QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification Number)
|
|
|
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(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
Trading symbols(s)
|
Name of each exchange on which registered
|
||
None
|
Not Applicable
|
Not Applicable
|
|
No ☐
|
|
No ☐
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
|
Smaller reporting company
|
Yes
|
No ☒
|
|
Page
|
3
|
|
3
|
|
3
|
|
4 | |
5
|
|
6
|
|
7
|
|
8
|
|
37
|
|
55
|
|
55
|
|
55
|
|
55
|
|
55
|
|
58
|
|
58
|
|
58
|
|
58
|
|
58
|
|
59
|
(in thousands, except share amounts)
|
September 30, 2023
|
December 31, 2022
|
||||||
|
||||||||
Assets
|
||||||||
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Certificates of deposit
|
|
|
||||||
Investment securities – available-for-sale, at estimated fair value, net of allowance for credit losses of $
|
|
|
||||||
Loans, net of allowance for credit losses of $
|
|
|
||||||
Loans held-for-sale
|
|
|
||||||
Stock in Federal Home Loan Bank and other equity securities, at cost
|
|
|
||||||
Premises and equipment, net
|
|
|
||||||
Core deposit intangible
|
||||||||
Interest receivable and other assets
|
|
|
||||||
|
||||||||
Total Assets
|
$
|
|
$
|
|
||||
|
||||||||
Liabilities and Stockholders’ Equity
|
||||||||
|
||||||||
Liabilities:
|
||||||||
|
||||||||
Demand deposits
|
$
|
|
$
|
|
||||
Interest-bearing transaction deposits
|
|
|
||||||
Savings and MMDA’s
|
|
|
||||||
Time, $250,000 or less
|
|
|
||||||
Time, over $250,000
|
|
|
||||||
Total deposits
|
|
|
||||||
|
||||||||
Interest payable and other liabilities
|
|
|
||||||
|
||||||||
Total Liabilities
|
|
|
||||||
Commitments and contingencies (Note 7)
|
||||||||
Stockholders’ Equity:
|
||||||||
Common stock,
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive loss, net
|
(
|
)
|
(
|
)
|
||||
Total Stockholders’ Equity
|
|
|
||||||
|
||||||||
Total Liabilities and Stockholders’ Equity
|
$
|
|
$
|
|
(in thousands, except per share amounts)
|
Three months
ended
September 30, 2023
|
Three months
ended
September 30, 2022
|
Nine months
ended
September 30, 2023
|
Nine months
ended
September 30, 2022
|
||||||||||||
Interest and dividend income:
|
||||||||||||||||
Loans
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Due from banks interest bearing accounts
|
|
|
|
|
||||||||||||
Investment securities
|
||||||||||||||||
Taxable
|
|
|
|
|
||||||||||||
Non-taxable
|
|
|
|
|
||||||||||||
Other earning assets
|
|
|
|
|
||||||||||||
Total interest and dividend income
|
|
|
|
|
||||||||||||
Interest expense:
|
||||||||||||||||
Deposits
|
|
|
|
|
||||||||||||
Total interest expense
|
|
|
|
|
||||||||||||
Net interest income
|
|
|
|
|
||||||||||||
Provision for credit losses
|
|
|
|
|
||||||||||||
Net interest income after provision for credit losses
|
|
|
|
|
||||||||||||
Non-interest income:
|
||||||||||||||||
Service charges on deposit accounts
|
|
|
|
|
||||||||||||
Gains on sales of loans held-for-sale
|
|
|
|
|
||||||||||||
Investment and brokerage services income
|
|
|
|
|
||||||||||||
Mortgage brokerage income
|
|
|
|
|
||||||||||||
Loan servicing income
|
|
|
|
|
||||||||||||
Debit card income
|
|
|
|
|
||||||||||||
Losses on sales/calls of available-for-sale securities
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||
Gain on bargain purchase
|
||||||||||||||||
Other income
|
|
|
|
|
||||||||||||
Total non-interest income
|
|
|
|
|
||||||||||||
Non-interest expenses:
|
||||||||||||||||
Salaries and employee benefits
|
|
|
|
|
||||||||||||
Occupancy and equipment
|
|
|
|
|
||||||||||||
Data processing
|
|
|
|
|
||||||||||||
Stationery and supplies
|
|
|
|
|
||||||||||||
Advertising
|
|
|
|
|
||||||||||||
Directors’ fees
|
|
|
|
|
||||||||||||
Amortization of core deposit intangible
|
||||||||||||||||
Other expense
|
|
|
|
|
||||||||||||
Total non-interest expenses
|
|
|
|
|
||||||||||||
Income before provision for income taxes
|
|
|
|
|
||||||||||||
Provision for income taxes
|
|
|
|
|
||||||||||||
|
||||||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
||||||||||||||||
Basic earnings per common share
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Diluted earnings per common share
|
$
|
|
$
|
|
$
|
|
$
|
|
(in thousands)
|
Three months
ended September 30,
2023
|
Three months
ended
September 30,
2022
|
Nine months
ended
September 30,
2023
|
Nine months
ended
September 30, 2022
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Other comprehensive loss, net of tax:
|
||||||||||||||||
Unrealized holding losses arising during the period, net of tax effect of $(
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Less: reclassification adjustment due to losses realized on sales of securities, net of tax effect of $
|
|
|
|
|
||||||||||||
Other comprehensive loss, net of tax
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
|
||||||||||||||||
Comprehensive (loss) income
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|
Common Stock
|
Additional
Paid-in
|
Retained
|
Accumulated
Other
Comprehensive
|
||||||||||||||||||||
|
Shares
|
Amounts
|
Capital
|
Earnings
|
Loss, net of tax
|
Total
|
||||||||||||||||||
|
||||||||||||||||||||||||
Balance
at December 31, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Net income
|
|
|
||||||||||||||||||||||
Other comprehensive loss, net of taxes
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
Stock dividend adjustment
|
|
|
(
|
)
|
|
|||||||||||||||||||
Cash in lieu of fractional shares
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||||||
Stock-based compensation
|
|
|
||||||||||||||||||||||
Common shares issued related to restricted stock grants
|
|
|
|
|||||||||||||||||||||
Stock options exercised, net
|
|
|
|
|||||||||||||||||||||
Stock repurchase and retirement | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
Balance at March 31, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Net income
|
|
|
||||||||||||||||||||||
Other comprehensive loss, net of taxes
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
Stock-based compensation
|
|
|
||||||||||||||||||||||
Common shares issued related to restricted stock grants
|
||||||||||||||||||||||||
Stock repurchase and retirement |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Balance at June 30, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Net income | ||||||||||||||||||||||||
Other comprehensive loss, net of taxes
|
( |
) | ( |
) | ||||||||||||||||||||
Stock-based compensation
|
||||||||||||||||||||||||
Stock repurchase and retirement
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Balance at September 30, 2022
|
$ |
$ |
$ |
$ |
( |
) | $ |
|||||||||||||||||
Balance at December 31, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Cumulative change from adoption of on January 1, 2023
|
( |
) | ( |
) | ||||||||||||||||||||
Balance at January 1, 2023 (as adjusted for adoption of accounting standard)
|
( |
) | ||||||||||||||||||||||
Net income
|
|
|
||||||||||||||||||||||
Other comprehensive income, net of taxes
|
|
|
||||||||||||||||||||||
Stock dividend adjustment
|
|
|
(
|
)
|
|
|||||||||||||||||||
Cash in lieu of fractional shares
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||||||
Stock-based compensation
|
|
|
||||||||||||||||||||||
Common shares issued related to restricted stock grants
|
|
|
|
|||||||||||||||||||||
Stock options exercised, net of swapped shares
|
|
|
|
|||||||||||||||||||||
Stock repurchase and retirement |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Balance at March 31, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Net income
|
|
|
||||||||||||||||||||||
Other comprehensive loss, net of taxes
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
Stock-based compensation
|
|
|
||||||||||||||||||||||
Common shares issued related to restricted stock grants
|
|
|
||||||||||||||||||||||
Stock repurchase and retirement
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||||||
Balance at June 30, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Net income | ||||||||||||||||||||||||
Other comprehensive loss, net of taxes
|
( |
) | ( |
) | ||||||||||||||||||||
Stock-based compensation
|
||||||||||||||||||||||||
Restricted stock cancelled, net of common shares issued related to restricted stock grants
|
( |
) | ||||||||||||||||||||||
Stock options exercised, net
|
||||||||||||||||||||||||
Balance at September 30, 2023
|
$ |
$ |
$ |
$ |
( |
) | $ |
|
(in thousands)
|
|||||||
|
Nine months
ended
September 30, 2023
|
Nine months
ended
September 30, 2022
|
||||||
Cash Flows From Operating Activities
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation
|
|
|
||||||
Accretion and amortization of investment securities premiums and discounts, net
|
|
|
||||||
Valuation adjustment on mortgage servicing rights
|
|
(
|
)
|
|||||
Increase (decrease) in deferred loan origination fees and costs, net
|
|
(
|
)
|
|||||
Amortization of core deposit intangible |
||||||||
Provision for credit losses
|
|
|
||||||
