What changed in this filing

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Item 1. Financial Statements

2022-05-17 compared with 2021-05-17 · 530 added, 555 removed, 259 unchanged (81% of the section changed)

Item 1 Financial

PEOPLES BANKSHARES, INC.

BALANCE SHEETS

THOUSANDS EXCEPT PER SHARE AND SHARE DATA)

Cash and due from banks

Interest-bearing deposits with banks

Federal funds sold

Total Cash and Cash Equivalents

Investment securities available-for-sale, at fair value

Loans held for sale

Loans receivable

Allowance for loan losses

Bank premises and equipment, net

Other real estate owned

Accrued interest receivable

Deferred taxes, net

Bank owned life insurance

Right-of-use assets – operating leases

Noninterest bearing

Interest-bearing

Total Deposits

Borrowed funds

Lease liabilities – operating leases

Accrued interest payable

Accrued expenses and other liabilities

Total Liabilities

SHAREHOLDERS’ EQUITY

Common stock - $ 2.00 par value;

50,000,000 shares authorized;

23,922,086 shares issued and outstanding at

March 31, 2022 and December 31, 2021

Additional paid-in-capital

Retained earnings

Accumulated other comprehensive loss

Total Shareholders’ Equity

Total Liabilities and Shareholders’ Equity

accompanying notes are an integral part of these consolidated financial statements.

PEOPLES BANKSHARES, INC.

STATEMENTS OF INCOME

1 unchanged sentence

THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

AND DIVIDEND INCOME

including fees

Interest-earning

deposits with banks

on equity securities (restricted)

INTEREST AND DIVIDEND INCOME

Loans including fees

Interest-earning deposits with banks

Dividends on equity securities (restricted)

Total Interest and Dividend Income

INTEREST EXPENSE

INTEREST INCOME

FOR LOAN LOSSES

INTEREST INCOME AFTER

FOR LOAN LOSSES

charges and fees

processing and interchange

and investment fees

gain on sales of available-for-sale securities

noninterest income

Borrowed funds

Total Interest Expense

NET INTEREST INCOME

PROVISION FOR LOAN LOSSES

NET INTEREST INCOME AFTER

PROVISION FOR LOAN LOSSES

NONINTEREST INCOME

and employee benefits

and equipment expense

processing and telecommunications

operating expenses

Service charges and fees

Card processing and interchange

Insurance and investment fees

Other noninterest income

Total Noninterest Income

NONINTEREST EXPENSES

BEFORE INCOME TAXES

Weighted Shares of Common Stock

accompanying notes are an integral part of these financial statements.

Salaries and employee benefits

Occupancy and equipment expense

Data processing and telecommunications

Other operating expenses

Total Noninterest Expenses

INCOME BEFORE INCOME TAXES

INCOME TAX EXPENSE

Earnings Per Share

Basic and diluted

Average Weighted Shares of Common Stock

Basic and diluted

accompanying notes are an integral part of these consolidated financial statements.

PEOPLES BANKSHARES, INC.

STATEMENTS OF COMPREHENSIVE INCOME

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

the three months ended

comprehensive income:

Securities Activity

(losses) gains arising during the period

Reclassification

adjustment for net gains included in net income

comprehensive (losses) gains on investment securities

tax (benefit) expense

OTHER COMPREHENSIVE INCOME

COMPREHENSIVE INCOME

accompanying notes are an integral part of these financial statements.

PEOPLES BANKSHARES, INC.

BALANCE SHEETS

THOUSANDS EXCEPT PER SHARE AND SHARE DATA)

and due from banks

Interest-bearing

deposits with banks

Cash and Cash Equivalents

securities available-for-sale

held for sale

for loan losses

premises and equipment, net

real estate owned

interest receivable

assets – operating leases

Interest-bearing

liabilities – operating leases

interest payable

expenses and other liabilities

STOCKHOLDERS’

stock - $ 2.00 par value;

50,000,000 shares authorized;

23,922,086 shares issued and outstanding at March 31, 2021 and December

paid-in-capital

For the three months ended

Other comprehensive income:

Stockholders’ Equity

Liabilities and Stockholders’ Equity

accompanying notes are an integral part of these financial statements.

Investment Securities Activity

Unrealized losses arising during the period

Other comprehensive losses on investment securities

Related tax benefit

TOTAL OTHER COMPREHENSIVE LOSS

TOTAL COMPREHENSIVE (LOSS) INCOME

accompanying notes are an integral part of these consolidated financial statements.

PEOPLES BANKSHARES, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

THOUSANDS INCLUDING SHARE DATA)

of Common Stock

Paid-in- Capital

Comprehensive

Income (Loss)

Stockholders’ Equity

December 31, 2019

comprehensive income, net of tax

March 31, 2020

December 31, 2020

comprehensive loss, net of tax

March 31, 2021

accompanying notes are an integral part of these financial statements.

Shares of Common Stock

Additional Paid-in- Capital

Accumulated Other

Comprehensive Income (Loss)

Total Shareholders’ Equity

Balance, December 31, 2020

Other comprehensive loss, net of tax

Balance, March 31, 2021

Balance, December 31, 2021

Other comprehensive loss, net of tax

Cash dividend declared ($0.05 per share)

Balance, March 31, 2022

accompanying notes are an integral part of these consolidated financial statements.

PEOPLES BANKSHARES, INC.

1 unchanged sentence

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FLOWS FROM OPERATING ACTIVITIES

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

for loan losses

on bank owned life insurance

on sale of securities available-for-sale

on sale of mortgage loans

(gain) on sale of premises and equipment

(gain) on sale of other real estate owned

originated for sale

from sales of loans originated for sale

of carrying value of other real estate owned

of bond premiums

interest receivable

interest payable

expenses and other liabilities

Cash Provided by Operating Activities

FLOWS FROM INVESTING ACTIVITIES

(increase) decrease in loans

of securities available-for-sale

from sale of investment securities available-for-sale

from repayments and maturities of securities available-for-sale

purchase of equity securities (restricted)

for the purchase of premises and equipment

from sale of premises and equipment

from sales of other real estate owned

Cash (Used in) Provided by Investing Activities

FLOWS FROM FINANCING ACTIVITIES

change in noninterest bearing deposits

change in interest bearing deposits

Cash Provided by Financing Activities

increase in cash and cash equivalents

and Cash Equivalents, Beginning of the Period

and Cash Equivalents, End of the Period

Disclosure of Cash Paid During the Period for:

Disclosure of Non-cash Transactions:

real estate acquired in settlement of foreclosed loans

made to finance sale of other real estate owned

in unrealized (losses) gains on securities available for sale

accompanying notes are an integral part of these financial statements.

