9 unchanged sentences
of this Form 10-K.
−Removed: On May 12, 2021, NBI’s Board of Directors approved the repurchase of up to 1,000,000 shares of the Company’s common stock.
+Added: In May 2022, NBI’s Board of Directors approved the repurchase of up to 250,000 shares of the Company’s common stock.
The authorization extends from June 1, 2022 to May 31, 2023.
5 unchanged sentences
Share repurchase activity during the fourth quarter of 2022 was as follows:
−Removed: Purchased (1)
Average Price
9 unchanged sentences
November 30, 2022
+Added: December 1, 2022 –
+Added: December 31, 2022
Total during fourth quarter 2022
24 unchanged sentences
general and local economic conditions,
−Removed: the legislative/regulatory climate,
monetary and fiscal policies of the U.S.
10 unchanged sentences
the Company’s technology initiatives,
−Removed: steps the Company takes in response to the COVID-19 pandemic, the severity and duration of the COVID-19 pandemic, the uncertainty regarding new variants of COVID-19 that have emerged, the speed and efficacy of vaccine and treatment developments, the impact of loosening or tightening of government restrictions, the pace of recovery when the COVID-19 pandemic subsides and the heightened impact it has on many of the risks described herein,
+Added: geopolitical conditions, including acts or threats of terrorism and/or military conflicts, or actions taken by the U.S.
+Added: or other governments in response to acts or threats of terrorism and/or military conflicts,
+Added: the occurrence of significant natural disasters, including severe weather conditions, floods, health related issues, and other catastrophic events,
+Added: the Company's ability to identify, attract, and retain experienced management, relationship managers, and support personnel, particularly in a competitive labor environment,
performance by the Company’s counterparties or vendors,
applicable accounting principles, policies and guidelines, and
−Removed: business disruption and/or impact due to the coronavirus or similar pandemic diseases.
+Added: the impact of the COVID-19 pandemic, including the adverse impact on our business and operations and on our customers.
These risks and uncertainties should be considered in evaluating the forward-looking statements contained in this report.
7 unchanged sentences
The Company also requires assurances from key vendors regarding their cybersecurity.
−Removed: We control functionalities of online and mobile banking to reduce risk. 
−Removed: We do not offer online account openings or loan originations. 
−Removed: We do not permit customers to submit address changes or wire requests through online banking, and we limit the dollar amount of online banking transfers to other banks. 
−Removed: We require a special vetting process for commercial customers who wish to originate ACH transfers.
+Added: We control functionalities of online and mobile banking to reduce risk.
+Added: We do not offer online account openings or loan originations.
+Added: We do not permit customers to submit address changes through online banking, and we limit the dollar amount of online banking transfers to other banks.
+Added: We require a special vetting process for commercial customers who wish to originate ACH transfers and for customers who submit wire requests through online banking.
+Added:          
Further, the Company has a program to identify, mitigate and manage its cybersecurity risks. 
The program includes penetration testing and vulnerability assessment, technological defenses such as antivirus software, patch management, firewall management, email and web protections, an intrusion prevention system, a cybersecurity insurance policy which covers some but not all losses arising from cybersecurity breaches, as well as ongoing employee training. 
−Removed: The cost of these measures was $357 for 2021 and $379 for 2020.
+Added: The cost of these measures was $418 for 2022 and $357 for 2021.
These costs are included in various categories of noninterest expense.
However, it is not possible to fully eliminate exposure.
−Removed: The potential for financial and reputational losses due to cyber-breaches is increased by the possibility of human error, unknown system susceptibilities, and the rising sophistication of cyber-criminals to attack systems, disable safeguards and gain access to accounts and related information. 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. 
−Removed: 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. 
+Added: The potential for financial and reputational losses due to cyber-breaches is increased by the possibility of human error, unknown system susceptibilities, and the rising sophistication of cyber-criminals to attack systems, disable safeguards and gain access to accounts and related information. 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.
+Added: 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.
−Removed: Response to COVID-19 Pandemic
−Removed: The COVID-19 pandemic has affected the global economy since the first quarter of 2020.
−Removed: The Company has complied with national, state and local guidelines to help reduce the spread of the virus, including implementing social distancing measures for employees and customers.
−Removed: The Company’s business relies on positive relationships with customers.
−Removed: At this time, we feel our customer relationships remain strong and our team remains ready to provide banking services.
−Removed: All forms of customer service are now available without restriction.
−Removed: The Company has a robust business continuity plan, and partners with vendors whom we believe also have robust business continuity plans.
−Removed: 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.
−Removed: Further, all critical functions are cross-trained as part of our business continuity preparedness.
−Removed: Controls over cash and physical assets have remained in place and internal controls over financial reporting and disclosure have been maintained.
+Added: Critical Accounting Policies
+Added: The Company’s consolidated financial statements are prepared in accordance with GAAP.
+Added: The financial information contained within our statements is, to a significant extent, based on measures of the financial effects of transactions and events that have already occurred.
+Added: A variety of factors could affect the ultimate value obtained when earning income, recognizing an expense, recovering an asset or relieving a liability.
+Added: Although the economics of the Company’s transactions may not change, the timing of events that would impact the transactions could change.
+Added: Critical accounting policies are most important to the portrayal of the Company’s financial condition or results of operations and require management’s most difficult, subjective, and complex judgments about matters that are inherently uncertain. 
+Added: If conditions occur that differ from our assumptions, depending upon the severity of such differences, the Company’s financial condition or results of operations may be materially impacted. 
+Added: The Company has designated three policies as critical, including those governing the allowance for loan losses, goodwill and the pension plan. The Company evaluates its critical accounting estimates and assumptions on an ongoing basis and updates them as needed.
+Added: Please refer to Note 1 of Notes to Consolidated Financial Statements for information on these and other accounting policies.
Non-GAAP Financial Measures
4 unchanged sentences
The Company uses the net interest margin to measure profit on interest generating activities, as a percentage of total interest-earning assets.
−Removed: The net interest margin is calculated by dividing taxable equivalent net interest income by total average interest-earning assets.
−Removed: Because a portion of interest income earned by the Company is nontaxable, the tax equivalent net interest income is considered in the calculation of this ratio.
−Removed: Tax equivalent net interest income is calculated by adding the tax benefit realized from interest income that is nontaxable to total interest income then subtracting total interest expense.
+Added: The net interest margin is calculated by dividing fully taxable equivalent (“FTE”) net interest income by total average interest-earning assets.
+Added: FTE net interest income is non-GAAP because it incorporates the tax benefit of interest income on loans and securities that is not subject to federal tax.
The tax rate utilized in calculating the tax benefit is 21%.
−Removed: The reconciliation of tax equivalent net interest income, which is not a measurement under GAAP, to net interest income, is reflected in the table below.
−Removed: $ in thousands
−Removed: Year ended December 31,
−Removed: GAAP measures:
−Removed: Interest and fees on loans
−Removed: Interest on interest-bearing deposits
−Removed: Interest and dividends on securities - taxable
−Removed: Interest on securities - nontaxable
+Added: The reconciliation of FTE net interest income, which is not a measurement under GAAP, to net interest income, is reflected in the table below.
+Added: Year ended December 31,
Total interest income
−Removed: Interest on deposits
−Removed: Net interest income
−Removed: Non-GAAP measures:
−Removed: Tax benefit on nontaxable loan income
−Removed: Tax benefit on nontaxable securities income
−Removed: Total tax benefit on nontaxable interest income
−Removed: Total tax-equivalent net interest income
+Added: FTE adjustment
+Added: FTE interest income (non-GAAP)
+Added: Interest expense
+Added: FTE net interest income (non-GAAP)
+Added: Average earning assets
+Added: Net interest margin (non-GAAP)
Efficiency Ratio
−Removed: The efficiency ratio is computed by dividing noninterest expense by the sum of net interest income on a tax-equivalent basis and noninterest income, excluding certain items management deems unusual or non-recurring.
−Removed: The tax rate used to calculate the fully taxable equivalent basis is 21%.
+Added: The efficiency ratio is computed by dividing noninterest expense by the sum of FTE net interest income and noninterest income, excluding certain items management deems unusual or non-recurring.
This is a non-GAAP financial measure that the Company believes provides investors with important information regarding operational efficiency.
The components of the efficiency ratio calculation are summarized in the following table.
−Removed: $ in thousands
Year ended December 31,
Noninterest expense
−Removed: Taxable-equivalent net interest income
+Added: FTE net interest income (non-GAAP)
Noninterest income
1 unchanged sentence
realized securities gains
+Added: gain on sale of private equity investment
Total income for ratio calculation
Efficiency ratio
−Removed: During the first quarter of each year, the Company adjusts its basis in partnership interests.
−Removed: During 2021 and 2020, the adjustment resulted in recognition of a gain. 
−Removed: During 2021, the Company also received a one-time payout from a partnership interest.
−Removed: The gains and one-time payout are reflected in other income.
−Removed: Critical Accounting Policies
−Removed: The Company’s consolidated financial statements are prepared in accordance with GAAP.
−Removed: The financial information contained within our statements is, to a significant extent, financial information based on measures of the financial effects of transactions and events that have already occurred.
−Removed: A variety of factors could affect the ultimate value obtained when earning income, recognizing an expense, recovering an asset or relieving a liability.
−Removed: Although the economics of the Company’s transactions may not change, the timing of events that would impact the transactions could change.
−Removed: Presented below is a discussion of accounting policies that are the most important to the portrayal and understanding of the Company’s financial condition and results of operations.
−Removed: Please refer to Note 1 of Notes to Consolidated Financial Statements for additional information on the Company’s accounting policies.
−Removed: Critical accounting policies require management’s most difficult, subjective, and complex judgments about matters that are inherently uncertain.
−Removed: If conditions occur that differ from our assumptions, depending upon the severity of such differences, the Company’s financial condition or results of operations may be materially impacted.
−Removed: The Company evaluates its critical accounting estimates and assumptions on an ongoing basis and updates them as needed.
−Removed: Allowance for Loan Losses
−Removed: The Company evaluates the allowance each quarter through a methodology that estimates losses on individual impaired loans and evaluates the effect of numerous factors on the credit risk of groups of homogeneous loans (collectively-evaluated loans).
−Removed: Impaired loans
−Removed: Impaired loans are identified through the Company’s credit risk rating process.
−Removed: Generally, impaired loans have risk ratings that indicate higher risk, such as “classified”
−Removed: or “special mention.”
−Removed: Nonaccrual loan relationships that meet the Company’s balance threshold of $250 are designated impaired.
−Removed: Other loan relationships that meet the Company’s balance threshold of $250 and for which a credit review identified a weakness that indicates principal and interest will not be collected according to the loan terms.
−Removed: All TDRs, regardless of size or past due status are designated impaired.
−Removed: Troubled debt restructurings
−Removed: Loan modifications are reviewed to determine whether, at the time of the modification, the borrower is experiencing financial difficulty and whether the Company provided a concession that it would not otherwise consider.
−Removed: With the exception of borrowers affected by COVID-19 in 2020 or 2021 who fell under the provisions of the CARES Act and CAA, modified loans that meet this criteria are designated TDRs.
−Removed: Individual evaluation
−Removed: At the reporting date, the fair value of each impaired loan is estimated using either the cash flow method or the collateral method.
−Removed: Cash flow method
−Removed: The cash flow method is applied to loans that are not collateral dependent and for which cash flows may be estimated.
−Removed: The cash flow method measures fair value using assumptions specific to each loan, including expected amount and timing of cash flows and discount rate.
