What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-12 compared with 2022-05-06 · 190 added, 93 removed, 756 unchanged (27% of the section changed)

43 unchanged sentences

Three Months Ended

Six Months Ended

INTEREST INCOME

35 unchanged sentences

Three Months Ended

Other comprehensive loss:

Other comprehensive income (loss)

Investment securities available for sale:

2 unchanged sentences

recognized in net income

Other comprehensive (loss) income

Comprehensive Income (Loss)

Six Months Ended

Other comprehensive income (loss)

Investment securities available for sale:

Unrealized holding (loss) gain

Reclassification of investment securities gains

recognized in net income

Other comprehensive (loss)

3 unchanged sentences

Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

Three Months Ended March 31, 2022 and 2021

Six Months Ended June 30, 2022 and 2021

( dollars in thousands, except share and per share data)

9 unchanged sentences

Compensation expense related to stock options

Balance, March 31, 2022

Balance, June 30, 2022

Treasury Stock

8 unchanged sentences

Compensation expense related to stock options

Balance, June 30, 2021

NORWOOD FINANCIAL CORP

Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

Three Months Ended June 30, 2022 and 2021

( dollars in thousands, except share and per share data)

Treasury Stock

Comprehensive

Income (Loss)

Balance, March 31, 2022

Other comprehensive loss

Cash dividends declared ($ 0.28 per share)

Acquisition of treasury stock

Compensation expense related to restricted stock

Stock options exercised

Compensation expense related to stock options

Balance, June 30, 2022

Treasury Stock

Comprehensive

Balance, March 31, 2021

Other comprehensive gain

Cash dividends declared ($ 0.26 per share)

Compensation expense related to restricted stock

Stock options exercised

Compensation expense related to stock options

Balance, June 30, 2021

See accompanying notes to the unaudited consolidated financial statements.

2 unchanged sentences

(dollars in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

13 unchanged sentences

Compensation expense related to restricted stock

Decrease (increase) in accrued interest receivable

(Increase) decrease in accrued interest receivable

Decrease in accrued interest payable

6 unchanged sentences

Redemption of regulatory stock

Net increase in loans

Net (decrease) increase in loans

Proceeds from bank-owned life insurance policies

Purchase of bank-owned life insurance

Purchase of premises and equipment

Proceeds from sales of bank premises and fixed assets

Proceeds from sales of foreclosed real estate owned

14 unchanged sentences

(dollars in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Supplemental Disclosures of Cash Flow Information

5 unchanged sentences

Dividends payable

Right of use for operating leases

Lease liability for operating leases

See accompanying notes to the unaudited consolidated financial statements.

8 unchanged sentences

The financial statements reflect, in the opinion of management, all normal, recurring adjustments necessary to present fairly the consolidated financial position and results of operations of the Company.

The operating results for the three-months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or any other future interim period.

The operating results for the three-month and six-month periods ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or any other future interim period.

Revenue Recognition

Under ASC Topic 606, management determined that the primary sources of revenue emanating from interest and dividend income on loans and investments along with noninterest revenue resulting from investment security gains, loan servicing, gains on the sale of loans sold and earnings on bank-owned life insurance are not within the scope of this Topic.

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three months ended March 31:

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and six months ended June 30:

Three months ended

18 unchanged sentences

Total Noninterest Income

Six months ended

(dollars in thousands)

Noninterest Income

In-scope of Topic 606:

Service charges on deposit accounts

Overdraft fees

Safe deposit box rental

Loan related service fees

Debit card fees

Fiduciary activities

Commissions on mutual funds and annuities

Gains on sales of other real estate owned

Noninterest Income ( in-scope of Topic 606 )

Out-of-scope of Topic 606:

Net realized gains on sales of securities

Loan servicing fees

Gains on sales of loans

Earnings on and proceeds from bank-owned life insurance

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

Total Noninterest Income

Earnings Per Share

5 unchanged sentences

Three Months Ended

Six Months Ended

Weighted average shares outstanding

4 unchanged sentences

Diluted EPS weighted average shares outstanding

For the three month period ended March 31, 2022, there were 74,350 stock options that were anti-dilutive and thereby excluded from the earnings per share calculations based upon the closing price of the Company’s common stock of $ 28.59 per share as of March 31, 2022.

For the three month period ended March 31, 2021, there were 114,100 stock options that were anti-dilutive and thereby excluded from the earnings per share calculations based upon the closing price of Norwood common stock of $ 26.61 per share as of March 31, 2021.

