What changed in this filing

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Item 1. Business

2021-03-18 compared with 2020-03-11 · 228 added, 151 removed, 259 unchanged (59% of the section changed)

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National Bankshares, Inc.

(the “Company” or “NBI”) is a financial holding company that was organized in 1986 under the laws of Virginia and is registered under the Bank Holding Company Act of 1956.

It conducts most of its operations through its wholly-owned community bank subsidiary, the National Bank of Blacksburg (the “Bank” or “NBB”).

(the “Company”

or “NBI”) is a financial holding company that was organized in 1986 under the laws of Virginia and is registered under the Bank Holding Company Act of 1956.

It conducts most of its operations through its wholly-owned community bank subsidiary, the National Bank of Blacksburg (the “Bank”

or “NBB”).

It also owns National Bankshares Financial Services, Inc.

(“NBFS”), which does business as National Bankshares Insurance Services and National Bankshares Investment Services.

References in this report to “we,” “us,” or “our” refer to NBI unless the context indicates that the reference is to NBB.

(“NBFS”), which does business as National Bankshares Insurance Services and National Bankshares Investment Services.

References in this report to “we,”

“us,”

or “our”

refer to NBI unless the context indicates that the reference is to NBB.

The National Bank of Blacksburg

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In 2004, NBB purchased Community National Bank of Pulaski, Virginia.

In May, 2006, Bank of Tazewell County, a Virginia bank which since 1996 was a wholly-owned subsidiary of NBI, was merged with and into NBB.

NBB is community-oriented and offers a full range of retail and commercial banking services to individuals, businesses, non-profits and local governments from its headquarters in Blacksburg, Virginia and its twenty-four branch offices throughout southwest Virginia and one loan production office in Roanoke Virginia.

NBB has telephone, mobile and internet banking and it operates twenty-four automated teller machines in its service area.

The Bank’s primary source of revenue stems from lending activities.

In 2006, Bank of Tazewell County, a Virginia bank which since 1996 was a wholly-owned subsidiary of NBI, was merged with and into NBB.

NBB is community-oriented and offers a full range of retail and commercial banking services to individuals, businesses, non-profits and local governments from its headquarters in Blacksburg, Virginia and its 24 branch offices throughout southwest Virginia and one loan production office in Roanoke Virginia.

NBB has telephone, mobile and internet banking and it operates 24 automated teller machines ("ATMs") in its service area.

The Bank’s primary source of revenue stems from lending activities.

The Bank focuses lending on small and mid-sized businesses and individuals.

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Underwriting and documentation requirements are tailored to the unique characteristics and inherent risks of each loan category.

The Bank’s loan policy is updated and approved by the Board of Directors annually and disseminated to lending and loan portfolio management personnel to ensure consistent lending practices.

The policy communicates the Company’s risk tolerance by prescribing underwriting guidelines and procedures, including approval limits and hierarchy, documentation standards, requirements for collateral and loan-to-value limits, debt coverage, overall creditworthiness and guarantor support.

The Bank’s loan policy is updated and approved by the Board of Directors annually and disseminated to lending and loan portfolio management personnel to ensure consistent lending practices.

Of primary consideration is the repayment ability of the borrowers and (if secured) the collateral value in relation to the principal balance.

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A discussion of underwriting policies and procedures specific to the major loan products follows.

Commercial Loans .

Commercial  Non Real Estate Loans .

Commercial and agricultural loans primarily finance equipment acquisition, expansion, working capital, and other general business purposes.

Because these loans have a higher degree of risk, the Bank generally obtains collateral such as inventory, accounts receivables or equipment and personal guarantees from the borrowing entity’s principal owners.

The Bank’s policy limits lending up to 60% of the appraised value for inventory, up to 90% of the lower of cost of market value of equipment and up to 70% for accounts receivables less than 90 days old.

Credit decisions are based upon an assessment of the financial capacity of the applicant, including the primary borrower’s ability to repay within proposed terms, a risk assessment, financial strength of guarantors and adequacy of collateral.

Credit agency reports of individual owners’ credit history supplement the analysis.

Credit agency reports of individual owners’

credit history supplement the analysis.

Commercial Real Estate Loans.

Commercial mortgages and construction loans are offered to investors, developers and builders primarily within the Bank’s market area in southwest Virginia.

These loans generally are secured by first mortgages on real estate.

The loan amount is generally limited to 80% of the collateral value and is individually determined based on the property type, quality, location and financial strength of any guarantors.

The loan amount is generally limited to 80% of the lower of cost or appraised value and is individually determined based on the property type, quality, location and financial strength of any guarantors.

Commercial properties financed include retail centers, office space, hotels and motels, apartments, and industrial properties.

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The Bank obtains appraisals from qualified certified independent appraisers to establish the value of collateral properties.

The property’s projected net cash flows compared to the debt service requirement (often referred to as the “debt service coverage ratio”) is required to be 115% or greater and is computed after deduction for a vacancy factor and property expenses, as appropriate.

Borrower cash flow may be supplemented by a personal guarantee from the principal(s) of the borrower and guarantees from other parties.

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The Bank provides both long and short term loans to municipalities and other governmental entities within its geographical footprint.

Borrowers include general taxing authorities such as a city or county,

industrial/economic development authorities or utility authorities.

Borrowers include general taxing authorities such as a city or county, industrial/economic development authorities or utility authorities.

Repayment sources are derived from taxation, such as property taxes and sales taxes, or revenue from the project financed with the loan.

The Company’s underwriting considers local economic and population trends, reserves and liabilities, including pension liabilities.

Construction Loans.

The Company’s underwriting considers local economic and population trends, reserves and liabilities, including pension liabilities.

Real Estate Construction Loans.

Construction loans are underwritten against projected cash flows from rental income, business and/or personal income from an owner-occupant or the sale of the property to an end-user.

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The Bank offers a variety of first mortgage and junior lien loans secured by primary residences to individuals within our markets.

Credit decisions are primarily based on loan-to-value (“LTV”) ratios, debt-to-income (“DTI”) ratios, liquidity and net worth.

Income and financial information is obtained from personal tax returns, personal financial statements and employment documentation.

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Variable rates are based on the weekly average yield of United States Treasury Securities and are underwritten at fully-indexed rates.