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net income to net cash provided by

operating activities:

Provision for loan losses

Income on bank owned life insurance

Gain on sale of mortgage loans

Loss on sale of premises and equipment

(Gain) loss on sale of other real estate owned

Loans originated for sale

Proceeds from sales of loans originated for sale

Adjustment of carrying value of other real estate owned

Amortization of bond premiums

Deferred tax benefit

Net change in:

Accrued interest receivable

Accrued interest payable

Accrued expenses and other liabilities

Net Cash Provided by Operating Activities

CASH FLOWS FROM INVESTING ACTIVITIES

Net increase in loans

Purchase of securities available-for-sale

Proceeds from repayments and maturities of securities available-for-sale

Net purchase of equity securities (restricted)

Payments for the purchase of premises and equipment

Proceeds from sales of other real estate owned

Net Cash Used in Investing Activities

CASH FLOWS FROM FINANCING ACTIVITIES

Net change in noninterest bearing deposits

Net change in interest bearing deposits

Dividends paid

Net Cash Provided by Financing Activities

Net increase in cash and cash equivalents

Cash and Cash Equivalents, Beginning of the Period

Cash and Cash Equivalents, End of the Period

Supplemental Disclosure of Cash Paid During the Period for:

Supplemental Disclosure of Non-cash Transactions:

Other real estate acquired in settlement of foreclosed loans

Loans made to finance sale of other real estate owned

Change in unrealized losses on securities available for sale

accompanying notes are an integral part of these consolidated financial statements.

PEOPLES BANKSHARES, INC.

2 unchanged sentences

of Operations – New Peoples Bankshares, Inc.

(New Peoples) is a financial holding company whose principal activity is

the ownership and management of a community bank, New Peoples Bank, Inc.

New Peoples and the Bank are organized and

incorporated under the laws of the Commonwealth of Virginia.

As a state chartered member bank, the Bank is subject to regulation

by the Virginia Bureau of Financial Institutions, the Federal Deposit Insurance Corporation and the Board of Governors of the

Federal Reserve System (the Federal Reserve).

The Bank provides general banking services to individuals, small and medium size

businesses and the professional community of southwest Virginia, southern West Virginia, western North Carolina and northeastern

These services include commercial and consumer loans along with traditional deposit products such as checking and savings

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(New Peoples) is a financial holding company whose principal activity is the ownership

and management of a community bank, New Peoples Bank, Inc.

New Peoples and the Bank are organized and incorporated under

the laws of the Commonwealth of Virginia.

As a state chartered member bank, the Bank is subject to regulation by the Virginia Bureau

of Financial Institutions, the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System (the Federal

The Bank provides general banking services to individuals, small and medium size businesses and the professional community

of southwest Virginia, southern West Virginia, western North Carolina and northeastern Tennessee.

These services include commercial and

consumer loans along with traditional deposit products such as checking and savings accounts.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1 unchanged sentence

generally accepted accounting principles (GAAP) and to general industry practices.

In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal

recurring accruals) necessary to present fairly the Company’s financial position at March 31, 2021 and December 31, 2020,

and the results of operations for the three month periods ended March 31, 2021 and 2020.

The notes included herein should be read

in conjunction with the notes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K

for the year ended December 31, 2020.

The results of operations for interim periods are not necessarily indicative of the results

of operations that may be expected for a full year or any future period.

In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring

accruals) necessary to present fairly the Company’s financial position at March 31, 2022 and December 31, 2021, and the results

of operations for the three month periods ended March 31, 2022 and 2021.

The notes included herein should be read in conjunction with

the notes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December

The results of operations for interim periods are not necessarily indicative of the results of operations that may be expected

for a full year or any future period.

consolidated financial statements include New Peoples, the Bank, NPB Insurance Services, Inc., and NPB Web Services, Inc.

2 unchanged sentences

All significant intercompany balances and transactions have been eliminated.

In accordance with Accounting Standards Codification (ASC) 942, Financial Services – Depository and Lending, NPB Capital

Trust I and 2 are not included in the consolidated financial statements.

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect

the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements

and the reported amounts of revenues and expenses during the reporting period.

In accordance with Accounting Standards Codification (ASC) 942, Financial Services – Depository and Lending, NPB Capital Trust

I and 2 are not included in the consolidated financial statements.

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported

amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

The determination of the adequacy of the allowance for loan losses and the determination of the deferred tax asset and related

valuation allowance are based on estimates that are particularly susceptible to significant changes in the economic environment

and market conditions.

3 INCOME PER SHARE

income per share computations are based on the weighted average number of shares outstanding during each period.

Dilutive earnings

per share reflect the additional common shares that would have been outstanding if dilutive potential common shares had been issued.

For the three month periods ended March 31, 2021 and 2020, there were no potential common shares.

and diluted net income per common share calculations follows:

in Thousands, Except

and Per Share Data)

the three months ended

average shares outstanding

average dilutive shares outstanding

and diluted income per share

The determination of

the adequacy of the allowance for loan losses and the determination of the deferred tax asset and related valuation allowance are based

on estimates that are particularly susceptible to significant changes in the economic environment and market conditions.

reclassifications have been made to prior period amounts to conform to current period presentation.

None of these reclassifications are

considered material and have no impact on net income.

3 EARNINGS PER SHARE

earnings per share computations are based on the weighted average number of shares outstanding during each period.

Diluted earnings per

share reflect the additional common shares that would have been outstanding if dilutive potential common shares had been issued.

the three month periods ended March 31, 2022 and 2021, there were no potential common shares.

Basic and diluted net earnings per common

share calculations follow:

Schedule of basic and diluted net loss per common share calculations

(Dollars in Thousands, Except

Share and Per Share Data)

For the three months ended

Weighted average shares outstanding

Weighted average diluted shares outstanding

Basic and diluted income per share

Requirements and Ratios

3 unchanged sentences

Failure to meet minimum capital requirements

can initiate certain mandatory and, possibly, additional discretionary actions by regulators that, if undertaken, could have a

direct material effect on the Bank’s financial statements.

Under capital adequacy guidelines and the regulatory framework

for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities,

and certain off-balance sheet items as calculated under regulatory accounting practices.

The capital amounts and classification

are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth

in the following table) of total and Tier 1 capital to risk-weighted assets, Tier 1 capital to average assets, and Common Equity

can initiate certain mandatory and, possibly, additional discretionary actions by regulators that, if undertaken, could have a direct

material effect on the Bank’s financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective

action, the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance

sheet items as calculated under regulatory accounting practices.

The capital amounts and classification are also subject to qualitative

judgments by the regulators about components, risk weightings, and other factors.

measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the

following table) of total and Tier 1 capital to risk-weighted assets, Tier 1 capital to average assets, and Common Equity Tier 1 capital

to risk-weighted assets.

As of March 31, 2022, the Bank meets all capital adequacy requirements to which it is subject.

Bank’s actual capital amounts and ratios are presented in the following table as of March 31, 2022 and December 31, 2021, respectively.

Schedule of capital requirements

Minimum Capital Requirement

Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions

(Dollars are in thousands)

March 31, 2022:

Total Capital to Risk Weighted Assets

Tier 1 Capital to Risk Weighted Assets

As of March 31, 2021, the Bank meets all capital adequacy requirements to which it is

Bank’s actual capital amounts and ratios are presented in the following table as of March 31, 2021 and December 31, 2020,

respectively.