Stock-based compensation
|
|
|
||||||
Losses on sales/calls of available-for-sale securities
|
|
|
||||||
Amortization of operating lease right-of-use asset
|
|
|
||||||
Gains on sales of loans held-for-sale
|
(
|
)
|
(
|
)
|
||||
Proceeds from sales of loans held-for-sale
|
|
|
||||||
Originations of loans held-for-sale
|
(
|
)
|
(
|
)
|
||||
Gain on bargain purchase
|
( |
) | ||||||
Changes in assets and liabilities:
|
||||||||
Decrease (increase) in interest receivable and other assets
|
|
(
|
)
|
|||||
Decrease in interest payable and other liabilities
|
(
|
)
|
(
|
)
|
||||
Net cash provided by operating activities
|
|
|
||||||
|
||||||||
Cash Flows From Investing Activities
|
||||||||
Proceeds from calls or maturities of available-for-sale securities
|
|
|
||||||
Proceeds from sales of available-for-sale securities
|
|
|
||||||
Principal repayments on available-for-sale securities
|
|
|
||||||
Purchases of available-for-sale securities
|
(
|
)
|
(
|
)
|
||||
Proceeds from maturities of certificates of deposit
|
|
|
||||||
Proceeds from sales of certificates of deposit
|
|
|
||||||
Purchases of certificates of deposit
|
( |
) | ( |
) | ||||
Net increase in loans
|
(
|
)
|
(
|
)
|
||||
Purchases of Federal Home Loan Bank stock and other equity securities, at cost
|
( |
) | ( |
) | ||||
Purchases of premises and equipment
|
(
|
)
|
(
|
)
|
||||
Cash and cash equivalents acquired in acquisition |
||||||||
Net cash provided by (used in) investing activities
|
|
(
|
)
|
|||||
|
||||||||
Cash Flows From Financing Activities
|
||||||||
Net (decrease) increase in deposits
|
(
|
)
|
|
|||||
Cash dividends paid in lieu of fractional shares
|
(
|
)
|
(
|
)
|
||||
Repurchases of common stock
|
(
|
)
|
(
|
)
|
||||
Net cash (used in) provided by financing activities
|
(
|
)
|
|
|||||
|
||||||||
Net increase (decrease) in Cash and Cash Equivalents
|
|
(
|
)
|
|||||
Cash and Cash
Equivalents, beginning of period
|
|
|
||||||
Cash and Cash
Equivalents, end of period
|
$
|
|
$
|
|
||||
|
||||||||
Supplemental Disclosures of Cash Flow Information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
|
$
|
|
||||
Income taxes
|
||||||||
Supplemental disclosures of non-cash investing and financing activities:
|
||||||||
Stock dividend distributed
|
|
|
||||||
Unrealized holding losses on available for sale securities, net of taxes
|
(
|
)
|
(
|
)
|
||||
Market value of shares tendered in-lieu of cash to pay for exercise of options
|
||||||||
Recognition of right-of-use assets obtained in exchange for operating lease liabilities
|
||||||||
Non-cash assets acquired (liabilities assumed) in acquisition: | ||||||||
Total assets acquired |
||||||||
Total liabilities assumed |
( |
) |
1. |
BASIS OF PRESENTATION
|
2. |
ACCOUNTING POLICIES
|
3. |
INVESTMENT SECURITIES
|
(in thousands)
|
Amortized
cost
|
Unrealized
gains
|
Unrealized
losses
|
Estimated fair
value
|
||||||||||||
|
||||||||||||||||
Investment securities available-for-sale:
|
||||||||||||||||
U.S. Treasury securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
Securities of U.S. government agencies and
corporations
|
|
|
(
|
)
|
|
|||||||||||
Obligations of states and political subdivisions
|
|
|
(
|
)
|
|
|||||||||||
Collateralized mortgage obligations
|
|
|
(
|
)
|
|
|||||||||||
Mortgage-backed securities
|
|
|
(
|
)
|
|
|||||||||||
Total debt securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
(in thousands)
|
Amortized
cost
|
Unrealized
gains
|
Unrealized
losses
|
Estimated fair
value
|
||||||||||||
|
||||||||||||||||
Investment securities available-for-sale:
|
||||||||||||||||
U.S. Treasury securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
Securities of U.S. government agencies and
corporations
|
|
|
(
|
)
|
|
|||||||||||
Obligations of states and political subdivisions
|
|
|
(
|
)
|
|
|||||||||||
Collateralized mortgage obligations
|
|
|
(
|
)
|
|
|||||||||||
Mortgage-backed securities
|
|
|
(
|
)
|
|
|||||||||||
Total debt securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
(in thousands)
|
Amortized
cost
|
Estimated
fair value
|
||||||
|
||||||||
Maturity in years:
|
||||||||
Due in one year or
less
|
$
|
|
$
|
|
||||
Due after one year
through five years
|
|
|
||||||
Due after five years
through ten years
|
|
|
||||||
Due after ten years
|
|
|
||||||
Subtotal
|
|
|
||||||
Mortgage-backed securities & Collateralized mortgage obligations |
|
|
||||||
Total
|
$
|
|
$
|
|
(in thousands)
|
Less than 12 months
|
12 months or more
|
Total
|
|||||||||||||||||||||
Fair Value
|
Unrealized
losses
|
Fair Value
|
Unrealized
losses
|
Fair Value
|
Unrealized
losses
|
|||||||||||||||||||
|
||||||||||||||||||||||||
U.S. Treasury securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
Securities of U.S. government agencies and
corporations
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Obligations of states and political subdivisions
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Collateralized mortgage obligations
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Mortgage-backed securities
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Total
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
(in thousands)
|
Less than 12 months
|
12 months or more
|
Total
|
|||||||||||||||||||||
Fair Value
|
Unrealized
losses
|
Fair Value
|
Unrealized
losses
|
Fair Value
|
Unrealized
losses
|
|||||||||||||||||||
|
||||||||||||||||||||||||
U.S. Treasury Securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
Securities of U.S. government agencies and
corporations
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Obligations of states and political subdivisions
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Collateralized Mortgage obligations
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Mortgage-backed securities
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Total
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
4.
|
LOANS AND ALLOWANCE FOR CREDIT LOSSES
|
($ in thousands)
|
September 30,
2023
|
December 31,
2022
|
||||||
|
||||||||
Commercial
|
$
|
|
$
|
|
||||
Commercial Real Estate
|
|
|
||||||
Agriculture
|
|
|
||||||
Residential Mortgage
|
|
|
||||||
Residential Construction
|
|
|
||||||
Consumer
|
|
|
||||||
|
|
|
||||||
Allowance for credit losses
|
(
|
)
|
(
|
)
|
||||
Deferred origination fees and costs, net
|
|
|
||||||
Loans, net
|
$
|
|
$
|
|
Allowance for credit losses – Three months ended September 30, 2023
|
||||||||||||||||||||
($ in thousands)
|
Beginning balance
|
Charge-offs
|
Recoveries
|
Provision
(recovery)
|
Ending Balance
|
|||||||||||||||
Commercial
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
|||||||||
Commercial Real Estate
|
|
|
|
|
|
|||||||||||||||
Agriculture
|
|
|
|
|
|
|||||||||||||||
Residential Mortgage
|
|
|
|
|
|
|||||||||||||||
Residential Construction
|
|
|
|
(
|
)
|
|
||||||||||||||
Consumer
|
|
(
|
)
|
|
|
|
||||||||||||||
Unallocated
|
|
|
|
|
|
|||||||||||||||
Allowance for credit losses on loans
|
|
(
|
)
|
|
|
|
||||||||||||||
Reserve for unfunded commitments
|
|
|
|
(
|
)
|
|
||||||||||||||
Total
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
Allowance for credit losses – Nine months ended September 30, 2023
|
||||||||||||||||||||||||
($ in thousands)
|
Beginning balance
|
Adoption of CECL
|
Charge-offs
|
Recoveries
|
Provision
(recovery)
|
Ending Balance
|
||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||
Commercial Real Estate
|
|
(
|
)
|
|
|
|
|
|||||||||||||||||
Agriculture
|
|
(
|
)
|
(
|
)
|
|
|
|
||||||||||||||||
Residential Mortgage
|
|
|
(
|
)
|
|
|
|
|||||||||||||||||
Residential Construction
|
|
|
|
|
(
|
)
|
|
|||||||||||||||||
Consumer
|
|
|
(
|
)
|
|
(
|
)
|
|
||||||||||||||||
Unallocated
|
|
|
|
(
|
)
|
|
||||||||||||||||||
Allowance for credit losses on loans
|
|
|
(
|
)
|
|
|
|
|||||||||||||||||
Reserve for unfunded commitments
|
|
|
|
|
(
|
)
|
|
|||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
Three Months Ended September 30, 2022
|
||||||||||||||||||||||||||||||||
($ in thousands)
|
Commercial
|
Commercial
Real Estate
|
Agriculture
|
Residential
Mortgage
|
Residential
Construction
|
Consumer
|
Unallocated
|
Total
|
||||||||||||||||||||||||
Balance as of June 30, 2022
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Provision for (reversal of) loan losses
|
(
|
)
|
|
|
|
(
|
)
|
|
(
|
)
|
|
|||||||||||||||||||||
Charge-offs
|
|
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||||
Recoveries
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Net (charge-offs)/recoveries
|
|
|
|
|
|
(
|
)
|
|
|
|||||||||||||||||||||||
Balance as of September 30, 2022
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Nine
Months Ended September 30, 2022
|
||||||||||||||||||||||||||||||||
($ in thousands)
|
Commercial
|
Commercial
Real Estate
|
Agriculture
|
Residential
Mortgage
|
Residential
Construction
|
Consumer
|
Unallocated
|
Total
|
||||||||||||||||||||||||
Balance as of December 31, 2021
