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Item 1. Financial Statements

2024-11-14 compared with 2024-08-14 · 436 added, 340 removed, 572 unchanged (58% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE

JUNE 30, 2024 AND

DECEMBER 31, 2023

SEPTEMBER 30, 2024

AND DECEMBER 31, 2023

THOUSANDS EXCEPT PER SHARE AND SHARE DATA)

and due from banks

Interest-bearing

deposits with banks

cash and cash equivalents

securities available-for-sale

for credit losses

premises and equipment, net

real estate owned

interest receivable

owned life insurance

assets – operating leases

September 30,

Cash and due from banks

Interest-bearing deposits with banks

Federal funds sold

Total cash and cash equivalents

Investment securities available-for-sale

Loans receivable

Allowance for credit losses

Bank premises and equipment, net

Other real estate owned

Accrued interest receivable

Deferred taxes, net

Bank owned life insurance

Right-of-use assets – operating leases

Noninterest bearing

Interest-bearing

liabilities – operating leases

interest payable

expenses and other liabilities

SHAREHOLDERS’

Common stock - $ 2.00 par

Total deposits

Borrowed funds

Lease liabilities – operating leases

Accrued interest payable

Accrued expenses and other liabilities

Total liabilities

SHAREHOLDERS’ EQUITY

Common stock - $ 2.00 par value;

50,000,000 shares authorized;

23,652,068 and 23,745,900 shares issued and outstanding at

June 30, 2024 and December 31, 2023, respectively

paid-in-capital

other comprehensive loss

shareholders’ equity

liabilities and shareholders’ equity

September 30, 2024 and December 31, 2023, respectively

Additional paid-in-capital

Retained earnings

Accumulated other comprehensive loss

Total shareholders’ equity

Total liabilities and shareholders’ equity

The accompanying notes

3 unchanged sentences

FOR THE THREE AND

SIX MONTHS ENDED JUNE 30, 2024 AND 2023

NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

For the Three

AND DIVIDEND INCOME

including fees

Interest-earning

deposits with banks

on equity securities (restricted)

For the Three Months Ended

For the Nine Months Ended

September 30,

INTEREST AND DIVIDEND INCOME

Loans including fees

Federal funds sold

Interest-earning deposits with banks

Dividends on equity securities (restricted)

Total interest and dividend income

INTEREST EXPENSE

INTEREST INCOME

FOR CREDIT LOSSES

INTEREST INCOME AFTER

FOR CREDIT LOSSES

charges and fees

processing and interchange

services fees

on sale and disposal of premises and equipment

noninterest income

Borrowed funds

Total interest expense

NET INTEREST INCOME

PROVISION FOR CREDIT LOSSES

NET INTEREST INCOME AFTER

PROVISION FOR CREDIT LOSSES

NONINTEREST INCOME

and employee benefits

and equipment expense

processing and telecommunications

operating expenses

Service charges and fees

Card processing and interchange

Financial services fees

Net gain on sales of available for sale securities

Net gain on sale and disposal of premises and equipment

Other noninterest income

Total noninterest income

NONINTEREST EXPENSES

BEFORE INCOME TAXES

Weighted Shares of Common Stock

Salaries and employee benefits

Occupancy and equipment expense

Data processing and telecommunications

Other operating expenses

Total noninterest expenses

INCOME BEFORE INCOME TAXES

INCOME TAX EXPENSE

Earnings per share

Basic and diluted

Average Weighted Shares of Common Stock

Basic and diluted

The accompanying

2 unchanged sentences

CONSOLIDATED STATEMENTS

OF COMPREHENSIVE INCOME

OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE AND

SIX MONTHS ENDED JUNE 30, 2024 AND 2023

the Three Months Ended

the Six Months Ended

comprehensive income (loss):

securities activity

gains (losses) arising during the period

tax (expense) benefit

NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

Other comprehensive income (loss):

COMPREHENSIVE INCOME

Investment securities activity

Unrealized gains (losses) arising during the period

Reclassification adjustment for net gains included in net income

Other comprehensive gains (losses) on investment securities

Related tax (expense) benefit

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)

TOTAL COMPREHENSIVE INCOME (LOSS)

The accompanying notes

4 unchanged sentences

FOR THE THREE AND

SIX MONTHS ENDED JUNE 30, 2024 AND 2023

NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(IN THOUSANDS INCLUDING

of Common Stock

Paid-in- Capital

Shares of Common Stock

Additional Paid-in- Capital

Accumulated Other

Comprehensive Loss

Shareholders’ Equity

Total Shareholders’ Equity

Balance, June 30, 2023

Other comprehensive loss, net of tax

Repurchase of common stock

Balance, September 30, 2023

Balance, December 31, 2022

Adoption of ASU 2016-13

comprehensive income, net of tax

Cash dividend declared

($0.06 per share)

of common stock

Balance, March 31, 2023

comprehensive loss, net of tax

of common stock

June 30, 2023

Other comprehensive loss, net of tax

Cash dividend declared ($0.06 per share)

Repurchase of common stock

Balance, September 30, 2023

Balance, June 30, 2024

Other comprehensive income, net of tax

Repurchase of common stock

Balance, September 30, 2024

Balance, December 31, 2023

comprehensive loss, net of tax

Cash dividend declared

($0.07 per share)

of common stock

Balance, March 31, 2024

comprehensive income, net of tax

of common stock

June 30, 2024

Other comprehensive income, net of tax

Cash dividend declared ($0.07 per share)

Repurchase of common stock

Balance, September 30, 2024

The accompanying notes

3 unchanged sentences

OF CASH FLOWS

FOR THE SIX MONTHS

ENDED JUNE 30, 2024 AND 2023

FLOWS FROM OPERATING ACTIVITIES

to reconcile net income to net cash provided by

FOR THE NINE MONTHS

ENDED SEPTEMBER 30, 2024 AND 2023

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net income to net cash provided by

operating activities:

for credit losses

on bank owned life insurance

on sale of mortgage loans

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

Net amortization/accretion

of bond premiums/discounts

interest receivable

interest payable

expenses and other liabilities

cash provided by operating activities

FLOWS FROM INVESTING ACTIVITIES

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 sales of premises and equipment

from sales of other real estate owned

cash used in investing activities

FLOWS FROM FINANCING ACTIVITIES

of long-term debt

in noninterest bearing deposits

in interest-bearing deposits

of common stock

cash provided by financing activities

in cash and cash equivalents

and cash equivalents, beginning of the period

and cash equivalents, end of the period

disclosure of cash paid during the period for:

disclosure of non-cash transactions:

of loans to other real estate owned

in unrealized losses on securities available-for-sale

Provision for credit losses

Income on bank owned life insurance

Gain on sale of mortgage loans

Net gain on sale of securities available-for-sale

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

Net amortization/accretion of bond premiums/discounts

Deferred tax benefit

Net change in:

Accrued interest receivable

Accrued interest payable

Accrued expenses and other liabilities

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Net increase in loans

Purchase of securities available-for-sale

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

Proceeds from sales 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

Proceeds from sales of other real estate owned

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Issuance of long-term debt

Net change in noninterest bearing deposits

Net change in interest-bearing deposits

Dividends paid

Repurchase of common stock

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of the period

Cash and cash equivalents, end of the period

Supplemental disclosure of cash paid during the period for:

Supplemental disclosure of non-cash transactions:

Transfer of loans to other real estate owned

Change 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, 2024 and December 31, 2023, and the results of operations

for the three- and six-month periods ended June 30, 2024 and 2023.

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, 2023.

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, 2024 and December 31, 2023, and the results of

operations for the three- and nine-month periods ended September 30, 2024 and 2023.

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, 2023.

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

23 unchanged sentences

31, 2023 except for the following:

Accounting Standards Adopted in 2024 –

Accounting Standards

Adopted in 2024 –

In March 2023, the

46 unchanged sentences

For the three-month

and six-month periods ended June 30, 2024 and 2023, there were no potential common shares.

Basic and diluted net income per common share

calculations follows:

and nine-month periods ended September 30, 2024 and 2023, 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

in thousands, except

share and per share data)

the three months

ended June 30

the six months

ended June 30,

average shares outstanding

average dilutive shares outstanding

and diluted earnings per share

(Dollars in thousands, except

per share data)

For the three months

ended September 30,

For the nine months

ended September 30,

Weighted average shares outstanding

Weighted average dilutive shares outstanding

Basic and diluted earnings per share

NOTE 4 CAPITAL

19 unchanged sentences

The capital conservation buffer required is 2.50%.

At June 30, 2024, the Bank had a capital conservation buffer of 8.74%.

At September 30, 2024, the Bank had a capital conservation buffer

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

Management believes

as of June 30, 2024, the Bank met all capital adequacy requirements to which it was subject.

believes as of September 30, 2024, 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.

At June 30, 2024, the most recent regulatory notifications categorized the

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

There are no conditions or events since that notification

that management believes have changed the institution's category.

2019, the U.S.

federal bank regulatory agencies approved a final rule modifying their regulatory capital rules and providing an option

to phase in over a three-year period the Day 1 adverse regulatory capital effects of the Current Expected Credit Loss (“CECL”)

accounting standard.

Additionally, in March 2020, the U.S.

federal bank regulatory agencies issued an interim final rule that provides

banking organizations an option to delay the estimated CECL impact on regulatory capital for an additional two years for a total transition

period of up to five years.

The final rule was adopted and became effective in September 2020.

The Company implemented the CECL model

commencing 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, 2024 and December 31, 2023, respectively.

At September 30, 2024, the most recent regulatory notifications categorized

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

There are no conditions or events since that

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

actual capital amounts and ratios are presented in the following table as of September 30, 2024 and December 31, 2023, respectively.

Schedule of bank’s

actual capital amounts and ratios presented

Capital Requirement

to Be Well Capitalized Under Prompt Corrective Action Provisions

in thousands)

June 30, 2024:

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

Minimum Capital Requirement

Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions

(Dollars in thousands)

September 30, 2024:

Total capital to risk weighted assets

Tier 1 capital to risk weighted assets

Tier 1 capital to average assets

Common equity Tier 1 capital

to risk weighted assets

December 31, 2023:

Total capital to risk weighted assets

Tier 1 capital to risk weighted assets

Tier 1 capital to average assets

Common equity Tier 1 capital

to risk weighted assets

NOTE 5 INVESTMENT

The amortized cost and estimated fair

value of available-for-sale (“AFS”) securities as of June 30, 2024 and December 31, 2023 are as follows:

value of available-for-sale (“AFS”) securities as of September 30, 2024 and December 31, 2023 are as follows:

Schedule of securities amortized cost and estimated fair value

in thousands)

June 30, 2024

(Dollars in thousands)

September 30, 2024

Government Agencies

backed securities

securities available-for-sale

Taxable municipals

Corporate bonds

Mortgage backed securities

Total securities available-for-sale

December 31, 2023

Government Agencies

backed securities

securities available-for-sale

Taxable municipals

Corporate bonds

Mortgage backed securities

Total securities available-for-sale

The following table

1 unchanged sentence

This information is aggregated by the length of time that individual

securities have been in a continuous unrealized loss position as of June 30, 2024 and December 31, 2023.

securities have been in a continuous unrealized loss position as of September 30, 2024 and December 31, 2023.

Schedule of fair value and gross unrealized losses on investment securities

than 12 Months

Less than 12 Months

12 Months or More

in thousands)

(Dollars in thousands)

September 30, 2024

Government Agencies

backed securities

securities available-for-sale

Taxable municipals

Corporate bonds

Mortgage backed securities

Total securities available-for-sale

December 31, 2023

Government Agencies

backed securities

securities available-for-sale

As of June 30, 2024,

Taxable municipals

Corporate bonds

Mortgage backed securities

Total securities available-for-sale

As of September 30,

2024, there were 165 securities in a loss position, of which 163 have been in a loss position for twelve months or more.

2 unchanged sentences

of credit deterioration.

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.”

Aside from strategic sales executed during the three months ended September 30, 2024, 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 $ 35.4 million and $ 36.8 million as of June 30, 2024 and December 31, 2023, 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, 2024 and 2023.

with a carrying value of $ 38.5 million and $ 36.8 million as of September 30, 2024 and December 31, 2023, respectively, were pledged as

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

During the three

and nine months ended September 30, 2024 available-for-sale investment securities with a carrying value of $ 2.2 million were sold, realizing

a net gain of $ 4,000 .

There were no sales of available-for-sale investment securities during the three and nine months ended September

The amortized cost

and fair value of investment securities as of June 30, 2024, 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

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

(Dollars in thousands)

Securities Available-for-Sale

and fair value of investment securities as of September 30, 2024, 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.

of amortized cost and fair value of investment securities contractual maturity

in thousands)

Available-for-Sale

in one year or less

one year through five years

five years through ten years

after one year through five years

after five years through ten years

after ten years

5 unchanged sentences

which 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 $ 2.7 million as of June 30, 2024 and December 31, 2023, 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.

million and $ 2.7 million as of September 30, 2024 and December 31, 2023, 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.

Loans receivable

outstanding as of June 30, 2024, and December 31, 2023, are summarized as follows:

outstanding as of September 30, 2024, and December 31, 2023, are summarized as follows:

Schedule of loans receivable outstanding

in thousands)

estate secured:

and land development

real estate loans

installment loans

(Dollars in thousands)

September 30,

December 31, 2023

Real estate secured:

Construction and land development

Residential 1-4 family

Total real estate loans

Consumer installment loans

All other loans

Also included in

total loans above are deferred loan fees of $ 1.8 million and $ 1.8 million as of June 30, 2024 and December 31, 2023, respectively.

loan costs were $ 2 .0 million and $ 2 .0 million, as of June 30, 2024 and December 31, 2023, 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 $ 1.9 million and $ 1.8 million as of September 30, 2024 and December 31, 2023, respectively.

Deferred loan costs were $ 1.9 million and $ 2 .0 million, as of September 30, 2024 and December 31, 2023, 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 fees or costs is recognized at that time.

Loans receivable

on nonaccrual status as of June 30, 2024, and December 31, 2023, are summarized as follows:

Schedule of Loans receivable

nonaccrual status

on nonaccrual status as of September 30, 2024, and December 31, 2023, are summarized as follows:

Schedule of loans receivable nonaccrual status

in thousands)

estate secured:

and land development

real estate loans

2 unchanged sentences

Total interest income

not recognized on nonaccrual loans for the three and six months ended June 30, 2024, and June 30, 2023, was $ 43,000 and $ 69,000 , and

(recognized), not recognized on nonaccrual loans for the three months ended September 30, 2024, and September 30, 2023, was ($ 18,000 )

and $ 5,000 , respectively.

Company evaluates loans that do not share risk characteristics on an individual basis utilizing the collateral or discounted cash flow

The following table presents the unpaid principal balance of collateral dependent loans, which are individually evaluated to

determine expected credit losses, and the related ACL allocated to those loans as of June 30, 2024 and December 31, 2023:

Total interest income not recognized on nonaccrual loans for the nine months ended September 30, 2024, and

September 30, 2023, was $ 51,000 and $ 33,000 , respectively.

The Company evaluates

loans that do not share risk characteristics on an individual basis utilizing the collateral or discounted cash flow methods.

The following

table presents the unpaid principal balance of collateral dependent loans, which are individually evaluated to determine expected credit

losses, and the related ACL allocated to those loans as of September 30, 2024 and December 31, 2023:

Schedule of summary of impaired loans

5 unchanged sentences

The following table

is an age analysis of past due loans receivable as of June 30, 2024, segregated by class:

is an age analysis of past due loans receivable as of September 30, 2024, segregated by class:

Schedule of analysis of past due loans receivable

in thousands)

estate secured:

real estate loans

September 30, 2024

(Dollars in thousands)

Real estate secured:

Construction and land

Residential 1-4 family

Total real estate loans

Consumer installment

All other loans

The following

29 unchanged sentences

The following table presents the credit

risk grade of loans by origination year as of June 30, 2024:

Schedule of credit

risk grade of loans

As of June 30, 2024

are in thousands)

risk grade of loans by origination year as of September 30, 2024:

Schedule of credit risk grade of loans

As of September 30, 2024

(Dollars are in thousands)

Commercial real estate

period gross charge-offs

and Land Development

Special mention

Total commercial real estate