For the three and six month periods ended June 30, 2022, there were 151,600 stock options that were anti-dilutive and thereby excluded from the earnings per share calculations based upon the closing price of the Company’s common stock of $ 24.26 per share as of June 30, 2022.

For the three and six month periods ended June 30, 2021, there were 115,100 stock options that were anti-dilutive and thereby excluded from the earnings per share calculations based upon the closing price of Norwood common stock of $ 26.00 per share as of June 30, 2021.

Stock-Based Compensation

During the three-month period ended March 31, 2022, no stock options were granted.

As of March 31, 2022, there was $ 202,000 of total unrecognized compensation cost related to non-vested options granted in 2021 under the 2014 Equity Incentive Plan, which will be fully amortized by December 31, 2022.

Compensation costs related to stock options amounted to $ 67,000 and $ 54,000 during the three-month periods ended March 31, 2022 and 2021, respectively.

A summary of the Company’s stock option activity for the three-month period ended March 31, 2022 is as follows:

During the six-month period ended June 30, 2022, no stock options were granted.

As of June 30, 2022, there was $ 135,000 of total unrecognized compensation cost related to non-vested options granted in 2021 under the 2014 Equity Incentive Plan, which will be fully amortized by December 31, 2022.

Compensation costs related to stock options amounted to $ 134,000 and $ 107,000 during the six-month periods ended June 30, 2022 and 2021, respectively.

A summary of the Company’s stock option activity for the six-month period ended June 30, 2022 is as follows:

Average Exercise

3 unchanged sentences

Outstanding at January 1, 2022

Outstanding at March 31, 2022

Exercisable at March 31, 2022

Outstanding at June 30, 2022

Exercisable at June 30, 2022

Intrinsic value represents the amount by which the market price of the stock on the measurement date exceeded the exercise price of the option.

The market price was $ 28.59 per share as of March 31, 2022 and $ 25.99 per share as of December 31, 2021.

A summary of the Company’s restricted stock activity for the three-month periods ended March 31, 2022 and 2021 is as follows:

The market price was $ 24.26 per share as of June 30, 2022 and $ 25.99 per share as of December 31, 2021.

A summary of the Company’s restricted stock activity for the six-month periods ended June 30, 2022 and 2021 is as follows:

Weighted-Average

3 unchanged sentences

Non-vested, January 1,

Non-vested, March 31,

The expected future compensation expense relating to the 32,030 shares of non-vested restricted stock outstanding as of March 31, 2022 is $ 871,000 .

Non-vested, June 30,

The expected future compensation expense relating to the 39,530 shares of non-vested restricted stock outstanding as of June 30, 2022 is $ 976,000 .

This cost will be recognized over the remaining vesting period of 4.5 years.

Compensation costs related to restricted stock amounted to $ 82,000 and $ 84,000 during the three-month periods ended March 31, 2022 and 2021, respectively.

Compensation costs related to restricted stock amounted to $ 171,000 and $ 167,000 during the six-month periods ended June 30, 2022 and 2021, respectively.

Accumulated Other Comprehensive Income (Loss)

The following table presents the changes in accumulated other comprehensive income (loss) (in thousands) by component net of tax for the three months ended March 31, 2022 and 2021:

The following table presents the changes in accumulated other comprehensive income (loss) (in thousands) by component net of tax for the three and six months ended June 30, 2022 and 2021:

Unrealized gains (losses) on

5 unchanged sentences

Total other comprehensive loss

Balance as of March 31, 2022

Balance as of June 30, 2022

Unrealized gains (losses) on

2 unchanged sentences

Balance as of December 31, 2020

Other comprehensive loss before reclassification

Amount reclassified from accumulated other comprehensive income

Total other comprehensive loss

Balance as of June 30, 2021

Unrealized gains (losses) on

available for sale

securities (a)

Balance as of March 31, 2022

Other comprehensive loss before reclassification

Amount reclassified from accumulated other comprehensive loss

Total other comprehensive loss

Balance as of June 30, 2022

Unrealized gains (losses) on

available for sale

securities (a)

Balance as of March 31, 2021

Other comprehensive income before reclassification

1 unchanged sentence

Total other comprehensive income

Balance as of March 31, 2021

Balance as of June 30, 2021

(a) All amounts are net of tax.

Amounts in parentheses indicate debits.

