What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-13 compared with 2024-08-14 · 274 added, 519 removed, 849 unchanged (48% of the section changed)

2 unchanged sentences

National Bankshares, Inc.

Consolidated Balance Sheets

Consol idated Balance Sheets

(in thousands, except share and per share data)

June 30, 2024

September 30, 2024

December 31, 2023

Cash and due from banks

$ 14,908 $ 12,967

Interest-bearing deposits

80,477 73,636

Federal funds sold

Total cash and cash equivalents

98,884 86,603

Securities available for sale, at fair value

605,196 618,601

Restricted stock, at cost

1 unchanged sentence

Loans, net of unearned income and deferred fees and costs

989,367 856,646

Less allowance for credit losses

( 10,502 ) ( 9,094 )

978,865 847,552

allowance for credit losses

Premises and equipment, net

15,468 11,109

Accrued interest receivable

1 unchanged sentence

Bank-owned life insurance

46,775 43,583

42,738 34,091

$ 1,809,216 $ 1,655,370

Liabilities and Stockholders' Equity

Noninterest-bearing demand deposits

$ 296,242 $ 281,215

Interest-bearing demand deposits

867,899 821,661

Savings deposits

176,852 177,856

Time deposits

304,059 223,240

Total deposits

1,645,052 1,503,972

Accrued interest payable

1 unchanged sentence

Total liabilities

1,660,253 1,514,848

Commitments and contingencies

1 unchanged sentence

Preferred stock, no par value, 5,000,000 shares authorized;

none issued and outstanding

no ne issued and outstanding

Common stock of $ 1.25 par value and additional paid in capital.

Authorized 10,000,000 shares;

issued and outstanding 6,361,433 (including 4,839 unvested) shares at June 30, 2024 and 5,893,782 (including 4,095 unvested) shares at December 31, 2023

Authorized 10,000,000

issued and outstanding 6,360,973 (including 4,379 unvested) shares at

September 30, 2024 and 5,893,782 (including 4,095 unvested) shares at December 31,

Retained earnings

195,549 197,984

Accumulated other comprehensive loss, net

( 68,354 ) ( 64,866 )

Total stockholders' equity

148,963 140,522

Total liabilities and stockholders' equity

$ 1,809,216 $ 1,655,370

See accompanying notes to consolidated financial statements.

National Bankshares, Inc.

Consolidated Statements of (Loss) Income

Three Months Ended June 30,

Cons olidated Statements of Income

Three Months Ended September 30,

(in thousands, except share and per share data)

12 unchanged sentences

Net interest income

Provision for credit losses

Net interest income after provision for credit losses

Recovery of credit losses

Net interest income after recovery of credit losses

Noninterest Income

2 unchanged sentences

Credit and debit card fees, net

Gain on sale of investment

Gain on sale of mortgage loans

Realized securities loss, net

Total noninterest income

9 unchanged sentences

Merger-related expenses

Contract termination

Other operating expenses

Total noninterest expense

(Loss) Income before income (benefit) tax

Income tax (benefit) expense

Net (Loss) Income

Basic net (loss) income per common share

Fully diluted net (loss) income per common share

Income before income tax expense

Income tax expense

Basic net income per common share

Fully diluted net income per common share

Weighted average number of common shares outstanding, basic

Weighted average number of common shares outstanding, fully diluted

Dividends declared per common share

See accompanying notes to consolidated financial statements.

National Bankshares, Inc.

Consolidated Statements of Comprehensive (Loss) Income

Three Months Ended June 30, 2024 and 2023

Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended September 30, 2024 and 2023

September 30,

(in thousands)

Net (Loss) Income

$ ( 306 ) $ 3,901

Other Comprehensive Loss, Net of Tax

Unrealized holding loss on available for sale securities net of tax of ($ 40 ) and ($ 1,289 ) for the periods ended June 30, 2024 and 2023, respectively

( 150 ) ( 4,848 )

Reclassification adjustment for loss included in net income, net of tax of $ 702 in 2023

Other comprehensive loss, net of tax

( 150 ) ( 2,206 )

Total Comprehensive (Loss) Income

$ ( 456 ) $ 1,695

See accompanying notes to consolidated financial statements.

Other Comprehensive Income (Loss), Net of Tax

Unrealized holding gain (loss) on available for sale securities net of tax of $ 4,284 and

($ 4,099 ) for the periods ended September 30, 2024 and 2023, respectively

Other comprehensive income (loss), net of tax

Total Comprehensive Income (Loss)

National Bankshares, Inc.

Consolidated Statements of Income

Six Months Ended June 30,

Consoli dated Statements of Income

Nine Months Ended September 30,

(in thousands, except share and per share data)

12 unchanged sentences

Net interest income

Provision for credit losses

Net interest income after provision for credit losses

Provision for (recovery of) credit losses

Net interest income after provision for (recovery of) credit losses

Noninterest Income

19 unchanged sentences

Total noninterest expense

Income before income taxes

Income before income tax expense

Income tax expense

5 unchanged sentences

National Bankshares, Inc.

Consolidated Statements of Comprehensive (Loss) Income

Six Months Ended June 30, 2024 and 2023

Consolidate d Statements of Comprehensive Income

Nine Months Ended September 30, 2024 and 2023

September 30,

(in thousands)

$ 1,868 $ 8,432

Other Comprehensive (Loss) Income, Net of Tax

Unrealized holding (loss) gain on available for sale securities net of tax of ($ 927 ) and $ 1,831 for the periods ended June 30, 2024 and 2023, respectively

( 3,488 ) 6,891

Other Comprehensive Income (Loss), Net of Tax

Unrealized holding gain (loss) on available for sale securities net of tax of $ 3,357 and

($ 2,268 ) for the periods ended September 30, 2024 and 2023, respectively

Reclassification adjustment for loss included in net income, net of tax of $ 700 in 2023

Other comprehensive (loss) income, net of tax

( 3,488 ) 9,523

Total Comprehensive (Loss) Income

$ ( 1,620 ) $ 17,955

Other comprehensive income (loss), net of tax

Total Comprehensive Income

See accompanying notes to consolidated financial statements.

National Bankshares, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended June 30, 2024 and 2023

Consolidated Statem ents of Changes in Stockholders’ Equity

Three Months Ended September 30, 2024 and 2023

(in thousands except share data)

Comprehensive

Balances at March 31, 2023

$ 7,362 $ 195,718 $ ( 72,037 ) $ 131,043

- 3,901 - 3,901

Cash dividends of $ 0.73 per share

- ( 4,299 ) - ( 4,299 )

Other comprehensive loss, net of tax of ($ 587 )

- - ( 2,206 ) ( 2,206 )

Stock based compensation

Common Stock and Additional Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Balances at June 30, 2023

$ 7,367 $ 195,320 $ ( 74,243 ) $ 128,444

Balances at March 31, 2024

$ 7,436 $ 200,158 $ ( 68,204 ) $ 139,390

- ( 306 ) - ( 306 )

Acquisition of Frontier Community Bank

14,299 - - 14,299

Cash dividends of $ 0.73 per share

- ( 4,303 ) - ( 4,303 )

Other comprehensive loss, net of tax of ($ 4,099 )

- - ( 150 ) ( 150 )

Stock based compensation

Balances at September 30, 2023

Balances at June 30, 2024

$ 21,768 $ 195,549 $ ( 68,354 ) $ 148,963

Other comprehensive income, net of tax of $ 4,284

Stock based compensation

Balances at September 30, 2024

See accompanying notes to consolidated financial statements.

