling approximately $ 6.5 million and $ 0.6 million at March 31, 2022 and December 31, 2021, respectively.

There were $ 5.8 million in new loans due to the addition of new directors, there was $ 36,000 in advances on loans in the first three months of 2022, and repayments amounted to $ 21,000 .

At June 30, 2022 and December 31, 2021, there was a remaining unaccreted discount on the retained portion of sold non-PPP SBA loans amounting to $ 5.4 million and $ 6.0 million, respectively.

Loans in the amount of $ 5.0 billion and $ 4.3 billion were pledged as collateral for certain borrowings at June 30, 2022 and December 31, 2021, respectively.

The loans above also include loans to executive officers and directors serving the Company at June 30, 2022 and to their related persons, totaling approximately $ 6.3 million and $ 0.6 million at June 30, 2022 and December 31, 2021, respectively.

For the six months ended June 30, 2022 t here were $ 5.8 million in new loans due to the addition of new directors, $ 66,000 in advances on loans, and repayments of $ 192,000 .

The loans were made on terms and conditions applicable to similarly situated borrowers and management does not believe these loans involve more than the normal risk of collectability or present other unfavorable features.

As of March 31, 2022 and December 31, 2021, unamortized discounts on all acquired loans totaled $ 15.6 million and $ 17.2 million, respectively.

As of June 30, 2022 and December 31, 2021, unamortized discounts on all acquired loans totaled $ 14.0 million and $ 17.2 million, respectively.

Loan discounts are generally amortized as yield adjustments over the respective lives of the loans, so long as the loans perform.

1 unchanged sentence

Nonperforming assets are summarized as follows.

($ in thousands) March 31,

($ in thousands) June 30,

2022 December 31,

5 unchanged sentences

Total nonperforming assets $ 41,144 52,637

At March 31, 2022 and December 31, 2021, the Company had $ 1.0 million and $ 1.5 million, respectively, in residential mortgage loans in process of foreclosure, respectively.

The following table is a summary of the Company’s nonaccrual loans by major categories as of March 31, 2022.

At June 30, 2022 and December 31, 2021, the Company had $ 1.0 million and $ 1.5 million, respectively, in residential mortgage loans in process of foreclosure.

The following table is a summary of the Company’s nonaccrual loans by major categories as of June 30, 2022.

($ in thousands) Nonaccrual Loans with No Allowance Nonaccrual Loans with an Allowance Total Nonaccrual Loans

15 unchanged sentences

Total $ 12,948 21,748 34,696

There was no interest income recognized during the three month period ended March 31, 2022 or the year ended December 31, 2021 on nonaccrual loans.

There was no interest income recognized during the six month period ended June 30, 2022 or the year ended December 31, 2021 on nonaccrual loans.

The Company follows its nonaccrual policy of reversing contractual interest income in the income statement when the Company places a loan on nonaccrual status.

The following table represents the accrued interest receivables written off by reversing interest income during each period indicated.

($ in thousands) For the Three Months Ended March 31, 2022 For the Year Ended December 31, 2021 For the Three Months Ended March 31, 2021

($ in thousands) Six Months Ended June 30, 2022 For the Year Ended December 31, 2021 Six Months Ended June 30, 2021

Commercial, financial, and agricultural $ 33 195 156

5 unchanged sentences

Total $ 184 699 568

The following table presents an analysis of the payment status of the Company’s loans as of March 31, 2022.

The following table presents an analysis of the payment status of the Company’s loans as of June 30, 2022.

($ in thousands) Accruing

27 unchanged sentences

The Company reviews individually evaluated loans on nonaccrual with a net book balance of $350,000 or greater for designation as collateral dependent loans, as well as certain other loans that may still be accruing interest and/or are less than $350,000 in size that management of the Company designates as having higher risk.

These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses.

The following table presents an analysis of collateral-dependent loans of the Company as of March 31, 2022.

These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses ("ACL").

The following table presents an analysis of collateral-dependent loans of the Company as of June 30, 2022.

($ in thousands) Residential Property Business Assets Land Commercial Property Total Collateral-Dependent Loans

12 unchanged sentences

Under CECL, for collateral dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral.

The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost.

The allowance for credit losses is calculated on an

individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost.

If the fair value of the collateral exceeds the amortized cost, no allowance is required.

1 unchanged sentence

For loans secured by real estate, the Company's policy is to write nonaccrual loans down to 90 % of the appraised value, which considers estimated selling costs.

For real estate collateral that is in industries which may be undergoing heightened stress due to economic or other external factors, the Company may reduce the collateral values by an additional 10 - 25 % to recognize additional discounts that are estimated to be incurred in a near-term sale.