We do not offer certain high risk loan products such as interest-only consumer mortgage loans, hybrid loans, payment option adjustable rate mortgages (“ARMs”), reverse mortgage loans, loans with initial teaser rates or any product with negative amortization.

Hybrid loans are loans that start out as a fixed rate mortgage, but after a set number of years they automatically adjust to an ARM.

Payment option ARMs usually have adjustable rates, for which borrowers choose their monthly payment of either a full payment, interest only, or a minimum payment which may be lower than the payment required to reduce the balance of the loan in accordance with the originally underwritten amortization.

Home equity loans are secured primarily by second mortgages on residential property.

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We do not offer home equity loan products with reduced documentation.

Consumer Loans .

Consumer Non Real Estate Loans .

Consumer loans include loans secured by automobiles, loans to consumers secured by other non-real estate collateral and loans to consumers that are unsecured.

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We require borrowers to maintain collision insurance on automobiles securing consumer loans.

Our procedures for underwriting consumer loans include an assessment of an applicant’s overall financial capacity, including credit history and the ability to meet existing obligations and payments on the proposed loan.

An applicant’s creditworthiness is the primary consideration, and if the loan is secured by an automobile or other collateral, the underwriting process also includes a comparison of the value of the collateral security to the proposed loan amount.

SBA Paycheck Protection Program.

 In response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law on March 27, 2020. 

The CARES Act created the Small Business Administration ("SBA") Paycheck Protection Program ("PPP"). 

Under the PPP, money was authorized for small business loans to pay payroll and group health costs, salaries and commissions, mortgage and rent payments, utilities and interest on other debt. 

The Company assisted customers in obtaining the loans during the application window between April and August 2020.

As of December 31, 2020, the Company held $35,992 in PPP loans, net of deferred fees and costs.

The Company is currently participating in the SBA lending window that opened in January 2021.

Other Products and Services .

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At December 31, 2020, NBB had total assets of $1,506,348 and total deposits of $1,298,294.

NBB’s net income for 2019 was $18,011, which produced a return on average assets of 1.43% and a return on average equity of 9.82%.

Refer to Note 11 of the Notes to Consolidated Financial Statements for NBB’s risk-based capital ratios.

NBB’s net income for 2020 was $16,668, which produced a return on average assets of 1.19% and a return on average equity of 8.62%.

Refer to Note 11 of the Notes to Consolidated Financial Statements for NBB’s risk-based capital ratios.

National Bankshares Financial Services, Inc.

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to provide investments and with Bankers Insurance, LLC for insurance products.

NBFS does not significantly contribute to NBI’s net income.

Operating Revenue

The following table displays components that contributed 15% or more of the Company’s total operating revenue for the years ended December 31, 2019, 2018 and 2017.

The following table displays components that contributed 15% or more of the Company’s total operating revenue for the years ended December 31, 2020, 2019 and 2018.

Class of Service

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Noninterest Income

The Company’s market area in southwest Virginia is made up of the counties of Montgomery, Roanoke, Giles, Pulaski, Tazewell, Wythe, Smyth and Washington.

It includes the independent cities of Roanoke, Radford and Galax, and the portions of Carroll and Grayson Counties that are adjacent to Galax.

The Company also serves those portions of Mercer County and McDowell County, West Virginia that are contiguous with Tazewell County, Virginia and portions of Monroe County, West Virginia that are contiguous with Giles County, Virginia.

Although largely rural, the market area is home to two major universities, Virginia Polytechnic Institute and State University (“Virginia Tech”) and Radford University, and to three community colleges.

Virginia Tech, located in Blacksburg, Virginia, is the area’s largest employer and is Virginia’s second largest university.

A second state supported university, Radford University, is located nearby.

In recent years, Virginia Tech’s Corporate Research Center has brought a number of technology-related companies to Montgomery County.

In addition to education, the market area has a diverse economic base with manufacturing, agriculture, tourism, healthcare, retail and service industries.

Large manufacturing facilities in the region include Celanese Acetate, the largest employer in Giles County, and Volvo Heavy Trucks, the largest company in Pulaski County.

Both of these firms have experienced cycles of hiring and layoffs within the past several years.

Both of these companies have experienced cycles of hiring and layoffs within the past several years.

Tazewell County is largely dependent on the coal mining industry and on agriculture for its economic base.

Coal production is a cyclical industry that has declined significantly in recent years and suffered from increased regulations.

Coal production has declined significantly in recent years and suffered from increased regulations.

Montgomery County, Bluefield in Tazewell County and Abingdon in Washington County are regional retail centers and have facilities to provide basic health care for the region.

NBI’s market area offers the advantages of a good quality of life, scenic beauty, moderate climate and historical and cultural attractions.

The region has had some recent success attracting retirees, particularly from the Northeast and urban northern Virginia.

Because NBI’s market area is economically diverse and includes large public employers, it has historically avoided the most extreme effects of past economic downturns.

If the economy wavers or experiences recession, it is likely that unemployment will rise and that other economic indicators will negatively impact the Company's market.

Effect of COVID-19 Pandemic

 During March 2020, the global COVID-19 pandemic began to severely impact the economy.

In response to substantial public health concern, the federal and state governments, individual companies and countries around the world implemented methods to slow the pandemic’s spread, including social distancing, stay-at-home orders and a vast number of cancellations of previously scheduled economic activity.

One of the Company’s top priorities is the health and safety of our customers and employees and to that end, the Company implemented certain protective measures. 

Where possible the Company allowed certain employees to work remotely and rearranged work environments for other employees to promote appropriate social distancing.

On March 20, 2020, the Company shifted to serving customers primarily through digital channels, drive-thrus and ATMs and closed the lobbies of the Company’s 25 branches.

We continue to serve customers in person by appointment and continue to monitor the situation to determine when we may safely reopen our lobbies.

Current analysis of transactions has not shown a decline compared with pre-pandemic operations. 

Controls over cash and physical assets have remained in place and internal controls over financial reporting and disclosure have been appropriately maintained. 

The Company also considered the impact of the pandemic on critical estimates, including the allowance for loan losses, valuation of goodwill, valuation of other real estate owned (“OREO”), other-than-temporary impairment of securities and pension obligations, as well as lease right of use assets.

