Item 1 Financial
−Removed: PEOPLES BANKSHARES, INC.
−Removed: BALANCE SHEETS
+Added: NEW PEOPLES BANKSHARES,
+Added: CONSOLIDATED BALANCE
+Added: MARCH 31, 2023
AND DECEMBER 31, 2022
5 unchanged sentences
securities available-for-sale
−Removed: for loan losses
+Added: for credit losses
premises and equipment, net
8 unchanged sentences
SHAREHOLDERS’
−Removed: stock - $ 2.00 par value;
+Added: Common stock - $ 2.00 par
50,000,000 shares authorized;
and 23,848,491 shares issued and outstanding at
−Removed: 30, 2022 and December 31, 2021, respectively
+Added: March 31, 2023 and December 31, 2022, respectively
paid-in-capital
2 unchanged sentences
liabilities and shareholders’ equity
−Removed: accompanying notes are an integral part of these consolidated financial statements.
−Removed: PEOPLES BANKSHARES, INC.
+Added: The accompanying notes
+Added: are an integral part of these consolidated financial statements.
+Added: NEW PEOPLES BANKSHARES,
STATEMENTS OF INCOME
−Removed: THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
+Added: FOR THE THREE MONTHS
+Added: ENDED MARCH 31, 2023 AND 2022
THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
the Three Months Ended
−Removed: the Nine Months Ended
AND DIVIDEND INCOME
6 unchanged sentences
INTEREST INCOME
−Removed: FOR LOAN LOSSES
+Added: FOR CREDIT LOSSES
INTEREST INCOME AFTER
−Removed: FOR LOAN LOSSES
+Added: FOR CREDIT LOSSES
charges and fees
1 unchanged sentence
and investment fees
−Removed: on sales of available-for-sale securities
+Added: on sale and disposal of premise and equipment
noninterest income
7 unchanged sentences
weighted shares of common stock
−Removed: accompanying notes are an integral part of these consolidated financial statements.
−Removed: PEOPLES BANKSHARES, INC.
−Removed: STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
−Removed: THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
+Added: The accompanying
+Added: notes are an integral part of these consolidated financial statements.
+Added: NEW PEOPLES BANKSHARES,
+Added: CONSOLIDATED STATEMENTS
+Added: OF COMPREHENSIVE INCOME (LOSS)
+Added: FOR THE THREE MONTHS
+Added: ENDED MARCH 31, 2023 AND 2022
the Three Months Ended
−Removed: the Nine Months Ended
−Removed: comprehensive (loss) income:
+Added: comprehensive income (loss):
securities activity
−Removed: losses arising during the period
−Removed: Reclassification
−Removed: adjustment for net gains included
−Removed: comprehensive loss on investment securities
−Removed: OTHER COMPREHENSIVE LOSS
−Removed: COMPREHENSIVE (LOSS) INCOME
−Removed: accompanying notes are an integral part of these consolidated financial statements.
−Removed: PEOPLES BANKSHARES, INC.
−Removed: STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
−Removed: THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
−Removed: THOUSANDS INCLUDING SHARE DATA)
+Added: gains (losses) arising during the period
+Added: comprehensive income (loss) on investment securities
+Added: tax (expense) benefit
+Added: OTHER COMPREHENSIVE INCOME (LOSS)
+Added: COMPREHENSIVE INCOME (LOSS)
+Added: The accompanying notes
+Added: are an integral part of these consolidated financial statements.
+Added: NEW PEOPLES BANKSHARES,
+Added: CONSOLIDATED STATEMENTS
+Added: OF CHANGES IN SHAREHOLDERS’ EQUITY
+Added: FOR THE THREE MONTHS
+Added: ENDED MARCH 31, 2023 AND 2022
+Added: (IN THOUSANDS INCLUDING
of Common Stock
Paid-in- Capital
−Removed: Comprehensive
−Removed: Income (Loss)
+Added: Comprehensive Income (Loss)
Shareholders’ Equity
1 unchanged sentence
comprehensive loss, net of tax
−Removed: Balance, March 31, 2021
−Removed: comprehensive loss, net of tax
−Removed: Balance, June 30, 2021
−Removed: comprehensive loss, net of tax
−Removed: September 30, 2021
+Added: dividend declared ($0.05 per share)
+Added: March 31, 2022
Balance, December 31, 2022
−Removed: comprehensive loss, net of tax
+Added: Adoption of ASU 2016-13
+Added: comprehensive income, net of tax
+Added: Repurchase of common stock,
dividend declared ($0.06 per share)
−Removed: Balance, March 31, 2022
−Removed: comprehensive loss, net of tax
−Removed: of common stock
−Removed: Balance, June 30, 2022
−Removed: comprehensive loss, net of tax
−Removed: of common stock
−Removed: September 30, 2022
−Removed: accompanying notes are an integral part of these consolidated financial statements.
−Removed: PEOPLES BANKSHARES, INC.
−Removed: STATEMENTS OF CASH FLOWS
−Removed: THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
+Added: March 31, 2023
+Added: The accompanying notes
+Added: are an integral part of these consolidated financial statements.
+Added: NEW PEOPLES BANKSHARES,
+Added: CONSOLIDATED STATEMENTS
+Added: OF CASH FLOWS
+Added: FOR THE THREE MONTHS
+Added: ENDED MARCH 31, 2023 AND 2022
FLOWS FROM OPERATING ACTIVITIES
to reconcile net income to net cash provided by
−Removed: for loan losses
−Removed: (income) on bank owned life insurance
−Removed: on sale of securities available-for-sale
+Added: operating activities:
+Added: for credit losses
+Added: on bank owned life insurance
on sale of mortgage loans
−Removed: (gain) on sale or disposal of premises and equipment
+Added: on sale or disposal of premises and equipment
on sale of other real estate owned
1 unchanged sentence
from sales of loans originated for sale
−Removed: to carrying value of premises transferred to other real estate owned
of carrying value of other real estate owned
1 unchanged sentence
of bond premiums/discounts
+Added: tax (benefit) expense
interest receivable
4 unchanged sentences
of securities available-for-sale
−Removed: from sale of investment securities available-for-sale
from repayments and maturities of securities available-for-sale
−Removed: Net (purchase)
−Removed: redemption of equity securities (restricted)
+Added: Net redemption
+Added: (purchase) of equity securities (restricted)
for the purchase of premises and equipment
from sale of premises and equipment
−Removed: from insurance claims on other real estate owned or premises
from sales of other real estate owned
−Removed: Cash Provided by (Used) in Investing Activities
+Added: cash used in investing activities
FLOWS FROM FINANCING ACTIVITIES
−Removed: in short term borrowings
in noninterest bearing deposits
2 unchanged sentences
cash provided by financing activities
−Removed: (decrease) in cash and cash equivalents
+Added: in cash and cash equivalents
and cash equivalents, beginning of the period
2 unchanged sentences
Disclosure of Non-cash Transactions:
−Removed: real estate acquired in settlement of foreclosed loans
made to finance sale of other real estate owned
−Removed: of premises and equipment to other real estate
−Removed: in unrealized losses on securities available for sale
−Removed: accompanying notes are an integral part of these consolidated financial statements.
−Removed: PEOPLES BANKSHARES, INC.
−Removed: TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: in unrealized losses on securities available for sale, net
+Added: The accompanying notes
+Added: are an integral part of these consolidated financial statements.
+Added: NEW PEOPLES BANKSHARES, INC.
+Added: NOTES TO CONSOLIDATED
+Added: FINANCIAL STATEMENTS
+Added: NOTE 1 NATURE OF OPERATIONS
Nature of Operations
−Removed: of Operations – New Peoples Bankshares, Inc.
−Removed: (New Peoples or the Company) is a financial holding company whose principal activity
−Removed: is the ownership and management of a community bank, New Peoples Bank, Inc.
+Added: – New Peoples Bankshares, Inc.
+Added: (New Peoples or the Company) is a financial holding company whose principal activity is the
+Added: ownership and management of a community bank, New Peoples Bank, Inc.
New Peoples and the Bank are organized and incorporated
6 unchanged sentences
consumer loans along with traditional deposit products such as checking and savings accounts.
−Removed: 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
−Removed: consolidated financial statements conform to U.
+Added: NOTE 2 SUMMARY
+Added: OF SIGNIFICANT ACCOUNTING POLICIES
+Added: These consolidated
+Added: financial statements conform to U.
generally accepted accounting principles (GAAP) and to general industry practices.
−Removed: In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring
−Removed: accruals) necessary to present fairly the Company’s financial position at September 30, 2022 and December 31, 2021, and the results
−Removed: of operations for the three- and nine-month periods ended September 30, 2022 and 2021.
−Removed: The Notes included herein should be read in conjunction
−Removed: with the notes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended
−Removed: December 31, 2021.
−Removed: The results of operations for interim periods are not necessarily indicative of the results of operations that may
−Removed: be expected for a full year or any future period.
−Removed: consolidated financial statements include New Peoples, the Bank, NPB Insurance Services, Inc., and NPB Web Services, Inc.
−Removed: (hereinafter,
−Removed: collectively referred to as the Company, we, us or our).
+Added: In the opinion
+Added: of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring accruals)
+Added: necessary to present fairly the Company’s financial position as of March 31, 2023 and December 31, 2022, and the results of operations
+Added: for the three months ended March 31, 2023 and 2022.
+Added: The Notes included herein should be read in conjunction with the notes to the consolidated
+Added: financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
+Added: The results of
+Added: operations for interim periods are not necessarily indicative of the results of operations that may be expected for a full year or any
+Added: future period.
+Added: The consolidated
+Added: financial statements include New Peoples, the Bank, NPB Insurance Services, Inc., and NPB Web Services, Inc.
+Added: (hereinafter, collectively
+Added: referred to as the Company, we, us or our).
All significant intercompany balances and transactions have been eliminated.
