What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-14 compared with 2024-05-15 · 457 added, 188 removed, 911 unchanged (41% of the section changed)

4 unchanged sentences

(in thousands, except share and per share data)

June 30, 2024

December 31, 2023

Cash and due from banks

2 unchanged sentences

80,477 73,636

Federal Funds sold

Total cash and cash equivalents

12 unchanged sentences

Accrued interest receivable

Core deposit intangible, net

Bank-owned life insurance

23 unchanged sentences

Authorized 10,000,000 shares;

issued and outstanding 5,893,782 (including 4,095 unvested) shares at March 31, 2024 and December 31, 2023

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

Retained earnings

8 unchanged sentences

National Bankshares, Inc.

Consolidated Statements of Income

Three Months Ended March 31,

Consolidated Statements of (Loss) Income

Three Months Ended June 30,

(in thousands, except share and per share data)

1 unchanged sentence

Interest and fees on loans

$ 10,277 $ 9,333

Interest on federal funds sold

Interest on interest-bearing deposits

2 unchanged sentences

Total interest income

16,021 14,044

Interest Expense

4 unchanged sentences

Net interest income

(Recovery of) provision for credit losses

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

Provision for credit losses

Net interest income after provision for credit losses

Noninterest Income

2 unchanged sentences

Credit and debit card fees, net

Gain on sale of investment

Gain on sale of mortgage loans

Realized securities gain, net

Realized securities loss, net

Total noninterest income

4 unchanged sentences

FDIC assessment

Intangible asset amortization

Net costs of other real estate owned

2 unchanged sentences

Merger-related expenses

Contract termination

Other operating expenses

Total noninterest expense

Income before income taxes

Income tax expense

$ 2,174 $ 4,531

Basic earnings per common share

(Loss) Income before income (benefit) tax

Income tax (benefit) expense

Net (Loss) Income

Basic net (loss) income per common share

Fully diluted net (loss) income per common share

Weighted average number of common shares outstanding, basic

Weighted average number of common shares outstanding, fully diluted

Dividends declared per common share

See accompanying notes to consolidated financial statements.

National Bankshares, Inc.

Consolidated Statements of Comprehensive (Loss) Income

Three Months Ended June 30, 2024 and 2023

(in thousands)

Net (Loss) Income

$ ( 306 ) $ 3,901

Diluted earnings per common share

Other Comprehensive Loss, Net of Tax

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

( 150 ) ( 4,848 )

Weighted average number of common shares outstanding, basic

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

Other comprehensive loss, net of tax

( 150 ) ( 2,206 )

Weighted average number of common shares outstanding, diluted

Total Comprehensive (Loss) Income

$ ( 456 ) $ 1,695

Dividends declared per common share

See accompanying notes to consolidated financial statements.

National Bankshares, Inc.

Consolidated Statements of Income

Six Months Ended June 30,

(in thousands, except share and per share data)

Interest Income

Interest and fees on loans

Interest on federal funds sold

Interest on interest-bearing deposits

Interest on securities – taxable

Interest on securities – nontaxable

Total interest income

Interest Expense

Interest on time deposits

Interest on other deposits

Interest on borrowings

Total interest expense

Net interest income

Provision for credit losses

Net interest income after provision for credit losses

Noninterest Income

Service charges on deposit accounts

Other service charges and fees

Credit and debit card fees, net

Gain on sale of investment

Gain on sale of mortgage loans

Realized securities loss, net

Total noninterest income

Noninterest Expense

Salaries and employee benefits

Occupancy, furniture and fixtures

Data processing and ATM

FDIC assessment

Intangible asset amortization

Net costs of other real estate owned

Franchise taxes

Professional services

Merger-related expenses

Contract termination

Other operating expenses

Total noninterest expense

Income before income taxes

Income tax expense

Basic net income per common share

Fully diluted net income per common share

Weighted average number of common shares outstanding, basic

Weighted average number of common shares outstanding, fully diluted

Dividends declared per common share

National Bankshares, Inc.

Consolidated Statements of Comprehensive (Loss) Income

Three Months Ended March 31, 2024 and 2023

Six Months Ended June 30, 2024 and 2023

(in thousands)

1 unchanged sentence

Other Comprehensive (Loss) Income, Net of Tax

Unrealized holding (loss) gain on available for sale securities net of tax of ($887) and $ 3,121 for the periods ended March 31, 2024 and 2023, respectively

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

( 3,488 ) 6,891

Reclassification adjustment for gain included in net income, net of tax of ($3) in 2023

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

Other comprehensive (loss) income, net of tax

5 unchanged sentences

Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended March 31, 2024 and 2023

Three Months Ended June 30, 2024 and 2023

(in thousands except share data)

Comprehensive

Balances at March 31, 2023

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

- 3,901 - 3,901

Cash dividends of $ 0.73 per share

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

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

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

Stock based compensation

Balances at June 30, 2023

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

Balances at March 31, 2024

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

- ( 306 ) - ( 306 )

Acquisition of Frontier Community Bank

14,299 - - 14,299

Cash dividends of $ 0.73 per share

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

Other comprehensive loss, net of tax of ($ 40 )

- - ( 150 ) ( 150 )

Stock based compensation

Balances at June 30, 2024

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

See accompanying notes to consolidated financial statements.