For real estate collateral that is in industries which may be undergoing heightened stress due to economic or other external factors, the Company may reduce the collateral values by an additional 10 - 25 % of appraised value to recognize additional discounts that are estimated to be incurred in a near-term sale.

For non real-estate collateral secured loans, the Company generally writes nonaccrual loans down to 75 % of the appraised value, which provides for selling costs and liquidity discounts that are usually incurred when disposing of non real-estate collateral.

1 unchanged sentence

The Company does not believe that there is significant excess collateral for any of the loan types noted above.

The following table presents the activity in the Allowance for Credit Losses ("ACL") on loans for each of the periods indicated.

The following table presents the activity in the ACL on loans for each of the periods indicated.

($ in thousands) Commercial,

5 unchanged sentences

and Other Consumer Loans Unallocated Total

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

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

Beginning balance $ 16,013 16,057 8,159 2,074 37,327 2,439 — 82,069

3 unchanged sentences

Ending balance $ 15,450 16,171 8,650 2,086 37,194 2,630 — 82,181

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

Beginning balance $ 16,249 16,519 8,686 4,337 30,342 2,656 — 78,789

Charge-offs ( 1,518 ) — — ( 41 ) ( 863 ) ( 381 ) — ( 2,803 )

Recoveries 470 267 15 361 1,455 127 — 2,695

Provisions / (Reversals) 249 ( 615 ) ( 51 ) ( 2,571 ) 6,260 228 — 3,500

Ending balance $ 15,450 16,171 8,650 2,086 37,194 2,630 — 82,181

($ in thousands) Commercial,

20 unchanged sentences

and Other Consumer Loans Unallocated Total

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

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

Beginning balance $ 13,606 10,134 8,996 4,309 26,507 2,297 — 65,849

Charge-offs ( 550 ) — ( 76 ) ( 8 ) ( 1,324 ) ( 173 ) — ( 2,131 )

Recoveries 153 392 236 218 78 227 — 1,304

Provisions/(Reversals) 1,600 ( 422 ) ( 505 ) ( 782 ) 97 12 — —

Ending balance $ 14,809 10,104 8,651 3,737 25,358 2,363 — 65,022

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

Beginning balance $ 11,316 5,355 8,048 2,375 23,603 1,478 213 52,388

Adjustment for implementation of CECL 3,067 6,140 2,584 2,580 ( 257 ) 674 ( 213 ) 14,575

39 unchanged sentences

($ in thousands) 2022 2021 2020 2019 2018 Prior Revolving Total

As of March 31, 2022

As of June 30, 2022

Commercial, financial, and agricultural

70 unchanged sentences

Concessions may include interest rate reductions or below market interest rates, principal forgiveness, extension of terms and other actions intended to minimize potential losses.

The vast majority of the Company’s TDRs modified during the periods ended March 31, 2022 and March 31, 2021 related to interest rate reductions combined with extension of terms.

The vast majority of the Company’s TDRs modified during the periods ended June 30, 2022 and June 30, 2021 related to interest rate reductions combined with extension of terms.

The Company does not generally grant principal forgiveness.

1 unchanged sentence

The TDRs that are nonaccrual are reported within the nonaccrual loan totals presented previously.

At March 31, 2022 there were two loans with immaterial commitments to lend additional funds to debtors whose loans were modified as a TDR.

At June 30, 2022, there were three loans with immaterial commitments to lend additional funds to debtors whose loans were modified as a TDR.

At December 31, 2021, there were no commitments to lend additional funds to debtors whose loans were modified as a TDR.

The following table presents information related to loans modified in a TDR during the three months ended March 31, 2022 and 2021.

($ in thousands) For the three months ended March 31, 2022 For the three months ended March 31, 2021

The following table presents information related to loans modified in a TDR during the three months ended June 30, 2022 and 2021.

($ in thousands) For the three months ended June 30, 2022 For the three months ended June 30, 2021

Contracts Pre-

4 unchanged sentences

TDRs – Accruing

Commercial, financial, and agricultural 1 $ 161 $ 161 — $ — $ —

Real estate – construction, land development & other land loans 1 131 131 — — —

Real estate – mortgage – residential (1-4 family) first mortgages — — — 1 33 33

Real estate – mortgage – home equity loans / lines of credit 2 203 203 — — —

TDRs – Nonaccrual

Commercial, financial, and agricultural 2 259 259 2 715 715

Real estate – construction, land development & other land loans — — — 1 75 75

Real estate – mortgage – residential (1-4 family) first mortgages — — — 1 263 263

Real estate – mortgage – commercial and other 1 244 244 3 1,569 1,569

Total TDRs arising during period 7 $ 998 $ 998 8 $ 2,655 $ 2,655

The following table presents information related to loans modified in a TDR during the six months ended June 30, 2022 and 2021.