Six Months Ended June 30, 2024 and 2023

Nine Months Ended September 30, 2024 and 202 3

(in thousands except share data)

Comprehensive

Common Stock and Additional Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Loss

Balances at December 31, 2022

$ 7,362 $ 199,091 $ ( 83,766 ) $ 122,687

Adoption of ASU 2016-13

- ( 2,014 ) - ( 2,014 )

- 8,432 - 8,432

Cash dividends of $ 1.73 per share

- ( 10,189 ) - ( 10,189 )

Other comprehensive income, net of tax of $ 2,531

- - 9,523 9,523

Other comprehensive loss, net of tax of ($ 1,568 )

Stock based compensation

Balances at June 30, 2023

$ 7,367 $ 195,320 $ ( 74,243 ) $ 128,444

Balances at September 30, 2023

Balances at December 31, 2023

$ 7,404 $ 197,984 $ ( 64,866 ) $ 140,522

- 1,868 - 1,868

Acquisition of Frontier Community Bank

14,299 - - 14,299

Cash dividends of $ 0.73 per share

- ( 4,303 ) - ( 4,303 )

Other comprehensive loss, net of tax of ($ 927 )

- - ( 3,488 ) ( 3,488 )

Other comprehensive income, net of tax of $ 3,357

Stock based compensation

Balances at June 30, 2024

$ 21,768 $ 195,549 $ ( 68,354 ) $ 148,963

Balances at September 30, 2024

See accompanying notes to consolidated financial statements.

National Bankshares, Inc.

Consolidated Statements of Cash Flows

Six Months Ended June 30, 2024 and 2023

Consolidat ed Statements of Cash Flows

Nine Months Ended September 30, 2024 and 2023

September 30,

(in thousands)

1 unchanged sentence

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

Provision for credit losses

Provision for (recovery of) credit losses

Depreciation of premises and equipment

Core deposit intangible amortization

Net accretion of acquisition accounting estimates

21 unchanged sentences

Purchases of premises and equipment

Proceeds from sale of premises and equipment

BOLI settlement

Cash acquired in the acquisition, net of cash paid

Net cash provided by investing activities

Net cash (used in) provided by investing activities

Cash Flows from Financing Activities

2 unchanged sentences

Cash dividends paid

Net cash provided by (used in) financing activities

Repayment of borrowings

Net cash used in financing activities

Net change in cash and cash equivalents

7 unchanged sentences

Loans transferred to repossessed assets

Unrealized holding (loss) gain on securities available for sale

Unrealized holding gain (loss) on securities available for sale

Lease liabilities arising from obtaining right-of-use assets during the period

1 unchanged sentence

National Bankshares, Inc.

Notes to Consolidated Financial Statements

June 30, 2024

Notes t o Consolidated Financial Statements

September 30, 2024

$ in thousands, except per share data

6 unchanged sentences

however, in the opinion of the Company’s management, all adjustments consisting of normal recurring adjustments, which are necessary for a fair presentation of the consolidated financial statements, have been included.

Application of the principles of GAAP and practices within the banking industry requires management to make estimates, assumptions, and judgements that affect the amounts reported in the financial statements and accompanying notes.

These estimates, assumptions, and judgements are based on information available as of the date of the financial statement;

Application of the principles of GAAP and practices within the banking industry requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes.

These estimates, assumptions, and judgments are based on information available as of the date of the financial statement;

accordingly, as this information changes, the financial statements may reflect different estimates, assumptions, and judgments.

1 unchanged sentence

Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance of credit losses on loans and acquisition accounting.

The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of results of operations for the full year or any other interim period.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of results of operations for the full year or any other interim period.

The interim period consolidated financial statements and financial information included in this Form 10-Q should be read in conjunction with the notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”).

6 unchanged sentences

Business combinations are accounted for under Accounting Standards Codification (“ASC”) 805, Business Combinations, using the acquisition method of accounting.

The acquisition method of accounting requires an acquirer to recognize the assets acquired and the liabilities assumed at the acquisition date measured at their fair values as of that date.

The acquisition method of accounting requires an acquirer to record at fair value on the acquisition date the assets acquired and the liabilities assumed.

To determine the fair values, the Company relies on internal or third-party valuations, such as appraisals, valuations based on discounted cash flow analyses, or other valuation techniques.

19 unchanged sentences

In accordance with ASC 805, the Company also identified intangible assets acquired.

Other intangible assets lack physical substance but have contractual or other legal rights or are capable of being sold or exchanged either on their own or in combination with a related contract, asset or liability.

Intangible assets lack physical substance but have contractual or other legal rights or are capable of being sold or exchanged either on their own or in combination with a related contract, asset or liability.

Intangible assets are initially recorded at fair value.

10 unchanged sentences

Recent Accounting Pronouncements

ASU 2023 - 09

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2023 - 09, “Income Taxes (Topic 740 ):

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” The amendments in this ASU require an entity to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, which is greater than five percent of the amount computed by multiplying pretax income by the entity’s applicable statutory rate, on an annual basis.

6 unchanged sentences

The Company does not expect the adoption of ASU 2023-09 to have a material impact on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.” ASU 2024-03 requires public companies to disclose, in the notes to the financial statements, specific information about certain costs and expenses at each interim and annual reporting period.

This includes disclosing amounts related to employee compensation, depreciation, and intangible asset amortization.

In addition, public companies will need to provide qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.

ASU 2024-03 is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Implementation of ASU 2024-03 may be applied prospectively or retrospectively.

The Company does not expect the adoption of ASU 2024-03 to have a material impact on its consolidated financial statements.

Business Combination

On June 1, 2024 ( the “Acquisition Date”), the Company completed its acquisition of Frontier Community Bank (“FCB”), a Virginia chartered commercial bank, in accordance with the definitive merger agreement that was entered into on January 23, 2024, by and among the Company, the Bank and FCB.

Upon completion of the merger, former FCB shareholders received a combination of common stock and cash.

On June 1, 2024 (the “Acquisition Date”), the Company completed its acquisition of FCB, a Virginia chartered commercial bank, in accordance with the definitive merger agreement that was entered into on January 23, 2024, by and among the Company, the Bank and FCB.

Upon completion of the merger, former FCB shareholders received a combination of the Company's common stock and cash.

The acquisition of FCB was accounted for as a business combination using the acquisition method of accounting.

4 unchanged sentences

The following table presents the calculation of the purchase price and the fair value of the identifiable assets and liabilities.

Estimated Fair Value

Estimated Fair

Values as Recorded

As Recorded by FCB

Estimated Fair Value Adjustments

Estimated Fair Values as Recorded by NBI

Purchase Price Consideration:

4 unchanged sentences

Cash and cash equivalents

$ 8,993 $ ( 59 ) $ 8,934

9,325 ( 5 ) 9,320

Loans, gross, purchased performing

115,589 ( 7,720 ) 107,869

Loans, gross, purchased credit deteriorated

11,157 ( 822 ) 10,335

Loans in process

1 unchanged sentence

Allowance for credit losses on loans

( 881 ) 881 -

Premises and equipment

3,003 449 3,452

Core deposit intangible

- 2,100 2,100

4,998 966 5,964

Total identifiable assets acquired

$ 152,757 $ ( 4,244 ) $ 148,513

Identifiable Liabilities

130,323 ( 606 ) $ 129,717

5,250 ( 20 ) 5,230

Other liabilities

1,960 131 2,091

Total identifiable liabilities assumed

$ 137,533 $ ( 495 ) $ 137,038

Provisional fair value of net assets acquired

5 unchanged sentences

Outstanding and vested options were settled at the difference between $ 14.48 and the strike price and totaled $ 281 .

