What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-14 compared with 2023-08-14 · 312 added, 378 removed, 876 unchanged (44% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE

JUNE 30, 2023 AND

DECEMBER 31, 2022

SEPTEMBER 30, 2023

AND DECEMBER 31, 2022

THOUSANDS EXCEPT PER SHARE AND SHARE DATA)

due from banks

Interest-bearing deposits

September 30,

and due from banks

Interest-bearing

deposits with banks

cash and cash equivalents

Investment securities

available-for-sale

Loans receivable

securities available-for-sale

for credit losses

Bank premises and equipment,

Other real estate owned

Accrued interest receivable

Deferred taxes, net

Bank owned life insurance

Right-of-use assets –

operating leases

premises and equipment, net

real estate owned

interest receivable

owned life insurance

assets – operating leases

Interest-bearing

Borrowed funds

Lease liabilities –

operating leases

Accrued interest payable

liabilities – operating leases

interest payable

expenses and other liabilities

SHAREHOLDERS’

Common stock - $ 2.00 par value;

Common stock - $ 2.00 par

50,000,000 shares authorized;

23,802,857 and 23,848,491

shares issued and outstanding at

June 30, 2023 and December 31, 2022, respectively

Additional paid-in-capital

Retained earnings

and 23,848,491 shares issued and outstanding at

September 30, 2023 and December 31, 2022, respectively

paid-in-capital

other comprehensive loss

6 unchanged sentences

FOR THE THREE AND

SIX MONTHS ENDED JUNE 30, 2023 AND 2022

NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

For the Three Months Ended

For the Six Months Ended

For the Three

AND DIVIDEND INCOME

Loans including

Federal funds sold

Interest-earning deposits

including fees

Interest-earning

deposits with banks

on equity securities (restricted)

5 unchanged sentences

FOR CREDIT LOSSES

Service charges and fees

Card processing and interchange

Insurance and investment

charges and fees

processing and interchange

and investment fees

noninterest income

Salaries and employee

Occupancy and equipment

Data processing and telecommunications

and employee benefits

and equipment expense

processing and telecommunications

operating expenses

1 unchanged sentence

BEFORE INCOME TAXES

Earnings per share

Average Weighted Shares

of Common Stock

Weighted Shares of Common Stock

The accompanying

2 unchanged sentences

CONSOLIDATED STATEMENTS

OF COMPREHENSIVE INCOME (LOSS)

OF COMPREHENSIVE (LOSS) INCOME

FOR THE THREE AND

SIX MONTHS ENDED JUNE 30, 2023 AND 2022

NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

the Three Months Ended

the Six Months Ended

comprehensive income (loss):

September 30,

the Nine Months Ended

September 30,

comprehensive (loss) income:

securities activity

(losses) gains arising during the period

tax benefit (expense)

OTHER COMPREHENSIVE INCOME (LOSS)

COMPREHENSIVE INCOME (LOSS)

losses arising during the period

OTHER COMPREHENSIVE LOSS

COMPREHENSIVE (LOSS) INCOME

The accompanying notes

4 unchanged sentences

FOR THE THREE AND

SIX MONTHS ENDED JUNE 30, 2023 AND 2022

NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(IN THOUSANDS INCLUDING

1 unchanged sentence

Paid-in- Capital

Comprehensive Income (Loss)

Comprehensive Loss

Shareholders’ Equity

Balance, June

comprehensive loss, net of tax

of common stock

Balance, September 30,

Balance, December 31, 2021

Other comprehensive loss,

comprehensive loss, net of tax

Cash dividend declared

($0.05 per share)

Balance, March 31, 2022

Other comprehensive loss,

of common stock

Balance, September 30,

Balance, June 30, 2023

comprehensive loss, net of tax

of common stock

September 30, 2023

Balance, December 31, 2022

Adoption of ASU 2016-13

Other comprehensive income,

Repurchase of common stock

Cash dividend declared

($0.06 per share)