($ in thousands) For the six months ended June 30, 2022

For the six months ended June 30, 2021

Contracts Pre-

Balances Post-

Balances Number of

Contracts Pre-

Balances Post-

TDRs – Accruing

Commercial, financial, and agricultural 1 $ 161 $ 161 — $ — $ —

Real estate – construction, land development & other land loans 1 131 131 — — —

Real estate – mortgage – residential (1-4 family) first mortgages 1 36 36 1 33 33

Real estate – mortgage – home equity loans / lines of credit 2 203 203 — — —

Real estate – mortgage – commercial and other — — — 1 160 160

TDRs – Nonaccrual

Commercial, financial, and agricultural 3 300 300 3 826 823

Real estate – construction, land development & other land loans — — — 1 75 75

Real estate – mortgage – residential (1-4 family) first mortgages 1 36 36 1 263 263

1 unchanged sentence

Total TDRs arising during period 11 $ 1,651 $ 1,651 10 $ 2,926 $ 2,923

The Company considers a loan to have defaulted when it becomes 90 or more days delinquent under the modified terms, has been transferred to nonaccrual status, or has been transferred to foreclosed real estate.

There were no accruing TDRs that were modified in the previous twelve months and that defaulted during the three months ended March 31, 2022 or 2021.

The Company considers a TDR loan to have defaulted when it becomes 90 or more days delinquent under the modified terms, has been transferred to nonaccrual status, or has been transferred to foreclosed real estate.

There were no accruing TDRs that were modified in the previous twelve months and that defaulted during the three or six months ended June 30, 2022 or 2021.

Concentration of Credit Risk

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Allowance for Credit Losses - Unfunded Loan Commitments

In addition to the allowance for credit losses on loans, the Company maintains an allowance for lending-related commitments such as unfunded loan commitments and letters of credit.

In addition to the ACL on loans, the Company maintains an ACL for lending-related commitments such as unfunded loan commitments and letters of credit.

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 lending-related commitments on off-balance sheet credit exposures is adjusted as a provision for unfunded commitments expense.

expected to be funded over its estimated life, which are the same loss rates that are used in computing the allowance for credit losses on loans.

The allowance for credit losses for unfunded loan commitments of $ 12.0 million and $ 13.5 million at March 31, 2022 and December 31, 2021, respectively, is separately classified on the Consolidated Balance Sheets within "Other liabilities".

The following table presents the balance and activity in the allowance for credit losses for unfunded loan commitments for the three months ended March 31, 2022.

The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the ACL on loans.

The ACL for unfunded loan commitments of $ 12.0 million and $ 13.5 million at June 30, 2022 and December 31, 2021, respectively, is separately classified on the Consolidated Balance Sheets within "Other liabilities".

The following table presents the balance and activity in the allowance for credit losses for unfunded loan commitments for the six months ended June 30, 2022.

($ in thousands) Total Allowance for Credit Losses - Unfunded Loan Commitments

2 unchanged sentences

Reversal of provision for unfunded commitments ( 1,500 )

Ending balance at March 31, 2022 $ 12,006

Ending balance at June 30, 2022

Allowance for Credit Losses - Securities Held to Maturity

The allowance for credit losses for securities held to maturity was immaterial at March 31, 2022 and December 31, 2021.

The ACL for securities held to maturity was immaterial at June 30, 2022 and December 31, 2021.

Note 5 – Goodwill and Other Intangible Assets

The following is a summary of the gross carrying amount and accumulated amortization of amortizable intangible assets as of March 31, 2022 and December 31, 2021, and the carrying amount of unamortized intangible assets as of those same dates.

March 31, 2022 December 31, 2021

The following is a summary of the gross carrying amount and accumulated amortization of amortizable intangible assets as of June 30, 2022 and December 31, 2021, and the carrying amount of unamortized intangible assets as of those same dates.

June 30, 2022 December 31, 2021

($ in thousands) Gross Carrying

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Goodwill $ 364,263 364,263

Amortization expense of all other intangible assets, excluding the SBA servicing assets, totaled $ 1.0 million and $ 0.8 million for the three months ended June 30, 2022 and 2021, respectively, and $ 2.0 million and $ 1.7 million for the six months ended June 30, 2022 and 2021, respectively.

SBA servicing assets are recorded for the portions of SBA loans that the Company has sold but continues to service for a fee.

Servicing assets are initially recorded at fair value and amortized over the expected lives of the related loans and are tested for impairment on a quarterly basis.