Management made significant estimates and exercised significant judgement in accounting for the acquisition of FCB.

Management made significant estimates and exercised significant judgment in accounting for the acquisition of FCB.

The following is a brief description of the valuation methodologies used to estimate the fair values of major categories of assets acquired and liabilities assumed.

4 unchanged sentences

All of the acquired portfolio was sold upon completion of the acquisition.

The fair valuation process identified loans with credit risk indicators that qualified for “purchase credit deteriorated” (“PCD”) status.

The fair valuation process identified loans with credit risk indicators that qualified for PCD status.

PCD and non-PCD loans were then evaluated for credit risk and other fair value indicators.

8 unchanged sentences

FCB recorded value

$ 11,157 $ 115,589

Discount for credit risk

( 295 ) ( 498 )

Discount for non-credit factors

( 527 ) ( 7,222 )

$ 10,335 $ 107,869

Premises and equipment

16 unchanged sentences

Loans and Allowance for Credit Losses

Loans as of June 30, 2024 include acquired loans at their outstanding principal balance, net of the remaining purchase discount of $ 8,255 .

Originated loans as of June 30, 2024 and December 31, 2023 are presented at amortized cost, net of unearned income and deferred fees and costs.

Loans as of September 30, 2024 include acquired loans at their outstanding principal balance, net of the remaining purchase discount of $ 7,886 .

Originated loans as of September 30, 2024 and December 31, 2023 are presented at amortized cost, net of unearned income and deferred fees and costs.

The following table presents the composition of the loan portfolio, excluding mortgage loans held for sale, as of the dates indicated.

June 30, 2024

September 30, 2024

December 31, 2023

Real estate construction

$ 81,355 $ 55,379

Consumer real estate

299,310 241,564

Commercial real estate

454,978 419,130

Commercial non real estate

52,297 41,555

Public sector and IDA

59,043 60,551

Consumer non real estate

42,915 38,996

$ 989,898 $ 857,175

Less unearned income and deferred fees and costs

( 531 ) ( 529 )

Loans, net of unearned income and deferred fees and costs

$ 989,367 $ 856,646

Allowance for credit losses on loans

( 10,502 ) ( 9,094 )

Total loans, net

$ 978,865 $ 847,552

Accrued interest receivable of $ 3,352 at June 30, 2024 and $ 3,032 at December 31, 2023 is not included in total loans above.

Accrued interest receivable of $ 3,269 at September 30, 2024 and $ 3,032 at December 31, 2023 is not included in total loans above.

Past Due and Nonaccrual Loans

The following tables present the aging of past due loans, by loan pool, as of the dates indicated.

June 30, 2024

September 30, 2024

Accruing Current Loans

Accruing Loans

30 – 89 Days Past Due

Accruing Loans

90 or More Days Past Due

Nonaccrual Loans

Accruing and Nonaccrual

90 or More Days Past Due

Real Estate Construction

Construction, 1-4 family residential

$ 22,801 $ 140 $ - $ - $ 22,941 $ -

Construction, other

58,264 150 - - 58,414 -

Consumer Real Estate

21,751 6 - - 21,757 -

Residential closed-end first liens

164,517 353 118 - 164,988 118

Residential closed-end junior liens

6,582 11 - - 6,593 -

Investor-owned residential real estate

105,716 256 - - 105,972 -

Commercial Real Estate

Multifamily residential real estate

120,601 190 - - 120,791 -

Commercial real estate owner-occupied

135,121 720 - 2,307 138,148 220

Commercial real estate, other

196,039 - - - 196,039 -

Commercial Non Real Estate

Commercial and industrial

51,852 199 46 200 52,297 46

Public Sector and IDA

States and political subdivisions

59,043 - - - 59,043 -

Consumer Non Real Estate

4,763 2 - - 4,765 -

13,482 264 13 - 13,759 13

Other consumer loans

24,170 164 57 - 24,391 57

$ 984,702 $ 2,455 $ 234 $ 2,507 $ 989,898 $ 454

December 31, 2023

Accruing Current Loans

Accruing Loans

30 – 89 Days Past Due

Accruing Loans

90 or More Days Past Due

Nonaccrual Loans

Accruing and Nonaccrual

90 or More Days Past Due

Real Estate Construction

Construction, 1-4 family residential

$ 13,442 $ - $ - $ - $ 13,442 $ -

Construction, other

41,916 21 - - 41,937 -

Consumer Real Estate

17,178 104 - - 17,282 -

Residential closed-end first liens

124,886 662 131 - 125,679 131

Residential closed-end junior liens

5,027 12 - - 5,039 -

Investor-owned residential real estate

93,564 - - - 93,564 -

Commercial Real Estate

Multifamily residential real estate

119,052 195 - - 119,247 -

Commercial real estate owner-occupied

114,477 336 - 2,408 117,221 231

Commercial real estate, other

182,662 - - - 182,662 -

Commercial Non Real Estate

Commercial and industrial

41,249 57 28 221 41,555 28

Public Sector and IDA

States and political subdivisions

60,551 - - - 60,551 -

Consumer Non Real Estate

4,648 17 3 - 4,668 3

12,126 135 - - 12,261 -

Other consumer loans

21,934 107 26 - 22,067 26

$ 852,712 $ 1,646 $ 188 $ 2,629 $ 857,175 $ 419

The following table presents nonaccrual loans, by loan class, as of the dates indicated:

June 30, 2024

September 30, 2024

December 31, 2023

1 unchanged sentence

Commercial real estate owner-occupied

$ 2,087 $ 220 $ 2,307 $ 2,177 $ 231 $ 2,408

Commercial Non Real Estate

Commercial and industrial

- 200 200 - 221 221

$ 2,087 $ 420 $ 2,507 $ 2,177 $ 452 $ 2,629

During the three and six months ended June 30, 2024, no accrued interest receivable was reversed against interest income.

During the three and nine months ended September 30, 2024, no accrued interest receivable was reversed against interest income.

Allowance for Credit Losses on Loans (“ACLL”)

The following tables present the activity in the ACLL by portfolio segment for the periods indicated:

Activity in the ACLL for the Six Months Ended June 30, 2024

Activity in the ACLL for the Nine Months Ended September 30, 2024

Real Estate Construction

Consumer Real Estate

Commercial Real Estate

Commercial Non Real Estate

Public Sector and IDA

Consumer Non Real Estate

Balance, December 31, 2023

$ 408 $ 3,162 $ 3,576 $ 682 $ 333 $ 583 $ 350 $ 9,094

- - - ( 20 ) - ( 157 ) - ( 177 )

- - 29 3 - 71 - 103

Provision for (recovery of) credit losses

131 376 594 79 ( 10 ) 87 50 1,307

Merger adjustment (1)

10 97 55 4 - 9 - 175

Balance, June 30, 2024

$ 549 $ 3,635 $ 4,254 $ 748 $ 323 $ 593 $ 400 $ 10,502

Balance, September 30, 2024

(1) Adjustment for PCD acquired loans.