Balance, March 31, 2023

Other comprehensive loss,

comprehensive loss, net of tax

of common stock

Balance, June 30,

dividend declared ($0.06 per share)

September 30, 2023

The accompanying notes

3 unchanged sentences

OF CASH FLOWS

FOR THE SIX MONTHS

ENDED JUNE 30, 2023 AND 2022

FOR THE NINE MONTHS

ENDED SEPTEMBER 30, 2023 AND 2022

FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile

net income to net cash provided by

to reconcile net income to net cash provided by

operating activities:

Provision for credit losses

Income on bank owned life

Gain on sale of mortgage

Gain on sale or disposal

of premises and equipment

Gain on sale of other

real estate owned

Loans originated for sale

Proceeds from sales of

loans originated for sale

Adjustment of carrying

value of other real estate owned

for credit losses

(loss) on bank owned life insurance

on sale of mortgage loans

(loss) on sale or disposal of premises and equipment

on sale of other real estate owned

originated for sale

from sales of loans originated for sale

of carrying value of other real estate owned

Net amortization/accretion

of bond premiums/discounts

Deferred tax (benefit)

Net change in:

Accrued interest receivable

Accrued interest payable

tax (benefit) expense

interest receivable

interest payable

expenses and other liabilities

1 unchanged sentence

FLOWS FROM INVESTING ACTIVITIES

Net (increase) decrease

Purchase of securities

available-for-sale

Proceeds from repayments

and maturities of securities available-for-sale

Net purchase of equity

securities (restricted)

Payments for the purchase

of premises and equipment

Proceeds from sales of

premises and equipment

Net (increase)

decrease in loans

of securities available-for-sale

from repayments and maturities of securities available-for-sale

of equity securities (restricted)

for the purchase of premises and equipment

from sale of premises and equipment

from sales of other real estate owned

cash used in investing activities

cash (used in) provided by investing activities

FLOWS FROM FINANCING ACTIVITIES

Net change in short term

Issuance of long-term

Net change in noninterest

bearing deposits

Net change in interest

bearing deposits

Dividends paid

in short term borrowings

of long-term debt

in noninterest bearing deposits

in interest-bearing deposits

of common stock

cash provided by financing activities

Net increase in cash and

cash equivalents

Net (decrease)

increase in cash and cash equivalents

and cash equivalents, beginning of the period

and cash equivalents, end of the period

Supplemental disclosure

of cash paid during the period for:

Supplemental disclosure

of non-cash transactions:

Loans made to finance

sale of other real estate owned

Change in unrealized losses

on securities available-for-sale

disclosure of cash paid during the period for:

disclosure of non-cash transactions:

made to finance sale of other real estate owned

in unrealized losses on securities available-for-sale

The accompanying notes

23 unchanged sentences

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

necessary to present fairly the Company’s financial position as of June 30, 2023 and December 31, 2022, and the results of operations

for the three- and six-month periods ended June 30, 2023 and 2022.

The Notes included herein should be read in conjunction with the notes

to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

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

full year or any future period.

necessary to present fairly the Company’s financial position as of September 30, 2023 and December 31, 2022, and the results of

operations for the three- and nine-month periods ended September 30, 2023 and 2022.

The Notes included herein should be read in conjunction

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

December 31, 2022.

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

be expected for a full year or any future period.

The consolidated

62 unchanged sentences

of ASC 326 Adoption

are in thousands)

Loans, at amortized

Allowance for credit losses

Real estate secured:

Construction and land development

Residential 1-4 family

in thousands)

at amortized cost

for credit losses on loans:

estate secured:

and land development

real estate loans

Consumer and other loans

and other loans

allowance for credit losses for loans

Deferred tax asset

Allowance for credit

losses for unfunded commitments

for credit losses for unfunded commitments

The Company elected

25 unchanged sentences

intent or requirement to sell is met.

As of June 30, 2023, there was no allowance for credit loss related to the available-for-sale portfolio.