SBA servicing asset amortization expense is recorded within noninterest income as an offset to SBA servicing fees within the line item "Other service charges, commissions, and fees." As derived from the table above, the Company had a SBA servicing asset at March 31, 2022 with a remaining book value of $ 5.6 million.

The Company recorded $ 0.7 million and $ 0.6 million in new servicing assets associated with the guaranteed portion of SBA loans sold during the first three months of 2022 and 2021, respectively.

During the first three months of 2022 and 2021, the Company recorded $ 0.6 million and $ 0.5 million, respectively, in related servicing asset amortization expense.

A t March 31, 2022 and December 31, 2021, the Company serviced SBA loans totali ng $ 426.6 million a nd $ 414.2 million, respectively, for others.

SBA servicing asset amortization expense is recorded within noninterest income as an offset to SBA servicing fees within the line item "Other service charges, commissions, and fees." The following table presents the changes in the SBA servicing assets for the three and six months ended June 30, 2022 and 2021.

Three months ended June 30, Six months ended June 30,

($ in thousands) 2022 2021 2022 2021

Beginning balance, net $ 5,591 5,925 5,472 5,788

New servicing assets 281 708 1,026 1,315

Amortization and impairment expense 905 544 1,531 1,014

Ending balance, net $ 4,967 6,089 4,967 6,089

A t June 30, 2022 and December 31, 2021, the Company serviced SBA loans totali ng $ 408.9 million a nd $ 414.2 million, respectively, for others.

There were no other loans serviced in any period presented.

Amortization expense of all other intangible assets, excluding the SBA servicing assets, totaled $ 1.0 million and $ 0.9 million for the three months ended March 31, 2022 and 2021, respectively.

There were no changes to the carrying amounts of goodwill for the three months ended March 31, 2022 .

There were no changes to the carrying amounts of goodwill for the six months ended June 30, 2022 .

Goodwill is evaluated for impairment on at least an annual basis, with the annual evaluation occurring as of October 31 of each year.

The Company performed the required annual impairment testing in the fourth quarter of 2021.

Management evaluated the events and circumstances in the first quarter of 2022 that could indicate that goodwill might be impaired and concluded that a subsequent interim test was not necessary.

Management evaluated the events and circumstances in the second quarter of 2022 that could indicate that goodwill might be impaired and concluded that a subsequent interim test was not necessary.

The following table presents the estimated amortization expense schedule related to acquisition-related amortizable intangible assets.

2 unchanged sentences

($ in thousands) Estimated Amortization

April 1, 2022 to December 31, 2022 $ 2,666

July 1, 2022 to December 31, 2022 $ 1,713

Thereafter 2,088

1 unchanged sentence

Note 6 - Borrowings

The following tables present information regarding the Company’s outstanding borrowings at March 31, 2022 and December 31, 2021 (dollars are in thousands):

Description Due date Call Feature March 31, 2022 Interest Rate

The following tables present information regarding the Company’s outstanding borrowings at June 30, 2022 and December 31, 2021 ($ in thousands).

Description Due date Call Feature June 30, 2022 Interest Rate

FHLB Principal Reducing Credit 7/24/2023 None $ 56 1.00 % fixed

10 unchanged sentences

Trust Preferred Securities 1/23/2034 Quarterly by Company

beginning 1/23/2009 10,310 4.04 % at 6/30/22 adjustable rate

3 month LIBOR + 2.75 %

Trust Preferred Securities 9/20/2034 Quarterly by Company

beginning 9/20/2009 12,372 4.25 % at 6/30/22

9 unchanged sentences

3 month LIBOR + 1.39 %

Total borrowings / weighted average rate as of March 31, 2022

Total borrowings / weighted average rate as of June 30, 2022

70,984 3.53 %

25 unchanged sentences

3 month LIBOR + 2.00 %

Trust Preferred Securities 6/15/2036 Quarterly by Company

beginning 6/15/2011 25,774 1.59 % at 12/31/21

adjustable rate

3 month LIBOR + 1.39 %

Total borrowings / weighted average rate as of December 31, 2021

4 unchanged sentences

The Company enters into leases in the normal course of business.

As of March 31, 2022, the Company leased 17 branch offices for which the land and buildings are leased and nine branch offices for which the land is leased but the building is owned.

As of June 30, 2022, the Company leased 16 branch offices for which the land and buildings are leased and nine branch offices for which the land is leased but the building is owned.

The Company also leases office space for several operational departments.

All of the Company’s leases are operating leases under applicable accounting standards and the lease agreements have maturity dates ranging from April 2022 through May 2076, some of which include options for multiple five - and ten-year extensions.