Activity in the ACLL for the Six Months Ended June 30, 2023

Activity in the ACLL for the Nine Months Ended September 30, 2023

Real Estate Construction

Consumer Real Estate

Commercial Real Estate

Commercial Non Real Estate

Public Sector and IDA

Consumer Non Real Estate

Balance, December 31, 2022

$ 450 $ 2,199 $ 3,642 $ 930 $ 319 $ 506 $ 179 $ 8,225

Adoption of ASU 2016-13

( 21 ) 1,261 700 216 ( 15 ) 72 129 2,342

- ( 17 ) - ( 11 ) - ( 132 ) - ( 160 )

- 102 25 3 - 77 - 207

Provision for (recovery of) credit losses

47 ( 180 ) ( 26 ) 78 ( 3 ) 70 26 12

Balance, June 30, 2023

$ 476 $ 3,365 $ 4,341 $ 1,216 $ 301 $ 593 $ 334 $ 10,626

Balance, September 30, 2023

Activity in the ACLL for the Year Ended December 31, 2023

Real Estate Construction

Consumer Real Estate

Commercial Real Estate

Commercial Non Real Estate

Public Sector and IDA

Consumer Non Real Estate

Balance, December 31, 2022

$ 450 $ 2,199 $ 3,642 $ 930 $ 319 $ 506 $ 179 $ 8,225

Adoption of ASU 2016-13

( 21 ) 1,261 700 216 ( 15 ) 72 129 2,342

- ( 17 ) - ( 214 ) - ( 247 ) - ( 478 )

- 103 45 6 - 129 - 283

Provision for (recovery of) for credit losses

( 21 ) ( 384 ) ( 811 ) ( 256 ) 29 123 42 ( 1,278 )

Balance, December 31, 2023

$ 408 $ 3,162 $ 3,576 $ 682 $ 333 $ 583 $ 350 $ 9,094

The following tables present information about the ACLL for individually evaluated loans and collectively evaluated loans by portfolio segment as of the dates indicated.

ACLL by Segment and Evaluation Method

June 30, 2024

September 30, 2024

Real Estate Construction

Consumer Real Estate

Commercial Real Estate

Commercial Non Real Estate

Public Sector and IDA

Consumer Non Real Estate

Individually evaluated

$ - $ 114 $ 391 $ 117 $ - $ 22 $ - $ 644

Collectively evaluated

549 3,521 3,863 631 323 571 400 9,858

$ 549 $ 3,635 $ 4,254 $ 748 $ 323 $ 593 $ 400 $ 10,502

ACLL by Segment and Evaluation Method

December 31, 2023

Real Estate Construction

Consumer Real Estate

Commercial Real Estate

Commercial Non Real Estate

Public Sector and IDA

Consumer Non Real Estate

Individually evaluated

$ - $ 74 $ 367 $ 126 $ - $ 5 $ - $ 572

Collectively evaluated

408 3,088 3,209 556 333 578 350 8,522

$ 408 $ 3,162 $ 3,576 $ 682 $ 333 $ 583 $ 350 $ 9,094

The following tables present information about individually evaluated loans and collectively evaluated loans by portfolio segment as of the dates indicated.

Loans by Segment and Evaluation Method as of

June 30, 2024

September 30, 2024

Real Estate Construction

Consumer Real Estate

Commercial Real Estate

Commercial Non Real Estate

Public Sector and IDA

Consumer Non Real Estate

Individually evaluated

$ 276 $ 2,259 $ 10,452 $ 305 $ - $ 179 $ 13,471

Collectively evaluated

81,079 297,051 444,526 51,992 59,043 42,736 976,427

$ 81,355 $ 299,310 $ 454,978 $ 52,297 $ 59,043 $ 42,915 $ 989,898

Loans by Segment and Evaluation Method as of

December 31, 2023

Real Estate Construction

Consumer Real Estate

Commercial Real Estate

Commercial Non Real Estate

Public Sector and IDA

Consumer Non Real Estate

Individually evaluated

$ 286 $ 1,183 $ 8,805 $ 227 $ - $ 43 $ 10,544

Collectively evaluated

55,093 240,381 410,325 41,328 60,551 38,953 846,631

$ 55,379 $ 241,564 $ 419,130 $ 41,555 $ 60,551 $ 38,996 $ 857,175

Collateral Dependent Loans

1 unchanged sentence

Collateral dependent loans are individually evaluated.

The Company measures the ACLL on collateral dependent loans based upon the fair value of the collateral, as permitted by ASU 2016 - 13.

The Company measures the ACLL

on collateral dependent loans based upon the fair value of the collateral, as permitted by ASU 2016-13.

Fair value of the collateral is adjusted for liquidation costs/discounts.

1 unchanged sentence

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

As of June 30, 2024, four of the Company’s individually evaluated loans were collateral dependent.

As of September 30, 2024, four of the Company’s individually evaluated loans were collateral dependent.

As of December 31, 2023, three of the Company’s individually evaluated loans were collateral dependent.

All collateral dependent loans were secured by real estate as of June 30, 2024 and December 31, 2023.

All collateral dependent loans were secured by real estate as of September 30, 2024 and December 31, 2023.

The following table details the amortized cost of the collateral dependent loans as of the dates indicated:

June 30, 2024

September 30, 2024

December 31, 2023

Related Allowance

Consumer Real Estate

Residential closed-end first lien

$ 84 $ - $ 7 $ -

Commercial Real Estate

Commercial real estate, owner occupied

2,087 - 2,177 -

Commercial real estate, other

$ 3,054 $ - $ 2,184 $ -

Credit Quality

6 unchanged sentences

Loans rated classified have well-defined weaknesses that heighten the risk of default.

The tables below present the loan portfolio by amortized cost basis, year of origination, loan class, credit quality, and charge-offs as of the dates indicated.

The tables below present the loan portfolio by amortized cost basis, year of origination, loan class and credit quality, and gross charge-offs for the nine months ended September 30, 2024 and year ended December 31, 2023.