The impact to the allowance for loan losses is discussed under the “Asset Quality”

section. 

Analysis as of December 31, 2020 did not indicate declines in the valuation of OREO, other-than-temporary impairment of securities, pension obligations or lease right-of-use assets. 

The Company will continue to monitor the values as the effects of the pandemic unfold. 

The COVID-19 pandemic has caused significant stock market volatility which adversely impacted the Company’s stock price.

As a result of this volatility and impact on the market, management determined that a triggering event occurred.

Management performed an interim quantitative goodwill impairment analysis as of March 31, 2020 and June 30, 2020 and contracted a third party expert to perform a quantitative goodwill impairment analysis as of September 30, 2020 during the fourth quarter 2020.

The analysis did not find impairment of goodwill.

The Company is also monitoring increased threats of fraud, including schemes against employees new to remote working arrangements, fraud related to state unemployment insurance and COVID-19 related scams against customers.

The Company’s business relies on positive relationships with customers.

At this time, we feel our customer relationships remain strong and our team remains ready to provide banking services. 

The Company has a robust business continuity plan, and partners with vendors whom we believe also have robust business continuity plans. 

In implementing its business continuity plan to address the COVID-19 pandemic, the Company has not incurred material expenditures and does not anticipate material expenditures. 

In the event that we experience high infection rates within our staff, our ability to serve our customers would be adversely impacted for a certain period. 

We have implemented many measures to protect the health of our employees and continue to monitor the situation closely. 

Further, all critical functions are cross-trained as part of our business continuity preparedness.

The banking and financial services industry is highly competitive.

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Many of these competitors are much larger in total assets and capitalization, have greater access to capital markets and offer a broader array of financial services than NBB.

In order to compete, NBB relies upon a deep knowledge of its markets, a service-based business philosophy, personal relationships with customers, specialized services tailored to meet customers’ needs and the convenience of office locations.

In order to compete, NBB relies upon a deep knowledge of its markets, a service-based business philosophy, personal relationships with customers, specialized services tailored to meet customers’

needs and the convenience of office locations.

In addition, the Bank is generally competitive with other financial institutions in its market area with respect to interest rates paid on deposit accounts, interest rates charged on loans and other service charges on loans and deposit accounts.

Cybersecurity

As a financial institution, NBI is subject to cybersecurity risks and has suffered two cybersecurity incidents.

To manage and mitigate cybersecurity risk, the Company limits certain transactions and interactions with customers.

The Company does not offer online account openings or loan originations, limits the dollar amount of online banking transfers to other banks, does not permit customers to submit address changes or wire requests through online banking, requires a special vetting process for commercial customers who wish to originate ACH transfers, and limits certain functionalities of mobile banking.

The Company also requires assurances from key vendors regarding their cybersecurity.

While these measures reduce the likelihood and scope of the risk of further cybersecurity breaches, in light of the evolving sophistication of system intruders, the risk of such breaches continues to exist.

We maintain insurance for these risks but insurance policies are subject to exceptions, exclusions and terms whose applications have not been widely interpreted in litigation.

Accordingly, insurance can provide less than complete protection against the losses that result from cybersecurity breaches and pursuing recovery from insurers can result in significant expense.

As a financial institution, NBI is subject to cybersecurity risks. 

Cybersecurity risks have expanded with the pandemic as fraudsters seek to take advantage of customer concerns and changes to work environment. 

The Company has not suffered any losses or breaches due to the pandemic. 

In prior years, the Company suffered two cybersecurity incidents. 

To manage and mitigate cybersecurity risk, the Company limits certain transactions and interactions with customers. 

The Company also requires assurances from key vendors regarding their cybersecurity. 

We maintain insurance for these risks but insurance policies are subject to exceptions, exclusions and terms whose applications have not been widely interpreted in litigation. 

Accordingly, insurance can provide less than complete protection against the losses that result from cybersecurity breaches and pursuing recovery from insurers can result in significant expense. 

In addition, some risks such as reputational damage and loss of customer goodwill, which can result from cybersecurity breaches cannot be insured against.

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NBI, NBB and NBFS are organized in a holding company/subsidiary structure.

At December 31, 2019, NBB had 235 full time equivalent employees and NBFS had 3 full time employees.

At December 31, 2020, NBB had 226 full time equivalent employees and NBFS had 3 full time equivalent employees.

NBB performs services and charges commensurate fees to NBI and NBFS.

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NBI and NBB are subject to state and federal banking laws and regulations that provide for general regulatory oversight of all aspects of their operations.

As a result of substantial regulatory burdens on banking, financial institutions like NBI and NBB are at a disadvantage to other competitors who are not as highly regulated, and NBI and NBB’s costs of doing business are accordingly higher.

Legislative efforts to prevent a repeat of the 2008 financial crisis culminated in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“the “Dodd-Frank Act”).

Legislative efforts to prevent a repeat of the 2008 financial crisis culminated in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”).

This legislation, together with existing and planned regulations, dramatically increased the regulatory burden on commercial banks.

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The financial crisis also heightened the examination focus by banking regulators, particularly on Bank Secrecy Act, real estate-related assets and commercial loans.

However, with the passage of the Economic Growth, Regulatory Reform and Consumer Protection Act (“EGRRCPA”) in 2018, a number of regulatory requirements for smaller financial institutions like the Company were reduced or eliminated (see below).

The following is a brief summary of certain laws, rules and regulations that affect NBI and NBB.

National Bankshares, Inc.

NBI is a bank holding company qualified as a financial holding company under the federal Bank Holding Company Act of 1956, as amended (“BHCA”), which is administered by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).

As such, NBI is subject to the supervision, examination, and reporting requirements of the BHCA and the regulations of the Federal Reserve.

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The Virginia Banking Act.

The Virginia Banking Act requires all Virginia bank holding companies to register with the Virginia State Corporation Commission (the “Commission”).

NBI is required to report to the Commission with respect to its financial condition, operations and management.

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The Gramm-Leach-Bliley Act.

The Gramm-Leach-Bliley Act (“GLBA”) permits significant combinations among different sectors of the financial services industry, allows for expansion of financial service activities by bank holding companies and offers financial privacy protections to consumers.

GLBA preempts most state laws that prohibit financial holding companies from engaging in insurance activities.