−Removed: For TDR loans, the discount rate is the rate immediately prior to the modification that resulted in a TDR.
−Removed: If an impaired loan evaluated under the cash flow method becomes 90 days or more past due, it is examined to determine whether the late payment indicates collateral dependency or cash flows below those that were used in the fair value measurement.
−Removed: Collateral method
−Removed: The collateral method is applied to impaired loans that are collateral-dependent, for which foreclosure is imminent or for which non-collateral repayment sources are determined not to be available or reliable.
−Removed: Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable.
−Removed: Fair value is based upon the “as-is”
−Removed: value of independent appraisals or evaluations.
−Removed: Impaired loans secured by residential 1-4 family properties with outstanding principal balances greater than $250 are valued using an appraisal.
−Removed: Appraisals are also used to value impaired loans secured by commercial real estate with outstanding principal balances greater than $500.
−Removed: Impaired loans secured by residential 1-4 family property with outstanding principal balances of $250 or less, or secured by commercial real estate with outstanding principal balances of $500 or less, are valued using a real estate evaluation prepared by a third party.
−Removed: Appraisals must conform to the Uniform Standards of Professional Appraisal Practice and are prepared by an independent third-party appraiser who is certified and licensed and who is approved by the Company.
−Removed: Appraisals may incorporate market analysis, comparable sales analysis, cash flow analysis and market data pertinent to the property to determine market value.
−Removed: Evaluations are prepared by third party providers and reviewed by employees of the Company who are independent of the loan origination, operation, management and collection functions.
−Removed: Evaluations provide a property’s market value based on the property’s current physical condition and characteristics and the economic market conditions that affect the collateral’s market value.
−Removed: Multiple sources of data contribute to the estimate of market value, including physical inspection, independent third-party automated tools, comparable sales analysis and local market information.
−Removed: Updated appraisals or evaluations are ordered when a loan becomes impaired if the appraisal or evaluation on file is more than 24 months old.
−Removed: Appraisals and evaluations are reviewed for propriety and reasonableness and may be discounted if the Company determines that the value exceeds reasonable levels.
−Removed: If an updated appraisal or evaluation has been ordered but has not been received by a reporting date, the fair value may be based on the most recent available appraisal or evaluation, discounted for age.
−Removed: The appraisal or evaluation value is reduced by selling costs if recovery is expected solely from the sale of collateral.
−Removed: Nonaccrual status of impaired loans
−Removed: Nonaccrual status is applied to impaired loans that are not TDRs and for which fair value measurement indicates an impairment loss.
−Removed: Nonaccrual status is applied to TDRs that allow the borrower to discontinue payments of principal or interest for more than 90 days, unless the modification provides reasonable assurance of repayment performance and collateral value supports regular underwriting requirements.
−Removed: TDRs that maintain current status for at least a six-month period, including history prior to restructuring, may accrue interest.
−Removed: Impaired loans with partial charge-offs are maintained as impaired until the remaining balance is satisfied.
−Removed: Collectively evaluated loans
−Removed: Non-impaired loans are grouped by portfolio segments.
−Removed: Portfolio segments are further divided into smaller loan classes.
−Removed: Loans within a segment or class have similar risk characteristics.
−Removed: Credit loss on collectively-evaluated loans is estimated by applying to current class balances the class historical charge-off rates and percentages for qualitative factors that affect credit risk.
−Removed: Qualitative factors include changes in national and local economic and business conditions, the nature and volume of classes within the portfolio, loan quality, loan officers’
−Removed: experience, lending policies and the Company’s loan review system.
−Removed: The qualitative factor allocations are determined for pass-rated loans. 
−Removed: To reflect the increased risk of criticized assets, qualitative factor allocations are multiplied by 150% for special mention loans, and multiplied by 200% for classified loans.
−Removed: Loss rates are calculated for and applied to individual classes by averaging loss rates over the most recent eight quarters.
−Removed: The loss rate calculation for each class includes losses and recoveries on all loans within the class, including TDRs and other impaired loans.
−Removed: The look-back period of eight quarters is applied consistently among all classes.
−Removed: Two loss rates for each class are calculated:
−Removed: total net charge-offs for the class as a percentage of average class loan balance (“class loss rate”), and total net charge-offs for the class as a percentage of average classified loans in the class (“classified loss rate”).
−Removed: Net charge-offs in both calculations include charge-offs and recoveries for all loans within the class, including classified and non-classified loans, as well as impaired and TDR loans.
−Removed: Class historical loss rates are applied to collectively evaluated pass-rated loan balances and special mention rated loan balances, and classified historical loss rates are applied to collectively evaluated classified loan balances.
−Removed: Qualitative factor allocations
−Removed: The analysis of certain factors results in standard allocations to all classes.
−Removed: These factors include the risk from changes in lending policies, loan officers’
−Removed: experience, changes in loan review, and economic factors including local unemployment levels, local bankruptcy rates, interest rate environment, and competition/legal/regulatory environments.
−Removed: Standard allocations for residential vacancy rates and housing inventory are applied to the following classes:
−Removed: all classes within the consumer real estate segment, residential construction, investor-owned residential real estate, multifamily loans, other commercial real estate and state and political subdivision loans.
−Removed: Qualitative factors incorporate economic data targeted to the Company’s market.
−Removed: If market–specific information is not available on a timely basis, regional or national information that historically shows a high degree of correlation to market data may be used.
−Removed: Also applied to all segments and classes is an economic factor implemented to address COVID-19 uncertainty:
−Removed: national unemployment filings.
−Removed: Due to continuous developments related to the COVID-19 pandemic, current data is valuable in assessing risk.
−Removed: Local unemployment data lags the reporting date but historical analysis determined that local unemployment filings were closely correlated to national unemployment filings.
−Removed: Factors analyzed for each class, with resultant allocations based upon the level of risk assessed for each class, include levels of past due loans, levels of nonaccrual loans, current class balance as a percentage of total loans, loans that received COVID-related modifications that are still in the modification period, and the percentage of high risk loans within the class.
−Removed: High risk loans include junior liens, interest only and high loan to value loans.
−Removed: High risk loans within each class are analyzed and allocated additional reserves based on current trends.
−Removed: Nonaccrual status
−Removed: The Company reviews loans with certain risk indicators to determine whether the loans should be placed on nonaccrual status, including loans that exceed 90 days past due, loans rated classified, and loans with a non-COVID 19 related modification that provides relief from payments of interest or principle for more than 90 days.
−Removed: Loans in nonaccrual are reviewed on an individual loan basis to determine whether they may return to accrual status.
−Removed: To return to accrual status, the Company’s analysis must determine that future payments are reasonably assured.
−Removed: To satisfy this criteria, the Company’s evaluation must determine that the underlying cause of the original delinquency or weakness that indicated nonaccrual status has been resolved, such as receipt of new guarantees, increased cash flows that cover the debt service or other resolution.
−Removed: Nonaccrual loans that demonstrate reasonable assurance of future payments and that have made at least six consecutive payments in accordance with repayment terms and timeframes may be returned to accrual status.
−Removed: Sales, purchases and reclassification of loans
−Removed: The Company finances consumer real estate mortgages under “best efforts”
−Removed: contracts with mortgage purchasers.
−Removed: The mortgages are designated as held for sale upon initiation.
−Removed: There have been no major reclassifications from portfolio loans to held for sale.
−Removed: Mortgages held for sale are not included in the calculation of the allowance for loan losses.
−Removed: Occasionally, the Company purchases or sells participations in loans.
−Removed: All participation loans purchased met the Company’s normal underwriting standards at the time the participation was entered.
−Removed: Participation loans are included in the appropriate portfolio balances to which the allowance methodology is applied.
−Removed: Unallocated surplus
−Removed: In addition to funding the allowance for loan losses based upon data analysis, the Company has the option to fund an unallocated surplus in excess to the calculated requirement, based upon management judgement. 
−Removed: The Company’s policy permits an unallocated surplus of between 0% and 5% of the calculated requirement. 
−Removed: At December 31, 2021, management provided an unallocated surplus of 4.9% to reflect the uncertainty presented by the ongoing COVID-19 pandemic.
−Removed: Estimation of the allowance for loan losses
−Removed: The estimation of the allowance involves analysis of internal and external variables, methodologies, assumptions and management’s judgment and experience.
−Removed: Key judgments used in determining the allowance for loan losses include internal risk rating determinations, market and collateral values, discount rates, loss rates, and management’s assessment of current economic conditions.
−Removed: These judgments are inherently subjective and actual losses could be greater or less than the estimate.
−Removed: Future estimates of the allowance could increase or decrease based on changes in the financial condition of individual borrowers, concentrations of various types of loans, economic conditions or the markets in which collateral may be sold.
−Removed: The estimate of the allowance accrual determines the amount of provision expense and directly affects our financial results.
−Removed: The estimate of the allowance for December 31, 2021 considered market conditions as of December 31, 2021 where possible, and the most recent available information when data was not available as of December 31, 2021, portfolio conditions and levels of delinquencies at December 31, 2021, and net charge-offs in the eight quarters prior to the quarter ended December 31, 2021.
−Removed: For additional discussion of the allowance, see Note 5 of the Notes to Consolidated Financial Statements and the subsections “Asset Quality,”
−Removed: and “Provision and Allowance for Loan Losses”
−Removed: Goodwill is subject to at least an annual assessment for impairment by applying a fair value based test.
−Removed: The Company contracts with a third party valuation expert to perform impairment testing in the fourth quarter of each year.
−Removed: The Company’s most recent impairment test was performed using data from September 30, 2021.
−Removed: Accounting guidance provides the option of performing preliminary assessment of qualitative factors to determine whether impairment testing is necessary.
−Removed: The Company opted not to perform the preliminary assessment.
−Removed: The Company’s goodwill impairment analysis considered three valuation techniques appropriate to the measurement. The first technique uses the Company’s market capitalization as an estimate of fair value;
−Removed: the second technique estimates fair value using current market pricing multiples for companies comparable to the Company;
−Removed: while the third technique uses current market pricing multiples for change-of-control transactions involving companies comparable to the Company. The analysis did not result in an impairment assessment.
−Removed: Certain key judgments were used in the valuation measurement. Goodwill is held by the Company’s bank subsidiary. The bank subsidiary is 100% owned by the Company, and no market capitalization is available. Because most of the Company’s assets are comprised of the bank subsidiary’s equity, the Company’s market capitalization was used to estimate the Bank’s market capitalization. Other judgments include the assumption that the companies and transactions used as comparables for the second and third technique were appropriate to the estimate of the Company’s fair value, and that the comparable multiples are appropriate indicators of fair value, and compliant with accounting guidance.
−Removed: The Company’s actuary determines plan obligations and annual pension expense using a number of key assumptions.
−Removed: Key assumptions may include the discount rate, the estimated return on plan assets and the anticipated rate of compensation increases.
−Removed: Changes in these assumptions in the future, if any, or in the method under which benefits are calculated may impact pension assets, liabilities or expense.
+Added: Gain on adjustment of basis in partnership interests and payouts at the partnerships’ election, reflected in other income.
Performance Summary
−Removed: The COVID-19 pandemic continued to impact the Company in 2021, although in somewhat different respects than the impact in 2020.
−Removed: During 2020, the Company worked with borrowers impacted by the COVID-19 pandemic to provide payment relief, which reduced interest income on certain loans within the portfolio.
−Removed: Adverse economic indicators escalated credit risk, increasing provision for loan loss expense.
−Removed: Positive effects of the COVID-19 pandemic resulted from the low interest rate environment, which fueled refinance activity and gains from the sale of mortgages.