Term Loans Amortized Cost Basis by Origination Year

June 30, 2024 Prior

Revolving Converted

September 30, 2024

Construction, residential

$ 177 $ 62 $ 269 $ 1,625 $ 6,504 $ 1,105 $ 13,199 $ - $ 22,941

Construction, other

$ 4,080 $ 1,141 $ 7,929 $ 26,139 $ 5,663 $ 6,964 $ 6,222 $ - $ 58,138

- - 276 - - - - - 276

$ 4,080 $ 1,141 $ 8,205 $ 26,139 $ 5,663 $ 6,964 $ 6,222 $ - $ 58,414

$ 554 $ 329 $ 429 $ 528 $ 938 $ 171 $ 18,763 $ 45 $ 21,757

Residential closed-end first liens

$ 42,736 $ 18,555 $ 35,607 $ 36,891 $ 17,900 $ 12,087 $ - $ 268 $ 164,044

Special Mention

370 - - - - - - - 370

574 - - - - - - - 574

$ 43,680 $ 18,555 $ 35,607 $ 36,891 $ 17,900 $ 12,087 $ - $ 268 $ 164,988

Residential closed-end junior liens

$ 1,679 $ - $ 290 $ 2,081 $ 1,652 $ 891 $ - $ - $ 6,593

Investor-owned residential real estate

$ 30,684 $ 23,613 $ 19,627 $ 16,561 $ 8,638 $ 2,775 $ 2,800 $ - $ 104,698

Special Mention

- - - 142 166 - - - 308

759 - 168 39 - - - - 966

$ 31,443 $ 23,613 $ 19,795 $ 16,742 $ 8,804 $ 2,775 $ 2,800 $ - $ 105,972

Multifamily residential real estate

$ 40,686 $ 2,114 $ 40,445 $ 28,096 $ 8,866 $ 442 $ 142 $ - $ 120,791

Commercial real estate, owner occupied

$ 55,824 $ 25,096 $ 7,778 $ 23,749 $ 10,695 $ 1,377 $ 4,064 $ 85 $ 128,668

Special mention

6,396 - - - - - - - 6,396

2,307 759 - - - - 18 - 3,084

$ 64,527 $ 25,855 $ 7,778 $ 23,749 $ 10,695 $ 1,377 $ 4,082 $ 85 $ 138,148

Commercial real estate, other

$ 93,009 $ 18,641 $ 38,340 $ 24,225 $ 17,239 $ 2,118 $ 1,771 $ - $ 195,343

Special Mention

696 - - - - - - - 696

$ 93,705 $ 18,641 $ 38,340 $ 24,225 $ 17,239 $ 2,118 $ 1,771 $ - $ 196,039

Commercial and industrial

$ 6,673 $ 2,412 $ 12,702 $ 6,415 $ 7,282 $ 4,292 $ 12,218 $ - $ 51,994

Special Mention

- - - - - - 96 - 96

200 - - 7 - - - - 207

$ 6,873 $ 2,412 $ 12,702 $ 6,422 $ 7,282 $ 4,292 $ 12,314 $ - $ 52,297

YTD gross charge-offs

Public sector and IDA

$ 20,062 $ 227 $ 26,162 $ 6,130 $ 6,462 $ - $ - $ - $ 59,043

$ - $ - $ - $ - $ - $ - $ 4,765 $ - $ 4,765

YTD gross charge-offs

$ - $ - $ - $ - $ - $ - $ 33 $ - $ 33

$ 111 $ 404 $ 1,139 $ 2,181 $ 5,946 $ 3,894 $ - $ - $ 13,675

Special Mention

- - - - 4 - - - 4

- - - - 69 11 - - 80

$ 111 $ 404 $ 1,139 $ 2,181 $ 6,019 $ 3,905 $ - $ - $ 13,759

YTD gross charge-offs

Other consumer

$ 322 $ 594 $ 1,318 $ 3,530 $ 8,901 $ 8,930 $ 698 $ - $ 24,293

Special Mention

- - 2 - 13 11 - - 26

- - 49 - 23 - - - 72

$ 322 $ 594 $ 1,369 $ 3,530 $ 8,937 $ 8,941 $ 698 $ - $ 24,391

YTD gross charge-offs

$ - $ 4 $ 9 $ 17 $ 51 $ 43 $ - $ - $ 124

$ 296,597 $ 93,188 $ 192,035 $ 178,151 $ 106,686 $ 45,046 $ 64,642 $ 398 $ 976,743

Special Mention

7,462 - 2 142 183 11 96 - 7,896

3,840 759 493 46 92 11 18 - 5,259

$ 307,899 $ 93,947 $ 192,530 $ 178,339 $ 106,961 $ 45,068 $ 64,756 $ 398 $ 989,898

YTD gross charge-offs

$ - $ 4 $ 9 $ 17 $ 51 $ 43 $ 53 $ - $ 177

Term Loans Amortized Cost Basis by Origination Year

December 31, 2023 Prior

Revolving Converted

December 31, 2023

Construction, residential

$ - $ - $ 246 $ 158 $ 3,275 $ 5,157 $ 4,606 $ - $ 13,442

Construction, other

$ 2,741 $ 1,094 $ 1,305 $ 12,671 $ 17,397 $ 4,884 $ 1,559 $ - $ 41,651

- - - 286 - - - - 286

$ 2,741 $ 1,094 $ 1,305 $ 12,957 $ 17,397 $ 4,884 $ 1,559 $ - $ 41,937

$ 51 $ - $ - $ - $ - $ - $ 17,182 $ - $ 17,233

- - - - - - 49 - 49

$ 51 $ - $ - $ - $ - $ - $ 17,231 $ - $ 17,282

Residential closed-end first liens

$ 32,404 $ 5,806 $ 14,634 $ 31,414 $ 29,787 $ 11,208 $ - $ - $ 125,253

426 - - - - - - - 426

$ 32,830 $ 5,806 $ 14,634 $ 31,414 $ 29,787 $ 11,208 $ - $ - $ 125,679

YTD gross charge-offs

$ - $ - $ 17 $ - $ - $ - $ - $ - $ 17

Residential closed-end junior liens

$ 1,499 $ 116 $ - $ 172 $ 1,387 $ 1,850 $ - $ 15 $ 5,039

Investor-owned residential real estate

$ 24,556 $ 5,162 $ 23,649 $ 19,062 $ 14,166 $ 4,880 $ 1,283 $ 98 $ 92,856

708 - - - - - - - 708

$ 25,264 $ 5,162 $ 23,649 $ 19,062 $ 14,166 $ 4,880 $ 1,283 $ 98 $ 93,564

Multifamily residential real estate

$ 40,092 $ 1,806 $ 2,148 $ 40,544 $ 25,681 $ 8,850 $ 126 $ - $ 119,247

Commercial real estate, owner occupied

$ 41,573 $ 11,091 $ 23,407 $ 4,792 $ 16,720 $ 7,914 $ 2,919 $ - $ 108,416

Special mention

6,396 - - - - - - - 6,396

2,409 - - - - - - - 2,409

$ 50,378 $ 11,091 $ 23,407 $ 4,792 $ 16,720 $ 7,914 $ 2,919 $ - $ 117,221

Commercial real estate, other

$ 68,889 $ 21,841 $ 19,098 $ 36,157 $ 22,697 $ 13,279 $ 701 $ - $ 182,662

Commercial and industrial

$ 6,004 $ 438 $ 1,060 $ 12,667 $ 6,954 $ 6,938 $ 7,267 $ - $ 41,328

220 - - - 7 - - - 227

$ 6,224 $ 438 $ 1,060 $ 12,667 $ 6,961 $ 6,938 $ 7,267 $ - $ 41,555

YTD gross charge-offs

$ - $ 12 $ - $ - $ - $ 12 $ 190 $ - $ 214

Public sector and IDA

$ 20,817 $ - $ 235 $ 26,702 $ 6,335 $ 6,462 $ - $ - $ 60,551

$ - $ - $ - $ - $ - $ - $ 4,668 $ - $ 4,668

YTD gross charge-offs

$ - $ - $ - $ - $ - $ - $ 39 $ - $ 39

$ 78 $ 204 $ 563 $ 1,619 $ 2,750 $ 7,047 $ - $ - $ 12,261

YTD gross charge-offs

$ - $ 3 $ - $ 1 $ 38 $ - $ - $ - $ 42

Other Consumer

$ 93 $ 334 $ 811 $ 1,943 $ 5,815 $ 12,356 $ 672 $ - $ 22,024

Special mention

- - - - - 17 - - 17

- - - - 11 15 - - 26

$ 93 $ 334 $ 811 $ 1,943 $ 5,826 $ 12,388 $ 672 $ - $ 22,067

YTD gross charge-offs

$ - $ - $ - $ 19 $ 52 $ 95 $ - $ - $ 166

$ 238,797 $ 47,892 $ 87,156 $ 187,901 $ 152,964 $ 90,825 $ 40,983 $ 113 $ 846,631

Special mention

6,396 - - - - 17 - - 6,413

3,763 - - 286 18 15 49 - 4,131

$ 248,956 $ 47,892 $ 87,156 $ 188,187 $ 152,982 $ 90,857 $ 41,032 $ 113 $ 857,175

YTD gross charge-offs

$ - $ 15 $ 17 $ 20 $ 90 $ 107 $ 229 $ - $ 478

Loan Modifications to Borrowers Experiencing Financial Difficulty

3 unchanged sentences

Two loans were modified for borrowers experiencing financial difficulty during the first three months of 2024.