−Removed: In accordance with Accounting Standards Codification (ASC) 942, Financial Services – Depository and Lending, NPB Capital Trust
−Removed: I and 2 are not included in the consolidated financial statements.
−Removed: preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
−Removed: amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported
−Removed: amounts of revenues and expenses during the reporting period.
+Added: In accordance
+Added: with Accounting Standards Codification (ASC) 942, Financial Services – Depository and Lending, NPB Capital Trust I and 2 are not
+Added: included in the consolidated financial statements.
+Added: The preparation of
+Added: financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of
+Added: assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
+Added: of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
−Removed: The determination of
−Removed: the adequacy of the allowance for loan losses and the determination of the deferred tax asset are based on estimates that are particularly
−Removed: susceptible to significant changes in the economic environment and market conditions.
−Removed: reclassifications have been made to prior period amounts to conform to current period presentation.
−Removed: None of these reclassifications are
−Removed: considered material and have no impact on net income.
−Removed: 3 EARNINGS PER SHARE
−Removed: Earnings per share computations are based on the weighted average number of shares outstanding during each period.
−Removed: Diluted earnings per
−Removed: share reflect the additional common shares that would have been outstanding if dilutive potential common shares had been issued.
−Removed: the three-month and nine-month periods ended September 30, 2022 and 2021, there were no potential common shares.
−Removed: Basic and diluted net
−Removed: income per common share calculations follows:
+Added: The determination of the adequacy
+Added: of the allowance for credit is based on estimates that are particularly susceptible to significant changes in the economic environment
+Added: and market conditions.
+Added: Certain reclassifications
+Added: have been made to prior period amounts to conform to current period presentation.
+Added: None of these reclassifications are considered material
+Added: and have no impact on net income.
+Added: The Company’s
+Added: significant accounting policies followed in the preparation of the unaudited consolidated financial statements are disclosed in the Company’s
+Added: Annual Report on Form 10-K.
+Added: There have been no significant changes to the application of significant accounting policies since December
+Added: 31, 2022, except for the following:
+Added: Standards Adopted in 2023
+Added: On January 1, 2023,
+Added: the Company adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326):
+Added: Measurement of Credit Losses on Financial Instruments
+Added: This standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current
+Added: expected credit loss (“CECL”) methodology.
+Added: CECL requires an estimate of credit losses for the remaining estimated life of
+Added: the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and generally applies to
+Added: financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities, and some off-balance sheet
+Added: credit exposures such as unfunded commitments to extend credit.
+Added: Financial assets measured at amortized cost will be presented at the
+Added: net amount expected to be collected by using an allowance for credit losses.
+Added: In addition, CECL
+Added: made changes to the accounting for available-for-sale debt securities.
+Added: One such change is to require credit losses to be presented as
+Added: an allowance rather than as a write-down on available for sale debt securities if management does not intend to sell and does not believe
+Added: that it is more likely than not, they will be required to sell.
+Added: The Company adopted
+Added: ASC 326 and all related subsequent amendments thereto effective January 1, 2023 using the modified retrospective approach for all financial
+Added: assets measured at amortized cost and off-balance sheet credit exposures.
+Added: The transition adjustment of the adoption of CECL included
+Added: a decrease in the allowance for credit losses on loans of $80,000, which is presented as a reduction to net loans outstanding, and an
+Added: increase in the allowance for credit losses on unfunded loan commitments of $348,000, which is recorded within other liabilities.
+Added: Company recorded a net decrease to retained earnings of $212,000 as of January 1, 2023 for the cumulative effect of adopting CECL, which
+Added: reflects the transition adjustments noted above, net of the applicable deferred tax assets recorded.
+Added: Results for reporting periods beginning
+Added: after January 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with previously applicable
+Added: accounting standards (“Incurred Loss”).
+Added: The Company adopted
+Added: ASC 326 using the prospective transition approach for debt securities for which other-than-temporary impairment had been recognized prior
+Added: to January 1, 2023.
+Added: As of December 31, 2022, the Company did not have any other-than-temporarily impaired investment securities.
+Added: upon adoption of ASC 326, the Company determined that an allowance for credit losses on available for sale securities was not deemed
+Added: The following table
+Added: illustrates the impact on the allowance for credit losses from the adoption of ASC 326:
+Added: Schedule of allowance for credit losses on available for sale securities
+Added: As Reported Under ASC 326
+Added: 31, 2022 Pre-ASC 326 Adoption
+Added: of ASC 326 Adoption
+Added: in thousands)
+Added: at amortized cost
+Added: for credit losses on loans:
+Added: and land development
+Added: real estate loans
+Added: and other loans
+Added: allowance for credit losses for loans
+Added: for credit losses for unfunded commitments
+Added: The Company elected
+Added: not to measure an allowance for credit losses for accrued interest receivable and instead elected to reverse interest income on loans
+Added: or securities that are placed on nonaccrual status, which is generally when the instrument is 90 days past due, or earlier if the Company
+Added: believes the collection of interest is doubtful.
+Added: The Company has concluded that this policy results in the timely reversal of uncollectible
+Added: Allowance for
+Added: Credit Losses – Available for Sale Securities
+Added: For available for
+Added: sale securities, management evaluates all investments in an unrealized loss position on a quarterly basis, and more frequently when economic
+Added: or market conditions warrant such evaluation.
+Added: If the Company has the intent to sell the security or it is more likely than not that the
+Added: Company will be required to sell the security, the security is written down to fair value and the entire loss is recorded in earnings.
+Added: If either of the
+Added: above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors.
+Added: making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost,
+Added: performance on any underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to
+Added: make scheduled interest or principal payments and adverse conditions specifically related to the security.
+Added: If the assessment indicates
+Added: that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security
+Added: and any excess is recorded as an allowance for credit loss, limited by the amount that the fair value is less than the amortized cost
+Added: Any amount of unrealized loss that has not been recorded through an allowance for credit loss is recognized in other comprehensive
+Added: Changes in the allowance
+Added: for credit loss are recorded as provision for (or reversal of) credit loss expense.
+Added: Losses are charged against the allowance for credit
+Added: loss when management believes an available for sale security is confirmed to be uncollectible or when either of the criteria regarding
+Added: intent or requirement to sell is met.
+Added: As of March 31, 2023, there was no allowance for credit loss related to the available for sale
+Added: Loans that management
+Added: has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost.
+Added: Amortized cost
+Added: is the principal balance outstanding, net of purchase premiums and discounts and deferred fees and costs.
+Added: Accrued interest receivable
+Added: related to loans totaled $1.9 million at March 31, 2023 and was reported in accrued interest receivable on the consolidated balance sheets.
+Added: Interest income is accrued on the unpaid principal balance.
+Added: Loan origination fees, net of certain direct origination costs, are deferred
+Added: and recognized in interest income using methods that approximate a level yield without anticipating prepayments.
+Added: The accrual of interest
+Added: is generally discontinued when a loan becomes 90 days past due and is not well collateralized and in the process of collection, or when
+Added: management believes, after considering economic and business conditions and collection efforts, that the principal or interest will not
+Added: be collectible in the normal course of business.
+Added: Past due status is based on contractual terms of the loan.
+Added: A loan is considered to be
+Added: past due when a scheduled payment has not been received 30 days after the contractual due date.
+Added: All accrued interest
+Added: is reversed against interest income when a loan is placed on nonaccrual status.
+Added: Interest received on such loans is accounted for using
+Added: the cost-recovery method, until qualifying for return to accrual.
+Added: Under the cost-recovery method, interest income is not recognized until
+Added: the loan balance is reduced to zero.
+Added: Loans are returned to accrual status when all the principal and interest amounts contractually due
+Added: are brought current, there is a sustained period of repayment performance, and future payments are reasonably assured.
+Added: Allowance for
+Added: Credit Losses – Loans
+Added: The allowance for
+Added: credit losses is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected
+Added: on the loans.
+Added: Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed.
+Added: Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.
+Added: Accrued interest receivable
+Added: is excluded from the estimate of credit losses.
+Added: The allowance for
+Added: credit losses represents management’s estimate of lifetime credit losses inherent in loans as of the balance sheet date.
+Added: The allowance
+Added: for credit losses is estimated by management using relevant available information, from both internal and external sources, relating
+Added: to past events, current conditions, and reasonable and supportable forecasts.
+Added: The Company primarily
+Added: utilizes the cohort and the probability of default/loss given default methodologies for its reasonable and supportable forecasting of
+Added: current expected credit losses.
+Added: To further adjust the allowance for credit losses for expected losses not already included within the
+Added: quantitative component of the calculation, the Company may consider the following qualitative adjustment factors:
+Added: policies and procedures, national and local economic conditions, the experience and ability of management and staff;
+Added: the volume and severity
+Added: of past due, rated and nonaccrual assets, loan review system, collateral value, concentrations of credit, and legal or regulatory requirements
+Added: and competition.
+Added: The Company measures
+Added: expected credit losses for loans on a pooled basis when similar risk characteristics exist.
+Added: The Company has identified the following
+Added: portfolio segments and calculates the allowance for credit losses for each using a discounted cash flow methodology:
+Added: We make commercial loans to qualified businesses in our market area.
+Added: Our commercial
+Added: lending consists primarily of commercial and industrial loans to finance accounts receivable,
+Added: inventory, property, plant and equipment.
+Added: Commercial business loans generally have a higher
+Added: degree of risk than residential mortgage loans, but have commensurately higher yields.
+Added: mortgage loans are generally made on the basis of the borrower’s ability to make repayment
+Added: from employment and other income and are secured by real estate whose value tends to be easily
+Added: ascertainable.
+Added: In contrast, commercial business loans typically are made on the basis of
+Added: the borrower’s ability to make repayment from cash flow from its business and are secured
+Added: by business assets, such as commercial real estate, accounts receivable, equipment and inventory.
+Added: As a result, the availability of funds for the repayment of commercial business loans may
+Added: be substantially dependent on the success of the business itself.
+Added: Further, the collateral
+Added: for commercial business loans may depreciate over time and cannot be appraised with as much
+Added: precision as residential real estate.
+Added: To manage these risks, our underwriting guidelines
+Added: generally require us to secure commercial loans with both the assets of the borrowing business
+Added: and other additional collateral and guarantees that may be available.
+Added: In addition, we actively
+Added: monitor certain measures of the borrower, including advance rate, cash flow, collateral value
+Added: and other appropriate credit factors.
+Added: · Residential
+Added: Mortgage Loans.
+Added: Our residential mortgage loans consist of residential first and second mortgage
+Added: loans, residential construction loans, home equity lines of credit and term loans secured
+Added: by first and second mortgages on the residences of borrowers for home improvements, education
+Added: and other personal expenditures.
+Added: We make mortgage loans with a variety of terms, including
+Added: fixed and floating or variable rates and a variety of maturities.
+Added: Under our underwriting
+Added: guidelines, residential mortgage loans are generally made on the basis of the borrower’s
+Added: ability to make repayment from employment and other income and are secured by real estate
+Added: whose value tends to be easily ascertainable.
+Added: These loans are made consistent with our appraisal
+Added: policies and real estate lending policies, which detail maximum loan-to-value ratios and
+Added: · Construction
+Added: Construction lending entails significant additional risks compared to residential
+Added: mortgage lending.
+Added: Construction loans often involve larger loan balances concentrated with
+Added: single borrowers or groups of related borrowers.
+Added: Construction loans also involve additional
+Added: risks attributable to the fact that loan funds are advanced upon the security of property
+Added: under construction, which is of uncertain value prior to the completion of construction.
+Added: Thus, it is more difficult to evaluate the total loan funds required to complete a project
+Added: and related loan-to-value ratios accurately.
+Added: To minimize the risks associated with construction
+Added: lending, loan-to-value limitations for residential, multi-family and non-residential construction
+Added: loans are in place.
+Added: These are in addition to the usual credit analyses of borrowers.
+Added: feels that the loan-to-value ratios help to minimize the risk of loss and to compensate for
+Added: normal fluctuations in the real estate market.
+Added: Maturities for construction loans generally
+Added: range from 4 to 12 months for residential property and from 6 to 18 months for non-residential
+Added: and multi-family properties.
+Added: Our consumer loans consist primarily of installment loans to individuals for personal,
+Added: family and household purposes.
+Added: The specific types of consumer loans that we make include
+Added: home improvement loans, debt consolidation loans and general consumer lending.
+Added: Consumer loans
+Added: entail greater risk than residential mortgage loans, particularly in the case of consumer
+Added: loans that are unsecured, such as lines of credit, or secured by rapidly depreciating assets
+Added: such as automobiles.
+Added: In such cases, any repossessed collateral for a defaulted consumer loan
+Added: may not provide an adequate source of repayment of the outstanding loan balance due to the
+Added: greater likelihood of damage, loss or depreciation.
+Added: The remaining deficiency often does not
+Added: warrant further substantial collection efforts against the borrower.
+Added: In addition, consumer
+Added: loan collections are dependent on the borrower’s continuing financial stability, and
+Added: thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy.
+Added: Furthermore, the application of various federal and state laws, including federal and state
+Added: bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.
+Added: A borrower may also be able to assert against the Bank as an assignee any claims and defenses
+Added: that it has against the seller of the underlying collateral.
+Added: Loans that do not
+Added: share risk characteristics are evaluated on an individual basis.
+Added: The Company designates loan relationships of $250,000 or more that have
+Added: been determined to meet the regulatory definitions of “special mention” or “classified” (together known as “criticized”)
+Added: as individually evaluated.
+Added: The fair value of individually evaluated loans is measured using the fair value of collateral (“collateral
+Added: method”) or the DCF method.
+Added: collateral method is applied to individually evaluated loans for which foreclosure is probable.
+Added: The collateral method is also applied to individually evaluated loans when borrowers are
+Added: experiencing financial difficulty and repayment is expected to be provided substantially
+Added: through the operation or sale of the collateral (“collateral dependent”).
+Added: allowance for credit loss is measured based on the difference between the fair value of the
+Added: collateral and the amortized cost basis of the loan as of the measurement date.
+Added: When repayment
+Added: is expected to be from the operation of the collateral, the allowance for credit loss is
+Added: calculated as the amount by which the amortized cost basis of the loan exceeds the present
+Added: value of expected cash flows from the operation of the collateral.
+Added: When repayment is expected
+Added: to be from the sale of the collateral, the allowance for credit loss is calculated as the
+Added: amount by which the loan's amortized cost basis exceeds the fair value of the underlying
+Added: collateral less estimated cost to sell.
+Added: The allowance for credit loss may be zero if the
+Added: fair value of the collateral at the measurement date exceeds the amortized cost basis of
+Added: DCF method is applied to individually evaluated loans that do not meet the criteria for collateral
+Added: method measurement.
+Added: Cash flows are projected and discounted using the same method as for
+Added: collectively evaluated loans, and the Company considers default and prepayment assumptions.
+Added: Allowance for
+Added: Credit Losses – Unfunded Commitments
+Added: Financial instruments
+Added: include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit issued to meet customer
+Added: financing needs.
+Added: The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument
+Added: for off-balance sheet loan commitments is represented by the contractual amount of those instruments.
+Added: Such financial instruments are
+Added: recorded when they are funded.
+Added: The Company records
+Added: an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable,
+Added: through a charge to provision for unfunded commitments, which is included in the provision for credit losses, in the Company’s
+Added: income statements.
+Added: The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment at each balance
+Added: sheet date under the current expected credit loss model using the same methodologies as portfolio loans, taking into consideration the
+Added: likelihood that funding will occur as well as any third-party guarantees.
+Added: The allowance for unfunded commitments is included in other
+Added: liabilities on the Company’s consolidated balance sheets.
+Added: On January 1, 2023,
+Added: concurrent with its adoption of ASU No.
+Added: 2016-13, the Company adopted ASU No.
+Added: 2022-02, “Financial Instruments-Credit Losses (Topic
+Added: 326), Troubled Debt Restructurings and Vintage Disclosures.” The amendments eliminate the accounting guidance for troubled debt
+Added: restructurings (“TDRs”) by creditors that have adopted the CECL model and enhance the disclosure requirements for loan refinancings
+Added: and restructurings made with borrowers experiencing financial difficulty.
+Added: Disclosures about periods prior to adoption will be presented
+Added: under GAAP applicable for that period.
+Added: Similar to its policy
+Added: under previous GAAP, the Company continues to identify modifications to loans and to determine whether the borrower is experiencing financial
+Added: If the Company determines that the borrower is experiencing financial difficulty, the loan's risk rating is evaluated to
+Added: determine whether it falls within the regulatory definition of “criticized” and requires individual evaluation.
+Added: Under previous
+Added: GAAP, modifications to loans when the borrower was experiencing financial difficulty were designated as TDR and were individually evaluated
+Added: for the duration of the loan.
+Added: Under CECL, if a previously modified loan with financial difficulty is subsequently upgraded to a pass
+Added: rating, it will no longer be individually evaluated.
+Added: NOTE 3 EARNINGS
+Added: Basic earnings per
+Added: share computations are based on the weighted average number of shares outstanding during each period.
+Added: Diluted earnings per share reflect
+Added: the additional common shares that would have been outstanding if dilutive potential common shares had been issued.
+Added: For the three-month
+Added: period ended March 31, 2023 and 2022, there were no potential common shares.
+Added: Basic and diluted net income per common share calculations
Schedule of basic and diluted net loss per common share calculations
in Thousands, Except
−Removed: and Per Share Data)
+Added: Share and Per Share Data)
the Three Months
−Removed: September 30,
−Removed: the Nine months
−Removed: September 30,
+Added: Ended March 31,
average shares outstanding
1 unchanged sentence
and diluted earnings per share
−Removed: Requirements and Ratios
−Removed: and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies.
−Removed: Capital adequacy
−Removed: guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and
−Removed: certain off-balance sheet items calculated under regulatory accounting practices.
−Removed: Capital amounts and classifications are also subject
−Removed: to qualitative judgments by regulators.
+Added: NOTE 4 CAPITAL
+Added: Capital Requirements
+Added: Banks and bank
+Added: holding companies are subject to regulatory capital requirements administered by federal banking agencies.
+Added: Capital adequacy guidelines
+Added: and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain
+Added: off-balance sheet items calculated under regulatory accounting practices.
+Added: Capital amounts and classifications are also subject to qualitative
+Added: judgments by regulators.
Failure to meet capital requirements can initiate regulatory action.
−Removed: qualify as a "Small Bank Holding Company" under federal regulations, a bank must have consolidated assets of $3 billion or
−Removed: The primary benefit of being deemed a "Small Bank Holding Company" is the exemption from the requirement to maintain
−Removed: consolidated regulatory capital ratios;
+Added: as a "Small Bank Holding Company" under federal regulations, a bank must have consolidated assets of $3 billion or less.
+Added: primary benefit of being deemed a "Small Bank Holding Company" is the exemption from the requirement to maintain consolidated
+Added: regulatory capital ratios;
instead, regulatory capital ratios only apply at the subsidiary bank level.
−Removed: final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S.
−Removed: banks (BASEL III rules) became fully
−Removed: phased in on January 1, 2019.
−Removed: Under the BASEL III rules, the Bank must hold a capital conservation buffer above the adequately capitalized
−Removed: risk-based capital ratios.
+Added: The final rules
+Added: implementing Basel Committee on Banking Supervision’s capital guidelines for U.S.
+Added: banks (BASEL III rules) became fully phased in
+Added: on January 1, 2019.
+Added: Under the BASEL III rules, the Bank must hold a capital conservation buffer above the adequately capitalized risk-based
+Added: capital ratios.
