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Item 5. Market for Registrant’s Common Equity

2021-03-26 compared with 2020-03-13 · 28 added, 550 removed, 43 unchanged (93% of the section changed)

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

MARKET INFORMATION, HOLDERS AND CASH DIVIDENDS

The shares of the Company’s common stock are listed on the NASDAQ Global Select Market under the symbol “SHBI”.

As of February 28, 2019, the Company had approximately 1,648 registered holders of record.

The shares of the Company’s common stock are listed on the NASDAQ Global Select Market under the symbol “SHBI”.

As of March 15, 2021, the Company had approximately 1,201 registered holders of record.

Shareholders received quarterly cash dividends on shares of common stock totaling $6.0 million in 2020 and $5.3 million in 2019.

Dividends increased from 2018 due to the Company’s improved operating results from continuing operations and excess capital.

As a general matter, the payment of dividends is at the discretion of the Company’s Board of Directors, based on such factors as operating results, financial condition, capital adequacy, regulatory requirements, and stockholder return.

Dividends increased from 2019 due to the Company’s operating results from continuing operations and excess capital.

The Company anticipates continuing a regular quarterly cash dividend.

1 unchanged sentence

Any future determination to pay dividends to holders of our common stock will depend on our results of operations, financial condition, capital requirements, banking regulations, contractual restrictions and any other factors that our board of directors may deem relevant.

The transfer agent for the Company’s common stock is:

51 Mercedes Way

22 unchanged sentences

Equity compensation plans approved by security holders

Equity compensation plans approved by security holders(1)

In addition to stock options and stock appreciation rights, the 2016 Plan permits the grant of stock awards, stock units, and performance units, and the shares available for issuance shown in column (c) may be granted pursuant to such awards.

Subject to the anti-dilution provisions of the Omnibus Plan, the maximum number of shares of restricted stock that may be granted to any participant in any calendar year is 50,000;

the maximum number of restricted stock units that may be granted to any one participant in any calendar year is 30,000;

and the maximum dollar value of

performance units that may be granted to any one participant in any calendar year is $1,000,000.

As of December 31, 2019, the Company has granted 213,511 shares of restricted stock and 106,494 in restricted stock units that are not reflected in column (a) of this table.

All other information required by this item is incorporated herein by reference to the section of the Company’s definitive proxy statement to be filed in connection with the 2020 Annual Meeting of Stockholders entitled “Beneficial Ownership of Common Stock”.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no unregistered sales of the Company’s stock during the fourth quarter of 2019.

On April 24, 2019 the Corporation’s Board of Directors approved a stock repurchase program.

Under the stock repurchase program, the Corporation is authorized to repurchase up to $10 million, or approximately 5%, of its common stock for 2019 and 2020.

The program may be limited or terminated at any time without prior notice.

During the three months ended December 31, 2019, the Corporation repurchased 242,000 shares under the recently approved stock repurchase program.

The following table provides information with respect to purchases made by or on behalf of us or any “affiliated purchaser”

(as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock during the fourth quarter of 2019.

Equity compensation plans not approved by security holders

All other information required by this item is incorporated herein by reference to the section of the Company’s definitive proxy statement to be filed in connection with the 2021 Annual Meeting of Stockholders entitled “Beneficial Ownership of Common Stock”.

UNREGISTERED SALES OF EQUITY SECURITIES AND ISSUER PURCHASES OF EQUITY SECURITIES

There were no unregistered sales of the Company’s stock during the fourth quarter of 2020.

The Company completed its original stock repurchase program that was approved in April of 2019 on October 26, 2020 which authorized the repurchase of up to $10.0 million of the Company’s common stock.

Subsequently, on November 24, 2020 the Company announced an additional stock repurchase program which was approved by the Board and authorized management to repurchase up to $5.0 million of the Company’s common stock.

During the fourth quarter of 2020, the Company repurchased 183,471 shares of its common stock under the “original” repurchase plan and repurchased 253,900 shares of its common stock under the “new” repurchase plan.

The following tables provide information with respect to purchases made by or on behalf of us or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock during the fourth quarter of 2020.

Original Stock Repurchase Plan $10.0 million (2019-2020)

Total Number of

10 unchanged sentences

December 1, 2020 to December 31, 2020

New Stock Repurchase Plan $5.0 million (2020-2021)

Total Number of

Maximum Dollar Value

Average Price

Shares Purchased as Part

Of Shares that May Yet Be

of the Publicly Announced

Purchased Under the

Plans or Programs

October 1, 2020 to October 31, 2020

November 1, 2020 to November 30, 2020

December 1, 2020 to December 31, 2020

Selected Financial Data

Not required.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion compares the Company’s financial condition at December 31, 2019 to its financial condition at December 31, 2018 and the results of operations for the years ended December 31, 2019 and 2018.

This discussion should be read in conjunction with the Consolidated Financial Statements and the Notes thereto appearing in Item 8 of Part II of this annual report.

PERFORMANCE OVERVIEW

The Company recorded net income of $16.20 million for 2019 and net income of $25.00 million for 2018.

The Company recorded net income from continuing operations of $16.28 million for 2019 and net income from continuing operations of $15.76 million for 2018, which excludes the sale of the Company’s retail insurance business, Avon Dixon, LLC(“Avon”) on December 31, 2018 for net proceeds of $25.2 million and a net gain after tax of $9.2 million.

The basic and diluted income per share was $1.27 which was comprised of $1.28 from continuing operations and ($.01) from discontinued operations for 2019 and $1.24 from continuing operations and $0.72 from discontinued operations for 2018.

When comparing net income from continuing operations for 2019 to 2018, earnings improved due to an increase in noninterest income and a lower provision for credit losses, partially offset by lower net interest income and higher noninterest expenses.

Total assets were $1.559 billion at December 31, 2019, a $76.2 million, or 5.1%, increase when compared to the $1.483 billion at December 31, 2018.

The primary factors contributing to the increase were increases in gross loans of $53.3 million, interest-bearing deposits with other banks of $25.6 million and other assets of $22.9 million which included the purchase of $26.5 million in bank owned life insurance (“BOLI”) during 2019, partially offset by decreases of $31.6 million in investment securities.

Total deposits increased $129.0 million, or 10.6% to $1.341 billion at December 31, 2019.

The increase was due to increases in rates paid on core deposits as well as rate specials on time deposits .

Total stockholders’

equity increased $9.6 million, or 5.2%, to $192.8 million, or 12.37% of total assets at December 31, 2019.

The increase in total stockholders’

equity was primarily due to current year earnings and other comprehensive income, which primarily consisted of unrealized gains in available-for-sale securities for 2019, compared to unrealized losses in 2018.

CRITICAL ACCOUNTING POLICIES

The Company’s consolidated financial statements are prepared in accordance with GAAP and follow general practices within the industries in which it operates.

Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes.

These estimates, assumptions, and judgments are based on information available as of the date of the financial statements;

accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments.

Certain policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and as such have a greater possibility of producing results that could be materially different than originally reported.

The most significant accounting policies that the Company follows are presented in Note 1 to the Consolidated Financial Statements.

These policies, along with the disclosures presented in the notes to the financial statements and in this discussion, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined.

Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has determined that the accounting policies with respect to the allowance for credit losses and goodwill and other intangible assets are critical accounting policies.

These policies are considered critical because they relate to accounting areas that require the most subjective or complex judgments, and, as such, could be most subject to revision as new information becomes available.

The allowance for credit losses represents management’s estimate of credit losses inherent in the loan portfolio as of the balance sheet date.

Determining the amount of the allowance for credit losses is considered a critical accounting estimate because it requires significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of similar loans based on historical loss experience, and consideration

of current economic trends and conditions, all of which may be susceptible to significant change.

The loan portfolio also represents the largest asset type on the consolidated balance sheets.

Note 1 to the Consolidated Financial Statements describes the methodology used to determine the allowance for credit losses.

A discussion of the allowance determination and factors driving changes in the amount of the allowance for credit losses is included in the Asset Quality - Provision for Credit Losses and Risk Management section below.

Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired.

Other intangible assets represent purchased assets that also lack physical substance but can be distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset or liability.

Goodwill and other intangible assets are required to be recorded at fair value at inception.

Determining fair value is subjective, requiring the use of estimates, assumptions and management judgment.

Goodwill is tested at least annually for impairment, usually during the fourth quarter, or on an interim basis if circumstances dictate.

Intangible assets that have finite lives are amortized over their estimated useful lives and also are subject to impairment testing.

Impairment testing requires a qualitative assessment or that the fair value of each of the Company’s reporting units be compared to the carrying amount of its net assets, including goodwill.

If the fair value of a reporting unit is less than book value, an expense may be required to write down the related goodwill to record an impairment loss.

As of December 31, 2019, the Company had only one banking reporting unit.

RECENT ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS

The Notes to the Consolidated Financial Statements discuss new accounting policies that the Company adopted during 2019 and the expected impact of accounting policies recently issued or proposed but not yet required to be adopted.

To the extent the adoption of new accounting standards materially affects our financial condition, results of operations or liquidity, the impacts are discussed in the applicable section(s) of this discussion and Notes to the Consolidated Financial Statements.

RESULTS OF OPERATIONS

Net Interest Income and Net Interest Margin

Net interest income remains the most significant factor affecting our results of operations.

Net interest income represents the excess of interest and fees earned on total average earning assets (loans, investment securities, federal funds sold and interest-bearing deposits with other banks) over interest owed on average interest-bearing liabilities (deposits and borrowings).

Tax-equivalent net interest income is net interest income adjusted for the tax-favored status of income from certain loans and investments.

As shown in the table below, tax-equivalent net interest income for 2019 was $50.3 million.

This represented a $455 thousand, or less than 1%, decrease from 2018.

Net interest income increased $5.0 million, or 10.9%, for 2018 when compared to 2017.

The decrease in net interest income when comparing 2019 to 2018 was primarily the result of higher average balances and rates paid on interest-bearing deposits, partially offset by higher average balances and yields on loans.

The increase in net interest income when comparing 2018 to 2017 was primarily due to funding loan growth with lower yielding assets and, to a lesser extent a higher overall yield on earning assets.

When comparing 2019 to 2018, interest income increased $3.9 million while interest expense increased $4.4 million.

When comparing 2018 to 2017, interest income increased $8.0 million while interest expense increased $3.0 million.

Our net interest margin (i.e., tax-equivalent net interest income divided by average earning assets) represents the net yield on earning assets minus the cost of average interest liabilities.

The net interest margin is managed through loan and deposit pricing and asset/liability strategies.

The net interest margin was 3.54% for 2019 and 3.74% for 2018.

The net interest margin decreased when comparing 2019 to 2018 due to the significant increase in the average balance of interest-bearing deposits in conjunction with higher rates paid on these deposits, partially offset by an improvement in the yield on total earning assets and a reduction in the average balance of short-term borrowings.

The net interest margin was stable in 2018 and 2017.

The net interest spread, which is the difference between the average yield on earning assets and the rate paid for interest-bearing liabilities, was 3.20% for 2019, 3.57% for 2018 and 3.67% for 2017.

The following table sets forth the major components of net interest income, on a tax-equivalent basis, for the years ended December 31, 2019, 2018, and 2017.

(Dollars in thousands)

Earning assets

Loans (2), (3)

Investment securities:

Interest-bearing deposits

Total earning assets

Cash and due from banks

Allowance for credit losses

Interest-bearing liabilities

Demand deposits

Money market and savings deposits

Brokered Deposits

Certificates of deposit $100,000 or more

Other time deposits

Interest-bearing deposits

Short-term borrowings

Long-term debt

Total interest-bearing liabilities

Noninterest-bearing deposits

Other liabilities

Stockholders’

Total liabilities and stockholders’

Net interest spread

Net interest margin

All amounts are reported on a tax-equivalent basis computed using the statutory federal income tax rate of 21% for 2019 and 21% for 2018 and 35% for 2017, exclusive of the alternative minimum tax rate and nondeductible interest expense.

The tax-equivalent adjustment amounts used in the above table to compute yields aggregated $162 thousand in 2019, $114 thousand in 2018 and $242 thousand in 2017.

Average loan balances include nonaccrual loans.

Interest income on loans includes amortized loan fees, net of costs, and all are included in the yield calculations.

On a tax-equivalent basis, total interest income was $59.9 million for 2019 compared to $56.0 million for 2018.

The increase in interest income for 2019 compared to 2018 was primarily due to the increase in the average balance and yields on loans.

For 2019 compared to 2018, the average balance of loans increased $73.2 million and the yield earned on these loans improved to 4.53% from 4.46%.

The increased volume of loans coupled with a disciplined effort to maintain and attempt to improve rates on new loan originations resulted in an increase in tax-equivalent interest income of $4.1 million.

Interest income on interest-bearing deposits with other banks increased $508 thousand or 177.6%, partially offset by a reduction in the average balance on taxable investment securities in 2019 compared to 2018.

On a tax-equivalent basis, total interest income was $56.0 million for 2018 compared to $48.0 million for 2017.

The increase in interest income for 2018 compared to 2017 was primarily due to the increase in the average balance of loans coupled with a higher yield on taxable investment securities.

Interest income on taxable investment securities increased

$442 thousand or 11.5% in 2018 compared to 2017.

For 2018 compared to 2017, average loans increased $169.7 million and the yield earned on loans remained flat at 4.46%.

Also impacting interest income is the accretion of acquisition accounting adjustments from the branch acquisition in 2017 for loans of $319 thousand and $506 thousand for 2018 and 2017, respectively, which is accounted for using a level yield method.

As a percentage of total average earning assets, loans, investment securities, and interest-bearing deposits were 86.2%, 11.0%, and 2.8%, respectively, for 2019 which reflected an increase in higher yielding earning assets as well as excess liquidity over 2018.

The comparable percentages for 2018 were 84.9%, 14.0%, and 1.1%, respectively, and for 2017 were 80.9%, 16.6%, and 2.5%, respectively.

When comparing 2019 to 2018, the overall increase in average balances of earning assets produced $3.9 million more in interest income the result of an increasing yield on loans, coupled with higher average balances in interest-bearing deposits, as seen in the Rate/Volume Variance Analysis below.

When comparing 2018 to 2017, the overall increase in average balances of earning assets produced $7.1 million more in interest income the result of a stable yield on loans, coupled with higher yields on taxable investment securities and interest-bearing deposits which produced $860 thousand more in interest income, as seen in the Rate/Volume Variance Analysis below.

Interest expense was $9.6 million for 2019 compared to $5.3 million for 2018.

The increase in interest expense for 2019 was primarily due to increases in the average balances and rates paid on interest-bearing deposits, partially offset by a reduction in the average balances on short-term borrowings.

During 2019 demand deposits, money market/savings deposits and certificates of deposit over $100 thousand experienced the most significant growth with increases in the average balances of $37.3 million, $10.7 million and $14.7 million, respectively, while the rates paid on these deposits increased 37, 45 and 96 bps, respectively.

Alternatively, the average balances on short-term borrowings decreased $58.9 million when compared to 2018, with a rate of 2.61% and 2.12%, respectively.

Interest expense was $5.3 million for 2018 compared to $2.3 million for 2017.

The increase in interest expense for 2018 was primarily due to increases in short and long-term borrowings, rates paid on interest-bearing deposits and the addition of brokered deposits.

The average balances on short-term and long-term deposits increased $72.8 million and $3.6 million when compared to 2017, with a rate of 2.12% and 2.89%, respectively.

Additionally, brokered deposits were added during 2018 resulting in an average balance of $14.8 million with a rate of 2.12%.

Both demand deposits and money market/savings deposits experienced growth with increases in average balances of $5.5 million and $38.4 million, respectively, while the rates paid on these deposits increased 12 and 15 bps, respectively.

Also impacting interest expense is the accretion of acquisition accounting adjustments from the branch acquisition in 2017 for CD’s of $275 thousand.

During 2019, higher rates on interest-bearing liabilities produced $5.5 million more in interest expense and decreased volume produced $1.1 million less in interest expense, as shown in the table below.

In 2018, higher rates on interest-bearing liabilities produced $1.2 million more in interest expense and increased volume produced $1.8 million more in interest expense.

The following Rate/Volume Variance Analysis identifies the portion of the changes in tax-equivalent net interest income attributable to changes in volume of average balances or to changes in the yield on earning assets and rates paid on interest-bearing liabilities.

The rate and volume variance for each category has been allocated on a consistent basis between rate and volume variances, based on a percentage of rate, or volume, variance to the sum of the absolute two variances.

2019 over (under) 2018

2018 over (under) 2017

(Dollars in thousands)

Interest income from earning assets:

Taxable investment securities

Tax-exempt investment securities

Interest-bearing deposits

Total interest income

Interest expense on deposits and borrowed funds:

Interest-bearing demand deposits

Money market and savings deposits

Brokered deposits

Time deposits

Short-term borrowings

Long-term debt

Total interest expense

Net interest income

Noninterest Income

Noninterest income, excluding discontinued operations, increased $1.0 million, or 11.2%, in 2019 when compared to 2018.

The increase in noninterest income in 2019 when compared to 2018 was primarily due to increases in other noninterest income of $1.0 million which was attributed to other loan and bank services fees for a combined $613 thousand, coupled with income from BOLI of $443 thousand, partially offset by lower trust and investment fee income of $35 thousand.

The bank services fees increased due to a conscience effort by management to implement cross-selling services and products within our branch network.

The increase in BOLI assets were attributed to the purchase of $26.5 million of additional insurance contracts during December of 2019 which will be used to offset future employee compensation benefit costs.

The following table summarizes our noninterest income from continuing operations for the years ended December 31.

Change from Prior Year

(Dollars in thousands)

Service charges on deposit accounts

Trust and investment fee income

Other noninterest income

Noninterest income from discontinued operations, excluding the gain on sale of Avon on December 31, 2018, decreased $9.3 million, or 99.8% when compared to 2018.

The decrease in noninterest income from discontinued operations was primarily due to insurance agency commissions from Avon of $9.0 million in 2018.

The sale of Avon resulted in a net gain before tax of $12.7 million for 2018.

Noninterest Expense

Noninterest expense, excluding discontinued operations, increased $726 thousand, or 2.0%, in 2019 when compared to 2018.

The increase in noninterest expenses was primarily due to higher employee benefits of $1.3 million, due to an increase in medical claims from the Company’s self-funded insurance program and the additional of supplemental executive retirement plans (“SERPs”) during 2019, data processing of $459 thousand, the result of utilizing additional services from our core processor, legal and professional fees of $242 thousand and other noninterest expenses of $265 thousand, partially offset by decreases in salaries and wages of $1.1 million, the result of amortization of intangible assets of $261 thousand and FDIC insurance premiums of $427 thousand.

The reduction in salaries and wages was primarily due to the reduction of a senior executive position at the beginning of 2019, coupled with the elimination of the long-term incentive plan during 2019 which was replaced by SERPs mentioned above.

Noninterest expense from discontinued operations, decreased $7.9 million, or 98.4% when compared to 2018.

The decrease in noninterest expense was primarily attributable to the sale of Avon on December 31, 2018 and was primarily concentrated in salaries and wages of $5.1 million and employee benefits of $1.2 million related to Avon in 2018.

The Company had 294 full-time equivalent employees at December 31, 2019, 343 full-time equivalent employees at December 31, 2018 and 327 full-time equivalent employees at December 31, 2017.

The following table summarizes our noninterest expense from continuing operations for the years ended December 31.

Change from Prior Year

(Dollars in thousands)

Salaries and wages

Employee benefits

Occupancy expense

Furniture and equipment expense

Data processing

Directors’

Amortization of intangible assets

FDIC insurance premium expense

Other real estate owned expenses, net

Legal and professional fees

Other noninterest expenses

The Company reported an income tax expense for continuing operations of $5.6 million for 2019, compared to an income tax expense for continuing operations of $5.4 million for 2018.

The effective tax rate for continuing operations was 25.6% for 2019 and 25.4% for 2018.

The Company’s effective tax rate remained relatively unchanged for 2019 compared to 2018.

Please refer to Note 16 of the Notes to Consolidated Financial Statements included in Part II of this Annual Report on Form 10‑K for further information.

REVIEW OF FINANCIAL CONDITION

Asset and liability composition, capital resources, asset quality, market risk, interest sensitivity and liquidity are all factors that affect our financial condition.

The following sections discuss each of these factors.

Interest-Bearing Deposits with Other Banks and Federal Funds Sold

The Company invests excess cash balances (i.e., the excess cash remaining after funding loans and investing in securities with deposits and borrowings) in interest-bearing accounts and federal funds sold offered by our correspondent banks.

These liquid investments are maintained at a level that management believes is necessary to meet current liquidity needs.

Total interest-bearing deposits with other banks increased $25.6 million from $50.9 million at December 31, 2018 to $76.5 million at December 31, 2019.

This significant increase was the result of deposit growth of $129.9 million, or 10.6%.

Average interest-bearing deposits with other banks increased $25.2 million in 2019 when compared to 2018.

The increase in 2019 was due to higher average balances on interest and noninterest-bearing deposits of $64.0 million and $22.0 million, respectively.

Investment Securities

The investment portfolio is structured to provide us with liquidity and also plays an important role in the overall management of interest rate risk.

Investment securities available for sale are stated at estimated fair value based on quoted prices and may be sold as part of the asset/liability management strategy or which may be sold in response to changing interest rates.

Net unrealized holding gains and losses on available for sale debt securities are reported net of related income taxes as accumulated other comprehensive income, a separate component of stockholders’

Investment securities in the held to maturity category are stated at cost adjusted for amortization of premiums and accretion of discounts.

We have the intent and current ability to hold such securities until maturity.

At December 31, 2019, 94% of the portfolio was classified as available for sale and 6% as held to maturity, similar to the 96% and 4%, respectively, at December 31, 2018.

The percentage of securities designated as available for sale reflects the amount that management believes is needed to support our anticipated growth and liquidity needs.

With the exception of municipal securities and corporate securities, our general practice is to classify all newly-purchased debt securities as available for sale.

On September 16, 2019, the Company bought a $4.0 million corporate bond which it intends to hold to maturity of September 16, 2027.

We do not typically invest in derivative securities and held no such investments at December 31, 2019 or December 31, 2018.

Total investment securities decreased $31.1 million from $168.2 million at December 31, 2018 to $137.1 million at December 31, 2019.

Average investment securities decreased $33.5 million in 2019.

Investment securities available for sale were $122.8 million at the end of 2019 and $154.4 million at the end of 2018.

The Company purchased no available for sale securities in 2019 or 2018.

The Company purchased a corporate bond of $4.0 million in the third quarter of 2019 which is classified as held to maturity and there were no purchases of held to maturity securities in 2018.

At year-end 2019, 19.4% of the available for sale securities in the portfolio were U.S.

Government agencies and 80.6% of the securities were mortgage-backed securities, compared to 21.0% and 79.0%, respectively, at year-end 2018.

As seen in the table below, 43% of the available-for-sale portfolio will mature in over five through ten years and 37% will mature in over ten years based on contractual maturities.

The comparable amounts for 2018 were 40% and 38%, respectively.

Our investments in mortgage-backed securities are issued or guaranteed by U.S.

Government agencies or government-sponsored agencies.

Investment securities held to maturity totaled $8.8 million at December 31, 2019.

The comparable amount was $6.0 million at December 31, 2018.

The following table sets forth the maturities and weighted average yields of the bond investment portfolio as of December 31, 2019.

1 Year or Less

5‑10 Years

Over 10 Years

(Dollars in thousands)

Available for sale:

Government agencies

Mortgage-backed

Total available for sale

Held to maturity:

Government agencies

States and political subdivisions 1

Other Debt Securities

Total held to maturity

Yields have been adjusted to reflect a tax equivalent basis using the statutory federal tax rate of 21%.

The loan portfolio is the primary source of our income.

Loans totaled $1.2 billion at December 31, 2019, an increase of $53.3 million, or 4.5%, from 2018.

Most of our loans are secured by real estate and are classified as construction, residential or commercial real estate loans.

The increase in loans was comprised of increases in commercial real estate loans of $63.1 million, or 12.1%, residential real estate loans of $12.9 million, or 3.0% and consumer loans of $10.5 million, or 143.8% at December 31, 2019 compared to December 31, 2018.

These increases were partially offset by a decrease of $28.3 million, or 22.2% in construction loans.

At December 31, 2019, the loan portfolio was comprised of 8.0% construction, 35.4% residential real estate and 47.0% commercial real estate.

That compares to 10.7%, 35.9% and 43.8%, respectively, at December 31, 2018.

Commercial and consumer loans were 8.2% and 1.4%, respectively, of the portfolio at December 31, 2019 and 9.0% and 0.6%, respectively, at December 31, 2018.

At December 31, 2019, 75.5% of the loan portfolio had fixed interest rates and 24.5% had adjustable interest rates, compared to 73.3% and 26.7%, respectively, at December 31, 2018.

See the discussion below under the caption “Asset Quality - Provision for Credit Losses and Risk Management”

and Note 4, “Loans and Allowance for Credit Losses”, in the Notes to Consolidated Financial Statements for additional information.

At December 31, 2019 and 2018, the Company did not have any loans held for sale.

We do not engage in foreign or subprime lending activities.

The table below sets forth trends in the composition of the loan portfolio over the past five years (including net deferred loan fees/costs).

(Dollars in thousands)

Residential real estate

Commercial real estate

The table below sets forth the maturities and interest rate sensitivity of the loan portfolio at December 31, 2019.

Maturing after

one but within

Maturing after

(Dollars in thousands)

within one year

Residential real estate

Commercial real estate

Fixed-interest rate loans

Adjustable-interest rate loans

The Bank uses deposits primarily to fund loans and to purchase investment securities.

Total deposits increased from $1.21 billion at December 31, 2018 to $1.34 billion at December 31, 2019 due to increases in every deposit product, with the exception of brokered deposits, which were zero at December 31, 2019.

The increases in deposit products consisted of the following:

interest-bearing checking deposits of $62.4 million, noninterest-bearing deposits of $26.2 million, time deposits greater than $100 thousand of $29.7 million, savings and money market accounts of $24.0 million and other time deposits of $8.8 million.

Average interest-bearing deposits increased $64.0 million, or 7.5%, in 2019, compared to an increase of $31.8 million, or 3.9% in 2018.

Average certificates of deposit and other time deposits increased $14.5 million, or 5.9% in 2019, compared to a decrease of $26.9 million, or 9.9% in 2018.

Average noninterest-bearing deposits increased $22.0 million, or 6.7%, in 2019, compared to an increase of $30.4 million, or 10.3% in 2018.

Deposits provided funding for approximately 89.0% and 86.9% of average earning assets for 2019 and 2018, respectively.

Average deposits increased for 2018 primarily in interest-bearing deposits of $31.8 million as well as an increase in noninterest-bearing deposits of $30.4 million, partially offset by a decline in certificates of deposit and other time deposits of $26.9 million.

The following table sets forth the average balances of deposits and the percentage of each category to total average deposits for the years ended December 31, 2019, 2018, and 2017.

Average Balances

(Dollars in thousands)

Noninterest-bearing demand

Interest-bearing deposits

Money market and savings

Brokered deposits

Certificates of deposit, $100,000 to $249,999

Certificates of deposit, $250,000 or more

Other time deposits

The following table sets forth the maturity ranges of certificates of deposit with balances of $250,000 or more as of December 31, 2019.

(Dollars in thousands)

Three months or less

Over three through 6 months

Over 6 through 12 months

Over 12 months

Short-Term Borrowings

Short-term borrowings generally consist of securities sold under agreements to repurchase and short-term borrowings from the FHLB.

Securities sold under agreements to repurchase are issued in conjunction with cash management services for commercial depositors.

We also borrow from the FHLB on a short-term basis and occasionally borrow from correspondent banks under federal fund lines of credit arrangements to meet short-term liquidity needs.

At December 31, 2019 short-term borrowings included repurchase agreements and at December 31, 2018 short-term borrowings included advances and repurchase agreements.

The average balance of short-term borrowings decreased $58.9 million, or 76.1%, in 2019, while the average balance increased $72.8 million, or 1,608.5%, in 2018.

While short-term borrowings were used to supplement deposits as a funding source in 2019 and 2018 the need for this funding source in 2019 was greatly reduced as a result of the increase in deposits in 2019.

The following table sets forth our position with respect to short-term borrowings at or for the periods presented.

(Dollars in thousands)

Average outstanding for the year

Outstanding at year end

Maximum outstanding at any month end

Long-Term Debt

The Company uses long-term borrowings to meet longer term liquidity needs, specifically to fund loan growth when liquidity from deposit growth is not sufficient.

The Company had $15.0 million outstanding at the end of 2019 and 2018.

The $15.0 million in fixed rate long-term borrowings from Federal Home Loan Bank carries an interest rate of 2.82% and will mature in April 2020.

Capital Resources Management

Total stockholders’

equity for the Company was $192.8 million at December 31, 2019, compared to $183.2 million at December 31, 2018.

The increase in stockholders’

equity in 2019 was primarily due to current year earnings and accumulated other comprehensive income, which primarily consisted of unrealized gains in available-for-sale securities, which was partially offset by dividends paid to common stockholders and stock repurchases.

The ratio of period-end equity to total assets was 12.37% for 2019, as compared to 12.35% for 2018.

We record unrealized holding gains (losses), net of tax, on investment securities available for sale as accumulated other comprehensive income (loss), a separate component of stockholders’

At December 31, 2019, the portion of the investment portfolio designated as “available for sale”

had a net unrealized holding gain, net of tax, of $218 thousand compared to net unrealized holding (losses), net of tax, of $(3.0) million at December 31, 2018.

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

Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by

regulators that, if undertaken, could have a material effect on the Company’s financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices.

The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum ratios of common equity Tier 1, Tier 1, and total capital as a percentage of assets and off-balance sheet exposures, adjusted for risk weights ranging from 0% to 1,250%.

The Bank is also required to maintain capital at a minimum level based on quarterly average assets, which is known as the leverage ratio.

In July 2013, federal bank regulatory agencies issued a final rule that revised their risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with certain standards that were developed by Basel III and certain provisions of the Dodd-Frank Act.

The final rule currently applies to all depository institutions and bank holding companies and savings and loan holding companies with total consolidated assets of more than $3 billion.

The Company has total consolidated assets of less than $3 billion and is currently exempt from the consolidated capital requirements.

As of December 31, 2019, the Bank was in compliance with all applicable regulatory capital requirements to which it was subject, and was classified as “well capitalized”

for purposes of the prompt corrective action regulations.

The following table compares the Bank’s capital ratios to the minimum regulatory requirements as of December 31, 2019, 2018 and 2017.

(Dollars in thousands)

Common equity Tier 1 capital

Tier 1 capital

Tier 2 capital

Total risk-based capital

Net risk-weighted assets

Adjusted average total assets

Risk-based capital ratios:

Common equity Tier 1

Total capital

Tier 1 leverage ratio

* includes phased in capital conservation buffer for 2019 of 2.50%

See Note 18 to the Consolidated Financial Statements for further information about the regulatory capital positions of the Bank (December 31, 2019 and 2018).

Asset Quality - Provision for Credit Losses and Risk Management

Originating loans involves a degree of risk that credit losses will occur in varying amounts according to, among other factors, the types of loans being made, the credit-worthiness of the borrowers over the terms of the loans, the quality of the collateral for the loans, if any, as well as general economic conditions.

Through the Company’s and the Bank’s Asset/Liability Management Committees, the Company’s Audit Committee and the Company’s Board actively reviews critical risk positions, including credit, market, liquidity and operational risk.

The Company’s goal in managing risk is to reduce earnings volatility, control exposure to unnecessary risk, and ensure appropriate returns for risk assumed.

Senior members of management actively manage risk at the product level, supplemented with corporate level oversight through

the Asset/Liability Management Committee and internal audit function.

The risk management structure is designed to identify risk through a systematic process, enabling timely and appropriate action to avoid and mitigate risk.

Credit risk is mitigated through loan portfolio diversification, limiting exposure to any single industry or customer, collateral protection, and prudent lending policies and underwriting criteria.

The following discussion provides information and statistics on the overall quality of the Company’s loan portfolio.

Note 1 to the Consolidated Financial Statements describes the accounting policies related to nonperforming loans (nonaccrual and delinquent 90 days or more), TDRs and loan charge-offs and describes the methodologies used to develop the allowance for credit losses, including the specific, formula and unallocated components (also discussed below).

Management believes the policies governing nonperforming loans, TDRs and charge-offs are consistent with regulatory standards.

The amount of the allowance for credit losses and the resulting provision are reviewed monthly by senior members of management and approved quarterly by the Board of Directors.

The allowance is increased by provisions for credit losses charged to expense and recoveries of loans previously charged off.

It is decreased by loans charged off in the current period.

Loans, or portions thereof, are charged off when considered uncollectible by management.

Provisions for credit losses are made to bring the allowance for credit losses within the range of balances that are considered appropriate.

The adequacy of the allowance for credit losses is determined based on management’s estimate of the inherent risks associated with lending activities, estimated fair value of collateral, past experience and present indicators such as loan delinquency trends, nonaccrual loans and current market conditions.

Management believes the current allowance is adequate to provide for probable losses inherent in our loan portfolio;

however, future changes in the composition of the loan portfolio and financial condition of borrowers may result in additions to the allowance.

Examination of the portfolio and allowance by various regulatory agencies and consultants engaged by the Company may result in the need for additional provisions based on information available at the time of the examination.

The Bank maintains a separate allowance for credit losses, which is only available to absorb losses from their respective loan portfolios.

The allowance set by the Bank is subject to regulatory examination and determination as to its adequacy.

The allowance for credit losses is comprised of three parts:

(i) the specific allowance;

(ii) the historical formula allowance;

and (iii) the qualitative formula allowance.

The specific allowance is established against impaired loans until charge offs are made.

Loans are considered impaired when it is probable that the Company will not collect all principal and interest payments according to the loan’s contractual terms.

The qualitative formula allowance is determined based on management’s assessment of industry trends and economic factors in the markets in which we operate.

The determination of the formula allowance involves a higher risk of uncertainty and considers current risk factors that may not have yet manifested themselves in our historical loss factors.

The specific allowance is used to individually allocate an allowance to loans identified as impaired.

An impaired loan may involve deficiencies in the borrower’s overall financial condition, payment history, support available from financial guarantors and/or the fair market value of collateral.

If it is determined that there is a loss associated with an impaired loan, a specific allowance is established until a charge off is made.

Impaired loans, or portions thereof, are charged off when deemed uncollectible.

The historical formula allowance is used to estimate the loss on internally risk-rated loans, exclusive of those identified as impaired.

Loans are grouped by type (construction, residential real estate, commercial real estate, commercial or consumer).

Each loan type is assigned allowance factors based on management’s estimate of the risk, complexity and size of individual loans within a particular category using average historical charge-offs by segment over the last 16 quarters, except for 1‑4 family residential and consumer loans which use the last 8 quarters.

The qualitative formula allowance is used to estimate the loss on loans stemming from more global factors such as delinquencies, loss history, trends in volume and terms of loans, effects of changes in lending policy, the experience and depth of management, national and local economic trends, concentrations of credit, the quality of the loan review system and the effect of external factors such as competition and regulatory requirements.

Loans that are identified as pass-watch, special mention, substandard and doubtful are considered to have elevated credit risk.

These loans are assigned higher allowance factors than favorably rated loans due to management’s concerns regarding collectability or management’s knowledge of particular elements regarding the borrower.

As seen in the table below, the provision for credit losses was $700 thousand for 2019, $1.7 million for 2018 and $2.3 million for 2017.

The decrease in the level of provision for credit losses in 2019 was primarily due to lower net charge-offs and improved credit quality when compared to 2018.

Net loan charge-offs totaled $536 thousand in 2019, $1.1 million in 2018 and $1.2 million in 2017.

Real estate loans were 59%, 58% and 44% of total net loans charged off during 2019, 2018 and 2017, respectively.

The allowance for credit losses was $10.5 million, or 0.86% of average outstanding loans at December 31, 2019, compared to an allowance of $10.3 million, or 0.90% of average outstanding loans at December 31, 2018.

The lower allowance percentage at the end of 2019 when compared to the end of 2018 was the result of improved credit quality and a reduction in net charge-offs.

At December 31, 2017, the allowance for credit losses was $9.8 million, or 0.99% of average outstanding loans.

The ratio of net charge-offs to average loans was 0.04% in 2019, 0.10% in 2018 and 0.13% in 2017.

The overall credit quality improved in 2019 compared to 2018 primarily due to a reduction in nonaccrual loans and OREO.

In addition, accruing TDRs declined $1.2 million when comparing 2019 to 2018 which reflects continued workout efforts on outstanding problem loans.

When comparing 2019 to 2018 loan risk categories, special mention loans increased $4.6 million and substandard loans decreased $9.8 million.

The increase in special mention loans was due to the downgrade of a few legacy loans which the Company has been monitoring for several years.

The decrease in substandard loans was primarily due to property sales and credit risk rating upgrades during 2019.

Management will continue to monitor and charge off nonperforming assets as rapidly as possible, and focus on the generation of healthy loan growth and new business development opportunities.

The following table sets forth a summary of our loan loss experience for the years ended December 31.

(Dollars in thousands)

Allowance balance - beginning of period

Residential real estate

Commercial real estate

Residential real estate

Commercial real estate

Net charge-offs

Provision for credit losses

Allowance balance - end of period

Average loans outstanding during the period

Net charge-offs (annualized) as a percentage of average loans outstanding during the period

Allowance for credit losses at period end as a percentage of total period end loans

Percentage of allowance for credit losses at

year end to average loans

The following table sets forth the allocation of the allowance for credit losses and the percentage of loans in each category to total loans for the years ended December 31.

(Dollars in thousands)

Residential real estate

Commercial real estate

At December 31, 2019, nonperforming assets were $12.0 million, a decrease of $6.0 million, or 33.4%, when compared to December 31, 2018.

T he decrease in nonperforming assets was due to diligent workout efforts by the Company to reduce nonaccrual loans and other real estate owned properties.

Accruing TDRs were $7.5 million at December 31, 2019, a decrease of $1.2 million, or 13.4%, when compared to December 31, 2018.

At December 31, 2019, the ratio of nonaccrual loans to total assets was 0.68%, a decrease from 1.12% at December 31, 2018.

The ratio of accruing TDRs to total assets at December 31, 2019 was 0.48% improving from 0.58% at December 31, 2018.

When comparing December 31, 2018 to December 31, 2017, the negative trend in nonperforming assets, as well as the corresponding asset quality ratios, was primarily due to a delinquent agricultural loan relationship which was placed on nonaccrual late in the fourth

quarter of 2018 for approximately $7.5 million.

No losses have been incurred for this relationship since the fourth quarter of 2018.

The Company continues to focus on the resolution of its nonperforming and problem loans.

The efforts to accomplish this goal include frequently contacting borrowers until the delinquency is cured or until an acceptable payment plan has been agreed upon;

obtaining updated appraisals;

provisioning for credit losses;

charging off loans;

transferring loans to other real estate owned;

aggressively marketing other real estate owned;

and selling loans.

The reduction of nonperforming and problem loans is and will continue to be a high priority for the Company.

The following table summarizes our nonperforming assets and accruing TDRs as of December 31.

(Dollars in thousands)

Nonperforming assets

Nonaccrual loans

Residential real estate

Commercial real estate

Total nonaccrual loans

Loans 90 days or more past due and still accruing

Residential real estate

Commercial real estate

Total loans 90 days or more past due and still accruing

Other real estate owned

Total nonperforming assets

Accruing TDRs

Residential real estate

Commercial real estate

Total accruing TDRs

As a percent of total loans:

Nonaccrual loans

Accruing TDRs

Nonaccrual loans and accruing TDRs

As a percent of total loans and other real estate owned:

Nonperforming assets

Nonperforming assets and accruing TDRs

As a percent of total assets:

Nonaccrual loans

Nonperforming assets

Accruing TDRs

Nonperforming assets and accruing TDRs

Market Risk Management and Interest Sensitivity

The Company’s net income is largely dependent on its net interest income.

Net interest income is susceptible to interest rate risk to the extent that interest-bearing liabilities mature or re-price on a different basis than interest-earning assets.

When interest-bearing liabilities mature or re-price more quickly than interest-earning assets in a given period, a significant increase in market rates of interest could adversely affect net interest income.

Similarly, when interest-earning assets mature or re-price more quickly than interest-bearing liabilities, falling interest rates could result in a decrease in net interest income.

Net interest income is also affected by changes in the portion of interest-earning assets that are funded by interest-bearing liabilities rather than by other sources of funds, such as noninterest-bearing deposits and stockholders’

The Company’s interest rate risk management goals are (1) to increase net interest income at a growth rate consistent with the growth rate of total assets, and (2) to minimize fluctuations in net interest margin as a percentage of interest-earning assets.

Management attempts to achieve these goals by balancing, within policy limits, the volume of floating-rate liabilities with a similar volume of floating-rate assets;

by keeping the average maturity of fixed-rate asset and liability contracts reasonably matched;

by maintaining a pool of administered core deposits;

and by adjusting pricing rates to market conditions on a continuing basis.

The Company’s Board of Directors has established a comprehensive asset liability management policy, which is administered by management’s Asset Liability Management Committee (“ALCO”).

The policy establishes limits on risk, which are quantitative measures of the percentage change in net interest income (a measure of net interest income at risk) and the fair value of equity capital (a measure of economic value of equity or “EVE”

at risk) resulting from a hypothetical change in the yield curve of U.S.

Treasury interest rates for maturities from one day to thirty years.

The Company evaluates the potential adverse impacts that changing interest rates may have on its short-term earnings, long-term value, and liquidity by outsourcing simulation analysis through the use of computer modeling.

The simulation model captures optionality factors such as call features and interest rate caps and floors imbedded in investment and loan portfolio contracts.

As with any method of gauging interest rate risk, there are certain shortcomings inherent in the interest rate modeling methodology used by the Company.

When interest rates change, actual movements in different categories of interest-earning assets and interest-bearing liabilities, loan prepayments, and withdrawals of time and other deposits, may deviate significantly from assumptions used in the model.

As an example, certain money market deposit accounts are assumed to reprice at 50% of the interest rate change in each of the up rate shock scenarios even though this is not a contractual requirement.

As a practical matter, management would likely lag the impact of any upward movement in market rates on these accounts as a mechanism to manage the Company’s net interest margin.

Finally, the methodology does not measure or reflect the impact that higher rates may have on adjustable-rate loan customers’

ability to service their debts, or the impact of rate changes on demand for loan, lease, and deposit products.

The Company presents a current base case and several alternative simulations at least once a quarter and reports the analysis to the Board of Directors.

In addition, more frequent forecasts could be produced when interest rates are particularly uncertain or when other business conditions so dictate.

The statement of condition is subject to quarterly testing for six alternative interest rate shock possibilities to indicate the inherent interest rate risk.

Average interest rates are shocked by +/- 100, 200, 300 and 400 basis points (“bp”), although the Company may elect not to use particular scenarios that it determines are impractical in a current rate environment.

It is management’s goal to structure the balance sheet so that net interest earnings at risk over a twelve-month period and the economic value of equity at risk do not exceed policy guidelines at the various interest rate shock levels.

Measures of net interest income at risk produced by simulation analysis are indicators of an institution’s short-term performance in alternative rate environments.

These measures are typically based upon a relatively brief period, usually one year.

They do not necessarily indicate the long-term prospects or economic value of the institution.

The measures of equity value at risk indicate the ongoing economic value of the Company by considering the effects of changes in interest rates on all of the Company’s cash flows, and by discounting the cash flows to estimate the present value of assets and liabilities.

The difference between these discounted values of the assets and liabilities is the EVE, which, in theory, approximates the fair value of the Company’s net assets.

The following tables present the projected change in the Bank’s net interest income and EVE at December 31, 2019 and 2018 that would occur upon an immediate change in interest rates based on independent analysis, but without giving effect to any steps that management might take to counteract that change:

Estimated Changes in Net Interest Income

Change in Interest Rates:

‑100 bp

‑200 bp

December 31, 2019

December 31, 2018

Estimated Changes in Economic Value of Equity

Change in Interest Rates:

‑100 bp

‑200 bp

December 31, 2019

December 31, 2018

As with any method of measuring interest rate risk, certain shortcomings are inherent in the method of analysis presented in the foregoing tables.

For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates.

Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates.

Additionally, certain assets, such as adjustable rate mortgage loans, have features which restrict changes in interest rates on a short-term basis and over the life of the asset.

Further, if interest rates change, expected rates of prepayments on loans and early withdrawals from certificates of deposit could deviate significantly from those assumed in calculating the tables.

Off-Balance Sheet Arrangements

In the normal course of business, to meet the financing needs of its customers, the Bank is party to financial instruments with off-balance sheet risk.

These financial instruments include commitments to extend credit and standby letters of credit.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to these financial instruments is represented by the contractual amount of the instruments.

The Bank uses the same credit policies in making commitments and conditional obligations as they use for on-balance sheet instruments.

The Bank generally requires collateral or other security to support the financial instruments with credit risk.

The amount of collateral or other security is determined based on management’s credit evaluation of the counterparty.

The Bank evaluates each customer’s creditworthiness on a case-by-case basis.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.

Letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party.

Letters of credit and other commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.

Because many of the letters of credit and commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements.

Further information about these arrangements is provided in Note 21 to the Consolidated Financial Statements.

Management does not believe that any of the foregoing arrangements have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Liquidity Management

Liquidity describes our ability to meet financial obligations that arise during the normal course of business.

Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of customers and to fund current and planned expenditures.

Liquidity is derived through increased customer deposits, maturities in the investment portfolio, loan repayments and income from earning assets.

To the extent that deposits are not adequate to fund customer loan demand, liquidity needs can be met in the short-term funds markets.

We have arrangements with correspondent banks whereby we

have $15 million available in federal funds lines of credit and a reverse repurchase agreement available to meet any short-term needs which may not otherwise be funded by the Bank’s portfolio of readily marketable investments that can be converted to cash.

The Bank is also a member of the FHLB, which provides another source of liquidity, and had credit availability of approximately $270.1 million from the FHLB as of December 31, 2019.

At December 31, 2019, our loan to deposit ratio was approximately 93.1%, lower than the 98.6% at year-end 2018.

Investment securities available for sale totaling $122.8 million at the end of 2019 were available for the management of liquidity and interest rate risk.

The comparable amount was $154.4 million at December 31, 2018.

Cash and cash equivalents were $95.0 million at December 31, 2019, an increase of $27.7 million, or 41.3%, compared to the $67.2 million at year-end 2018, which reflects the increase in deposits during 2019.

Management is not aware of any demands, commitments, events or uncertainties that will materially affect our ability to maintain liquidity at satisfactory levels.

Quantitative and Qualitative Disclosures About Market Risk.

The information required by this item may be found in Item 7 of Part II of this annual report under the caption “Market Risk Management and Interest Sensitivity”, which is incorporated herein by reference.

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 5. Market for Registrant’s Common Equity