Six Months Ended June 30, 2024 and 2023

(in thousands except share data)

Comprehensive

Balances at December 31, 2022

7 unchanged sentences

- - 9,523 9,523

Balances at March 31, 2023

Stock based compensation

Balances at June 30, 2023

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

2 unchanged sentences

- 1,868 - 1,868

Acquisition of Frontier Community Bank

14,299 - - 14,299

Cash dividends of $ 0.73 per share

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

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

1 unchanged sentence

Stock based compensation

Balances at March 31, 2024

Balances at June 30, 2024

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

2 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended March 31, 2024 and 2023

Six Months Ended June 30, 2024 and 2023

(in thousands)

Cash Flows from Operating Activities

$ 2,174 $ 4,531

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

(Recovery of) provision for credit losses

Provision for credit losses

Depreciation of premises and equipment

Net accretion of acquisition accounting estimates

Amortization of premiums and accretion of discounts, net

Gain on sale of securities available for sale, net

Loss on sale of securities available for sale, net

Loss on disposal of repossessed assets

Increase in cash value of bank-owned life insurance

( 258 ) ( 239 )

Origination of mortgage loans held for sale

( 1,023 ) ( 1,239 )

Proceeds from sale of mortgage loans held for sale

Gain on sale of mortgage loans held for sale

( 24 ) ( 16 )

Equity based compensation expense

1 unchanged sentence

Accrued interest receivable

( 165 ) ( 6 )

Accrued interest payable

5 unchanged sentences

Purchase of loan participations

( 5,609 ) ( 2,280 )

Collection of loan participations

Loan originations and principal collections, net

( 2,012 ) ( 5,166 )

Proceeds from sale of repossessed assets

1 unchanged sentence

Purchases of premises and equipment

( 315 ) ( 223 )

Net cash (used in) provided by investing activities

( 3,096 ) 16,062

BOLI settlement

Cash acquired in the acquisition, net of cash paid

Net cash provided by investing activities

Cash Flows from Financing Activities

Net change in time deposits

16,661 57,942

Net change in other deposits

17,175 ( 89,215 )

Cash dividends paid

Net cash provided by (used in) financing activities

33,836 ( 37,163 )

Net change in cash and cash equivalents

34,580 ( 16,768 )

Cash and cash equivalents at beginning of period

86,603 71,429

Cash and cash equivalents at end of period

$ 121,183 $ 54,661

Supplemental Disclosures of Cash Flow Information

Interest paid on deposits and borrowings

$ 6,678 $ 2,890

Income taxes paid

3 unchanged sentences

Unrealized holding (loss) gain on securities available for sale

( 4,225 ) 14,847

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

See accompanying notes to consolidated financial statements.

1 unchanged sentence

Notes to Consolidated Financial Statements

March 31, 2024

June 30, 2024

$ in thousands, except per share data

10 unchanged sentences

Certain policies inherently rely more extensively on the use of estimates, assumptions, and judgments and as such may have a greater possibility of producing results that could be materially different than originally reported.

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

The results of operations for the three month period ended March 31, 2024 are not necessarily indicative of results of operations for the full year or any other interim period.

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

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

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

The Company’s significant accounting policies followed in preparation of the unaudited consolidated financial statements are disclosed in Note 1 of the 2023 Form 10 -K.

There have been no significant changes to the application of significant accounting policies since December 31, 2023.

All amounts and disclosures included in this quarterly report as of December 31, 2023, were derived from the Company’s audited consolidated financial statements.

The Company posts all reports required to be filed under the Securities Exchange Act of 1934 on its web site at www.nationalbankshares.com .

Certain items in the prior period financial statements have been reclassified to conform to the current presentation.

These reclassifications had no effect on prior year net income or stockholders’ equity.

The Company posts all reports required to be filed under the Securities Exchange Act of 1934 on its web site at www.nationalbankshares.com.

In addition to applying significant accounting policies disclosed in Note 1 of the 2023 Form 10 -K, the Company implemented accounting policies appropriate for its merger with Frontier Community Bank (“FCB”).