The following table presents significant amounts reclassified out of each component of accumulated other comprehensive income (loss) (in thousands) for the three months ended March 31, 2022 and 2021:

The following table presents significant amounts reclassified out of each component of accumulated other comprehensive income (loss) (in thousands) for the three and six months ended June 30, 2022 and 2021:

Amount Reclassified

8 unchanged sentences

Income tax expense

Six months ended

Unrealized gains on available for sale securities

Net realized gains on sales of securities

Income tax expense

(a) Amounts in parentheses indicate debits to net income

20 unchanged sentences

The Bank, generally, holds collateral and/or personal guarantees supporting these commitments.

Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees.

The current amount of the liability as of March 31, 2022 for guarantees under standby letters of credit issued is not material.

Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments

required under the corresponding guarantees.

The current amount of the liability as of June 30, 2022 for guarantees under standby letters of credit issued is not material.

The amortized cost, gross unrealized gains and losses, and fair value of securities available for sale were as follows:

March 31, 2022

June 30, 2022

(In Thousands)

16 unchanged sentences

The following tables show the Company’s investments’ gross unrealized losses and fair value aggregated by length of time that individual securities have been in a continuous unrealized loss position (in thousands):

March 31, 2022

June 30, 2022

Less than 12 Months

17 unchanged sentences

Mortgage-backed securities-government sponsored entities

At March 31, 2022, the Company had 249 debt securities in an unrealized loss position in the less than twelve months category and 28 debt securities in the twelve months or more category.

In Management’s opinion the unrealized losses reflect changes

in interest rates subsequent to the acquisition of specific securities.

At June 30, 2022, the Company had 292 debt securities in an unrealized loss position in the less than twelve months category and 33 debt securities in the twelve months or more category.

In Management’s opinion the unrealized losses reflect changes in interest rates subsequent to the acquisition of specific securities.

No other-than-temporary-impairment charges were recorded in 2022.

Management believes that all unrealized losses represent temporary impairment of the securities as the Company does not have the intent to sell the securities and it is more likely than not that it will not have to sell the securities before recovery of its cost basis.

The amortized cost and fair value of debt securities as of March 31, 2022 by contractual maturity are shown below.

The amortized cost and fair value of debt securities as of June 30, 2022 by contractual maturity are shown below.

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

8 unchanged sentences

Gross realized gains and gross realized losses on sales of securities available for sale were as follows (in thousands):

Ended March 31,

Ended June 30,

Gross realized gains

2 unchanged sentences

Proceeds from sales of securities

Securities with a carrying value of $ 336,782,000 and $ 339,769,000 at March 31, 2022 and December 31, 2021, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase and for other purposes as required or permitted by law.

Securities with a carrying value of $ 378,696,000 and $ 339,769,000 at June 30, 2022 and December 31, 2021, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase and for other purposes as required or permitted by law.

Loans Receivable and Allowance for Loan Losses

Set forth below is selected data relating to the composition of the loan portfolio at the dates indicated (dollars in thousands):

March 31, 2022

June 30, 2022

December 31, 2021

9 unchanged sentences

The PPP provides loans to small businesses who were affected by economic conditions as a result of COVID-19 to provide cash-flow assistance to employers who maintain their payroll (including healthcare and certain related expenses), mortgage interest, rent, leases, utilities and interest on existing debt during the COVID-19 emergency.

As of March 31, 2022 and December 31, 2021, the Company had outstanding principal balances of $ 5.7 million and $ 15.2 million, respectively, in PPP loans.

The PPP loans are fully guaranteed by the SBA and may be eligible for forgiveness by the SBA to the extent that the proceeds are used to cover eligible payroll costs, interest costs, rent, and utility costs over a period of up to 24 weeks after the

loan is made as long as certain conditions are met regarding employee retention and compensation levels.

As of June 30, 2022 and December 31, 2021, the Company had outstanding principal balances of $ 983,000 and $ 15.2 million, respectively,

in PPP loans.

PPP loans deemed eligible for forgiveness by the SBA will be repaid by the SBA to the Company.

As of March 31, 2022, $ 145.8 million of PPP loans have been forgiven.

As of June 30, 2022, $ 150.5 million of PPP loans have been forgiven.

PPP loans are included in the commercial loan category.

1 unchanged sentence

Upon funding of the loan, these fees were deferred and will be amortized over the life of the loan as an adjustment to yield in accordance with FASB ASC 310-20-25-2.

As of March 31, 2022, the carrying value of these unamortized loan fees was $ 156,000 .

As of June 30, 2022, the carrying value of these unamortized loan fees was $ 30,000 .