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The Sarbanes-Oxley Act.

The Sarbanes-Oxley Act (“SOX”) protects investors by improving the accuracy and reliability of corporate disclosures.

It impacts all companies with securities registered under the Securities Exchange Act of 1934, including NBI.

SOX creates increased responsibility for chief executive officers and chief financial officers with respect to the content of filings with the Securities and Exchange Commission.

Section 404 of SOX and related Securities and Exchange Commission rules focused increased scrutiny by internal and external auditors on NBI’s systems of internal controls over financial reporting, which is designed to ensure that those internal controls are effective in both design and operation.

SOX sets out enhanced requirements for audit committees, including independence and expertise, and it includes stronger requirements for auditor independence and limits the types of non-audit services that auditors can provide.

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Capital and Related Requirements.

In August, 2018, the Federal Reserve updated the Small Bank Holding Company Policy Statement (the “Statement”), in compliance with the EGRRCPA.

The Statement, among other things, exempts bank holding companies that fall below a certain asset threshold from reporting consolidated regulatory capital ratios and from minimum regulatory capital requirements.

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The Bank continues to be subject to various capital requirements administered by banking agencies as described below.

Failure to meet minimum capital requirements can trigger certain mandatory and discretionary actions by regulators that could have a direct material effect on the Company’s consolidated financial statements.

Dodd-Frank Wall Street Reform and Consumer Protection Act.

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Its wide ranging provisions affect all federal financial regulatory agencies and nearly every aspect of the American financial services industry.

The Dodd-Frank Act created an independent Consumer Financial Protection Bureau (the “CFPB”) which has the ability to write rules for consumer protections governing all financial institutions.

All consumer protection responsibility formerly handled by other banking regulators was consolidated in the CFPB.

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Any capital loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment to depositors and to certain other indebtedness of such subsidiary banks.

In the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment.

The Economic Growth, Regulatory Reform and Consumer Protection Act of 2018.

In May 2018 the EGRRCPA amended provisions of the Dodd-Frank Act and other statutes administered by banking regulators.

Among these amendments are provisions to tailor applicability of certain of the enhanced prudential standards for Systemically Important Financial Institutions (“SIFI’s”) and to increase the $50 billion asset threshold in two stages to $250 billion to which these enhanced standards apply.

In May 2018 the EGRRCPA amended provisions of the Dodd-Frank Act and other statutes administered by banking regulators.

The EGRRCPA exempts insured depository institutions (and their parent companies) with less than $10 billion in consolidated assets and that meet certain tests from the Volker Rule (which prohibits banks from conducting certain investment activities with their own accounts).

As discussed above, pursuant to EGRRCPA, regulators finalized a new CBLR framework for financial institutions with less than $10 billion in consolidated assets.

As discussed below, pursuant to EGRRCPA, regulators finalized an optional, simplified measure of capital adequacy, which is commonly known as the “community bank leverage ratio”

(“CBLR”) framework, for qualifying financial institutions with less than $10 billion in consolidated assets.

If the financial institution maintains its tangible equity above the CBLR it will be deemed in compliance with the various regulatory capital requirements currently in effect.

The EGRRCPA increased the asset threshold from $1 billion to $3 billion for financial institutions to qualify for an 18 month on site examination schedule.

The EGRRCPA also increased the asset threshold from $1 billion to $3 billion for financial institutions to qualify for an 18 month on site examination schedule.

The EGRRCPA changes numerous other regulatory requirements based on the size and complexity of financial institutions, particularly benefiting smaller institutions like the Company.

The National Bank of Blacksburg

NBB is a national banking association incorporated under the laws of the United States, and the bank is subject to regulation and examination by the Office of the Comptroller of the Currency (the “OCC”).

NBB’s deposits are insured by the Federal Deposit Insurance Corporation (the “FDIC”) up to the limits of applicable law.

The OCC, as the primary regulator, and the FDIC regulate and monitor all areas of NBB’s operation.

NBB’s deposits are insured by the Federal Deposit Insurance Corporation (the “FDIC”) up to the limits of applicable law.

The OCC, as the primary regulator, and the FDIC regulate and monitor all areas of NBB’s operation.

These areas include adequacy of capitalization and loss reserves, loans, deposits, business practices related to the charging and payment of interest, investments, borrowings, payment of dividends, security devices and procedures, establishment of branches, corporate reorganizations and maintenance of books and records.

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The Community Reinvestment Act.

NBB is subject to the provisions of the Community Reinvestment Act (“CRA”), which imposes an affirmative obligation on financial institutions to meet the credit needs of the communities they serve, including low and moderate income neighborhoods.

The OCC monitors NBB’s compliance with the CRA and assigns public ratings based upon the bank’s performance in meeting stated assessment goals.

Unsatisfactory CRA ratings can result in restrictions on bank operations or expansion.

NBB received a “satisfactory” rating in its last CRA examination by the OCC.

In December 2019, the FDIC and the OCC jointly proposed rules that would significantly change existing CRA regulations.

The proposed rules are intended to increase bank activity in low and moderate income communities where there is significant need for credit, more responsible lending, greater access to banking services, and improvements to critical infrastructure.

The proposals change four key areas:

(i) clarifying what activities qualify for CRA credit;

(ii) updating where activities count for CRA credit;

(iii) providing a more transparent and objective method for measuring CRA performance;

and (iv) revising CRA-related data collection, record keeping, and reporting.

The Bank is evaluating what impact this proposed rule, if implemented, may have on its operations.

NBB received a “satisfactory”

rating in its last CRA examination by the OCC.

On June 5, 2020, the OCC published a final rule, effective October 1, 2020, to modernize the agency’s regulations under the CRA.

The rule (i) clarifies which activities qualify for CRA credit and (ii) requires banks to identify an additional assessment area based on where they receive a significant portion of their domestic retail products, thus creating two assessment areas:

a deposit-based assessment area and a facility-based assessment area.

Further, on November 24, 2020, the OCC issued a proposed rule to establish the agency’s proposed approach to determine the CRA evaluation measure benchmarks, retail lending distribution test thresholds, and community development minimums under the general performance standards set forth in the June, 2020 final rule. 

The Company is evaluating what impact this new rule will have on its operations.