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

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

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

Under the acquisition method of accounting, the Company identifies the acquirer and the closing date and applies applicable recognition principles and conditions.

Acquisition-related costs are costs the Company incurs to effect a business combination.

Those costs include advisory, legal, accounting, valuation, and other professional or consulting fees.

Some other examples of costs to the Company include systems conversions, integration planning consultants and advertising costs.

The Company accounts for acquisition-related costs as expenses in the periods in which the costs are incurred and the services are received, with one exception.

The costs to issue debt or equity securities are recognized in accordance with other applicable GAAP.

These acquisition-related costs have been and will be included within the consolidated statements of income classified within the noninterest expenses caption.

The most significant assessment of fair value in the Company’s accounting for business combinations relates to the valuation of an acquired loan portfolio.

At acquisition, loans are classified as either (i) purchase credit-deteriorated (“PCD”) loans or (ii) non-PCD loans and are recorded at fair value on the date of acquisition.

PCD loans are those for which there is more than insignificant evidence of credit deterioration since origination.

Fair values are determined primarily through a discounted cash flow approach which considers the acquired loans’ underlying characteristics, including account types, remaining terms, annual interest rates, interest types, timing of principal and interest payments, current market rates, and remaining balances.

Estimates of fair value also include estimates of default, loss severity, and estimated prepayments.

At acquisition, an allowance for credit losses (“ACL”) for PCD loans is determined based upon the Company’s methodology for estimating the ACL on loans.

This allowance is credited to the ACL on loans with a corresponding adjustment to the amortized cost basis of the loan on the date of the acquisition.

The difference between the new amortized cost basis and the unpaid principal balance is either a noncredit discount or premium that is amortized or accreted to interest income over the remaining life of the loan.

Disposals of PCD loans, which may include sale of loans to third parties, receipt of payments in full or in part from the borrower or foreclosure of the collateral, result in removal of the loan from the loan portfolio at its carrying amount.

For non-PCD loans, an ACL is established in a manner that is consistent with the Company’s originated loans.

The ACL is determined using the Company’s methodology and the related ACL for non-PCD loans is recorded through a charge to the provision for credit losses in the period in which the loans are purchased or acquired.

The entirety of any purchase discount or premium on non-PCD loans is amortized or accreted to interest income over the remaining life of the loan.

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

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

Intangible assets are initially recorded at fair value.

Determining fair value is subjective, requiring the use of estimates, assumptions and management judgment.

Intangible assets that have finite lives are amortized over their estimated useful lives and are subject to impairment testing.

Upon acquisition of FCB, the Company recognized a core deposit intangible asset, which represents the value of customer deposit relationships.

Core deposit intangible assets are amortized over an estimated useful life of 10 years using an accelerated method which approximates the estimated attrition of the acquired deposits.

Risks and Uncertainties

6 unchanged sentences

ASU 2023 - 09

In December 2023, the FASB issued ASU 2023 - 09, “Income Taxes (Topic 740 ):

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

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

6 unchanged sentences

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

Recently Adopted Accounting Standards

ASU 2022 - 03

In June 2022, the Financial Accounting Standards Board (FASB) issued ASU 2022 - 03, “Fair Value Measurement (Topic 820 ):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” ASU 2022 - 03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

ASU 2022 - 03 was effective for the Company on January 1, 2024.

The adoption of ASU 2022 - 03 did not have a material impact on the Company’s consolidated financial statements.

Business Combination

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

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

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

Assets acquired, liabilities assumed, and consideration paid were recorded at estimated fair value on the Acquisition Date.

The excess of the purchase price over the fair value of the net assets was recorded as provisional goodwill and represents the benefit from the transaction that is not otherwise quantifiable, including expected management and operational synergies and intangible assets that do not qualify for separate recognition.

The Company will keep the measurement of goodwill open for twelve months following the Acquisition Date in order to reflect any adjustments to the fair value of assets acquired and liabilities assumed that may arise during the Company’s final review procedures of any updated information.

The Company does not expect that any portion of goodwill will be deductible.

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

Estimated Fair Value

Estimated Fair

Values as Recorded

Purchase Price Consideration:

Stock consideration (1)

Cash consideration (2)

Total purchase price consideration

Identifiable assets:

Cash and cash equivalents

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

9,325 ( 5 ) 9,320

Loans, gross, purchased performing

115,589 ( 7,720 ) 107,869

Loans, gross, purchased credit deteriorated

11,157 ( 822 ) 10,335

Loans in process

Deferred fees and costs on loans

Allowance for credit losses on loans

( 881 ) 881 -

Premises and equipment

3,003 449 3,452

Core deposit intangible

- 2,100 2,100

4,998 966 5,964

Total identifiable assets acquired

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

Identifiable Liabilities

130,323 ( 606 ) $ 129,717

5,250 ( 20 ) 5,230

Other liabilities

1,960 131 2,091

Total identifiable liabilities assumed

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

Provisional fair value of net assets acquired

Provisional goodwill

The Company issued 464,855 shares of its common stock valued at $ 30.76 per share, which was the closing price of the Company’s common stock on May 31, 2024, the last day of trading prior to the consummation of the acquisition.