The weighted average remaining life of the lease term for these leases was 19.4 years as of March 31, 2022.

All of the Company’s leases are operating leases under applicable accounting standards and the lease agreements have maturity dates ranging from July 2023 through May 2076, some of which include options for multiple five - and ten-year extensions.

The weighted average remaining life of the lease term for these leases was 19.5 years as of June 30, 2022.

Certain of the Company's lease agreements include variable lease payments based on changes in inflation, with the impact of that factor being insignificant to the Company's total lease expense.

6 unchanged sentences

The Company uses its incremental borrowing rate, on a collateralized basis, at lease commencement to calculate the present value of lease payments when the rate implicit in the lease is not known.

The weighted average discount rate for leases was 2.88 % as of March 31, 2022.

Total operating lease expense was $ 0.9 million and $ 0.7 million for the three months ended March 31, 2022 and 2021, respectively.

The right-of-use assets and lease liabilities were $ 20.4 million and $ 20.9 million as of March 31, 2022, respectively, and were $ 20.7 million and $ 21.2 million as of December 31, 2021, respectively.

Future undiscounted lease payments for operating leases with initial terms of one year or more as of March 31, 2022 are as follows.

The weighted average discount rate for leases was 2.92 % as of June 30, 2022.

Total operating lease expense was $ 0.7 million and $ 0.6 million for the three months ended June 30, 2022 and 2021, respectively, and $ 1.6 million and $ 1.3 million for the six months ended June 30, 2022 and 2021, respectively.

The right-of-use assets and lease liabilities were $ 19.7 million and $ 20.3 million as of June 30, 2022, respectively, and were $ 20.7 million and $ 21.2 million as of December 31, 2021, respectively.

Future undiscounted lease payments for operating leases with initial terms of one year or more as of June 30, 2022 are as follows.

($ in thousands)

April 1, 2022 to December 31, 2022 $ 1,747

July 1, 2022 to December 31, 2022 $ 1,167

Thereafter 19,988

3 unchanged sentences

Note 8 – Pension Plans

The Company has historically sponsored two defined benefit pension plans – a qualified retirement plan (the “Pension Plan”) which was generally available to all employees, and a Supplemental Executive Retirement Plan (the “SERP”), which was for the benefit of certain senior management executives of the Company.

The Company sponsored two defined benefit pension plans – a qualified retirement plan (the “Pension Plan”) which was generally available to all employees, and a Supplemental Executive Retirement Plan (the “SERP”) which was for the benefit of certain senior management executives of the Company.

Effective December 31, 2012, the Company froze both plans for all participants.

Although no previously accrued benefits were lost, employees no longer accrue benefits under these plans for service subsequent to 2012.

The Company recorded periodic pension cost totaling $ 51,000 and $ 191,000 for the three months ended March 31, 2022 and 2021, respectively.

The following table contains the components of the pension cost.

For the Three Months Ended March 31,

The Company recorded periodic pension cost totaling $ 51,000 and $ 126,000 for the three months ended June 30, 2022 and 2021, respectively, and $ 102,000 and $ 317,000 for the six months ended June 30, 2022 and 2021, respectively.

The following tables contain the components of the pension cost.

For the Three Months Ended June 30,

($ in thousands) 2022 Pension Plan 2021 Pension Plan 2022 SERP 2021 SERP 2022 Total Both Plans 2021 Total Both Plans

4 unchanged sentences

Net periodic pension cost $ 159 59 ( 108 ) 67 51 126

For the Six Months Ended June 30,

($ in thousands) 2022 Pension Plan 2021 Pension Plan 2022 SERP 2021 SERP 2022 Total Both Plans 2021 Total Both Plans

Service cost $ — — — — — —

Interest cost 534 410 56 59 590 469

Expected return on plan assets ( 576 ) ( 528 ) — — ( 576 ) ( 528 )

Amortization of net (gain)/loss 360 368 ( 272 ) 8 88 376

Net periodic pension cost $ 318 250 ( 216 ) 67 102 317

The service cost component of net periodic pension cost is included in salaries and benefits expense and all other components of net periodic pension cost are included in other noninterest expense.

The Company’s contributions to the Pension Plan are based on computations by independent actuarial consultants and are intended to be deductible for income tax purposes.

The Company did no t contribute to the Pension Plan in the first three months of 2022 and does no t expect to contribute to the Pension Plan in the remainder of 2022.

The Company did not contribute to the Pension Plan in the first six months of 2022 and does not expect to contribute to the Pension Plan in the remainder of 2022.