One of these loans was modified a second time during the three months ended June 30, 2024.

There was one loan to a borrower experiencing financial difficulty that was modified during the three and six months ended June 30, 2023.

The following table presents information as of June 30, 2024 about loans modified for borrowers experiencing financial difficulty during the six months ended June 30, 2024.

June 30, 2024

These loans were modified again during the three months ended September 30, 2024.

There was one loan to a borrower experiencing financial difficulty that was modified during the nine months ended September 30, 2023.

The following table presents information as of September 30, 2024 about loans modified for borrowers experiencing financial difficulty during the nine months ended September 30, 2024.

September 30, 2024

Amortized Cost Basis

Type of Modification

Financial Effect

5 unchanged sentences

Commercial and industrial

$ 7 0.01 % Term extension

Renewal of single-payment note for an additional 3 months.

The following table presents information as of June 30, 2023 about loans modified for borrowers experiencing financial difficulty during the six months ended June 30, 2023.

June 30, 2023

The following table presents information as of September 30, 2023 about loans modified for borrowers experiencing financial difficulty during the nine months ended September 30, 2023.

September 30, 2023

Amortized Cost Basis

Type of Modification

Financial Effect

1 unchanged sentence

Commercial real estate owner-occupied

$ 6,396 5.40 % Interest only payments

6 months of interest only payments, re-amortization of the balance to contractual maturity.

Interest only

6 months of interest only payments,

re-amortization of the balance to contractual

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty.

Both loans are in current status as of June 30, 2024.

There were no loans to borrowers experiencing financial difficulty that had a payment default during the three or six months ended June 30, 2024 and 2023 and were modified in the twelve months prior to that default.

Both loans are in current status as of September 30, 2024.

There were no loans to borrowers experiencing financial difficulty that had a payment default during the three or nine months ended September 30, 2024 and 2023 and were modified in the twelve months prior to that default.

Default is determined at 90 or more days past due, upon charge-off, or upon foreclosure.

Modified loans in default are individually evaluated for the allowance for credit losses or if the modified loan is deemed uncollectible, the loan, or a portion of the loan, is written off and the allowance for credit losses is adjusted accordingly.

Residential Real Estate Loans In Process of Foreclosure

As of June 30, 2024, the Company had two 1 - 4 family residential real estate loans totaling $ 123 in process of foreclosure.

As of December 31, 2023, one 1 - 4 family residential real estate loan of $ 7 was in process of foreclosure.

Consumer Real Estate Loans In Process of Foreclosure

As of September 30, 2024 , the Company had three consumer real estate loans totaling $ 397 in process of foreclosure.

As of December 31, 2023 , one consumer real estate loan of $ 7 was in process of foreclosure.

ACL for Unfunded Commitments

The following tables present the balance and activity in the ACL for unfunded commitments for the six months ended June 30, 2024 and 2023:

The following tables present the balance and activity in the ACL for unfunded commitments for the nine months ended September 30, 2024 and 2023:

Allowance for Credit Losses on Unfunded Commitments

2 unchanged sentences

FCB acquisition

Balance, June 30, 2024

Balance, September 30, 2024

Allowance for Credit Losses on Unfunded Commitments

2 unchanged sentences

Recovery of credit losses

Balance, June 30, 2023

Balance, September 30, 2023

The amortized cost and estimated fair value of securities available for sale along with gross unrealized gains and losses as of the dates indicated are summarized as follows:

June 30, 2024

September 30, 2024

Unrealized Gains

1 unchanged sentence

government agencies and corporations

$ 353,018 $ - $ 44,205 $ 308,813

States and political subdivisions

178,435 - 32,433 146,002

Mortgage-backed securities

149,839 27 6,120 143,746

Corporate debt securities

6,506 - 849 5,657

Total securities available for sale

$ 688,796 $ 27 $ 83,627 $ 605,196

December 31, 2023

2 unchanged sentences

government agencies and corporations

$ 353,904 $ - $ 42,060 $ 311,844

States and political subdivisions

179,507 - 29,614 149,893

Mortgage-backed securities

156,875 - 6,724 150,151

Corporate debt securities

6,504 - 754 5,750

Total securities available for sale

$ 697,786 $ - $ 79,185 $ 618,601

No allowance for credit loss on securities available for sale was recorded as of June 30, 2024 or December 31, 2023.

Accrued interest receivable on securities, included in accrued interest receivable on the Consolidated Balance Sheets, totaled $ 3,263 at June 30, 2024 and $ 3,281 at December 31, 2023.

The deferred tax asset for the net unrealized loss on securities available for sale was $ 17,556 as of June 30, 2024 and $ 16,629 as of December 31, 2023.

No allowance for credit loss on securities available for sale was recorded as of September 30, 2024 or December 31, 2023.

Accrued interest receivable on securities, included in accrued interest receivable on the Consolidated Balance Sheets, totaled $ 3,379 at September 30, 2024 and $ 3,281 at December 31, 2023.

The deferred tax asset for the net unrealized loss on securities available for sale was $ 13,272 as of September 30, 2024 and $ 16,629 as of December 31, 2023.

The deferred tax asset is included in other assets on the Consolidated Balance Sheets.

The amortized cost and fair value of single maturity securities available for sale at June 30, 2024, by contractual maturity, are shown below.

The amortized cost and fair value of single maturity securities available for sale at September 30, 2024, by contractual maturity, are shown below.

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

Mortgage-backed securities included in these totals are categorized by final maturity.

June 30, 2024

September 30, 2024

Amortized Cost

1 unchanged sentence

Due in one year or less

$ 20,010 $ 19,618

Due after one year through five years

187,697 172,569

Due after five years through ten years

268,663 227,654

Due after ten years

212,426 185,355

Total securities available for sale

$ 688,796 $ 605,196

Information pertaining to securities with gross unrealized losses aggregated by investment category and length of time that the individual securities have been in a continuous loss position, as of the dates indicated, follows.

June 30, 2024

September 30, 2024

Less Than 12 Months

3 unchanged sentences

government agencies and corporations

$ - $ - $ 308,813 $ 44,205

State and political subdivisions

882 120 145,120 32,313

Mortgage-backed securities

520 1 121,951 6,119

Corporate debt securities

- - 5,657 849

Total temporarily impaired securities

$ 1,402 $ 121 $ 582,519 $ 83,506

December 31, 2023

4 unchanged sentences

government agencies and corporations

$ - $ - $ 311,844 $ 42,060

State and political subdivisions

884 1 148,763 29,613

Mortgage-backed securities

1,616 26 147,922 6,698

Corporate debt securities

- - 5,750 754

Total temporarily impaired securities

$ 2,500 $ 27 $ 615,242 $ 79,158

The Company evaluates securities available for sale that are in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors.

Consideration is given to the extent to which the fair value is less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.

At June 30, 2024, the Company had 566 securities with a fair value of $ 583,921 in an unrealized loss position.

At September 30, 2024, the Company had 563 securities with a fair value of $ 599,897 in an unrealized loss position.

The Company reviews securities in an unrealized loss position to evaluate credit risk.

The Company considers payment history, risk ratings from external parties, financial statements for municipal and corporate securities, public statements from issuers and other available credible published sources in evaluating credit risk.

No credit risk was found and no ACL on securities available for sale was recorded as of June 30, 2024.

No credit risk was found and no ACL on securities available for sale was recorded as of September 30, 2024.

The unrealized losses are attributed to noncredit-related factors, including changes in interest rates and other market conditions.

10 unchanged sentences

At its discretion, the FHLB may declare dividends on the stock.

In addition to dividends, NBB also benefits from its membership with FHLB through eligibility to borrow from the FHLB, using as collateral NBB’s capital stock investment in the FHLB and qualifying NBB real estate mortgage loans totaling $ 503,383 at June 30, 2024.

The Company’s management reviews for impairment based upon the ultimate recoverability of the cost basis of the FHLB stock, and at June 30, 2024, did not determine any impairment.

The Company’s management reviews for impairment based upon the ultimate recoverability of the cost basis of the FHLB stock, and at September 30, 2024, did not determine any impairment.

Realized Securities Gains and Losses

The Company initiated sale of FCB’s securities portfolio upon completion of the acquisition, and no gain or loss was recorded.

During the first six months of 2023, the Company realized net securities losses of $ 3,332 on the sale of securities with an amortized cost basis of $ 46,850 .

During the first nine months of 2023, the Company realized net securities losses of $ 3,332 on the sale of securities with an amortized cost basis of $ 46,850 .

The sales were part of the Company’s interest rate risk management strategy.

2 unchanged sentences

Pension Benefits

Three Months Ended June 30,

Three Months Ended September 30,

Interest cost

Expected return on plan assets

( 608 ) ( 518 )

Amortization of prior service cost

Recognized net actuarial loss

Net periodic benefit income

$ ( 12 ) $ ( 25 )

Pension Benefits

Six Months Ended June 30,

Nine Months Ended September 30,

Interest cost

Expected return on plan assets

( 1,216 ) ( 1,036 )

Amortization of prior service cost

Recognized net actuarial loss

Net periodic benefit income

$ ( 24 ) $ ( 50 )

The service cost component of net periodic benefit cost is included in salaries and employee benefits expense in the Consolidated Statements of Income.

30 unchanged sentences

Fair Value Measurement Using

June 30, 2024

September 30, 2024

government agencies and corporations

$ 308,813 $ - $ 308,813 $ -

States and political subdivisions

146,002 - 146,002 -

Mortgage-backed securities

143,746 - 143,746 -

Corporate debt securities

5,657 - 5,657 -

Total securities available for sale

$ 605,196 $ - $ 605,196 $ -

Fair Value Measurement Using

1 unchanged sentence

government agencies and corporations

$ 311,844 $ - $ 311,844 $ -

States and political subdivisions

149,893 - 149,893 -

Mortgage-backed securities

150,151 - 150,151 -

Corporate debt securities

5,750 - 5,750 -

Total securities available for sale

$ 618,601 $ - $ 618,601 $ -

The Company’s securities portfolio is valued using Level 2 inputs.

5 unchanged sentences

Level 2 inputs are subject to a certain degree of uncertainty and changes in these assumptions or methodologies in the future, if any, may impact securities fair value, deferred tax assets or liabilities, or expense.

Interest Rate Loan Contracts and Forward Sale Commitment

Interest Rate Loan Contracts and Forward Sale Commitments

The Company originates consumer real estate loans which it intends to sell to a correspondent lender.

12 unchanged sentences

Changes in fair value measurement impacts net income.

As of June 30, 2024, one interest rate lock commitment gave rise to an asset for the interest rate loan contract and a liability for the forward sales commitment.

Funded loans gave rise to a liability for the forward sales commitment.

As of September 30, 2024, three funded loans gave rise to a liability for the forward sales commitment.

The Company had one rate lock commitment as of December 31, 2023, resulting in an asset for the interest rate loan contract and a liability for the forward sales commitment, and one funded loan resulting in a forward sales commitment.

1 unchanged sentence

Fair Value Measurement Using

June 30, 2024

Interest rate loan contract

$ 1 $ - $ - $ 1

September 30, 2024

Forward sale commitment

$ ( 2 ) $ - $ - $ ( 2 )

June 30, 2024

September 30, 2024

Valuation Technique

1 unchanged sentence

Range (Weighted Average)

Interest rate loan contract

Market approach

Pull-through rate

Forward sale commitment

1 unchanged sentence

Pull-through rate

Interest rate loan contract

Market approach

Current reference price

Forward sale commitment

5 unchanged sentences

Interest rate loan contract

$ 3 $ - $ - $ 3

Forward sale commitment

$ ( 4 ) $ - $ - $ ( 4 )

December 31, 2023

27 unchanged sentences

As such, the Company records any fair value adjustments on a nonrecurring basis.

A liability of $ 1 for the fair value of loans held for sale was recorded as of June 30, 2024.

A liability of $ 3 for the fair value of loans held for sale was recorded as of September 30, 2024 .

No nonrecurring fair value adjustments were recorded on loans held for sale at December 31, 2023.

12 unchanged sentences

Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3).

As of June 30, 2024, one consumer real estate loan totaling $ 84 and three commercial real estate loans totaling $ 2,970 were collateral dependent.

As of September 30, 2024 , one consumer real estate loan totaling $ 84 and three commercial real estate loans totaling $ 9,344 were collateral dependent.

Valuation of the consumer real estate loan and two of the commercial real estate loans were based upon third party evaluations (Level 2).

5 unchanged sentences

Estimated Fair Value

June 30, 2024

September 30, 2024

Carrying Amount

1 unchanged sentence

Cash and due from banks

$ 14,908 $ 14,908 $ - $ -

Federal funds sold 3,499 3,499

Interest-bearing deposits

80,477 80,477 - -

Federal funds sold

Securities available for sale

605,196 - 605,196 -

Restricted stock, at cost

1,752 - 1,752 -

Mortgage loans held for sale

978,865 - - 919,403

Accrued interest receivable

6,615 - 6,615 -

Bank-owned life insurance

46,775 - 46,775 -

Interest rate loan contract

Financial liabilities:

$ 1,645,052 $ - $ 1,340,993 $ 303,497

Accrued interest payable

2,525 - 2,525 -

Forward sale commitment

4 unchanged sentences

Cash and due from banks

$ 12,967 $ 12,967 $ - $ -

Interest-bearing deposits

73,636 73,636 - -

Securities available for sale

618,601 - 618,601 -

Restricted stock, at cost

1,264 - 1,264 -

Mortgage loans held for sale

847,552 - - 793,800

Accrued interest receivable

6,313 - 6,313 -

Bank-owned life insurance

43,583 - 43,583 -

Interest rate loan contract

Financial liabilities:

$ 1,503,972 $ - $ 1,280,732 $ 222,374

Accrued interest payable

1,416 - 1,416 -

Forward sale commitment

1 unchanged sentence

The following tables provide information about components of accumulated other comprehensive loss as of the dates indicated:

Net Unrealized

Pension Benefits

Accumulated Other

Comprehensive Loss

Balance at March 31, 2023

$ ( 69,692 ) $ ( 2,345 ) $ ( 72,037 )

Unrealized holding loss on available for sale securities, net of tax of ($ 1,289 )

( 4,848 ) - ( 4,848 )