−Removed: The Company also participated in the SBA’s PPP loan program and recognized increased fee income.
−Removed: During 2021, the Company recognized additional fee income from PPP loans.
−Removed: Pandemic-related modifications slowed significantly and there are currently no loans under modified terms related to the COVID-19 pandemic.
−Removed: Economic indicators improved markedly and the Company was able to recover some of the provision expense recognized in 2020.
+Added: The following table presents summary income and expenses for the years indicated:
+Added: Year ended December 31,
+Added: Interest income
+Added: Interest on deposits
+Added: Net interest income
+Added: Provision for (recovery of) loan losses
+Added: Net interest income after provision for (recovery of) loan losses
+Added: Noninterest income
+Added: Noninterest expense
+Added: Income before income taxes
+Added: Income tax expense
+Added: Net income in 2022 benefitted from expansion in net interest income and from the sale of a private equity investment, reflected in noninterest income.
Key performance ratios provide a summary of the Company’s results and allow comparison with results from prior years.
3 unchanged sentences
Return on average equity (1)(2)
−Removed: Basic net earnings per common share
−Removed: Fully diluted net earnings per common share
+Added: Basic and fully diluted net earnings per common share
Net interest margin (3)
1 unchanged sentence
During the year ended December 31, 2022, the Company repurchased 174,250 shares under its publicly announced stock repurchase plan.
−Removed: The repurchased shares reduced shareholders equity by $13,354 during 2021.
+Added: The repurchased shares reduced stockholders' equity by $6,338 during 2022.
During the year ended December 31, 2021, the Company repurchased 368,083 shares under its publicly announced stock repurchase plan.
−Removed: The repurchased shares reduced shareholders equity by $1,722 during 2020.
+Added: The repurchased shares reduced stockholders' equity by $13,354 during 2021.
+Added: During 2022, average unrealized losses on the securities portfolio reduced average stockholders’ equity by $48,109.
+Added: During 2021, average unrealized gains on the securities portfolio increased stockholders’ equity by $7,759.
The net interest margin is a non-GAAP financial measure.
−Removed: Tax advantaged portions of net interest income are adjusted to their fully-taxable equivalent basis.
−Removed: Net interest income on a fully-taxable equivalent basis is divided by average earning assets.
Please see “Non-GAAP Financial Measures” for a reconciliation of non-GAAP measures to GAAP.
−Removed: The efficiency ratio is a non-GAAP financial measure that the Company believes provides investors with important information regarding operational efficiency.
−Removed: Such information is not prepared in accordance with GAAP and should not be viewed as a substitute for GAAP.
−Removed: See “Non-GAAP Financial Measures” above.
−Removed: NBI’s key growth indicators are shown in the following table:
−Removed: $ in thousands
−Removed: Securities and restricted stock
+Added: The efficiency ratio is a non-GAAP financial measure.
+Added: Please see “Non-GAAP Financial Measures” for a reconciliation of non-GAAP measures to GAAP.
+Added: Change in Key Balances
+Added: Key balances are shown in the following table:
Loans, net of unearned income and deferred fees and costs, and the allowance for loan losses
−Removed: Securities and restricted stock, loans and total assets increased when amounts at December 31, 2021 are compared with amounts at December 31, 2020.
−Removed: Customer deposits increased $197,444 or 15.22% from December 31, 2020, with the most substantial increase in interest-bearing deposits, as well as increases in noninterest-bearing deposits and savings deposits.
−Removed: Time deposits declined.
−Removed: The liquidity provided by the increase of deposits supported growth in loans of $35,256 or 4.64% and growth in securities and restricted stock of $138,904 or 25.35%.
+Added: Securities available for sale
+Added: Stockholders’
+Added: Loans, net of unearned income and deferred fees and costs and the allowance for loan losses, grew when December 31, 2022 is compared with December 31, 2021 due to customer demand in the Company’s primary markets. 
+Added: During 2022, the Company expanded its lending footprint, opening two new loan production offices in Charlottesville and Staunton, Virginia.
+Added: Securities available for sale are reported at fair value, which moves inversely to interest rate changes. 
+Added: The Federal Reserve increased interest rates substantially during 2022, causing a decline in securities fair value when December 31, 2022 is compared with December 31, 2021.
+Added: Customer deposits increased when December 31, 2022 is compared with December 31, 2021, in all categories except for time deposits. 
+Added: Time deposit offering rates were set strategically low during 2022.
+Added: During the fourth quarter of 2022, deposits decreased from the third quarter of 2022 due to competitive pressure.
+Added: When December 31, 2022 is compared with December 31, 2021, the decrease in total assets and in stockholders’
+Added: equity is primarily due to a decline in the market value of securities.
Asset Quality
Key indicators of NBI’s asset quality are presented in the following table:
−Removed: $ in thousands
Nonperforming loans (1)
3 unchanged sentences
Net charge-off ratio
−Removed: Nonperforming loans are nonaccrual loans and TDRs in nonaccrual status.
+Added: Nonperforming loans are nonaccrual loans and troubled debt restructurings ("TDRs") in nonaccrual status.
Accruing TDRs are not included.
1 unchanged sentence
The Company monitors asset quality indicators in managing credit risk and in determining the allowance and provision for loan losses.
−Removed: As of December 31, 2021, nonperforming loans and other real estate improved when compared with levels at December 31, 2020, while accruing loans past due 90 days or more increased slightly.
−Removed: The net charge-off ratio remained steady from 2020 to 2021.
−Removed: The Company’s risk analysis determined an allowance for loan losses of $7,674 at December 31, 2021, resulting in a recovery of previous provision expense of $398.
−Removed: This compares with an allowance for loan losses of $8,481 as of December 31, 2020, and a provision of $1,991 for the year ended December 31, 2020.
−Removed: The ratio of the allowance for loan losses to loans decreased to 0.96% at December 31, 2021, from 1.10% at December 31, 2020.
−Removed: The methodology for determining the allowance for loan losses relies on historical charge-off trends, modified by loan portfolio trends and economic indicators.
−Removed: More information about the level and calculation methodology of the allowance for loan losses is provided in the sections “Provision and Allowance for Loan Losses”, “Balance Sheet –
−Removed: Loans –
−Removed: Risk Elements”
−Removed: and “Balance Sheet –
−Removed: Loans –
−Removed: Modifications and Troubled Debt Restructurings”
−Removed: below as well as Notes 1 and 5 of the Notes to Consolidated Financial Statements.
−Removed: Sufficient resources have been dedicated to working out problem assets, and exposure to loss is somewhat mitigated because most of the nonperforming loans are collateralized.
−Removed: More information about nonaccrual and past due loans is provided in the section “Balance Sheet –
−Removed: Loans –
−Removed: Risk Elements”
−Removed: below and Note 5 of the Notes to Consolidated Financial Statements.
−Removed: The Company continues to carefully monitor risk levels within the loan portfolio and the evolving impact of the COVID-19 pandemic.
+Added: As of December 31, 2022, nonperforming loans, other real estate owned ("OREO"), and loans past due 90 days or more improved when compared with levels as of December 31, 2021.
+Added: The net charge-off ratio decreased from 2021 to 2022.
+Added: The Company believes that sufficient resources have been dedicated to working out problem assets, and exposure to loss is somewhat mitigated because most of the nonperforming loans are collateralized.
+Added: More information about nonaccrual and past due loans is provided in Note 1 and Note 5 of Notes to Consolidated Financial Statements.
+Added: The Company continues to carefully monitor risk levels within the loan portfolio.
+Added: Income Statement
+Added: The following provides information on the results of operations for the years ended December 31, 2022 and December 31, 2021.
Net Interest Income
−Removed: The Company’s primary source of revenue is net interest income, which is the difference between the interest and fees earned on loans and investments and the interest paid on deposits and other interest-bearing liabilities.
+Added: The Company’s primary source of revenue is net interest income, which is the difference between the interest and fees earned on loans and investments and the interest paid on customer deposits and other interest-bearing liabilities.
Net interest income is affected by various factors, including the Federal Reserve’s monetary policy, U.S.
fiscal policy, competitive pressure, the level and composition of the interest-earning assets and the composition of interest-bearing liabilities.
−Removed: Changes in the Federal Reserve’s target interest rate immediately affect the yield on the Company’s interest-bearing deposits in other banks, and affect other interest-earning assets within a short time.
+Added: Changes in the Federal Reserve’s target interest rate immediately affect the yield on the Company’s interest-bearing deposits in correspondent banks and affect other interest-earning assets over time.
The primary source of funds used to support the Company’s interest-earning assets is deposits.
−Removed: When the interest rate environment changes, the Company can immediately change rates on interest-bearing deposits and change offering rates on new time deposits.
−Removed: Existing time deposits commit the Company to the contractual rate for the length of the term.
−Removed: Time deposits provide a measure of stability in the cost of funds, but partially delay the Company’s ability to respond to downward rate movements.
−Removed: The net interest margin for the year ended December 31, 2021 declined when compared with the year ended December 31, 2020.
−Removed: The Federal Reserve cut rates in March 2020 in an effort to counter the COVID-19 pandemic’s economic impact and maintained low interest rates throughout 2021.
−Removed: The low rates spurred high levels of loan refinance activity.
−Removed: Calls on securities surged and reinvestment opportunities for matured and called securities as well as investing excess liquidity from customer deposits resulted in lower yields for taxable and nontaxable securities.
−Removed: Further, uncertainty surrounding the length of time that customer deposits, bolstered by federal stimulus aid, will remain with the Bank resulted in a higher balance in interest-bearing deposits, which provides the lowest yielding investment opportunity.
−Removed: In response, the Company reduced offering rates on deposits in 2020 and 2021.
−Removed:          Fees and interest income from PPP loans helped increase the net interest margin in 2021 and 2020.
−Removed: During 2020 and 2021, the Company generated 1,259 PPP loans with original principal balances totaling $83,023.
−Removed: The loans bear a contractual interest rate of 1%, supplemented by an origination fee which is accreted over the life of the loan.
−Removed: When loans are forgiven or paid off prior to maturity, the Company recognizes the outstanding origination fee at the date of forgiveness or payoff.
−Removed: PPP loans contributed interest and fee income of $2,711 for the year ended December 31, 2021 and $1,753 for the year ended December 31, 2020.
−Removed: As of December 31, 2021, gross PPP loans totaling $1,094 with net deferred fees of $42 remain on the balance sheet.
+Added: When the interest rate environment changes, the Company assesses competition for deposits in determining changes to its offering rates.
+Added: The net interest margin for the year ended December 31, 2022 improved when compared with the year ended December 31, 2021. 
+Added: Federal Reserve rate increases during 2022 improved yields on interest-bearing deposits in correspondent banks and on adjustable-rate mortgage backed securities. 
+Added: The yield on loans decreased during 2022,  due to PPP fees received in 2021, however the yield on loans originated or repriced after March of 2022 benefitted from the Federal Reserve rate increases. 
+Added: High levels of customer deposits and low competition during 2022 allowed the Company to maintain low interest expense for the year ended December 31, 2022, compared with the year ended December 31, 2021. 
+Added: During the fourth quarter of 2022, the Company experienced higher competition and pricing pressure on deposits, and expects this will continue into 2023.
The frequency and/or magnitude of future changes in market interest rates and legislative changes are difficult to predict and may have a greater short-term impact on net interest income than adjustments by management.
5 unchanged sentences
December 31, 2021
−Removed: $ in thousands
Interest-earning assets:
Loans (1)(2)(3)(4)(5)
−Removed: Taxable securities (5)(6)
−Removed: Nontaxable securities (2)(5)
+Added: Taxable securities, at amortized cost (6)
+Added: Nontaxable securities, at amortized cost (2)
Interest-bearing deposits
9 unchanged sentences
Loans include loans held in portfolio and loans held for sale.