Capital Requirement

Capitalized Under

Prompt Corrective

Action Provisions

are in thousands)

Capital to Risk Weighted Assets

1 Capital to Risk Weighted Assets

1 Capital to Average Assets

Equity Tier 1 Capital to Risk Weighted Assets

Capital to Risk Weighted Assets

1 Capital to Risk Weighted Assets

1 Capital to Average Assets

Equity Tier 1 Capital to Risk Weighted Assets

as of March 31, 2021 and December 31, 2020, the Bank was well capitalized under the regulatory framework for prompt corrective

Tier 1 Capital to Average Assets

Common Equity Tier 1 Capital

to Risk Weighted Assets

December 31, 2021:

Total Capital to Risk Weighted Assets

Tier 1 Capital to Risk Weighted Assets

Tier 1 Capital to Average Assets

Common Equity Tier 1 Capital

to Risk Weighted Assets

as of March 31, 2022 and December 31, 2021, the Bank was well capitalized under the regulatory framework for prompt corrective action.

There are no conditions or events since such dates that management believes have changed the Bank’s category.

1 unchanged sentence

Wall Street Reform and Consumer Protection Act of 2010.

The final rules require the Bank to comply with the following minimum

capital ratios:

(i) a Common Equity Tier 1 capital to risk-weighted assets ratio of at least 4.5%, plus a 2.5% “capital

conservation buffer” (effectively resulting in a minimum Common Equity Tier 1 capital to risk-weighted assets ratio of 7%),

(ii) a ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the 2.5% capital conservation buffer (effectively

resulting in a minimum Tier 1 capital ratio of 8.5%), (iii) a ratio of total capital to risk-weighted assets of at least 8.0%,

plus the 2.5% capital conservation buffer (effectively resulting in a minimum total capital ratio of 10.5%), and (iv) a leverage

ratio of 4%, calculated as the ratio of Tier 1 capital to average assets.

The phase-in of the capital conservation buffer

requirement began on January 1, 2016, at 0.625% of risk-weighted assets, increasing by the same amount each year until it

was fully implemented at 2.5% on January 1, 2019.

The capital conservation buffer is designed to absorb losses during periods

of economic stress.

Banking institutions with a Common Equity Tier 1 capital to risk-weighted assets ratio above the minimum but

below the conservation buffer face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall.

All ratios shown in the table above exceed the minimum requirements.

The Bank’s capital conservation buffer as of March

31, 2021 was 8.16%.

The final rules require the Bank to comply with the following minimum capital

(i) a Common Equity Tier 1 capital to risk-weighted assets ratio of at least 4.5%, plus a 2.5% “capital conservation

buffer” (effectively resulting in a minimum Common Equity Tier 1 capital to risk-weighted assets ratio of 7%), (ii) a ratio of

Tier 1 capital to risk-weighted assets of at least 6.0%, plus the 2.5% capital conservation buffer (effectively resulting in a minimum

Tier 1 capital ratio of 8.5%), (iii) a ratio of total capital to risk-weighted assets of at least 8.0%, plus the 2.5% capital conservation

buffer (effectively resulting in a minimum total capital ratio of 10.5%), and (iv) a leverage ratio of 4%, calculated as the ratio

of Tier 1 capital to average assets.

The capital conservation buffer is designed to absorb losses during periods of economic stress.

Banking institutions with a Common Equity Tier 1 capital to risk-weighted assets ratio above the minimum but below the conservation buffer

face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall.

All ratios shown in the table

above exceed the minimum requirements.

The Bank’s capital conservation buffer as of March 31, 2022 was 7.90 %.

5 INVESTMENT SECURITIES

amortized cost and estimated fair value of available-for-sale (AFS) securities as March 31, 2021 and December 31, 2020 is as follows:

amortized cost and estimated fair value of available-for-sale (AFS) securities as of March 31, 2022 and December 31, 2021 are as follows:

Schedule of securities amortized cost and estimated fair value

(Dollars are in thousands)

March 31, 2022

9 unchanged sentences

Mortgage backed securities

Total Securities AFS

Total Securities available for sale

following table details unrealized losses and related fair values in the AFS portfolio.

This information is aggregated by the

length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2021 and December

than 12 Months

This information is aggregated by the length

of time that individual securities have been in a continuous unrealized loss position as of March 31, 2022 and December 31, 2021.

Schedule of fair value and gross unrealized losses on investment securities

Less than 12 Months

12 Months or More

are in thousands)

(Dollars are in thousands)

March 31, 2022

Government Agencies

backed securities

Securities AFS

Taxable municipals

Corporate bonds

Mortgage backed securities

Total Securities AFS

December 31, 2021

Government Agencies

backed securities

Securities AFS

Taxable municipals

Corporate bonds

Mortgage backed securities

Total Securities AFS

March 31, 2022, there were 192 securities in a loss position, of which 33 have been in a loss position for twelve months or more.

Management believes that all unrealized losses have resulted from temporary changes in the interest rates and current market conditions

and not as a result of credit deterioration.

Management does not intend to sell, and it is not likely that the Bank will be required

to sell any of the securities referenced in the table above before recovery of their amortized cost.

securities with a carrying value of $6.3 million and $6.8 million at March 31, 2021 and December 31, 2020, respectively, were

pledged as collateral to secure public deposits and for other purposes required by law.

following table summarizes sales of AFS debt securities for the three months ended March 31,

(Dollars are in thousands)

amortized cost and fair value of investment securities at March 31, 2021, by contractual maturity, are shown in the following

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations

with or without call or prepayment penalties.

believes that all unrealized losses have resulted from temporary changes in the interest rates and current market conditions and not

as a result of credit deterioration.

Management does not intend to sell, and it is not likely that the Bank will be required to sell

any of the securities referenced in the table above before recovery of their amortized cost.

securities with a carrying value of $ 11.1 million and $ 12.1 million at March 31, 2022 and December 31, 2021, respectively, were pledged

as collateral to secure public deposits and for other purposes required by law.

AFS debt securities were sold during the three months ended March 31, 2022 and 2021.

amortized cost and fair value of investment securities at March 31, 2022, by contractual maturity, are shown in the following schedule.

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or

without call or prepayment penalties.

Schedule of amortized cost and fair value of investment securities contractual maturity

(Dollars are in thousands)

4 unchanged sentences

Due after ten years

Bank, as a member of the Federal Reserve Bank of Richmond (the Reserve Bank) and the Federal Home Loan Bank (the FHLB) of Atlanta,

is required to hold stock in each.

Bank, as a member of the Federal Reserve Bank of Richmond (the Reserve Bank) and the Federal Home Loan Bank (the FHLB) of Atlanta, is

required to hold stock in each.

The Bank also owns stock in CBB Financial Corp., which is a correspondent of the Bank.

equity securities are restricted from trading and are recorded at a cost of $2.22 million and $2.58 million at March 31, 2021

and December 31, 2020, respectively.

loans were held for sale at March 31, 2021.

At December 31, 2020, $389 thousand of loans were held for sale, which represent mortgage

These equity securities,

which are included in Other Assets on the consolidated balance sheet, are restricted from trading and are recorded at a cost of $ 2.1

million and $ 2.0 million at March 31, 2022 and December 31, 2021, respectively.