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Provision for (reversal of) loan losses
|
(
|
)
|
|
|
|
|
|
(
|
)
|
|
||||||||||||||||||||||
Charge-offs
|
(
|
)
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||
Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Net (charge-offs)/recoveries
|
(
|
)
|
|
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||||||
Balance as of September 30, 2022
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
September 30, 2023
|
||||||||||||||||||||||||||||||||
($ in thousands)
|
Secured by 1-4
Family
Residential
Properties-1st
lien
|
Secured by 1-4
Family
Residential
Properties-junior
lien
|
Secured by 1-4
Family
Residential
Properties-
revolving
|
Commercial
|
Construction and land development
|
Secured by farmland
|
Agriculture production loans
|
Total
|
||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Commercial Real Estate
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Agriculture
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Residential Mortgage
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Residential Construction
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Consumer
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
December 31, 2022
|
||||||||||||||||||||||||||||||||
($ in thousands)
|
Secured by 1-4
Family
Residential
Properties-1st
lien
|
Secured by 1-4
Family
Residential
Properties-junior
lien
|
Secured by 1-4
Family
Residential
Properties-
revolving
|
Commercial
|
Construction and land development
|
Secured by farmland
|
Agriculture production loans
|
Total
|
||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Commercial Real Estate
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Agriculture
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Residential Mortgage
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Residential Construction
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Consumer
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
($ in thousands)
|
30-59 days
Past Due
& Accruing
|
60-89 days
Past Due
& Accruing
|
90 days or
More Past
Due &
Accruing
|
Nonaccrual
Loans
|
Total Past
Due
& Nonaccrual
Loans
|
Current &
Accruing
Loans
|
Total Loans
|
Nonaccrual
loans with
No ACL
|
||||||||||||||||||||||||
September 30, 2023
|
||||||||||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$ | $ |
$
|
|
$ | |||||||||||||||||||
Commercial Real Estate
|
|
|
|
|
|
|||||||||||||||||||||||||||
Agriculture
|
|
|
|
|
|
|||||||||||||||||||||||||||
Residential Mortgage
|
|
|
|
|
|
|||||||||||||||||||||||||||
Residential Construction
|
|
|
|
|
|
|||||||||||||||||||||||||||
Consumer
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$ | $ |
$
|
|
$ | |||||||||||||||||||
|
||||||||||||||||||||||||||||||||
December 31, 2022
|
||||||||||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$ |
$
|
|
$ |
|||||||||||||||||||
Commercial Real Estate
|
|
|
|
|
|
|||||||||||||||||||||||||||
Agriculture
|
|
|
|
|
|
|||||||||||||||||||||||||||
Residential Mortgage
|
|
|
|
|
|
|||||||||||||||||||||||||||
Residential Construction
|
|
|
|
|
|
|||||||||||||||||||||||||||
Consumer
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$ | $ |
$
|
|
$ |
($ in thousands)
|
Term Extension
|
Combination Term Extension
and Interest Rate Reduction
|
Total Class of Financing
Receivable
|
|||||||||
|
||||||||||||
Commercial
|
$
|
|
$
|
|
|
|||||||
Commercial Real
Estate
|
|
|
|
|||||||||
Agriculture
|
|
|
|
|||||||||
Residential
Mortgage
|
|
|
|
|||||||||
Residential
Construction
|
|
|
|
%
|
||||||||
Consumer
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
|
%
|
($ in thousands)
|
Term Extension
|
Combination Term Extension
and Interest Rate Reduction
|
Total Class of Financing
Receivable
|
|||||||||
Commercial
|
$
|
|
$
|
|
|
%
|
||||||
Commercial Real Estate
|
|
|
|
%
|
||||||||
Agriculture
|
|
|
|
%
|
||||||||
Residential Mortgage
|
|
|
|
|||||||||
Residential Construction
|
|
|
|
%
|
||||||||
Consumer
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
|
%
|
($ in thousands)
|
Weighted-Average
Interest Rate
Reduction
|
Weighted-Average
Term Extension (in
months)
|
||||||
Commercial
|
|
$
|
|
|||||
Commercial Real Estate
|
|
|
||||||
Agriculture
|
|
|
||||||
Residential Mortgage
|
|
|
||||||
Residential Construction
|
|
|
||||||
Consumer
|
|
|
||||||
Total
|
|
$
|
|
($ in thousands)
|
Weighted-Average
Interest Rate
Reduction
|
Weighted-Average
Term Extension (in
months)
|
||||||
Commercial
|
|
%
|
$
|
|
||||
Commercial Real Estate
|
|
%
|
|
|||||
Agriculture
|
|
|
||||||
Residential Mortgage
|
|
|
||||||
Residential Construction
|
|
|
||||||
Consumer
|
|
|
||||||
Total
|
|
%
|
$
|
|
($ in thousands)
|
Nine months ended September 30, 2022
|
|||||||||||
Number of
Contracts
|
Pre-
modification
outstanding
recorded
investment
|
Post-
modification
outstanding
recorded
investment
|
||||||||||
Consumer
|
|
$
|
|
$
|
|
|||||||
Total
|
|
$
|
|
$
|
|
(in thousands)
|
||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year - As of September 30, 2023
|
||||||||||||||||||||||||||||||||
2023
|
2022
|
2021
|
2020
|
2019
|
Prior
|
Revolving
Loans
Amortized
Cost Basis
|
Total
|
|||||||||||||||||||||||||
Commercial
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Doubtful/Loss
|
||||||||||||||||||||||||||||||||
Total Commercial loans
|
$
|
|
$ |
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
||||||||||||||||||
Year-to-date Period Charge-offs
|
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||||||
Year-to-date Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Year-to-date Net Charge-offs
|
|
(
|
)
|
(
|
)
|
|
|
|
(
|
)
|
||||||||||||||||||||||
Commercial Real Estate
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Doubtful/Loss
|
||||||||||||||||||||||||||||||||
Total Commercial Real Estate loans
|
$
|
|
$ |
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
||||||||||||||||||
Year-to-date Charge-offs
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Year-to-date Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Year-to-date Net Charge-offs
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Agriculture
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
$ |
$
|
|
||||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Doubtful/Loss
|
||||||||||||||||||||||||||||||||
Total Agriculture loans
|
$
|
|
$ |
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
||||||||||||||||||
Year-to-date Charge-offs
|
(
|
)
|
|
|
|
|
|
( |
) |
(
|
)
|
|||||||||||||||||||||
Year-to-date Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Year-to-date Net Charge-offs
|
(
|
)
|
|
|
|
|
|
( |
) |
(
|
)
|
(in thousands)
|
||||||||||||||||||||||||||||||||
Term Loans Amortized Cost Basis by Origination Year - As of September 30, 2023
|
||||||||||||||||||||||||||||||||
2023
|
2022
|
2021
|
2020
|
2019
|
Prior
|
Revolving
Loans
Amortized
Cost Basis
|
Total
|
|||||||||||||||||||||||||
Residential Mortgage
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Doubtful/Loss
|
||||||||||||||||||||||||||||||||
Total Residential Mortgage loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Year-to-date Charge-offs
|
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||
Year-to-date Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Year-to-date Net Charge-offs
|
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||
Residential Construction
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Doubtful/Loss
|
||||||||||||||||||||||||||||||||
Total Residential Construction loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Year-to-date Charge-offs
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Year-to-date Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Year-to-date Net Charge-offs
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Consumer
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Doubtful/Loss
|
||||||||||||||||||||||||||||||||
Total Consumer loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Year-to-date Charge-offs
|
(
|
)
|
|
|
|
|
|
(
|
)
|
|||||||||||||||||||||||
Year-to-date Recoveries
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Year-to-date Net Charge-offs
|
(
|
)
|
|
|
|
|
|
(
|
)
|
|||||||||||||||||||||||
Total Loans | ||||||||||||||||||||||||||||||||
Pass
|
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Special Mention
|
||||||||||||||||||||||||||||||||
Substandard
|
||||||||||||||||||||||||||||||||
Doubtful/Loss
|
||||||||||||||||||||||||||||||||
Total Loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Year-to-date Charge-offs
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) |
$
|
(
|
)
|
|||||||||
Year-to-date Recoveries
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
$
|
|
|||||||||||||||||
Year-to-date Net Charge-offs
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
$ | ( |
) |
$
|
(
|
)
|
Pass
|
Special
Mention |
Substandard
|
Doubtful
|
Loss
|
Total
|
|||||||||||||||||||
December 31, 2022
|
||||||||||||||||||||||||
Commercial
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Commercial Real Estate
|
|
|
|
|
|
|
||||||||||||||||||
Agriculture
|
|
|
|
|
|
|
||||||||||||||||||
Residential Mortgage
|
|
|
|
|
|
|
||||||||||||||||||
Residential Construction
|
|
|
|
|
|
|
||||||||||||||||||
Consumer
|
|
|
|
|
|
|
||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
5. |
MORTGAGE OPERATIONS
|
|
September 30, 2023
|
December 31, 2022
|
||||||
|
||||||||
Constant prepayment rate
|
|
%
|
|
%
|
||||
Discount rate
|
|
%
|
|
%
|
||||
Weighted average life (years)
|
|
|
|
(in thousands)
|
|||||||||||||||
|
December 31, 2022
|
Additions
|
Reductions
|
September 30, 2023
|
||||||||||||
|
||||||||||||||||
Mortgage servicing rights
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
Valuation allowance
|
|
|
|
|
||||||||||||
Mortgage servicing rights, net of
valuation allowance
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
6. |
FAIR VALUE MEASUREMENTS
|
|
(in thousands) | |||||||||||||||
September 30, 2023
|
Fair Value
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
U.S. Treasury securities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Securities of U.S. government agencies and
corporations
|
|
|
|
|
||||||||||||
Obligations of states and political
subdivisions
|
|
|
|
|
||||||||||||
Collateralized mortgage obligations
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
|
|
|
|
||||||||||||
Total investments at fair value
|
$
|
|
$
|
|
$
|
|
$
|
|
|
(in thousands) | |||||||||||||||
December 31, 2022
|
Fair Value
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||
U.S. Treasury securities
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Securities of U.S. government agencies and
corporations
|
|
|
|
|
||||||||||||
Obligations of states and political
subdivisions
|
|
|
|
|
||||||||||||
Collateralized mortgage obligations
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
|
|
|
|
||||||||||||
Total investments at fair value
|
$
|
|
$
|
|
$
|
|
$
|
|
(in thousands)
|
||||||||||||||||
September 30, 2023
|
Carrying
Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Individually evaluated loans
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Total assets at fair value
|
$
|
|
$
|
|
$
|
|
$
|
|
Method
|
Assumption Inputs
|
||
Individually evaluated loans
|
Collateral, market, income, enterprise, liquidation, and discounted cash flows
|
External appraised values, management assumptions regarding market trends or other relevant factors, selling costs of
|
(in thousands)
|
September 30, 2023
|
December 31, 2022
|
||||||||||||||||||
|
Level
|
Carrying
amount
|
Fair value
|
Carrying
amount
|
Fair value
|
|||||||||||||||
|
||||||||||||||||||||
Financial assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
1
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||
Certificates of deposit
|
2
|
|
|
|
|
|||||||||||||||
Stock in Federal Home Loan Bank and other
equity securities
|
3
|
|
|
|
|
|||||||||||||||
Loans receivable:
|
||||||||||||||||||||
Net loans
|
3
|
|
|
|
|
|||||||||||||||
Loans held-for-sale
|
2
|
|
|
|
|
|||||||||||||||
Interest receivable
|
2
|
|
|
|
|
|||||||||||||||
Mortgage servicing rights
|
3 | |||||||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Time deposits
|
3
|
|
|
|
|
|||||||||||||||
Interest payable
|
2
|
|
|
|
|
7. |
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
|
(in thousands)
|
September 30,
2023
|
December 31,
2022
|
||||||
|
||||||||
Undisbursed loan commitments
|
$
|
|
$
|
|
||||
Standby letters of credit
|
|
|
||||||
Commitments to sell loans
|
|
|
||||||
|
$
|
|
$
|
|
8. |
STOCK PLANS
|
|
Number of
Shares
|
Weighted
Average
Exercise Price
|
Aggregate
Intrinsic
Value
|
Weighted
Average
Remaining
Contractual
Term (in
years)
|
||||||||||||
Options outstanding at Beginning of
Period
|
|
$
|
|
|||||||||||||
Granted
|
|
|
||||||||||||||
Expired
|
|
|
||||||||||||||
Cancelled / Forfeited
|
|
|
||||||||||||||
Exercised
|
(
|
)
|
|
|||||||||||||
Options outstanding at End of Period
|
|
$
|
|
$
|
|
|
||||||||||
Exercisable (vested) at End of Period
|
|
$
|
|
$
|
|
|
|
Number of
Shares
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
|
Weighted
Average
Remaining
Contractual
Term (in
years)
|
||||||||||||
Options outstanding at Beginning
of Period
|
|
$
|
|
|||||||||||||
Granted
|
|
|
||||||||||||||
Expired
|
|
|
||||||||||||||
Cancelled / Forfeited
|
|
|
||||||||||||||
Exercised
|
(
|
)
|
|
|||||||||||||
Options outstanding at End of Period
|
|
$
|
|
$
|
|
|
||||||||||
Exercisable (vested) at End of Period
|
|
$
|
|
$
|
|
|
|
Number of
Shares
|
Weighted
Average
Grant Date
Fair Value
|
Aggregate
Intrinsic
Value
|
Weighted
Average
Remaining
Contractual
Term (in
years)
|
||||||||||
Non-vested Restricted stock
outstanding at Beginning of Period
|
|
|
$
|
|
||||||||||
Granted
|
|
|
||||||||||||
Cancelled / Forfeited
|
(
|
)
|
|
|||||||||||
Exercised/Released/Vested
|
(
|
)
|
|
|||||||||||
Non-vested restricted stock outstanding
at End of Period
|
|
$
|
|
$ |
|
|
|
Number of
Shares
|
Weighted
Average
Grant Date
Fair Value
|
Aggregate
Intrinsic
Value
|
Weighted
Average
Remaining
Contractual
Term (in
years)
|
||||||||||
Non-vested Restricted stock
outstanding at Beginning of Period
|
|
$
|
|
|
|
|||||||||
Granted
|
|
|
|
|
||||||||||
Cancelled / Forfeited
|
(
|
)
|
|
|
|
|||||||||
Exercised/Released/Vested
|
(
|
)
|
|
|
|
|||||||||
Non-vested restricted stock
outstanding at End of Period
|
|
$
|
|
$ |
|
|
|
Three Months Ended
September 30, 2023
|
Nine Months Ended
September 30, 2023
|
||||||
Risk Free Interest Rate
|
|
%
|
|
%
|
||||
|
||||||||
Expected Dividend Yield
|
|
%
|
|
%
|
||||
|
||||||||
Expected Life in Years
|
|
|
||||||
|
||||||||
Expected Price Volatility
|
|
%
|
|
%
|
9. |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
|
(in thousands)
|
Unrealized
losses on
securities
|
Officers’
retirement
plan
|
Directors’
retirement
plan
|
Accumulated
other
comprehensive
loss
|
||||||||||||
Balance as of June 30, 2023
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
Current period other comprehensive loss
|
(
|
)
|
|
|
(
|
)
|
||||||||||
Balance as of September 30, 2023
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
(in thousands)
|
Unrealized
losses on
securities
|
Officers’
retirement
plan
|
Directors’
retirement
plan
|
Accumulated
other
comprehensive
loss
|
||||||||||||
Balance as of December 31, 2022
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
Current period other comprehensive
income
|
(
|
)
|
|
|
(
|
)
|
||||||||||
Balance as of September 30, 2023
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
(in thousands)
|
Unrealized
gains on
securities
|
Officers’
retirement
plan
|
Directors’
retirement
plan
|
Accumulated
other
comprehensive
loss
|
||||||||||||
Balance as of June 30, 2022
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Current period other comprehensive loss
|
(
|
)
|
|
|
(
|
)
|
||||||||||
Balance as of September 30, 2022
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
(in thousands)
|
Unrealized
gains on
securities
|
Officers’
retirement
plan
|
Directors’
retirement
plan
|
Accumulated
other
comprehensive
loss
|
||||||||||||
Balance as of December 31, 2021
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Current period other comprehensive
loss
|
(
|
)
|
|
|
(
|
)
|
||||||||||
Balance as of September 30, 2022
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
10. |
OUTSTANDING SHARES AND EARNINGS PER SHARE
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Basic earnings per share:
|
||||||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
||||||||||||||||
Weighted average
common shares outstanding
|
|
|
|
|
||||||||||||
Basic EPS
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
||||||||||||||||
Diluted earnings per share:
|
||||||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
||||||||||||||||
Weighted average
common shares outstanding
|
|
|
|
|
||||||||||||
|
||||||||||||||||
Effect of dilutive shares
|
|
|
|
|
||||||||||||
|
||||||||||||||||
Adjusted weighted
average common shares outstanding
|
|
|
|
|
||||||||||||
Diluted EPS
|
$
|
|
$
|
|
$
|
|
$
|
|
11. |
LEASES
|
(in thousands)
|
September 30, 2023
|
|||
2023 (remaining 3 months)
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
2028 and thereafter
|
|
|||
Total lease payments
|
|
|||
Less: interest
|
(
|
)
|
||
Present value of lease liabilities
|
$
|
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
||||||||||||||
(in thousands)
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Cash paid for amounts included in the
measurement of lease liabilities
|
||||||||||||||||
Operating cash flows from operating leases
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Right-of-use assets obtained in exchange
for new operating lease liabilities
|
|
|
|
|
September 30, 2023
|
December 31, 2022
|
|||||||
Weighted-average remaining lease term –
operating leases, in years
|
|
|
||||||
Weighted-average discount rate – operating
leases
|
|
%
|
|
%
|
12. |
BUSINESS COMBINATIONS
|
Acquired Branches
January 20, 2023
|
||||
Fair value of consideration received:
|
||||
Cash consideration
|
$
|
|
||
Total fair value of consideration received
|
||||
Assets acquired:
|
||||
Cash and cash equivalents
|
|
|||
Loans
|
|
|||
Premises and equipment
|
|
|||
Core deposit intangible
|
|
|||
Other assets
|
|
|||
Total assets acquired
|
|
|||
Liabilities assumed:
|
||||
Deposits
|
|
|||
Other liabilities
|
|
|||
Total liabilities assumed
|
|
|||
Total net liabilities assumed
|
||||
Bargain purchase gain recognized
|
$ |
Acquired Branches
January 20, 2023
|
||||
Cash consideration received
|
$
|
|
||
Less:
|
||||
Cost basis of net liabilities assumed
|
(
|
)
|
||
Fair Value Adjustments:
|
||||
Loans
|
(
|
)
|
||
Premises and equipment
|
|
|||
Core deposit intangible
|
|
|||
Deposits
|
|
|||
Bargain purchase gain recognized
|
$
|
|
Three months
ended
September 30,
2023
|
Three months
ended
September 30,
2022
|
Nine months
ended
September 30,
2023
|
Nine months
ended
September 30,
2022
|
|||||||||||||
Summarized proforma income statement data:
|
||||||||||||||||
Net interest income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Provision for loan losses
|
|
|
|
|
||||||||||||
Non-interest income
|
|
|
|
|
||||||||||||
Non-interest expense
|
|
|
|
|
||||||||||||
Income before taxes
|
|
|
|
|
||||||||||||
Provision for income taxes
|
|
|
|
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Basic earnings per share
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Diluted earnings per share
|
$
|
|
$
|
|
$
|
|
$ |
● |
Our business objectives, strategies and initiatives, our organizational structure, the growth of our business and our competitive position and prospects, and the effect of competition on our business and strategies
|
● |
Our assessment of significant factors and developments that have affected or may affect our results
|
● |
Legal and regulatory actions, and future legislative and regulatory developments, including the effects of the Dodd-Frank Wall Street Reform and Protection Act (the “Dodd-Frank Act”), the Economic Growth, Regulatory Relief and Consumer
Protection Act (the “EGRRCPA”), and other legislation and governmental measures introduced in response to the financial crisis which began in 2008 and the ensuing recession affecting the banking system, financial markets and the U.S.
economy, as well as the effect of the federal Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), enacted in March 2020, in an effort to mitigate the consequences of the coronavirus pandemic and the governmental actions in
response to the pandemic
|
● |
Regulatory and compliance controls, processes and requirements and their impact on our business
|
● |
The costs and effects of legal or regulatory actions
|
● |
Expectations regarding draws on performance letters of credit and liabilities that may result from recourse provisions in standby letters of credit
|
● |
Our intent to sell or hold, and the likelihood that we would be required to sell, various investment securities
|
● |
Our regulatory capital requirements, including the capital rules established after the 2008 financial crisis by the U.S. federal banking agencies and our current intention not to elect to use the community bank leverage ratio framework
|
● |
Expectations regarding our non-payment of a cash dividend on our common stock in the foreseeable future
|
● |
Credit quality and provision for credit losses and management of asset quality and credit risk, expectations regarding collections and the timing thereof
|
● |
Our allowances for credit losses, including the conditions we consider in determining the unallocated allowance and our portfolio credit quality, the adequacy of the allowance for credit losses, underwriting standards, and risk grading
|
● |
Our assessment of economic conditions and trends and credit cycles and their impact on our business
|
● |
The seasonal nature of our business
|
● |
The impact of changes in interest rates and our strategy to manage our interest rate risk profile and the possible effect of changes in residential mortgage interest rates on new originations and refinancing of existing residential
mortgage loans
|
● |
Loan portfolio composition and risk grade trends, expected charge-offs, portfolio credit quality, loan demand, our strategy regarding loan modifications, delinquency rates and our underwriting standards and our expectations regarding our
recognition of interest income on loans that were provided payment deferrals upon completion of the payment forbearance period
|
● |
Our deposit base including renewal of time deposits and the outlook for deposit balances
|
● |
The impact on our net interest income and net interest margin of changes in interest rates
|
● |
The effect of possible changes in the initiatives and policies of the federal and state bank regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, the Securities and
Exchange Commission and other standard setters
|
● |
Tax rates and the impact of changes in the U.S. tax laws
|
● |
Our pension and retirement plan costs
|
● |
Our liquidity strategies and beliefs concerning the adequacy of our liquidity position
|
● |
Critical accounting policies and estimates, the impact or anticipated impact of recent accounting pronouncements or changes in accounting principles
|
● |
Expected rates of return, maturities, loss exposure, growth rates, yields, and projected results, including expectations about the results of the Company’s acquisition of these branches from Columbia State Bank, completed in January 2023
|
● |
The possible impact of weather-related or other natural conditions, including drought, fire or flooding, seismic events, and related governmental responses, including related electrical power outages, on economic conditions, especially
in the agricultural sector
|
● |
Maintenance of insurance coverages appropriate for our operations
|
● |
Threats to the banking sector and our business due to cybersecurity issues and attacks and regulatory expectations related to cybersecurity
|
● |
Possible changes in the fair values recorded on our financial statements of the assets acquired and liabilities assumed in our business combination completed in January 2023
|
● |
The effects of the coronavirus pandemic on the U.S., California and global economies and the actions of governments to reduce the spread of the virus and to mitigate the resulting economic consequences
|
● |
The possible effects on community banks and our business from the recent failures of other banks
|
● |
The possible adverse impacts on the banking industry and our business from a period of significant, prolonged inflation
|
● |
Descriptions of assumptions underlying or relating to any of the foregoing
|
• |
Net income of $14.7 million for the nine months ended September 30, 2023, up 31.5% from $11.2 million earned for the same period last year. Net income of $4.6 million for each of the three-month periods ended September 30, 2023 and
September 30, 2022.
|
• |
Diluted income per share of $1.01 for the nine months ended September 30, 2023, up 31.2% from diluted income per share of $0.77 in the same period last year. Diluted income per share of $0.32 for the three months ended September 30,
2023, up 3.2% from diluted income per share of $0.31 for the same period last year.
|
• |
Net interest income of $49.6 million for the nine months ended September 30, 2023, up 27.7% from $38.9 million for the same period last year. Net interest income of $15.9 million for the three months ended September 30, 2023, up 11.7%
from $14.2 million for the same period last year.
|
• |
Net interest margin of 3.68% for the nine months ended September 30, 2023, up 26.0% from 2.92% for the same period last year. Net interest margin of 3.51% for the three months ended September 30, 2023, up 12.5% from 3.12% for the same
period last year.
|
• |
Provision for credit losses of $3.1 million for the nine months ended September 30, 2023, up 244.4% from $0.9 million for the same period last year. Provision for credit losses of $0.5 million for the three months ended September 30,
2023, up 66.7% from $0.3 million for the same period last year. The increase in provision for credit losses was primarily due to an agricultural relationship that required a charge-off of $2.6 million during the second quarter of 2023,
coupled with loan growth during the nine months ended September 30, 2023.
|
• |
Total assets of $1.90 billion as of September 30, 2023, up 1.7% from $1.87 billion as of December 31, 2022.
|
• |
Total net loans (including loans held-for-sale) of $1.04 billion as of September 30, 2023, up 6.9% from $970.1 million as of December 31, 2022.
|
• |
Total investment securities of $567.4 million as of September 30, 2023, down 8.2% from $618.1 million as of December 31, 2022.
|
• |
Total deposits of $1.75 billion as of September 30, 2023, up 1.1% from $1.73 billion as of December 31, 2022.
|
•
|
The Company adopted and implemented ASU 2016-13, more commonly referred to as the Current Expected Credit Loss (“CECL”) methodology, on January 1, 2023, which resulted in an increase to the allowance for
credit losses (“ACL”) and reserve for unfunded commitments totaling $1,300,000 as a cumulative effect adjustment from change in accounting policies, with a corresponding decrease in opening retained earnings of $916,000, net of deferred
taxes of $384,000.
|
•
|
On January 20, 2023, the Company completed the acquisition from Columbia State Bank of three branches in the California cities of Colusa, Willows, and Orland. The acquisition resulted in the assumption of $115.9 million of deposits and
acquisition of loans totaling $4.0 million, fixed assets totaling $3.6 million and cash on hand of $1.3 million. The Company also recognized a core deposit intangible of $5.0 million. The Bank received cash consideration totaling
approximately $103.4 million, resulting in a bargain purchase gain totaling approximately $1.4 million recognized during the nine months ended September 30, 2023. On an after-tax basis, the bargain purchase gain contributed $1.0 million
to net income for the nine months ended September 30, 2023.
|
Three Months
Ended September
30, 2023
|
Three Months
Ended September
30, 2022
|
Nine Months
Ended September
30, 2023
|
Nine Months
Ended September
30, 2022
|
|||||||||||||
(dollars in thousands except for per share amounts)
|
||||||||||||||||
For the Period:
|
||||||||||||||||
Net Income
|
$
|
4,619
|
$
|
4,568
|
$
|
14,672
|
$
|
11,155
|
||||||||
Basic Earnings Per Common Share
|
$
|
0.32
|
$
|
0.32
|
$
|
1.01
|
$
|
0.77
|
||||||||
Diluted Earnings Per Common Share
|
$
|
0.32
|
$
|
0.31
|
$
|
1.01
|
$
|
0.77
|
||||||||
Return on Average Assets (annualized)
|
0.96
|
%
|
0.95
|
%
|
1.02
|
%
|
0.79
|
%
|
||||||||
Return on Average Equity (annualized)
|
13.11
|
%
|
14.07
|
%
|
14.41
|
%
|
11.00
|
%
|
||||||||
Average Equity to Average Assets
|
7.30
|
%
|
6.75
|
%
|
7.09
|
%
|
7.19
|
%
|
September 30, 2023
|
December 31, 2022
|
|||||||
(in thousands except for ratios)
|
||||||||
At Period End:
|
||||||||
Total Assets
|
$
|
1,902,328
|
$
|
1,871,361
|
||||
Total Investment Securities, at fair value
|
$
|
567,409
|
$
|
618,092
|
||||
Total Loans, Net (including loans held-for-sale)
|
$
|
1,037,435
|
$
|
970,138
|
||||
Total Deposits
|
$
|
1,746,344
|
$
|
1,726,874
|
||||
Loan-To-Deposit Ratio
|
59.4
|
%
|
56.2
|
%
|
Three months ended
September 30, 2023
|
Three months ended
September 30, 2022
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Yield/
Rate (4)
|
Average
Balance
|
Interest
|
Yield/
Rate (4)
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans (1)
|
$
|
1,031,647
|
$
|
13,098
|
5.04
|
%
|
$
|
949,424
|
$
|
10,857
|
4.54
|
%
|
||||||||||||
Certificate of deposits
|
20,794
|
194
|
3.70
|
%
|
11,423
|
57
|
1.98
|
%
|
||||||||||||||||
Interest bearing due from banks
|
148,250
|
1,870
|
5.00
|
%
|
208,059
|
1,061
|
2.02
|
%
|
||||||||||||||||
Investment securities, taxable
|
551,555
|
2,685
|
1.93
|
%
|
589,082
|
2,122
|
1.43
|
%
|
||||||||||||||||
Investment securities, non-taxable (2)
|
31,765
|
199
|
2.49
|
%
|
40,272
|
250
|
2.46
|
%
|
||||||||||||||||
Other interest earning assets
|
10,518
|
214
|
8.07
|
%
|
9,440
|
137
|
5.76
|
%
|
||||||||||||||||
Total average interest-earning assets
|
1,794,529
|
18,260
|
4.04
|
%
|
1,807,700
|
14,484
|
3.18
|
%
|
||||||||||||||||
Non-interest-earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
49,630
|
41,157
|
||||||||||||||||||||||
Premises and equipment, net
|
9,704
|
6,125
|
||||||||||||||||||||||
Interest receivable and other assets
|
59,579
|
54,289
|
||||||||||||||||||||||
Total average assets
|
$
|
1,913,442
|
$
|
1,909,271
|
||||||||||||||||||||
Liabilities and Stockholders’ Equity:
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Interest-bearing transaction deposits
|
415,232
|
472
|
0.45
|
%
|
452,708
|
69
|
0.06
|
%
|
||||||||||||||||
Savings and MMDA’s
|
443,536
|
819
|
0.73
|
%
|
447,797
|
171
|
0.15
|
%
|
||||||||||||||||
Time, $250,000 or less
|
98,898
|
968
|
3.88
|
%
|
36,456
|
23
|
0.25
|
%
|
||||||||||||||||
Time, over $250,000
|
17,554
|
127
|
2.87
|
%
|
10,504
|
8
|
0.30
|
%
|
||||||||||||||||
Total average interest-bearing liabilities
|
975,220
|
2,386
|
0.97
|
%
|
947,465
|
271
|
0.11
|
%
|
||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Non-interest-bearing demand deposits
|
779,615
|
814,300
|
||||||||||||||||||||||
Interest payable and other liabilities
|
18,858
|
18,662
|
||||||||||||||||||||||
Total liabilities
|
1,773,693
|
1,780,427
|
||||||||||||||||||||||
Total average stockholders’ equity
|
139,749
|
128,844
|
||||||||||||||||||||||
Total average liabilities and stockholders’ equity
|
$
|
1,913,442
|
$
|
1,909,271
|
||||||||||||||||||||
Net interest income and net interest margin (3)
|
$
|
15,874
|
3.51
|
%
|
$
|
14,213
|
3.12
|
%
|
(1)
|
Average balances for loans include loans held-for-sale and non-accrual loans and are net of the allowance for loan losses, but non-accrued interest thereon is generally excluded. Loan interest income
includes loan fees, net of deferred costs of approximately $(50) and $223 for the three months ended September 30, 2023 and 2022, respectively. Net loan fees for the three months ended September 30, 2023 and September 30, 2022 include $0
and $154 in PPP loan fees recognized, respectively. Also included in loan interest income is interest income recognized on nonaccrual loans paid off totaling $4 and $19 for the three months ended September 30, 2023 and 2022, respectively.
|
(2) |
Interest income and yields on tax-exempt securities are not presented on a taxable-equivalent basis.
|
(3) |
Net interest margin is computed by dividing net interest income by total average interest-earning assets.
|
(4) |
For disclosure purposes, yield /rates are annualized by dividing the number of days in the reported period by 365.
|
Nine months ended
September 30, 2023
|
Nine months ended
September 30, 2022
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Yield/
Rate (4)
|
Average
Balance
|
Interest
|
Yield/
Rate (4)
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans (1)
|
$
|
994,504
|
$
|
38,197
|
5.14
|
%
|
$
|
896,708
|
$
|
30,979
|
4.62
|
%
|
||||||||||||
Certificate of deposits
|
21,115
|
556
|
3.52
|
%
|
11,659
|
167
|
1.92
|
%
|
||||||||||||||||
Interest bearing due from banks
|
174,391
|
6,411
|
4.92
|
%
|
231,712
|
1,626
|
0.94
|
%
|
||||||||||||||||
Investment securities, taxable
|
568,322
|
8,041
|
1.89
|
%
|
597,040
|
5,783
|
1.30
|
%
|
||||||||||||||||
Investment securities, non-taxable (2)
|
36,092
|
692
|
2.56
|
%
|
36,656
|
634
|
2.31
|
%
|
||||||||||||||||
Other interest earning assets
|
9,985
|
557
|
7.46
|
%
|
8,513
|
361
|
5.67
|
%
|
||||||||||||||||
Total average interest-earning assets
|
1,804,409
|
54,454
|
4.03
|
%
|
1,782,288
|
39,550
|
2.97
|
%
|
||||||||||||||||
Non-interest-earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
47,135
|
46,737
|
||||||||||||||||||||||
Premises and equipment, net
|
8,713
|
6,298
|
||||||||||||||||||||||
Interest receivable and other assets
|
58,805
|
49,547
|
||||||||||||||||||||||
Total average assets
|
$
|
1,919,062
|
$
|
1,884,870
|
||||||||||||||||||||
Liabilities and Stockholders’ Equity:
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Interest-bearing transaction deposits
|
432,741
|
1,107
|
0.34
|
%
|
441,819
|
205
|
0.06
|
%
|
||||||||||||||||
Savings and MMDA’s
|
460,198
|
1,926
|
0.56
|
%
|
443,063
|
395
|
0.12
|
%
|
||||||||||||||||
Time, $250,000 or less
|
73,485
|
1,542
|
2.81
|
%
|
37,374
|
68
|
0.24
|
%
|
||||||||||||||||
Time, over $250,000
|
13,043
|
242
|
2.48
|
%
|
10,769
|
23
|
0.29
|
%
|
||||||||||||||||
Total average interest-bearing liabilities
|
979,467
|
4,817
|
0.66
|
%
|
933,025
|
691
|
0.10
|
%
|
||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Non-interest-bearing demand deposits
|
785,634
|
797,890
|
||||||||||||||||||||||
Interest payable and other liabilities
|
17,837
|
18,380
|
||||||||||||||||||||||
Total liabilities
|
1,782,938
|
1,749,295
|
||||||||||||||||||||||
Total average stockholders’ equity
|
136,124
|
135,575
|
||||||||||||||||||||||
Total average liabilities and stockholders’ equity
|
$
|
1,919,062
|
$
|
1,884,870
|
||||||||||||||||||||
Net interest income and net interest margin (3)
|
$
|
49,637
|
3.68
|
%
|
$
|
38,859
|
2.92
|
%
|
(1)
|
Average balances for loans include loans held-for-sale and non-accrual loans and are net of the allowance for loan losses, but non-accrued interest thereon is generally excluded. Loan interest income
includes loan fees, net of deferred costs of approximately $(17) and $2,703 for the nine months ended September 30, 2023 and 2022, respectively. Net loan fees for the nine months ended September 30, 2023 and September 30, 2022 include $0
and $2,706 in PPP loan fees recognized, respectively. Also included in loan interest income is interest income recognized on nonaccrual loans paid off totaling $1,289 and $46 for the nine months ended September 30, 2023 and 2022,
respectively.