−Removed: Interest on nontaxable loans and securities is computed on a fully taxable equivalent basis using a Federal income tax rate of 21%.
−Removed: Net loan fees included in interest income in 2021 are $2,558, of which $2,444 was related to PPP loans.
−Removed: Net loan fees included in interest income in 2020 are $1,441, of which $1,366 was related to PPP loans.
+Added: Interest on nontaxable loans and securities is computed on an FTE basis using a Federal income tax rate of 21%.
+Added: Net loan fees included in interest income in 2022 were $230.
+Added: Net loan fees included in interest income in 2021 were $2,558, of which $2,444 were related to PPP loans.
+Added: In 2021, average loans included PPP loans of $25,600 with associated interest and fee income of $2,711.
+Added: If PPP loans were excluded the FTE yield on loans would have been 4.27%, and the net interest margin would have been 2.63%.
+Added: The vast majority of PPP loans were paid off by December 31, 2021.
Nonaccrual loans are included in average balances for yield computations.
−Removed: Daily averages are shown at amortized cost.
Includes restricted stock.
−Removed: The following table reconciles net interest income on a fully-taxable equivalent basis to net interest income on a GAAP basis for the years indicated.
−Removed: $ in thousands
+Added: The following table reconciles net interest income on an FTE basis to net interest income on a GAAP basis for the years indicated.
Net interest income, GAAP
−Removed: Taxable equivalent adjustment
−Removed: Net interest income, fully taxable equivalent
+Added: FTE adjustment
+Added: Net interest income, FTE
Analysis of Changes in Interest Income and Interest Expense
The following table sets forth, for the years indicated, a summary of the changes in interest income and interest expense resulting from changes in average asset and liability balances (volume) and changes in average interest rates (rate).
−Removed: $ in thousands
2022 Over 2021
5 unchanged sentences
Interest-bearing deposits
+Added: Increase in income on interest-earning assets
+Added: Interest expense:
+Added: Interest-bearing demand deposits
+Added: Savings deposits
+Added: Time deposits
+Added: Increase (decrease) in expense of interest-bearing liabilities
+Added: Increase in net interest income
+Added: FTE basis using a Federal income tax rate of 21%.
+Added: Variances caused by the change in rate multiplied by the change in volume have been allocated to rate and volume changes proportional to the relationship of the absolute dollar amounts of the change in each.
+Added: Total interest income increased when the year ended December 31, 2022 is compared with the year ended December 30, 2021, primarily due to volume. 
+Added: Rate-related income on loans fell when the year ended December 31, 2022 is compared with the year ended December 31, 2021 due to PPP fees that were received during 2021. 
+Added: However, increased volume offset much of the impact of lower income from rates. 
+Added: Federal Reserve interest rate increases in 2022 improved yield on interest-bearing deposits and yield on variable-rate and new taxable securities, when the year ended December 31, 2022 is compared with the year ended December 31, 2021.
+Added: Higher volume in taxable securities also increased interest income.
+Added: Income on nontaxable securities decreased when the year ended December 31, 2022 is compared with the year ended December 31, 2021, as higher-yielding nontaxable securities matured and were not replaced. 
+Added: Deposit volume increased interest expense that was mitigated by lower deposit offering rates, when the years ended December 31, 2022 and 2021 are compared. 
+Added: The following table sets forth a summary of the changes in interest income and interest expense resulting from changes in average asset and liability balances (volume) and changes in average interest rates (rate), when the year ended December 31, 2021 is compared with the year ended December 31, 2020.
+Added: 2021 Over 2020
+Added: Changes Due To
+Added: Net Dollar Change
+Added: Interest income:
+Added: Taxable securities
+Added: Nontaxable securities
+Added: Interest-bearing deposits
Increase (decrease) in income on interest-earning assets
4 unchanged sentences
Increase (decrease) in expense of interest-bearing liabilities
−Removed: Increase in net interest income
+Added: Increase in net interest income
+Added: (1)  
Taxable equivalent basis using a Federal income tax rate of 21%.
+Added: (2)  
Variances caused by the change in rate multiplied by the change in volume have been allocated to rate and volume changes proportional to the relationship of the absolute dollar amounts of the change in each.
−Removed: The low interest rate environment reduced interest income when the year ended December 31, 2021 is compared with the year ended December 31, 2020.
−Removed: However, greater volume more than offset the impact of rates, resulting in a net increase in interest income.
+Added: The low interest rate environment reduced interest income when the year ended December 31, 2021 is compared with the year ended December 31, 2020. 
+Added: However, greater volume more than offset the impact of rates, resulting in a net increase in interest income. 
The Company’s reduced deposit offering rates saved $3,178 in interest expense, slightly offset by increased expense for higher volume when the year ended December 31, 2021 is compared with the year ended December 31, 2020.
9 unchanged sentences
Simulation analysis applies interest rate shocks, hypothetical immediate shifts in interest rates, to the Company’s financial instruments and determines the impact to projected one-year net interest income and other key measures.
−Removed: The following table shows the results of rate shocks on the one-year projected net interest income as of December 31, 2021 and 2020.
+Added: The following table shows the results of rate shocks on net interest income projected for one year from the reporting date.
For purposes of this analysis, noninterest income and expenses are assumed to be flat.
−Removed: Rate Shift (bp)
+Added: (basis points)
Change in Projected Net Interest Income
−Removed: Results of the simulation for net interest income at December 31, 2021 and December 31, 2020 indicate the Company is in an asset sensitive position.
−Removed: As a part of the simulation process, certain estimates and assumptions must be made.
−Removed: These include, but are not limited to, asset growth, the mix of assets and liabilities, the interest rate environment and local and national economic conditions.
+Added: as of December 31,
+Added: Results of the net interest income simulation as of December 31, 2022 indicate that the Company is liability sensitive, a change from the asset sensitive position as of December 31, 2021. 
+Added: The simulation process requires certain estimates and assumptions including, but not limited to, asset growth, the mix of assets and liabilities, the interest rate environment and local and national economic conditions.
Asset growth and the mix of assets can, to a degree, be influenced by management.
6 unchanged sentences
The Company’s profitability in the near term may be temporarily negatively affected in a period of rapidly rising or rapidly falling rates, because it takes some time for the Company’s portfolio to reflect changes to offering rates in response to a new interest rate environment.
+Added: Provision for (Recovery of) Loan Loss
+Added: Provision for loan loss for the year ended December 31, 2022 was $706, compared with a recovery of $398 for the year ended December 31, 2021. 
+Added: The ratio of the allowance for loan loss to total loans was 0.96% as of December 31, 2022 and December 31, 2021. 
+Added: The provision for the year ended December 31, 2022 reflects loan portfolio growth and changes in factors detailed in “Balance Sheet –
+Added: Loans –
+Added: Allowance for Loan Losses”
+Added: The recovery in 2021 reflected improved economic indicators from those in 2020. 
+Added: More information about the level and calculation methodology of the allowance for loan losses is provided in Notes 1 and 5 of Notes to Consolidated Financial Statements.
Noninterest Income
The following table presents the Company’s noninterest income for the years indicated.
−Removed: $ in thousands
Year Ended December 31,
4 unchanged sentences
Gain on sale of mortgage loans
+Added: Gain on sale of private equity investment
Realized securities gains, net
Total noninterest income
−Removed: An enhanced fee schedule implemented in the latter half of 2020 benefitted income from service charges on deposits in 2021.
−Removed: Service charges on deposit accounts include account maintenance fees, fees for nonsufficient funds, ATM and wire transfer fees.
−Removed: Other service charges and fees include charges for official checks, income from the sale of checks to customers, safe deposit box rent, fees from letters of credit and income from commissions on the sale of credit life, accident and health insurance.
−Removed: Increased transactions improved credit card fees when the year ended December 31, 2021 is compared with the year ended December 31, 2020.
+Added: Service charges on deposit accounts increased when the year ended December 31, 2022 is compared with the year ended December 31, 2021, primarily due to fees generated from increased customer use of the Bank’s overdraft program.
+Added: Service charges on deposit accounts also include account maintenance fees, ATM fees and wire transfer fees.
+Added: Other service charges and fees increased due to higher volume of letters of credit and associated fees, when the year ended December 31, 2022 is compared with the year ended December 31, 2021.
+Added: Other service charges and fees also include charges for official checks, income from the sale of checks to customers, safe deposit box rent, and income from commissions on the sale of credit life, accident and health insurance.
+Added: Increased transaction volume improved credit card fees when the year ended December 31, 2022 is compared with the year ended December 31, 2021.
Credit card fees are presented net of certain processing expenses and are dependent on the volume of transactions.
−Removed: Trust fees increased when the year ended December 31, 2021 is compared with the year ended December 31, 2020.
+Added: Trust income increased when the year ended December 31, 2022 is compared with the year ended December 31, 2021.
Trust fees are generated from a number of different types of accounts, including estates, personal trusts, employee benefit trusts, investment management accounts, attorney-in-fact accounts and guardianships.
1 unchanged sentence
The Company purchased an additional $5,000 in bank-owned life insurance (“BOLI”) during 2021, contributing to increased income compared with 2021.
−Removed: A robust housing market during 2020 and the Federal Reserve’s rate cuts in March 2020 spurred a high level of consumer real estate purchase activity and refinance activity, increasing the sale of mortgage loans.
−Removed: During the year ended December 31, 2021, activity returned to more conventional levels, decreasing the gain on sale of mortgage loans when the year ended December 31, 2021 is compared with the year ended December 31, 2020.
−Removed: Other income benefitted in 2021 from increased commissions on sales of securities and insurance, compared with the year ended December 31, 2020.
−Removed: Other income includes dividends and increases in the Company’s equity-method investments, net gains from the sale of fixed assets, and revenue from investment and insurance sales.
−Removed: During 2021, securities gains resulted solely from the call of securities.
−Removed: During 2020, the Company realized net securities gains of $43 on the sale of securities and $65 on calls of securities.
−Removed: The sale of securities was pursuant to a restructuring plan to manage interest rate risk.
+Added: The Federal Reserve’s rate increases in 2022 slowed the level of consumer real estate purchase and refinance activity, decreasing the sale of mortgage loans when compared to 2021.
+Added: The Company held an ownership interest in Infinex Investments, Inc.
+Added: (“Infinex”), through which NBFS provides investment services. 
+Added: During the fourth quarter of 2022, the Company recognized a gain on the sale of its shares when Infinex was acquired by a larger holding company. 
+Added: Infinex continues as a division of its new parent company and NBFS continues to work through Infinex to provide investment services .
+Added: Other income includes dividends and increases in the Company’s equity-method investments, which decreased when the year ended December 31, 2022 is compared with the year ended December 31, 2021.
+Added: Other income also includes net gains from the sale of fixed assets and revenue from investment and insurance sales.
Noninterest Expense
The following table presents the Company’s noninterest expense for the years indicated.
−Removed: $ in thousands
Year Ended December 31,
3 unchanged sentences
FDIC assessment
−Removed: Net costs of other real estate owned
+Added: Net costs of OREO
Franchise taxes
1 unchanged sentence
Total noninterest expense
−Removed: Salaries and employee benefits expense, which includes salaries, payroll taxes, health insurance, contributions to the employee stock ownership plan and employee 401(k), pension expense, incentives and salary continuation increased when 2021 is compared with 2020, due to normal compensation and staffing decisions as well as increased pension cost.