Cash consideration was paid for shareholder elections, fractional shares and to settle outstanding vested stock options.

The merger agreement provided for up to 10 % of consideration to be paid in cash of $ 14.48 per FCB common share, at the shareholders’ election.

Payments for shareholder elections and fractional shares totaled $ 1,769 .

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

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

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

The Company utilized a valuation specialist to assist with the determination of fair values for certain acquired assets and assumed liabilities.

Cash and equivalents

Included in cash and equivalents are an investment in time deposits of other financial institutions, valued at the present value of the expected contractual payments discounted at market rates for instruments with similar terms.

The estimated fair value of the acquired portfolio of debt securities was based on quoted market prices.

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

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

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

Consistent with GAAP, FCB’s related allowance for credit losses on loans and deferred fees and costs were not recorded.

Credit risk was quantified using a probability of default (“PD”)/loss given default(“LGD”) methodology from a market participant perspective and applied to each loan’s outstanding principal balance.

PD/LGD rates were tailored to PCD or non-PCD status.

Other fair value indicators were quantified using a discounted cash flow methodology, with discounts applied for current market rates, credit risk and liquidity.

Cash flows were generated based upon the loans’ underlying characteristics and estimated prepayment speeds.

The following table provides information on PCD and non-PCD loans as of the Acquisition Date:

Non-PCD Loans

Number of loans

FCB recorded value

$ 11,157 $ 115,589

Discount for credit risk

( 295 ) ( 498 )

Discount for non-credit factors

( 527 ) ( 7,222 )

$ 10,335 $ 107,869

Premises and equipment

The fair value of premises acquired was based on a recent third -party appraisal.

Acquired equipment was based on the remaining net book value of FCB, which approximated fair value.

Core Deposit Intangible

Core deposit relationships provide a stable source of funds for lending and contribute to profitability.

The core deposit intangible was valued using an income approach focused on cost savings, which recognizes the cost savings represented by the expense of maintaining the core deposit base versus the cost of an alternative funding source.

The valuation incorporates assumptions related to account retention, discount rates, deposit interest rates, deposit maintenance costs and alternative funding rates.

right of use asset, lease liability and fair value

Right of use assets (included in other assets) and lease liabilities (included in other liabilities) for branch locations were measured at the acquisition date.

The fair value of leases was determined by applying a discounted cash flow methodology discounted by current lease rates within the appropriate market.

Deposits were valued using methods appropriate to their characteristics.

The fair value of noninterest bearing demand deposits, interest bearing demand deposits, money market and savings deposit accounts were assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand.

Time deposits were valued at the present value of the expected contractual payments discounted at market rates for instruments with similar terms.

The estimated fair value of borrowings was determined by obtaining payoff quotes from the lender.

Borrowings were paid off upon completion of the acquisition.

Deferred Tax Asset

Application of fair value measurements resulted in an increase to the deferred tax asset, included in other assets.

Loans and Allowance for Credit Losses

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

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

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

March 31, 2024

June 30, 2024

December 31, 2023

20 unchanged sentences

$ 978,865 $ 847,552

The amortized cost of loans excludes accrued interest receivable of $ 3,035 at March 31, 2024 and $ 3,032 at December 31, 2023.

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

Past Due and Nonaccrual Loans

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

March 31, 2024

June 30, 2024

Real Estate Construction

31 unchanged sentences

December 31, 2023

Accruing Loans

Days Past Due

Real Estate Construction

31 unchanged sentences

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

March 31, 2024

June 30, 2024

December 31, 2023

6 unchanged sentences

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

During the three months ended March 31, 2024, no accrued interest receivable was reversed against interest income.

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

Allowance for Credit Losses on Loans ( “ ACLL ” )

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

Activity in the Allowance for Credit Losses on Loans for the Three Months Ended March 31, 2024

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

Balance, December 31, 2023

4 unchanged sentences

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

Balance, March 31, 2024

Merger adjustment (1)

10 97 55 4 - 9 - 175

Activity in the Allowance for Credit Losses on Loans for the Three Months Ended March 31, 2023

Balance, June 30, 2024

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

Adjustment for PCD acquired loans.

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

Balance, December 31, 2022

6 unchanged sentences

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

Balance, March 31, 2023

Balance, June 30, 2023

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

Activity in the Allowance for Credit Losses on Loans for the Year Ended December 31, 2023

Consumer Non-

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

Balance, December 31, 2022

9 unchanged sentences

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

Allowance for Credit Losses on Loans by Segment and Evaluation Method

March 31, 2024

ACLL by Segment and Evaluation Method

June 30, 2024

Individually evaluated

3 unchanged sentences

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

Allowance for Credit Losses on Loans by Segment and Evaluation Method

ACLL by Segment and Evaluation Method

December 31, 2023

Consumer Non-

Consumer Non Real Estate

Individually evaluated

5 unchanged sentences

Loans by Segment and Evaluation Method as of

March 31, 2024

June 30, 2024

Individually evaluated

13 unchanged sentences

Collateral dependent loans are individually evaluated.

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

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

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

If the fair value of the collateral falls below the amortized cost of the loan, the shortfall is recognized in the ACLL.

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

As of March 31, 2024, five of the Company’s individually evaluated loans were collateral dependent.

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

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

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

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

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

March 31, 2024

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

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

June 30, 2024

December 31, 2023

5 unchanged sentences

2,087 - 2,177 -

Commercial real estate, other

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

8 unchanged sentences

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

Term Loans Amortized Cost Basis by Origination Year Loans

March 31, 2024 Prior

Revolving to Term Total

Term Loans Amortized Cost Basis by Origination Year

June 30, 2024 Prior

Revolving Converted

Construction, residential

5 unchanged sentences

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

- - - - - - 90 - 90

$ 76 $ - $ - $ - $ - $ - $ 17,393 $ 47 $ 17,516

Residential closed-end first liens

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

Special Mention

370 - - - - - - - 370

574 - - - - - - - 574

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

Residential closed-end junior liens

2 unchanged sentences

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

Special Mention

- - - 142 166 - - - 308

759 - 168 39 - - - - 966

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

Multifamily residential real estate

8 unchanged sentences

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

Special Mention

696 - - - - - - - 696

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

Commercial and industrial

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

Special Mention

- - - - - - 96 - 96

200 - - 7 - - - - 207

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

YTD gross charge-offs

Public sector and IDA

4 unchanged sentences

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

Special Mention

- - - - 4 - - - 4

- - - - 69 11 - - 80

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

Other consumer

13 unchanged sentences

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

Term Loans Amortized Cost Basis by Origination Year Loans

Term Loans Amortized Cost Basis by Origination Year

December 31, 2023 Prior

Revolving to Term Total

Revolving Converted

Construction, residential

62 unchanged sentences

If the borrower is experiencing financial difficulty, the loan’s risk rating is evaluated and is typically changed to special mention or classified, which results in individual evaluation of the loan for the ACLL.

There were two loans modified for borrowers experiencing financial difficulty during the three months period ended March 31, 2024.

There were no loans to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2023.

The following table presents information about loans modified for borrowers experiencing financial difficulty during the three months and as of the date indicated.

March 31, 2024

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

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

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

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

June 30, 2024

Financial Effect

7 unchanged sentences

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

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

June 30, 2023

Financial Effect

Commercial Real Estate

Commercial real estate owner-occupied

$ 6,396 5.40 % Interest only payments

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

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

Both loans are in current status as of March 31, 2024.

There were no loans to borrowers experiencing financial difficulty that had a payment default during the three months ended March 31, 2024 and 2023 and were modified in the twelve months prior to that default.

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

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

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

1 unchanged sentence

Residential Real Estate Loans In Process of Foreclosure

As of March 31, 2024 the Company had three 1 - 4 family residential real estate loans totaling $ 126 in process of foreclosure.

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

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

ACL on Unfunded Commitments

The following tables present the balance and activity in the ACL for unfunded commitments for the three months ended March 31, 2024 and 2023:

ACL for Unfunded Commitments

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

Allowance for Credit Losses on Unfunded Commitments

1 unchanged sentence

Recovery of credit losses

Balance, March 31, 2024

FCB acquisition

Balance, June 30, 2024

Allowance for Credit Losses on Unfunded Commitments

2 unchanged sentences

Recovery of credit losses

Balance, March 31, 2023

Balance, June 30, 2023

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

March 31, 2024

June 30, 2024

Unrealized Gains

23 unchanged sentences

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

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

Accrued interest receivable on securities, included in accrued interest receivable on the Consolidated Balance Sheets, totaled $ 3,444 at March 31, 2024 and $ 3,281 at December 31, 2023.

The deferred tax asset for the net unrealized loss on securities available for sale was $ 17,516 as of March 31, 2024 and $ 16,629 as of December 31, 2023.

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

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

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

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

The amortized cost and fair value of single maturity securities available for sale at March 31, 2024, by contractual maturity, are shown below.

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

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

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

March 31, 2024

June 30, 2024

Amortized Cost

11 unchanged sentences

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

March 31, 2024

June 30, 2024

Less Than 12 Months

12 Months or More

Gross Unrealized

government agencies and corporations

11 unchanged sentences

12 Months or More

Gross Unrealized

government agencies and corporations

10 unchanged sentences

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

At March 31, 2024, the Company had 574 securities with a fair value of $ 598,720 in an unrealized loss position.

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

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

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

No credit risk was found and no ACL on securities available for sale was recorded as of March 31, 2024.

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

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

10 unchanged sentences

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

In addition to dividends, NBB also benefits from its membership with FHLB through eligibility to borrow from the FHLB, using as collateral NBB’s capital stock investment in the FHLB and qualifying NBB real estate mortgage loans totaling $ 506,896 at March 31, 2024.

The Company’s management reviews for impairment based upon the ultimate recoverability of the cost basis of the FHLB stock, and at March 31, 2024, did not determine any impairment.

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

Realized Securities Gains and Losses

There were no sales of securities during 2024.

During the first three months of 2023, the Company realized net securities gains of $ 12 on the sale of securities with an amortized cost basis of $ 17,987 .

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

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

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

2 unchanged sentences

Pension Benefits

Three Months Ended March 31,

Three Months Ended June 30,

Interest cost

5 unchanged sentences

$ ( 12 ) $ ( 25 )

Pension Benefits

Six Months Ended June 30,

Interest cost

Expected return on plan assets

( 1,216 ) ( 1,036 )

Amortization of prior service cost

Recognized net actuarial loss

Net periodic benefit income

$ ( 24 ) $ ( 50 )

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

8 unchanged sentences

Valuation is based on quoted prices in active markets for identical assets and liabilities.

Level 2 – Valuation is based on observable inputs including:

Valuation is based on observable inputs including:

● quoted prices in active markets for similar assets and liabilities,

16 unchanged sentences

Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that consider observable market data (Level 2 ).

The carrying value of restricted Federal Reserve Bank of Richmond and Federal Home Loan Bank of Atlanta stock approximates fair value based upon the redemption provisions of each entity and is therefore excluded from the following tables.

The carrying value of restricted Federal Reserve Bank of Richmond and FHLB stock approximates fair value based upon the redemption provisions of each entity and is therefore excluded from the following tables.

The following tables present the balances of financial assets measured at fair value on a recurring basis as of the dates indicated.

Fair Value Measurement Using

March 31, 2024

June 30, 2024

government agencies and corporations

42 unchanged sentences

Changes in fair value measurement impacts net income.

The Company had two rate lock commitments as of March 31, 2024, resulting in interest rate loan contracts and forward sales commitments.

The interest rate lock commitments gave rise to an asset and the forward loan sales contracts gave rise to a liability.

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

The interest rate lock commitment gave rise to an asset and the forward loan sales contracts gave rise to a liability.

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

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

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

The following tables present information on the interest rate loan contracts and forward sale commitments as of the date indicated:

Fair Value Measurement Using

March 31, 2024

June 30, 2024

Interest rate loan contract

2 unchanged sentences

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

March 31, 2024

June 30, 2024

Valuation Technique

10 unchanged sentences

Current reference price

- 103.05% (102.76%) (2)

Forward sale commitment

37 unchanged sentences

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

No nonrecurring fair value adjustments were recorded on loans held for sale at March 31, 2024 or December 31, 2023.

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

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

Collateral Dependent Loans

Collateral dependent loans are measured on a non-recurring basis for the ACL.

Collateral dependent loans are measured on a non-recurring basis for the ACLL.

If the fair value of the collateral is lower than the loan’s amortized cost basis, the shortfall is recognized in the ACLL.

9 unchanged sentences

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

As of March 31, 2024, three consumer real estate loan totaling $ 121 and two commercial real estate loans totaling $ 2,156 were collateral dependent.

Valuations were based upon a third party evaluation (Level 2 ) and did not result in a specific allocation.

Other Real Estate Owned ( “ OREO ” )

Certain assets such as OREO are measured at fair value less cost to sell.

Valuation of OREO is determined using current appraisals from independent parties, a Level 2 input.

The Company works with a realtor to determine the list price, which may be set at appraised value or at a different amount based on the realtor’s advice and management’s judgement of marketability.

Discounts to appraisals for selling costs or for marketability result in a Level 3 estimate.

The Company did not have any OREO as of March 31, 2024 or December 31, 2023.

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

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

Valuation for one commercial real estate loan was based upon an internal evaluation (Level 3 ).

None of the measurements resulted in a specific allocation.

Fair Value Summary

2 unchanged sentences

Estimated Fair Value

March 31, 2024

June 30, 2024

Carrying Amount

2 unchanged sentences

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

Federal funds sold 3,499 3,499

Interest-bearing deposits

4 unchanged sentences

1,752 - 1,752 -

Mortgage loans held for sale

978,865 - - 919,403

39 unchanged sentences

Comprehensive Loss

Balance at March 31, 2023

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

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

( 4,848 ) - ( 4,848 )

Reclassification adjustment, net of tax of $ 702

2,642 - 2,642

Balance at June 30, 2023

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

Balance at March 31, 2024

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

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

( 150 ) - ( 150 )

Balance at June 30, 2024

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

Net Unrealized

Pension Benefits

Accumulated Other

Comprehensive Loss

Balance at December 31, 2022

4 unchanged sentences

2,632 - 2,632

Balance at March 31, 2023

Balance at June 30, 2023

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

3 unchanged sentences

( 3,488 ) - ( 3,488 )

Balance at March 31, 2024

Balance at June 30, 2024

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

1 unchanged sentence

Substantially all of the Company’s revenue is generated from contracts with customers.

Noninterest revenue streams such as service charges on deposit accounts, other service charges and fees, credit and debit card fees, trust income, and annuity and insurance commissions are recognized in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”.

Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities.

35 unchanged sentences

OREO Gains and Losses

The Company records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed.

The Company records a gain or loss from the sale of other real estate owned ("OREO") when control of the property transfers to the buyer, which generally occurs at the time of an executed deed.

When the Company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable.

1 unchanged sentence

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

Three Months March 31,

Three Months Ended June 30,

Noninterest Income

5 unchanged sentences

Noninterest Income (in-scope of Topic 606)

$ 1,903 $ 1,842

Noninterest Income (out-of-scope of Topic 606)

Total noninterest income

$ 2,199 $ 2,199

Six Months Ended June 30,

Noninterest Income

In-scope of Topic 606:

Service charges on deposit accounts

Other service charges and fees

Credit and debit card fees, net

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

Noninterest Income (in-scope of Topic 606)

Noninterest Income (out-of-scope of Topic 606)

Total noninterest income

The Company’s leases are recorded under ASC Topic 842, “Leases”.

The Company examines its contracts to determine whether they are or contain a lease.

A contract with a lease is further examined to determine whether the lease is a short-term, operating or finance lease.

As permitted by ASC Topic 842, the Company elected not to capitalize short-term leases, defined by the standard as leases with terms of 12 months or less.

The Company also elected the practical expedient not to separate non-lease components from lease components within a single contract.

Right-of-use assets and lease liabilities are recognized for operating and finance leases.

Right-of-use assets represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor.

Lease liabilities represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows.

The Company categorizes leases as short-term, operating or finance leases.

Leases with terms of 12 months or less are designated as short-term and are not capitalized.

Operating and finance leases are capitalized as right-of-use assets and lease liabilities.

Right-of-use assets, included in other assets, represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor.

Lease liabilities, included in other liabilities, represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows.

Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease.

The Company does not separate non-lease components from lease components within a single contract.

Counterparties for the Company’s lease contracts are external to the Company and not related parties.

On June 1, 2024, the Company’s acquisition of FCB added two long-term branch leases.

At the Acquisition Date, the leases were remeasured using the Company’s incremental borrowing rate and remaining lease terms, resulting in an increase of $ 548 to the right of use asset and the lease liability.

Lease payments

Lease payments for short-term leases are recognized as lease expense on a straight-line basis over the lease term, or for variable lease payments, in the period in which the obligation was incurred.

Payments for leases with terms longer than 12 months are included in the determination of the lease liability.

Payments may be fixed for the term of the lease or variable.

Variable payments result when the lease agreement includes a clause providing for escalation of lease payments at specified dates.

If the escalation factor is known, such as a specified percentage increase per year or a stated increase at a specified time, the variable payment is included in the cash flows used to determine the lease liability.

Short-term lease payments are recognized as lease expense on a straight-line basis over the lease term, or for variable lease payments, in the period in which the obligation was incurred.

Operating and finance lease payments may be fixed for the term of the lease or variable.

If the escalation factor for a variable lease payment is known, such as a specified percentage increase per year or a stated increase at a specified time, the variable payment is included in the cash flows used to determine the lease liability.

If the variable payment is based upon an unknown escalator, such as the consumer price index at a future date, the increase is not included in the cash flows used to determine the lease liability.

One of the Company’s leases provides a known escalator that is included in the determination of the lease liability.

The remaining leases do not have variable payments during the term of the lease.

Options to Extend, Residual Value Guarantees, Restrictions and Covenants

Of the Company’s six operating leases as of March 31, 2024, four leases offer the option to extend the lease term.

At the time of capitalization, the Company was not reasonably certain whether it would exercise the options and did not include the time period in the calculation of the lease liability.

The lease agreements provide that the lease payment will increase at the exercise date based on the Consumer Price Index for All Urban Consumers (“CPI-U”).

Because the CPI-U at the exercise date is unknown, the increase is not included in the cash flows determining the lease liability.

None of the Company’s leases provide for residual value guarantees and none provide restrictions or covenants that would impact dividends or require incurring additional financial obligations.

The contracts in which the Company is lessee are with parties external to the Company and not related parties.

The Company’s lease right of use asset is included in other assets and the lease liability is included in other liabilities.

Certain of the Company’s operating leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably certain of being exercised.

The lease agreements do not provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations.

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

March 31, 2024

June 30, 2024

December 31, 2023

6 unchanged sentences

3.84 % 3.29 %

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Lease Expense

4 unchanged sentences

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

For the Six Months Ended June 30,

Lease Expense

Operating lease expense

Short-term lease expense

Total lease expense

Cash paid for amounts included in lease liabilities

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

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

Undiscounted Cash Flow for the Period

March 31, 2024

Twelve months ending March 31, 2025

Twelve months ending March 31, 2026

Twelve months ending March 31, 2027

Twelve months ending March 31, 2028

Twelve months ending March 31, 2029

June 30, 2024

Twelve months ending June 30, 2025

Twelve months ending June 30, 2026

Twelve months ending June 30, 2027

Twelve months ending June 30, 2028

Twelve months ending June 30, 2029

Total undiscounted cash flows

1 unchanged sentence

Stock Based Compensation

The Company’s 2023 Stock Incentive Plan (“the Plan”) was approved by shareholders at the annual shareholder’s meeting on May 9, 2023.

The Company’s 2023 Stock Incentive Plan (“the Plan”) was approved by shareholders at the annual shareholders meeting on May 9, 2023.

The Plan provides for the grant of various forms of stock-based compensation awards that may be settled in, or based upon the value of, the Company’s common stock.

2 unchanged sentences

Restricted Stock Awards

Under the Plan, part of the June and December 2023 semi-annual retainer for non-employee directors was paid in restricted stock awards (“RSAs”).

A summary of changes in the Company’s nonvested RSAs under the Plan for the three months ended March 31, 2024 follows:

Weighted-Average Grant

Date Fair Value

Under the Plan, non-employee directors receive restricted stock awards (“RSAs”) each June and December.

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

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

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

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

Weighted-Average Grant-Date Fair Value

Nonvested at January 1, 2024

4,095 $ 30.73

Nonvested at March 31, 2024

Vested and released

( 2,052 ) 30.70

The RSAs have a one year vesting period.

Expense for the RSAs will be recognized over the vesting period based on the fair value of the stock at the issue date.

Stock based compensation expense charged against income was $ 32 for the three months ended March 31, 2024.

As of March 31, 2024, expense of $ 52 related to the nonvested RSAs is expected to be recognized over the coming 9 months.

Earnings Per Share

The factors used in the earnings per share computation for the periods indicated are presented below:

For the Three Months Ended March 31,

Common Shares 1

Nonvested at June 30, 2024

4,839 $ 30.32

Net (Loss) Income Per Share

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

For the Three Months Ended June 30,

(Denominator)

Basic earnings per common share

$ 2,174 5,889,687 $ 0.37 $ 4,531 5,889,687 $ 0.77

Basic net (loss) income per common share

Dilutive shares for restricted stock awards:

Diluted earnings per common share

$ 2,174 5,891,651 $ 0.37 $ 4,531 5,889,687 $ 0.77

Diluted net (loss) income per common share

Weighted average outstanding

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

There were no anti-dilutive RSAs for the three month periods ended March 31, 2024 and March 31, 2023.

For the Six Months Ended June 30,

(Denominator)

Basic net income per common share

Dilutive shares for restricted stock awards:

Diluted net income per common share

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

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

Note 12 – Goodwill and Other Intangibles

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

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

Gross Carrying

Measurement Period Adjustment Accumulated

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

Core deposit intangible

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

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

Amortization Expense

Total amortizing core deposit intangible

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements