What changed in this filing

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Item 1. Financial Statements

2022-08-16 compared with 2022-05-17 · 297 added, 234 removed, 555 unchanged (49% of the section changed)

2 unchanged sentences

BALANCE SHEETS

30, 2022 AND DECEMBER 31, 2021

THOUSANDS EXCEPT PER SHARE AND SHARE DATA)

3 unchanged sentences

Total Cash and Cash Equivalents

Investment securities available-for-sale, at fair value

Investment securities available-for-sale

Loans held for sale

18 unchanged sentences

50,000,000 shares authorized;

23,922,086 shares issued and outstanding at

March 31, 2022 and December 31, 2021

23,905,576 and 23,922,086 shares issued and outstanding at

June 30, 2022 and December 31, 2021, respectively

Additional paid-in-capital

6 unchanged sentences

STATEMENTS OF INCOME

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

For the Three Months Ended

For the Six Months Ended

INTEREST AND DIVIDEND INCOME

Loans including fees

Federal funds sold

Interest-earning deposits with banks

28 unchanged sentences

PEOPLES BANKSHARES, INC.

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

For the three months ended

Other comprehensive income:

For the six months ended

Other comprehensive (loss) income:

Investment securities activity

Unrealized losses arising during the period

Other comprehensive losses on investment securities

Other comprehensive loss on investment securities

Related tax benefit

4 unchanged sentences

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

THOUSANDS INCLUDING SHARE DATA)

7 unchanged sentences

Balance, March 31, 2021

Other comprehensive loss, net of tax

Balance, June 30, 2021

Balance, December 31, 2021

2 unchanged sentences

Balance, March 31, 2022

Other comprehensive loss, net of tax

Repurchase of common stock

Balance, June 30, 2022

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

1 unchanged sentence

STATEMENTS OF CASH FLOWS

THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

CASH FLOWS FROM OPERATING ACTIVITIES

3 unchanged sentences

Income on bank owned life insurance

Net gain on sale of securities available-for-sale

Gain on sale of mortgage loans

Loss on sale of premises and equipment

Loss on sale or disposal of premises and equipment

(Gain) loss on sale of other real estate owned

2 unchanged sentences

Adjustment of carrying value of other real estate owned

Amortization of bond premiums

Deferred tax benefit

Adjustment of carrying value of repossessed assets

Net amortization/accretion of bond premiums/discounts

Deferred tax expense

Net change in:

4 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES

Net increase in loans

Net decrease (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)

Net (purchase) redemption of equity securities (restricted)

Payments for the purchase of premises and equipment

2 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES

Net change in short term borrowings

Net change in noninterest bearing deposits

1 unchanged sentence

Dividends paid

Repurchase of common stock

Net Cash Provided by Financing Activities

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and Cash Equivalents, Beginning of the Period

10 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.

(New Peoples or the Company) 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

8 unchanged sentences

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.

accruals) necessary to present fairly the Company’s financial position at June 30, 2022 and December 31, 2021, and the results

of operations for the three- and six-month periods ended June 30, 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 31, 2021.

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.

9 unchanged sentences

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.

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

5 unchanged sentences

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:

the three-month and six-month periods ended June 30, 2022 and 2021, there were no potential common shares.

Basic and diluted net income

per common share calculations follows:

Schedule of basic and diluted net loss per common share calculations

1 unchanged sentence

Share and Per Share Data)

For the three months ended

For the three months

ended June 30,

For the six months

ended June 30,

Weighted average shares outstanding

Weighted average diluted shares outstanding

Basic and diluted income per share

Weighted average dilutive shares outstanding

Basic and diluted Earnings per share

Requirements and Ratios

Company meets eligibility criteria of a small bank holding company in accordance with the Federal Reserve’s Small Bank Holding

Company Policy Statement issued in February 2015 and, therefore, is not obligated to report consolidated regulatory capital.

Bank is subject to various capital requirements administered by federal banking agencies.

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 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.

and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies.

Capital adequacy

guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and

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

Capital amounts and classifications are also subject

to qualitative judgments by regulators.

Failure to meet capital requirements can initiate regulatory action.

qualify as a "Small Bank Holding Company" under federal regulations, a bank must have consolidated assets of $3 billion or

The primary benefit of being deemed a "Small Bank Holding Company" is the exemption from the requirement to maintain

consolidated regulatory capital ratios;

instead, regulatory capital ratios only apply at the subsidiary bank level.

final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S.

banks (BASEL III rules) became fully

phased in on January 1, 2019.

Under the BASEL III rules, the Bank must hold a capital conservation buffer above the adequately capitalized

risk-based capital ratios.

The capital conservation buffer required is 2.50 %.

At June 30, 2022, the Bank had a capital conservation buffer

Amounts recorded to accumulated other comprehensive income (loss) are not included in computing regulatory capital.

believes as of June 30, 2022, the Bank met all capital adequacy requirements to which it was subject.

corrective action regulations provide five classifications:

well capitalized, adequately capitalized, undercapitalized, significantly

undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition.

If adequately

capitalized, regulatory approval is required to accept brokered deposits.

If undercapitalized, capital distributions are limited, as

is asset growth and expansion, and capital restoration plans are required.

At June 30, 2022, the most recent regulatory notifications

categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.

There are no conditions or events

since that notification that management believes have changed the institution's category.

The Bank’s actual capital amounts and

ratios are presented in the following table as of June 30, 2022 and December 31, 2021, respectively.

Schedule of capital requirements

2 unchanged sentences

(Dollars are in thousands)

March 31, 2022:

June 30, 2022:

Total Capital to Risk Weighted Assets

9 unchanged sentences

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.

Bank is also subject to the rules implementing the Basel III capital framework and certain related provisions of the Dodd-Frank

Wall Street Reform and Consumer Protection Act of 2010.

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

amortized cost and estimated fair value of available-for-sale (AFS) securities as of June 30, 2022 and December 31, 2021 is as follows:

Schedule of securities amortized cost and estimated fair value

(Dollars are in thousands)

March 31, 2022

June 30, 2022

Government Agencies

2 unchanged sentences

Mortgage backed securities

Total Securities AFS

Total Securities available for sale

December 31, 2021

6 unchanged sentences

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.

of time that individual securities have been in a continuous unrealized loss position as of June 30, 2022 and December 31, 2021.

Schedule of fair value and gross unrealized losses on investment securities

2 unchanged sentences

(Dollars are in thousands)

March 31, 2022

June 30, 2022

Government Agencies

2 unchanged sentences

Mortgage backed securities

Total Securities AFS

Total Securities available for sale

December 31, 2021

3 unchanged sentences

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.

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.

Total Securities available for sale

June 30, 2022, there were 215 securities in a loss position, of which 47 have been in a loss position for twelve months or more.

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

not 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

securities with a carrying value of $ 29.7 million and $ 12.1 million at June 30, 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.

AFS debt securities were sold during the three and six months ended June 30, 2022 and 2022.

amortized cost and fair value of investment securities at June 30, 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

7 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 bank of the Federal Reserve Bank of Richmond (Federal Reserve Bank) and the Federal Home Loan Bank of Atlanta (FHLB),

is required to hold stock in each.

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

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.

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

of $ 4.3 million and $ 2.0 million at June 30, 2022 and December 31, 2021, respectively.

The stock has no quoted market value and no ready

market exists.

held for sale at June 30, 2022 and December 31, 2021, totaled $ 62 thousand and $ 0 , respectively, which represents mortgage loans originated

These originations and sales are executed on a best-efforts basis.

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

receivable outstanding as of June 30, 2022, and December 31, 2021, are summarized as follows:

Schedule of Loans receivable outstanding

7 unchanged sentences

All other loans

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,

in commercial loans at June 30, 2022 and December 31, 2021 were $ 845 thousand 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.

included in total loans above are deferred loan fees of $ 1.7 million and $ 1.8 million at June 30, 2022 and December 31, 2021, respectively.

Deferred loan costs were $ 2.1 million and $ 2.0 million, at June 30, 2022 and December 31, 2021, respectively.

Income from net deferred

2 unchanged sentences

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:

receivable on nonaccrual status as of June 30, 2022, and December 31, 2021, are summarized as follows:

Summary of loans receivable on nonaccrual status

7 unchanged sentences

Total loans receivable on nonaccrual status

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

interest income not recognized on nonaccrual loans for the six months ended June 30, 2022, and June 30, 2021, was $11 thousand and $264

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

following tables presents information concerning the Company’s investment in loans considered impaired as of June 30, 2022, and

December 31, 2021:

Schedule of summary of impaired loans

As of March 31, 2022

As of June 30, 2022

(Dollars are in thousands)

29 unchanged sentences

loans, for the periods indicated:

Six Months Ended

June 30, 2022

June 30, 2021

(Dollars are in thousands)

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

Three Months Ended

March 31, 2022

March 31, 2021

June 30, 2022

June 30, 2021

(Dollars are in thousands)

With no allowance recorded:

With no related allowance recorded:

Real estate secured:

9 unchanged sentences

All other loans

age analysis of past due loans receivable as of March 31, 2022 and December 31, 2021 is below.

At March 31, 2022 and December 31, 2021,

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

age analysis of past due loans receivable as of June 30, 2022, and December 31, 2021, is below.

At June 30, 2022 and December 31, 2021,

no loans over 90 days past due were accruing.

Summary age analysis of past due loans receivable

As of March 31, 2022

As of June 30, 2022

(Dollars are in thousands)

3 unchanged sentences

Total real estate loans

Consumer installment loans

Consumer installment

All other loans

31 unchanged sentences

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:

on the most recent analysis performed, the risk categories of loans receivable as of June 30, 2022, and December 31, 2021, was as follows:

Summary of risk category of loans receivable

As of March 31, 2022

As of June 30, 2022

(Dollars are in thousands)

19 unchanged sentences

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, 2022, and December 31, 2021, respectively

these accounts were not included in either the portfolio segment or impairment calculations at June 30, 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 table presents activity in the allowance for loan losses for the six- and three-month periods ended June 30, 2022 and 2021,

respectively.

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

30, 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

estate secured

are in thousands)

and Land Development

and All Other

Six months ended June

Beginning balance

Ending balance

Allowance for loan losses at March 31, 2022

Individually evaluated for impairment

Collectively evaluated for impairment

Loans at March 31, 2022

Individually evaluated for impairment

Collectively evaluated for impairment

(Dollars are in thousands)

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 impairment

Three months ended June

Beginning balance

Ending balance

Allowance for loan

losses at June 30, 2022

Individually evluated for impairment

Collectively evaluated for impairment

Loans at December 31, 2021

Individually evaluated for impairment

Loans at June 30, 2022

Individually evluated for impairment

Collectively evaluated for impairment

estate secured

are in thousands)

and Land Development

and All Other

for loan losses at December 31, 2021

Individually evaluated

for impairment

Collectively evaluated

for impairment

at December 31, 2021

Individually evaluated

for impairment

Collectively evaluated

for impairment

estate secured

(Dollars are in thousands)

estate secured Commercial

Construction and Land Development

Residential 1-4 family

Consumer and All Other

Three months ended March 31, 2021

and Land Development

and All Other

Six months ended June

Beginning balance

Ending balance

Three months ended June

Beginning balance

Ending balance

of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

8 TROUBLED DEBT RESTRUCTURINGS

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

were $ 2.2 million and $ 2.5 million in loans classified as troubled debt restructurings at June 30, 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.

No loans modified during the three and six months ended June 30, 2022 or June 30, 2021, were considered to be troubled debt

restructurings.

loans totaling $84 thousand, secured by residential real estate, previously modified as troubled debt restructurings, defaulted during

the three months ended June 30, 2022.

One loan totaling $81 thousand, previously modified as a trouble debt restructuring, that defaulted

during the first three months of 2022, was in compliance with the terms of the restructuring at June 30, 2022.

During the three months

ended June 30, 2021, two loans to the same borrower, previously modified as troubled debt restructurings, totaling $1.1 million defaulted,

resulting in charge-offs totaling $835 thousand.

No loans previously modified as troubled debt restructurings defaulted during the first

three months of 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

5 unchanged sentences

9 OTHER REAL ESTATE OWNED

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

following table summarizes the activity in other real estate owned for the six months ended June 30, 2022, and the year ended December

Schedule of other real estate owned

11 unchanged sentences

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.

In accordance with the Fair Value Measurements and Disclosures topic of Financial Accounting Standards Board (the 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.

value is best determined based upon quoted market prices.

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

23 unchanged sentences

The Company’s available for sale securities, totaling $ 100.6 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.

at June 30, 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.

16 unchanged sentences

The Company records foreclosed assets as nonrecurring Level 3.

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

and liabilities measured at fair value are as follows as of June 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

June 30, 2022

(Dollars are in thousands)

13 unchanged sentences

net of the related allowance):

December 31, 2021

(Dollars are in thousands)

Quoted market price in active markets

Significant other observable inputs

Significant unobservable inputs

(On a recurring basis)

Available for sale investments

are in thousands)

market price in active markets

other observable inputs

unobservable inputs

a recurring basis)

for sale investments

Government Agencies

Taxable municipals

Corporate bonds

Mortgage backed securities

(On a non-recurring basis)

Other real estate owned

Impaired loans

Level 3 assets measured at fair value on a recurring or non-recurring basis as of March 31, 2022 and December 31, 2021, the significant

Mortgage-backed

a non-recurring basis)

real estate owned

Level 3 assets measured at fair value on a recurring or non-recurring basis as of June 30, 2022 and December 31, 2021, the significant

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

1 unchanged sentence

in thousands)

Value at March 31, 2022

Value at June 30, 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

3 unchanged sentences

Value of Financial Instruments

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):

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 different.

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 June 30, 2022, and December 31, 2021, are as follows:

Schedule of estimated fair value of financial instruments

4 unchanged sentences

Significant unobservable inputs

March 31, 2022

June 30, 2022

Financial Instruments – Assets

7 unchanged sentences

Borrowed funds

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

These estimates do not reflect any premium or discount that could result from offering for sale at one

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 and 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 June 30, 2022 and December 31, 2021, represent an approximation of exit price;

however, an actual exit price

11 LEASING ACTIVITIES

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

of June 30, 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.

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The weighted average remaining life

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

of the lease terms at June 30, 2022 was 10.12 years.

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

1 unchanged sentence

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

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.

average discount rate for the leases at June 30, 2022 was 3.24 %.

the six months ended June 30, 2022 and 2021, operating lease expenses were $ 228 thousand and $ 275 thousand, respectively.

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

At March 31, 2022,

At June 30, 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

Less imputed interest

lease payments

imputed interest

12 BORROWED FUNDS

in Borrowed Funds are two short-term FHLB Advances totaling $ 60 million at June 30, 2022.

No short-term borrowings were outstanding at

December 31, 2021.

Of the outstanding advances at June 30, 2022, $20 million, at an interest rate of 2.05%, matures September 16, 2022;

and $40 million, at a rate of 2.60%, matures December 19, 2022.

13 REVENUE FROM CONTRACTS WITH CUSTOMERS

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The following table presents

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

Noninterest income by revenue stream for the three and six months ended June 30, 2022 and 2021:

Schedule of revenue from contracts with customers

the three months ended

the six months ended

in thousands)

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Schedule of noninterest expenses

For the three months ended

For the three months ended June 30,

For the six months ended June 30,

(Dollars are in thousands)

5 unchanged sentences

FDIC insurance premiums

Other real estate owned, net

Other real estate owned expenses, net

Other operating expenses

Total other operating expenses

15 SUBSEQUENT EVENTS

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.

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

Recognized 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.

There were no subsequent events requiring

recognition or disclosure.

16 RECENT ACCOUNTING DEVELOPMENTS

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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.

Instruments,’ the FASB issued guidance to change the accounting for credit losses and modify the impairment model for certain debt

Subsequently, per ASU No.

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.

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

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.

has contracted with a software vendor and is currently working through the implementation process.

The new model has been constructed,

initial assumptions have been input and historical loan and loss activity has been input and validated.

The Company will run the new

methodology parallel to the current allowance methodology for several periods before full implementation, beginning with the June 30,

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

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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