−Removed: When the year ended December 31, 2021 is compared with the year ended December 31, 2020, occupancy, furniture and fixtures expense increased slightly, while data processing and ATM expense decreased slightly.
−Removed: FDIC assessment expense increased from 2020 to 2021.
+Added: Salaries and employee benefits expense, which includes payroll taxes, health insurance, contributions to the employee stock ownership plan and employee 401(k), pension expense, incentives and salary continuation increased when 2022 is compared with 2021, due to normal compensation and staffing decisions.
+Added: When the year ended December 31, 2022 is compared with the year ended December 31, 2021, occupancy, furniture and fixtures expense and data processing and ATM expense increased slightly, as did FDIC assessment expense.
The FDIC assessment is accrued based on a method provided by the FDIC.
−Removed: During the third quarter of 2019, the FDIC notified the Bank that it was eligible to use small bank assessment credits.
−Removed: The credits reduced expense for the first half of 2020, after which FDIC assessment expense returned to normal levels.
−Removed: Net costs of other real estate owned ("OREO") increased slightly when the years ended December 31, 2021 and 2020 are compared.
+Added: Net costs of OREO include write-downs, maintenance costs, and net gains or losses on the sale of OREO property.
This expense category varies with the number of foreclosed properties owned by NBB and with the costs associated with each.
−Removed: It includes write-downs on OREO plus other costs associated with carrying these properties, as well as net gains or losses on the sale of other real estate.
−Removed: There were no write downs during 2021 and one write-down in 2020 totaling $9.
−Removed: Other costs for these properties in 2021 were $25, compared with $51 in 2020.
−Removed: The Company recorded a loss of $26 on the sale of OREO in 2021 and a gain of $21 on the sale of OREO in 2020.
−Removed: The Company currently has loans of $62 in process of foreclosure.
+Added: During 2022, the Company wrote down a property by $295 to reflect reduction in list price taken as part of a marketing strategy.
+Added: Other costs for these properties in 2022 were $30.
+Added: In 2021, the Company recorded a loss on sale of $26 and other expenses of $25. 
Franchise tax expense increased when the years ended December 31, 2022 and 2021 are compared.
Franchise taxes are levied by the states in which NBB operates and are based upon NBB’s total equity at the prior year-end, adjusted for real estate taxes and certain other items.
−Removed: The category of other operating expenses includes noninterest expense items such as professional services, stationery and supplies, telephone costs and charitable donations.
−Removed: Other operating expenses decreased when the years ended December 31, 2021 and 2020 are compared, primarily due to decreased non-service pension cost.
+Added: The category of other operating expenses includes noninterest expense items such as professional services, stationery and supplies, telephone costs, non-service pension cost and charitable donations.
+Added: Other operating expenses decreased when the years ended December 31, 2022 and 2021 are compared, primarily due to a decrease of $597 in non-service pension cost.
+Added: Non-service pension cost is determined by actuarial assumptions and projections.
+Added: During 2022 and 2021, the calculations resulted in a credit to expense, due to the expected return on plan assets. 
+Added: For more information on non-service pension cost, please refer to Note 8 of Notes to Consolidated Financial Statements.
Income tax expense for 2022 was $5,831 compared to $4,251 in 2021.
2 unchanged sentences
The expected income tax expense based on the Company’s statutory tax rate differs from the actual income tax expense due to tax exempt income on municipal securities and loans.
−Removed: See Note 9 of the Notes to Consolidated Financial Statements for information relating to income taxes.
−Removed: Effects of Inflation
−Removed: The Company’s consolidated statements of income generally reflect the effects of inflation.
−Removed: Since interest rates, loan demand and deposit levels are related to inflation, the resulting changes are included in net income.
−Removed: The most significant item which does not reflect the effects of inflation is depreciation expense.
−Removed: Historical dollar values used to determine depreciation expense do not reflect the effects of inflation on the market value of depreciable assets after their acquisition.
−Removed: Provision and Allowance for Loan Losses
−Removed: The Company’s risk analysis at December 31, 2021 determined an allowance for loan losses of $7,674 or 0.96% of loans net of unearned income and deferred fees and costs.
−Removed: The allowance at December 31, 2020 was $8,481 or 1.10% of loans net of unearned income and deferred fees and costs.
−Removed: The determination of the appropriate level for the allowance for loan losses resulted in a recovery of $398 for the twelve months ended December 31, 2021, compared with a provision of $1,991 for the twelve month period ended December 31, 2020.
−Removed: To determine the appropriate level of the allowance for loan losses, the Company considers credit risk for certain loans designated as impaired and for non-impaired (“collectively evaluated”) loans.
−Removed: Individually Evaluated Impaired Loans
−Removed: Individually evaluated impaired loans at December 30, 2021 were $5,878 gross and $5,880 net of unearned income and deferred fees and costs.
−Removed: There were no specific allocations to the allowance for loan losses as of December 31, 2021.
−Removed: At December 31, 2020, individually evaluated impaired loans totaled $4,903 gross and $4,905 net of unearned income and deferred fees and costs, with specific allocations to the allowance for loan losses totaling $75.
−Removed: The specific allocation is determined based on criteria particular to each impaired loan.
−Removed: Collectively Evaluated Loans
−Removed: Collectively evaluated loans totaled $797,851 gross and $797,368 net of unearned income and deferred fees and costs, with an allowance of $7,674 or 0.96% of collectively-evaluated loans net of unearned income and deferred fees and costs at December 31, 2021.
−Removed: At December 31, 2020, collectively evaluated loans totaled $765,124 gross and $763,894 net of unearned income and deferred fees and costs, with an allowance of $8,406 or 1.10%.
−Removed: Collectively evaluated loans are divided into classes based upon risk characteristics.
−Removed: In order to calculate the allowance for collectively evaluated loans, the Company applies to each loan class a historical net charge-off rate for the class, adjusted for qualitative factors that influence credit risk.
−Removed: Qualitative factors evaluated for impact to credit risk include economic measures, asset quality indicators, loan characteristics, and changes to internal Company policies and changes in management.
−Removed: Net Charge-Offs
−Removed: Increases in the net charge-off rate increase the required allowance for collectively-evaluated loans, while decreases in the net charge-off rate decrease the required allowance for collectively-evaluated loans.
−Removed: On a portfolio level, net charge-offs were $409 for the twelve months ended December 31, 2021, or 0.05% of average loans.
−Removed: Net charge-offs for the twelve months ended December 31, 2020 were $373 or 0.05% of average loans.
−Removed: The 8-quarter average historical loss rate was 0.05% as of December 31, 2021 and 0.07% as of December 31, 2020.
−Removed: Economic Factors
−Removed: Economic factors influence credit risk and impact the allowance for loan loss.
−Removed: The Company considers economic indicators within its market area, including:
−Removed: unemployment, business and personal bankruptcy filings, the residential vacancy rate and the inventory of new and existing homes.
−Removed: The Company sources economic data pertinent to its market from the most recently available publications.
−Removed: Most economic indicators lag the report date by one to three months.
−Removed: In periods of low volatility, lagging indicators are accepted as reasonably representative of current conditions.
−Removed: The COVID-19 pandemic introduced significant uncertainty and beginning in 2020, the Company implemented a qualitative factor for national unemployment filings to capture current economic data.
−Removed: Unemployment filings for the Company’s market area are not available on a timely basis, however national data is available on a timely basis and historical analysis shows a strong correlation between national and local unemployment filings.
−Removed: National unemployment claims escalated sharply beginning in the latter half of March 2020 and the Company reacted by substantially increasing the allowance for loan losses.
−Removed: During 2021, national unemployment claims decreased considerably and average weekly claims over the last six weeks of the year were similar to pre-pandemic levels, allowing the Company to reduce the allocation for this factor.
−Removed: The Company continues to monitor the most recently available economic indicators for its market and their effect on credit risk.
−Removed: As of December 30, 2021, the unemployment rate for the Company’s market area was measured as of November 30, 2021 and decreased from the measurement available at December 31, 2020, decreasing the allocation to the allowance for loan losses.
−Removed: Business and personal bankruptcy filing data was available as of September 2021.
−Removed: Higher bankruptcy filings indicate heightened credit risk and increase the allowance for loan losses, while lower bankruptcy filings have a beneficial impact on credit risk.
−Removed: Compared with data available at December 31, 2020, business bankruptcies were at a similar level and received the same allocation and personal bankruptcies were slightly lower and resulted in a slightly lower allocation.
−Removed: Residential vacancy rates and housing inventory impact the Company’s residential construction customers and the consumer real estate market.
−Removed: Higher levels increase credit risk.
−Removed: The residential vacancy rate at December 31, 2021 was measured as of the third quarter of 2021 and while still lower than normal levels, worsened slightly from the data incorporated into the December 31, 2020 calculation, resulting in a higher allocation.
−Removed: Housing inventory data was available as of December 31, 2021.
−Removed: Levels are historically low and are lower than those at December 31, 2020.
−Removed: Asset Quality Indicators
−Removed: Asset quality indicators, including past due levels, nonaccrual levels and internal risk ratings, are evaluated at the class level.
−Removed: Loans past due and loans designated nonaccrual indicate heightened credit risk.
−Removed: Increases in past due and nonaccrual loans increase the required level of the allowance for loan losses and decreases in past due and nonaccrual loans reduce the required level of the allowance for loan losses.
−Removed: Accruing loans past due 30-89 days were 0.12% of total loans net of unearned income and deferred fees and costs at December 31, 2021, a decrease from 0.19% at December 31, 2020.
−Removed: Accruing loans past due 90 days or more were 0.01% of total loans, net of unearned income and deferred fees and costs at December 31, 2021 compared to 0.00% at December 31, 2020.
−Removed: Nonaccrual loans at December 30, 2021 were 0.36% of total loans net of unearned income and deferred fees and costs, lower than 0.48% at December 31, 2020.
−Removed: Loans rated special mention and classified (together, “criticized assets”) indicate heightened credit risk.
−Removed: Higher levels of criticized assets increase the required level of the allowance for collectively-evaluated loans, while lower levels of criticized assets reduce the required level of the allowance for collectively-evaluated loans.
−Removed: Collectively evaluated loans rated special mention were $3,728 at December 31, 2021, lower than $8,035 at December 31, 2020.
−Removed: Collectively evaluated loans rated classified were $1,064 at December 31, 2021 and $473 at December 31, 2020.
−Removed: Other Factors
−Removed: The Company considers other factors that impact credit risk, including the interest rate environment, the competitive, legal and regulatory environments, changes in lending policies and loan review, changes in management, high risk loans, as well as a factor to measure the risk from loans that received a COVID-19 modification and then received a subsequent COVID-19 modification.
−Removed: The interest rate environment impacts variable rate loans.
−Removed: If interest rates increase, the payment on variable rate loans increases, which may increase credit risk.
−Removed: The interest rate environment is at a low level as of December 31, 2021, unchanged from the level at December 31, 2020.
−Removed: The low level of interest rates indicates no additional credit risk.
−Removed: The competitive, legal and regulatory environments were evaluated for changes that would impact credit risk.
−Removed: Higher competition for loans increases credit risk, while lower competition decreases credit risk.
−Removed: Competition remained at similar levels to those at December 31, 2020.
−Removed: The legal and regulatory environments remain in a similar posture to that at December 31, 2020.
−Removed: Lending policies, loan review procedures and management’s experience influence credit risk.
−Removed: Since December 31, 2020, there have been no changes that affect credit risk to the Company’s lending policies or loan review procedures.