The capital conservation buffer required is 2.50 %.
−Removed: At September 30, 2022, the Bank had a capital conservation
−Removed: buffer of 8.35%.
+Added: As of March 31, 2023, the Bank had a capital conservation buffer of
Amounts recorded to accumulated other comprehensive income (loss) are not included in computing regulatory capital.
−Removed: Management believes as of September 30, 2022, the Bank met all capital adequacy requirements to which it was subject.
−Removed: corrective action regulations provide five classifications:
−Removed: well capitalized, adequately capitalized, undercapitalized, significantly
−Removed: undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition.
−Removed: If adequately
−Removed: capitalized, regulatory approval is required to accept brokered deposits.
−Removed: If undercapitalized, capital distributions are limited, as
−Removed: is asset growth and expansion, and capital restoration plans are required.
−Removed: At September 30, 2022, the most recent regulatory notifications
−Removed: categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.
−Removed: There are no conditions or events
−Removed: since that notification that management believes have changed the institution's category.
−Removed: The Bank’s actual capital amounts and
−Removed: ratios are presented in the following table as of September 30, 2022 and December 31, 2021, respectively.
+Added: believes as of March 31, 2023, the Bank met all capital adequacy requirements to which it was subject.
+Added: Prompt corrective
+Added: action regulations provide five classifications:
+Added: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized
+Added: and critically undercapitalized, although these terms are not used to represent overall financial condition.
+Added: If adequately capitalized,
+Added: regulatory approval is required to accept brokered deposits.
+Added: If undercapitalized, capital distributions are limited, as is asset growth
+Added: and expansion, and capital restoration plans are required.
+Added: As of March 31, 2023, the most recent regulatory notifications categorized
+Added: the Bank as well capitalized under the regulatory framework for prompt corrective action.
+Added: There are no conditions or events since that
+Added: notification that management believes have changed the institution's category.
+Added: 2019, the U.S.
+Added: federal bank regulatory agencies approved a final rule modifying their regulatory capital rules and providing an option
+Added: to phase-in over a three-year period the Day 1 adverse regulatory capital effects of the CECL accounting standard.
+Added: Additionally, in March
+Added: 2020, the U.S.
+Added: Federal bank regulatory agencies issued an interim final rule that provides banking organizations an option to delay the
+Added: estimated CECL impact on regulatory capital for an additional two years for a total transition period of up to five years.
+Added: rule was adopted and became effective in September 2020.
+Added: The Company implemented the CECL model commencing January 1, 2023, and elected
+Added: not to phase in the effect of CECL on regulatory capital.
+Added: actual capital amounts and ratios are presented in the following table as of March 31, 2023 and December 31, 2022, respectively.
Schedule of capital requirements
2 unchanged sentences
are in thousands)
−Removed: September 30,
+Added: March 31, 2023:
capital to risk weighted assets
8 unchanged sentences
risk weighted assets
−Removed: 5 INVESTMENT SECURITIES
−Removed: amortized cost and estimated fair value of available-for-sale (AFS) securities as of September 30, 2022 and December 31, 2021 is as follows:
+Added: NOTE 5 INVESTMENT
+Added: The amortized cost and estimated fair
+Added: value of securities (all available-for-sale) as of March 31, 2023 and December 31, 2022 are as follows:
Schedule of securities amortized cost and estimated fair value
are in thousands)
+Added: March 31, 2023
Government Agencies
4 unchanged sentences
securities available for sale
−Removed: following table details unrealized losses and related fair values in the AFS portfolio.
−Removed: This information is aggregated by the length
−Removed: of time that individual securities have been in a continuous unrealized loss position as of September 30, 2022 and December 31, 2021.
+Added: The following table
+Added: details unrealized losses and related fair values in the available-for-sale portfolio, for which no allowance for credit loss is recorded.
+Added: This information is aggregated by the length of time that individual securities have been in a continuous unrealized loss position as
+Added: of March 31, 2023 and December 31, 2022.
Schedule of fair value and gross unrealized losses on investment securities
8 unchanged sentences
securities available for sale
−Removed: September 30, 2022, there were 216 securities in a loss position, of which 100 have been in a loss position for twelve months or more.
−Removed: Management believes that all unrealized losses have resulted from temporary changes in the interest rates and current market conditions
−Removed: and are not a result of credit deterioration.
−Removed: Management does not intend to sell, and it is not likely that the Bank will be required
−Removed: to sell any of the securities referenced in the table above before recovery of their amortized cost.
−Removed: securities with a carrying value of $ 28.3 million and $ 12.1 million at September 30, 2022 and December 31, 2021, respectively, were pledged
−Removed: as collateral to secure public deposits and for other purposes required by law.
−Removed: following table summarizes sales of AFS debt securities for the nine months-ended September 30,
−Removed: Schedule of summarizes sales of AFS debt securities
−Removed: are in thousands)
−Removed: provision (benefit)
−Removed: amortized cost and fair value of investment securities at September 30, 2022, by contractual maturity, are shown in the following schedule.
−Removed: Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or
−Removed: without call or prepayment penalties.
+Added: As of March 31, 2023,
+Added: there were 218 securities in a loss position, of which 200 have been in a loss position for twelve months or more.
+Added: Management believes
+Added: that all unrealized losses have resulted from temporary changes in the interest rates and current market conditions and are not a result
+Added: of credit deterioration.
+Added: Management does not intend to sell, and it is not likely that the Bank will be required to sell any of the securities
+Added: referenced in the table above before recovery of their amortized cost.
+Added: None of the individual securities held are past due as to principal
+Added: or interest payments and a number of these securities held have explicit or implicit payment guarantees.
+Added: The remaining securities have
+Added: credit ratings at or above that necessary to be considered “bank qualified”.
+Added: Investment securities
+Added: with a carrying value of $ 37.9 million and $ 27.3 million as of March 31, 2023 and December 31, 2022, respectively, were pledged as collateral
+Added: to secure public deposits and for other purposes required or permitted by law.
+Added: There were no sales
+Added: of available for sale investment securities during the three months ended March 31, 2023 and 2022.
+Added: The amortized cost
+Added: and fair value of investment securities as of March 31, 2023, by contractual maturity, are shown in the following schedule.
+Added: maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without
+Added: call or prepayment penalties.
Schedule of amortized cost and fair value of investment securities contractual maturity
5 unchanged sentences
after ten years
−Removed: Bank, as a member bank of the Federal Reserve Bank of Richmond (Federal Reserve Bank) and the Federal Home Loan Bank of Atlanta (FHLB),
−Removed: is required to hold stock in each.
+Added: The Bank, as a member
+Added: bank of the Federal Reserve Bank of Richmond (Federal Reserve Bank) and the Federal Home Loan Bank of Atlanta (FHLB), is required to
+Added: hold stock in each.
The Bank also owns stock in CBB Financial Corp., which is a correspondent of the Bank.
−Removed: securities, which are included in Other Assets on the consolidated balance sheet, are restricted from trading and are recorded at a cost
−Removed: of $ 3.0 million and $ 2.0 million at September 30, 2022 and December 31, 2021, respectively.
−Removed: The stock has no quoted market value and
−Removed: no ready market exists.
−Removed: receivable outstanding as of September 30, 2022, and December 31, 2021, are summarized as follows:
+Added: These equity securities, which
+Added: are included in other assets on the consolidated balance sheet, are restricted from trading and are recorded at a cost of $ 2.0 million
+Added: and $ 2.1 million at March 31, 2023 and December 31, 2022, respectively.
+Added: The stock has no quoted market value and no ready market exists.
+Added: Loans receivable
+Added: outstanding as of March 31, 2023, and December 31, 2022, are summarized as follows:
Schedule of Loans receivable outstanding
4 unchanged sentences
installment loans
−Removed: in commercial loans at September 30, 2022 and December 31, 2021 were $ 298 thousand and $ 6.4 million of Paycheck Protection Program (PPP)
−Removed: loans, respectively, that are guaranteed by the Small Business Administration (SBA).
−Removed: included in total loans above are deferred loan fees of $ 1.7 million and $ 1.8 million at September 30, 2022 and December 31, 2021, respectively.
−Removed: Deferred loan costs were $ 2.1 million and $ 2.0 million, at September 30, 2022 and December 31, 2021, respectively.
−Removed: Income from net deferred
−Removed: fees and costs is recognized over the lives of the respective loans as a yield adjustment.
−Removed: If loans repay prior to scheduled maturities
−Removed: any unamortized fee or costs is recognized at that time.
−Removed: receivable on nonaccrual status as of September 30, 2022, and December 31, 2021, are summarized as follows:
+Added: Also included in
+Added: total loans above are deferred loan fees of $ 1.6 million as of March 31, 2023 and December 31, 2022.
+Added: Deferred loan costs were $ 1.9 million,
+Added: as of March 31, 2023 and December 31, 2022.
+Added: Income from net deferred fees and costs is recognized over the lives of the respective loans
+Added: as a yield adjustment.
+Added: If loans repay prior to scheduled maturities, any unamortized fee or cost is recognized at that time.
+Added: Loans receivable
+Added: on nonaccrual status as of March 31, 2023, and December 31, 2022, are summarized as follows:
Summary of loans receivable on nonaccrual status
5 unchanged sentences
loans receivable on nonaccrual status
−Removed: interest income not recognized on nonaccrual loans for the nine months ended September 30, 2022, and September 30, 2021, was $22 thousand
−Removed: and $445 thousand, respectively.
−Removed: following tables presents information concerning the Company’s investment in loans considered impaired as of September 30, 2022,
−Removed: and December 31, 2021:
+Added: Total interest income
+Added: not recognized on nonaccrual loans for the three months ended March 31, 2023 and 2022, was $13,000 and $5,000, respectively.
+Added: Prior to the adoption
+Added: of ASU 2016-13, loans were considered impaired when, based on current information and events, it was probable the Company would be unable
+Added: to collect all amounts due in accordance with the original contractual terms of the loan agreements.
+Added: Impaired loans include loans on
+Added: nonaccrual status and accruing troubled debt restructurings.
+Added: When determining if the Company would be unable to collect all principal
+Added: and interest payments due in accordance with the contractual terms of the loan agreement, the Company considered the borrower’s
+Added: capacity to pay, which included such factors as the borrower’s current financial statements, an analysis of global cash flow sufficient
+Added: to pay all debt obligations and an evaluation of secondary sources of repayment, such as guarantor support and collateral value.
+Added: Company individually assessed for impairment all nonaccrual loans greater than $250,000 and all troubled debt restructurings, whether
+Added: or not currently classified as such.
+Added: The tables below include all loans deemed impaired, whether or not individually assessed for impairment.
+Added: If a loan was deemed impaired, a specific valuation allowance was allocated, if necessary, so that the loan was reported net, at the
+Added: present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment was
+Added: expected solely from the collateral.
+Added: Interest payments on impaired loans were typically applied to principal unless collectability of
+Added: the principal amount was reasonably assured, in which case interest was recognized on a cash basis.
+Added: The following table
+Added: presents loans individually evaluated for impairment by class of loans as of December 31, 2022:
Schedule of summary of impaired loans
−Removed: of September 30, 2022
−Removed: are in thousands)
−Removed: Principal Balance
−Removed: no related allowance recorded:
−Removed: estate secured:
−Removed: and land development
−Removed: installment loans
−Removed: an allowance recorded:
−Removed: estate secured:
−Removed: and land development
−Removed: installment loans
of December 31, 2022
9 unchanged sentences
installment loans
−Removed: following tables present information concerning the Company’s average impaired loans and interest recognized on those impaired
−Removed: loans, for the periods indicated:
−Removed: are in thousands)
−Removed: no related allowance recorded:
−Removed: estate secured:
−Removed: and land development
−Removed: installment loans
−Removed: an allowance recorded:
−Removed: estate secured:
−Removed: and land development
−Removed: installment loans
+Added: Upon adoption of
+Added: ASU 2016-13 the Company began evaluating loans that do not share risk characteristics on an individual basis utilizing the collateral
+Added: or discounted cash flow methods as described in Note 2 Summary of Significant Accounting Policies.
+Added: The following table presents the amortized
+Added: cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses, and the related ACL allocated
+Added: to those loans as March 31, 2023:
+Added: of March 31, 2023
are in thousands)
−Removed: no related allowance recorded:
−Removed: estate secured:
−Removed: and land development
−Removed: installment loans
−Removed: an allowance recorded:
+Added: Principal Balance
estate secured:
and land development
+Added: real estate secured
installment loans
−Removed: age analysis of past due loans receivable as of September 30, 2022, and December 31, 2021, is below.
−Removed: At September 30, 2022 and December
−Removed: 31, 2021, no loans over 90 days past due were accruing.
+Added: The following table
+Added: is an age analysis of past due loans receivable as of March 31, 2023, segregated by class:
Summary age analysis of past due loans receivable
−Removed: of September 30, 2022
+Added: of March 31, 2023
are in thousands)
1 unchanged sentence
real estate loans
+Added: The following
+Added: table is an age analysis of past due loans receivable as of December 31, 2022, segregated by class:
of December 31, 2022
2 unchanged sentences
real estate loans
−Removed: Company categorizes loans receivable into risk categories based on relevant information about the ability of borrowers to service their
−Removed: debt such as:
−Removed: current financial information, historical payment experience, credit documentation, public information, and current economic
−Removed: trends, among other factors.
+Added: The Company categorizes
+Added: loans receivable into risk categories based on relevant information about the ability of borrowers to service their debt such as:
+Added: financial information, historical payment experience, credit documentation, public information, and current economic trends, among other
The Company analyzes loans individually by classifying the loans receivable as to credit risk.
−Removed: uses the following definitions for risk ratings:
−Removed: - Loans in this category are considered to have a low likelihood of loss based on relevant information analyzed about the ability
−Removed: of the borrowers to service their debt and other factors.
−Removed: Mention - Loans in this category are currently protected but are potentially weak, including adverse trends in borrower’s operations,
+Added: The Company uses the following
+Added: definitions for risk ratings:
+Added: in this category are considered to have a low likelihood of loss based on relevant information analyzed about the ability of the borrowers
+Added: to service their debt and other factors.
+Added: Special Mention
+Added: - Loans in this category are currently protected but are potentially weak, including adverse trends in borrower’s operations,
credit quality or financial strength.
4 unchanged sentences
the Company’s credit position at some future date.
−Removed: - A substandard loan is inadequately protected by the current sound net worth and paying capacity of
−Removed: the obligor or of the collateral pledged, if any.
−Removed: Loans classified as substandard must have a well-defined weakness or weaknesses that
−Removed: jeopardize the liquidation of the debt;
−Removed: they are characterized by the distinct possibility that the institution will sustain some loss
−Removed: if the deficiencies are not corrected.
+Added: - A substandard loan is inadequately protected by the current sound net worth and paying capacity of the
+Added: obligor or of the collateral pledged, if any.
+Added: Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize
+Added: the liquidation of the debt;
+Added: they are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies
+Added: are not corrected.
- Loans classified doubtful have all the weaknesses
1 unchanged sentence
on the basis of currently existing facts, conditions, and values highly questionable and improbable.
−Removed: on the most recent analysis performed, the risk categories of loans receivable as of September 30, 2022, and December 31, 2021, was as
+Added: The following table
+Added: present the credit risk grade of loans by origination year as of March 31, 2023:
Summary of risk category of loans receivable
−Removed: of September 30, 2022
−Removed: are in thousands)
−Removed: estate secured:
+Added: As of March 31, 2023
+Added: commercial real estate
+Added: period gross charge-offs
and Land Development
−Removed: real estate loans
−Removed: installment loans
+Added: construction and land development
+Added: period gross charge-offs
+Added: residential 1-4 family
+Added: period gross charge-offs
+Added: period gross charge-offs
+Added: period gross charge-offs
+Added: period gross charge-offs
+Added: period gross charge-offs
+Added: and All Other
+Added: consumer and all other
+Added: period gross charge-offs
+Added: current period gross charge-offs
+Added: The following table presents the credit
+Added: risk grade of loans as of December 31, 2022, prior to the adoption of ASU 2016-13, under the incurred loss model:
of December 31, 2022
4 unchanged sentences
installment loans
−Removed: 7 ALLOWANCE FOR LOAN LOSSES
−Removed: determining the amount of our allowance for loan losses, we rely on an analysis of our loan portfolio, our experience and our evaluation
−Removed: of general economic conditions.
−Removed: If our assumptions prove to be incorrect, our current allowance may not be sufficient to cover future
−Removed: loan losses and we may experience significant increases to our provision.
−Removed: Due to the underlying SBA guarantee provided for PPP loans,
−Removed: these accounts were not included in either the portfolio segment or impairment calculations at September 30, 2022 and December 31, 2021.
−Removed: Additionally, due to uncertainties presented by the ongoing pandemic and the resulting economic uncertainty, internal and external qualitative
−Removed: factors were revised accordingly.
−Removed: This revision included reviewing our internal scoring related to loan modifications and extensions,
−Removed: and external factors, specifically, unemployment and other economic factors.
−Removed: following table presents activity in the allowance for loan losses for the nine- and three-month periods ended September 30, 2022 and
−Removed: 2021, respectively.
−Removed: Additionally, the allocation of the allowance by recorded portfolio segment and impairment method is presented as
−Removed: of September 30, 2022, and December 31, 2021, respectively.
+Added: NOTE 7 ALLOWANCE
+Added: FOR CREDIT LOSSES FOR LOANS (“ACLL”)
+Added: In determining the
+Added: amount of our allowance for credit losses, we rely on an analysis of our loan portfolio, our experience and our evaluation of general
+Added: economic conditions.
+Added: If our assumptions prove to be incorrect, our current allowance may not be sufficient to cover future loan losses
+Added: and we may experience significant increases to our provision.
+Added: The following
+Added: table presents a disaggregated analysis of activity in the allowance for credit losses as of March 31, 2023:
Schedule of allocation of portion of allowance
estate secured
−Removed: are in thousands)
+Added: (Dollars are in thousands)
and Land Development
and All Other
−Removed: Nine months ended September
+Added: Three months ended
+Added: March 31, 2023
+Added: Beginning balance
+Added: Adjustment to allowance for adoption of ASU 2016-13
+Added: Provision for credit losses
Ending balance
−Removed: Three months ended September
+Added: The following
+Added: tables present a disaggregated analysis of activity in the allowance for loan losses, for comparative periods, prior to the adoption
+Added: of ASU 2016-13:
+Added: estate secured
+Added: (Dollars are in thousands)
+Added: and Land Development
+Added: and All Other
+Added: Year ended December
Beginning balance
Ending balance
−Removed: for loan losses at September 30, 2022
−Removed: Individually evaluated
−Removed: for impairment
−Removed: evaluated for impairment
−Removed: Loans at September
−Removed: Individually evaluated
−Removed: for impairment
−Removed: evaluated for impairment
+Added: for loan losses at December 31, 2022
+Added: Individually evaluated for impairment
+Added: Collectively evaluated for impairment
+Added: Allowance for loan losses
+Added: Loans at December 31,
+Added: Individually evaluated for impairment
+Added: Collectively evaluated for impairment
estate secured
2 unchanged sentences
and All Other
−Removed: for loan losses at December 31, 2021
−Removed: evaluated for impairment
+Added: For the three
+Added: months ended March 31, 2022
+Added: Ending balance
+Added: Allowance for loan
+Added: losses as of March 31, 2022
+Added: Individually evaluated
+Added: for impairment
evaluated for impairment
−Removed: Loans at December 31,
+Added: Allowance for loan losses
+Added: Loans as of March 31,
Individually evaluated
1 unchanged sentence
evaluated for impairment
−Removed: Real estate secured
−Removed: (Dollars are in thousands)
−Removed: Construction and Land Development
−Removed: Residential 1-4 family
−Removed: Consumer and All Other
−Removed: Nine months ended September 30, 2021
−Removed: Beginning balance
−Removed: Ending balance
−Removed: Three months ended September 30, 2021
−Removed: Beginning balance
−Removed: Ending balance
−Removed: of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
−Removed: 8 TROUBLED DEBT RESTRUCTURINGS
−Removed: were $ 2.1 million and $ 2.5 million in loans classified as troubled debt restructurings at September 30, 2022 and December 31, 2021, respectively.
−Removed: All loans considered to be troubled debt restructurings are individually evaluated for impairment as part of the allowance for loan losses
−Removed: No loans modified during the three and nine months ended September 30, 2022 or September 30, 2021, were considered to be
−Removed: troubled debt restructurings.
−Removed: loan totaling $6 thousand, secured by residential real estate, previously modified as a troubled debt restructuring, was in default during
−Removed: the three months ended September 30, 2022.
−Removed: Two loans totaling $73 thousand, previously modified as a troubled debt restructuring, that
−Removed: defaulted during the first nine months of 2022, were in compliance with the terms of the restructuring at September 30, 2022.
−Removed: the nine months ended September 30, 2021, two loans to the same borrower, previously modified as troubled debt restructurings, totaling
−Removed: $1.1 million defaulted, resulting in charge-offs totaling $835 thousand.
−Removed: Generally, a restructured troubled debt is considered to be
−Removed: in default once it becomes 90 days or more past due following a modification.
−Removed: determining the allowance for loan losses, management considers troubled debt restructurings and subsequent defaults in these restructurings
−Removed: in its estimate.
−Removed: The Company evaluates all troubled debt restructurings for possible further impairment.
−Removed: As a result, the allowance may
−Removed: be increased, adjustments may be made in the allocation of the allowance, or charge-offs may be taken to further write down the carrying
−Removed: value of the loan.
−Removed: 9 OTHER REAL ESTATE OWNED
−Removed: following table summarizes the activity in other real estate owned for the Nine months ended September 30, 2022, and the year ended December
+Added: Allocation of a portion
+Added: of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
+Added: NOTE 8 MODIFICATIONS MADE TO BORROWERS
+Added: EXPERIENCING FINANCIAL DIFFICULTY
+Added: The allowance for
+Added: credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition.
+Added: The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications
+Added: of receivables to borrowers experiencing financial difficulty.
+Added: The Company uses a discounted cash flow methodology to determine the allowance
+Added: for credit losses.
+Added: An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.
+Added: Because the effect
+Added: of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because
+Added: of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded
+Added: upon modification.
+Added: Occasionally, the Company modifies loans by providing principal forgiveness on certain of its real estate loans.
+Added: principal forgiveness is provided, the amortized cost basis of the asset is written off against the allowance for credit losses.
+Added: amount of the principal forgiveness is deemed to be uncollectible;
+Added: therefore, that portion of the loan is written off, resulting in a
+Added: reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.
+Added: In some cases, the
+Added: Company will modify a certain loan by providing multiple types of concessions.
+Added: Typically, one type of concession, such as a term extension,
+Added: is granted initially.
+Added: If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness,
+Added: may be granted.
+Added: There were no loans
+Added: modified to borrowers experiencing financial difficulty in the three months ended March 31, 2023.
+Added: Additionally, there were no loans that
+Added: had a payment default during the quarter that were modified in the previous 12 months.
+Added: Prior to adoption
+Added: of ASC 2022-02, there were $2.0 million in loans classified as troubled debt restructurings as of December 31, 2022.
+Added: All loans considered
+Added: to be troubled debt restructurings are individually evaluated for impairment as part of the allowance for loan losses calculation.
+Added: loans modified during the three months ended March 31, 2022, were considered to be troubled debt restructurings.
+Added: For the three months
+Added: ended March 31, 2022, there were no loans modified as a troubled debt restructuring that subsequently defaulted within twelve months
+Added: of the loan modification.
+Added: Generally, a restructured troubled debt is considered to be in default once it becomes 90 days or more past
+Added: due following a modification.
+Added: NOTE 9 CREDIT
+Added: ALLOWANCE FOR UNFUNDED COMMITMENTS
+Added: The Company maintains
+Added: a separate allowance for credit losses on off-balance-sheet credit exposures, including unfunded loan commitments, which is included
+Added: in other liabilities on the consolidated balance sheet.
+Added: The allowance for credit losses for off-balance-sheet credit exposures is adjusted
+Added: through a provision for credit losses in the income statement.
+Added: The estimate includes consideration of the likelihood that funding will
+Added: occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life, utilizing the same models
+Added: and approaches for the Company's other loan portfolio segments described above, as these unfunded commitments share similar risk characteristics
+Added: as its loan portfolio segments.
+Added: The Company has identified the unfunded portion of certain lines of credit as unconditionally cancellable
+Added: credit exposures, meaning the Company can cancel the unfunded commitment at any time.
+Added: No credit loss estimate is reported for off-balance-sheet
+Added: credit exposures that are unconditionally cancellable by the Company or for undrawn amounts under such arrangements that may be drawn
+Added: prior to the cancellation of the arrangement.
+Added: On January 1, 2023,
+Added: the Company recorded an adjustment to initiate an allowance for credit losses for unfunded commitments of $348,000 for the adoptions
+Added: of ASC Topic 326.
+Added: For the three months ended March 31, 2023, the Company recorded a reversal to the provision for credit losses for unfunded
+Added: commitments of $24,000.
+Added: At March 31, 2023, the liability for credit losses on off-balance-sheet credit exposures included in other liabilities
+Added: was $324,000.
+Added: NOTE 10 OTHER
+Added: REAL ESTATE OWNED
+Added: The following table
+Added: summarizes the activity in other real estate owned for the three months ended March 31, 2023, and the year ended December 31, 2022:
Schedule of other real estate owned
−Removed: (Dollars are in thousands)
−Removed: September 30,
−Removed: December 31, 2021
−Removed: Balance, beginning of period
−Removed: Transfers from premises and equipment
−Removed: Proceeds from sales
−Removed: Proceeds from insurance claims
−Removed: Loans made to finance sales
−Removed: Adjustment of carrying value
−Removed: Net gains from sales
−Removed: Balance, end of period
−Removed: 10 FAIR VALUES
−Removed: Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.
−Removed: In accordance with the Fair Value Measurements and Disclosures topic of Financial Accounting Standards Board (the FASB) ASC, the fair
−Removed: 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)
−Removed: in the principal or most advantageous market and in an orderly transaction between market participants at the measurement date.
−Removed: value is best determined based upon quoted market prices.
−Removed: However, in many instances, there are no quoted market prices for the Company's
−Removed: various financial instruments.
−Removed: In cases where quoted market prices are not available, fair values are based on estimates using present
−Removed: value or other valuation techniques.
−Removed: Those techniques are significantly affected by the assumptions used, including the discount rate
−Removed: and estimates of future cash flows.
+Added: are in thousands)
+Added: beginning of period
+Added: from premises and equipment
+Added: from insurance claims
+Added: made to finance sales
+Added: of carrying value
+Added: gains from sales
+Added: end of period
+Added: NOTE 11 FAIR VALUES
+Added: The Company uses
+Added: fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.
+Added: accordance with the Fair Value Measurements and Disclosures topic of Financial Accounting Standards Board (the FASB) ASC, the fair value
+Added: 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
+Added: principal or most advantageous market and in an orderly transaction between market participants at the measurement date.
+Added: Fair value is
+Added: best determined based upon quoted market prices.
+Added: However, in many instances, there are no quoted market prices for the Company's various
+Added: financial instruments.
+Added: In cases where quoted market prices are not available, fair values are based on estimates using present value
+Added: or other valuation techniques.
+Added: Those techniques are significantly affected by the assumptions used, including the discount rate and estimates
+Added: of future cash flows.
Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.
−Removed: fair value guidance provides a consistent definition of fair value, which focuses on exit price in the principal or most advantageous
−Removed: market and in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement
−Removed: date under current market conditions.
−Removed: If there has been a significant decrease in the volume and level of activity for the asset or liability,
−Removed: a change in valuation technique or the use of multiple valuation techniques may be appropriate.
−Removed: In such instances, determining the price
−Removed: at which willing market participants would transact at the measurement date under current market conditions depends on the facts and
−Removed: circumstances and requires the use of significant judgment.
−Removed: The fair value is a reasonable point within the range that is most representative
−Removed: of fair value under current market conditions.
−Removed: accordance with this guidance, the Company groups its financial assets and financial liabilities generally measured at fair value in
−Removed: three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine
+Added: The fair value guidance
+Added: provides a consistent definition of fair value, which focuses on exit price in the principal or most advantageous market and in an orderly
+Added: transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current
+Added: market conditions.
+Added: If there has been a significant decrease in the volume and level of activity for the asset or liability, a change
+Added: in valuation technique or the use of multiple valuation techniques may be appropriate.
+Added: In such instances, determining the price at which
+Added: willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances
+Added: and requires the use of significant judgment.
+Added: The fair value is a reasonable point within the range that is most representative of fair
+Added: value under current market conditions.
+Added: In accordance with
+Added: this guidance, the Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based
+Added: on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.
Quoted prices are available in active markets for identical assets or liabilities as of the reported date.
6 unchanged sentences
significant management judgment or estimation.
−Removed: description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such
−Removed: instruments pursuant to the valuation hierarchy are as follows:
−Removed: Securities Available for Sale - Investment securities available for sale are recorded at fair value on a recurring basis.
−Removed: measurement is based upon quoted prices.
−Removed: The Company’s available for sale securities, totaling $ 98.8 million and $ 107.4 million
−Removed: at September 30, 2022 and December 31, 2021, respectively, are the only assets whose fair values are measured on a recurring basis using
−Removed: Level 2 inputs from an independent pricing service.
−Removed: - The Company does not record loans at fair value on a recurring basis.
−Removed: Real estate serves as collateral on a substantial majority of
−Removed: the Company’s loans.
−Removed: When a loan is considered impaired, a specific reserve may be established.
−Removed: Loans, which are deemed to be impaired
−Removed: and require a reserve are primarily valued on a non-recurring basis at the fair value of the underlying real estate collateral.
−Removed: there is no observable market price, such fair values are obtained using independent appraisals, which management evaluates to determine
−Removed: whether or not the fair value of the collateral is further impaired below the appraised value and adjusts for estimated costs of disposition.
−Removed: The Company records impaired loans as nonrecurring Level 3 assets.
−Removed: Real Estate Owned –Other real estate owned is adjusted to fair value upon transfer of the loans, or former bank premises, to other
−Removed: real estate owned.
+Added: A description of
+Added: the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant
+Added: to the valuation hierarchy are as follows:
+Added: Investment Securities
+Added: Available for Sale - Investment securities available for sale are recorded at fair value on a recurring basis.
+Added: Fair value measurement
+Added: is based upon quoted prices.
+Added: The Company’s available for sale securities, totaling $ 96.7 million and $ 96.1 million as of March
+Added: 31, 2023 and December 31, 2022, respectively, are the only assets whose fair values are measured on a recurring basis using Level 2 inputs
+Added: from an independent pricing service.
+Added: Collateral Dependent
+Added: Loans with an ACL - In accordance with ASC 326, we may determine that an individual loan exhibits unique risk characteristics which differentiate
+Added: it from other loans within our loan pools.
+Added: In such cases, the loans are evaluated for expected credit losses on an individual basis and
+Added: excluded from the collective evaluation.
+Added: Specific allocations of the allowance for credit losses are determined by analyzing the borrower's
+Added: ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower's
+Added: industry, among other things.
+Added: A loan is considered to be collateral dependent when, based upon management's assessment, the borrower
+Added: is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral.
+Added: In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling
+Added: costs if satisfaction of the loan depends on the sale of the collateral.
+Added: We reevaluate the fair value of collateral supporting collateral
+Added: dependent loans on a quarterly basis.
+Added: The fair value of real estate collateral supporting collateral dependent loans is evaluated by
+Added: appraisal services using a methodology that is consistent with the Uniform Standards of Professional Appraisal Practice.
+Added: Other Real Estate
+Added: Owned –Other real estate owned is adjusted to fair value upon transfer of the loans, or former bank premises, to other real estate
These assets are carried at the lower of their carrying value or fair value.
−Removed: Fair value is based upon observable market
−Removed: prices, when available, reduced by estimated disposition costs, which the Company considers to be nonrecurring Level 2 inputs.
+Added: Fair value is based upon observable market prices,
+Added: when available, reduced by estimated disposition costs, which the Company considers to be nonrecurring Level 2 inputs.
When observable
2 unchanged sentences
The Company records foreclosed assets as nonrecurring Level 3.
−Removed: and liabilities measured at fair value are as follows as of September 30, 2022 (for purpose of this table the impaired loans are shown
−Removed: net of the related allowance):
+Added: Assets and liabilities
+Added: measured at fair value are as follows as of March 31, 2023:
Schedule of summary of assets and liabilities measured at fair value
−Removed: September 30, 2022
−Removed: (Dollars are in thousands)
−Removed: Quoted market price in active markets
−Removed: Significant other observable inputs
−Removed: Significant unobservable inputs
−Removed: (On a recurring basis)
+Added: are in thousands)
+Added: market price in active markets
+Added: other observable inputs
+Added: unobservable inputs
+Added: recurring basis)
Available for sale investments
Government Agencies
−Removed: Taxable municipals
−Removed: Corporate bonds
−Removed: Mortgage-backed securities
−Removed: (On a non-recurring basis)
+Added: Mortgage-backed
+Added: non-recurring basis)
Other real estate owned
−Removed: Impaired loans
−Removed: and liabilities measured at fair value are as follows as of December 31, 2021 (for purpose of this table the impaired loans are shown
−Removed: net of the related allowance):
−Removed: December 31, 2021
−Removed: (Dollars are in thousands)
−Removed: Quoted market price in active markets
−Removed: Significant other observable inputs
−Removed: Significant unobservable inputs
−Removed: (On a recurring basis)
+Added: dependent loans with ACL:
+Added: Assets and liabilities
+Added: measured at fair value are as follows as of December 31, 2022 (for purpose of this table the impaired loans are shown net of the related
+Added: are in thousands)
+Added: market price in active markets
+Added: other observable inputs
+Added: unobservable inputs
+Added: recurring basis)
Available for sale investments
Government Agencies
−Removed: Taxable municipals
−Removed: Corporate bonds
−Removed: Mortgage-backed securities
−Removed: (On a non-recurring basis)
+Added: Mortgage-backed
+Added: non-recurring basis)
Other real estate owned
−Removed: Impaired loans
−Removed: Level 3 assets measured at fair value on a recurring or non-recurring basis as of September 30, 2022 and December 31, 2021, the significant
−Removed: unobservable inputs used in the fair value measurements were as follows:
+Added: For Level 3 assets
+Added: measured at fair value on a recurring or non-recurring basis as of March 31, 2023 and December 31, 2022, the significant unobservable
+Added: inputs used in the fair value measurements were as follows:
Schedule of significant unobservable inputs In level 3 assets
−Removed: in thousands)
−Removed: Value at September 30, 2022
+Added: (Dollars in thousands)
+Added: at March 31, 2023
+Added: Valuation Technique
Unobservable Inputs
Range of Significant Unobservable Input Values
+Added: dependent loans with ACL:
to reflect current market conditions, ultimate collectability, and estimated costs to sell
2 unchanged sentences
to reflect current market conditions and estimated costs to sell
−Removed: Value of Financial Instruments
−Removed: value information about financial instruments, whether or not recognized in the balance sheet, for which it is practical to estimate
−Removed: the value is based upon the characteristics of the instruments and relevant market information.
−Removed: Financial instruments include cash, evidence
−Removed: of ownership in an entity, or contracts that convey or impose on an entity that contractual right or obligation to either receive or
−Removed: deliver cash for another financial instrument.
+Added: of Financial Instruments
+Added: Fair value information
+Added: about financial instruments, whether or not recognized in the balance sheet, for which it is practical to estimate the value is based
+Added: upon the characteristics of the instruments and relevant market information.
+Added: Financial instruments include cash, evidence of ownership
+Added: in an entity, or contracts that convey or impose on an entity that contractual right or obligation to either receive or deliver cash
+Added: for another financial instrument.
following summary presents the methodologies and assumptions used to estimate the fair value of the Company’s financial instruments
6 unchanged sentences
will actually be realized or paid upon settlement or maturity on these various instruments could be significantly different.
−Removed: carrying amount and fair value of the Company’s financial instruments that are not required to be measured or reported at fair
−Removed: value on a recurring basis as of September 30, 2022, and December 31, 2021, are as follows:
+Added: The carrying amount
+Added: and fair value of the Company’s financial instruments that are not required to be measured or reported at fair value on a recurring
+Added: basis as of March 31, 2023, and December 31, 2022, are as follows:
Schedule of estimated fair value of financial instruments
−Removed: Fair Value Measurements
−Removed: (Dollars are in thousands)
−Removed: Quoted market price in active markets
−Removed: Significant other observable inputs
−Removed: Significant unobservable inputs
−Removed: September 30, 2022
−Removed: Financial Instruments – Assets
−Removed: Financial Instruments – Liabilities
−Removed: Time Deposits
−Removed: Borrowed funds
−Removed: December 31, 2021
−Removed: Financial Instruments – Assets
−Removed: Financial Instruments – Liabilities
−Removed: Time Deposits
−Removed: Borrowed funds
−Removed: value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.
−Removed: These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire
−Removed: holdings of a particular financial instrument.
−Removed: Because no market exists for a significant portion of the Company’s financial instruments,
−Removed: fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics
−Removed: of various financial instruments and other factors.
−Removed: These estimates are subjective in nature and involve uncertainties and matters of
−Removed: significant judgment and therefore cannot be determined with precision.
+Added: Value Measurements
+Added: are in thousands)
+Added: market price in active markets
+Added: other observable inputs
+Added: unobservable inputs
+Added: Instruments – Assets
+Added: Instruments – Liabilities
+Added: Instruments – Assets
+Added: Instruments – Liabilities
+Added: Fair value estimates
+Added: are made at a specific point in time, based on relevant market information and information about the financial instrument.
+Added: These estimates
+Added: do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a
+Added: particular financial instrument.
+Added: Because no market exists for a significant portion of the Company’s financial instruments, fair
+Added: value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of
+Added: various financial instruments and other factors.
+Added: These estimates are subjective in nature and involve uncertainties and matters of significant
+Added: judgment and therefore cannot be determined with precision.
Changes in assumptions can significantly affect the estimates.
−Removed: fair values have been determined by the Company using historical data, as generally provided in the Company’s regulatory reports,
−Removed: and an estimation methodology suitable for each category of financial instruments.
−Removed: The Company’s fair value estimates, methods
−Removed: and assumptions are set forth below for the Company’s other financial instruments.
−Removed: carrying values of cash and due from banks, federal funds sold, interest-bearing deposits, deposits with no stated maturities and
−Removed: accrued interest approximates fair value and are excluded from the table above.
−Removed: accordance with our adoption of Accounting Standards Update (ASU) 2016-01 in 2018, the methods utilized to measure the fair value of
−Removed: financial instruments at September 30, 2022 and December 31, 2021, represent an approximation of exit price;
−Removed: however, an actual exit
−Removed: price may differ.
−Removed: 11 LEASING ACTIVITIES
−Removed: of September 30, 2022, the Bank leases four branch office sites resulting from sale leaseback transactions entered into in 2017 and a
−Removed: sublet of a lot adjacent to another office.
−Removed: The lease agreements have maturity dates ranging from May 2032 to December 2041.
−Removed: It is assumed
−Removed: that there are currently no circumstances in which the leases would be terminated prior to expiration.
−Removed: The weighted average remaining
−Removed: life of the lease terms at September 30, 2022 was 9.87 years.
+Added: Estimated fair values
+Added: have been determined by the Company using historical data, as generally provided in the Company’s regulatory reports, and an estimation
+Added: methodology suitable for each category of financial instruments.
+Added: The Company’s fair value estimates, methods and assumptions are
+Added: set forth below for the Company’s other financial instruments.
+Added: The carrying values
+Added: of cash and due from banks, federal funds sold, interest-bearing deposits, deposits with no stated maturities and accrued interest approximates
+Added: fair value and are excluded from the table above.
+Added: In accordance with
+Added: our adoption of Accounting Standards Update (ASU) 2016-01 in 2018, the methods utilized to measure the fair value of financial instruments
+Added: as of March 31, 2023 and December 31, 2022, represent an approximation of exit price;
+Added: however, an actual exit price may differ.
+Added: NOTE 12 LEASING
+Added: of March 31, 2023, the Bank leases four branch offices and sublets of a lot adjacent to another branch office.
+Added: The lease agreements have
+Added: maturity dates ranging from May 2032 to December 2041.
+Added: It is assumed that there are currently no circumstances in which the leases would
+Added: be terminated prior to expiration.
+Added: The weighted average remaining life of the lease terms at March 31, 2023 was 9.35 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.
−Removed: average discount rate for the leases at September 30, 2022 was 3.24 %.
−Removed: the nine months ended September 30, 2022 and 2021, operating lease expenses were $ 342 thousand and $ 421 thousand, respectively.
+Added: average discount rate for the leases as of March 31, 2023 was 3.29 % .
+Added: For the three months
+Added: ended March 31, 2023 and 2022, operating lease expenses were $ 114,000 and $ 114,000 , respectively.
Company’s other operating leases were evaluated and determined to be immaterial to the financial statements.
−Removed: At September 30, 2022,
+Added: As of March 31, 2023,
future minimum rental commitments under the non-cancellable operating leases discussed above are as follows (dollars are in thousands):
2 unchanged sentences
imputed interest
−Removed: 12 BORROWED FUNDS
−Removed: in Borrowed Funds is a short-term FHLB Advance totaling $ 25 million at September 30, 2022.
−Removed: No short-term borrowings were outstanding
−Removed: at December 31, 2021.
−Removed: The outstanding advance at September 30, 2022, of $25 million, has a fixed rate of 2.60%, and matures December
13 REVENUE FROM CONTRACTS WITH CUSTOMERS
2 unchanged sentences
Report on Form 10-K for the year ended December 31, 2022 for a description of how each revenue stream is accounted for under ASC 606.
−Removed: The following table presents Noninterest income by revenue stream for the three and nine months ended September 30, 2022 and 2021:
+Added: The following table presents Noninterest income by revenue stream for the three months ended March 31, 2023 and 2022:
Schedule of revenue from contracts with customers
the Three Months
−Removed: For the nine months
+Added: Ended March 31,
in thousands)
1 unchanged sentence
processing and interchange income
−Removed: on sale of securities available-for-sale (1)
and investment fees
1 unchanged sentence
noninterest income
−Removed: Not within the scope of ASU 2014-19
−Removed: 14 NONINTEREST EXPENSES
−Removed: operating expenses, included as part of noninterest expenses, consisted of the following for the periods presented:
+Added: NOTE 14 NONINTEREST EXPENSES
+Added: Other operating expenses,
+Added: included as part of noninterest expenses, consisted of the following for the periods presented:
Schedule of noninterest expenses
−Removed: For the three months ended September 30,
−Removed: For the Nine months ended September 30,
−Removed: (Dollars are in thousands)
−Removed: ATM network expense
−Removed: Legal, accounting and professional fees
−Removed: Consulting fees
−Removed: Loan related expenses
−Removed: Printing and supplies
−Removed: FDIC insurance premiums
−Removed: Other real estate owned expenses, net
+Added: the Three Months
+Added: Ended March 31,
+Added: are in thousands)
+Added: sponsorships and donations
+Added: accounting and professional fees
+Added: related expenses
+Added: insurance premiums
+Added: real estate owned expenses, net
+Added: operating expenses
other operating expenses
−Removed: Total other operating expenses
+Added: NOTE 15 SUBSEQUENT
Subsequent events
−Removed: events are events or transactions that occur after the balance sheet date but before financial statements are issued.
+Added: are events or transactions that occur after the balance sheet date but before financial statements are issued.
Recognized subsequent
5 unchanged sentences
recognition or disclosure.
−Removed: 16 RECENT ACCOUNTING DEVELOPMENTS
−Removed: following is a summary of recent authoritative announcements:
−Removed: June 2016, per ASU No.
+Added: NOTE 16 RECENT
+Added: ACCOUNTING DEVELOPMENTS
+Added: The following is
+Added: a summary of recent authoritative announcements:
+Added: In June 2016, per
2016-13, ‘Financial Instruments – Credit Losses (Topic 326):
−Removed: Measurement of Credit Losses on Financial
−Removed: Instruments,’ the FASB issued guidance to change the accounting for credit losses and modify the impairment model for certain debt
−Removed: Subsequently, per ASU No.
−Removed: 2019-10, implementation for the Company is delayed until reporting periods beginning after December
−Removed: Early adoption is permitted for all organizations for periods beginning after December 15, 2018.
−Removed: The Company is currently evaluating
−Removed: the effect that implementation of the new standard will have on its financial position, results of operations, and cash flows.
−Removed: has contracted with a software vendor and is currently working through the implementation process.
−Removed: The new model has been constructed,
−Removed: initial assumptions have been input and historical loan and loss activity has been input and validated.
−Removed: The Company is running the new
−Removed: methodology parallel to the current allowance methodology, and will be assessing the comparative results for the first three quarterly
−Removed: calculations during the fourth quarter of 2022.
−Removed: March 2020, the FASB released ASU 2020-04, ‘Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform
−Removed: on Financial Reporting,’ which provides optional guidance for a limited period of time to ease the potential burden in accounting
−Removed: for (or recognizing the effects of) reference rate reform.
−Removed: The amendments in this Update are elective and apply to all entities, subject
−Removed: to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference the London Interbank Offering
−Removed: Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform.
−Removed: The amendments in the Update are
−Removed: effective for the Company as of March 12, 2020 through December 31, 2022.
−Removed: The Company is working through implementation of this guidance,
−Removed: and to date this amendment has not had a material impact on its financial statements.
−Removed: January 2021, the FASB released ASU 2021-01, ‘Reference Rate Reform (Topic 848),’ which clarifies that certain optional expedients
−Removed: and exceptions in topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting
−Removed: transition related to reference rate reform.
−Removed: The amendments in this Update are effective immediately for all entities.
−Removed: An entity may
−Removed: 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
−Removed: includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that
−Removed: 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
−Removed: The Company does not expect this amendment to have a material effect on its financial statements.
−Removed: March 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.
+Added: Measurement of Credit Losses on Financial Instruments,’
+Added: the FASB issued guidance to change the accounting for credit losses and modify the impairment model for certain debt securities.
+Added: Company adopted this guidance on January 1, 2023.
+Added: The Company recognized an adjustment to retained earnings in the amount of $212,000,
+Added: and recorded an adjustment to the allowance for credit losses in loans and unfunded commitments on loans in the amount of $80,000 and
+Added: $348,000, respectively.
+Added: In June 2022, the
+Added: FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820):
+Added: Fair Value Measurement of Equity Securities Subject to Contractual
+Added: Sale Restrictions”.
+Added: ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part
+Added: of the unit of account of the equity security and, therefore, is not considered in measuring fair value.
+Added: The ASU is effective for fiscal
+Added: years, including interim periods within those fiscal years, beginning after December 15, 2023.
+Added: Early adoption is permitted.
+Added: does not expect the adoption of ASU 2022-03 to have a material impact on its consolidated financial statements.
+Added: In March 2022, the
+Added: Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.
2022-02, “Financial Instruments-Credit
18 unchanged sentences
enhancements separately from the amendments related to vintage disclosures.
−Removed: The Company is currently assessing the impact that ASU 2022-02
−Removed: will have on its consolidated financial statements.
−Removed: accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material
−Removed: impact on the Company’s financial position, results of operations or cash flows.
+Added: The Company adopted this guidance on January 1, 2023 and
+Added: it did not have a material impact on the consolidated financial statements.
+Added: In December 2022,
+Added: the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848):
+Added: Deferral of the Sunset Date of Topic 848”.
+Added: ASU 2022-06 extends
+Added: the period of time preparers can utilize the reference rate reform relief guidance in Topic 848.
+Added: The objective of the guidance in Topic
+Added: 848 is to provide relief during the temporary transition period, so the FASB included a sunset provision within Topic 848 based on expectations
+Added: of when the London Interbank Offered Rate (LIBOR) would cease being published.
+Added: In 2021, the UK Financial Conduct Authority (FCA) delayed
+Added: the intended cessation date of certain tenors of USD LIBOR to June 30, 2023.
+Added: To ensure the relief
+Added: in Topic 848 covers the period of time during which a significant number of modifications may take place, the ASU defers the sunset date
+Added: of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic
+Added: The ASU is effective for all entities upon issuance.
+Added: The Company is assessing ASU 2022-06 and its impact on the Company’s
+Added: transition away from LIBOR for its loan and other financial instruments that have not already been transitioned to an alternative reference
+Added: Other accounting
+Added: standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact
+Added: 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.