As of September 30, 2023, there was no allowance for credit loss related to the available-for-sale

Loans that management

3 unchanged sentences

Accrued interest receivable

related to loans totaled $2.0 million as of June 30, 2023 and was reported in accrued interest receivable on the consolidated balance

related to loans totaled $2.2 million at September 30, 2023 and was reported in accrued interest receivable on the consolidated balance

Interest income is accrued on the unpaid principal balance.

178 unchanged sentences

Under previous

GAAP, modifications to loans when the borrower was experiencing financial difficulty were designated as TDR and were individually evaluated

GAAP, modifications to loans when the borrower was experiencing financial difficulty were designated as TDRs and were individually evaluated

for the duration of the loan.

7 unchanged sentences

For the three-month

and six-month periods ended June 30, 2023 and 2022, there were no potential common shares.

Basic and diluted net income per common share

calculations follows:

and nine-month periods ended September 30, 2023 and 2022, there were no potential common shares.

Basic and diluted net income per common

share calculations follows:

Schedule of basic and diluted net loss per common share calculations

(Dollars are in thousands,

in thousands, except

share and per share data)

the three months

ended June 30,

the six months

ended June 30,

ended September 30,

the nine months

ended September 30,

average shares outstanding

Weighted average

dilutive shares outstanding

average dilutive shares outstanding

and diluted earnings per share

10 unchanged sentences

as a "Small Bank Holding Company" under federal regulations, a bank must have consolidated assets of $3.0 billion or less.

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

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

regulatory capital ratios;

7 unchanged sentences

The capital conservation buffer required is 2.50 % .

As of June 30, 2023, the Bank had a capital conservation buffer of

At September 30, 2023, the Bank had a capital conservation buffer

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

believes as of June 30, 2023, the Bank met all capital adequacy requirements to which it was subject.

believes as of September 30, 2023, the Bank met all capital adequacy requirements to which it was subject.

Prompt corrective

6 unchanged sentences

and expansion, and capital restoration plans are required.

As of June 30, 2023, the most recent regulatory notifications categorized

At September 30, 2023, the most recent regulatory notifications categorized

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

9 unchanged sentences

rule was adopted and became effective in September 2020.

The Company implemented the CECL model commencing January 1, 2023, and elected

The Company implemented the CECL model commending January 1, 2023, and elected

not to phase in the effect of CECL on regulatory capital.

actual capital amounts and ratios are presented in the following table as of June 30, 2023 and December 31, 2022, respectively.

actual capital amounts and ratios are presented in the following table as of September 30, 2023 and December 31, 2022, respectively.

Schedule of capital requirements

1 unchanged sentence

to Be Well Capitalized Under Prompt Corrective Action Provisions

(Dollars are in thousands)

June 30, 2023:

Total capital

to risk weighted assets

Tier 1 capital to risk

weighted assets

Tier 1 capital to average

Common equity Tier 1

to risk weighted assets

December 31, 2022:

Total capital to risk

weighted assets

Tier 1 capital to risk

weighted assets

Tier 1 capital to average

Common equity Tier 1

to risk weighted assets

in thousands)

September 30,

capital to risk weighted assets

1 capital to risk weighted assets

1 capital to average assets

equity Tier 1 capital

risk weighted assets

capital to risk weighted assets

1 capital to risk weighted assets

1 capital to average assets

equity Tier 1 capital

risk weighted assets

NOTE 5 INVESTMENT

The amortized cost and estimated fair

value of available-for-sale (“AFS”) securities as of June 30, 2023 and December 31, 2022 is as follows:

value of available-for-sale (“AFS”) securities as of September 30, 2023 and December 31, 2022 are as follows:

Schedule of securities amortized cost and estimated fair value

are in thousands)

June 30, 2023

in thousands)

September 30, 2023

Government Agencies

Taxable municipals

Corporate bonds

backed securities

securities available-for-sale

December 31, 2022

Government Agencies

Taxable municipals

Corporate bonds

backed securities

3 unchanged sentences

This information is aggregated by the length of time that individual

securities have been in a continuous unrealized loss position as of June 30, 2023 and December 31, 2022.

securities have been in a continuous unrealized loss position as of September 30, 2023 and December 31, 2022.