−Removed: During the fourth quarter, the Company’s Chief Credit Officer resigned.
−Removed: The Company allocated to the allowance for loan losses to reflect the increased risk that results from a change in management.
−Removed: Levels of high risk loans are considered in the determination of the level of the allowance for loan loss.
−Removed: A decrease in the level of high risk loans within a class decreases the required allocation for the loan class, and an increase in the level of high risk loans within a class increases the required allocation for the loan class.
−Removed: Total high risk loans decreased $23,101 or 20.41% from the level at December 31, 2020, resulting in a decreased allocation.
−Removed: At December 31, 2020, the Company allocated to the allowance for loan losses for certain COVID-19 related modifications.
−Removed: As of December 31, 2021, there were no loans with COVID-19 related modifications still in the modification period, and no allocation was taken.
−Removed: Unallocated Surplus
−Removed: The unallocated surplus at December 30, 2021 is $361 or 4.94% in excess of the calculated requirement.
−Removed: The unallocated surplus at December 31, 2020 was $396 or 4.89% in excess of the calculated requirement.
−Removed: The surplus provides some mitigation of the uncertainty surrounding the impact of COVID-19.
−Removed: The calculation of the appropriate level for the allowance for loan losses incorporates analysis of multiple factors and requires management’s prudent and informed judgment.
−Removed: The most recently available data showed improvements that decreased the required level of the allowance for loan losses at December 31, 2021 from December 31, 2020 including loans considered high risk, business and personal bankruptcy filings, the unemployment rate, criticized loans and certain loans with COVID-19 related modifications.
−Removed: Other indicators, including accruing loans past due 90 days or more and residential vacancy, showed worsening from levels at December 31, 2020 and increased the required level of the allowance for loan losses.
−Removed: To reflect the impact of the COVID-19 pandemic, the Company added a qualitative factor for national unemployment filings beginning with the first quarter of 2020.
−Removed: During 2020, national unemployment filings increased dramatically from pre-pandemic levels and was the source of most of the provision taken for 2020.
−Removed: During 2021, unemployment filings declined substantially, which was a key factor in reducing the required level of the allowance for loan losses and resulted in a recovery for the year ended December 31, 2021.
−Removed: The Company augmented the calculated requirement with an unallocated surplus of 4.94% to mitigate some of the uncertainty caused by the lingering pandemic.
−Removed: Based on analysis of historical indicators, asset quality and economic factors, management believes the level of allowance for loan losses is reasonable for the credit risk in the loan portfolio as of December 31, 2021.
−Removed: Please refer to Note 5of Notes to Consolidated Financial Statements for further information on collectively evaluated loans, individually evaluated impaired loans and the unallocated portion of the allowance for loan losses.
+Added: See Note 9 of Notes to Consolidated Financial Statements for information relating to income taxes.
Balance Sheet
−Removed: Total assets at December 31, 2021 were $1,702,175, an increase of $182,502 or 12.01%, from $1,519,673 at December 31, 2020.
−Removed: Growth in assets was fueled by growth in customer deposits, which increased $197,444 or 15.22% from $1,297,143 at December 31, 2020 to $1,494,587 at December 31, 2021.
+Added: The following provides information on the Company’s financial position as of December 31, 2022 and December 31, 2021.
The Company’s loan categorization reflects its approach to loan portfolio management and includes six groups.
−Removed: Real estate construction loans include construction loans for residential and commercial properties, as well as land. 
+Added: Real estate construction loans include construction loans for residential and commercial properties, as well as land.
Consumer real estate loans include conventional and junior lien mortgages, equity lines and investor-owned residential real estate.
Commercial real estate loans are comprised of owner-occupied and leased nonfarm, nonresidential properties, multi-family residence loans and farmland.
−Removed: Commercial non-real estate loans include agricultural loans, operating capital lines and loans secured by capital assets, as well as PPP loans. 
−Removed: At December 31, 2021, PPP loans were $1,094 with deferred fees of $42. 
−Removed: At December 31, 2020, PPP loans were $36,903 with net deferred fees of $911.
−Removed: Public sector and industrial development authority (“IDA”) loans are extended to municipalities. 
+Added: Commercial non real estate loans include agricultural loans, operating capital lines and loans secured by capital assets.
+Added: Public sector and industrial development authority (“IDA”) loans are extended to municipalities.
Consumer non-real estate loans include automobile loans, personal loans, credit cards and consumer overdrafts.
−Removed:     Maturities and Interest Rate Sensitivities
−Removed: The following table presents maturities and interest rate sensitivities for loans.
+Added: Maturities and Interest Rate Sensitivities
+Added: The following table presents maturities and interest rate sensitivities for total loans, loans with predetermined interest rates and loans with adjustable interest rates.
+Added: Predetermined interest rates do not adjust throughout the life of the loan.
Loans are presented on a gross basis.
−Removed: $ in thousands
December 31, 2022
−Removed:  5 Years
−Removed: 6-15 Years
Real estate construction
3 unchanged sentences
Public sector and IDA
−Removed: Consumer non-real estate loans
−Removed: Less loans with predetermined interest rates
−Removed: Loans with adjustable rates
−Removed: Modifications and Troubled Debt Restructurings
+Added: Consumer non-real estate 
+Added: Loans with predetermined interest rates:
+Added: Real estate construction
+Added: Consumer real estate
+Added: Commercial real estate
+Added: Commercial non real estate
+Added: Public sector and IDA
+Added: Consumer non-real estate
+Added: Total loans with predetermined interest rates:
+Added: Loans with adjustable interest rates:
+Added: Real estate construction
+Added: Consumer real estate
+Added: Commercial real estate
+Added: Commercial non real estate
+Added: Public sector and IDA
+Added: Consumer non-real estate
+Added: Total loans with adjustable interest rates
Modifications
8 unchanged sentences
The Company codes modifications to assist in identifying TDRs.
−Removed: When the COVID-19 pandemic began, the Company added coding to identify modifications to borrowers experiencing COVID-19 related hardship.
−Removed: Modifications Made for Competitive Purposes
During the year ended December 31, 2022, the Company provided modifications for competitive reasons to 840 loans totaling $120,241.
+Added: During the year ended December 31, 2021, the Company provided modifications for competitive reasons to 875 loans totaling $112,718.
The modifications were not TDRs and were not related to COVID-19.
−Removed: For the twelve months ended December 31, 2020, the Company provided non-TDR modifications for competitive reasons to 1,047 loans totaling $152,681.
−Removed: Modifications Related to COVID-19
−Removed: The COVID-19 pandemic negatively impacted a significant number of the Company’s borrowers, and may adversely impact some borrowers in the future.
−Removed: Since the COVID-19 pandemic began in March 2020, the Company provided modifications related to COVID-19 financial difficulty, including payment extensions and interest only periods.
−Removed: The CARES Act, the CAA and regulatory guidance specify criteria that, if met, permit an election not to designate the loans as TDRs.
−Removed: The TDRs designated during the year ended December 31, 2021 resulted from COVID-19 related modifications that did not meet the legal and regulatory criteria to avoid designation as TDR.
−Removed: All of the Company’s other COVID-19 related modifications met the criteria and were not designated TDR.
+Added: During 2021, the Company provided modifications to borrowers experiencing COVID-19 related hardship.
+Added: The modification met criteria specified by the CARES Act, the CAA and regulatory guidance and were not designated TDR, including 37 payment extensions to loans totaling $16,426 and 8 amortizing loans granted temporary interest-only periods totaling $22,135.
The Company followed its normal risk rating and nonaccrual designation procedures and did not automatically downgrade or designate as nonaccrual if the loan was modified for COVID-19 related difficulty.
−Removed: The following tables provide information regarding COVID-19 related modifications for the years ended December 31, 2021 and December 31, 2020.
−Removed: Twelve Months Ended December 31,
−Removed: Modifications To Borrowers Impacted by the
−Removed: COVID-19 Pandemic
−Removed: (in thousands)
−Removed: (in thousands)
−Removed: Payment extensions (2)
−Removed: Interest-only period for amortizing loans (2)
−Removed: Maturity date extension
−Removed: Rate reductions (1)
−Removed: Rate reductions were granted to qualifying loans and are permanent for the remaining term of the loan.
−Removed: Rate reductions were provided to alleviate COVID-19 hardship and also to remain competitive in the current low interest rate environment.
−Removed: Payment extensions and interest-only periods granted to amortizing loans have a set expiration date.
−Removed: A loan that received multiple modifications as part of one request, for instance, a rate reduction and a payment extension, is presented only under one modification category.
−Removed: A loan that was modified pursuant to a first request and then was modified subsequently pursuant to a separate request is included for each of the requests.
−Removed: For example, a loan that received a payment extension under a first request and a rate reduction under a second request is counted in the rate reduction category and again in the payment extension category.
−Removed: All COVID-19 related modifications for payment extensions and interest-only periods have returned to contractual terms as of December 31, 2021.
+Added: Modifications are evaluated to determine whether they meet requirements for designation as TDR.
+Added: Please refer to Notes 1 and 5 of Notes to Consolidated Financial Statements for information on designation of TDRs during the reporting periods and the effect of default on the allowance for loan losses.
The Company’s TDRs, by delinquency status, are presented below:
−Removed: $ in thousands
TDR Delinquency Status as of December 31, 2022
3 unchanged sentences
Total TDR Loans
−Removed: $ in thousands
TDR Delinquency Status as of December 31, 2021
+Added: Total TDR Loans
Consumer real estate
1 unchanged sentence
Commercial non real estate
−Removed: Consumer non-real estate
Total TDR Loans
−Removed: Please refer to Note 5 of Notes to Consolidated Financial Statements for information on the effect of default on the allowance for loan losses.
Summary of Loan Loss Experience
−Removed:  Loan Loss Data 
The following table provides information about the allowance for loan losses, nonperforming assets and accruing loans past due 90 days or more:
−Removed: $ in thousands
Allowance for loan losses
Total loans, net of unearned income and deferred fees
−Removed: Allowance for loan losses to loans, net of unearned income and deferred fees
+Added: Allowance for loan losses to loans, net of unearned income and deferred fees and costs
Nonaccrual loans
8 unchanged sentences
Accruing loans past due 90 days or more
−Removed: Management analyzes many factors to determine the appropriate level for the allowance for loan losses and resultant provision expense, including the historical loss rate, the quality of the loan portfolio as determined by management, diversification as to type of loans in the portfolio, internal policies and economic factors. The allowance for loan losses at December 31, 2020 reflected stressed economic data and a high level of uncertainty associated with the COVID-19 pandemic. 
−Removed: The percentage of the allowance for loan losses to total loans decreased from December 31, 2020 to December 31, 2021. 
−Removed: Improved economic conditions at December 31, 2021, as well as lower loss rates, decreases in the amount of loans considered high risk, criticized loans and certain loans with COVID-19 related modifications, led to the reduction of the percentage of the allowance for loan losses to loans. 
−Removed: Nonperforming loans and other real estate owned (“OREO”), together nonperforming assets, improved from December 31, 2020 to December 31, 2021, while accruing loans past due 90 days or more worsened slightly. 
−Removed: More information about the level and calculation methodology of the allowance for loan losses is provided in the sections “Provision and Allowance for Loan Losses”
+Added:  More information about the level and calculation methodology of the allowance for loan losses is provided in the sections “Allowance for Loan Losses”
as well as Notes 1 and 5 of Notes to Consolidated Financial Statements.
Analysis of Net Charge-Offs
−Removed: The following tables show net charge-offs, average loan balance and the percentage of charge-offs to average loan balance for each of the Company’s loan segments at the end of each period. 