The stock has no quoted market value and no ready market

March 31, 2022, $ 100 thousand of loans were held for sale.

At December 31, 2021, no loans were held for sale, which represent mortgage

loans originated for sale.

1 unchanged sentence

receivable outstanding as of March 31, 2022 and December 31, 2021 are summarized as follows:

Schedule of Loans receivable outstanding

(Dollars are in thousands)

6 unchanged sentences

All other loans

in commercial loans at March 31, 2021 and December 31, 2020 were $37.6 million and $34.8 million of Paycheck Protection Program

(PPP) loans, respectively, that are guaranteed by the Small Business Administration (SBA).

Fees paid by SBA for round 1 PPP loans

ranged from 1% to 5% of the amount borrowed, with 5% paid on loans up to $350 thousand, 3% on loans between $350 thousand and

$2 million, and 1% on loans over $2 million.

For round 2 PPP loans the fee structure was modified to the lesser of 50%, or $2.5

thousand for loans up to $50 thousand, 5% on loans ranging from $50 thousand to $350 thousand;

3% on loans between $350 thousand

and $2 million and 1% on loans over $2 million.

Included in total loans above, are net deferred fees, including unearned PPP loans

fees, of $860 thousand and $456 thousand at March 31, 2021 and December 31, 2020, respectively.

Income from net deferred fees

is recognized as income over the lives of the respective loans as a yield adjustment.

in commercial loans at March 31, 2022 and December 31, 2021 were $ 2.8 million and $ 6.4 million of Paycheck Protection Program (PPP) loans,

respectively, that are guaranteed by the Small Business Administration (SBA).

included in total loans above are deferred loan fees of $ 1.7 million and $ 1.8 million at March 31, 2022 and December 31, 2021, respectively.

Deferred loan costs were $ 2.1 million and $ 2.0 million, at March 31, 2022 and December 31, 2021, respectively.

Income from net deferred

fees and costs is recognized over the lives of the respective loans as a yield adjustment.

If loans repay prior to scheduled maturities

any unamortized fee or cost is recognized at that time.

any unamortized fee or costs is recognized at that time.

receivable on nonaccrual status as of March 31, 2022 and December 31, 2021 are summarized as follows:

Summary of loans receivable on nonaccrual status

(Dollars are in thousands)

6 unchanged sentences

Total loans receivable on nonaccrual status

interest income not recognized on nonaccrual loans for the three months ended March 31, 2021 and March 31, 2020 was $135 thousand

and $189 thousand, respectively.

the provisions of the CARES Act, or related guidance issued by banking regulators, modifications, mainly in the form of short-term

payment deferrals, were granted on 786 loans, during 2020.

At March 31, 2021, 646 loans totaling $103.2 million had completed

their forbearance period and resumed a normal payment schedule and two loans totaling $206 thousand remained in forbearance.

remaining 138 loans have repaid in full or been refinanced at market terms and conditions.

following table presents information concerning the Company’s investment in loans considered impaired as of March 31, 2021

and December 31, 2020:

of March 31, 2021

are in thousands)

interest income not recognized on nonaccrual loans for the three months ended March 31, 2022 and March 31, 2021 was $5 thousand and $135

thousand, respectively.

the provisions of the CARES Act, or related guidance issued by banking regulators, modifications, mainly in the form of short-term payment

deferrals, were granted on 786 loans totaling $119.6 million, during 2020.

At March 31, 2022 and December 31, 2021, no loans were subject

to pandemic related forbearance.

At March 31, 2022, 511 of the original 786 accounts remain, totaling $75.5 million.

Of these remaining

accounts, three loans totaling $133 thousand are past due 90 days or more.

following table presents information concerning the Company’s investment in loans considered impaired as of March 31, 2022 and

December 31, 2021:

Schedule of summary of impaired loans

As of March 31, 2022

(Dollars are in thousands)

Unpaid Principal Balance

no related allowance recorded:

estate secured:

and land development

installment loans

an allowance recorded:

estate secured:

and land development

installment loans

With no related allowance recorded:

Real estate secured:

Construction and land development

Residential 1-4 family

Consumer installment loans

All other loans

With an allowance recorded:

Real estate secured:

Construction and land development

Residential 1-4 family

Consumer installment loans

All other loans

As of December 31, 2021

18 unchanged sentences

March 31, 2021

are in thousands)

(Dollars are in thousands)

With no allowance recorded:

13 unchanged sentences

there were no loans over 90 days past due that were accruing.

Summary age analysis of past due loans receivable

As of March 31, 2022

1 unchanged sentence

Real estate secured:

Construction and land development

Construction and land

Residential 1-4 family

5 unchanged sentences

Real estate secured:

Construction and land development

Construction and land

Residential 1-4 family

Total real estate loans

Consumer installment loans

Consumer installment

All other loans

Company categorizes loans receivable into risk categories based on relevant information about the ability of borrowers to service

their debt such as:

current financial information, historical payment experience, credit documentation, public information, and

current economic trends, among other factors.

The Company analyzes loans individually by classifying the loans receivable as to

The Company uses the following definitions for risk ratings:

- Loans in this category are considered to have a low likelihood of loss based on relevant information analyzed about the

ability of the borrowers to service their debt and other factors.

Mention - Loans in this category are currently protected but are potentially weak, including adverse trends in borrower’s

operations, credit quality or financial strength.

Those loans constitute an undue and unwarranted credit risk but not to the point

of justifying a substandard classification.

The credit risk may be relatively minor yet constitute an unwarranted risk in light

of the circumstances.

Special mention loans have potential weaknesses which may, if not checked or corrected, weaken the

loan or inadequately protect the Company’s credit position at some future date.

- A substandard loan is inadequately protected by the current sound net worth and paying capacity

of the obligor or of the collateral pledged, if any.

Loans classified as substandard must have a well-defined weakness or weaknesses

that jeopardize the liquidation of the debt;

they are characterized by the distinct possibility that the institution will sustain

some loss if the deficiencies are not corrected.

- Loans classified doubtful have all the

weaknesses inherent in loans classified as substandard, plus the added characteristic that the weaknesses make collection or liquidation

in full on the basis of currently existing facts, conditions, and values highly questionable and improbable.

on the most recent analysis performed, the risk categories of loans receivable as of March 31, 2021 and December 31, 2020 was

Company categorizes loans receivable into risk categories based on relevant information about the ability of borrowers to service their

debt such as:

current financial information, historical payment experience, credit documentation, public information, and current economic

trends, among other factors.

The Company analyzes loans individually by classifying the loans receivable as to credit risk.

uses the following definitions for risk ratings:

- Loans in this category are considered to have a low likelihood of loss based on relevant information analyzed about the ability

of the borrowers to service their debt and other factors.

Mention - Loans in this category are currently protected but are potentially weak, including adverse trends in borrower’s operations,

credit quality or financial strength.

Those loans constitute an undue and unwarranted credit risk but not to the point of justifying

a substandard classification.

The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances.

Special mention loans have potential weaknesses which may, if not checked or corrected, weaken the loan or inadequately protect

the Company’s credit position at some future date.