Schedule of fair value and gross unrealized losses on investment securities

1 unchanged sentence

Months or More

(Dollars are in thousands)

June 30, 2023

in thousands)

Government Agencies

Taxable municipals

Corporate bonds

backed securities

1 unchanged sentence

Government Agencies

Taxable municipals

Corporate bonds

backed securities

securities available-for-sale

As of June 30, 2023,

As of September 30,

2023, there were 212 securities in a loss position, of which 209 have been in a loss position for twelve months or more.

2 unchanged sentences

of credit deterioration.

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

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

None of the individual securities are past due as to

principal or interest payments and a number of these securities have explicit or implicit payment guarantees.

The remaining securities

have credit ratings at or above that necessary to be considered “bank qualified”.

Management does not plan to sell, and it is not likely that the Bank will be required to sell any of the securities

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

None of the individual securities are past due as to principal

or interest payments and a number of these securities have explicit or implicit payment guarantees.

The remaining securities have credit

ratings at or above that necessary to be considered “bank qualified.”

Investment securities

with a carrying value of $ 36.9 million and $ 27.3 million as of June 30, 2023 and December 31, 2022, respectively, were pledged as collateral

to secure public deposits and for other purposes required or permitted by law.

with a carrying value of $ 35.3 million and $ 27.3 million as of September 30, 2023 and December 31, 2022, respectively, were pledged as

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

There were no sales

of available-for-sale investment securities during the three and six months ended June 30, 2023 and 2022.

of available-for-sale investment securities during the three and nine months ended September 30, 2023 and 2022.

The amortized cost

and fair value of investment securities as of June 30, 2023, by contractual maturity, are shown in the following schedule.

Expected maturities

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

and fair value of investment securities as of September 30, 2023, by contractual maturity, are shown in the following schedule.

maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without

call or prepayment penalties.

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

(Dollars are in thousands)

(Dollars in thousands)

Securities Available-for-Sale

Due after one year through

Due after five years through

in one year or less

one year through five years

five years through ten years

after ten years

5 unchanged sentences

are included in other assets on the consolidated balance sheet, are restricted from trading and are recorded at a cost of $ 2.7 million

and $ 2.1 million as of June 30, 2023 and December 31, 2022, respectively.

The stock has no quoted market value and no ready market exists.

When evaluating these securities for impairment, their value is determined based on the ultimate recoverability of the par value rather

than by recognizing temporary declines in value.

Equity securities are viewed as long-term investments and management believes the Company

has the ability and the intent to hold these securities until their value is recovered

and $ 2.1 million as of September 30, 2023 and December 31, 2022, respectively.

The stock has no quoted market value and no ready market

When evaluating these securities for impairment, their value is determined based on the ultimate recoverability of the par value

rather than by recognizing temporary declines in value.

Equity securities are viewed as long-term investments and management believes

the Company has the ability and the intent to hold these securities until their value is recovered.

Loans receivable

outstanding as of June 30, 2023, and December 31, 2022, are summarized as follows:

outstanding as of September 30, 2023, and December 31, 2022, are summarized as follows:

Schedule of Loans receivable outstanding

(Dollars are in thousands)

Real estate secured:

Construction and land

Residential 1-4 family

Total real estate loans

Consumer installment

in thousands)

estate secured:

and land development

real estate loans

installment loans

Also included in

total loans above are deferred loan fees of $ 1.7 million and $ 1.6 million as of June 30, 2023 and December 31, 2022, respectively.

loan costs were $ 1.9 million and $ 1.9 million, as of June 30, 2023 and December 31, 2022, respectively.

Income from net deferred fees

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

If loans repay prior to scheduled maturities, any

unamortized fee or costs is recognized at that time.

total loans above are deferred loan fees of $1.8 million and $1.6 million as of September 30, 2023 and December 31, 2022, respectively.

Deferred loan costs were $2.0 million and $1.9 million, as of September 30, 2023 and December 31, 2022, respectively.

Income from net

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

If loans repay prior to scheduled

maturities any unamortized fee or costs is recognized at that time.

Loans receivable

on nonaccrual status as of June 30, 2023, and December 31, 2022, are summarized as follows:

on nonaccrual status as of September 30, 2023, and December 31, 2022, are summarized as follows:

Summary of loans receivable on nonaccrual status

are in thousands)

in thousands)

estate secured:

4 unchanged sentences

Total interest income

not recognized on nonaccrual loans for the six months ended June 30, 2023, and June 30, 2022, was $28,000 and $11,000, respectively.

not recognized on nonaccrual loans for the nine months ended September 30, 2023, and September 30, 2022, was $33,000 and $22,000, respectively.

Prior to the adoption

1 unchanged sentence

to collect all amounts due in accordance with the original contractual terms of the loan agreements.

Impaired loans include loans on

Impaired loans included loans on

nonaccrual status and accruing troubled debt restructurings.

15 unchanged sentences

of December 31, 2022

are in thousands)

in thousands)

Principal Balance

With no related allowance

Real estate secured:

Construction and land

Residential 1-4 family

Consumer installment loans

All other loans

With an allowance recorded:

Real estate secured:

Construction and land

Residential 1-4 family

Consumer installment loans

no related allowance recorded:

estate secured:

and land development

installment loans

an allowance recorded:

estate secured:

and land development

installment loans

Upon adoption of

3 unchanged sentences

cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses, and the related ACL allocated

to those loans as June 30, 2023:

of June 30, 2023

are in thousands)

to those loans as September 30, 2023:

of September 30, 2023

in thousands)

Principal Balance

estate secured:

and land development

real estate secured

Construction and land

Residential 1-4 family

Total real estate secured

installment loans

The following table

is an age analysis of past due loans receivable as of June 30, 2023, segregated by class:

is an age analysis of past due loans receivable as of September 30, 2023, segregated by class:

Summary age analysis of past due loans receivable

of June 30, 2023

are in thousands)

Real estate secured:

Construction and land

Residential 1-4 family

Total real estate loans

Consumer installment

in thousands)

estate secured:

real estate loans

The following

table is an age analysis of past due loans receivable as of December 31, 2022, segregated by class:

of December 31, 2022

are in thousands)

Real estate secured:

Construction and land

Residential 1-4 family

Total real estate loans

Consumer installment

in thousands)

estate secured:

real estate loans

The Company categorizes

24 unchanged sentences

The following table

present the credit risk grade of loans by origination year as of June 30, 2023:

presents the credit risk grade of loans by origination year as of September 30, 2023:

Summary of risk category of loans receivable

As of June 30, 2023

As of September 30, 2023

are in thousands)

17 unchanged sentences

of December 31, 2022

are in thousands)

Real estate secured:

in thousands)

estate secured:

and land development

Total real estate loans

Consumer installment loans

real estate loans

installment loans

NOTE 7 ALLOWANCE

6 unchanged sentences

The following

table presents a disaggregated analysis of activity in the allowance for credit losses as of June 30, 2023:

table presents a disaggregated analysis of activity in the allowance for credit losses for loans as of September 30, 2023:

Schedule of allocation of portion of allowance

3 unchanged sentences

and All Other

Six months ended June 30,

Nine months ended

September 30, 2023

Beginning balance

3 unchanged sentences

Ending balance

Three months ended June 30,

Three months ended September

Beginning balance

1 unchanged sentence

Ending balance

The following

tables present a disaggregated analysis of activity in the allowance for loan losses, for comparative periods, prior to the adoption

of ASU 2016-13:

The following tables present a disaggregated

analysis of activity in the allowance for loan losses, for comparative periods, prior to the adoption of ASU 2016-13:

estate secured

15 unchanged sentences

and All Other

For the six months ended

June 30, 2022

Nine months ended September

Beginning balance

Ending balance

For the three months ended

June 30, 2022

Three months ended September

Beginning balance

4 unchanged sentences

evaluated for impairment

Loans as of June 30, 2022

Loans as of September 30,

Individually evaluated for

evaluated for impairment

Allocation of a portion

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

Allocation of

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

NOTE 8 MODIFICATIONS MADE TO BORROWERS

23 unchanged sentences

There were no loans

modified to borrowers experiencing financial difficulty in the three or six months ended June 30, 2023.

Additionally, there were no loans

that had a payment default during the quarter that were modified in the previous 12 months.

modified to borrowers experiencing financial difficulty in the three or nine months ended September 30, 2023.

Additionally, there were

no loans that had a payment default during the quarter that were modified in the previous 12 months.

Prior to adoption

2 unchanged sentences

to be troubled debt restructurings are individually evaluated for impairment as part of the allowance for loan losses calculation.

loans modified during the three and six months ended June 30, 2022 were considered to be troubled debt restructurings.

For the three and

six months ended June 30, 2022, there were no loans modified as a troubled debt restructuring that subsequently defaulted within twelve

months of the loan modification.

Generally, a restructured troubled debt is considered to be in default once it becomes 90 days or more

past due following a modification.

loans modified during the three and nine months ended September 30, 2022 were considered to be troubled debt restructurings.

During the three

months ended September 30, 2022, one loan modified as a troubled debt restructuring totaling $6,000 defaulted within twelve months of

the loan modification.

During the nine months ended September 30, 2022, two loans modified as troubled debt restructurings totaling $73,000

defaulted within twelve months of the loan modification.

Generally, a restructured troubled debt is considered to be in default once

it becomes 90 days or more past due following a modification.

NOTE 9 CREDIT

17 unchanged sentences

ASC Topic 326.

For the three and six months ended June 30, 2023, the Company recorded a reversal to the provision for credit losses for

unfunded commitments of $43,000, and $66,000, respectively.

As of June 30, 2023, the liability for credit losses on off-balance-sheet

For the three and nine months ended September 30, 2023, the Company recorded a reversal to the provision for credit losses

for unfunded commitments of $6,000, and $73,000, respectively.

As of September 30, 2023, the liability for credit losses on off-balance-sheet

credit exposures included in other liabilities was $275,000.

2 unchanged sentences

The following table

summarizes the activity in other real estate owned for the six months ended June 30, 2023, and the year ended December 31, 2022:

summarizes the activity in other real estate owned for the nine months ended September 30, 2023, and the year ended December 31, 2022:

Schedule of other real estate owned

are in thousands)

in thousands)

beginning of period

Transfers from premises

and equipment

Proceeds from sales

Loans made to finance

Adjustment of carrying

from premises and equipment

from insurance claims

made to finance sales

of carrying value

gains from sales

end of period

As of June 30, 2023, four loans totaling

As of September 30, 2023, two loans totaling

$109,145 were in the process of foreclosure.

43 unchanged sentences

is based upon quoted prices.

The Company’s available-for-sale securities, totaling $ 93.1 million and $ 96.1 million as of June 30,

The Company’s available-for-sale securities, totaling $ 87.5 million and $ 96.1 million as of September

30, 2023 and December 31, 2022, respectively, are the only assets whose fair values are measured on a recurring basis using Level 2 inputs

26 unchanged sentences

Assets and liabilities

measured at fair value are as follows as of June 30, 2023:

measured at fair value are as follows as of September 30, 2023:

Schedule of summary of assets and liabilities measured at fair value

are in thousands)

in thousands)

market price in active markets

1 unchanged sentence

unobservable inputs

(On a recurring basis)

recurring basis)

Available-for-sale investments

1 unchanged sentence

Mortgage-backed

(On a non-recurring basis)

non-recurring basis)

Other real estate owned

Collateral dependent loans

dependent loans with ACL:

Assets and liabilities

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

are in thousands)

in thousands)

market price in active markets

1 unchanged sentence

unobservable inputs

(On a recurring basis)

recurring basis)

Available-for-sale investments

1 unchanged sentence

Mortgage-backed

(On a non-recurring basis)

non-recurring basis)

Other real estate owned

For Level 3 assets

measured at fair value on a recurring or non-recurring basis as of June 30, 2023 and December 31, 2022, the significant unobservable

measured at fair value on a recurring or non-recurring basis as of September 30, 2023 and December 31, 2022, the significant unobservable

inputs used in the fair value measurements were as follows:

Schedule of significant unobservable inputs In level 3 assets

(Dollars are in thousands)

Fair Value at June 30,

(Dollars in thousands)

Fair Value at

September 30, 2023

Fair Value at

Valuation Technique

Significant Unobservable Inputs

General Range of Significant Unobservable Input Values

Significant Unobservable

Range of Significant Unobservable Input Values

Collateral dependent loans with ACL:

Appraised Value

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

Commercial real estate

Other Real Estate Owned

Appraised Value/Comparable Sales/Other Estimates from Independent Sources

Discounts to reflect current market conditions and estimated costs to sell

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

Real Estate Owned

Value/Comparable Sales/Other Estimates from Independent Sources

to reflect current market conditions and estimated costs to sell

of Financial Instruments

15 unchanged sentences

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

basis as of June 30, 2023, and December 31, 2022, are as follows:

basis as of September 30, 2023, and December 31, 2022, are as follows:

Schedule of estimated fair value of financial instruments

Fair Value Measurements

are in thousands)

Value Measurements

in thousands)

market price in active markets

1 unchanged sentence

unobservable inputs

Financial instruments

– liabilities

Financial instruments

– liabilities

instruments – assets

instruments – liabilities

instruments – assets

instruments – liabilities

Fair value estimates

15 unchanged sentences

The carrying values

of cash and due from banks, federal funds sold, interest-bearing deposits, deposits with no stated maturities, trust preferred securities

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

of cash and due from banks, federal funds sold, deposits with no stated maturities, and accrued interest approximates fair value and

are excluded from the table above.

In accordance with

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

as of June 30, 2023 and December 31, 2022, represent an approximation of exit price;

as of September 30, 2023 and December 31, 2022, represent an approximation of exit price;

however, an actual exit price may differ.

NOTE 12 LEASING

of June 30, 2023, the Bank leases four branch offices and sublets a lot adjacent to another branch office.

The lease agreements have

maturity dates ranging from May 2032 to December 2041.

It is assumed that there are currently no circumstances in which the leases would

be terminated prior to expiration.

The weighted average remaining life of the lease terms as of June 30, 2023 was 9.11 years.

of September 30, 2023, the Bank leases four branch offices and sublets a lot adjacent to another branch office.

The lease agreements

have maturity dates ranging from May 2032 to December 2041.

It is assumed that there are currently no circumstances in which the leases

would be terminated prior to expiration.

The weighted average remaining life of the lease terms as of September 30, 2023 was 8.85 years.

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

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

average discount rate for the leases as of June 30, 2023 was 3.29 % .

For the six months

ended June 30, 2023 and 2022, operating lease expenses were $ 224,000 and $ 228,000 , respectively.

average discount rate for the leases as of September 30, 2023 was 3.29 % .

For the three and

nine months ended September 30, 2023, operating lease expenses were $ 117,000 and $ 341,000 , respectively.

For the three and nine months

ended September 30, 2022, operating lease expenses were $ 115,000 and $ 342,000 respectively.

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

As of June 30, 2023,

As of September 30,

2023, future minimum rental commitments under the non-cancellable operating leases discussed above are as follows (dollars are in thousands):

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13 BORROWED FUNDS

in Borrowed Funds is an FHLB Advance of $ 10.0 million as of June 30, 2023, bearing an interest rate of 3.51 % maturing on May 4, 2028 .

No FHLB Advances were outstanding at December 31, 2022.

For additional information on borrowed funds, refer to Note 18 in Item 8 of Form

10-K for the year ended December 31, 2022.

in Borrowed Funds is one FHLB Advance of $ 10.0 million as of September 30, 2023 bearing an interest rate of 3.51 % maturing on May 4,

No FHLB advances were outstanding as of December 31, 2022.

For additional information on borrowed funds, refer to Note 18 in Item

8 of Form 10-K for the year ended December 31, 2022.

14 REVENUE FROM CONTRACTS WITH CUSTOMERS

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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.

The following table presents noninterest income by revenue stream for the three and six months ended June 30, 2023 and 2022:

The following table presents noninterest income by revenue stream for the three and nine months ended September 30, 2023 and 2022:

Schedule of revenue from contracts with customers

the three months ended

the six months ended

are in thousands)

the nine months ended

in thousands)

charges and fees

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Schedule of noninterest expenses

For the three months ended June 30,

For the six months ended June 30,

(Dollars are in thousands)

ATM network expense

Legal, accounting and professional fees

Consulting fees

Loan related expenses

Printing and supplies

FDIC insurance premiums

Other real estate owned expenses, net

the three months ended September 30,

the nine months ended September 30,

in thousands)

operating expenses

network expense

accounting, and professional

related expenses

insurance premiums

real estate owned expenses, net

other operating expenses

Total other operating expenses

NOTE 16 RECENT

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a summary of recent authoritative announcements:

In June 2016, per

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

Measurement of Credit Losses on Financial Instruments,’

the FASB issued guidance to change the accounting for credit losses and modify the impairment model for certain debt securities.

Company adopted this guidance on January 1, 2023.

The Company recognized an adjustment to retained earnings in the amount of $212,000,

and recorded an adjustment to the allowance for credit losses in loans and unfunded commitments on loans in the amount of $80,000 and

$348,000, respectively.

In June 2022, the

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does not expect the adoption of ASU 2022-03 to have a material impact on its consolidated financial statements.

In March 2022, the

Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2022-02, “Financial Instruments-Credit

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

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

The amendments eliminate

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

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

In addition, the amendments require a

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

origination in the vintage disclosures.

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

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

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

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

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

For entities that

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

Early adoption

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

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

enhancements separately from the amendments related to vintage disclosures.

The Company adopted this guidance on January 1, 2023 and

it did not have a material impact on the consolidated financial statements.

In December 2022,

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The ASU is effective for all entities upon issuance.

The Company is assessing ASU 2022-06 and its impact on the Company’s

transition away from LIBOR for its loan and other financial instruments that have not already been transitioned to an alternative reference

The Company completed its transition away from LIBOR for its loan and other

financial instruments that have not already been transitioned to an alternative reference rate.

This transition had no material impact

on earnings or capital.

In July 2023, the

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financial statements.

In October 2023,

the Financial Accounting Standards Board (FASB) issued ASU 2023-06, “Disclosure Improvements:

Codification Amendments in Response

to the SEC’s Disclosure Update and Simplification Initiative”.

This ASU incorporates certain U.S.

Securities and Exchange

Commission (SEC) disclosure requirements into the FASB Accounting Standards Codification.

The amendments in the ASU are expected to clarify

or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities

subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the

requirements in the Codification with the SEC’s regulations.

For entities subject to the SEC’s existing disclosure requirements

and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of

issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date

on which the SEC removes that related disclosure from its rules.

For all other entities, the amendments will be effective two years later.

However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from

the Codification and not become effective for any entity.

The Company does not expect the adoption of ASU 2023-06 to have a material

impact on its consolidated financial statements.

Other accounting

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

What changed 10-Q

Item 1. Financial Statements