|
(2) |
Interest income and yields on tax-exempt securities are not presented on a taxable-equivalent basis.
|
(4) |
For disclosure purposes, yield /rates are annualized by dividing the number of days in the reported period by 365.
|
Three months ended
September 30, 2023
|
Three months ended
June 30, 2023
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Yield/
Rate
|
Average
Balance
|
Interest
|
Yield/
Rate (4)
|
|||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans (1)
|
$
|
1,031,647
|
$
|
13,098
|
5.04
|
%
|
$
|
988,094
|
$
|
13,722
|
5.57
|
%
|
||||||||||||
Certificates of deposit
|
20,794
|
194
|
3.70
|
%
|
21,491
|
188
|
3.51
|
%
|
||||||||||||||||
Interest bearing due from banks
|
148,250
|
1,870
|
5.00
|
%
|
169,071
|
2,315
|
5.49
|
%
|
||||||||||||||||
Investment securities, taxable
|
551,555
|
2,685
|
1.93
|
%
|
571,381
|
2,673
|
1.88
|
%
|
||||||||||||||||
Investment securities, non-taxable (2)
|
31,765
|
199
|
2.49
|
%
|
34,953
|
220
|
2.52
|
%
|
||||||||||||||||
Other interest earning assets
|
10,518
|
214
|
8.07
|
%
|
9,985
|
165
|
6.63
|
%
|
||||||||||||||||
Total average interest-earning assets
|
1,794,529
|
18,260
|
4.04
|
%
|
1,794,975
|
19,283
|
4.31
|
%
|
||||||||||||||||
Non-interest-earning assets:
|
||||||||||||||||||||||||
Cash and due from banks
|
49,630
|
46,004
|
||||||||||||||||||||||
Premises and equipment, net
|
9,704
|
9,804
|
||||||||||||||||||||||
Interest receivable and other assets
|
59,579
|
59,479
|
||||||||||||||||||||||
Total average assets
|
$
|
1,913,442
|
$
|
1,910,262
|
||||||||||||||||||||
Liabilities and Stockholders’ Equity:
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Interest-bearing transaction deposits
|
415,232
|
472
|
0.45
|
%
|
425,903
|
377
|
0.36
|
%
|
||||||||||||||||
Savings and MMDA’s
|
443,536
|
819
|
0.73
|
%
|
455,943
|
582
|
0.51
|
%
|
||||||||||||||||
Time, $250,000 and under
|
98,898
|
968
|
3.88
|
%
|
78,378
|
470
|
2.41
|
%
|
||||||||||||||||
Time, over $250,000
|
17,554
|
127
|
2.87
|
%
|
11,373
|
72
|
2.54
|
%
|
||||||||||||||||
Total average interest-bearing liabilities
|
975,220
|
2,386
|
0.97
|
%
|
971,597
|
1,501
|
0.62
|
%
|
||||||||||||||||
Non-interest-bearing liabilities:
|
||||||||||||||||||||||||
Non-interest-bearing demand deposits
|
779,615
|
783,045
|
||||||||||||||||||||||
Interest payable and other liabilities
|
18,858
|
17,210
|
||||||||||||||||||||||
Total liabilities
|
1,773,693
|
1,771,852
|
||||||||||||||||||||||
Total average stockholders’ equity
|
139,749
|
138,410
|
||||||||||||||||||||||
Total average liabilities and stockholders’ equity
|
$
|
1,913,442
|
$
|
1,910,262
|
||||||||||||||||||||
Net interest income and net interest margin (3)
|
$
|
15,874
|
3.51
|
%
|
$
|
17,782
|
3.97
|
%
|
(1) |
Average balances for loans include loans held-for-sale and non-accrual loans and are net of the allowance for loan losses, but non-accrued interest is generally excluded. Loan interest income includes loan fees, net of deferred costs of
approximately $(50) and $69 for the three months ended September 30, 2023 and June 30, 2023, respectively. Also included in loan interest income is interest income recognized on nonaccrual loans paid off totaling $4 and $1,285 for the three
months ended September 30, 2023 and June 30, 2023, respectively.
|
(2) |
Interest income and yields on tax-exempt securities are not presented on a taxable equivalent basis.
|
(3) |
Net interest margin is computed by dividing net interest income by total average interest-earning assets.
|
(4) |
For disclosure purposes, yield/rates are annualized by dividing the number of days in the reported period by 365.
|
Three Months Ended
September 30, 2023
Over
Three Months Ended
September 30, 2022
|
Nine Months Ended
September 30, 2023
Over
Nine Months Ended
September 30, 2022
|
Three Months Ended
September 30, 2023
Over
Three Months Ended
June 30, 2023
|
||||||||||||||||||||||||||||||||||
Volume
|
Interest
Rate
|
Change
|
Volume
|
Interest
Rate
|
Change
|
Volume
|
Interest
Rate
|
Change
|
||||||||||||||||||||||||||||
Increase in Interest Income:
|
||||||||||||||||||||||||||||||||||||
Loans
|
$
|
986
|
$
|
1,255
|
$
|
2,241
|
$
|
3,552
|
$
|
3,666
|
$
|
7,218
|
$
|
631
|
$
|
(1,255
|
)
|
$
|
(624
|
)
|
||||||||||||||||
Certificates of Deposit
|
67
|
70
|
137
|
192
|
197
|
389
|
(5
|
)
|
11
|
6
|
||||||||||||||||||||||||||
Due From Banks
|
(374
|
)
|
1,183
|
809
|
(500
|
)
|
5,285
|
4,785
|
(258
|
)
|
(187
|
)
|
(445
|
)
|
||||||||||||||||||||||
Investment Securities - Taxable
|
(140
|
)
|
703
|
563
|
(290
|
)
|
2,548
|
2,258
|
(75
|
)
|
87
|
12
|
||||||||||||||||||||||||
Investment Securities - Non-taxable
|
(54
|
)
|
3
|
(51
|
)
|
(10
|
)
|
68
|
58
|
(18
|
)
|
(3
|
)
|
(21
|
)
|
|||||||||||||||||||||
Other Assets
|
18
|
59
|
77
|
69
|
127
|
196
|
10
|
39
|
49
|
|||||||||||||||||||||||||||
$
|
503
|
$
|
3,273
|
$
|
3,776
|
$
|
3,013
|
$
|
11,891
|
$
|
14,904
|
$
|
285
|
$
|
(1,308
|
)
|
$
|
(1,023
|
)
|
|||||||||||||||||
Increase in Interest Expense:
|
||||||||||||||||||||||||||||||||||||
Deposits:
|
||||||||||||||||||||||||||||||||||||
Interest-Bearing Transaction Deposits
|
$
|
(6
|
)
|
$
|
409
|
$
|
403
|
$
|
(4
|
)
|
$
|
906
|
$
|
902
|
$
|
(9
|
)
|
$
|
104
|
$
|
95
|
|||||||||||||||
Savings & MMDAs
|
(1
|
)
|
649
|
648
|
16
|
1,515
|
1,531
|
(16
|
)
|
253
|
237
|
|||||||||||||||||||||||||
Time Certificates
|
123
|
941
|
1,064
|
138
|
1,555
|
1,693
|
249
|
304
|
553
|
|||||||||||||||||||||||||||
$
|
116
|
$
|
1,999
|
$
|
2,115
|
$
|
150
|
$
|
3,976
|
$
|
4,126
|
$
|
224
|
$
|
661
|
$
|
885
|
|||||||||||||||||||
Increase in Net Interest Income:
|
$
|
387
|
$
|
1,274
|
$
|
1,661
|
$
|
2,863
|
$
|
7,915
|
$
|
10,778
|
$
|
61
|
$
|
(1,969
|
)
|
$
|
(1,908
|
)
|
(in thousands)
|
||||||||||||||||
Three months ended
September 30, 2023
|
Three months ended
September 30, 2022
|
Nine months ended
September 30, 2023
|
Nine months ended
September 30, 2022
|
|||||||||||||
Other non-interest expenses
|
||||||||||||||||
FDIC assessments
|
$
|
231
|
$
|
126
|
$
|
681
|
$
|
401
|
||||||||
Contributions
|
79
|
66
|
190
|
148
|
||||||||||||
Legal fees
|
88
|
151
|
428
|
474
|
||||||||||||
Accounting and audit fees
|
134
|
135
|
451
|
404
|
||||||||||||
Consulting fees
|
163
|
239
|
599
|
428
|
||||||||||||
Postage expense
|
27
|
36
|
123
|
129
|
||||||||||||
Telephone expense
|
37
|
36
|
124
|
109
|
||||||||||||
Public relations
|
87
|
52
|
230
|
183
|
||||||||||||
Training expense
|
37
|
34
|
165
|
115
|
||||||||||||
Loan origination expense
|
120
|
29
|
248
|
178
|
||||||||||||
Computer software depreciation
|
1
|
9
|
17
|
32
|
||||||||||||
Sundry losses
|
80
|
80
|
203
|
184
|
||||||||||||
Loan collection expense (recovery)
|
160
|
114
|
(294
|
)
|
292
|
|||||||||||
Debit card expense
|
305
|
246
|
902
|
722
|
||||||||||||
Other non-interest expense
|
437
|
350
|
1,296
|
1,055
|
||||||||||||
Total other non-interest expenses
|
$
|
1,986
|
$
|
1,703
|
$
|
5,363
|
$
|
4,854
|
(in thousands)
|
||||||||
September 30, 2023
|
December 31, 2022
|
|||||||
Undisbursed loan commitments
|
$
|
197,710
|
$
|
205,610
|
||||
Standby letters of credit
|
1,251
|
1,930
|
||||||
Commitments to sell loans
|
765
|
—
|
||||||
$
|
199,726
|
$
|
207,540
|
• |
Substandard Assets – A substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have a well-defined weakness or weaknesses that
jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
|
• |
Doubtful Assets – An asset classified doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing
facts, conditions, and values, highly questionable or improbable.
|
At September 30, 2023
|
At December 31, 2022
|
|||||||||||||||||||||||
Gross
|
Guaranteed
|
Net
|
Gross
|
Guaranteed
|
Net
|
|||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
Commercial
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||||
Commercial real estate
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Agriculture
|
5,020
|
—
|
5,020
|
7,416
|
—
|
7,416
|
||||||||||||||||||
Residential mortgage
|
400
|
—
|
400
|
123
|
—
|
123
|
||||||||||||||||||
Residential construction
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Consumer
|
699
|
—
|
699
|
637
|
—
|
637
|
||||||||||||||||||
Total non-accrual loans
|
$
|
6,119
|
$
|
—
|
$
|
6,119
|
$
|
8,176
|
$
|
—
|
$
|
8,176
|
|
At September 30, 2023
|
At December 31, 2022
|
||||||||||||||||||||||
Gross
|
Guaranteed
|
Net
|
Gross
|
Guaranteed
|
Net
|
|||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||
Non-accrual loans
|
$
|
6,119
|
$
|
—
|
$
|
6,119
|
$
|
8,176
|
$
|
-
|
$
|
8,176
|
||||||||||||
Loans 90 days past due and still accruing
|
—
|
—
|
—
|
403
|
—
|
403
|
||||||||||||||||||
Total non-performing loans
|
6,119
|
—
|
6,119
|
8,579
|
—
|
8,579
|
||||||||||||||||||
Other real estate owned
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Total non-performing assets
|
$
|
6,119
|
$
|
—
|
$
|
6,119
|
$
|
8,579
|
$
|
—
|
$
|
8,579
|
||||||||||||
Non-performing loans (net of guarantees) to total loans
|
0.6
|
%
|
0.9
|
%
|
||||||||||||||||||||
Non-performing assets (net of guarantees) to total assets
|
0.3
|
%
|
0.5
|
%
|
||||||||||||||||||||
Allowance for credit losses to non-performing loans (net of guarantees)
|
263.9
|
%
|
172.4
|
%
|
Nine months ended
September 30,
|
Year ended
December 31,
|
|||||||||||
2023
|
2022
|
2022
|
||||||||||
Balance at beginning of period
|
$
|
14,792
|
$
|
13,952
|
$
|
13,952
|
||||||
Impact of adopting ASC 326
|
800
|
—
|
—
|
|||||||||
Provision for credit losses
|
3,250
|
900
|
900
|
|||||||||
Loans charged-off:
|
||||||||||||
Commercial
|
(269
|
)
|
(297
|
)
|
(297
|
)
|
||||||
Commercial Real Estate
|
—
|
—
|
—
|
|||||||||
Agriculture
|
(2,567
|
)
|
—
|
—
|
||||||||
Residential Mortgage
|
(3
|
)
|
—
|
—
|
||||||||
Residential Construction
|
—
|
—
|
—
|
|||||||||
Consumer
|
(10
|
)
|
(39
|
)
|
(48
|
)
|
||||||
Total charged-off
|
(2,849
|
)
|
(336
|
)
|
(345
|
)
|
||||||
Recoveries:
|
||||||||||||
Commercial
|
155
|
249
|
275
|
|||||||||
Commercial Real Estate
|
—
|
—
|
—
|
|||||||||
Agriculture
|
—
|
—
|
—
|
|||||||||
Residential Mortgage
|
—
|
—
|
—
|
|||||||||
Residential Construction
|
—
|
—
|
—
|
|||||||||
Consumer
|
1
|
6
|
10
|
|||||||||
Total recoveries
|
156
|
255
|
285
|
|||||||||
Net charge-offs
|
(2,693
|
)
|
(81
|
)
|
(60
|
)
|
||||||
Balance at end of period
|
$
|
16,149
|
$
|
14,771
|
$
|
14,792
|
||||||
Ratio of net charge-offs to average loans outstanding during the period (annualized)
|
(0.36
|
%)
|
(0.01
|
%)
|
(0.01
|
%)
|
||||||
Allowance for credit losses to total loans
|
1.53
|
%
|
1.50
|
%
|
1.50
|
%
|
||||||
Nonaccrual loans to total loans
|
0.6
|
%
|
0.9
|
%
|
0.8
|
%
|
||||||
Allowance for credit losses to nonaccrual loans
|
263.9
|
%
|
174.3
|
%
|
180.9
|
%
|
September 30,
2023
|
December 31,
2022
|
|||||||
Non-interest bearing transaction
|
44.1
|
%
|
44.9
|
%
|
||||
Interest-bearing transaction
|
23.2
|
%
|
25.9
|
%
|
||||
Savings and MMDA
|
25.5
|
%
|
26.6
|
%
|
||||
Time
|
7.2
|
%
|
2.6
|
%
|
|
(in thousands)
|
|||||||
|
September 30, 2023
|
December 31, 2022
|
||||||
Three months or less
|
$
|
1,652
|
$
|
1,211
|
||||
Over three to six months
|
3,294
|
1,012
|
||||||
Over six to twelve months
|
8,159
|
3,769
|
||||||
Over twelve months
|
5,752
|
3,248
|
||||||
Total
|
$
|
18,857
|
$
|
9,240
|
|
(amounts in thousands except percentage amounts)
|
|||||||||||
|
Actual
|
Well Capitalized
|
||||||||||
Capital
|
Ratio
|
Ratio
Requirement
|
||||||||||
Leverage
|
$
|
180,092
|
9.21
|
%
|
5.0
|
%
|
||||||
Common Equity Tier 1
|
$
|
180,092
|
14.31
|
%
|
6.5
|
%
|
||||||
Tier 1 Risk-Based
|
$
|
180,092
|
14.31
|
%
|
8.0
|
%
|
||||||
Total Risk-Based
|
$
|
195,844
|
15.56
|
%
|
10.0
|
%
|
Exhibit
Number
|
|
Description of Document
|
|
|
|
|
Rule 13a — 14(a) Certification of Chief Executive Officer
|
|
|
|
|
|
Rule 13a — 14(a) Certification of Chief Financial Officer
|
|
|
|
|
|
Statement of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
|
|
|
|
|
|
Statement of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
|
|
|
|
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
|
|
|
|
FIRST NORTHERN COMMUNITY BANCORP
|
|
|
|
|
|
|
Date:
|
November 9, 2023
|
By:
|
/s/ Kevin Spink
|
|
|
|
|
|
|
|
|
|
Kevin Spink, Executive Vice President / Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer and Duly Authorized Officer)
|