Privacy Legislation .

Several recent laws, including the Right to Financial Privacy Act and the GBLA, and related regulations issued by the federal bank regulatory agencies, also provide new protections against the transfer and use of customer information by financial institutions.

A financial institution must provide to its customers information regarding its policies and procedures with respect to the handling of customers’ personal information.

A financial institution must provide to its customers information regarding its policies and procedures with respect to the handling of customers’

personal information.

Each institution must conduct an internal risk assessment of its ability to protect customer information.

These privacy provisions generally prohibit a financial institution from providing a customer’s personal financial information to unaffiliated parties without prior notice and approval from the customer.

The USA Patriot Act.

The USA Patriot Act (“Patriot Act”) facilitates the sharing of information among government entities and financial institutions to combat terrorism and money laundering.

The Patriot Act imposes an obligation on NBB to establish and maintain anti-money laundering policies and procedures, including a customer identification program.

The Bank must screen all customers against government lists of known or suspected terrorists.

The Patriot Act, particularly as it relates to money laundering, is a significant focus of regulators and there is substantial regulatory oversight to insure compliance.

Consumer Laws and Regulations.

There are a number of laws and regulations that regulate banks’ consumer loan and deposit transactions.

There are a number of laws and regulations that regulate banks’

consumer loan and deposit transactions.

Among these are the Truth in Lending Act, the Truth in Savings Act, the Expedited Funds Availability Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Fair Credit Reporting Act, the Electronic Funds Transfer Act, the Fair Debt Collections Practices Act, the Home Mortgage Disclosure Act, the Service Members Civil Relief Act, laws governing flood insurance, federal and state laws prohibiting unfair and deceptive business practices, foreclosure laws and various regulations that implement some or all of the foregoing.

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There are numerous disclosure and other compliance requirements associated with the consumer laws and regulations.

The EGRRCPA modified a number of these requirements, including, for qualifying institutions with less than $10 billion in assets, a safe harbor for compliance with the “ability to pay” requirements for consumer mortgage loans.

The EGRRCPA modified a number of these requirements, including, for qualifying institutions with less than $10 billion in assets, a safe harbor for compliance with the “ability to pay”

requirements for consumer mortgage loans.

Deposit Insurance.

NBB has deposits that are insured by the FDIC.

The FDIC maintains a Deposit Insurance Fund (“DIF”) that is funded by risk-based insurance premium assessments on insured depository institutions.

Assessments are determined based upon several factors, including the level of regulatory capital and the results of regulatory examinations.

The FDIC may adjust assessments if the insured institution’s risk profile changes or if the size of the DIF declines in relation to the total amount of insured deposits.

Beginning April 1, 2011, an institution’s assessment base became consolidated total assets less its average tangible equity as defined by the FDIC.

The FDIC has authority to impose (and has imposed during the recent financial crisis) special measures to boost the deposit insurance fund such as prepayments of assessments and additional special assessments.

After giving primary regulators an opportunity to first take action, FDIC may initiate an enforcement action against any depository institution it determines is engaging in unsafe or unsound actions or which is in an unsound condition, and the FDIC may terminate that institution’s deposit insurance.

The FDIC may adjust assessments if the insured institution’s risk profile changes or if the size of the DIF declines in relation to the total amount of insured deposits.

Beginning April 1, 2011, an institution’s assessment base became consolidated total assets less its average tangible equity as defined by the FDIC.

The FDIC has authority to impose (and has imposed as a result of the 2008 financial crisis) special measures to boost the deposit insurance fund such as prepayments of assessments and additional special assessments.

After giving primary regulators an opportunity to first take action, the FDIC may initiate an enforcement action against any depository institution it determines is engaging in unsafe or unsound actions or which is in an unsound condition, and the FDIC may terminate that institution’s deposit insurance.

NBB has no knowledge of any matter that would threaten its FDIC insurance coverage.

Capital Requirements.

NBB is subject to the rules implementing the Basel III capital framework and certain related provisions of the Dodd-Frank Act (the “Basel III Capital Rules”) as applied by the OCC.

The Basel III Capital Rules require NBB to comply with minimum capital ratios plus a “capital conservation buffer” designed to absorb losses during periods of economic stress.

The implementation period for the capital conservation buffer began in 2016 and it was fully phased in on January 1, 2019.

NBB is subject to the rules implementing the Basel III capital framework and certain related provisions of the Dodd-Frank Act (the “Basel III Capital Rules”) as applied by the OCC.

The Basel III Capital Rules require NBB to comply with minimum capital ratios plus a “capital conservation buffer”

designed to absorb losses during periods of economic stress.

The implementation period for the capital conservation buffer began in 2016 and it was fully phased in on January 1, 2019.

The following table presents the required minimum ratios along with the required minimum ratios including the capital conservation buffer:

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Minimum Ratio

Minimum Ratio With Capital Conservation Buffer

Minimum Ratio With

Capital Conservation

Common Equity Tier 1 Capital to Risk Weighted Assets

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Risk-weighted assets are assets on the balance sheet as well as certain off-balance sheet items, such as standby letters of credit, to which weights between 0% and 1250% are applied, according to the risk of the asset type.

Common Equity Tier 1 Capital (“CET1”) is capital according to the balance sheet, adjusted for goodwill and intangible assets and other prescribed adjustments.

At NBB’s election, CET1 is also adjusted to exclude accumulated other comprehensive income.

Common Equity Tier 1 Capital (“CET1”) is capital according to the balance sheet, adjusted for goodwill and intangible assets and other prescribed adjustments.

At NBB’s election, CET1 is also adjusted to exclude accumulated other comprehensive income.

Tier 1 Capital is CET1 adjusted for additional capital deductions.

Total Capital is Tier 1 Capital increased for the allowance for loan losses and adjusted for other items.

The Leverage Ratio is the ratio of Tier 1 Capital to total average assets, less goodwill and intangibles and certain deferred tax assets.

As of December 31, 2019, NBB’s capital ratios exceeded the above minimum ratios including the capital conservation buffer.

NBB is also subject to the “prompt corrective action” regulations pursuant to Section 38 of the Federal Deposit Insurance Act of 1950, which were revised, effective as of January 1, 2015, to incorporate a CET1 ratio and to increase certain other capital ratios.

