What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-04-01 compared with 2023-03-31 · 531 added, 465 removed, 139 unchanged (88% of the section changed)

Peoples Bankshares, Inc.

(New Peoples, the Company, we, us or our) is a Virginia financial holding company headquartered in Honaker,

Our business is conducted primarily through New Peoples Bank, Inc., a Virginia banking corporation (the “Bank”).

The Bank has a division doing business as New Peoples Financial Services which offers investment services through its broker-dealer relationship

with Infinex Investments, Inc.

New Peoples Bankshares,

(New Peoples, the Company, we, us or our) is a Virginia financial holding company headquartered in Honaker, Virginia.

is conducted primarily through New Peoples Bank, Inc., a Virginia banking corporation (the “Bank”).

The Bank has a division

doing business as New Peoples Financial Services which offers investment services through its broker-dealer relationship with Osaic Institutions,

NPB Insurance Services, Inc.

(“NPB Insurance”) is a subsidiary of the Bank and generates revenue

through the referral of insurance services.

Bank, headquartered in Honaker, Virginia, offers a range of banking and related financial services focused primarily on serving individuals,

small to medium size businesses, and the professional community.

We strive to serve the banking needs of our customers while developing

personal, hometown relationships with them.

Our board of directors believes that marketing customized banking services enables us to

establish a niche in the financial services marketplace where we do business.

provide professionals and small to medium size businesses in our market area with responsive and technologically enabled banking services.

These services include loans that are priced on a deposit relationship basis, easy access to our decision makers, and quick and innovative

action necessary to meet a customer’s banking needs.

Our capitalization and lending limit enable us to satisfy the credit needs

of a large portion of the targeted market segment.

When a customer needs a loan that exceeds our lending limit, we try to find other

financial institutions to participate in the loan with us.

Bank was incorporated under the laws of the Commonwealth of Virginia on December 9, 1997 and began operations on October 28, 1998.

September 27, 2001, the shareholders of the Bank approved a plan of reorganization under which they exchanged their shares of Bank common

stock for shares of New Peoples common stock.

On November 30, 2001, the reorganization was completed and the Bank became New Peoples’

wholly-owned subsidiary.

June 2003, New Peoples formed two new wholly-owned subsidiaries, NPB Financial Services, Inc.

(“NPB Insurance”) is a subsidiary of the Bank and generates revenue through the referral

of insurance services.

The Bank, headquartered

in Honaker, Virginia, offers a range of banking and related financial services focused primarily on serving individuals, small to medium

size businesses, and the professional community.

We strive to serve the banking needs of our customers while developing personal, hometown

relationships with them.

Our Board of Directors believes that marketing customized banking services enables us to establish a niche in

the financial services marketplace where we do business.

We provide professionals

and small to medium size businesses in our market area with responsive and technologically enabled banking services.

These services include

loans that are priced on a deposit relationship basis, easy access to our decision makers, and quick and innovative action necessary

to meet a customer’s banking needs.

Our capitalization and lending limit enable us to satisfy the credit needs of a large portion

of the targeted market segment.

When a customer needs a loan that exceeds our lending limit, we try to find other financial institutions

to participate in the loan with us.

The Bank was incorporated

under the laws of the Commonwealth of Virginia on December 9, 1997 and began operations on October 28, 1998.

On September 27, 2001, the

shareholders of the Bank approved a plan of reorganization under which they exchanged their shares of Bank common stock for shares of

New Peoples common stock.

On November 30, 2001, the reorganization was completed and the Bank became New Peoples’ wholly-owned

In June 2003, New

Peoples formed two new wholly-owned subsidiaries, NPB Financial Services, Inc.

(renamed NPB Insurance Services, Inc.

June 2012) and NPB Web Services, Inc., an inactive web design and hosting company.

Bank, through its division New Peoples Financial Services, offers fixed and variable annuities, fee-based asset management and other

investment products through a broker/dealer relationship with Infinex Investments, Inc.

in June 2012) and

NPB Web Services, Inc., an inactive web design and hosting company.

The Bank, through

its division New Peoples Financial Services, offers fixed and variable annuities, fee-based asset management and other investment products

through a broker/dealer relationship with Osaic Institutions, Inc.

July 2004, NPB Capital Trust I was formed by New Peoples to issue $11.3 million in trust preferred securities.

September 2006, NPB Capital Trust 2 was formed by New Peoples to issue $5.2 million in trust preferred securities.

June 7, 2017, NPB Insurance Services, Inc.

purchased a 39% membership interest in Lonesome Pine Title Agency, LLC, which provides title

In September 2006,

NPB Capital Trust 2 was formed by New Peoples to issue $5.2 million in trust preferred securities.

On June 7, 2017,

NPB Insurance Services, Inc.

purchased a 39% membership interest in Lonesome Pine Title Agency, LLC, which provides title insurance.

Another member of the agency is a related party to the Company.

have 17 full-service branches located in three states:

Virginia - Abingdon, Bluefield, Bristol (2), Castlewood, Clintwood, Gate City,

Grundy, Haysi, Honaker, Lebanon, Pounding Mill, Tazewell and Wise;

As of March 2024,

we have 17 full-service branches located in four states:

Virginia - Abingdon, Bluefield, Bristol, Castlewood, Clintwood, Gate City, Grundy,

Haysi, Honaker, Lebanon, Pounding Mill, Tazewell and Wise;

West Virginia - Princeton (2);

and Tennessee – Kingsport.

Additionally,

we have a loan production office in Boone, North Carolina.

primary market area consists of southwestern Virginia, southern West Virginia, northeastern Tennessee, and western North Carolina.

Specifically,

we operate in the southwestern Virginia counties of Russell, Scott, Washington, Tazewell, Buchanan, Dickenson, and Wise;

North Carolina – Boone, and Tennessee

Our Market Areas

Our primary market

area consists of southwestern Virginia, southern West Virginia, northeastern Tennessee, and western North Carolina.

Specifically, we

operate in the southwestern Virginia counties of Russell, Scott, Washington, Tazewell, Buchanan, Dickenson, and Wise;

in the southern

West Virginia county of Mercer and the northeastern Tennessee county of Sullivan (collectively, the “Tri-State Area”).

North Carolina, our loan production office is in the county of Watauga.

The close proximity and mobile nature of individuals and businesses

in adjoining counties and nearby cities in Virginia, West Virginia, Tennessee and North Carolina place these markets within our Bank’s

targeted trade area, as well.

Accessibility

to Interstates I-77, I-81, I-26, I-64, I40 and I-75, as well as major state and U.S.

North Carolina, our loan production office in the county of Watauga became a full-service branch in March 2024.

The close proximity and

mobile nature of individuals and businesses in adjoining counties and nearby cities in Virginia, West Virginia, Tennessee and North Carolina

place these markets within our Bank’s targeted trade area, as well.

Accessibility to

Interstates I-77, I-81, I-26, I-64, I40 and I-75, as well as major state and U.S.

highways including US 19, US 23, US 58, US 460 and

6 unchanged sentences

Commercial rail service providers include CSX Transportation and Norfolk Southern Railways.

Tri-State Area has a diversified economy supported by natural resources, which include coal, natural gas, limestone, and timber;

The Tri-State Area

has a diversified economy supported by natural resources, which include coal, natural gas, limestone, and timber;

manufacturing and services industries.

Predominantly, the market is comprised of locally owned and

operated small businesses.

Considerable investments in high-technology communications, high-speed broadband network and infrastructure

have been made which has opened the area to large technology companies and future business development potential for new and existing

Businesses are taking advantage of the low cost of doing business, training opportunities, available workforce and an exceptional

quality of life experience for employers and employees alike.

internet banking site can be accessed at www.newpeoples.bank .

The site includes a customer service area that contains branch and

Interactive Teller Machine (ITM) locations, product descriptions and current interest rates offered on deposit accounts.

Customers with

internet access can apply for loans and credit cards, open deposit accounts online, access account balances, make transfers between accounts,

enter stop payment orders, order checks, and use an optional bill paying service.

file annual, quarterly, and current reports, proxy statements and other information with the Securities and Exchange Commission (the

The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers,

like us, that file electronically with the SEC.

Our SEC filings are filed electronically and are available to the public online at the

SEC’s web site at www.sec.gov.

We also provide a link to our filings on the SEC website, free of charge, through our internet

website https://newpeoples.bank/Bankshares-About-Us under "Investor Relations." Information on the websites of the Company

and the Bank is not a part of, and is not incorporated into, this report or any other filings the Company makes with the SEC.

We accept deposits, make consumer and commercial loans, issue drafts, and provide other services customarily offered by a commercial

bank, such as business and personal checking and savings accounts, walk-up tellers, drive-in windows, and 24-hour ITMs.

The Bank is a

member of the Federal Reserve System and its deposits are insured under the Federal Deposit Insurance Act (the FDIA) to the maximum limit.

Generally, we offer a full range of short-, medium- and longer-term commercial, 1-4 family residential mortgages and personal loans.

Commercial loans include both secured and unsecured loans for working capital (including inventory and receivables), business expansion

(including acquisition of real estate and improvements) and purchase of equipment and machinery.

Consumer loans may include secured and

unsecured loans for financing automobiles, home improvements, education, personal investments and other purposes.

lending activities are subject to a variety of lending limits imposed by state law.

While differing limits may apply in certain circumstances

based on the type of loan or the nature of the borrower (including the borrower’s relationship to the Bank), the Bank generally

is subject to a loans-to-one-borrower limit of an amount equal to 15% of its capital and surplus plus the allowance for loan losses.

The Bank voluntarily may choose to impose a policy limit on loans to a single borrower that is less than the legal lending limit.

obtain short-, medium- and longer-term commercial and personal loans through direct solicitation of business owners and continued business

from existing customers.

Predominantly, the market is comprised of locally owned and operated small

Considerable investments in high-technology communications, high-speed broadband network and infrastructure have been made

which has opened the area to large technology companies and future business development potential for new and existing businesses.

are taking advantage of the low cost of doing business, training opportunities, available workforce and an exceptional quality of life

experience for employers and employees alike.

Internet Site

Our internet banking

site can be accessed at www.newpeoples.bank .

The site includes a customer service area

that contains branch and Automated Teller Machine (“ATM”) locations, product descriptions and current interest rates offered

on deposit accounts.

Customers with internet access can apply for credit cards, open deposit accounts online, access account balances,

make transfers between accounts, enter stop payment orders, order checks, and use an optional bill paying service.

Available Information

We file annual, quarterly,

and current reports, proxy statements and other information with the Securities and Exchange Commission (the SEC).

The SEC maintains

an internet site that contains reports, proxy and information statements and other information regarding issuers, like us, that file

electronically with the SEC.

Our SEC filings are filed electronically and are available to the public online at the SEC’s web site

at www.sec.gov.

We also provide a link to our filings on the SEC website, free of charge,

through our internet website https://newpeoples.bank/Bankshares-About-Us under "Investor Relations." Information on the websites

of the Company and the Bank is not a part of, and is not incorporated into, this report or any other filings the Company makes with the

accept deposits, make consumer and commercial loans, issue drafts, and provide other services customarily offered by a commercial bank,

such as business and personal checking and savings accounts, walk-up tellers, drive-in windows, and 24-hour ATMs.

The Bank is a member

of the Federal Reserve System and its deposits are insured under the Federal Deposit Insurance Act (the FDIA) to the maximum limit.

we offer a full range of short-, medium- and longer-term commercial, 1-4 family residential mortgages and personal loans.

loans include both secured and unsecured loans for working capital (including inventory and receivables), business expansion (including

acquisition of real estate and improvements) and purchase of equipment and machinery.

Consumer loans may include secured and unsecured

loans for financing automobiles, home improvements, education, personal investments and other purposes.

Our lending activities

are subject to a variety of lending limits imposed by state law.

While differing limits may apply in certain circumstances based on the

type of loan or the nature of the borrower (including the borrower’s relationship to the Bank), the Bank generally is subject to

a loans-to-one-borrower limit of an amount equal to 15% of its capital and surplus plus the allowance for credit losses.

The Bank voluntarily

may choose to impose a policy limit on loans to a single borrower that is less than the legal lending limit.

We obtain short-,

medium- and longer-term commercial and personal loans through direct solicitation of business owners and continued business from existing

Completed loan applications are reviewed by our loan officers.

As part of the application process, information

is obtained concerning the income, financial condition, employment and credit history of the applicant.

If commercial real estate is

involved, information is also obtained concerning cash flow after debt service.

Loan quality is analyzed based on the Bank’s experience

and its credit underwriting guidelines.

As part of the application process, information is obtained

concerning the income, financial condition, employment and credit history of the applicant.

If commercial real estate is involved, information

is also obtained concerning cash flow after debt service.

Loan quality is analyzed based on the Bank’s experience and its credit

underwriting guidelines.

Commercial Loans .

We make commercial loans to qualified businesses in our market area.

Our commercial lending consists primarily of commercial

and industrial loans to finance accounts receivable, inventory, property, plant and equipment.

Commercial business loans generally have

a higher degree of risk than residential mortgage loans, but have commensurately higher yields.

Residential mortgage loans are generally

made on the basis of the borrower’s ability to make repayment from employment and other income and are secured by real estate whose

value tends to be easily ascertainable.

In contrast, commercial business loans typically are made on the basis of the borrower’s

ability to make repayment from cash flow from its business and are secured by business assets, such as commercial real estate, accounts

receivable, equipment and inventory.

As a result, the availability of funds for the repayment of commercial business loans may be substantially

dependent on the success of the business itself.

the collateral for commercial business loans may depreciate over time and cannot be appraised with as much precision as residential real

To manage these risks, our underwriting guidelines generally require us to secure commercial loans with both the assets of the

borrowing business and other additional collateral and guarantees that may be available.

In addition, we actively monitor certain measures

of the borrower, including advance rate, cash flow, collateral value and other appropriate credit factors.

Mortgage Loans .

Our residential mortgage loans consist of residential first and second mortgage loans, residential construction loans,

home equity lines of credit and term loans secured by first and second mortgages on the residences of borrowers for home improvements,

education and other personal expenditures.

We make mortgage loans with a variety of terms, including fixed and floating or variable rates

and a variety of maturities.

our underwriting guidelines, residential mortgage loans are generally made on the basis of the borrower’s ability to make repayment

from employment and other income and are secured by real estate whose value tends to be easily ascertainable.

These loans are made consistent

with our appraisal policies and real estate lending policies, which detail maximum loan-to-value ratios and maturities.

Our commercial lending consists primarily of commercial and industrial

loans to finance accounts receivable, inventory, property, plant and equipment.

Commercial business loans generally have a higher degree

of risk than residential mortgage loans but have commensurately higher yields.

Residential mortgage loans are generally made on the basis

of the borrower’s ability to make repayment from employment and other income and are secured by real estate whose value tends to

be easily ascertainable.

In contrast, commercial business loans typically are made on the basis of the borrower’s ability to make

repayment from cash flow from its business and are secured by business assets, such as commercial real estate, accounts receivable, equipment

and inventory.

As a result, the availability of funds for the repayment of commercial business loans may be substantially dependent on

the success of the business itself.

Further, the collateral

for commercial business loans may depreciate over time and cannot be appraised with as much precision as residential real estate.

manage these risks, our underwriting guidelines generally require us to secure commercial loans with both the assets of the borrowing

business and other additional collateral and guarantees that may be available.

In addition, we actively monitor certain measures of the

borrower, including advance rate, cash flow, collateral value and other appropriate credit factors.

Residential Mortgage

Our residential mortgage loans consist of residential first and second mortgage loans, residential construction loans, home

equity lines of credit and term loans secured by first and second mortgages on the residences of borrowers for home improvements, education

and other personal expenditures.

We make mortgage loans with a variety of terms, including fixed and floating or variable rates and a

variety of maturities.

Under our underwriting

guidelines, residential mortgage loans are generally made on the basis of the borrower’s ability to make repayment from employment

and other income and are secured by real estate whose value tends to be easily ascertainable.

These loans are made consistent with our

appraisal policies and real estate lending policies, which detail maximum loan-to-value ratios and maturities.

Construction Loans .

Construction lending entails significant additional risks compared to residential mortgage lending.

Construction loans often

involve larger loan balances concentrated with single borrowers or groups of related borrowers.

Construction loans also involve additional

risks attributable to the fact that loan funds are advanced upon the security of property under construction, which is of uncertain value

prior to the completion of construction.

Thus, it is more difficult to evaluate the total loan funds required to complete a project and

related loan-to-value ratios accurately.

Construction loans often involve

larger loan balances concentrated with single borrowers or groups of related borrowers.

Construction loans also involve additional risks

attributable to the fact that loan funds are advanced upon the security of property under construction, which is of uncertain value prior

to the completion of construction.

Thus, it is more difficult to evaluate the total loan funds required to complete a project and related

loan-to-value ratios accurately.

To minimize the risks associated with construction lending, loan-to-value limitations for residential,

4 unchanged sentences

and multi-family properties.

Consumer Loans .

Our consumer loans consist primarily of installment loans to individuals for personal, family and household purposes.

specific types of consumer loans that we make include home improvement loans, debt consolidation loans and general consumer lending.

Consumer loans entail greater risk than residential mortgage loans, particularly in the case of consumer loans that are unsecured, such

as lines of credit, or secured by rapidly depreciating assets such as automobiles.

In such cases, any repossessed collateral for a defaulted

consumer loan may not provide an adequate source of repayment of the outstanding loan balance due to the greater likelihood of damage,

loss or depreciation.

The specific types

of consumer loans that we make include home improvement loans, debt consolidation loans and general consumer lending.

Consumer loans

entail greater risk than residential mortgage loans, particularly in the case of consumer loans that are unsecured, such as lines of

credit, or secured by rapidly depreciating assets such as automobiles.

In such cases, any repossessed collateral for a defaulted consumer

loan may not provide an adequate source of repayment of the outstanding loan balance due to the greater likelihood of damage, loss or

depreciation.

The remaining deficiency often does not warrant further substantial collection efforts against the borrower.

addition, consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to

be adversely affected by job loss, divorce, illness or personal bankruptcy.

Furthermore, the application of various federal and state

laws, including federal and state bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.

may also be able to assert against the Bank as an assignee any claims and defenses that it has against the seller of the underlying collateral.

underwriting policy for consumer loans seeks to limit risk and minimize losses, primarily through a careful analysis of the borrower’s

creditworthiness.

In evaluating consumer loans, we require our lending officers to review the borrower’s level and stability of

income, past credit history and the impact of these factors on the ability of the borrower to repay the loan in a timely manner.

we maintain an appropriate margin between the loan amount and collateral value.

consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be adversely

affected by job loss, divorce, illness or personal bankruptcy.

Furthermore, the application of various federal and state laws, including

federal and state bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.

A borrower may also be able

to assert against the Bank as an assignee any claims and defenses that it has against the seller of the underlying collateral.

Our underwriting

policy for consumer loans seeks to limit risk and minimize losses, primarily through a careful analysis of the borrower’s creditworthiness.

In evaluating consumer loans, we require our lending officers to review the borrower’s level and stability of income, past credit

history and the impact of these factors on the ability of the borrower to repay the loan in a timely manner.

In addition, we maintain

an appropriate margin between the loan amount and collateral value.

We offer a variety of deposit products for both individual and business customers.

These include demand deposit, interest-bearing

demand deposit, savings deposit, money market, health savings and individual retirement (IRA) deposit accounts.

In addition, we offer

certificates of deposit with terms ranging from 7 days to 60 months, including IRAs with terms ranging from 12 months to 60 months.

These include demand deposit, interest-bearing demand

deposit, savings deposit, money market, health savings and individual retirement (IRA) deposit accounts.

In addition, we offer certificates

of deposit with terms ranging from 7 days to 60 months, including IRAs with terms ranging from 12 months to 60 months.

Investment Services.

We offer a variety of investment services for both individual and business customers.

These services include fixed income

products, variable annuities, mutual funds, indexed certificates of deposit, individual retirement accounts, long term care insurance,

employee group benefit plans, college savings plans, financial planning, managed money accounts, and estate planning.

We offer these

services through our broker-dealer relationship with Infinex Investments, Inc.

Bank Services .

Other bank services include safe deposit boxes, cashier’s checks, certain cash management services, direct deposit

of payroll and social security checks and automatic drafts for various accounts.

We offer ITM and debit card services that can be used

by our customers throughout our service area and other regions.

These services include fixed income products,

variable annuities, mutual funds, indexed certificates of deposit, individual retirement accounts, long term care insurance, employee

group benefit plans, college savings plans, financial planning, managed money accounts, and estate planning.

We offer these services

through our broker-dealer relationship with Osaic Institutions, Inc.

Other Bank Services .

Other bank services include safe deposit boxes, cashier’s checks, certain cash management services, direct deposit of payroll and

social security checks and automatic drafts for various accounts.

We offer ATM and debit card services that can be used by our customers

throughout our service area and other regions.

We also offer consumer and commercial VISA credit card services.

banking services include debit cards, internet banking, telephone banking, mobile banking, remote deposit capture;

merchant transaction

processing and wire transfers.

do not presently anticipate obtaining trust powers, but we are able to provide similar services through our affiliation with Infinex

Investments, Inc.

Additionally, we have initiated programs of differentiator presentations focusing on such issues as financial literacy

and elder abuse.

We believe that these types of programs assist our local communities and highlight the skills of our financial service

financial services business is highly competitive.

We compete as a financial intermediary with other commercial banks, credit unions,

mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market mutual funds and other

financial institutions operating in the southwestern Virginia, southern West Virginia, eastern Tennessee, and western North Carolina

market areas and elsewhere, including online financial services providers.

Our market area is a highly competitive, highly branched banking

in the market area for loans to small businesses and professionals, the Bank’s target market, is intense, and pricing is important.

Many of our larger competitors have substantially greater resources and lending limits than we have.

They offer certain services, such

as extensive and established branch networks and trust services, that we do not provide or do not expect to provide in the near future.

Electronic banking services

include debit cards, internet banking, telephone banking, mobile banking, remote deposit capture, merchant transaction processing and

wire transfers.

We do not presently

anticipate obtaining trust powers, but we are able to provide similar services through our affiliation with Osaic Institutions, Inc.

Additionally, we offer programs of differentiator presentations focusing on such issues as financial literacy and elder abuse.

that these types of programs assist our local communities and highlight the skills of our financial service providers.

The financial services

business is highly competitive.

We compete as a financial intermediary with other commercial banks, credit unions, mortgage banking firms,

consumer finance companies, securities brokerage firms, insurance companies, money market mutual funds and other financial institutions

operating in the southwestern Virginia, southern West Virginia, eastern Tennessee, and western North Carolina market areas and elsewhere,

including online financial services providers.

Our market area is a highly competitive, highly branched banking market.

Competition in the

market area for loans to small businesses and professionals, the Bank’s target market, is intense, and pricing is important.

of our larger competitors have substantially greater resources and lending limits than we have.

They offer certain services, such as

extensive and established branch networks and trust services, that we do not provide or do not expect to provide in the near future.

Moreover, larger institutions operating in the market area have access to borrowed funds at lower costs than are available to us.

4 unchanged sentences

This decreased customer liquidity, combined with increased interest rates, has resulted in increased competition for

pricing is important, our principal method of countering the competition is service.

As a community banking organization, we strive to

serve the banking needs of our customers while developing personal, hometown relationships with them.

Additionally, we continue to add

and enhance digital banking services.

As a result, we provide a significant amount of service and a range of products through multiple

channels at reasonable fees.

to a market share report prepared by the Federal Deposit Insurance Corporation (the “FDIC”), as of June 30, 2022, the most

recent date for which market share information is available, the Bank’s deposits as a percentage of total deposits in its major

market areas were as follows:

of Bristol, VA

While pricing is

important, our principal method of countering the competition is service.

As a community banking organization, we strive to serve the

banking needs of our customers while developing personal, hometown relationships with them.

Additionally, we continue to add and enhance

digital banking services.

As a result, we provide a significant amount of service and a range of products through multiple channels at

reasonable fees.

According to a market share report prepared

by the Federal Deposit Insurance Corporation (the “FDIC”), as of June 30, 2023, the most recent date for which market share

information is available, the Bank’s deposits as a percentage of total deposits in its major market areas were as follows:

of Kingsport, TN

- In August 2022, we closed our branch operation in Smyth County, Virginia, and transferred those deposits to our office in Washington

County, Virginia

of December 31, 2022, we had 194 full-time equivalent employees.

None of our employees is covered by a collective bargaining agreement,

and we consider relations with employees to be excellent.

and Regulation

As a financial holding company, we are subject to regulation under the Bank Holding Company Act of 1956, as amended (BHCA), and the

examination and reporting requirements of the Federal Reserve.

We are also subject to the provisions of the Code of Virginia governing

bank holding companies.

As a state-chartered commercial bank, the Bank is subject to regulation, supervision and examination by the Virginia

State Corporation Commission’s Bureau of Financial Institutions (BFI).

As a member of the Federal Reserve System, the Bank is also

subject to regulation, supervision and examination by the Federal Reserve.

Other federal and state laws, including various consumer protection

and compliance laws, also govern the activities of the Bank.

following description summarizes the most significant federal and state laws applicable to New Peoples and its subsidiaries.

To the extent

that statutory or regulatory provisions are described, the description is qualified in its entirety by reference to that particular statutory

or regulatory provision.

Bank Holding Company Act.

As of December 31,

2023, we had 183 full-time equivalent employees.

None of our employees are covered by a collective bargaining agreement, and we consider

relations with employees to be excellent.

Supervision and Regulation

a financial holding company, we are subject to regulation under the Bank Holding Company Act of 1956, as amended (“BHCA”),

and the examination and reporting requirements of the Federal Reserve.

We are also subject to the provisions of the Code of Virginia

governing bank holding companies.

As a state-chartered commercial bank, the Bank is subject to regulation, supervision and examination

by the Virginia State Corporation Commission’s Bureau of Financial Institutions (“BFI”).

As a member of the Federal

Reserve System, the Bank is also subject to regulation, supervision and examination by the Federal Reserve.

Other federal and state laws,

including various consumer protection and compliance laws, also govern the activities of the Bank.

The following description

summarizes the most significant federal and state laws applicable to New Peoples and its subsidiaries.

To the extent that statutory or

regulatory provisions are described, the description is qualified in its entirety by reference to that particular statutory or regulatory

The Bank Holding

Under the BHCA, the Federal Reserve examines New Peoples periodically.

New Peoples is also required to

file periodic reports and provide any additional information that the Federal Reserve may require.

Activities at the bank holding company

level are generally limited to:

managing or controlling banks;

services to or performing services for its subsidiaries;

in other activities that the Federal Reserve has determined by

or order to be so closely related to banking as to be a proper

to these activities.

the activities we can engage in are restricted as a matter of law.

some limited exceptions, the BHCA requires every bank holding company to obtain the prior approval of the Federal Reserve before:

substantially all the assets of any bank;

direct or indirect ownership or control of any voting shares of any bank if after such acquisition it would own or control more than

5% of the voting shares of such bank (unless it already owns or controls the majority of such shares);

or consolidating with another bank holding company.

a result, our ability to engage in certain strategic activities is conditioned on regulatory approval.

addition, and subject to some exceptions, the BHCA and the Change in Bank Control Act require Federal Reserve approval prior to any person

or company acquiring “control” of a bank holding company as defined in the statutes and regulations.

These requirements make

it more difficult for control of our company to change or for us to acquire substantial investments.

Holding Company.

New Peoples is also required to file periodic

reports and provide any additional information that the Federal Reserve may require.

Activities at the bank holding company level are

generally limited to:

banking, managing or controlling banks;

engaging in other activities that the Federal Reserve

has determined by regulation or order to be so closely related to banking as to be a proper incident to these activities.

furnishing services to or performing services for its

subsidiaries;

Thus, the activities

we can engage in are restricted as a matter of law.

With some limited

exceptions, the BHCA requires every bank holding company to obtain the prior approval of the Federal Reserve before:

acquiring substantially all the assets of any bank;

acquiring direct or indirect ownership or control

of any voting shares of any bank if after such acquisition it would own or control more than 5% of the voting shares of

such bank (unless it already owns or controls the majority of such shares);

merging or consolidating with another bank holding company.

As a result, our

ability to engage in certain strategic activities is conditioned on regulatory approval.

In addition, and

subject to some exceptions, the BHCA and the Change in Bank Control Act require Federal Reserve approval prior to any person or company

acquiring “control” of a bank holding company as defined in the statutes and regulations.

These requirements make it more

difficult for control of our company to change or for us to acquire substantial investments.

Financial Holding

As of March 4, 2016, the Company elected to become qualified as a financial holding company (FHC).

5 unchanged sentences

give prior notice of such activities but must notify the Federal Reserve within 30 days after an event.

BHCA provides a long list of “financial” activities that may be engaged in by FHCs such as underwriting, brokering or selling

The BHCA provides

a long list of “financial” activities that may be engaged in by FHCs such as underwriting, brokering or selling insurance;

providing financial or investment advice or underwriting, dealing in or making a market in securities.

are other potential “financial” activities in which the Federal Reserve is permitted to designate as permitted financial

or incidental to financial activities.

do not currently undertake activities specifically permitted to us as an FHC that are not otherwise permissible for bank holding companies

not qualified as FHCs.

of Financial Institutions.

As a bank holding company registered with BFI, we must provide the BFI with information concerning our

financial condition, operations and management, among other reports required by the BFI.

New Peoples is also examined by the BFI in addition

to its Federal Reserve examinations.

Similar to the BHCA, the Code of Virginia requires that the BFI approve the acquisition of direct

or indirect ownership or control of more than 5% of the voting shares of any Virginia bank or bank holding company like us.

of Dividends.

New Peoples is a separate legal entity that derives the majority of its revenues from dividends paid to it by its

subsidiaries.

There are other potential

“financial” activities in which the Federal Reserve is permitted to designate as permitted financial or incidental to financial

We do not currently

undertake activities specifically permitted to us as an FHC that are not otherwise permissible for bank holding companies not qualified

Bureau of Financial

Institutions.

As a bank holding company registered with BFI, we must provide the BFI with information concerning our financial condition,

operations and management, among other reports required by the BFI.

New Peoples is also examined by the BFI in addition to its Federal

Reserve examinations.

Similar to the BHCA, the Code of Virginia requires that the BFI approve the acquisition of direct or indirect ownership

or control of more than 5% of the voting shares of any Virginia bank or bank holding company like us.

Payment of Dividends.

New Peoples is a separate legal entity that derives the majority of its revenues from the earnings of, and dividends paid to it

by, its subsidiaries.

The Bank is subject to laws and regulations that limit the amount of dividends it can pay.

In addition, both New Peoples

and the Bank are subject to various regulatory restrictions relating to the payment of dividends, including requirements to maintain

In addition, both New

Peoples and the Bank are subject to various regulatory restrictions relating to the payment of dividends, including requirements to maintain

capital at or above regulatory minimums.

7 unchanged sentences

to an inadequate level would be an unsound and unsafe banking practice.

The federal banking regulators have issued substantially similar capital requirements applicable to all banks and bank

holding companies.

In addition, those regulators may from time to time require that a banking organization maintain capital above the

minimum levels because of its financial condition or actual or anticipated growth.

Company meets the eligibility criteria to be considered a small bank holding company in accordance with the Federal Reserve’s Small

Bank Holding Company Policy Statement issued in February, 2015 and does not report consolidated regulatory capital.

With respect to the

Bank, the “prompt corrective action” regulations pursuant to Section 38 of the FDIA are set forth in the following table:

Capital Adequacy.

The federal banking regulators have issued substantially similar capital requirements applicable to all banks and bank holding companies.

In addition, those regulators may from time to time require that a banking organization maintain capital above the minimum levels because

of its financial condition or actual or anticipated growth.

The Company meets

the eligibility criteria to be considered a small bank holding company in accordance with the Federal Reserve’s Small Bank Holding

Company Policy Statement issued in February 2015 and does not report consolidated regulatory capital.

With respect to the Bank, the “prompt

corrective action” regulations pursuant to Section 38 of the FDIA are set forth in the following table:

Undercapitalized

3 unchanged sentences

equity to total assets ≤ 2.00%

FDIA requires the federal banking regulators to take “prompt corrective action” if a depository institution does not meet

minimum capital requirements as set forth above.

Generally, a receiver or conservator for a bank that is “critically undercapitalized”

must be appointed within specific time frames.

The regulations also provide that a capital restoration plan must be filed within 45 days

of the date a bank is deemed to have received notice that it is “undercapitalized,” “significantly undercapitalized”

The FDIA requires

the federal banking regulators to take “prompt corrective action” if a depository institution does not meet minimum capital

requirements as set forth above.

Generally, a receiver or conservator for a bank that is “critically undercapitalized” must

be appointed within specific time frames.

The regulations also provide that a capital restoration plan must be filed within 45 days of

the date a bank is deemed to have received notice that it is “undercapitalized,” “significantly undercapitalized”

or “critically undercapitalized.” Any holding company for a bank required to submit a capital restoration plan must guarantee

5 unchanged sentences

undercapitalized institutions include a prohibition on capital distributions, growth limits and restrictions on activities.

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

Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act).

The final rules established minimum capital ratios plus

a “capital conservation buffer” designed to absorb losses during periods of economic stress.

The final provisions for banks

with $250 billion or less in total assets, such as the Bank, are set forth in the following table:

The Bank is also

subject to the rules implementing the Basel III capital framework and certain related provisions of the Dodd-Frank Wall Street Reform

and Consumer Protection Act of 2010 (the Dodd-Frank Act).

The final rules established minimum capital ratios plus a “capital conservation

buffer” designed to absorb losses during periods of

economic stress.

The final provisions for banks with $250.0 billion or less in total assets, such as the Bank, are set forth in the following table:

Leverage Ratio

9 unchanged sentences

bonus payments to executive officers.

final rules include comprehensive guidance with respect to the measurement of risk-weighted assets.

For residential mortgages,

Basel III retains the risk-weights contained in the prior capital rules, which assign a risk-weight of 50% to most first-lien exposures

and 100% to other residential mortgage exposures.

The final rule increased the risk-weights associated with certain on-balance

sheet assets, such as high volatility commercial real estate loans, and loans that are more than 90 days past due or in nonaccrual status.

Capital requirements also increased for certain off-balance sheet exposures including, for example, loan commitments with an original

maturity of one year or less.

the final rules, certain banking organizations, including the Company and the Bank, were permitted to make a one-time election to continue

the prior treatment of excluding from regulatory capital most accumulated other comprehensive income (AOCI) components, including amounts

relating to unrealized gains and losses on available-for-sale debt securities and amounts attributable to defined benefit post-retirement

Institutions that elected to exclude most AOCI components from regulatory capital under Basel III will be able to avoid

volatility that would otherwise be caused by things such as the impact of fluctuations in interest rates on the fair value of available-for-sale

debt securities.

The final rules include

comprehensive guidance with respect to the measurement of risk-weighted assets.

For residential mortgages, Basel III retains the

risk-weights contained in the prior capital rules, which assign a risk-weight of 50% to most first-lien exposures and 100% to other residential

mortgage exposures.

The final rule increased the risk-weights associated with certain on-balance sheet assets, such as high volatility

commercial real estate loans, and loans that are more than 90 days past due or in nonaccrual status.

Capital requirements also increased

for certain off-balance sheet exposures including, for example, loan commitments with an original maturity of one year or less.

Under the final rules,

certain banking organizations, including the Company and the Bank, were permitted to make a one-time election to continue the prior treatment

of excluding from regulatory capital most accumulated other comprehensive income (“AOCI”) components, including amounts relating

to unrealized gains and losses on available-for-sale debt securities and amounts attributable to defined benefit post-retirement plans.

Institutions that elected to exclude most AOCI components from regulatory capital under Basel III will be able to avoid volatility that

would otherwise be caused by things such as the impact of fluctuations in interest rates on the fair value of available-for-sale debt

The Company and the Bank elected to exclude AOCI components from regulatory capital under Basel III.

to meet capital guidelines could subject a bank to a variety of enforcement remedies, including issuance of a capital directive, the

termination of deposit insurance by the FDIC, a prohibition on taking brokered deposits and certain other restrictions on its business.

As described below, the FDIC can impose substantial additional restrictions upon FDIC-insured depository institutions that fail to meet

applicable capital requirements as set forth above.

September 17, 2019, the federal banking regulators jointly issued a final rule required by the Economic Growth, Regulatory Reform and

Consumer Protection Act (EGRRCPA) that permits qualifying banks and bank holding companies that have less than $10 billion in consolidated

Failure to meet capital

guidelines could subject a bank to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit

insurance by the FDIC, a prohibition on taking brokered deposits and certain other restrictions on its business.

As described below,

the FDIC can impose substantial additional restrictions upon FDIC-insured depository institutions that fail to meet applicable capital

requirements as set forth above.

On September 17,

2019, the federal banking regulators jointly issued a final rule required by the Economic Growth, Regulatory Reform and Consumer Protection

Act (“EGRRCPA”) that permits qualifying banks and bank holding companies that have less than $10.0 billion in consolidated

assets, such as New Peoples and the Bank, to elect to be subject to a 9.00% leverage ratio that would be applied using less complex leverage

calculations (commonly referred to as the community bank leverage ratio or “CBLR”).

Under the rule, which became effective on January 1,

2020, banks and bank holding companies that opt into the CBLR framework and maintain a CBLR of greater than 9% are not subject to other

risk-based and leverage capital requirements under the Basel III rules and would be deemed to have met the well capitalized ratio requirements

under the “prompt corrective action” framework.

further detail on capital and capital ratios, see discussion contained in Item 7, “Management’s Discussion and Analysis of

Financial Condition and Results of Operations,” sections “Capital Resources” and “Liquidity,” and in Item

8, “Financial Statements and Supplementary Data,” “Consolidated Financial Statements and Notes,” Note 21, “Capital.”

Safety and Soundness Regulations .

There are a number of obligations and restrictions imposed on banks and financial or bank holding

companies and their bank subsidiaries by federal law and regulatory policy that are designed to reduce potential loss exposure to the

depositors of such depository institutions and to the FDIC insurance funds in the event that the depository institution is insolvent

or is in danger of becoming insolvent.

For example, the Federal Reserve requires a bank or financial or bank holding company to serve

as a source of financial strength to its subsidiary depository institutions and to commit resources to support such institutions in circumstances

where it might not do so otherwise.

These requirements can restrict the ability of bank holding companies to deploy their capital as

they otherwise might.

Banking and Branching.

Under the rule, which became effective

on January 1, 2020, banks and bank holding companies that opt into the CBLR framework and maintain a CBLR of greater than 9.00% are not

subject to other risk-based and leverage capital requirements under the Basel III rules and would be deemed to have met the well capitalized

ratio requirements under the “prompt corrective action” framework.

For further detail

on capital and capital ratios, see discussion contained in Item 7, “Management’s Discussion and Analysis of Financial Condition

and Results of Operations,” sections “Capital Resources” and “Liquidity,” and in Item 8, “Financial

Statements and Supplementary Data,” “Consolidated Financial Statements and Notes,” Note 22, “Capital.”

Other Safety and

Soundness Regulations .

There are a number of obligations and restrictions imposed on banks and financial or bank holding companies

and their bank subsidiaries by federal law and regulatory policy that are designed to reduce potential loss exposure to the depositors

of such depository institutions and to the FDIC insurance funds in the event that the depository institution is insolvent or is in danger

of becoming insolvent.

For example, the Federal Reserve requires a bank or financial or bank holding company to serve as a source of

financial strength to its subsidiary depository institutions and to commit resources to support such institutions in circumstances where

it might not do so otherwise.

These requirements can restrict the ability of bank holding companies to deploy their capital as they otherwise

Interstate Banking

and Branching.

Banks in Virginia may branch without geographic restriction.

6 unchanged sentences

These laws have the effect of increasing competition in banking markets.

The commercial banking business is affected not only by general economic conditions but also by the monetary policies of

the Federal Reserve.

The Federal Reserve’s monetary policies have had a significant effect on the operating results of commercial

banks in the past and are expected to continue to do so in the future.

In view of unsettled conditions in the national and international

political environment, economy and money markets, as well as governmental fiscal and monetary policies, their impact on interest rates,

deposit levels, loan demand or the business and earnings of the Bank is unpredictable.

Reserve System.

Monetary Policy.

The commercial banking business is affected not only by general economic conditions but also by the monetary policies of the Federal

The Federal Reserve’s monetary policies have had a significant effect on the operating results of commercial banks in

the past and are expected to continue to do so in the future.

In view of unsettled conditions in the national and international political

environment, economy and money markets, as well as governmental fiscal and monetary policies, their impact on interest rates, deposit

levels, loan demand or the business and earnings of the Bank is unpredictable.

Federal Reserve

Depository institutions that maintain transaction accounts or nonpersonal time deposits are subject to reserve requirements.

1 unchanged sentence

Because required reserves must be maintained in the form

of vault cash or in a non-interest-bearing account at, or on behalf of, a Federal Reserve Bank, the effect of the reserve requirement

of vault cash or in a noninterest-bearing account at, or on behalf of, a Federal Reserve Bank, the effect of the reserve requirement

is to reduce the amount of the institution’s interest-earning assets.

with Affiliates.

Transactions with

Transactions between banks and their affiliates are governed by Sections 23A and 23B of the Federal Reserve Act.

These provisions restrict the amount of, and provide conditions with respect to, loans, investments, transfers of assets and other transactions

provisions restrict the amount of, and provide conditions with respect to, loans, investments, transfers of assets and other transactions

between New Peoples and the Bank.

The Bank is subject to rules on the amount, terms and risks associated with loans to executive officers, directors,

principal shareholders and their related interests.

Reinvestment Act.

Under the Community Reinvestment Act, depository institutions have an affirmative obligation to assist in meeting

the credit needs of their market areas, including low and moderate-income areas, consistent with safe and sound banking practices.

Community Reinvestment Act emphasizes the delivery of bank products and services through branch locations in a bank’s market areas

and requires banks to keep data reflecting their efforts to assist in its community’s credit needs.

Depository institutions are

periodically examined for compliance with the Community Reinvestment Act and are assigned ratings in this regard.

Banking regulators

consider a depository institution’s Community Reinvestment Act rating when reviewing applications to establish new branches, undertake

new lines of business, and/or acquire part or all of another depository institution.

An unsatisfactory rating can significantly delay

or even prohibit regulatory approval of a proposed transaction by a bank holding company or its depository institution subsidiaries.

A bank holding company will not be permitted to become a financial holding company and no new activities authorized under the GLBA (see

below) may be commenced by a holding company or by a bank financial subsidiary if any of its bank subsidiaries received less than a “Satisfactory”

rating in its latest Community Reinvestment Act examination.

Loans to Insiders.

The Bank is subject to rules on the amount, terms and risks associated with loans to executive officers, directors, principal shareholders

and their related interests.

Community Reinvestment

Under the Community Reinvestment Act, depository institutions have an affirmative obligation to assist in meeting the credit

needs of their market areas, including low and moderate-income areas, consistent with safe and sound banking practices.

The Community

Reinvestment Act emphasizes the delivery of bank products and services through branch locations in a bank’s market areas and requires

banks to keep data reflecting their efforts to assist in its community’s credit needs.

Depository institutions are periodically

examined for compliance with the Community Reinvestment Act and are assigned ratings in this regard.

Banking regulators consider a depository

institution’s Community Reinvestment Act rating when reviewing applications to establish new branches, undertake new lines of business,

and/or acquire part or all of another depository institution.

An unsatisfactory rating can significantly delay or even prohibit regulatory

approval of a proposed transaction by a bank holding company or its depository institution subsidiaries.

A bank holding company will

not be permitted to become a financial holding company and no new activities authorized under the GLBA (see below) may be commenced by

a holding company or by a bank financial subsidiary if any of its bank subsidiaries received less than a “Satisfactory” rating

in its latest Community Reinvestment Act examination.

The Bank received a rating of “Satisfactory” at its last Community

Reinvestment Act performance evaluation, as of August 1, 2022.

May 2022, the federal bank regulatory agencies jointly issued a proposed rule intended to strengthen and modernize the CRA regulatory

If implemented, the rule would, among other things, (i) expand access to credit, investment and basic banking services in

low- and moderate-income communities, (ii) adapt to changes in the banking industry, including internet and mobile banking, (iii) provide

greater clarity, consistency and transparency in the application of the regulations and (iv) tailor performance standards to account

for differences in bank size, business model, and local conditions.

In October 2023,

the federal bank regulatory agencies jointly issued a final rule intended to strengthen and modernize the CRA regulatory framework.

implemented, the rule would, among other things, (i) expand access to credit, investment and basic banking services in low- and moderate-income

communities, (ii) adapt to changes in the banking industry, including internet and mobile banking, (iii) provide greater clarity, consistency

and transparency in the application of the regulations and (iv) tailor performance standards to account for differences in bank size,

business model, and local conditions.

Most of the final rule’s new requirements are applicable beginning January 1, 2026.

The remaining

new requirements, including data reporting requirements, are applicable on January 1, 2027.

Gramm-Leach-Bliley

7 unchanged sentences

approved New Peoples’ election to become an FHC.

GLBA also provides that the states continue to have the authority to regulate insurance activities, but prohibits the states, in most

instances, from preventing or significantly interfering with the ability of a bank, directly or through an affiliate, to engage in insurance

sales, solicitations or cross-marketing activities.

Laundering Legislation .

New Peoples is subject to the Bank Secrecy Act and other anti-money laundering laws and regulations, including

the Money Laundering Control Act of 1986, the USA PATRIOT Act of 2001, and the Anti-Money Laundering Act of 2020.

Among other things,

these laws and regulations require New Peoples to take steps to prevent the use of New Peoples for facilitating the flow of illegal or

illicit money, to report large currency transactions, and to file suspicious activity reports.

The Company is also required to carry

out a comprehensive anti-money laundering compliance program.

The GLBA also provides

that the states continue to have the authority to regulate insurance activities, but prohibits the states, in most instances, from preventing

or significantly interfering with the ability of a bank, directly or through an affiliate, to engage in insurance sales, solicitations

or cross-marketing activities.

Anti-Money Laundering

Legislation .

New Peoples is subject to the Bank Secrecy Act and other anti-money laundering laws and regulations, including the Money

Laundering Control Act of 1986, the USA PATRIOT Act of 2001, and the Anti-Money Laundering Act of 2020.

Among other things, these laws

and regulations require New Peoples to take steps to prevent the use of New Peoples for facilitating the flow of illegal or illicit money,

to report large currency transactions, and to file suspicious activity reports.

The Company is also required to carry out a comprehensive

anti-money laundering compliance program.

Violations can result in substantial civil and criminal sanctions.

provisions of the USA Patriot Act require the federal bank regulatory agencies to consider the effectiveness of a financial institution’s

In addition, provisions

of the USA Patriot Act require the federal bank regulatory agencies to consider the effectiveness of a financial institution’s

anti-money laundering activities when reviewing bank mergers and bank holding company acquisitions.

and Fair Credit Reporting.

Financial institutions, such as the Bank, are required to disclose their privacy policies to customers

and consumers and require that such customers or consumers be given a choice (through an opt-out notice) to forbid the sharing of nonpublic

personal information about them with nonaffiliated third persons.

Privacy and Fair

Credit Reporting.

Financial institutions, such as the Bank, are required to disclose their privacy policies to customers and consumers

and require that such customers or consumers be given a choice (through an opt-out notice) to forbid the sharing of nonpublic personal

information about them with nonaffiliated third persons.

The Bank also requires business partners with whom it shares such information

2 unchanged sentences

to the use of customer information.

The Virginia Consumer Data Protection Act, passed in 2021, became effective January 1, 2023 These

The Virginia Consumer Data Protection Act, passed in 2021, became effective January 1, 2023.

privacy laws create compliance obligations and potential liability for the Bank.

Banking Regulation .

Mortgage Banking

The Bank is subject to rules and regulations related to mortgage loans that, among other things, establish standards

14 unchanged sentences

Sarbanes-Oxley

The Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act) is intended to increase corporate responsibility, provide enhanced penalties

for accounting and auditing improprieties by publicly traded companies and to protect investors by improving the accuracy and reliability

of corporate disclosures made pursuant to the securities law.

The changes required by the Sarbanes-Oxley Act and its implementing regulations

are intended to allow shareholders to monitor the performance of companies and their directors more easily and effectively.

Sarbanes-Oxley Act generally applies to all domestic companies, such as New Peoples, that file periodic reports with the SEC under the

Securities Exchange Act of 1934, as amended.

The Sarbanes-Oxley Act includes significant additional disclosure requirements and expanded

corporate governance rules and the SEC has adopted extensive additional disclosures, corporate governance provisions and other related

rules pursuant to it.

New Peoples has expended, and will continue to expend, considerable time and money in complying with the Sarbanes-Oxley

Deposit Insurance Corporation.

The Bank’s deposits are insured by the Deposit Insurance Fund, as administered by the FDIC,

to the maximum amount permitted by law, which is $250,000 per depositor.

The FDIC uses a “financial ratios method” based

on “CAMELS” composite ratings to determine deposit insurance assessment rates for small established institutions with less

than $10 billion in assets, such as the Bank.

The CAMELS rating system is a supervisory rating system designed to take into account

and reflect all financial and operational risks that a bank may face, including capital adequacy, asset quality, management capability,

earnings, liquidity and sensitivity to market risk (CAMELS).

CAMELS composite ratings set a maximum assessment for banks rated CAMELS

1 and 2, and set minimum assessments for lower rated institutions.

In 2022 and 2021, the Company recorded expense of $216 thousand and

$266 thousand, respectively, for FDIC insurance premiums.

Wall Street Reform and Consumer Protection Act.

The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) is intended to increase corporate responsibility, provide

enhanced penalties for accounting and auditing improprieties by publicly traded companies and to protect investors by improving the accuracy

and reliability of corporate disclosures made pursuant to the securities law.

The changes required by the Sarbanes-Oxley Act and its

implementing regulations are intended to allow shareholders to monitor the performance of companies and their directors more easily and

The Sarbanes-Oxley

Act generally applies to all domestic companies, such as New Peoples, that file periodic reports with the SEC under the Securities Exchange

Act of 1934, as amended.

The Sarbanes-Oxley Act includes significant additional disclosure requirements and expanded corporate governance

rules and the SEC has adopted extensive additional disclosures, corporate governance provisions and other related rules pursuant to it.

New Peoples has expended, and will continue to expend, considerable time and money in complying with the Sarbanes-Oxley Act.

Federal Deposit

Insurance Corporation.

The Bank’s deposits are insured by the Deposit Insurance Fund, as administered by the FDIC, to the maximum

amount permitted by law, which is $250,000 per depositor.

The FDIC uses a “financial ratios method” based on “CAMELS”

composite ratings to determine deposit insurance assessment rates for small established institutions with less than $10 billion

in assets, such as the Bank.

The CAMELS rating system is a supervisory rating system designed to take into account and reflect all financial

and operational risks that a bank may face, including capital adequacy, asset quality, management capability, earnings, liquidity and

sensitivity to market risk (“CAMELS”).

CAMELS composite ratings set a maximum assessment for banks rated CAMELS 1 and 2 and

set minimum assessments for lower rated institutions.

Effective for the first quarterly assessment period of 2023 the FDIC increased

the deposit insurance assessment by 2 basis points for all insured institutions.

In 2023 and 2022, the Company recorded expense of $360,000

and $217,000, respectively, for FDIC insurance premiums.

Dodd-Frank Wall

Street Reform and Consumer Protection Act.

The Dodd-Frank Act was signed into law on July 21, 2010.

Its wide-ranging provisions

affect all federal financial regulatory agencies and nearly every aspect of the American financial services industry.

Among the provisions

of the Dodd-Frank Act that directly impacted the Company was the creation of an independent Consumer Financial Protection Bureau (CFPB),

Its wide-ranging provisions affect

all federal financial regulatory agencies and nearly every aspect of the American financial services industry.

Among the provisions of

the Dodd-Frank Act that directly impacted the Company was the creation of an independent Consumer Financial Protection Bureau (“CFPB”),

which has the ability to write rules for consumer protections governing all financial institutions.

5 unchanged sentences

by their primary regulators.

Dodd-Frank Act contains provisions designed to reform mortgage lending, which includes the requirement of additional disclosures for

consumer mortgages.

The EGRRCPA modified a number of these requirements, including, for smaller institutions (under $10 billion in total

assets) that qualify, a safe harbor for compliance with the “ability to pay” requirements for consumer mortgage loans.

CFPB has implemented mortgage lending regulations to carry out its mandate.

In addition, the Federal Reserve has issued rules limiting

the fees charged to merchants by credit card companies for debit card transactions.

The result of these rules is to limit the amount

of interchange fee income available explicitly to larger banks and indirectly to us.

The Dodd-Frank Act also contains provisions that

affect corporate governance and executive compensation.

Dodd-Frank Act has had, and may in the future have, a material impact on New Peoples’ operations, particularly through increased

compliance costs resulting from new and possible future consumer and fair lending regulations.

Any future changes resulting from the

Dodd-Frank Act may affect the profitability of business activities, require changes to certain business practices, impose more stringent

regulatory requirements or otherwise adversely affect the business and financial condition of New Peoples and the Bank.

These changes

may also require New Peoples to invest significant management attention and resources to evaluate and make necessary changes to comply

with new statutory and regulatory requirements.

Economic Growth, Regulatory Reform and Consumer Protection Act of 2018.

The EGRRCPA, which became effective in May 2018, amended

provisions of the Dodd-Frank Act and other statutes administered by banking regulators.

Among these amendments are provisions exempting

insured depository institutions (and their parent companies) with less than $10 billion in consolidated assets and meeting certain other

asset and liabilities trading tests from the Volker Rule, which prohibits banks from conducting certain investment activities with their

own accounts.

The EGRRCPA required the regulators to promulgate rules establishing the new CBLR, as described above.

The EGRRCPA increased

the asset threshold from $1 billion to $3 billion for financial institutions to qualify for a less burdensome 18-month on-site examination

The EGRRCPA made numerous other changes in regulatory requirements based on the size and complexity of financial institutions,

particularly benefiting smaller institutions like the Company.

Federal regulators expect that financial institutions design multiple layers of security controls to establish lines of

defense and to ensure that their risk management processes also address the risk posed by compromised customer credentials, including

security measures to reliably authenticate customers accessing internet-based services of the financial institution.

Additionally, a

financial institution’s management is expected to maintain sufficient business continuity planning processes to ensure the rapid

recovery, resumption and maintenance of the institution’s operations after a cyber-attack involving destructive malware.

institution is expected to maintain appropriate processes to enable recovery of data and business operations and address rebuilding network

capabilities and restoring data if the institution or any of its critical service providers fall victim to this type of cyber-attack.

If the Company fails to observe the regulatory guidance, it could be subject to various regulatory sanctions, including financial penalties.

bank regulators issued a joint rule, effective in 2022, establishing computer-security incident notification requirements for banking

organizations and their bank service providers.

The rule requires a banking organization to notify its primary federal regulator of any

significant computer-security incident as soon as possible and no later than 36 hours after the banking organization determines that

a cyber incident has occurred.

In addition, the final rule requires a bank service provider to notify affected banking organization customers

as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or

is reasonably likely to materially affect banking organization customers for four or more hours.

The rule defines computer-security incident

as an occurrence that results in actual harm to the confidentiality, integrity, or availability of an information system or the information

that the system processes, stores, or transmits.

on Incentive Compensation .

The federal bank regulatory agencies have issued comprehensive final guidance on incentive compensation

policies intended to ensure that the incentive compensation policies of financial institutions do not undermine the safety and soundness

of such institutions by encouraging excessive risk-taking.

The Interagency Guidance on Sound Incentive Compensation Policies, which covers

all employees that have the ability to materially affect the risk profile of financial institutions, either individually or as part of

a group, is based upon the key principles that a financial institution’s incentive compensation arrangements should (i) provide

incentives that do not encourage risk-taking beyond the institution’s ability to effectively identify and manage risks, (ii) be

compatible with effective internal controls and risk management, and (iii) be supported by strong corporate governance, including active

and effective oversight by the financial institution’s board of directors.

Federal Reserve will review, as part of the regular, risk-focused examination process, the incentive compensation arrangements of financial

institutions, such as the Company and the Bank, that are not “large, complex banking organizations.” These reviews will be

tailored to each financial institution based on the scope and complexity of the institution’s activities and the prevalence of

incentive compensation arrangements.

The Dodd-Frank Act

contains provisions designed to reform mortgage lending, which includes the requirement of additional disclosures for consumer mortgages.

The EGRRCPA modified a number of these requirements, including, for smaller institutions (under $10 billion in total assets) that qualify,

a safe harbor for compliance with the “ability to pay” requirements for consumer mortgage loans.

The CFPB has implemented

mortgage lending regulations to carry out its mandate.

In addition, the Federal Reserve has issued rules limiting the fees charged to

merchants by credit card companies for debit card transactions.

The result of these rules is to limit the amount of interchange fee income

available explicitly to larger banks and indirectly to us.

The Dodd-Frank Act also contains provisions that affect corporate governance

and executive compensation.

The Dodd-Frank Act

has had, and may in the future have, a material impact on New Peoples’ operations, particularly through increased compliance costs

resulting from new and possible future consumer and fair lending regulations.

Any future changes resulting from the Dodd-Frank Act may

affect the profitability of business activities, require changes to certain business practices, impose more stringent regulatory requirements

or otherwise adversely affect the business and financial condition of New Peoples and the Bank.

These changes may also require New Peoples

to invest significant management attention and resources to evaluate and make necessary changes to comply with new statutory and regulatory

requirements.

The Economic Growth,

Regulatory Reform and Consumer Protection Act of 2018.

The EGRRCPA, which became effective in May 2018, amended provisions of the

Dodd-Frank Act and other statutes administered by banking regulators.

Among these amendments are provisions exempting insured depository

institutions (and their parent companies) with less than $10 billion in consolidated assets and meeting certain other asset and liabilities

trading tests from the Volker Rule, which prohibits banks from conducting certain investment activities with their own accounts.

EGRRCPA required the regulators to promulgate rules establishing the new CBLR, as described above.

The EGRRCPA increased the asset threshold

from $1 billion to $3 billion for financial institutions to qualify for a less burdensome 18-month on-site examination schedule.

EGRRCPA made numerous other changes in regulatory requirements based on the size and complexity of financial institutions, particularly

benefiting smaller institutions like the Company.

Cybersecurity.

Federal regulators expect that financial institutions design multiple layers of security controls to establish lines of defense and

to ensure that their risk management processes also address the risk posed by compromised customer credentials, including security measures

to reliably authenticate customers accessing internet-based services of the financial institution.

Additionally, a financial institution’s

management is expected to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption and maintenance

of the institution’s operations after a cyber-attack involving destructive malware.

A financial institution is expected to maintain

appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data

if the institution or any of its critical service providers fall victim to this type of cyber-attack.

If the Company fails to observe

the regulatory guidance, it could be subject to various regulatory sanctions, including financial penalties.

Federal bank regulators

issued a joint rule, effective in 2022, establishing computer-security incident notification requirements for banking organizations and

their bank service providers.

The rule requires a banking organization to notify its primary federal regulator of any significant computer-security

incident as soon as possible and no later than 36 hours after the banking organization determines that a cyber incident has occurred.

In addition, the final rule requires a bank service provider to notify affected banking organization customers as soon as possible when

the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to

materially affect banking organization customers for four or more hours.

The rule defines computer-security incident as an occurrence

that results in actual harm to the confidentiality, integrity, or availability of an information system or the information that the system

processes, stores, or transmits.

For additional disclosure related to Cybersecurity, refer to Item 1.C “Cybersecurity.”

Limitations on

Incentive Compensation .

The federal bank regulatory agencies have issued comprehensive final guidance on incentive compensation policies

intended to ensure that the incentive compensation policies of financial institutions do not undermine the safety and soundness of such

institutions by encouraging excessive risk-taking.

The Interagency Guidance on Sound Incentive Compensation Policies, which covers all

employees that have the ability to materially affect the risk profile of financial institutions, either individually or as part of a

group, is based upon the key principles that a financial institution’s incentive compensation arrangements should (i) provide incentives

that do not encourage risk-taking beyond the institution’s ability to effectively identify and manage risks, (ii) be compatible

with effective internal controls and risk management, and (iii) be supported by strong corporate governance, including active and effective

oversight by the financial institution’s board of directors.

The Federal Reserve

will review, as part of the regular, risk-focused examination process, the incentive compensation arrangements of financial institutions,

such as the Company and the Bank, that are not “large, complex banking organizations.” These reviews will be tailored to

each financial institution based on the scope and complexity of the institution’s activities and the prevalence of incentive compensation

arrangements.

The findings of the supervisory initiatives will be included in reports of examination.

will be incorporated into the institution’s supervisory ratings, which can affect the institution’s ability to make acquisitions

and take other actions.

Enforcement actions may be taken against a financial institution if its incentive compensation arrangements or

related risk-management control or governance processes pose a risk to the institution’s safety and soundness, and the financial

institution is not taking prompt and effective measures to correct the deficiencies.

As of December 31, 2022, the Company and the Bank

have not been made aware of any instances of noncompliance with this guidance.

Banks and other depository institutions also are subject to other numerous consumer-oriented laws and regulations.

which include the Truth in Lending Act, the Truth in Savings Act, the Real Estate Settlement Procedures Act, the Electronic Funds Transfer

Act, the Equal Credit Opportunity Act, the Fair and Accurate Credit Transactions Act of 2003 and the Fair Housing Act, require compliance

by depository institutions with various disclosure and consumer information handling requirements.

These and other similar laws result

in significant costs and create potential liability for financial institutions, including the imposition of regulatory penalties for

inadequate compliance.

Regulatory Uncertainty.

Because federal and state regulation of financial institutions changes regularly and is the subject of constant

legislative debate, New Peoples cannot forecast how regulation of financial institutions may change in the future and impact its operations.

New Peoples fully expects that the financial institution industry will remain heavily regulated notwithstanding the regulatory relief

that has been recently adopted.

Staff Comments

Deficiencies will be incorporated

into the institution’s supervisory ratings, which can affect the institution’s ability to make acquisitions and take other

Enforcement actions may be taken against a financial institution if its incentive compensation arrangements or related risk-management

control or governance processes pose a risk to the institution’s safety and soundness, and the financial institution is not taking

prompt and effective measures to correct the deficiencies.

As of December 31, 2023, the Company and the Bank have not been made aware

of any instances of noncompliance with this guidance.

and other depository institutions also are subject to other numerous consumer-oriented laws and regulations.

These laws, which include

the Truth in Lending Act, the Truth in Savings Act, the Real Estate Settlement Procedures Act, the Electronic Funds Transfer Act, the

Equal Credit Opportunity Act, the Fair and Accurate Credit Transactions Act of 2003 and the Fair Housing Act, require compliance by depository

institutions with various disclosure and consumer information handling requirements.

These and other similar laws result in significant

costs and create potential liability for financial institutions, including the imposition of regulatory penalties for inadequate compliance.

Future Regulatory

Because federal and state regulation of financial institutions changes regularly and is the subject of constant legislative

debate, New Peoples cannot forecast how regulation of financial institutions may change in the future and impact its operations.

Peoples fully expects that the financial institution industry will remain heavily regulated notwithstanding the regulatory relief that

has been recently adopted.

Not required.

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-K

Item 1. Business