The Company’s funding policy with respect to the SERP is to fund the related benefits from the operating cash flow of the Company.

6 unchanged sentences

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

The following table summarizes the Company’s financial instruments that were measured at fair value on a recurring and nonrecurring basis at March 31, 2022.

The following table summarizes the Company’s financial instruments that were measured at fair value on a recurring and nonrecurring basis at June 30, 2022.

($ in thousands)

Description of Financial Instruments

Fair Value at March 31, 2022 Quoted Prices in

Fair Value at June 30, 2022 Quoted Prices in

Active Markets for

5 unchanged sentences

Securities available for sale:

US Treasury $ 149,391 — 149,391 —

Treasury $ 172,195 — 172,195 —

Government-sponsored enterprise securities 60,917 — 60,917 —

24 unchanged sentences

Securities Available for Sale — When quoted market prices are available in an active market, the securities are classified as Level 1 in the valuation hierarchy.

If quoted market prices are not available, but fair values can be estimated by observing quoted prices of securities with similar characteristics, the securities are classified as Level 2 on the valuation hierarchy.

Most of the fair values for the Company’s Level 2 securities are determined by our third-party bond accounting provider using matrix pricing.

Matrix pricing is a mathematical technique widely used in the industry to value 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.

For the Company, Level 2 securities include U.S.

12 unchanged sentences

Appraisals used in this analysis are generally obtained at least annually based on when the assets were acquired, and thus the appraisals are not necessarily as of the period ends presented.

At the time of foreclosure, any excess of the loan balance over the fair value of the real estate held as collateral is treated as a charge against the allowance for credit losses.

For any real estate valuations subsequent to foreclosure, any excess of the real estate recorded value over the fair value of the real estate is treated as a foreclosed real estate write-down on the Consolidated Statements of Income.

For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of March 31, 2022, the significant unobservable inputs used in the fair value measurements were as follows:

($ in thousands) Fair Value at March 31, 2022 Valuation

At the time of foreclosure, any excess of the loan balance over the fair value of the real estate held as collateral is treated as a charge against the ACL.

For any real estate valuations

subsequent to foreclosure, any excess of the real estate recorded value over the fair value of the real estate is treated as a foreclosed real estate write-down on the Consolidated Statements of Income.

For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of June 30, 2022, the significant unobservable inputs used in the fair value measurements were as follows:

($ in thousands) Fair Value at June 30, 2022 Valuation

Technique Significant Unobservable

9 unchanged sentences

Foreclosed real estate 364 Appraised value Discounts applied for estimated costs to sell 10 %

The carrying amounts and estimated fair values of financial instruments not carried at fair value at March 31, 2022 and December 31, 2021 are as follows:

March 31, 2022 December 31, 2021

The carrying amounts and estimated fair values of financial instruments not carried at fair value at June 30, 2022 and December 31, 2021 were as follows:

June 30, 2022 December 31, 2021

($ in thousands) Level in Fair

23 unchanged sentences

Note 10 – Stock-Based Compensation

The Company recorded total stock-based compensation expense of $ 547,000 and $ 397,000 for the three months ended March 31, 2022 and 2021, respectively.

In addition, the Company recog nized $ 126,000 an d $ 91,000 of income tax benefits related to stock-based compensation expense for the three months ended March 31, 2022 and 2021, respectively.

At March 31, 2022, the sole equity-based compensation plan for the Company is the First Bancorp 2014 Equity Plan (the "Equity Plan"), which was approved by shareholders on May 8, 2014.

As of March 31, 2022, the Equity Plan had 431,852 shares remaining available for grant.

The Company recorded total stock-based compensation expense of $ 0.6 million and $ 0.8 million for the three months ended June 30, 2022 and 2021, respectively, and $ 1.2 million and $ 1.2 million for the six months ended June 30, 2022 and 2021, respectively.

In addition, the Company recog nized $ 149,000 an d $ 191,000 of income tax benefits related to stock-based compensation expense for the three months ended June 30, 2022 and 2021, respectively, and $ 275,000 and $ 282,000 for the six months ended June 30, 2022 and 2021, respectively.

At June 30, 2022, the sole equity-based compensation plan for the Company was the First Bancorp 2014 Equity Plan (the "Equity Plan"), which was approved by shareholders on May 8, 2014.

As of June 30, 2022, the Equity Plan had 374,192 shares remaining available for grant.

The Equity Plan is intended to serve as a means to attract, retain and motivate key employees and directors and to associate the interests of the plans' participants with those of the Company and its shareholders.

10 unchanged sentences

Compensation expense associated with these director awards is recognized on the date of award since there are no vesting conditions.