The Leverage Ratio is the ratio of Tier 1 Capital to total average assets, less goodwill and intangibles and certain deferred tax assets.

As of December 31, 2020, NBB’s capital ratios exceeded the above minimum ratios including the capital conservation buffer.

NBB is also subject to the “prompt corrective action”

regulations pursuant to Section 38 of the Federal Deposit Insurance Act of 1950, which were revised, effective as of January 1, 2015, to incorporate a CET1 ratio and to increase certain other capital ratios.

To be classified as well capitalized under the revised regulations, NBB must have the following minimum capital ratios:

(i) a CET1 ratio of at least 6.5%;

(i) a CET1 ratio of at least 6.5%;

(ii) a Tier 1 Capital to Risk Weighted Assets ratio of at least 8.0%;

(iii) a Total Capital to Risk Weighted Assets ratio of at least 10.0%;

and (iv) a Leverage Ratio of at least 5.0%.

and (iv) a Leverage Ratio of at least 5.0%.

NBB exceeded the thresholds to be considered well capitalized as of December 31, 2020.

Pursuant to the EGRRCPA regulators have provided for an optional, simplified measure of capital adequacy, which is commonly known as the “community bank leverage ratio” framework (“CBLR”), for qualifying community banking organizations.

Banks that qualify, including NBB, may opt in to the CBLR framework beginning January 1, 2020 or any time thereafter.

The CBLR framework eliminates the requirement to comply with capital ratios disclosed above and, instead, requires the disclosure of a single leverage ratio, with a minimum requirement of 9%.

The Company and the Bank are evaluating whether to opt in to the CBLR framework.

In December 2017, the Basel Committee on Banking Supervision published standards that it described as the finalization of the Basel III post-crisis regulatory reforms (the standards are commonly referred to as “Basel IV”).

Among other things, these standards revise the standardized approach for credit risk (including by recalibrating risk weights and introducing new capital requirements for certain “unconditionally cancellable commitments,” such as unused credit card lines of credit) and provide a new standardized approach for operational risk capital.

Under the proposed framework, these standards will generally be effective on January 1, 2022, with an aggregate output floor phasing-in through January 1, 2027.

Under the current capital rules, operational risk capital requirements and a capital floor apply only to “advanced approaches” institutions, and not to the Company or the Bank.

Pursuant to the EGRRCPA, regulators have provided for an optional, simplified measure of capital adequacy, the CBLR framework, for qualifying community banking organizations with consolidated assets of less than $10 billion. 

Banks that qualify, including NBB, may opt in to the CBLR framework beginning January 1, 2020 or any time thereafter. 

The CBLR framework eliminates the requirement to comply with capital ratios disclosed above and, instead, requires the disclosure of a single leverage ratio, with a minimum requirement of 9%. 

These CBLR rules were modified in response to the COVID-19 pandemic. 

See “Coronavirus Aid, Relief, and Economic Security Act and Consolidated Appropriations Act, 2021”

The Bank has not opted in to the CBLR framework at this time.

such as unused credit card lines of credit) and provide a new standardized approach for operational risk capital.

Under the proposed framework, these standards will generally be effective on January 1, 2022, with an aggregate output floor phasing-in through January 1, 2027.

Under the current capital rules, operational risk capital requirements and a capital floor apply only to “advanced approaches”

institutions, and not to the Company or the Bank.

The impact of Basel IV on the Company and the Bank will depend on the manner in which it is implemented by the federal bank regulatory agencies.

Limits on Dividend Payments.

A significant portion of NBI’s income is derived from dividends paid by NBB.

As a national bank, NBB may not pay dividends from its capital, and it may not pay dividends if the bank would become undercapitalized, as defined by regulation, after paying the dividend.

Without prior OCC approval, NBB’s dividend payments in any calendar year are restricted to the bank’s retained net income for that year, as that term is defined by the laws and regulations, combined with retained net income from the preceding two years, less any required transfer to surplus.

The OCC and FDIC have authority to limit dividends paid by NBB if the payments are determined to be an unsafe and unsound banking practice.

Any payment of dividends that depletes the bank’s capital base could be deemed to be an unsafe and unsound banking practice.

As a national bank, NBB is required to comply with the state branch banking laws of Virginia, the state in which the main office of the bank is located.

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Pursuant to the Dodd-Frank Act, the CFPB amended Regulation Z as implemented by the Truth in Lending Act, requiring mortgage lenders to make a reasonable and good faith determination based on verified and documented information that a consumer applying for a mortgage loan has a reasonable ability to repay the loan according to its terms.

Mortgage lenders are required to determine consumers’ ability to repay in one of two ways.

Mortgage lenders are required to determine consumers’

ability to repay in one of two ways.

The first alternative requires the mortgage lender to consider the following eight underwriting factors when making the credit decision:

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and (viii) credit history.

Alternatively, the mortgage lender can originate “qualified mortgages,” which are entitled to a presumption that the creditor making the loan satisfied the ability-to-repay requirements.

In general, a “qualified mortgage” is a mortgage loan without negative amortization, interest-only payments, balloon payments or terms exceeding 30 years.

Alternatively, the mortgage lender can originate “qualified mortgages,”

which are entitled to a presumption that the creditor making the loan satisfied the ability-to-repay requirements.

In general, a “qualified mortgage”

is a mortgage loan without negative amortization, interest-only payments, balloon payments or terms exceeding 30 years.

In addition, to be a qualified mortgage the points and fees paid by a consumer cannot exceed 3% of the total loan amount.

Qualified mortgages that are “higher-priced” (e.g.

subprime loans) create a rebuttable presumption of compliance with the ability-to-repay rules, while qualified mortgages that are not “higher-priced” (e.g.

Qualified mortgages that are “higher-priced”

subprime loans) create a rebuttable presumption of compliance with the ability-to-repay rules, while qualified mortgages that are not “higher-priced”

prime loans) are given a safe harbor of compliance.

The Company is predominantly an originator of compliant qualified mortgages.

Anti-Money Laundering Laws and Regulations.

The Company is subject to several federal laws that are designed to combat money laundering, terrorist financing, and transactions with persons, companies or foreign governments designated by U.S.

authorities (“AML laws”).

This category of laws includes the Bank Secrecy Act of 1970, the Money Laundering Control Act of 1986, the USA PATRIOT Act of 2001, and the Anti-Money Laundering Act of 2020.

The AML laws and their implementing regulations require insured depository institutions, broker-dealers, and certain other financial institutions to have policies, procedures, and controls to detect, prevent, and report money laundering and terrorist financing.

The AML laws and their regulations also provide for information sharing, subject to conditions, between federal law enforcement agencies and financial institutions, as well as among financial institutions, for counter-terrorism purposes.

Federal banking regulators are required, when reviewing bank holding company acquisition and bank merger applications, to take into account the effectiveness of the anti-money laundering activities of the applicants.

To comply with these obligations, the Company has implemented appropriate internal practices, procedures, and controls.

Office of Foreign Assets Control.

Treasury Department’s Office of Foreign Assets Control (“OFAC”) is responsible for administering and enforcing economic and trade sanctions against specified foreign parties, including countries and regimes, foreign individuals and other foreign organizations and entities.

OFAC publishes lists of prohibited parties that are regularly consulted by the Company in the conduct of its business in order to assure compliance.

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In June 2010, the federal bank regulatory agencies issued comprehensive final guidance on incentive compensation policies intended to ensure that the incentive compensation policies of financial institutions do not undermine the safety and soundness of such institutions by encouraging excessive risk-taking.

The Interagency Guidance on Sound Incentive Compensation Policies, which covers all employees that have the ability to materially affect the risk profile of a financial institutions, either individually or as part of a group, is based upon the key principles that a financial institution’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the institution’s ability to effectively identify and manage risks, (ii) be compatible with effective internal controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the financial institution’s board of directors.

Section 956 of the Dodd-Frank Act requires the federal banking agencies and the Securities and Exchange Commission to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities that encourage inappropriate risk-taking by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity.

The federal banking agencies issued such proposed rules in March 2011 and issued a revised proposed rule in June 2016 implementing the requirements and prohibitions set forth in Section 956.

The revised proposed rule would apply to all banks, among other institutions, with at least $1 billion in average total consolidated assets for which it would go beyond the existing Interagency Guidance on Sound Incentive Compensation Policies to (i) prohibit certain types and features of incentive-based compensation arrangements for senior executive officers, (ii) require incentive-based compensation arrangements to adhere to certain basic principles to avoid a presumption of encouraging inappropriate risk, (iii) require appropriate board or committee oversight, (iv) establish minimum recordkeeping, and (v) mandate disclosures to the appropriate federal banking agency.

The Federal Reserve will review, as part of the regular, risk-focused examination process, the incentive compensation arrangements of financial institutions, such as the Company, that are not “large, complex banking organizations.” These reviews will be tailored to each financial institution based on the scope and complexity of the institution’s activities and the prevalence of incentive compensation arrangements.

The Interagency Guidance on Sound Incentive Compensation Policies, which covers all employees that have the ability to materially affect the risk profile of a financial institutions, either individually or as part of a group, is based upon the key principles that a financial institution’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the institution’s ability to effectively identify and manage risks, (ii) be compatible with effective internal controls and risk management, and (iii) be supported by strong corporate governance, including active and effective oversight by the financial institution’s board of directors.

Section 956 of the Dodd-Frank Act requires the federal banking agencies and the Securities and Exchange Commission to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities that encourage inappropriate risk-taking by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity.

The federal banking agencies issued such proposed rules in March 2011 and issued a revised proposed rule in June 2016 implementing the requirements and prohibitions set forth in Section 956.

The revised proposed rule would apply to all banks, among other institutions, with at least $1 billion in average total consolidated assets for which it would go beyond the existing Interagency Guidance on Sound Incentive Compensation Policies to (i) prohibit certain types and features of incentive-based compensation arrangements for senior executive officers, (ii) require incentive-based compensation arrangements to adhere to certain basic principles to avoid a presumption of encouraging inappropriate risk, (iii) require appropriate board or committee oversight, (iv) establish minimum recordkeeping, and (v) mandate disclosures to the appropriate federal banking agency.

These reviews will be tailored to each financial institution based on the scope and complexity of the institution’s activities and the prevalence of incentive compensation arrangements.

The findings of the supervisory initiatives will be included in reports of examination.

Deficiencies will be incorporated into the institution’s supervisory ratings, which can affect the institution’s ability to make acquisitions and take other actions.

Enforcement actions may be taken against a financial institution if its incentive compensation arrangements, or related risk-management control or governance processes, pose a risk to the institution’s safety and soundness and the financial institution is not taking prompt and effective measures to correct the deficiencies.

As of December 31, 2019, the Company had not been made aware of any instances of non-compliance with the final guidance.

Deficiencies will be incorporated into the institution’s supervisory ratings, which can affect the institution’s ability to make acquisitions and take other actions.

As of December 31, 2020, the Company had not been made aware of any instances of non-compliance with the final guidance.

Cybersecurity .

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One statement indicates that financial institutions should design multiple layers of security controls to establish lines of defense and to ensure that their risk management processes also address the risk posed by compromised customer credentials, including security measures to reliably authenticate customers accessing internet-based services of the financial institution.

The other statement indicates that a financial institution’s management is expected to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption and maintenance of the institution’s operations after a cyber-attack involving destructive malware.

A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the institution or its critical service providers fall victim to this type of cyber-attack.

If the Company fails to observe the regulatory guidance, it could be subject to various regulatory sanctions, including financial penalties.

In December 2020, the federal banking agencies issued a notice of proposed rulemaking that would require banking organizations to notify their primary regulator within 36 hours of becoming aware of a “computer-security incident”

or a “notification incident.”

The proposed rule also would require specific and immediate notifications by bank service providers that become aware of similar incidents.

The Company’s systems and those of its customers and third-party service providers are under constant threat.

Risks and exposures related to cybersecurity attacks are expected to remain high for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as due to the expanding use of Internet banking, mobile banking and other technology-based products and services by the Company and its customers.

Coronavirus Aid, Relief, and Economic Security Act and Consolidated Appropriations Act, 2021.

In response to the COVID-19 pandemic, the CARES Act was signed into law on March 27, 2020 and the Consolidated Appropriations Act, 2021 (“Appropriations Act”) was signed into law on December 27, 2020. 

Among other things, the CARES Act and Appropriations Act include the following provisions impacting financial institutions:

Community Bank Leverage Ratio .  The CARES Act directed federal banking agencies to adopt interim final rules to lower the threshold under the CBLR from 9% to 8% and to provide a reasonable grace period for a community bank that falls below the threshold to regain compliance, in each case until the earlier of the termination date of the national emergency or December 31, 2020.  In April 2020, the federal bank regulatory agencies issued two interim final rules implementing this directive.  One interim final rule provides that, as of the second quarter 2020, banking organizations with leverage ratios of 8% or greater (and that meet the other existing qualifying criteria) may elect to use the CBLR framework.  It also establishes a two-quarter grace period for qualifying community banking organizations whose leverage ratios fall below the 8% CBLR requirement, so long as the banking organization maintains a leverage ratio of 7% or greater.  The second interim final rule provides a transition from the temporary 8% CBLR requirement to a 9% CBLR requirement.  It establishes a minimum CBLR of 8% for the second through fourth quarters of 2020, 8.5% for 2021, and 9% thereafter, and maintains a two-quarter grace period for qualifying community banking organizations whose leverage ratios fall no more than 100 basis points below the applicable CBLR requirement.

Temporary Troubled Debt Restructurings Relief .  The CARES Act allowed banks to elect to suspend requirements under U.S.

generally accepted accounting principles (“GAAP”) for loan modifications related to the COVID-19 pandemic (for loans that were not more than 30 days past due as of December 31, 2019) that would otherwise be categorized as a troubled debt restructuring (“TDR”), including impairment for accounting purposes, until the earlier of 60 days after the termination date of the national emergency or December 31, 2020.  Federal banking agencies are required to defer to the determination of the banks making such suspension.  The Appropriations Act extended this temporary relief until the earlier of 60 days after the termination date of the national emergency or January 1, 2022.

Small Business Administration Paycheck Protection Program .  The CARES Act created the SBA’s PPP and it was extended by the Appropriations Act.  Under the PPP, money was authorized for small business loans to pay payroll and group health costs, salaries and commissions, mortgage and rent payments, utilities, and interest on other debt.  The loans are provided through participating financial institutions, such as the Bank, that process loan applications and service the loans.

Monetary Policy

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NBB and other banks are particularly sensitive to interest rate fluctuations.

The spread between the interest paid on deposits and that which is charged on loans is the most important component of the bank’s earnings.

In addition, interest earned on investments held by NBI and NBB has a significant effect on earnings.

fiscal policy, including deficits requiring increased governmental borrowing also can affect interest rates.

As conditions change in the national and international economy and in the money markets, the Federal Reserve’s actions, particularly with regard to interest rates, and the effects of fiscal policies can impact loan demand, deposit levels and earnings at NBB.

It is not possible to accurately predict the effects on NBI of economic and interest rate changes.

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NBI maintains a website at www.nationalbankshares.com .

The Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports are made available on its website as soon as is practical after the material is electronically filed with the Securities and Exchange Commission.

The Company’s proxy materials for the 2020 annual meeting of stockholders are also posted on a separate website at www.investorvote.com/NKSH .

Access through the Company’s websites to the Company’s filings is free of charge.

The Securities and Exchange Commission maintains an internet site ( http://www.sec.gov ) that contains reports, proxy, and information statements, and other information the Company files electronically with the SEC.

The Company’s proxy materials for the 2020 annual meeting of stockholders are also posted on a separate website at www.investorvote.com/NKSH. 

Access through the Company’s websites to the Company’s filings is free of charge.

The SEC maintains an internet site ( http://www.sec.gov ) that contains reports, proxy, and information statements, and other information the Company files electronically with the SEC.

Executive Officers of the Company

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the positions and offices within the Company held by each officer;

and each person’s principal occupation or employment during the past five years.

Offices and Positions Held

Year Elected an Officer/Director

Year Elected an

Officer/Director

National Bankshares, Inc.:

Chairman, President and Chief Executive Officer (“CEO”), May 2019 to Present;

President and CEO, September 2017 – May 2019;

Executive Vice President, April 2008 – August 2017.

Chairman, President and Chief Executive Officer (“CEO”), May 2019 to Present;

President and CEO, September 2017 –

Executive Vice President, April 2008 –

The National Bank of Blacksburg:

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President & CEO, July 2014 to Present;

Executive Vice President/Chief Operating Officer, October 2002 – July 2014.

Executive Vice President/Chief Operating Officer, October 2002 –

National Bankshares Financial Services, Inc.:

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National Bankshares, Inc.:

Treasurer and Chief Financial Officer (“CFO”), January 2009 to Present.

The National Bank of Blacksburg:

Senior Vice President/Operations & Risk Management & CFO, January 2009 to Present;

Senior Vice President/Operations & Risk Management, February 2008 – January 2009;

Senior Vice President/Operations & Risk Management, February 2008 –

January 2009;

Vice President/Operations & Risk Management, April 2004- February 2008.

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Corporate Secretary, June 2016 to Present.

The National Bank of Blacksburg:

Senior Vice President/Administration, January 2018 to Present.

National Bankshares, Inc.:

Senior Vice President/Administration, June 2011 to Present.

Senior Vice President/Administration, June 2011 –

December 2017.

National Bankshares, Inc.:

Vice President/Human Resources, January 2001 – June 2011.

Vice President/Human Resources, January 2001 –

The National Bank of Blacksburg:

Executive Vice President, November 2019 to Present.

Executive Vice President/Chief Lending Officer, November 2019 to Present

The National Bank of Blacksburg:

Senior Vice President/Chief Lending Officer, August 2016 – November 2019.

Senior Vice President/Chief Lending Officer, August 2016 –

November 2019.

The National Bank of Blacksburg:

Senior Vice President/Loans, August 2012—August 2016.

The National Bank of Blacksburg:

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Skyline National Bank:

Chief Risk Officer, July 2016 – November 2018.

Chief Risk Officer, July 2016 –

November 2018.

Skyline National Bank:

Chief Credit Officer, June 2011 – July 2016.

Chief Credit Officer, June 2011 –

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-K

Item 1. Business