- A substandard loan is inadequately protected by the current sound net worth and paying capacity of

the obligor or of the collateral pledged, if any.

Loans classified as substandard must have a well-defined weakness or weaknesses that

jeopardize the liquidation of the debt;

they are characterized by the distinct possibility that the institution will sustain some loss

if the deficiencies are not corrected.

- Loans classified doubtful have all the weaknesses

inherent in loans classified as substandard, plus the added characteristic that the weaknesses make collection or liquidation in full

on the basis of currently existing facts, conditions, and values highly questionable and improbable.

on the most recent analysis performed, the risk categories of loans receivable as of March 31, 2022 and December 31, 2021 was as follows:

Summary of risk category of loans receivable

As of March 31, 2022

15 unchanged sentences

7 ALLOWANCE FOR LOAN LOSSES

determining the amount of our allowance for loan losses, we rely on an analysis of our loan portfolio, our experience and our

evaluation of general economic conditions.

If our assumptions prove to be incorrect, our current allowance may not be sufficient

to cover future loan losses and we may experience significant increases to our provision.

Due to the underlying SBA guarantee

provided for PPP loans, these accounts were not included in either the portfolio segment or impairment calculations at March 31,

2021 and December 31, 2020.

Additionally, due to uncertainties presented by the ongoing pandemic and the resulting economic uncertainty,

internal and external qualitative factors were revised accordingly.

This revision included reviewing our internal scoring related

to loan modifications and extensions, and external factors, specifically, unemployment and other economic factors.

determining the amount of our allowance for loan losses, we rely on an analysis of our loan portfolio, our experience and our evaluation

of general economic conditions.

If our assumptions prove to be incorrect, our current allowance may not be sufficient to cover future

loan losses and we may experience significant increases to our provision.

Due to the underlying SBA guarantee provided for PPP loans,

these accounts were not included in either the portfolio segment or impairment calculations at March 31, 2022 and December 31, 2021.

Additionally, due to uncertainties presented by the ongoing pandemic and the resulting economic uncertainty, internal and external qualitative

factors were revised accordingly.

This revision included reviewing our internal scoring related to loan modifications and extensions,

and external factors, specifically, unemployment and other economic factors.

following tables present activity in the allowance for loan losses by portfolio segment for the three month periods ended March 31, 2022

and 2021, respectively.

Additionally, the allocation of the allowance by recorded portfolio segment and impairment method

is presented as of March 31, 2021, and December 31, 2020, respectively.

estate secured

(Dollars are in thousands)

and Land Development

and All Other

Additionally, the allocation of the allowance by recorded portfolio segment and impairment method is presented

as of March 31, 2022, and December 31, 2021, respectively

Schedule of allocation of portion of allowance

(Dollars are in thousand)

secured Commercial

Construction and Land Development

Residential 1-4 family

Consumer and All Other

Three months ended March 31, 2022

3 unchanged sentences

Individually evaluated for impairment

Collectively evaluated

for impairment

Collectively evaluated for impairment

Loans at March 31, 2022

Individually evaluated for impairment

Collectively evaluated

for impairment

estate secured

Collectively evaluated for impairment

(Dollars are in thousands)

and Land Development

and All Other

estate secured Commercial

Construction and Land Development

Residential 1-4 family

Consumer and All Other

Allowance for loan losses at December 31, 2021

Individually evaluated for

Collectively evaluated

for impairment

Individually evaluated for impairment

Collectively evaluated for impairment

Loans at December 31, 2021

Individually evaluated for impairment

Collectively evaluated

for impairment

estate secured

Collectively evaluated for impairment

(Dollars are in thousands)

and Land Development

and All Other

estate secured Commercial

Construction and Land Development

Residential 1-4 family

Consumer and All Other

Three months ended March 31, 2021

3 unchanged sentences

8 TROUBLED DEBT RESTRUCTURINGS

were $4.0 million in loans that were classified as troubled debt restructurings at both March 31, 2021 and December 31, 2020.

All loans considered to be troubled debt restructurings are individually evaluated for impairment as part of the allowance for

loan losses calculation.

No loans modified during the three months ended March 31, 2021 or March 31, 2020, were considered to

be troubled debt restructurings.

loans previously modified as troubled debt restructurings defaulted during the three months ended March 31, 2021.

One loan previously

modified as troubled debt restructuring, with a balance of $663 thousand, defaulted during the three months ended March 31, 2020.

Generally, a troubled debt restructuring is considered to be in default once it becomes 90 days or more past due following a modification.

determining the allowance for loan losses, management considers troubled debt restructurings and subsequent defaults in these

restructurings in its estimate.

were $ 2.4 million and $ 2.5 million in loans classified as troubled debt restructurings at March 31, 2022 and December 31, 2021, respectively.

All loans considered to be troubled debt restructurings are individually evaluated for impairment as part of the allowance for loan losses

No loans modified during the three months ended March 31, 2022 or March 31, 2021, were considered to be troubled debt restructurings.

loan totaling $84 thousand, previously modified as a trouble debt restructuring, defaulted during the three months ended March 31, 2022.

No restructured notes defaulted during the three months ended March 31, 2021.

Generally, a restructured troubled debt is considered to

be in default once it becomes 90 days or more past due following a modification.

determining the allowance for loan losses, management considers troubled debt restructurings and subsequent defaults in these restructurings

in its estimate.

The Company evaluates all troubled debt restructurings for possible further impairment.

the allowance may be increased, adjustments may be made in the allocation of the allowance, or charge-offs may be taken to further

write down the carrying value of the loan.

As a result, the allowance may

be increased, adjustments may be made in the allocation of the allowance, or charge-offs may be taken to further write down the carrying

value of the loan.

9 OTHER REAL ESTATE OWNED

following table summarizes the activity in other real estate owned for the three months ended March 31, 2021 and the year ended

December 31, 2020:

following table summarizes the activity in other real estate owned for the three months ended March 31, 2022 and the year ended December

Schedule of other real estate owned

(Dollars are in thousands)

6 unchanged sentences

Adjustment of carrying value

(Losses) gains from sales

Net gains from sales

Balance, end of period

10 FAIR VALUES

financial reporting standard, “Fair Value Measurements and Disclosures” provides a framework for measuring fair value

under generally accepted accounting principles and requires disclosures about the fair value of assets and liabilities recognized

in the balance sheet in periods subsequent to initial recognition, whether the measurements are made on a recurring basis (for

example, available-for-sale investment securities) or on a nonrecurring basis (for example, impaired loans and other real estate

acquired through foreclosure).

value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in

the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on

the measurement date.

Fair Value Measurements and Disclosures also establish fair value hierarchy which requires an entity to

maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The standard describes

three levels of inputs that may be used to measure fair value.

Quoted prices in active markets for identical assets or liabilities.

Level 1 assets and liabilities include debt and equity

securities and derivative contracts that are traded in an exchange market, as well as U.

Treasury, other U.

Government and

agency mortgage-backed debt securities that are highly liquid and are actively traded in over-the-counter markets.