The following table presents information regarding loans acquired and accounted for in accordance with ASC 310-30 (in thousands):

March 31, 2022

June 30, 2022

December 31, 2021

6 unchanged sentences

For loans acquired without a deterioration of credit quality, losses incurred will result in adjustments to the allowance for loan losses through the allowance for loan loss adequacy calculation.

Changes in the accretable yield for purchased credit impaired loans for the three-months ended March 31, 2022 and 2021, were as follows (in thousands):

Changes in the accretable yield for purchased credit impaired loans for the six-months ended June 30, 2022 and 2021, were as follows (in thousands):

Balance at beginning of period

20 unchanged sentences

Foreclosed assets acquired in settlement of loans are carried at fair value less estimated costs to sell and are included in foreclosed real estate owned on the Consolidated Balance Sheets.

As of March 31, 2022 and December 31, 2021, foreclosed real estate owned totaled $ 590,000 and $ 1,742,000 , respectively.

During the three months ended March 31, 2022, there were no additions to the foreclosed real estate category.

The Co mpany disposed of a parcel of the one property that was previously transferred to foreclosed real estate owned with a carrying value of $ 120,000 , and disposed of another property with a carrying value of $1,032,000 through the sale of the property.

As of March 31, 2022, the Company has initiated formal foreclosure proceedings on six properties classified as consumer residential mortgages with an aggregate carrying value of $ 454,000 .

As of June 30, 2022 and December 31, 2021, foreclosed real estate owned totaled $ 346,000 and $ 1,742,000 , respectively.

During the six months ended June 30, 2022, there were no additions to the foreclosed real estate category.

The Co mpany disposed of a parcel of one property that was previously transferred to foreclosed real estate owned with a carrying value of $ 364,000 , and disposed of another property with a carrying value of $ 1,032,000 through the sale of the property.

As of June 30, 2022, the Company has initiated formal foreclosure proceedings on four properties classified as consumer residential mortgages with an aggregate carrying value of $ 180,000 .

The following table shows the amount of loans in each category that were individually and collectively evaluated for impairment at the dates indicated:

Real Estate Loans

March 31, 2022

June 30, 2022

(In thousands)

9 unchanged sentences

The following table includes the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount, if applicable.

March 31, 2022

June 30, 2022

(in thousands)

With no related allowance recorded:

Real Estate Loans:

Commercial Loans

Real Estate Loans:

Commercial Loans

10 unchanged sentences

Total Impaired Loans

The following table presents the average recorded investment in impaired loans and the related amount of interest income recognized during the three-month periods ended March 31, 2022 and 2021, respectively (in thousands):

The following table presents the average recorded investment in impaired loans and the related amount of interest income recognized during the three-month periods ended June 30, 2022 and 2021, respectively (in thousands):

Average Recorded

2 unchanged sentences

Commercial Loans

Other agricultural loans

The following table presents the average recorded investment in impaired loans and the related amount of interest income recognized during the six-month periods ended June 30, 2022 and 2021, respectively (in thousands):

Average Recorded

Interest Income

Real Estate Loans:

Commercial Loans

Other agricultural loans

Troubled debt restructured loans are those loans whose terms have been renegotiated to provide a reduction or deferral of principal or interest as a result of financial difficulties experienced by the borrower, who could not obtain comparable terms from alternate financing sources.

As of March 31, 2022 and December 31, 2021, the Company had no troubled debt restructured loans to report.

For the three-month period ended March 31, 2022 and 2021, there were no new loans identified as troubled debt restructurings.

As of June 30, 2022 and December 31, 2021, the Company had no troubled debt restructured loans to report.

For the six-month period ended June 30, 2022 and 2021, there were no new loans identified as troubled debt restructurings.

Management uses an eight point internal risk rating system to monitor the credit quality of the overall loan portfolio.

11 unchanged sentences

Loans in the Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance.

The following table presents the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard, Doubtful and Loss within the internal risk rating system as of March 31, 2022 and December 31, 2021 (in thousands):

March 31, 2022

The following table presents the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard, Doubtful and Loss within the internal risk rating system as of June 30, 2022 and December 31, 2021 (in thousands):

June 30, 2022

Commercial real estate loans

8 unchanged sentences

For residential real estate loans, construction loans and consumer loans, the Company evaluates credit quality based on the performance of the individual credits.

The following table presents the recorded investment in the loan classes based on payment activity as of March 31, 2022 and December 31, 2021 (in thousands):

The following table presents the recorded investment in the loan classes based on payment activity as of June 30, 2022 and December 31, 2021 (in thousands):

Nonperforming

March 31, 2022

June 30, 2022

Residential real estate loans

5 unchanged sentences

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due.