+Added: The following tables show net charge-offs, average loan balance and the percentage of charge-offs to average loan balance for each of the Company’s loan segments at the end of each period.
Average loans are presented net of unearned income and net deferred fees.
−Removed: $ in thousands
December 31, 2022
6 unchanged sentences
Commercial non real estate
−Removed: Public Sector  and IDA
+Added: Public Sector and IDA
Consumer non-real estate
−Removed: $ in thousands
December 31, 2021
6 unchanged sentences
Commercial non real estate
−Removed: Public Sector  and IDA
+Added: Public Sector and IDA
Consumer non-real estate
2 unchanged sentences
Any loan amount in excess of collateral value is charged off and the collateral is taken into OREO.
+Added: Allowance for Loan Losses
+Added: The Company’s risk analysis as of December 31, 2022 determined an allowance for loan losses of $8,225 or 0.96% of loans net of unearned income and deferred fees and costs.
+Added: The allowance as of December 31, 2021 was $7,674 or 0.96% of loans net of unearned income and deferred fees and costs.
+Added: To determine the appropriate level of the allowance for loan losses, the Company considers credit risk for certain loans designated as impaired and for non-impaired (“collectively evaluated”) loans.
+Added: Individually Evaluated Impaired Loans
+Added: Individually evaluated impaired loans decreased from December 31, 2021 to December 31, 2022, due to the payoff of one relationship.
+Added: As of December 31, 2022 individually evaluated loans were $3,032 on a gross basis and $3,033 net of unearned income and deferred fees and costs.
+Added: Individually evaluated impaired loans as of December 31, 2021 were $5,878 gross and $5,880 net of unearned income and deferred fees and costs.
+Added: Measurement as of December 31, 2022 and December 31, 2021 did not result in specific allocations to the allowance for loan losses.
+Added: Collectively Evaluated Loans
+Added: Collectively evaluated loans totaled $850,161 gross and $849,711 net of unearned income and deferred fees and costs, with an allowance of $8,225 or 0.97% of collectively evaluated loans net of unearned income and deferred fees and costs as of December 31, 2022.
+Added: As of December 31, 2021, collectively evaluated loans totaled $797,851 gross and $797,368 net of unearned income and deferred fees and costs, with an allowance of $7,674 or 0.96% of collectively evaluated loans net of unearned income and deferred fees and costs.
+Added: Collectively evaluated loans are divided into classes based upon risk characteristics.
+Added: In order to calculate the allowance for collectively evaluated loans, the Company applies to each loan class a historical net charge-off rate for the class, adjusted for qualitative factors that influence credit risk.
+Added: Qualitative factors evaluated for impact to credit risk include economic measures, asset quality indicators, loan characteristics, and changes to internal Company policies and management.
+Added: Net Charge-Offs
+Added: Increases in the net charge-off rate require the allowance for collectively evaluated loans to be increased, while decreases in the net charge-off rate require the allowance for collectively evaluated loans to be decreased.
+Added: On a portfolio level, net charge-offs were $155 for the year ended December 31, 2022, or 0.02% of average loans.
+Added: For the year ended December 31, 2021, net charge-offs were $409 or 0.05% of average loans.
+Added: The 8-quarter average historical loss rate was 0.03% for the year ended December 31, 2022 and 0.05% for the year ended December 31, 2021.
+Added: Economic Factors
+Added: Economic factors influence credit risk and impact the allowance for loan loss.
+Added: The Company sources economic data pertinent to its market from the most recently available publications, including unemployment, business and personal bankruptcy filings, the residential vacancy rate and the inventory of new and existing homes.
+Added: As of December 31, 2022, the unemployment rate for the Company’s market area was measured as of November 2022 and increased from the measurement available as of December 31, 2021, leading management to increase the allocation to the allowance for loan losses.
+Added: Business and personal bankruptcy filing data was available as of September 2022.
+Added: Higher bankruptcy filings indicate heightened credit risk and increase the allowance for loan losses, while lower bankruptcy filings have a beneficial impact on credit risk.
+Added: Compared with data available as of December 31, 2021, business bankruptcy filings slightly decreased and personal bankruptcy filings slightly increased.
+Added: Residential vacancy rates and housing inventory impact the Company’s residential construction customers and the consumer real estate market.
+Added: Higher levels increase credit risk.
+Added: The residential vacancy rate as of December 31, 2022 was measured as of the third quarter of 2022 and worsened slightly from the data incorporated into the December 31, 2021 calculation, resulting in a higher allocation.
+Added: Housing inventory data was available as of December 31, 2022.
+Added: The level was slightly higher than as of December 31, 2021, resulting in a higher allocation.
+Added: Economic factors in 2021 included an allocation for national unemployment filings.
+Added: This factor was added early in the COVID-19 pandemic to capture risk that may not have been reflected by the Company’s standard economic indicators.
+Added: By the beginning of 2022, national unemployment filings had returned to pre-pandemic levels for a sustained period and the Company removed the allocation.
+Added: Asset Quality Indicators
+Added: Asset quality indicators, including past due levels, nonaccrual levels and internal risk ratings, are evaluated at the class level.
+Added: Loans past due and loans designated nonaccrual indicate heightened credit risk.
+Added: Increases in past due and nonaccrual loans increase the required level of the allowance for loan losses and decreases in past due and nonaccrual loans reduce the required level of the allowance for loan losses.
+Added: Accruing loans past due 30-89 days were 0.16% of total loans net of unearned income and deferred fees and costs as of December 31, 2022, an increase from 0.12% as of December 31, 2021.
+Added: As of December 31, 2022, accruing loans past due 90 days were $8, compared with $90 or 0.01% of total loans, net of unearned income and deferred fees and costs as of December 31, 2021.
+Added: Nonaccrual loans as a percentage of total loans net of unearned income and deferred fees and costs were 0.33% as of December 31, 2022 and 0.36% as of December 31, 2021.
+Added: Loans rated special mention and classified (together, “criticized assets”) indicate heightened credit risk.
+Added: Higher levels of criticized assets increase the required level of the allowance for collectively evaluated loans, while lower levels of criticized assets reduce the required level of the allowance for collectively evaluated loans.
+Added: There were no collectively evaluated loans rated special mention as of December 31, 2022, compared with $3,728 as of December 31, 2021, due to improvement in credit quality of a large relationship.
+Added: Collectively evaluated loans rated classified were $1,393 as of December 31, 2022 and $1,064 as of December 31, 2021.
+Added: Other Factors
+Added: The Company considers other factors that impact credit risk, including the interest rate environment, the competitive, legal and regulatory environments, changes in lending policies and loan review, changes in management, and high risk loans.
+Added: The interest rate environment impacts variable rate loans.
+Added: When interest rates increase, the payment on variable rate loans increases, which may increase credit risk.
+Added: The Federal Reserve increased the target Fed Funds rate seven times, totaling 425 basis points during 2022, resulting in an increased allocation for December 31, 2022 compared with the allocation for December 31, 2021.
+Added: The competitive, legal and regulatory environments were evaluated for changes that would impact credit risk.
+Added: Higher competition for loans may increase credit risk, while lower competition may decrease credit risk.
+Added: Competition remained at a similar level to that as of December 31, 2021.
+Added: The legal and regulatory environments remain in a similar posture to that as of December 31, 2021.
+Added: Lending policies, loan review procedures and management’s experience influence credit risk.
+Added: During 2022, appraisal requirements on residential real estate changed, resulting in an increased allocation from December 31, 2021.
+Added: Loan review procedures remained similar to those as of December 31, 2021 and no allocation was taken.
+Added: The allocation for management experience declined from December 31, 2021 to December 31, 2022, due to the hiring of a seasoned Chief Credit Officer to replace the former Chief Credit Officer who left at the end of 2021.
+Added: Levels of high risk loans are considered in the determination of the level of the allowance for loan loss.
+Added: A decrease in the level of high risk loans within a class decreases the required allocation for the loan class, and an increase in the level of high risk loans within a class increases the required allocation for the loan class.
+Added: Total high risk loans decreased 7.67% from the level as of December 31, 2021.
+Added: Unallocated Surplus
+Added: The unallocated surplus as of December 31, 2022 was $179 or 2.23% in excess of the calculated requirement.
+Added: The unallocated surplus as of December 31, 2021 was $361 or 4.94% in excess of the calculated requirement.
+Added: The surplus provides some mitigation of current economic uncertainty that may impact credit risk.
+Added: The calculation of the appropriate level for the allowance for loan losses incorporates analysis of multiple factors and requires management’s prudent and informed judgment.
+Added: The Company augmented the calculated requirement with an unallocated surplus.
+Added: Based on analysis of historical indicators, asset quality and economic factors, management believes the level of allowance for loan losses is reasonable for the credit risk in the loan portfolio as of December 31, 2022.
+Added: Please refer to Note 5 of Notes to Consolidated Financial Statements for further information on collectively evaluated loans, individually evaluated impaired loans and the unallocated portion of the allowance for loan losses.
Allocation of the Allowance for Loan Losses
−Removed: The allowance for loan losses has been allocated according to the amount deemed necessary to provide for anticipated losses within the categories of loans for the years indicated. 
−Removed: Loans are presented net of unearned income and net deferred fees.
−Removed: $ in thousands
+Added: The allowance for loan losses has been allocated according to the amount deemed necessary to provide for anticipated losses within the categories of loans as of the dates indicated.
+Added: Loans are presented net of unearned income and net deferred fees and costs.
December 31, 2022
December 31, 2021
−Removed: Allowance 
−Removed: Percent of 
−Removed: Loans to 
−Removed: Percent of 
−Removed: Allowance to 
−Removed: Allowance 
−Removed: Percent of 
−Removed: Loans to 
−Removed: Percent of 
Real estate construction
−Removed: Consumer real estate    
+Added: Consumer real estate
Commercial real estate
Commercial non real estate
−Removed: Public sector and IDA     
−Removed: Consumer non-real estate     
−Removed: Unallocated     
−Removed: An analysis of the allowance for loan losses by impairment basis follows. 
+Added: Public sector and IDA
+Added: Consumer non-real estate
+Added: An analysis of the allowance for loan losses by impairment basis follows.
Loans are presented on a gross basis.
−Removed: $ in thousands
Impaired loans
9 unchanged sentences
Allowance as a percentage of loans, net of unearned income and deferred fees and costs
−Removed: Please refer to the discussion under “Provision and Allowance for Loan Losses”
+Added: Please refer to the discussion under “Allowance for Loan Losses”
for additional information on the determination of the allowance for loan loss.
−Removed: The fair value of securities available for sale was $686,080, an increase of $139,338 or 25.49% from December 31, 2020.
−Removed: The securities portfolio is subject to the volatility and risk in the financial markets.
−Removed: The risk in financial markets affects the Company in the same way that it affects other institutional and individual investors.
+Added: The Company's securities are designated as available for sale and as such, are reported at fair value.
+Added: The following table presents information on securities available for sale as of the dates indicated.
+Added: December 31, 2022
+Added: December 31, 2021
+Added: Securities available for sale at amortized cost
+Added: Unrealized (loss) gain
+Added: Securities available for sale 
+Added: The securities portfolio is subject to the volatility and risk in the financial markets.
+Added: The risk in financial markets, including interest rate risk and credit risk, affects the Company in the same way that it affects other institutional and individual investors.
+Added: The fair value of available for sale securities is reflected on the Company's balance sheet.
+Added: The unrealized loss in the Company’s investment portfolio is due to interest rate risk, the result of increases in the Federal Reserve’s target interest rate during 2022. 
+Added: The Company’s Asset Liability Management Committee is closely monitoring all of the Company’s financial assets and liabilities in order to manage interest rate risk.
+Added: Credit risk in the Company’s investment portfolio is evaluated on an individual security basis. 
The Company’s investment portfolio includes corporate bonds.
3 unchanged sentences
If economic forces reduce the ability of states and municipalities to make scheduled principal and interest payments on their outstanding indebtedness, or if their income from taxes and other sources declines significantly, states and municipalities could default on their bond obligations.
−Removed: There have been no defaults among the municipal bonds in the Company’s investment portfolio.
−Removed: The fair value of available for sale securities is reflected on the Company's balance sheet.
−Removed: In making investment decisions, management follows internal policy guidelines that help to limit risk by specifying parameters for both security quality and industry and geographic concentrations.
−Removed: Management regularly monitors the quality of the investment portfolio and tracks changes in financial markets.
−Removed: The value of individual securities will be written down if a decline in fair value is considered to be other than temporary, given the totality of the circumstances.
−Removed: Additional information about securities available for sale and securities held to maturity can be found in Note 3 of the Notes to Consolidated Financial Statements.
−Removed: Maturities and Associated Yields
−Removed: The following table presents the maturities for debt securities available for sale at their carrying values as of December 31, 2021 and weighted average yield for each range of maturities. 
−Removed: Weights are based upon the value of each security.
−Removed: $ in thousands
−Removed: Maturities and Yields
−Removed: December 31, 2021
−Removed: Available for Sale:
−Removed: government agencies
−Removed: Weighted average yield
−Removed: Mortgage-backed securities
−Removed: Weighted average yield
−Removed: States and political subdivision –
−Removed: nontaxable (1)
−Removed: Weighted average yield
−Removed: Weighted average yield
−Removed: Weighted average yield
−Removed: Rates shown represent weighted average yield on a fully taxable basis.
−Removed: The majority of mortgage-backed securities and collateralized mortgage obligations held at December 31, 2021 were backed by U.S.
+Added: There have been no defaults among the municipal bonds in the Company’s investment portfolio. 
+Added: As of December 31, 2022, there are no credit risk concerns with any of the Company’s securities.
+Added: The majority of mortgage-backed securities and collateralized mortgage obligations were backed by U.S.
government agencies.
1 unchanged sentence
These tests address possible fluctuations in the average life and variances caused by the change in rate times the change in volume that have been allocated to rate and volume changes proportional to the relationship of the absolute dollar amounts of the change in each.
−Removed: Except for U.S.
−Removed: government agency securities, the Company has no securities with any issuer that exceeds 10% of stockholders’
−Removed: The following table presents deposit categories:
+Added: In making investment decisions, management follows internal policy guidelines that help to limit risk by specifying parameters for both security quality and industry and geographic concentrations.
+Added: Management regularly monitors the quality of the investment portfolio and tracks changes in financial markets.
+Added: The value of individual securities will be written down if a decline in fair value is considered to be other than temporary, given the totality of the circumstances.
+Added: Additional information about securities available for sale can be found in Note 3 of Notes to Consolidated Financial Statements.
+Added: The following table presents deposits by category:
December 31, 2022
December 31, 2021
−Removed: Percent Change
Noninterest-bearing demand deposits
9 unchanged sentences
Average amounts and average rates paid on deposit categories are presented below:
−Removed: $ in thousands
Year Ended December 31,
5 unchanged sentences
Uninsured Deposits
−Removed: FDIC insurance covers deposits of up to $250 per depositor. 
−Removed: As of December 31, 2021, $599,948 of the Bank's deposits were uninsured. 
−Removed: The following table sets forth time deposit that exceed $250.
−Removed: $ in thousands
+Added: FDIC insurance covers deposits of up to $250 per depositor.
+Added: As of December 31, 2022, $665,002 of the Bank’s deposits were uninsured.
+Added: The following table sets forth time deposits that exceed $250.
December 31, 2022
3 unchanged sentences
Through 12 Months
−Removed: Total time deposits of $250 or more
+Added: Total time deposits exceeding $250
Derivatives and Market Risk Exposures
−Removed: The Company engages in derivative financial instruments associated with its secondary market operation. 
−Removed: The derivatives are valued within other assets and other liabilities. 
−Removed: Please refer to Note 1 of Notes to Consolidated Financial Statements for information on derivative valuation. 
+Added: The Company engages in derivative financial instruments associated with its secondary market operation.
+Added: The derivatives are recorded within other assets and other liabilities.
+Added: Please refer to Note 1 of Notes to Consolidated Financial Statements for information on derivative valuation.
The Company is not a party to derivatives with off-balance sheet risks such as futures, forwards, swaps, and options.
2 unchanged sentences
Management does not plan any future involvement in high risk derivative products.
−Removed: The Company has investments in mortgage-backed securities, principally through the Government National Mortgage Association and Federal National Mortgage Association, with a fair value of approximately $206,174.
+Added: The Company’s investments in mortgage-backed securities are primarily through the Government National Mortgage Association and Federal National Mortgage Association.
See Note 3 of Notes to Consolidated Financial Statements for additional information relating to securities.
12 unchanged sentences
The Company has diverse liquidity sources, including customer and purchased deposits, customer repayments of loan principal and interest, sales, calls and maturities of securities, Federal Reserve discount window borrowing, short-term borrowing, and FHLB advances.
−Removed: At December 31, 2021, the Bank did not have purchased deposits, discount window borrowings, short-term borrowings, or FHLB advances.  To assure that short-term borrowing is readily available, the Company tests accessibility annually.
+Added: As of December 31, 2022, the Bank did not have purchased deposits, discount window borrowings, short-term borrowings, or FHLB advances.  To assure that short-term borrowing is readily available, the Company tests accessibility annually.
The Company considers its security portfolio for typical liquidity needs, within accounting, legal and strategic parameters.
4 unchanged sentences
Regulatory capital levels determine the Company’s ability to use purchased deposits and the Federal Reserve discount window.
−Removed: At December 31, 2021, the Company is considered well capitalized and does not have any restrictions on purchased deposits or borrowing ability at the Federal Reserve discount window.
+Added: As of December 31, 2022, the Company is considered well capitalized and does not have any restrictions on purchased deposits or borrowing ability at the Federal Reserve discount window.
The Company monitors factors that may increase its liquidity needs.
Some of these factors include deposit trends, large depositor activity, maturing deposit promotions, interest rate sensitivity, maturity and repricing timing gaps between assets and liabilities, the level of unfunded loan commitments and loan growth.
−Removed: At December 31, 2021, the Company’s liquidity is sufficient to meet projected trends in these areas.
+Added: As of December 31, 2022, the Company’s liquidity is sufficient to meet projected trends.
To monitor and estimate liquidity levels, the Company performs stress testing under varying assumptions on credit sensitive liabilities and the sources and amounts of balance sheet and external liquidity available to replace outflows.
The Company’s Contingency Funding Plan sets forth avenues for rectifying liquidity shortfalls.
−Removed: At December 31, 2021, the analysis indicated adequate liquidity under the tested scenarios.
+Added: As of December 31, 2022, the analysis indicated adequate liquidity under the tested scenarios.
The Company utilizes several other strategies to maintain sufficient liquidity.
−Removed: Loan and deposit growth are managed to keep the loan to deposit ratio within the Company’s own policy range of 65% to 75%.
−Removed: At December 31, 2021, the loan to deposit ratio was 53.74%.
+Added: Loan and deposit growth are managed to keep the loan to deposit ratio within the Company’s internally-set target range.
+Added: As of December 31, 2022, the loan to deposit ratio was 55.28%.
The investment strategy takes into consideration the term of the investment, and securities in the available for sale portfolio are laddered based upon projected funding needs.
In the normal course of business, we enter into certain contractual obligations, including obligations to make future payments on lease arrangements, contractual commitments with depositors, and service contracts.
−Removed: The table below presents our significant contractual obligations as of December 31, 2021, except for pension and other postretirement benefit plans, which are included in Note 8 of Notes to Consolidated Financial Statements in this Form 10-K.
−Removed: $ in thousands
+Added: The table below presents our significant contractual obligations, except for pension and other postretirement benefit plans, which are included in Note 8 of Notes to Consolidated Financial Statements.
+Added: December 31, 2022
Payments Due by Period
5 unchanged sentences
As of December 31, 2022, the Company has no material commitments for long term debt or for capital expenditures.
−Removed: Recent Accounting Pronouncements
−Removed: See Note 1 of Notes to Consolidated Financial Statements for information relating to recent accounting pronouncements.
Capital Resources
Total stockholders’
−Removed: equity at December 31, 2021 was $191,751, a decrease of $8,856, or 4.41%, from the $200,607 at December 31, 2020.
+Added: equity as of December 31, 2022 was $122,687, a decrease of $69,064, or 36.02%, from $191,751 as of December 31, 2021.
+Added: The decline in stockholders’
+Added: equity is due to the change in market value of the securities portfolio, which was in a gain position as of December 31, 2021 and ended December 31, 2022 in a loss position.
+Added: Unrealized gains and losses in the securities portfolio are reflected in the equity component, accumulated other comprehensive income (loss).
The largest component of stockholders’
−Removed: equity, retained earnings, decreased from $189,547 at December 31, 2020 to $188,229 at December 31, 2020, due to dividends of $8,806 and repurchase of shares of $12,894, offset by net income of $20,382.
+Added: equity, retained earnings, increased from $188,229 as of December 31, 2021 to $199,091 as of December 31, 2022.
+Added: The increase stemmed from net income of $25,932, offset by dividends of $8,950 and repurchases of shares of $6,120.
The Company qualifies as a small bank holding company under the Federal Reserve’s Small Bank Holding Company Policy Statement, which exempts bank holding companies with less than $3 billion in assets from reporting consolidated regulatory capital ratios and from minimum regulatory capital requirements.
−Removed: NBB is subject to various capital requirements administered by banking agencies, including an additional capital conservation buffer in order to make capital distributions or discretionary bonus payments.
+Added: NBB is subject to various capital requirements administered by banking agencies, including an additional capital conservation buffer in order to make capital distributions or discretionary bonus payments.
Risk-based capital ratios are calculated in compliance with OCC rules based on the Basel III Capital Rules.
−Removed: The Bank’s ratios are well above the required minimums at December 31, 2021 and December 31, 2020.
−Removed: Risk based capital ratios for the Bank are shown in the following tables.
+Added: The Bank’s ratios are well above the required minimums as of December 31, 2022 and December 31, 2021.
+Added: Risk based capital ratios for NBB are shown in the following tables.
December 31, 2022
December 31, 2021
−Removed: Regulatory Capital
−Removed: Minimum Ratios
+Added: Regulatory Capital Minimum Ratios
Regulatory Capital Minimum
−Removed: Ratios with Capital
−Removed: Conservation Buffer
+Added: Ratios with Capital Conservation
Total Capital Ratio
3 unchanged sentences
Off-Balance Sheet Arrangements
−Removed: The Company’s off-balance sheet arrangements at December 31, 2021 are detailed in the table below.
−Removed: $ in thousands
+Added: The Company’s off-balance sheet arrangements as of December 31, 2022 are detailed in the table below.
Payments Due by Period
21 unchanged sentences
Operating leases are for buildings used in the Company’s day-to-day operations.
+Added: Recent Accounting Pronouncements
+Added: See Note 1 of Notes to Consolidated Financial Statements for information relating to recent accounting pronouncements.
+Added: Quantitative and Qualitative Disclosures About Market Risk
+Added: Not applicable.
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.