Reclassification adjustment, net of tax of $ 702

2,642 - 2,642

Net Unrealized Loss on Securities

Adjustments Related to Pension Benefits

Accumulated Other Comprehensive Loss

Balance at June 30, 2023

$ ( 71,898 ) $ ( 2,345 ) $ ( 74,243 )

Balance at March 31, 2024

$ ( 65,894 ) $ ( 2,310 ) $ ( 68,204 )

Unrealized holding loss on available for sale securities, net of tax of ($ 40 )

( 150 ) - ( 150 )

Unrealized holding loss on available for sale securities, net of

tax of ($ 4,099 )

Balance at September 30, 2023

Balance at June 30, 2024

$ ( 66,044 ) $ ( 2,310 ) $ ( 68,354 )

Net Unrealized

Pension Benefits

Accumulated Other

Comprehensive Loss

Unrealized holding loss on available for sale securities, net of

tax of $ 4,284

Balance at September 30, 2024

Net Unrealized Loss on Securities

Adjustments Related to Pension Benefits

Accumulated Other Comprehensive Loss

Balance at December 31, 2022

$ ( 81,421 ) $ ( 2,345 ) $ ( 83,766 )

Unrealized holding gain on available for sale securities, net of tax of $ 1,831

6,891 - 6,891

Unrealized holding gain on available for sale securities, net of

tax of ($ 2,268 )

Reclassification adjustment, net of tax of $ 700

2,632 - 2,632

Balance at June 30, 2023

$ ( 71,898 ) $ ( 2,345 ) $ ( 74,243 )

Balance at September 30, 2023

Balance at December 31, 2023

$ ( 62,556 ) $ ( 2,310 ) $ ( 64,866 )

Unrealized holding loss on available for sale securities, net of tax of ($ 927 )

( 3,488 ) - ( 3,488 )

Balance at June 30, 2024

$ ( 66,044 ) $ ( 2,310 ) $ ( 68,354 )

Unrealized holding loss on available for sale securities, net of

tax of $ 3,357

Balance at September 30, 2024

Revenue Recognition

13 unchanged sentences

Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment.

The Company determined that since rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation.

The Company determined that since

rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation.

Check ordering charges are transactional based, and therefore the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time.

26 unchanged sentences

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the periods indicated.

Three Months Ended June 30,

Three Months Ended September 30,

Noninterest Income

3 unchanged sentences

Credit and debit card fees, net

Insurance and Investment (included within Other Income in the Consolidated Statements of Income)

Insurance and Investment (included within Other Income in the Consolidated

Statements of Income)

Noninterest Income (in-scope of Topic 606)

1 unchanged sentence

Total noninterest income

Six Months Ended June 30,

Nine Months Ended September 30,

Noninterest Income

3 unchanged sentences

Credit and debit card fees, net

Insurance and Investment (included within Other Income in the Consolidated Statements of Income)

Insurance and Investment (included within Other Income in the Consolidated

Statements of Income)

Noninterest Income (in-scope of Topic 606)

21 unchanged sentences

The following tables present information about leases as of the dates and for the periods indicated:

June 30, 2024

September 30, 2024

December 31, 2023

Lease liability

$ 1,506 $ 1,127

Right-of-use asset

$ 1,476 $ 1,096

Weighted average remaining lease term (in years)

Weighted average discount rate

3.84 % 3.29 %

For the Three Months Ended June 30,

For the Three Months Ended September 30,

Lease Expense

3 unchanged sentences

Cash paid for amounts included in lease liabilities

Right-of-use assets obtained in exchange for operating lease liabilities commencing during the period

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Lease Expense

3 unchanged sentences

Cash paid for amounts included in lease liabilities

Right-of-use assets obtained in exchange for operating lease liabilities commencing during the period

Right-of-use assets obtained in exchange for operating lease liabilities commencing

during the period

The following table presents a maturity schedule of undiscounted cash flows that contribute to the lease liability:

Undiscounted Cash Flow for the Period

June 30, 2024

Twelve months ending June 30, 2025

Twelve months ending June 30, 2026

Twelve months ending June 30, 2027

Twelve months ending June 30, 2028

Twelve months ending June 30, 2029

September 30, 2024

Twelve months ending September 30, 2025

Twelve months ending September 30, 2026

Twelve months ending September 30, 2027

Twelve months ending September 30, 2028

Twelve months ending September 30, 2029

Total undiscounted cash flows

8 unchanged sentences

The RSAs are valued at the closing stock price on the grant date and expensed over the one-year vesting period.

Stock based compensation expense charged against income was $ 33 and $ 65 for the three and six months ended June 30, 2024.

As of June 30, 2024, expense of $ 103 related to the nonvested RSAs is expected to be recognized over the coming 12 months.

A summary of changes in the Company’s nonvested RSAs under the Plan for the six months ended June 30, 2024 follows:

Stock based compensation expense charged against income was $ 28 and $ 93 for the three and nine months ended September 30, 2024.

As of September 30, 2024 , expense of $ 61 related to the nonvested RSAs is expected to be recognized over the coming 12 months.

A summary of changes in the Company’s nonvested RSAs under the Plan for the nine months ended September 30, 2024 follows:

Weighted-Average Grant-Date Fair Value

Nonvested at January 1, 2024

4,095 $ 30.73

Vested and released

( 2,052 ) 30.70

Nonvested at June 30, 2024

4,839 $ 30.32

Net (Loss) Income Per Share

The factors used in the computation of net (loss) income per share computation for the periods indicated are presented below:

For the Three Months Ended June 30,

(Denominator)

Basic net (loss) income per common share

Dilutive shares for restricted stock awards:

Diluted net (loss) income per common share

Nonvested at September 30, 2024

Net Income Per Common Share

The factors used in the computation of net income per common share for the periods indicated are presented below:

For the Three Months Ended September 30,

Common Shares 1 (Denominator)

Basic net income per

Dilutive shares for restricted stock

Diluted net income per

For the Nine Months Ended September 30,

Common Shares 1 (Denominator)

Basic net income per

Dilutive shares for restricted stock

Diluted net income per

(1) Weighted average outstanding

For the Six Months Ended June 30,

(Denominator)

Basic net income per common share

Dilutive shares for restricted stock awards:

Diluted net income per common share

RSA grants are disregarded in the computation of diluted net income per share if they are determined to be anti-dilutive.

There were no anti-dilutive RSAs for the three and six months ended June 30, 2024 and June 30, 2023.

There were no anti-dilutive RSAs for the three and nine months ended September 30, 2024 and September 30, 2023 .

Note 12 – Goodwill and Other Intangibles

The aggregate amortization expense was $ 35 for the three and six months ended June 30, 2024.

The following table provides information on the significant components of goodwill and other acquired intangible assets at June 30, 2024.

Gross Carrying

Measurement Period Adjustment Accumulated

$ 5,848 $ 4,874 $ 11 $ - $ 10,733

The aggregate amortization expense was $ 102 and $ 137 for the three and nine months ended September 30, 2024.

The following table provides information on the significant components of goodwill and other acquired intangible assets at September 30, 2024.

Gross Carrying Amount

Measurement Period Adjustment

Accumulated Amortization

Net Carrying Amount

Core deposit intangible

$ - $ 2,100 $ - $ ( 35 ) $ 2,065

At June 30, 2024, estimated future remaining amortization core deposit intangible within the years ending December 31, is as follows:

As of September 30, 2024, estimated future remaining amortization of the core deposit intangible within the years ending December 31, is as follows:

Amortization Expense

1 unchanged sentence

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