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of March 31, 2022 and December 31, 2021 (in thousands):

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of June 30, 2022 and December 31, 2021 (in thousands):

31-60 Days Past Due

3 unchanged sentences

Purchased Credit-Impaired

March 31, 2022

June 30, 2022

Real Estate loans

14 unchanged sentences

When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the allowance.

As of March 31, 2022, the allocation of the allowance pertaining to each major category of loans includes an allocation for loans secured by farmland and other agricultural loans.

As of March 31 2022, the Company has also continued to incorporate qualitative factors related to the pandemic to capture some of the risk associated with higher-risk industries, although the factor has been reduced from the December 31, 2021 level.

As of June 30, 2022, the allocation of the allowance pertaining to each major category of loans includes an allocation for loans secured by farmland and other agricultural loans.

As of June 30 2022, the Company has also continued to incorporate qualitative factors related to the pandemic to capture some of the risk associated with higher-risk industries, although the factor has been reduced from the December 31, 2021 level.

The qualitative factor related to the deferral of payments due to COVID-19 has been eliminated.

At March 31, 2022, the allowance for loan losses includes $ 1.7 million of COVID related factors, compared to $ 2.3 million at December 31, 2021.

At June 30, 2022, the allowance for loan losses includes $ 1.2 million of COVID related factors, compared to $ 2.3 million at December 31, 2021.

The 2022 allowance for loan losses excludes Paycheck Protection Program loans which are fully guaranteed by the Small Business Association as well as loans acquired from UpState which were recorded at fair value.

6 unchanged sentences

Provision for loan losses

Ending balance, March 31, 2022

Ending balance, June 30, 2022

Ending balance individually evaluated

6 unchanged sentences

Other Agricultural

Beginning balance, March 31, 2022

Provision for loan losses

Ending balance, June 30, 2022

(In thousands)

Residential Real Estate

Commercial Real Estate

Other Agricultural

Beginning balance, December 31, 2020

Provision for loan losses

Ending balance, March 31, 2021

Ending balance, June 30, 2021

Ending balance individually evaluated

2 unchanged sentences

‎ for impairment

The Company’s primary business activity as of March 31, 2022 was with customers located in northeastern Pennsylvania and the New York counties of Delaware, Sullivan, Ontario, Otsego and Yates.

(In thousands)

Residential Real Estate

Commercial Real Estate

Other Agricultural

Beginning balance, March 31, 2021

Provision for loan losses

Ending balance, June 30, 2021

The Company’s primary business activity as of June 30, 2022 was with customers located in northeastern Pennsylvania and the New York counties of Delaware, Sullivan, Ontario, Otsego and Yates.

Accordingly, the Company has extended credit primarily to commercial entities and individuals in this area whose ability to repay their loans is influenced by the region’s economy.

As of March 31, 2022, the Company considered its concentration of credit risk to be acceptable.

As of June 30, 2022, the Company considered its concentration of credit risk to be acceptable.

The highest concentrations are in commercial rentals with $ 145.0 million of loans outstanding, or 10.3 % of total loans outstanding, and residential rentals with loans outstanding of $ 115.5 million, or 8.2 % of loans outstanding.

During 2022, the Company did not recognize any charge offs on loans in the named concentrations.

For the six months ended June 30, 2022, the Company did not recognize any charge offs on loans in the named concentrations.

Operating Leases

4 unchanged sentences

These variable nonlease components were excluded from the calculation of the present value of the remaining lease payments, therefore, they are not included in other assets and other liabilities on the Consolidated Balance Sheets.

The lease cost associated with the operating leases for the three-month periods ended March 31, 2022 and 2021, amounted to $ 148,000 and $ 147,000 respectively.

The lease cost associated with the operating leases for the six-month periods ended June 30, 2022 and 2021, amounted to $ 299,000 and $ 294,000 respectively.

Certain of the Company’s leases contain options to renew the lease after the initial term.

2 unchanged sentences

The discount rate utilized in calculating the present value of the remaining lease payments for each lease was the Federal Home Loan Bank of Pittsburgh advance rate corresponding to the remaining maturity of the lease.

The following table presents the weighted-average remaining lease term and discount rate for the leases outstanding at March 31, 2022.

The following table presents the weighted-average remaining lease term and discount rate for the leases outstanding at June 30, 2022.