The following table presents information regarding the activity for the first three months of 2022 related to the Company’s outstanding restricted stock awards:

The following table presents information regarding the activity for the first six months of 2022 related to the Company’s outstanding restricted stock awards:

Long-Term Restricted Stock Awards

5 unchanged sentences

Forfeited or expired during the period ( 7,115 ) 31.50

Nonvested at March 31, 2022 212,713 $ 36.33

Total unrecognized compensation expense as of March 31, 2022 amounted to $ 4.2 million with a weighted-average remaining term of 2.3 years.

For the nonvested awards that are outstanding at March 31, 2022, the Company expects to record $ 2.1 million in compensation expense in the next twelve months, $ 1.6 million of which is expected to be recorded in the remaining quarters of 2022.

Nonvested at June 30, 2022 215,465 $ 36.18

Total unrecognized compensation expense as of June 30, 2022 amounted to $ 5.2 million with a weighted-average remaining term of 2.4 years.

For the nonvested awards that are outstanding at June 30, 2022, the Company

expects to record $ 2.5 million in compensation expense in the next twelve months, $ 1.3 million of which is expected to be recorded in the remaining quarters of 2022.

Note 11 - Shareholders' Equity

Stock Repurchases

During the first three months of 2022, the Company did no t repurchase any shares of the Company's common stock.

During the first three months of 2021, the Company repurchased approximately 106,744 shares of the Company's common stock at an average stock price of $ 37.81 per share, which totaled $ 4 million, under a $ 20 million repurchase authorization publicly in January 2021.

During the first six months of 2022, the Company did not repurchase any shares of the Company's common stock.

The Company currently has a $ 40.0 million repurchase authorization that was announced on February 7, 2022, and expires December 31, 2022.

During the first six months of 2021, the Company repurchased approximately 106,744 shares of the Company's common stock at an average stock price of $ 37.81 per share, which totaled $ 4.0 million, under a $ 20.0 million repurchase authorization announced publicly in January 2021.

Note 12 – Earnings Per Share

The following is a reconciliation of the numerators and denominators used in computing Basic and Diluted Earnings Per Common Share ("EPS"):

For the Three Months Ended March 31,

For the Three Months Ended June 30,

($ in thousands except per

11 unchanged sentences

Diluted EPS per common share $ 36,585 35,642,471 $ 1.03 $ 29,285 28,490,031 $ 1.03

For the Six Months Ended June 30,

($ in thousands except per

share amounts) Income

(Numerator) Shares

(Denominator) Per Share

Amount Income

(Numerator) Shares

(Denominator) Per Share

Net income $ 70,554 $ 57,479

income allocated to participating securities ( 326 ) ( 341 )

Basic EPS per common share $ 70,228 35,476,902 $ 1.98 $ 57,138 28,344,633 $ 2.02

Net income $ 70,554 35,476,902 $ 57,479 28,344,633

Effect of Dilutive Securities — 164,826 — 169,309

Diluted EPS per common share $ 70,554 35,641,728 $ 1.98 $ 57,479 28,513,942 $ 2.02

Note 13 – Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive loss for the Company are as follows:

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

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

Unrealized loss on securities available for sale $ ( 323,485 ) ( 32,067 )

5 unchanged sentences

Total accumulated other comprehensive loss $ ( 249,352 ) ( 24,970 )

The following table discloses the changes in accumulated other comprehensive loss for the three months ended March 31, 2022 (all amounts are net of tax).

The following tables disclose the changes in accumulated other comprehensive loss for the three and six months ended June 30, 2022 and 2021 (all amounts are net of tax).

For the Three Months Ended June 30, 2022

($ in thousands) Unrealized Loss on

1 unchanged sentence

(Liability) Total

Beginning balance at January 1, 2022 $ ( 24,698 ) ( 272 ) ( 24,970 )

Beginning balance $ ( 164,717 ) ( 238 ) ( 164,955 )

Other comprehensive loss before reclassifications ( 84,431 ) — ( 84,431 )

1 unchanged sentence

Net current-period other comprehensive (loss) income ( 84,431 ) 34 ( 84,397 )

Ending balance at March 31, 2022 $ ( 164,717 ) ( 238 ) ( 164,955 )

The following table discloses the changes in accumulated other comprehensive income (loss) for the three months ended March 31, 2021 (all amounts are net of tax).

Ending balance $ ( 249,148 ) ( 204 ) ( 249,352 )

For the Three Months Ended June 30, 2021

($ in thousands) Unrealized (Loss) Gain on

Available for Sale Postretirement Plans Asset

(Liability) Total

Beginning balance $ ( 2,917 ) ( 1,268 ) ( 4,185 )

Other comprehensive income before reclassifications 3,332 — 3,332

Amounts reclassified from accumulated other comprehensive income

Net current-period other comprehensive income 3,332 128 3,460

Ending balance $ 415 ( 1,140 ) ( 725 )

For the Six Months Ended June 30, 2022

($ in thousands) Unrealized Loss on

Available for Sale Postretirement Plans Asset

(Liability) Total

Beginning balance $ ( 24,698 ) ( 272 ) ( 24,970 )

Other comprehensive loss before reclassifications ( 224,450 ) — ( 224,450 )

Amounts reclassified from accumulated other comprehensive income

Net current-period other comprehensive (loss) income ( 224,450 ) 68 ( 224,382 )

Ending balance $ ( 249,148 ) ( 204 ) ( 249,352 )

For the Six Months Ended June 30, 2021

($ in thousands) Unrealized Gain

1 unchanged sentence

(Liability) Total

Beginning balance at January 1, 2021 $ 15,749 ( 1,399 ) 14,350

Beginning balance $ 15,749 ( 1,399 ) 14,350

Other comprehensive loss before reclassifications ( 15,334 ) — ( 15,334 )

1 unchanged sentence

Net current-period other comprehensive (loss) income ( 15,334 ) 259 ( 15,075 )

Ending balance at March 31, 2021 $ ( 2,917 ) ( 1,268 ) ( 4,185 )

Amounts reclassified from accumulated other comprehensive income for Unrealized Gain (Loss) on Securities Available for Sale represent realized securities gains or losses, net of tax effects.

Ending balance $ 415 ( 1,140 ) ( 725 )

Amounts reclassified from accumulated other comprehensive income for rnrealized gain (loss) on securities available for sale represent realized securities gains or losses, net of tax effects.

Amounts reclassified from accumulated other comprehensive income for postretirement plans asset (liability) represent amortization of amounts included in accumulated other comprehensive income, net of taxes, and are recorded in the "Other operating expenses" line item of the Consolidated Statements of Income.

1 unchanged sentence

All of the Company’s revenues that are in the scope of the “ Revenue from Contracts with Customers ” accounting standard (“ASC 606”) are recognized within noninterest income.

The following table presents the Company’s sources of noninterest income for the three months ended March 31, 2022 and 2021.

The following table presents the Company’s sources of noninterest income for the three and six months ended June 30, 2022 and 2021.

Items outside the scope of ASC 606 are noted as such.

For the Three Months Ended

($ in thousands) March 31, 2022 March 31, 2021

For the Three Months Ended For the Six Months Ended

($ in thousands) June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Noninterest Income:

1 unchanged sentence

Service charges on deposit accounts $ 3,700 2,824 7,241 5,557

$ 3,541 2,733

Other service charges, commissions, and fees:

Interchange income 4,711 3,524

Other service charges and fees:

Bankcard interchange income, net 4,812 4,409 9,523 7,933

Other service charges and fees 1,490 1,160 2,753 2,151

Commissions from sales of insurance and financial products:

13 unchanged sentences

Service charges on deposits are withdrawn from the customer’s account balance.

Other service charges, commissions, and fees:

Other service charges and fees:

The Company earns interchange income on its customers’ debit and credit card usage and earns fees from other services utilized by its customers.

5 unchanged sentences

Payment is typically received immediately or in the following month.

Commissions from the sale of insurance and financial products:

Commissions from the sales of insurance and financial products:

The Company earns commissions from the sale of wealth management products and also earned commissions from the sale of insurance policies until the sale of First Bank Insurance Services on June 30, 2021.

Wealth management income primarily consists of commissions received on financial product sales, such as annuities.

The Company’s performance obligation is generally satisfied upon the issuance of the financial product.

Shortly after the policy is issued, the carrier remits the commission payment to the Company, and the Company recognizes the revenue.

The Company also earns some fees from asset management, which is billed quarterly for services rendered in the most recent period, for which the performance obligation has been satisfied.

Insurance income, which was earned by the Company until June 30, 2021, generally consisted of commissions from the sale of insurance policies and performance-based commissions from insurance companies.

3 unchanged sentences

Performance-based commissions from insurance companies were recognized at a point in time as policies are sold.

Wealth management income primarily consists of commissions received on financial product sales, such as annuities.

The Company’s performance obligation is generally satisfied upon the issuance of the financial product.

Shortly after the policy is issued, the carrier remits the commission payment to the Company, and the Company recognizes the revenue.

The Company also earns some fees from asset management, which is billed quarterly for services rendered in the most recent period, for which the performance obligation has been satisfied.

SBA consulting fees:

3 unchanged sentences

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