Significant observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities;

quoted prices

in markets that are not active;

or other inputs that are observable or can be corroborated by observable market data for substantially

the full term of the assets or liabilities.

Level 2 assets and liabilities include debt securities with quoted prices that are

traded less frequently than exchange-traded instruments and derivative contracts whose value is determined using a pricing model

with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.

category generally includes certain derivative contracts and impaired loans.

Significant unobservable inputs that are supported by little or no market activity and that are significant to the fair value

of the assets and liabilities.

Level 3 assets and liabilities include financial instruments whose value is determined using pricing

models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair

value requires significant management judgment or estimation.

For example, this category generally includes certain private equity

investments, retained residual interests in securitizations, residential mortgage servicing rights, and highly structured or long-term

derivative contracts.

Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.

In accordance with the Fair Value Measurements and Disclosures topic of FASB ASC, the fair value of a financial instrument is the price

that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market

and in an orderly transaction between market participants at the measurement date.

Fair value is best determined based upon quoted market

However, in many instances, there are no quoted market prices for the Company's various financial instruments.

In cases where

quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.

Those techniques

are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.

Accordingly, the

fair value estimates may not be realized in an immediate settlement of the instrument.

fair value guidance provides a consistent definition of fair value, which focuses on exit price in the principal or most advantageous

market and in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement

date under current market conditions.

If there has been a significant decrease in the volume and level of activity for the asset or liability,

a change in valuation technique or the use of multiple valuation techniques may be appropriate.

In such instances, determining the price

at which willing market participants would transact at the measurement date under current market conditions depends on the facts and

circumstances and requires the use of significant judgment.

The fair value is a reasonable point within the range that is most representative

of fair value under current market conditions.

accordance with this guidance, the Company groups its financial assets and financial liabilities generally measured at fair value in

three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine

Quoted prices are available in active markets for identical assets or liabilities as of the reported date.

Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported

The nature of these assets and liabilities include items for which quoted prices are available but traded less frequently, and

items that are valued using other financial instruments, the parameters of which can be directly observed.

Assets and liabilities that have little to no pricing observability as of the reported date.

These items do not have two-way markets

and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require

significant management judgment or estimation.

description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such

instruments pursuant to the valuation hierarchy are as follows:

Securities Available for Sale - Investment securities available for sale are recorded at fair value on a recurring basis.

Fair value measurement is based upon quoted prices if available.

If quoted prices are not available, fair value is measured using

independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted

for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions.

Level 1 securities

include those traded on an active exchange such as the New York Stock Exchange, or by dealers or brokers in active over-the counter

Level 2 securities include mortgage backed securities issued by government sponsored entities, municipal bonds and corporate

debt securities.

Securities classified as Level 3 include asset-backed securities in less liquid markets.

measurement is based upon quoted prices.

The Company’s available for sale securities, totaling $106.8 million and $107.4 million

at March 31, 2022 and December 31, 2021, respectively, are the only assets whose fair values are measured on a recurring basis using

Level 2 inputs from an independent pricing service.

- The Company does not record loans at fair value on a recurring basis.

Real estate serves as collateral on a substantial

majority of the Company’s loans.

Real estate serves as collateral on a substantial majority of

the Company’s loans.

When a loan is considered impaired, a specific reserve may be established.

are deemed to be impaired and require a reserve, are primarily valued on a non-recurring basis at the fair values of the underlying

real estate collateral.

Where there is no observable market price, such fair values are obtained using independent appraisals,

which management evaluates to determine whether or not the fair value of the collateral is further impaired below the appraised

value and adjusts for estimated costs of disposition.

Loans, which are deemed to be impaired

and require a reserve are primarily valued on a non-recurring basis at the fair value of the underlying real estate collateral.

there is no observable market price, such fair values are obtained using independent appraisals, which management evaluates to determine

whether or not the fair value of the collateral is further impaired below the appraised value and adjusts for estimated costs of disposition.

The Company records impaired loans as nonrecurring Level 3 assets.

Assets – Foreclosed assets are adjusted to fair value upon transfer of the loans to foreclosed assets.

Foreclosed assets are carried at the lower of the carrying value or fair value.

Real Estate Owned –Other real estate owned is adjusted to fair value upon transfer of the loans, or former bank premises, to other

real estate owned.

These assets are carried at the lower of their carrying value or fair value.

Fair value is based upon observable market

prices, when available, reduced by estimated disposition costs, which the Company considers to be nonrecurring Level 2 inputs.

When observable market prices are not available, management determines the fair value of the foreclosed asset using independent

appraisals, evaluated to determine whether or not the property is further impaired below the appraised value and adjusts for estimated

costs of disposition.

When observable

market prices are not available, management determines the fair value of the foreclosed asset using independent third-party appraisals,

evaluated to determine whether or not the property is further impaired below the appraised value, and adjusts for estimated costs of

The Company records foreclosed assets as nonrecurring Level 3.

and liabilities measured at fair value are as follows as of March 31, 2021 (for purpose of this table the impaired loans are shown

net of the related allowance):

and liabilities measured at fair value are as follows as of March 31, 2022 (for purpose of this table the impaired loans are shown net

of the related allowance):

Schedule of summary of assets and liabilities measured at fair value

March 31, 2022

12 unchanged sentences

Impaired loans

and liabilities measured at fair value are as follows as of December 31, 2020 (for purpose of this table the impaired loans are

shown net of the related allowance):

and liabilities measured at fair value are as follows as of December 31, 2021 (for purpose of this table the impaired loans are shown

net of the related allowance):

December 31, 2021

14 unchanged sentences

unobservable inputs used in the fair value measurements were as follows:

(Dollars in thousands)

Fair Value at March 31, 2021

Fair Value at

Valuation Technique

Significant Unobservable Inputs

General Range of Significant Unobservable Input Values

Impaired Loans

Appraised Value/Discounted Cash Flows/Market Value of Note

Discounts to reflect current market conditions, ultimate collectability, and estimated costs to sell

Other Real Estate Owned

Appraised Value/Comparable Sales/Other Estimates from Independent Sources

Discounts to reflect current market conditions and estimated costs to sell

Schedule of significant unobservable inputs In level 3 assets

in thousands)

Value at March 31, 2022

Unobservable Inputs

Range of Significant Unobservable Input Values

Value/ Market Value of Note

to reflect current market conditions, ultimate collectability, and estimated costs to sell

Real Estate Owned

Value/Comparable Sales/Other Estimates from Independent Sources

to reflect current market conditions and estimated costs to sell

Value of Financial Instruments

value information about financial instruments, whether or not recognized in the balance sheet, for which it is practical to estimate

the value is based upon the characteristics of the instruments and relevant market information.

Financial instruments include

cash, evidence of ownership in an entity, or contracts that convey or impose on an entity that contractual right or obligation

to either receive or deliver cash for another financial instrument.

following summary presents the methodologies and assumptions used to estimate the fair value of the Company’s financial

instruments presented below.

The information used to determine fair value is highly subjective and judgmental in nature and, therefore,

the results may not be precise.

Subjective factors include, among other things, estimates of cash flows, risk characteristics,

credit quality, and interest rates, all of which are subject to change.

Since the fair value is estimated as of the balance sheet

date, the amounts that will actually be realized or paid upon settlement or maturity on these various instruments could be significantly

carrying amount and fair value of the Company’s financial instruments that are not required to be measured or reported at

fair value on a recurring basis as of March 31, 2021 and December 31, 2020 are as follows:

ASC 825, Financial Instruments, requires disclosure about fair value of financial instruments, including those financial

assets and financial

liabilities that are not required to be measured and reported at fair value on a recurring or nonrecurring basis.

ASC 825 excludes certain

financial instruments and all nonfinancial instruments from its disclosure requirements.

Accordingly, the aggregate fair value amounts

presented may not necessarily represent the underlying fair value of the Company.

The carrying values of cash and due from banks, federal

funds sold, interest-bearing deposits, deposits with no stated maturities and accrued interest approximates fair value and are excluded

from the table below.

estimated fair values, and related carrying or notional amounts, of the Company's financial instruments and their placement in the fair

value hierarchy at March 31, 2022 and December 31, 2021 was as follows (in thousands):

Schedule of estimated fair value of financial instruments

Fair Value Measurements

13 unchanged sentences

Borrowed funds

value estimates are made at a specific point in time, based on relevant market information and information about the financial

These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s

entire holdings of a particular financial instrument.

Because no market exists for a significant portion of the Company’s

financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic

conditions, risk characteristics of various financial instruments and other factors.

These estimates are subjective in nature,

involve uncertainties and matters of significant judgment, and therefore cannot be determined with precision.

Changes in assumptions

can significantly affect the estimates.

fair values have been determined by the Company using historical data, as generally provided in the Company’s regulatory

reports, and an estimation methodology suitable for each category of financial instruments.

The Company’s fair value estimates,

methods and assumptions are set forth below for the Company’s other financial instruments.

carrying values of cash and due from banks, federal funds sold, interest-bearing deposits, deposits with no stated maturities,

trust preferred securities and accrued interest approximates fair value and are excluded from the table above.

accordance with our adoption of Accounting Standards Update (ASU) 2016-01 in 2018, the methods utilized to measure the fair value

of financial instruments at March 31, 2021 and December 31, 2020, represent an approximation of exit price;

however, an actual

exit price may differ.

11 LEASING ACTIVITIES

of March 31, 2021, the Bank leases five branch office sites resulting from sale leaseback transactions entered into in 2017 and

The lease agreements have maturity dates ranging from May 2032 to September 2034.

It is assumed that there are currently

no circumstances in which the leases would be terminated prior to expiration.

The weighted average remaining life of the lease

terms at March 31, 2021 was 11.65 years.

discount rate used in determining the lease liability for each individual lease was the FHLB fixed advance rate which corresponded

to the lease term for each transaction.

of March 31, 2022, the Bank leases four branch office sites resulting from sale leaseback transactions entered into in 2017 and a sublet

of a lot adjacent to another office.

The lease agreements have maturity dates ranging from May 2032 to December 2041.

It is assumed that

there are currently no circumstances in which the leases would be terminated prior to expiration.

The weighted average remaining life

of the lease terms at March 31, 2022 was 10.36 years.

discount rate used in determining the lease liability for each individual lease was the FHLB fixed advance rate which corresponded to

the lease term for each transaction.

This methodology is expected to be used for any other subsequent lease agreements.

weighted average discount rate for the leases at March 31, 2021 was 3.16%.

the three months ended March 31, 2021 and 2020, operating lease expenses were $138 thousand and $144 thousand, respectively.

average discount rate for the leases at March 31, 2022 was 3.24 %.

Company’s operating lease costs for the three months ended March 31, 2022 and 2021, as the result of the transactions discussed

above, were $ 114 thousand and $ 138 thousand, respectively.

Company’s other operating leases were evaluated and determined to be immaterial to the financial statements.

2021, future minimum rental commitments under the non-cancellable operating leases discussed above are as follows (dollars are

in thousands):

At March 31, 2022,

future minimum rental commitments under the non-cancellable operating leases discussed above are as follows (dollars are in thousands):

Schedule of future minimum rental commitments under the non-cancellable operating leases

Total lease payments

4 unchanged sentences

Noninterest income by revenue stream for the three months ended March 31, 2022 and 2021:

For the three months ended

(Dollars in thousands)

Service charges and fees

Card processing and interchange income

Net gain on sale of securities available-for-sale (1)

Insurance and investment fees

Other noninterest income

Total Noninterest Income

within the scope of ASU 2014-09

Schedule of revenue from contracts with customers

the three months ended

in thousands)

charges and fees

processing and interchange income

and investment fees

noninterest income

Noninterest Income

13 NONINTEREST EXPENSES

operating expenses, included as part of noninterest expenses, consisted of the following for the periods presented:

Schedule of noninterest expenses

For the three months ended

7 unchanged sentences

Other real estate owned, net

Total other operatinsg expenses

Total other operating expenses

14 SUBSEQUENT EVENTS

events are events or transactions that occur after the balance sheet date but before financial statements are issued.

subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the

balance sheet, including the estimates inherent in the process of preparing financial statements.

Non-recognized subsequent events

are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date.

No subsequent events have occurred since March 31, 2021.

April 20, 2022, the United States District Court for the Western District of Virginia issued summary judgment, in favor of the Bank,

dismissing all remaining claims made in a lawsuit filed by a former employee in January 2021, alleging wrongful termination based on

gender, religion and age.

April 28, 2022 the board of directors of the Company authorized the repurchase of up to 500,000 shares of the Company’s outstanding

common stock through March 31, 2023.

The actual means and timing of any purchases, number of shares and prices or range of prices will

be determined by the Company in its discretion and will depend on a number of factors, including the market price of the Company’s

common stock, general market and economic conditions, and applicable legal and regulatory requirements.

There is no assurance that the

Company will purchase any shares under this program.

15 RECENT ACCOUNTING DEVELOPMENTS

2 unchanged sentences

2016-13, ‘Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses

on Financial Instruments,’ the Financial Accounting Standards Board (the FASB) issued guidance to change the accounting

for credit losses and modify the impairment model for certain debt securities.

Subsequently, per ASU No.

implementation for the Company is delayed until reporting periods beginning after December 15, 2022.

Early adoption is

permitted for all organizations for periods beginning after December 15, 2018.

The Company is currently evaluating the effect

that implementation of the new standard will have on its financial position, results of operations, and cash

May 2019, the FASB issued targeted transition relief for entities which irrevocably elect the fair value option for certain financial

assets previously measured at amortized cost basis.

For those entities, the amendments to the transition guidance for ASU 2016-13

will increase comparability of financial statement information by providing an option to align measurement methodologies for similar

financial assets.

Measurement of Credit Losses on Financial

Instruments,’ the Financial Accounting Standards Board (the FASB) issued guidance to change the accounting for credit losses and

modify the impairment model for certain debt securities.

Subsequently, per ASU No.

2019-10, implementation for the Company is delayed until reporting periods beginning

after December 15, 2021.

The Company is currently in the process of evaluating the impact of adoption of this guidance on its

financial statements.

November 2019, the FASB released ASU 2019-10, ‘Financial Instruments – Credit Losses (Topic 326), Derivatives and

Hedging (Topic 815), and Leases (Topic 842),’ in which the FASB shared a new philosophy to extend and simplify how

effective dates for certain major Updates would be staggered between larger public companies (bucket one) and all other

entities (bucket two).

A major Update would first be effective for bucket-one entities.

For bucket-two entities, including

the Company, it is anticipated that the FASB will consider requiring an effective date staggered at least two years after

bucket one for major Updates.

Generally, it is expected that early application would continue to be allowed for all entities.

The Company is considered a bucket-two entity due to its eligibility to be a smaller reporting company, per the Securities

and Exchange Commission (the SEC).

This Update applies to ASU 2016-13, as discussed above, ASU 2017-12, which does not apply

to the Company, and ASU 2016-02, which the Company has already early-adopted.

December 2019, the FASB released ASU 2019-12, ‘Income Taxes (Topic 740),’ which simplify the accounting for income

taxes by removing certain exceptions to the general principles in Topic 740, improve consistent application, and simplify GAAP

for other areas of Topic 740.

The amendments in this Update are effective for the Company for fiscal years beginning after December

15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

The Company does not expect these amendments

to have a material effect on its financial statements.

January 2020, the FASB released ASU 2020-01, ‘Investments – Equity Securities (Topic 321), Investments –

Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815),’ which clarify certain

interactions between the guidance to account for certain equity securities under Topic 321, 323 and 815, and improve current

GAAP by reducing diversity in practice and increasing comparability of accounting.

The amendments in this Update are

effective for the Company for fiscal years beginning after December 31, 2021, and interim periods within those fiscal years.

Early adoption is permitted.

The Company does not expect these amendments to have a material effect on its financial

March 2020, the FASB released ASU 2020-03, ‘Codification Improvements to Financial Instruments,’ as part of its ongoing

project for improving the Codification or correcting its unintended application.

This Update is being issued to increase stakeholder

awareness of these amendments.

These amendments affect Fair Value Option Disclosures, Applicability of Portfolio Exception in

Topic 820 to Nonfinancial Items, Disclosures for Depository and Lending Institutions, Cross-Reference to Line-of-Credit or Revolving-Debt

Arrangements Guidance in Subtopic

470-50, Cross-Reference to Net Asset Value Practical Expedient in Subtopic 820-10, Interaction of Topic 842 and Topic 326, and

Interaction of Topic 326 and Subtopic 860-20.

The amendments in this update are effective immediately.

The Company does not expect

these amendments to have a material effect on its financial statements.

March 2020, the FASB released ASU 2020-04, ‘Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference

Rate Reform on Financial Reporting,’ which provides optional guidance for a limited period of time to ease the potential

burden in accounting for (or recognizing the effects of) reference rate reform.

The amendments in this Update are elective and

apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions

that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The amendments in

the Update are effective for the Company as of March 12, 2020 through December 31, 2022.

The Company is currently in the process

of evaluating the impact of adoption of this guidance, but does not expect this amendment to have a material impact on its financial

August 2020, the FASB released ASU 2020-06, ‘Accounting for Convertible Instruments and Contracts in an Entity’s Own

Equity,’ which reduces the number of accounting models for convertible debt instruments and convertible preferred stock.

The Board concluded that eliminating certain accounting models simplifies the accounting for convertible instruments, reduces

complexity for preparers and practitioners, and improves the decision usefulness and relevance of the information provided to

financial statement users.

The amendments in this Update are effective for the Company for fiscal years beginning after December

15, 2021, including interim periods within those fiscal years.

The Company does not expect these amendments to have a material

effect on its financial statements.

January 2021, the FASB released ASU 2021-01, ‘Reference Rate Reform (Topic 848),’ which clarifies that certain optional

expedients and exceptions in topic 848 for contract modifications and hedge accounting apply to derivatives that are affected

by the discounting transition related to reference rate reform.

The amendments in this Update are effective immediately for all

An entity may elect to apply the amendments in the Update on a full retrospective basis as of any date from the beginning

of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any

date within an interim period that includes or is subsequent to the date of the issuance of a final Update, up to the date that

financial statements are available to be issued.

The Company does not expect this amendment to have a material effect on its financial

accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have

a material impact on the Company’s financial position, results of operations or cash flows.

2019-10, implementation for the Company is delayed

until reporting periods beginning after December 15, 2022.

Early adoption is permitted for all organizations for periods beginning after

December 15, 2018.

The Company is currently evaluating the effect that implementation of the new standard will have on its financial

position, results of operations, and cash flows.

The Company has contracted with a software vendor and is currently working through the

implementation process.

It is anticipated the Company will run the new methodology parallel to the current allowance methodology for

several periods before full implementation.

March 2020, the FASB released ASU 2020-04, ‘Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform

on Financial Reporting,’ which provides optional guidance for a limited period of time to ease the potential burden in accounting

for (or recognizing the effects of) reference rate reform.

The amendments in this Update are elective and apply to all entities, subject

to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference the London Interbank Offering

Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform.

The amendments in the Update are

effective for the Company as of March 12, 2020 through December 31, 2022.

The Company is working through implementation of this guidance,

and to date this amendment has not had a material impact on its financial statements.

January 2021, the FASB released ASU 2021-01, ‘Reference Rate Reform (Topic 848),’ which clarifies that certain optional expedients

and exceptions in topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting

transition related to reference rate reform.

The amendments in this Update are effective immediately for all entities.

An entity may

elect to apply the amendments in the Update on a full retrospective basis as of any date from the beginning of an interim period that

includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that

includes or is subsequent to the date of the issuance of a final Update, up to the date that financial statements are available to be

The Company does not expect this amendment to have a material effect on its financial statements.

March 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2022-02, “Financial Instruments-Credit

Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures.” ASU 2022-02 addresses areas identified by the FASB as

part of its post-implementation review of the credit losses standard (ASU 2016-13) that introduced the CECL model.

The amendments eliminate

the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements

for loan refinancings and restructurings made with borrowers experiencing financial difficulty.

In addition, the amendments require a

public business entity to disclose current-period gross write-offs for financing receivables and net investment in leases by year of

origination in the vintage disclosures.

The amendments in this ASU should be applied prospectively, except for the transition method

related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method, resulting

in a cumulative-effect adjustment to retained earnings in the period of adoption.

For entities that have adopted ASU 2016-13, ASU 2022-02

is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

For entities that

have not yet adopted ASU 2016-13, the effective dates for ASU 2022-02 are the same as the effective dates in ASU 2016-13.

Early adoption

is permitted if an entity has adopted ASU 2016-13.

An entity may elect to early adopt the amendments about TDRs and related disclosure

enhancements separately from the amendments related to vintage disclosures.

The Company is currently assessing the impact that ASU 2022-02

will have on its consolidated financial statements.

accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material

impact on the Company’s financial position, results of operations or cash flows.

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/A

Item 1. Financial Statements