Weighted-average remaining term

Weighted-average discount rate

The following table presents the undiscounted cash flows due related to operating leases as of March 31, 2022, along with a reconciliation to the discounted amount recorded on the Consolidated Balance Sheets:

The following table presents the undiscounted cash flows due related to operating leases as of June 30, 2022, along with a reconciliation to the discounted amount recorded on the Consolidated Balance Sheets:

Undiscounted cash flows due (in thousands)

15 unchanged sentences

Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis

For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2022 and December 31, 2021 are as follows:

For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at June 30, 2022 and December 31, 2021 are as follows:

Fair Value Measurement Using

Reporting Date

March 31, 2022

June 30, 2022

(In thousands)

31 unchanged sentences

Assets and Liabilities Required to be Measured and Reported at Fair Value on a Non-Recurring Basis

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2022 and December 31, 2021 are as follows:

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at June 30, 2022 and December 31, 2021 are as follows:

Fair Value Measurement Using Reporting Date

(In thousands)

March 31, 2022

June 30, 2022

Impaired Loans

6 unchanged sentences

Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the lowest level of input that is significant to the fair value measurements.

As of March 31, 2022, the fair value investment in impaired loans was $ 1,659,000 which included four loan relationships that did not require a valuation allowance since the estimated realizable value of the collateral exceeded the recorded investment in the loans.

As of March 31, 2022, the Company has not recognized charge-offs against the allowance for loan losses on any of these impaired loans.

As of June 30, 2022, the fair value investment in impaired loans was $ 13,000 which included one loan relationship that did not require a valuation allowance since the estimated realizable value of the collateral exceeded the recorded investment in the loan.

As of June 30, 2022, the Company has not recognized charge-offs against the allowance for loan losses on any of these impaired loans.

As of December 31, 2021, the fair value investment in impaired loans totaled $ 1,402,000 which included three loan relationships with a carrying value of $ 157,000 that did not require a valuation allowance since either the estimated realizable value of the collateral or the discounted cash flows exceeded the recorded investment in the loan.

13 unchanged sentences

Range (Weighted Average)

March 31, 2022

June 30, 2022

Impaired loans

27 unchanged sentences

Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.

The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at March 31, 2022 and December 31, 2021.

The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at June 30, 2022 and December 31, 2021.

Loans receivable (carried at cost):

11 unchanged sentences

These prices obtained from this active market represent a fair value that is deemed to represent the transfer price if the liability were assumed by a third party.

The estimated fair values of the Bank’s financial instruments not required to be measured or reported at fair value were as follows at March 31, 2022 and December 31, 2021.

The estimated fair values of the Bank’s financial instruments not required to be measured or reported at fair value were as follows at June 30, 2022 and December 31, 2021.

(In thousands)

Fair Value Measurements at March 31, 2022

Fair Value Measurements at June 30, 2022

Carrying Amount

38 unchanged sentences

There was no effect on earnings in any periods presented.

At March 31, 2022 and December 31, 2021, based upon the swap contract values, the company pledged cash in the amount of $ 350,000 as collateral for its interest rate swaps with a third-party financial institution.

The fair value of the swaps as of March 31, 2022 and December 31, 2021 was $ 831,000 and $ 235,000 , respectively.

At June 30, 2022 and December 31, 2021, based upon the swap contract values, the company pledged cash in the amount of $ 350,000

as collateral for its interest rate swaps with a third-party financial institution.

The fair value of the swaps as of June 30, 2022 and December 31, 2021 was $ 1,167,000 and $ 235,000 , respectively.

Summary information regarding these derivatives is presented below:

1 unchanged sentence

Notional Amount

March 31, 2022

June 30, 2022

December 31, 2021

1 unchanged sentence

Interest Rate Received

March 31, 2022

June 30, 2022

December 31, 2021

13 unchanged sentences

Balance Sheet Location

March 31, 2022

June 30, 2022

Interest rate derivatives

17 unchanged sentences

In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination.

Instead, under the amendments in this Update, an entity should perform

its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.

Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.

An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value;

38 unchanged sentences

Other amendments are effective upon issuance of this ASU.

The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In January 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, March 2020 , to provide temporary optional expedients and exceptions to the U.S.

GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR

and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate.

GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate.

Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls “reference rate reform” if certain criteria are met.

14 unchanged sentences

These amendments are intended to enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

Additionally, the amendments to ASC 326 require that an entity disclose current-period gross writeoffs by year of origination within the vintage disclosures, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination.

Additionally, the amendments to ASC 326 require that an entity disclose current-period gross write-offs by year of origination within the vintage disclosures, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination.

The guidance is only for entities that have adopted the amendments in Update 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022.

2 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements